Innovation in Healthcare:

Balancing Patient Risk

and Rewards

Alfred E. Mann
Chairman and CEO, MannKind Corporation
Chairman and co-CEO, Advanced Bionics Corporation

October 2007
Balance Between Risk and Reward

• Current considerable debate in many countries over the effects of

public policy – in particular governmental regulations – for the
development of innovative pharmaceuticals and medical devices
• Regulators must balance patient access to therapies with the
safety of drugs and technology

The consequences of decision making can be dire:

• If access is promoted at the expense of safety, a dangerous
product can cause incalculable harm
• Conversely, if safety is over-emphasized at the expense of
access, patients can suffer from the absence of life-saving and
life-enhancing medications and technology
 2006 Global Life Expectancy – US is 32nd
In spite of increasing US life expectancy, in 2006 the US is 32nd behind Japan,
Canada and most of Western Europe
76 77 78 79 80 81 82 83

Japan
Hong Kong
Iceland
Switzerland
Australia
Spain
Sweden
Israel Global life
Macau
France expectancy
Canada
Italy
New Zealand
Norway
Singapore
Austria
Netherlands
Martinique
Greece 80
Belgium Average US Life Expectancy 1900 - 2004
Malta 75

Average Life Expectancy

United Kingdom
Germany
U.S. Virgin Islands 70
Finland
Guadeloupe 65
Channel Islands
Cyprus
Republic of Ireland 60
Costa Rica
Puerto Rico
55
Luxembourg
United Arab Emirates
South Korea 50
Chile
Denmark
Cuba 45
United States
40
1900 1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2004
Source: United Nations World Population Prospects: 2006 revision, US National Center for Health Statistics Source: Centers for Disease Control and Prevention, National Vital
Vital Statistics Report
 Global Harmonization

The efforts of Global Harmonization are moving towards ensuring the safety,
effectiveness and quality of medical devices promoting technological
innovation and facilitating international trade.
• Accomplishments of the 5 GHTF Study Groups under the Steering Committee
include harmonized guidance documents on:
ƒ Premarket approval and harmonized product labeling requirements
ƒ Adverse event reporting
ƒ Post-market surveillance
ƒ Quality systems requirements
ƒ Regulatory auditing of quality management systems
ƒ Evidence of clinical safety

• GHTF is ensuring the transformation and alignment of policies essential for safe
and effective outcomes that can be evaluated and regulated with predictable
consistency

• Reach consensus internationally on the regulatory infrastructure that guide our

nations to streamline the process of innovation

• Ultimately, we must expedite the time to deliver cost-effective safe and effective
clinical solutions to patients
Timeline of Alfred E. Mann Companies
 Development of Pacemakers
Pacesetter Increases Average Life from 18 months to 25 years

• 1969 Became involved in medical devices through the

Johns Hopkins connection from the aerospace program
• 1972 Medtronic pacemaker: Average life of 18 months
• 1973 First Pacesetter pacemaker: Average life > 25 years
• 1977 Programmable pacemaker with 2-way telemetry 1973

• 1985 Programmable lithium iodine shrinking 50% in size

by 1995.

Pacesetter grew to be the number two pacemaker

company, and is now the major part of St. Jude Medical
1975

Today 1995 1985 1979 1977

 Insulin Pump and
Glucose Sensor
• Diabetes Therapy Innovation
1. Continuous
Glucose Sensor

2. Insulin
Pump
 HiResolution®
Bionic Ear System

HiRes® Harmony™ HiRes 90K® Implant

Processor

• RF Powered
• 16 Independent Stimulation Channels
• 90,000 Pulses Per Second
• DSP Control
 Precision ™
Spinal Cord Stimulator

Competition

•Smaller IPG size

ƒ Greater patient comfort
ƒ Increased placement options

•Rechargeable Battery
ƒ Longevity designed to surpass
existing systems
 ®
bion

• Miniature implantable single-channel neurostimulator

• ~ 2.7 cm length and 3 mm diameter
• Fully programmable
• Bi-directional telemetry
• Rechargeable
• Innovative Functional Electrical
Stimulation (FES) and
neuromodulation devices for physical
rehabilitation

