MannKind – Will They Make it to the Finish Line

MannKind – Will They Make it to the Finish Line

This morning MannKind Corporation (NASDAQ:MNKD) reported second quarter results which appeared to indicate the company is having trouble finding a strategic partner and may be in danger of running out of cash. The company announced that they had entered into a loan agreement with company founder Al Mann to borrow up to $150 million and has already accessed $50 million of this amount.

During this mornings conference call the company stated they believed they would come to market at the same time as the Lilly (NYSE:LLY) Alkermes (NASDAQ:ALKS) product, which would put them in three way battle as Exubera from Pfizer (NYSE:PFE) is set to launch next month. (More on Exubera later.)

While the MannKind product has demonstrated impressive results in clinical trials Diabetic Investor finds it telling that company is finding it difficult to form a partnership. We see this as more to do with overall view of inhaled insulin than any issues with the MannKind product. With Exubera set to hit the market next month and Lilly. Novo Nordisk (NYSE:NVO) and KOS (NASDAQ:KOSP) also working on inhaled insulin that makes a total of 5 potential inhaled insulin choices. Just as the insulin pump market is not large enough or growing fast enough to support all the players, the inhaled insulin market is shaping up much the same way.

Everyone is watching Exubera closely to see if this market is really a billion dollar market as many analysts have predicted or a niche market as Diabetic Investor has predicted. Should Exubera fail to live up to analyst’s expectations as Diabetic Investor suspects this would deal a serious blow to the entire category. Given there are so many potential Exubera competitors companies not currently in the space appear to be taking a wait and see attitude before aligning themselves with MannKind. Potential MannKind partners are also aware of the company’s financial situation and are in no hurry to overpay for what might just be a niche product. Al Mann may have very deep pockets however even Mr. Mann does not have unlimited resources. (It should be noted that this latest loan agreement between the company and Mr. Mann is not the first time he’s had to put more of his money into the company.)

Diabetic Investor is also hearing there may be issues with the Exubera launch. According to Pfizer the product is still on schedule and will be available to patients in September, although the company would not specify when in September. Interestingly Pfizer sales reps for Exubera aren’t be given this date, something one would think they would need to know. Investors should pay very close attention to Nektar’s (NASDAQ:NKTR) earnings call this afternoon at 5pm EST. The company has already upped their guidance for the year and any change here would be telling.

David Kliff
Diabetic Investor
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