The beginning of a transformation
When it comes to the insulin market Afrezza has always been lost in the shuffle. The problem with Afrezza has never been whether it works the problem has always been and continues to be getting Afrezza into the hands of patients. As MannKind noted during their earnings call yesterday they face some very high hurdles. Lilly, Novo Nordisk and Sanofi have substantial resources at their disposable and MannKind just can’t compete with that.
Therefore, the company must refocus their efforts and begin to transform from a diabetes company to a drug delivery company. This transformation will involve several steps.
1. Becoming financially stable.
2. Finding more partners outside of diabetes.
3. Not giving up on Afrezza rather finding its place in the treatment paradigm.
Based on what we are seeing and what we heard (actually we read the earnings call transcript) this transformation is underway. The balance sheet is beginning to look better giving the company greater flexibility. The United Therapeutics deal is just the first of what we suspect will be many more non-diabetes deals. And Afrezza sales while nothing to write to Mom about should see continual albeit slow improvement.
Now this may sound crazy, but we can see the day coming when MannKind will eventually sell Afrezza. That after they develop a greater patient base and do all the heavy lifting developing the market someone will come along and take Afrezza off their hands. As we keep saying there is a place in the treatment paradigm for Afrezza. No, it will never be a Humalog or Novolog, but it doesn’t have to be. As we stated since Afrezza hit this market it can be a multimillion-dollar drug.
For the time being the company will continue to transform itself, a transformation which we believe will reward stakeholders handsomely. While we don’t see a Tandem like rise, we do see more upside than downside here. Simply put the risk reward profile of MannKind shares has become very favorable. As Momma Kliff used to say I wouldn’t bet the farm on the company, but I’d throw a few shekels at it.