• Exoskeletal neuroprosthetics stimulate

sensory and motor nerves to
rehabilitate and restore limb function

ƒ Maintaining or increasing range of

motion

ƒ Preventing or retarding atrophy of

function

• A pipeline of exoskeletal and

implantable products
 L300

Without the L300 With the L300

 Implanted Integrated
Hearing System

• Implanted integrated hearing

system requiring only minor
surgical procedure

• Uses miniature acoustic

devices, hermetic implanted
electronics, and tissue
tissue--
integrating bio -compatible
bio-compatible
materials

• Designed for individuals with

mild to moderately severe
hearing losses
• Fully and partially implantable
tissue-specific drug-delivery
systems

• Founded in 2004
• Neuroprotective drugs to treat
tinnitus, Ménière's Disease,
progressive hearing loss and
maintain nerve function following
surgery or other trauma

• Novel strategies for sustained

delivery of unstable therapeutics
• Percutaneous access
devices incorporating
new tissue-integrating
bio-compatible materials
permitting safe repeated
access to the body

• The first product for

hemodialysis is serving the
needs of 300,000 critically ill
patients
 Second Sight® Medical Products, Inc.

• Implantable visual prosthetics to enable

blind individuals achieve greater
independence
• Target patients with retinitis pigmentosa
• Argus II Retinal prosthesis
• Using implantable electronics to restore
sight to the blind
• Novel electrode with over 20x surface
area of standard platinum electrodes
which allows much smaller array.

Argus I Patient
 MannKind: Pulmonary Insulin from
the Patient’s Perspective

MannKind Pfizer/Nektar

• MannKind Insulin System.

A proprietary dry powder
inhaled into the deep lung
using hand held inhaler
believed to facilitate
patient compliance
• Super rapid delivery of
charge masked monomeric
insulin to the deep lung

MannKind Technosphere® Competition

Insulin System
 Technosphere®/Insulin
and Research Results

1 μm

Technosphere®/Insulin Mimics Early Insulin Secretions

Insulin Levels Glucose Levels
160 260

140 240
14 IU SC 14 IU SC
Blood Insulin (uU/m L)

120 48 U T/I 48 U T/I

220

Blood G lucose (m g/dL)

100 200

80 180
60
160
40
140
20
120
0
100
-30 0 30 60 90 120 150 180 210 240 270
-30 0 30 60 90 120 150 180 210 240 270
Time from Meal Onset (min) Time from Meal Onset (min)
 Post Prandial Synchronization
Technosphere Insulin vs.
Subcutaneous Insulin

180 min Approximating

4.0 the early
insulin secretions
3.5 24 IU sc increases glucose
Glucose Lowering Activity

control at the
3.0 48 U T/I beginning of a meal
and reduces excess
2.5 insulin following
digestion
2.0

1.5

1.0

0.5

0.0
0 100 200 300 400 500 600
Time from Dosing (min) With T/I With Sub

Glucose lowering activity within 180 minutes following start of meal 74% 18%*

*Over 15 hours; 29% over 9 Hours

 Solutions to Major Insulin Issues

Technosphere Insulin can:

1. Reduce postprandial glucose excursions to normal levels

2. Virtually avoid causing hypoglycemia
3. Require no complex meal titration
4. Reduce the need for mealtime glucose measurements –
likely just to infrequent fasting glucose measurements
5. Cause no weight gain
6. Eliminate prandial injections
 The FDA Critical Path Initiative

• Objective is to reduce uncertainty about product performance

throughout the product life cycle using updated scientific
research techniques
• Collaborative model conceived to bridge the gap with a focus on
downstream product development concerns.
• Critical Path Initiative presents 76 major opportunities likely to
modernize and transform the development and use of
medicines and technology
ƒ Should increase predictability in the development and
performance of the regulated products
ƒ Physicians and patients would be also be given improved
information about product use to maximize its benefit and minimize
side effects
Molecular Metamorphosis in Medicine

