Jefferies analyst Shaunak Deepak has slashed his price target on MannKind from $10 to $9, though he maintains a Buy rating on the stock. In a research note issued Tuesday, Deepak said that the price target adjustment was driven by a more gradual sales of Afrezza. Based on the feedback from physicians, Jefferies said it was now more confident about the long-term sales potential of Afrezza.
Physicians express strong interest in MannKind’s drug
MannKind won the USFDA approval for its inhaled insulin in June last year. It launched the drug in collaboration with Sanofi in the U.S. market on February 3. Jefferies spoke with 16 endocrinologists, and none of them had prescribed Afrezza as of early March. But they expressed strong interest in the drug. So, Deepak and his team spoke to another two physicians at diabetes centers, who had prescribed the drug six and four times respectively.
The collective feedback suggested that MannKind’s Afrezza could be a desirable option as an alternative to injectable mealtime insulin or as a first insulin. But that will take more time and effort to educate physicians to use the inhaled insulin to its full potential. Given the more gradual sales ramp, Jefferies now assumes that Afrezza will take ten years, rather than six, to report an accelerated sale.
Afrezza offers limited effectiveness
Jefferies maintained its peak penetration estimates across all subgroups. Earlier this month, The Medical Letter compared Afrezza to other rapid-acting mealtime insulin. It found that the Valencia-based company’s drug offered limited effectiveness. The Medical Letter said in its review that Afrezza was “only modestly effective in reducing HBA1c.”
Though Afrezza costs more than competing injectable insulin products from Eli Lilly and Novo Nordisk, it is easy to use. If MannKind and Sanofi can educate physicians and address concerns about side effects, it represents immense growth potential. According to Investopedia, the number of diabetics is expected to grow from 205 million currently to 592 million in the next 20 years.
