Hate to say we told you so

Hate to say we told you so

Shares of MannKind (NASDAQ:MNKD) are
getting hammered today as the company disclosed the following statement in
their most recent SEC filing;

“We had previously
disclosed that we had set a goal of entering a marketing partnership for
AFRESA, our ultra rapid-acting insulin product candidate, before the end of
2009, with an internal objective of the end of the third quarter. We made
substantial progress toward a definitive agreement with a lead potential
partner; however, as the discussions progressed, we came to believe that it
would be more productive to complete a partnership after we have received a
response from the United States Food and Drug Administration, or FDA, regarding
our new drug application for AFRESA. We believe that we and our potential
partners will be better able to address appropriate deal terms and structure
once the label for AFRESA is clarified. Since we do not expect a response from
the FDA before January 2010, we believe that we will not conclude a deal
before the end of 2009. We continue to believe that AFRESA represents a
significant commercial opportunity.”

Once again Diabetic
Investor was ahead of the curve when we told investors back on September 22 to “Take
the money and run”. Back then shares were trading above $12 and the stock had
seen an incredible increase based primarily on the belief that company would
soon announce a partnership agreement. As this statement from their SEC filing
clearly indicates this much anticipated partnership isn’t going to happen
anytime soon and depends greatly on when or if AFRESA is approved by the FDA.

Diabetic Investor
has little sympathy for anyone who held onto MannKind shares believing that
somehow a partnership would solve the many hurdles Afersa will face when, or
if, it comes to market. The reality is even with a partnership marketing Afersa
will be a Herculean task. The fact is when people think inhaled insulin they
think Exubera, which was pulled from the market and cost Pfizer (NYSE:PFE) over
$4 billion.

Even with Exubera
disaster and the many companies who have exited the inhaled insulin market
investors continue to buy into the fantasy that the reason more patients don’t
use insulin is because insulin must be injected or pumped into the patient’s
body. This so-called “fear of the needle” is the most over-hyped reason and
shows just how little these investors understand the diabetes market.

On several
occasions Diabetic Investor laid out in detail why Exubera would fail and why
Afersa would suffer from Exubera’s demise. We made it clear that this “fear of
the needle” was not the main reason more physicians did not prescribe insulin.
We pointed out that Lantus, the world’s number one selling insulin, could only
achieve this milestone by successfully penetrating the type 2 market. The fact
is physicians and patients aren’t afraid of injections their afraid of
hypoglycemia and all the education an insulin using patient needs.

Still investors
in MannKind drank the kool-aid believing that Afersa would be different.  That Afersa would succeed when so many others
have failed. That somehow Afersa had some sort of magical power that would overcome
the realities of the market. Well the facts are Afersa will never amount to
anything more than a niche product with sales in the millions not billions.

We can only
imagine the spin the company will put on this latest setback. It will be
equally interesting to see what the analysts, who kept touting MannKind, will
recommend to their investors who have now seen shares plummet in value. As sure
as night follows day there will be some who will say this setback has created a
buying opportunity and just as sure there will be some idiots who believe this
and buy back in. As Burton Stevenson once said; “A sucker is a fool that bites
at any bait.”