• Transition from the micro level to the molecular level

• Enhanced understanding of the disease process
• Andrew von Eschenbach has termed this transition
the “molecular metamorphosis in medicine”
• As our knowledge and performance measurement
tools evolve, we may be positioned to intervene at
the molecular level
• Potential results are personalized, predictive,
preemptive and participatory medicine
 Critical Path Initiative May
Expedite Development Times
The Critical Path Initiative has the potential to
address industry-wide initiatives;
• For verification of clinical efficacy and drug toxicity
• Use of data mining and computer modeling
• Development of innovative clinical trial designs for
smaller but smarter clinical trials
• Ability to use modern imaging technologies to track
outcomes measures.
• Identification of biomarker sets with increased
predictability of clinical risks and/or benefits over
single markers.
 FDA Decisions and User Fees
∆’04-‘06 2006 2005 2004
Number FDA
-3% 37 39 38

PMAs and PMA

Supplements
$4,500 $300,000 decisions

Panel Track
Ave FDA
decision days
-8% 252 273 273
Ave total
elapsed days
-30% 353 416 504
$4,000 510(k) fees $275,000
Number FDA
decisions
-8% 3198 3222 3463

510 (k)s
Ave FDA
-22% 57 58 73
PMA Fees decision days
$3,500 $250,000 Ave total
elapsed days
-10% 89 88 99

• User fees have doubled in 5 years

$3,000 $225,000
• FDA has Ð review times

$2,500 $200,000 • Manufactures have Ð their response

510(k) User Fees
PMA User Fees times
$2,000 $175,000 • Average FDA decision days = ave # days
for FDA to review the applications
(FDA time only)
$1,500 $150,000
2003 2004 2005 2006 2007
• Average total elapsed days = ave # of
days from receipt to final approval
decision (FDA time + manufacturer time).
Increasing Drug and Device User Fees

• User fees make up an increasing part of the drug and device review budget
• An increasing concern is voiced about the significant portion of FDA funding that
comes from the drug and device companies the FDA is chartered to regulate.

MDUFMA PDUFA
(Millions) FDA Congress-Allocated Funds FDA Congress-Allocated Funds (Millions)
$200 MDUFMA User Fees PDUFA User Fees $500

$150 $375

$100 $250

57%
$50 59% $125
53%

21%
16% 17%
$0 $0
2003 2004 2005
 Delayed Approval Denies Access

• Terminal patients request access to investigational

drugs and devices and are consistently denied
• Advocacy alliances push for access to drugs with
completed animal testing, positive Phase I and in
some cases more-advanced Phase II or Phase III
trials
• A few examples of drugs with delayed approval
ƒ Gleevec/Glivec: Chronic myelogenous leukemia
ƒ Eloxatin: Advanced colorectal cancer
ƒ Erbitux: Head and neck and colorectal
cancer
ƒ Tykerb: Breast cancer
 Post Market Surveillance

• Need to address the culture of risk aversion that unnecessarily

delays product approvals
• The FDA could contract out product reviews – a process which
has been highly successful in pilot programs
• Congress could create extra-governmental mechanism for
product oversight
• A regulatory approach, which treats the device development
process as a continuum beginning with initial use extending into
routine use would provide a more realistic framework to address
issues of safety and efficacy.
• EU contracts out product reviews by third-parties in the private-
sector (notified bodies) that test products, inspect manufacturing
systems and ultimately verify that EU standards have been met
Balancing Patient Risks and Rewards
Recommendations for regulatory evolution:

1. More prudent tolerance for risk to gain benefits

2. Expedited and less costly drug regulatory processes
3. Global reciprocity across regulatory agencies
4. Greater reliance on independent evaluation companies
5. Balance between pre- and post market control
6. Emphasis on contraindications for patient classes
7. Approval process for off label use
8. Compassionate care use
9. Greater focus on reality rather than process
10. Realistic patent extension
Imagine the Possibilities