Pharma firm Sanofi released its second quarter 2015 results this morning, and where generally stable, with net sales across its pharmaceutical division growing 4% year-on-year to €7.8bn ($8.6bn) thanks mostly to growth in its generics business and its biopharma subsidiary Genzyme.
But this was offset by a 3.8% decline in its diabetes division - mostly due to loss in sales of its recombinant insulin glargine product Lantus, which came off patent in the US in May – wherein sales of the inhalable insulin Afrezza, launched in February, were €2m; double that of the first quarter yet still minimal.
Sanofi partnered MannKind last year on the diabetes product which uses MannKind’s inhalable drug delivery technology – comprising of the excipient fumaryl diketopiperazine (FDKP) which increases the solubility of the insulin to be compatible with the lung – and delivery device, but since launch both firms have faced criticism about the slow uptake.
Earlier this month, MannKind’s CFO Matthew Pfeffer told in-Pharmatechnologist.com a second-stage marketing push including direct-to-consumer (DTC) would help raise the profile of Afrezza’s effectiveness and ease of administration, and not lead to a failure like that of Pfizer’s inhalable insulin product Exubera which was pulled a year after launch at a cost of $2.8bn.
Death-spiral convert and Sanofi pull-out?
But despite this reassurance, the latest sales figures will not quell the mood of several commentators who have been wary of Afrezza’s long-term financial health since Sanofi’s Q1 results. This criticism has been further fuelled this week by MannKind announcing a stock and note exchange to help pay off about $100m of debt.
The exchange will raise around $57m through a stock offering, with a further $28m being converted into Senior Notes due in 2018. The news was described by The Street as a “classic definition of a death-spiral convert, a form of distressed financing which forces companies to hand over more shares when the stock price falls.”
While it is not thought MannKind is at risk of shutting down, Healthy Outcomes President and founder of Diabetic Investor David Kliff said in a blogpost: “Shares of MannKind are down over 7% in early trading as investors are beginning to realize sales of Afrezza aren’t accelerating and with no improvement in site the strong possibility exists that Sanofi will terminate their partnership with the company.”
He continued: “The way we see it MannKind has hit the iceberg and is taking on water. The crew cannot bail fast enough to prevent the ship from sinking. This most recent move is just delaying the inevitable but it won’t stop the ship from sinking.”