Struggling MannKind Replaces CEO
May 31, 2017
By Alex Keown, BioSpace.com Breaking News Staff
VALENCIA, Calif. – Will a new chief executive officer help beleaguered MannKind Corporation ? We will soon find out. On May 30, the company announced Michael Castagna has been tapped to helm the company.
Castagna, who served as MannKind’s chief commercial officer, replaces Matthew Pfeffer, who served as both CEO and Chief Financial Officer since January 2016 and as CFO from 2008 to 2016. Pfeffer will remain with MannKind until the end of July to serve in an advisory capacity to Castagna.
The news has not thrilled investors, as share prices for MannKind are down this morning. As of 10:42 a.m. the stock is selling for $1.60 per share.
Although the company has struggled for more than a year, Kent Kresa, MannKind’s chairman of the board of directors, praised Pfeffer’s role in “setting the foundation” of the company. Now, though, the company needs a new leader as it continues to try and carve a share of the market for its lead product Afrezza, a rapid-acting inhaled form of insulin to treat diabetes.
In his statement, Kresa touted Castagna and his “deep commercial expertise” as the leader who can achieve the company’s strategic goals. Kresa said Castagna has “built the capabilities” to position Afrezza and the company for future growth.
“Under Michael's leadership, new prescriptions of Afrezza have shown a steady increase since the MannKind launch and future prospects for this innovative product are strong,” Kresa said.
Castagna said Afrezza is a “truly differentiated brand” that can help millions of diabetes patients. The drug however, has had troubles finding ground in the market. In fact, last year partner Paris-based Sanofi terminated its license and collaboration deal for Afrezza with MannKind because the drug had not met sales expectations since it hit the market in 2015.
Part of Afrezza’s sales problems were related to insurance reimbursement issues. The drug was classified as a Tier 3 medication, which meant patients had to pay a higher co-pay for the drug. The higher tier status also means more restrictions can be placed on the drug. Another issue with the drug is that it cannot be prescribed to patients with asthma and other serious lung ailments. Some analysts suggested the novelty of inhaling the insulin rather than injecting it is not worth the additional price.
The company has made some headway with sales since it gained access for Afrezza with managed care providers like Aetna and Express Scripts.
As MannKind has struggled with Afrezza sales, the company has undertaken several cost-savings steps, including the sale of its corporate headquarters for $17.3 million. In January, the company also said it planned to double its in-house sales team and begin a direct-to-consumer marketing plan for Afrezza.
In addition to the change of CEOs, MannKind tapped Rose Alinaya, the company’s principal accounting officer, to serve as acting chief financial officer until a permanent CFO is named.