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MannKind's hopes rest with its inhaled insulin

The firm faces a lawsuit and other hurdles as it develops Technosphere.

May 21, 2007|Daniel Yi | Times Staff Writer

If a drug being tested by a small pharmaceutical company in Valencia lives up to its promise, it could revolutionize the treatment of diabetes and spare millions of Americans the pain of daily insulin injections.

For MannKind Corp., founded by Beverly Hills billionaire Alfred E. Mann, the financial payoff would be huge. Insulin sales worldwide are about $21 billion annually and growing, and a safe, effective inhaled form would no doubt be wildly popular.

The company has to scale some hurdles first, including a $400-million lawsuit filed by its former medical officer who claims MannKind played fast and loose with its research and fired him because he complained. The wrongful-termination suit went to trial recently, and Mann is set to testify today.

The outcome of the trial may have no effect on the development of Technosphere, the brand name MannKind has given to the drug. The drug is in late-stage human trials and, according to the company, could hit the market as early as 2010.

For The Record
Los Angeles Times Thursday May 24, 2007 Home Edition Main News Part A Page 2 National Desk 1 inches; 43 words Type of Material: Correction
Mannkind: A story in Monday's Business section said that Valencia-based pharmaceutical company, Mannkind Corp., was being sued for $400 million in a wrongful termination case filed by its former medical officer, Wayman Wendell Cheatham. The lawsuit seeks $4 million or more in damages.

But a win for Wayman Wendell Cheatham, the former medical officer, could be a black eye for MannKind.

The company -- which has yet to bring any drugs to market -- has spent $700 million on Technosphere, said President Hakan Edstrom. Technosphere is by far the most promising drug in MannKind's slim product-development pipeline, which includes a cancer drug and another diabetes medicine.

Cheatham, a nationally recognized endocrinologist and a member of the American Diabetes Assn.'s board of directors, doesn't allege that Technosphere is unsafe. He contends that the company withheld from the Food and Drug Administration information about possible problems in the development of the drug in early 2005. The omission could have harmed people when the drug reached human trials, Cheatham alleges.

"Human safety should be primary in drug development," Cheatham said last week. "The FDA expects us to be truthful."

Cheatham said he told the FDA about the omission. The agency didn't respond to requests for comment.

Technosphere also faces challenges outside the courtroom. A competing drug, Pfizer Inc.'s Exubera, the first FDA-approved inhaled insulin, has had lackluster sales since debuting last year. One reason: Doctors are concerned about possible health effects of delivering powder drugs directly into the lungs, including diminished lung capacity.

Mann started MannKind in 1991. The 81-year-old former aerospace entrepreneur made a fortune setting up medical companies and selling them for big profits. He founded Advanced Bionics Corp., which sold for an estimated $4 billion in 2004, and MiniMed Inc., a maker of insulin pumps, which sold for $3 billion in 2001. Mann donated $100 million to USC to start up the Alfred E. Mann Institute for biomedical research.

MannKind went public in 2004 at $15.50 a share and its stock soon reached nearly $25. Within a year, its shares were below $10. It closed Friday at $12.26.

Cheatham said in an interview that in 2005, when rival Exubera was close to reaching the market, he felt the pressure that MannKind was under to show results with Technosphere.

"At least monthly, if not weekly, they wanted to know: 'Where are you at? What's your projection?' " said Cheatham, who had been a chief medical officer at Takeda Pharmaceuticals North America Inc. before Mann hired him in 2002.

Cheatham claims in his suit that MannKind hid from the FDA the fact that Technosphere had shown unexpected results in lab tests, demonstrating potentially more potency. Cheatham says the company should have notified the FDA; instead, he says, he contacted the agency.

Eventually, MannKind conducted more tests and found the potency wasn't a problem.

The company says that it never tried to deceive regulators and that it requested a meeting with FDA officials to discuss the early test findings but that the agency said it wasn't needed.

"The worst that could happen to us as a company is to be shut down because we didn't follow regulations very carefully," Edstrom said.

He said the problem was Cheatham, who was let go in May 2005 after he refused to move to a post in which he would promote the company and its drugs.

"He is a great scientist," Edstrom said, "just not a good manager."

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