Simply put, the company is right back to where it was before all the drama started back in late 2010. Remember, however, that Afrezza was seemingly on the verge of approval in 2010 — Cheng Yi Liang already had his front-running trade in place, the Phase 3 results looked good, and the arguments against the drug’s approval were relatively weak. One has to wonder whether Shkreli did end up instigating the denial. If so, the FDA isn’t likely to put itself into a situation where its credibility could be questioned again with the very same drug.
That being said, it can’t be underscored enough right now … Afrezza wasn’t approved this week. MannKind simply finished up the most recent Phase 3 trial. It hasn’t even filed a new drug application yet. Even at the earliest, it wouldn’t be until early/mid-2014 before the FDA gives Afrezza a green or red light.
On the flip side, veteran biotech traders know all too well that the market rewards drug development milestones, and is more than happy to bid up biotech stocks in advance of key news developments. Just be wary of jumping on board right now, as MNKD has advanced more than 200% during the past six months and is quite overbought as a result.
Still, this week’s news bodes very well for Mannkind and its shareholders, and once the volatility dust settles, this might be a buy-worthy idea.
Although some have questioned the demand for an inhaled insulin, the fact that a couple of other high-profile companies have tried — and failed — to bring a marketable inhaled insulin to the market validates the idea.
One of them was Eli Lilly (LLY), which canned the development of its project in 2008 before ever even asking for approval. The other was Pfizer (PFE), which actually brought Exubera to the market in late 2006, only to close the program down in late 2007 due to weak sales stemming from the drug’s high cost. Point being, MannKind isn’t the only company that thinks there’s a market for such a project — but its version of inhalable insulin appears to be the most marketable one yet.
The final chapter in the story has yet to be penned, but with two separate encouraging Phase 3 studies under its belt — in addition to what’s expected to be a $32 billion market in just five years — MannKind is most definitely worth putting on your radar as a long-term idea.
The odds favor Afrezza’s approval. Just let the froth die down a bit first.
As of this writing, James Brumley did not hold a position in any of the aforementioned securities.