At its fourth-quarter earnings call, MannKind was pretty straightforward about its expectations from Afrezza. The company said that Afrezza sales will not be explosive, instead its sales would initially be “slow and steady.” Jefferies analyst Shaunak Deepak said that he was “encouraged” by the early feedback on the inhaled insulin. Sanofi and MannKind launched Afrezza in the U.S. market on February 3.
MannKind expected to boost production
Sanofi said demand for Afrezza had been higher than expected. The French drugmaker has asked its U.S. partner to increase the volume of samples. Jefferies believes that MannKind’s Afrezza Patient Savings Card would help ease the financial burden on a large number of patients. However, Deepak said that the Afrezza launch will take time, as doctors will have to “change the way they use mealtime insulin to fully realize Afrezza’s potential.”
An inhaled insulin product offers a convenient alternative to traditional methods such as injections and pumps. The research firm expects MannKind’s 12U cartridge to win approval by the second quarter of this year. It will provide a larger single dose option to advanced patients. MannKind is also expected to boost manufacturing capacity to increase cartridge production by three times.
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JPMorgan skeptical of Afrezza’s commercial potential
Jefferies has a Buy rating on MannKind with a $10 price objective. The Valencia-based company is targeting other therapeutic areas such as oncology, pain, and pulmonary diseases to leverage its proprietary Technosphere technology. For Afrezza, MannKind has set the sales target of $46.1 million for this year. As of the most recent week, Sanofi reported cumulative prescriptions of 132. That means prescriptions must grow by 13% a week through 2014 to achieve the sales target.
However, JPMorgan analyst Cory Kasimov isn’t impressed with early performance of Afrezza. Kasimov has a Neutral rating on the stock with $6 price target. JPMorgan said they were still skeptical that the commercial potential of Afrezza was enough to provide meaningful upside to MannKind’s valuation. Kasimov said Afrezza must match the world’s leading mealtime insulin just to justify the company’s current valuation.