Image source: MannKind Corp.

Well, it looks like MannKind (NASDAQ:MNKD) is officially in some serious trouble.

Sanofi (NASDAQ:SNY), MannKind's marketing partner for its inhaled insulin Afrezza, recently reported its third-quarter results, and once again, the numbers for Afrezza don't look pretty. The company only managed to sell 2 million euros worth of Afrezza during the quarter, or roughly $2.2 million, a result that looks strangely similar to the 2 million euros it sold in the second quarter of the year.

You read that right: Despite all of the company's efforts to spur demand and knock down the barriers to adoption, Afrezza sales were flat quarter over quarter.


That brings total net sales for Afrezza since launching earlier in the year to roughly $5.52 million, which is an awful start for a drug that supposedly held blockbuster potential.

This result is even more disappointing as it comes against the backdrop of management saying at the end of last quarter that it was in discussions with insurance companies to expand access to the drug, which supposedly had been a major barrier to patient adoption. In addition, the company started a direct-to-consumer campaign that included print ads in magazines like Time and Diabetes Forecast and launched a new consumer-facing Afrezza website. 

Sanofi losing faith?
As disappointing as these lagging sales numbers are, there appears to be more trouble brewing behind the scenes. Global sales at Sanofi have been lackluster recently, largely weighed down by results at its diabetes division. Global sales from the division were down by 6.6% worldwide, largely due to shrinking sales of its blockbuster long-acting insulin Lantus in the U.S.

Looking ahead, the company expects total annual sales from its diabetes division to fall between 4% to 8% per year for the next few years. While most of that decline is due to lagging Lantus sales, disappointing Afrezza sales are certainly a contributing factor to its guidance.

In order to help get the company back on track, Sanofi brought in a new CEO named Olivier Brandicourt earlier in the year, who appears to be looking for ways to shake things up and get the company back on track. Brandicourt has announced he will be presenting a five-year plan for the company on November 6th, which could mean changes are likely coming in the company's diabetes franchise.

As a reminder, Sanofi holds the option to drop Afrezza from its lineup on Jan. 1, 2016, and given the performance of the drug thus far, it seems increasingly likely that the company will exercise that option.

If Sanofi did choose to drop Afrezza, it would likely be disastrous for MannKind, since while the company has hinted it is exploring other uses for its technology platform, it has yet to make any announcements, which means it has truly bet the farm on the success of Afrezza.

What now?
In an effort to lower its cost structure caused by lagging Afrezza sales, MannKind announced yet another round of layoffs last month, which is the third time the company has been forced to do so this year. While cutting costs can help keep the ship afloat for a bit longer, the only real remedy to this situation is for Afrezza sales to take off, and with each passing quarter, that becomes increasingly unlikely. 

On the surface, inhaled insulin sounds like such a winning concept, and I really thought Afrezza had a shot at making it big. However, at this point, the diabetes community has spoken, and there doesn't appear to be enough demand for an inhaled insulin to make that happen.

Pfizer gave up on its inhaled insulin, Exubera, after less than a year of trying. Despite MannKind's attempts to avoid all of the ways Pfizer went wrong, with each passing quarterly report, it looks like Afrezza is heading that way, too. 

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