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Post by brentie on Apr 29, 2015 8:42:56 GMT -5
MannKind's Future: More than Just Afrezza?
By Brian Feroldi
April 29, 2015
2014 was an exciting year for MannKind (NASDAQ: MNKD ) investors, as its inhaled insulin product Afrezza finally gained approval from the FDA. MannKind also signed a global liscencing deal with Sanofi (NYSE: SNY ) , which gave the company an immediate $150 million cash injection as well as a strong partner with a global sales footprint.
MannKind also has the opportunity to earn an additional $775 million from Sanofi if certain regulatory and sales milestones are reached with Afrezza. The company was able to meet a few of those requirements in the fourth quarter of 2014, entitling it to a collect an additional $50 million.
Beyond Afrezza...
For the next few quarters investors' eyes are going to be laser focused on Afrezza sales -- if the drug is a hit with patients and providers, it could pay off handsomely.
However, even with Afrezza getting all the attention, there's more to MannKind's story. Savvy investors should be asking: what else does the company have in its pipeline?
MannKind has stated that its Technosphere formulation technology has applications beyond the insulin delivery market. The Technosphere technology allows for drugs that are currently administered via an injection to potentially become inhaled, which allows for faster absorption as well as eliminating the need to take a shot.
On its most recent conference call, MannKind's management team noted that they hired a consulting group to identify a number of disease states that could benefit from inhaled drug delivery. CEO Hakan Edstrom highlighted a specific focus on pulmonary diseases, pain, and oncology support.
MannKind has also hinted in the past that another opportunity may exist in the diabetes space: GLP-1 agonists. This drug class, which is designed to stimulate the pancreas to produce more insulin when blood sugar levels are high, is already on the market and is used to treat patients with type 2 diabetes. When asked about the opportunity here, CEO Edstrom confirmed that they are discussing the opportunity with their partner Sanofi, and hinted that there many be a development project in the works.
We do not have a lot to go on about the clinical status of the GLP-1 opportunity, as the company hasn't put out a follow up press release since posting positive phase 1a results way back in November 2007. However, with CEO Edstrom calling it out as a potential development project with Sanofi, it could be an interesting opportunity for the company.
What to look for in the years ahead
While a near term investment in MannKind hinges around the success of Afrezza, the big opportunity that exists for MannKind is trying to make its Technosphere technology into a delivery platform for future drugs. Afrezza could be the much needed proof of concept for the technology itself, and if providers become comfortable prescribing an inhaled insulin, it's reasonable to assume that they may also be interested in offering patients inhaled versions of other drugs as well.
For the next few quarters investors should watch sales growth closely, which should hint at how comfortable physicians feel prescribing an inhaled insulin. A radical change in delivery mechanism may simply be too big of a leap for many providers to make, so investors should be on the lookout for any resistance that the company reports with making physicians feel comfortable. They should also closely watch how quickly the milestone payments are reached and listen for any announcements related to other drug opportunities.
If Afrezza is successful, it would go a long way to validate that the Technosphere platform works, and could open up MannKind's pipeline to a number of other interesting drug opportunities. At this point, all of MannKind's eggs are in the Afrezza basket, making the company much higher risk than if they had a full pipeline of announced projects.
The investment community remains skeptical of MannKind's future, as this already heavily shorted name has seen the number of shares sold short increase recently. As of March 31st, as many as 95 million shares of the 396 million outstanding have been sold short. The bears have been right so far about MannKind, but if Afrezza turns out to be a hit and validates doctors' acceptance of the Technosphere platform, then 2015 may finally be the year when long term bulls take over.
www.fool.com/investing/general/2015/04/29/mannkinds-future-more-than-just-afrezza.aspx
