MannKind’s future (and whether it even has one) hangs on whether or not its only product on the market ever catches on. Analysts remain split on MannKind with most being at one or the other extreme end of the spectrum in their views.
MannKind says expect big things in Q4
Jefferies analyst Shaunak Deepak remains firmly in the bull camp on MannKind with a Buy rating and $9 per share price target on the inhaled insulin maker. The company’s stock surged on Monday after a positive earnings surprise and comments on management that the fourth quarter should bring a significant increase in Afrezza sales. MannKind shipped $5.9 million worth of Afrezza during the June quarter.
Unfortunately they may be setting MannKind stock up for a steep decline if the company doesn’t make good on those comments. Marketing partner Sanofi is planning a big marketing push in the current quarter, which is why MannKind management expects sales in the fourth quarter will be significant. They’re looking for an inflection point sometime between the middle of next month and the end of the year.
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Afrezza ramp fails to impress
Since MannKind launched Afrezza earlier this year, sales have been underwhelming. In recent weeks, sales have remained low with the drug’s share of the overall insulin market languishing in fractions of a percent. Deepak highlighted a number of factors which have been negatively impacted Afrezza sales.
For example, doctors remain little-aware of Afrezza. Also patients must undergo lung function testing and receive preauthorization from their insurance companies before their doctors may prescribe it for them.
MannKind and Sanofi are hoping to change these problems through their new direct-to-consumer marketing campaign. They have also expanded their sales team and are targeting more doctors to promote awareness among physicians. Deepak expects these efforts to be successful in making more doctors aware of Afrezza, which is an important step in getting them to take the steps necessary to prescribe it for their patients.
The bear case on MannKind
Goldman Sachs analyst Jay Olson and his team are as bearish on MannKind as Deepak is bullish on the insulin maker. They have a Sell rating and $2 per share price target on MannKind stock.
The Goldman Sachs team noted that MannKind posted a net loss of $36.6 million on the collaboration with Sanofi for the drug. Thus far, MannKind’s share of the net losses on Afrezza is $12.8 million, which the company has financed through a $175 million loan facility with Sanofi. They also point out that Afrezza’s ramp is going much more slowly than the leading insulin brand, Exubera, did when it was launched in 2006. Prescriptions for Afrezza are half of what Exubera’s were at this point of its launch. (Graph is courtesy Goldman Sachs.)
In addition to highlighting their efforts to improve sales of the inhaled insulin, management also discussed refinancing the $100 million worth of convertible debt which is due Aug. 15, but no firm decision had been made yet as of Monday.