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 The decision to terminate the collaboration marks a blow for the
idea of delivering insulin through an inhaler, rather than by
injection, and shares in U.S.-based Mannkind fell 40 percent after
the companies announced the move on Tuesday.
Rights to Afrezza will revert to Mannkind from Sanofi in the next 90
to 180 days and Mannkind said it was reviewing strategic options for
the product, although analysts questioned if the drug had any
future.
Sanofi first signed up the rights to Afrezza in August 2014 in the
hope that an inhaled insulin would boost its flagging diabetes
business, although many investors were skeptical from the start.
Afrezza, which is delivered via a whistle-sized inhaler, acts more
rapidly than insulin injections made by Sanofi or rivals such as Eli
Lilly and Novo Nordisk, but it also carries risks.
The product can cause acute bronchospasm, or constriction of the
airways of the lung, in patients with asthma and chronic obstructive
pulmonary disease.
A Sanofi spokesman said Afrezza continued to suffer from a low level
of prescriptions, despite substantial sales efforts.
"The product never met even modest expectations and we do not
project Afrezza reaching even the lowest patient levels anticipated
at the time of entering the license and collaboration agreement,
while costs are projected to remain very high for a significant
period of time," he said.
Afrezza was developed in the shadow of another failed inhaled
insulin from Pfizer, called Exubera, which was approved in 2006 but
eventually withdrawn due to poor sales.
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Under the Afrezza marketing deal struck with Sanofi in 2014,
Mannkind secured an upfront payment of $150 million and had the
right to potential further milestone payments of up to $775 million,
plus a share of profits.
Those payments, however, depended on the drug's success and Sanofi
reported Afrezza sales of just 5 million euros ($5.4 million) in the
first nine months of 2015.
Given such poor sales, Sanofi's decision to ditch Afrezza - albeit
after an orderly transition - came as no great surprise to many
analysts and the French company's shares ended 1.2 percent higher in
Paris.
"We can't imagine that another legitimate diabetes company would
show serious interest in this asset," JP Morgan analysts said in a
note. "With little hope for resuscitating Afrezza and a dismal
balance sheet (net debt), we see Mannkind in an increasingly
precarious position."
(Editing by Adrian Croft, Greg Mahlich)
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