Published at Retail Investor 360: Saturday, 23 August 2014 12:19 Written by Doctor Hung V. Tran, MD, MS.

360 Catalyst Keys

• The ORIGIN trial – studied insulin glargine (Lantus) in patients with Type 2 diabetes and presented at the American Diabetes Association (ADA) in 2013 – proved that insulin does not cause malignancy. The same fallacious notion that Lantus causes cancer or neoplasm now directs toward Afrezza
• Critics misapprehended the data (on insulin and cancer) due to the difficulty and often misunderstood relationship between statistical correlation and causality
• Patients with Type 2 diabetes often have other coexisting diseases such as obesity, hypertension, and/or hypercholesterolemia, which collectively refer to as "confounders." Obesity is a confounder of interest because there is a plethora of literature proving that obesity increases risk of cancer
• The United States Food and Drugs Administration (FDA) has mandatory post-approval surveillance (i.e. phase 4 trials) studies of all drugs and Afrezza is not an exception
• Pulmonary hyperplasia is a requisite for lung cancer, but all clinical trials did not show any evidence of hyperplasia. MannKind's clinical trials data proved Afrezza is indeed safe. If hyperplasia occurs, it will occur in patients who participated in the Affinity trials already. Moreover, patients who were on Exubera and then switched to Afrezza, in an ongoing trial, do not exhibit signs and/or symptoms of hyperplasia such as decreasing total lung capacity (TLC), forced expiratory volume (FEV1), force vital capacity (FVC), and etcetera; otherwise, the trial should have been halted
• Patients exposed to carcinogens like tobacco smoke are found to have elevated levels of insulin-like growth factors receptors (IGF-Rs) in the lungs, which means carcinogens cause an increased in IGF-R. Hence, IGF-Rs are simply biomarkers produced by cancerous lungs rather than causing lung cancer
• The human physiology has evolved over centuries, and natural substances produce by our body (i.e. insulin) do not cause cancers or else, we are already extinct

The Story. 2015 will mark a new era of diabetes care as Sanofi SA ADR (NYSE: SNY) teamed up with MannKind Corporation (NASDAQ: MNKD) to launch the revolutionary ultra rapid-acting insulin called Afrezza. Revolutionary in its designs and kinetics Afrezza will treat $28 million patients with diabetes in the United States (US) initially and then potentially 382 million patients worldwide, as Sanofi will rapidly gain the Europe Medicines Agency (EMA) approval for Afrezza. We recently debunked a common misperception, which stated that the required lung testing (spirometry) would hamper Afrezza's sales. According to our clinical familiarity with spirometry, the test can be quickly and easily performed with minimal discomfort while compensating prescribers, thus leading to sales improvements. Likewise, the focus of this research is to clarify the misapprehension that insulin and Afrezza cause cancer.It is quite easy to believe that insulin causes cancer because statistics, in fact, show that there are more cancer cases for patients with Type 2 diabetes taking insulin compared to the general population. The aforementioned statistics are, however, tricky, and needs to be analyzed by seasoned trial investigators or researchers as the higher number of cancer cases simply represents "CORRELATION" rather than a "CAUSAL" relationship per se.

More Insights. It is imperative to note that correlation and causal are two distinctive relationships. According the Australian Bureau of Statistics, correlation is a "statistical measure (expressed as a number) that describes the size and direction of a relationship between two or more variables. The Pearson Correlation Coefficient (r) can express the degree of correlation between two variables mathematically.

Source: Education Portal

A correlation between variables (e.g. insulin and cancer), however, does not automatically mean that the change in one variable is the cause of the change in the values of the other variable." On the other hand, "causation indicates that one event is the result of the occurrence of the other event; i.e. there is a causal relationship between the two events. This is also referred to as cause and effect." Theoretically, "the differences between the two types of relationships are easy to identify — an action or occurrence can cause another, or it can correlate with another. In practice, however, it remains difficult to clearly establish cause and effect, compared with establishing correlation."

