Sanofi and MannKind terminate Afrezza partnership

Sanofi ($SNY) and MannKind ($MNKD) are calling it quits less than a year after pushing their inhaled insulin Afrezza onto a skeptical market. MannKind said today that the two will wrap up their business dealings on the drug within 6 months.

Sanofi said today in a statement it will work with MannKind "to support a smooth transition" and will continue to make Afrezza available about 6 months after the official termination date of April 4. "Sanofi remains focused on supporting the millions of people living with diabetes through our strong expertise, current offerings and continued expansion of our portfolio, including strategic partnerships."

The drugmaker told Bloomberg that Afrezza had "never met even modest expectations, and we do not project Afrezza reaching even the lowest patient levels anticipated," while it expected costs for the med to remain high.

MannKind for its part said it is "reviewing its strategic options." But those look narrow at this point. It shares were off more than 27% in early trading. Sanofi had seemed like the best hope for MannKind, which had met many setbacks in getting the new presentation of insulin approved and to market. The French drugmaker, whose Lantus is the top seller in injected insulin but which is nearing patent expiration, had made a significant bet on Afrezza. It laid out $150 million in cash for global rights promised up to $775 million in milestone payments if it took off, which it never did.

Sanofi's research had indicated that many patients with diabetes avoid taking their insulin because they don't want to do injections. Many said that an inhaled product would be better for them. Analysts had indicated they thought the drug might do around $600 million a year in sales.

But the scripts were not being written. In the first 9-months of last year, Bloomberg says that MannKind shipped more than $17 million of the product. But Sanofi had recorded only $5 million in sales for Afrezza in that period. In what may have been the handwriting on the wall, Sanofi in November said that it was expecting all of its diabetes business to be off between 4% and 8% over the period of 2015-2018, and attributed half that decline to "reduced expectations for Afrezza."

MannKind borrowed money from Sanofi to cover its portion of the agreement and then posted a $14.7 million loss on that, Bloomberg said.

It is not as if Sanofi had not seen this kind of situation play out before. A decade ago, Sanofi and Pfizer ($PFE) developed Exubera, also an inhaled insulin which was approved in 2006. Analysts cheered it as a breakthrough and projected $1.5 billion in sales. Pfizer was so confident it bought Sanofi's interest in it for $1.4 billion. But after two years, the med had captured just 1% of the market; Pfizer pulled the product and wrote off its losses.

- here's the release (PDF)
- read the Bloomberg story

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