MannKind shares tumbled today following a key downgrade from analysts at RBC Capital. The stock fell by as much as 6.81% to $3.01 per share after the firm warned that doctors are not receiving the drug maker’s only product very well at all.
MannKind’s Afrezza growth remains negligible
In a report dated Nov. 3, analyst Adnan Butt said that data on Afrezza prescriptions has been disappointing, also resulting in disappointing sales through MannKind’s marketing partner Sanofi. The analyst has found that the number of prescriptions for Afrezza is growing from week to week, but it’s only modestly, and the insulin’s share of the market remains almost nonexistent at 0.15%.
The analyst added that usage according to their survey is a bit higher, but their sample size is very small and doesn’t correlate with IMS data or reported sales. Sanofi reported sales of about $1 million in the first quarter, which was only a partial quarter because Afrezza wasn’t available for the full quarter. In the second quarter, sales were at around $2.2 million, and in the third quarter, sales were flat with the second quarter at $2.2 million.
Following the release of the sales data, Sanofi said part of the reduction in its future sales is due to lower than expected sales of Afrezza.
MannKind needs to convince patients
Butt said in order to garner more prescriptions, MannKind and Sanofi must make patients more aware of Afrezza’s existence. He said physicians aren’t worried about the safety (90% think it is safe) or efficacy and are willing to prescribe the inhaled insulin if patients request it. The problem is that either patients aren’t interested in it or they aren’t aware that it exists. Only a small percentage of patients are even asking about it.
However, Butt said he sees a large addressable market for Afrezza, as a significant percentage of diabetic patients are hesitant to take injectable insulin.
However, his survey suggests only modest share growth at about 13% to 22% per year.
Another issue is payer hurdles, with some prescriptions appearing to be lost because payers don’t want to pay for it. Also physicians believe out-of-pocket costs for patients are higher with Afrezza compared to those of other types of insulin.
The RBC analyst downgraded MannKind two notches from Outperform to Underperform and slashed his price target from $9 to $1 per share as a result of his findings. In order to become more constructive on the insulin maker again, he wants to see signs of prescription growth and turnaround plans to address the problems he sees, including access to Afrezza.
On the company’s analyst day on Friday, he wants to hear that Sanofi is committing to Afrezza in the long term. He also wants to hear details of a long-term study on the safety of the inhaled insulin because it is resource intensive. And finally, he wants to see MannKind improve its balance sheet.
All graphs in this article are courtesy RBC Capital.