MannKind Corporation (NASDAQ:MNKD) shares surged a whopping 81% yesterday to $7.25 after the USFDA regulators unanimously recommended that its diabetes drug Afrezza be granted approval. Research firm MLV & Co, which already had a Buy rating on the stock, has now increased its price target from $9 to $11. The advisory committee reviewing its inhaled treatment voted 13-1 in favor of Afrezza for type-1 diabetes. The voted 14-0 that the inhalable insulin be granted approval to improve glycemic control in type-2 diabetes patients.

MannKind

MannKind has spent more than $500M on Afrezza over the past three years

The Food and Drug Administration follows the recommendation of third-party committees. The overwhelmingly positive recommendation means MannKind Corporation (NASDAQ:MNKD)’s treatment could be put on a fast track for approval. The USFDA has scheduled an action date of April 15. MannKind CEO Alfred Mann said he is pleased with the Advisory Committee’s approval of Afrezza. The recommendation comes just a week after the committee raised questions about the drug’s effectiveness and safety.

MannKind Corporation (NASDAQ:MNKD) has spent well over half a billion dollars over the past three years trying to get Afrezza approved. The FDA has rejected Afrezza three times. The stock has suffered steep declines amid worries the drug would fail again. After rejecting the drug in early 2011, the FDA asked MannKind to conduct two additional clinical trials.

MannKind’s drug may have a higher price tag due to additional testing expenses

All those testing, re-testing and clinical trials cost a lot of money, which should drive up the price of Afrezza. The American Diabetes Association last year estimated that the U.S. diabetes market has grown from $174 billion in 2007 to $245 billion in 2012. Clearly, there is plenty of monetization potential for this California-based company.

Those shorting the stock were annihilated after a whopping 81% jump. The chart below shows that short interest in the stock had risen to as high as 41.7% of the float.

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MannKind Corporation (NASDAQ:MNKD) shares were down 2.86% to $6.79 at 11:32 AM EDT.