Source: Explorable

That being said, patients with diabetes taking insulin somehow tend to have cancer more than the general population; not with standing, this correlation does not mean insulin is causing cancer in these patients. It simply implies there is a statistical correlation between diabetes and cancer. What truly cause cancer in patients with diabetes are "confounding variables." Research demonstrated that coexisting chronic diseases including obesity, high blood pressure (hypertension), high cholesterol (hypercholesterolemia), or heart diseases … increase the chances of developing cancers. Given there is aplethora of literature, which demonstrates that obesity and tobacco abuse cause cancer, the confounding variable obesity is most likely one of the culprits that causes cancer rather than the lifesaving drug, insulin, per se.

In addition, the ambiguity of the statistical concepts of correlation and causal relationship between insulin and cancer explains why there are ongoing questions whether Afrezza and Lantus cause cancer despite Sanofi's flagship basal insulin glargine being prescribed safely and efficaciously for more than a decade. Much of this debate dampened in 2013 when Louise Bordeleau, MD,presented at the American Diabetes Association (ADA) the data for a large international clinical trial studying Lantus in 12,537 patients (via randomization and 2x2 factorial designs) known as the ORIGIN trial –and proved that there is no causal relationship between insulin and cancer.

Even More. It's understandable why Wall Street analysts suggest Afrezza could cause lung cancer, because even some physicians with considerable training in data analysis still misapprehend that insulin causes malignancies, again due to particular difficulties of teasing out correlation versus causation when faced with the mind-boggling fact of higher prevalence of cancers amongst patients with Type 2 diabetes and obesity. Nevertheless, critical data investigation by top authorities in medicine like those at the ADCOM, Doctor Skyler who is the Deputy Director of Diabetes Research at Miller Institute, and Doctor Bordeleau, proved insulin does not cause cancer.

Based on our MD/MS background and extensive independent research on obesity and diabetes from the Columbia University's Institute of Human Nutrition, we firmly believe that cancers that occur in patients taking insulin (be it Lantus orAfrezza) are due to the "confounders" like obesity and perhaps other unaccounted causes. There is a plethora of literature that proves obesity indeed causes increasing chances of getting cancer. However, that is beyond the scope of this research.

If Lantus does not cause cancer, Afrezza is even less likely to cause malignancies at all. Here's the reason: the lining of the lungs (pulmonary epithelium) is unique as it is the thinnest layer in the human anatomy, as slim as only a single-cell layer, which makes sense because that reduces the thickness needed to optimize oxygen delivery in accordance to Fick's Law of Diffusion. According to Adolf Fick, "the rate of transfer of gas through a sheet of tissue (lungs) is proportional to the tissue area and the difference in gas partial pressure between the two sides and inversely proportional to the tissue thickness."

Volume of gas (per unit time)=Area/Thickness x Diffusion constant x (Partial Pressure 1 - Partial Pressure 2)

Source: Berne and Levy

Hence, if even a tiny bit of hyperplasia (thickening via cellgrowth) occurred invarious trials like the Affinity Trials and those trials that studied Exubera, this increased thickness would have showed up as breathing problems – respiratory distress, shortness of breath, rapid decline in lung function metrics such as FVC, TLC, FEV, FEV1, TV – and we could have observed these symptoms and problems inpatients who participated in these trials. The process of lung cancer in general may take years to develop, but hyperplasia (similar to hypertrophy) does not take years.

Source: Conner Med

With respect to an increased incidence of initial coughing found in patients taking Afrezza, investors should NOT be alarmed because when a patient inhales anew medicine like albuterol –a highly safe and efficacious drug to treat asthma/COPD exacerbations – their lungs will naturally react to the new drug by coughing as the body attempts to clear out what it believes to be foreign to it.

