MannKind Reports – Can they survive?

MannKind Reports – Can they survive?

Listening to today’s earnings call from MannKind (NASDAQ:MNKD) it would be difficult to come away believing that the company and their inhaled project will survive over the long term. As everyone knows the company has been hit hard by three events. First came Pfizer’s (NYSE:PFE) announcement that they were terminating Exubera sales. News that was quickly followed by an announcement that the FDA was changing the label for Exubera as studies found an association between Exubera use and lung cancer. Finally both Lilly (NYSE:LLY) and Novo Nordisk (NYSE:NVO) announced they were also terminating their inhaled insulin projects. Not surprisingly shares of Mannkind sank with each announcement.

Today company officials spent 42 minutes out of an hour long call trying to explain why their inhaled insulin is not Exubera and in fact is better than the existing treatment options available for patients with diabetes. They insist that the company is viable although they did acknowledge that partnership discussions have been put on hold due to the concern over the commercial viability of inhaled insulin. With almost $270 million in cash and $350 million available through a credit facility the company has enough capital to continue operations through the end of 2009.

Even with their detailed explanation and insistence they are in this for the long term, Diabetic Investor isn’t optimistic MannKind can make it. It should be noted that Diabetic Investor has always believed that MannKind had the best inhaled insulin under development. In our opinion the problem was always timing not safety or effectiveness. Should everything go MannKind’s way, by no means a certainty, they still would have to deal with another drug set to hit the market in late 2009 or early 2010.

Keep in mind that MannKind’s inhaled insulin is, or at least it was, targeted at the same patients as the long-acting once-a-week version of Byetta from Amylin (NASDAQ:AMLN). As Diabetic Investor has said many times Byetta LAR will be game changing technology and will likely shift the paradigm for treating type 2 patients. Given the choice between injecting once a week or inhaling a short acting insulin with every meal or snack, Diabetic Investor sees LAR as the clear winner.

The bottom line here is there are just too many obstacles for MannKind to overcome.

David Kliff
Diabetic Investor
847-634-4646 fax
224-715-3761 mobile