(Bloomberg) — MannKind Corp. (Nasdaq:MNKD) shares plunged after Sanofi (NYSE:SNY) ended its collaboration on the development and sale of Afrezza, the latest inhaled insulin to struggle in the diabetes market.
MannKind fell 34 percent to 96 cents at 10:02 a.m., a record intraday low. MannKind, which doggedly pursued development of Afrezza despite numerous setbacks, will take back responsibility for sales of the drug over the next three to six months and is exploring options for the device, the Valencia, Calif.-based company said in a statement. The end of the collaboration will take place no later than July 4, MannKind said.
“The product never met even modest expectations, and we do not project Afrezza reaching even the lowest patient levels anticipated,” Sanofi said in an emailed statement. “Costs are projected to remain very high for a significant period of time.”
While inhaled insulin offers diabetics an alternative to using needles, safety concerns and a lack of familiarity have held the therapies back from wide adoption. Pfizer Inc. (NYSE:PFE) pulled its inhaled product, Exubera, from the market in 2007 after diabetics shunned the device, citing its size, cost and safety concerns.
Alfred Mann, the eponymous chairman of the inhaled insulin manufacturer, spent $1 billion and more than a decade to get Afrezza approved, making it the company’s first product to reach the market. He persisted even after U.S. regulators twice rejected the therapy and it was tied to concerns about lung function.
Mann was already scheduled to be replaced Tuesday as chief executive officer by Duane DeSisto, the former CEO of insulin pump maker Insulet Corp. Mann had taken over as CEO on an interim basis late last year following the departure of Hakan Edstrom.
Sanofi paid $150 million for the global rights to Afrezza in August 2014, just seven weeks after it won regulatory approval in the U.S., and committed to another $775 million provided the drug met sales and development targets.
MannKind shipped $17.1 million worth of Afrezza in the first nine months of 2015, including $4.1 million in the third quarter, which it recorded as deferred product sales. The company posted a $14.7 million loss on its portion of the agreement with Sanofi, which it financed through a loan from a Sanofi affiliate.
Sanofi continues to search for new products to boost its diabetes business after cutting its three-year sales forecast for therapies to treat the disease, citing slumping demand for its best-selling Lantus insulin. In November, Sanofi announced a collaboration and licensing agreement with Lexicon Pharmaceuticals Inc. for rights to an experimental oral diabetes therapy called sotagliflozin. The French drugmaker also paid South Korea’s Hanmi Pharmaceutical Co. 400 million euros ($435 million) upfront for a license to develop three investigational diabetes treatments.
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