Former MannKind Exec Charges Clinical Trial Fraud

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fraudWill this be a big step back for MannKind? A former MannKind exec has filed a lawsuit charging the drugmaker fired him in retaliation for alleging that scientific misconduct involving clinical trial data for the fledgling Afrezza diabetes drug was withheld from the FDA. The charges, which concern clinical trial sites in Russia and Bulgaria, were made by John Artidi, a former senior director for regulatory affairs, TheStreet writes.

In the lawsuit, which was filed in a New Jersey state court two months ago, Arditi claimed he uncovered evidence of potential scientific misconduct at the sites and informed MannKind execs. At a site in Russia, for instance, he charged patients enrolled in the study had the same blood pressure readings at each visit for several months, but and so the finding could be inaccurate and he raised the possibility of “fraudulent study results,” including fictitious patients, according to the news site.

Arditi, who was responsible for overseeing foreign clinical trials, he went on to charge that he was fired by MannKind after he voiced his concerns and requested the info go to the FDA, but “commercial interests trumped integrity and transparency,” according to the lawsuit. MannKind Matt Pfeffer cfo tells The Street the drugmaker conducted an independent investigation of the allegations and concluded there was no substance, and he added the firing was unrelated to the charges.

The disclosure could significantly delay approval of Afrezza, an inhaled insulin device that has already generated considerable skepticism among some Wall Street analysts due to charges that MannKind has been accused of hyping its progress in developing the product (read this). Earlier this year, the FDA delayed approval because inspection of a manufacturing plant was not complete (look here). And last week, Hapoalim Securities analyst Jon LeCroy forecast the FDA will issue another complete response letter next month when the PDUFA date is scheduled.

The lawsuit “is bad in my opinion,” LeCroy tells us. “This is the second employee that has accused them of monkeying around with data…The FDA is already very cautious with international data.” In a regulatory filing, MannKind says “the allegations in the complaint are without merit and intends to defend against them vigorously ” (see page 10).

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  1. 1. One allegation I read was that the dates of Afrezza shipment were after the trial began. To this I can imagine that in Europe the dates are reversed. e.g. in America 4/8/2009 would be April 8th, 2009, but in Europe it would be written 8/04/2009..thus if the auditor didn’t pay attention..he could assume that the shipment of Afrezza came after the trial began but..if he was using common sense back then..he would have realized his error in reading the date. imo speculating MNKD Long!
    Secondly, Mannkind is standing up to the allegations has had an independant investigation that cleared the allegation as Meritless! No analyst has ask any questions during the last CC call and this lawsuit was clearly posted for them to ask if they had any concerns..but they didnt! WHY?

  2. The hedge fund guys will have a field day with this one, just like ARNA. Stock down 11% today.

  3. As of 5:30 EST today, MNKD under investigation for securities fraud. Stay tuned.

    http://finance.yahoo.com/news/Berman-DeValerio-Announces-bw-3999692671.html?x=0&.v=1

  4. “commercial interests trumped integrity and transparency,”

    Wow!Imagine that. Commercial pressure is so high on corporations to make money, patient well being too frequently takes a back seat.

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