MannKind Corporation (NASDAQ:MNKD) stock is primed to take off higher as the much-awaited launch of its inhalable insulin drug, Afrezza, approaches.
MNKD stock and its $2.3 billion market capitalization hang in the balance, as its fate could ultimately hinge on the success of the Afrezza launch. As the launch date approaches, MNKD stock looks like more of a buy than ever. Here’s why:
A First Glimpse at Afrezza
At the moment, MannKind is more or less a one-trick pony. MNKD has also developed a pulmonary drug delivery technology called Technosphere that it hopes to use in future endeavors, but that’s a far longer-term effort.
No, right now all eyes are on how the Afrezza launch goes.
Less than two months after the FDA’s approval of Afrezza in June 2014, MNKD secured a marketing partnership with pharmaceutical powerhouse Sanofi SA (ADR) (NYSE:SNY). MannKind — burdened by relatively limited resources after years of R&D spending and no revenue leading up to the FDA approval — needed the reach and influence of Sanofi, who was tasked with marketing and selling the product.
SNY paid MNKD $150 million for that right (royalties could go up to $925 million depending on the product’s success), and in return will receive 65% of Afrezza’s profit share.
Well, investors will soon get a good idea of just how big that profit share could be. At the JP Morgan Healthcare Conference last week, the company’s new CEO Hakan Edstrom said that the company reached two manufacturing milestones and that Afrezza would launch in the first quarter, as expected.
The idea that MNKD is ahead of schedule with its Afrezza delivery gained some credibility on Thursday when StockTwits user OilInWaterRph shared the first photo of Afrezza’s commercial packaging. When pressed on how he got his hands on the product, he said:
“Cardinal is my wholesaler. Should be available to anybody that uses them.”
In other words, Cardinal Health Inc (NYSE:CAH), a pharmaceutical distribution company, is already shipping the product in preparation for the launch.
While it’s great that MannKind seems to be ahead of schedule, what’s better yet for MNKD stock bulls is the short-term and long-term opportunities a product like Afrezza affords.
MNKD Stock is Still a Screaming Buy
Back in October, I laid out my bull case for MannKind stock, explaining why I saw MNKD as a screaming buy. The scale of the diabetes epidemic in itself was fairly compelling:
In October 2013, the WHO estimated that nearly 350 million people worldwide suffer from diabetes. CDC estimates from 2012 peg the number of U.S. adults over age 20 with diabetes at 28.9 million. It’s a sweeping problem, and one that leads to a number of other health issues and even death.
On top of that, Afrezza, as a fast-acting inhaled insulin product that’s FDA-approved to treat both type 1 and 2 diabetes, will appeal to many diabetics who loathe having to deal with needles constantly. Consider the fact that Afrezza and its Technosphere technology can fit in your palm, and I’m sold.
I still think MNKD stock is a screaming buy. It’s only about 3% higher than it was when I wrote my bullish piece in October. And as an owner of MNKD stock and MNKD call options myself, I’m putting my money where my mouth is.
As of this writing John Divine owns MNKD stock and Jan 2016 MNKD $7 call options. You can follow him on Twitter at @divinebizkid.
