MannKind Corp.: Will Afrezza’s FDA Approval Shake Up Big Pharma?

Source: Thinkstock

After having the U.S. Food and Drug Administration deny Afrezza twice, third time was the charm for MannKind (NASDAQ:MNKD). The company’s stock has doubled in 2014 alone, now carrying a market capitalization of nearly $4 billion, but as we look at MannKind’s financial position and Afrezza’s outlook, is there more upside in the stock, and should you buy now?

Afrezza is a form of insulin that does not require patients to inhale prior to a meal or at a particular time prior to a meal. The product is highly controversial, with longs believing that Afrezza could create billions in annual sales due to its convenience. However, bears argue that its safety concerns, including the risk of acute bronchospasm and a highly competitive market, could make Afrezza a commercial dud.

While the latter dire-outlook argument remains unknown, Afrezza does have a Boxed Warning for the former argument, requiring that the company communicate with physicians the risks of developing acute bronchospasm. Further, MannKind must complete four Phase 4 safety-related trials following the drug’s approval.

Indirectly, Afrezza’s questionable safety profile adds to commercial doubts expressed by bears. Afrezza will be competing in an insulin market owned by big pharma, competing against companies that spend hundreds of millions of dollars in marketing to remain relevant in a crowded market. With that said, there’s nothing special about MannKind’s insulin — it’s as good as any insulin. The key advantage is its delivery, and it’ll be interesting to see if the post-meal advantage will be enough to overshadow safety concerns and major competitors.