After initially taking a nosedive in trading late last week, MannKind Corporation (NASDAQ:MNKD) shares are recovering nicely this morning. The Food and Drug administration approved the drug maker’s new inhaled insulin on Friday, and initially, investors were concerned about MannKind’s future. A mix of worries about whether the company has enough cash to successfully bring the drug to market and also a serious warning label on the packaging dragged down the company’s stock.

MannKind

FDA approves MannKind’s drug early

It’s a new week though, and it appears as if investors have a new perspective on MannKind. The company could be receiving some help from a report from RBC Capital Markets analysts, who suggest that a partnership could be in the drug maker’s near future.

In a report dated June 30, analyst Adnan Butt and associate John Chung note that the FDA actually approved Afrezza before the July 15 Prescription Drug User Fee Act (PDUFA) date. Earlier this year, the agency delayed the PDUFA date to July 15, which sparked investor concern despite an FDA committee’s recommendation of approval.

MannKind’s warning label a positive

Butt and Chung say the label that will appear on MannKind’s diabetes drug is “broadly clean and as expected.” In fact, they say some elements of the label were in line with what they expected, while others were even better than they expected. They note that some of the language could be seen as limiting.

Afrezza’s warning label will say that it is indicated for adult diabetes patients. It warns against patients with chronic obstructive pulmonary disorder (COPD) and other lung disorders. In addition, it warns about lung function testing while taking the drug. The RBC team says the “dosing discussion is better than anticipated,” although the FDA points out that there is a statistically significant difference between injectable  insulin and Afrezza, although Adrezza “met the primary endpoint of non-inferiority in the type 1 study.’

In their view though, the positives outweigh any “perceived limitations.” The FDA said it now wants Phase IV studies, including a trial to examine pulmonary malignancy and cardiovascular risk, as well as long-term pulmonary effects. The RBC Capital team said these studies could impact overhangs in long-term safety.

MannKind to partner?

Now they say MannKind’s next step is probably a partnership, which would bring the experience and also commitment from a partner. They say the terms of any deal could “determine the ultimate outlook on Afrezza and MNKD.” They still think a partnership is possible and likely, and they say that’s the next step in their thesis for MannKind. The other step is that Afrezza will be more successful than Exubera, another inhaled insulin that flopped years ago when Pfizer (NYSE:PFE) brought it to market.

MannKind has already said it plans to seek a marketing partner for its drug. Butt and Chung say this makes sense because there must be a focus on primary care physicians in order to maximize the drug’s market opportunity. The company already said in May that it was having “intensive” discussions about a partnership for Afrezza.