MannKind Corporation: Lantus Pricing Pressure Won’t Affect Afrezza

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MannKind Corporation (NASDAQ:MNKD) released its third-quarter results on Monday. The company posted a net loss of $36.5 million or 9 cents a share. The company said at the earnings call that it is on track to launch Afrezza in the U.S. in the first quarter of 2015. MannKind ended the third-quarter with $173 million, which includes $150 million upfront payment it received from Sanofi SA (ADR) (NYSE:SNY) (EPA:SAN).

Sanofi’s Nov.20 event important for MannKind investors

RBC Capital Markets analysts Adnan Butt and John Chung said in a research note that Sanofi will hold an analyst event on Nov.20. At the event, the French company is expected to highlight its plans, commitment, commercialization outlook and preparations for Afrezza. Analysts said the debate around Afrezza’s market potential and MannKind’s profitability will continue at least until Q1, 2015.

While MannKind will be manufacturing Afrezza, Sanofi will be responsible for commercialization, development and regulatory activities. MannKind has started commercial production of its inhaled insulin treatment. The company is also increasing capacity of its Danbury facility by adding two more production lines. RBC Capital Markets has an Outperform rating on MannKind with $13 price objective.

Afrezza may reach the EU markets by 2017

RBC analysts forecast that Afrezza will hit the U.S. market in 2015 and European markets in 2017. Sanofi will begin preparations for the EU regulatory filing of Afrezza after the U.S. launch. The research firm says Afrezza sales will peak at more than $7 billion. FDA has asked MannKind to conduct three more studies, pediatric, long-term safety and dosing. The company said it was in talks with the U.S. regulators, and plans to start these studies after launch.

Recently, Sanofi said at its earnings call that its blockbuster diabetes drug Lantus was facing pricing pressure due to low-cost competing drugs from Novo Nordisk A/S (ADR) (NYSE:NVO). MannKind said that the pricing pressures don’t apply at its Afrezza (basal vs. meal time). JPMorgan analyst Cory Kasimov said that Sanofi is the “best case scenario partner.” But JPMorgan remains skeptical about commercial potential of Afrezza.

JPMorgan has a Neutral rating on the stock with $6 price target. MannKind shares inched up 2.20% to $6.05 in pre-market trading Wednesday.

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