MannKind Corporation Shares Fall Ahead Of Earnings

Updated on

MannKind is expected to post a loss of 10 cents per share in tomorrow’s earnings report

MannKind is scheduled to release its next earnings report tomorrow, and the company sits at a critical junction. It just got its first approval through the U.S. Food and Drug Administration last summer and has finally now launched its first drug, Afrezza, a type of insulin that is inhaled rather than injected.

What to expect in MannKind’s earnings report

It’s still too early to see any impact from sales of Afrezza, and Wall Street is still expecting to see a loss in tomorrow’s report. Analysts with Zacks are expecting to see losses of 10 cents per share for the fourth quarter.

It doesn’t seem like Wall Street is expecting much good in tomorrow’s earnings report. As of this writing, shares of MannKind were down by 2.97% to $6.70 per share.

Will Afrezza be a success?

The reason much of Wall Street is on pins and needles about MannKind right now is because we still have no idea whether doctors and patients will embrace Afrezza or not. The last inhaled insulin drug was a big-time flop, but there are plenty of reasons to think MannKind’s insulin will do better. On the other hand, there are probably just as many reasons to think that Afrezza will flop too.

In order to be a success, the first thing MannKind must do is talk doctors into prescribing the inhaled insulin. The company signed on with Sanofi for a marketing deal, and with Sanofi behind it, there’s a good chance doctors will at least consider prescribing Afrezza.

The price must be right

However, it will probably take quite some time before MannKind starts seeing sales of the drug climb. It may take longer than Wall Street thinks it will, simply because doctors are probably going to start out prescribing it gingerly until they see how well it works and whether there are any reasons to prescribe it over traditional insulin. Of course the fact that Afrezza is inhaled rather than injected will appeal to many patients, but will that be enough for it to take hold? It will take some time to find out.

Sean Williams of The Motley Fool points out that the cost of the drug will be especially important. MannKind is undoubtedly going to try to charge a premium for Afrezza because it isn’t injected, but the amount of that premium will be important because some consumers won’t pay much extra to be able to inhale their insulin rather than inject it. There isn’t going to be much room for error in terms of pricing.

RBC Capital analyst Adnan Butt reported that just in the first couple of weeks, MannKind saw 19 scripts the first week and 34 prescriptions the following week. Williams thinks this is disappointing, and it is, although the small numbers don’t surprise me this early in the game. Education is going to play a key role for MannKind and Sanofi as they market Afrezza.

Alfred Mann out as CEO

He also points out that founder Alfred Mann is stepping down as CEO to become MannKind’s executive chairman. He will still be involved, but in a different capacity and no longer as the face of the company. Williams suggests that investors may be happy to see the man who spent so much cash on the development of one drug step aside.

On the other hand though, anytime there is a transition of management, there are risks. Sanofi’s CEO was ousted recently as well, so now two of the key players in this critical time of MannKind’s development are suddenly different. It will be interesting to see how this plays out.

What’s next for MannKind?

And then there’s the question of what MannKind will do next. The company has been putting all of its resources behind the development of Afrezza, so this is yet another thing that’s going to take some time to play out. It’s never a good idea for a pharmaceutical company to only release one drug.

There’s really no possible way to be successful with the way drug exclusivity is lost after a set number of years. Drug makers have to constantly have something new in the pipeline, and as of now, there are no signs of anything else yet. Hopefully the folks at MannKind are working on something even though they aren’t saying much about it.

Williams sees too many question marks in MannKind right now, and I tend to agree. This is one story that’s going to take some time to play out, so either investors will be left waiting a long time to find out if they bet correctly, or they’re going to be left holding the bag if Afrezza flops.

Leave a Comment

Signup to ValueWalk!

Get the latest posts on what's happening in the hedge fund and investing world sent straight to your inbox! 
This is information you won't get anywhere else!