Bottom Line. Investors should note that medicine is an imperfect science – subjecting to continual changes as some current evidence-based practices, and certain misperceptions, can become obsolete in light of future discoveries. In the past, some (physicians), due to limited knowledge at the time, believed insulin causes heart disease; needless to say, such a notion is now considered completely absurd. Not long ago there was also the delusional belief that coffee causes cancer. A large study from Harvard Medical School, however, proved coffee drinkers tend to smoke, and smoking is the culprit that causes cancer instead of the wonderful dark magic from Green Mountain (NASDAQ: GMCR) Coffee's Keurig K-Cups.Moreover, smoking is the "confounder" in this case because it can bias previous studies' results and/or interpretations. Similarly, another example is the fear that an artificial sweetener called Splenda likewise causes cancer. We are now fully cognizant that Splenda is "splendidly healthy" due to its ability to reduce calories and fats as fats are also physiologically made from excess sugars consumption.

Given there was no statistically significant sign of lung problems for patients invarious trials such as the Affinity trials, the ORIGIN trial and other data beyond the scope of this paper, Vincata Equity Research strongly affirms Afrezza will not cause lung cancer as some imply. In addition, insulin is a natural hormone produced by the pancreatic Beta cells, and it makes sense evolutionary pressure prevents the human body from producing a hormone like insulin for the purpose of self-destruction. The mentor of Warren Buffett (Benjamin Graham) states in his book "The Intelligent Investor" that Mr. Market has a tendency to be overly pessimistic or optimistic. We concur with the Father of Value Investing, as our research reveals that the cholesterol fear was not as scary after all – when Intercept Pharmaceuticals recently released the final outcomes for FLINT trial data on August 11, 2014, the stock rewarded shareholders by gapping up more than 30 percent.

An excess of anything can kill patients; for instance, too much testosterone indeed causes prostate cancer. Nevertheless, the insulin doses administered were not in excess of the natural levels produce in human physiology. Investors should also realize that it was not unusual that the FDA required MannKind to run additional post-approval studies – all FDA approved drugs require post-approval surveillance studies (phase 4) to optimize public consumer safety. More importantly,shareholders should have realistic expectations, as investors do not make money overnight in the market. Instead of swinging for quick profits as yours truly had attempted in the past and lost money, shareholders are best to exercise due diligence and patience to consistently profit from investments over the long run.Nothing in life, including investing research is a 100 percent guaranteed, so one must weigh the risks versus rewards. MannKind Corporation is a highly prudent investment having strikingly low risks (at this point) versus high rewards.Nonetheless, unconvinced investors will not make a dime if they can not withstand share price fluctuations and refrain from, as the Legendary Investor Peter Lynchputs it best, "pulling out the rose only to water the weed" (something yours truly was also guilty of from time to time.) On a parting note, MannKind is a prudent investment when viewed from all angles, even the 30-60-90 degrees angles of Ionian Greek Mathematician, Pythagoras. With the recent Sanofi partnership we are even more optimistic on MannKind; hence, we revise our objective valuation up to $50 per share.

"Integrity, Ingenuity, Essence, and Essentially All Else Follows"

Catalysts Revealed. Vincata Equity Research (formerly 360 Biotech) insights have been leveraged amongst the pros and retails to forecast trials data such as the Flint Trials for Intercept, the ASCEND trials for InterMune, or the Affinity Trials MannKind. Investing in biotech is highly risky but it can be quite rewarding when investors have an edge in data analysis. Physicians who are rigidly scientific tend to lack the analytical prowess of financial experts. Conversely, Wall Street financiers usually do not possess a physician's medical expertise. Likewise, PhDs are skillful in data analysis but these scientists might not be familiar with physicians' prescribing patterns, which give the foresight to successful investing in biotech. Hence, experts will improve their analytical skills, as well as, forecasting accuracy if they leverage on each other complimentary skills. 360 Biotech's strength is our Integrated Research approach – leveraging on our hybrid backgrounds as MDs, researchers, and financially analysts. SIGN UP as a registered member to enjoy the full benefits of our tireless diligence in delivering market intelligence ahead of Wall Street to you, the pros and the everyday investor. We tipped our registered users about InterMune when it was selling below $10, as well as, exciting companies before they took off such as MannKind, Intercept, JAZZ, Regeneron, Amphastar, FONAR, GT Advanced Technology, Chipotle, Tesla, Green Mountain Coffee, Sun Power and etcetera. … There are great companies with brewing catalysts and you do not want to miss the train!