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Summary

  • Yesterday's earnings report from MannKind offered piecemeal for investors and analysts with regard to updating company progress.
  • Comments on the conference call were muted and non-specific due to the sensitive nature of the company's situation.
  • All eyes are focused on the company's PDUFA date in July; the stock is unlikely to move much until we get a couple weeks out from that date.

Yesterday, we were treated to MannKind's (NASDAQ:MNKD) quarterly earnings. The company reported nominally higher expenses (up by 13.7%) as a result of higher administrative, general, and stock-based compensation awards. The company had cash and equivalents of $35.8 million in the bank, with an untapped $30.1 million in credit available if necessary.

Yesterday's conference call, to accompany earnings, was also a non-event.

The estimates missed what analysts were expecting, but to be honest - no one is paying any mind to these numbers. It's all about July for MannKind.

The biotech company experienced recent success when its inhaled insulin drug, Afrezza, received a positive vote at its FDA ADCOM meeting just weeks ago. Afrezza is potentially the first drug of its kind to potentially hit the diabetes market.

From MannKind's website:

AFREZZA® (pronounced uh-FREZZ-uh) is a first-in-class, ultra rapid-acting mealtime insulin therapy being developed to improve glycemic control in adults with Type 1 and Type 2 diabetes mellitus. It is a drug-device combination product, consisting of AFREZZA Inhalation Powder single use dose cartridges, and the small, discreet and easy-to-use AFREZZA inhaler. Administered at the start of a meal, AFREZZA dissolves immediately upon inhalation and delivers insulin quickly to the blood stream. Peak insulin levels are achieved within 12 to 15 minutes of administration, mimicking the release of mealtime insulin observed in healthy individuals.

Since then, it was announced that the company's PDUFA date was moved to July 15th of this year. The ADCOM vote comes as a predecessor of the company's PDUFA date, which will determine ultimate approval to market the drug from the FDA.

A very significant event during this past three months was as Hakan mentioned the FDA Advisory Panel meeting on April 1. During that meeting there was an extensive open discussion after which the panel overwhelmingly voted to recommend approval of the AFREZZA 13-1 for type 1 diabetes and 14-0 for type 2.

Of course we were really very pleased with the proceedings of the AdCom and with the overwhelming positive vote. There was so much that was satisfying. Our Mannkind team delivered effective presentations on the safety, efficacy and many valuable attributes to the AFREZZA.

17 public speakers gave strong, very strong endorsements and arguments for approval.

- MannKind CEO, Alfred Mann, via yesterday's conference call

Many people see the delay as simply a formality, due to the close date the PDUFA date held in relation to the ADCOM vote. Few that follow MannKind seem to think the date change was a vote to either the bearish or bullish side; just simply a formality so the FDA would have more time to carefully examine Afrezza.

Until then, MannKind finds itself in a bit of a holding pattern.

Even with "earnings" reported yesterday, the stock has continued to sit in the trading range it has occupied post-PDUFA date announcement.

(click to enlarge)

Investors, not so wary about the FDA approval itself, have kept the stock parked. The debate now is about how much MannKind will be able to monetize Afrezza after approval. I don't expect the stock to move either way until we begin to approach the middle to end of June.

The promise of inhaled insulin has been the golden child for this company - keeping investors on the hook for years. It's something that, if it can deliver, could be massively lucrative. Pending the FDA's ultimate approval, MannKind could be sitting on a gold mine. Should the FDA be wary to approve for some reason, or safety questions arise last minute, expect MannKind stock to get hit pretty hard.

We're looking at a bona fide binary event here.

Like many other late-stage biopharma companies, MannKind doesn't have any revenue. Analyst projections for the company were simply a formality, as the numbers don't mean much until the company winds up reporting news about Afrezza.

Rather than scrutinize the numbers, the continued focus from the company is going to be on the editorialization that management wants to offer up about Afrezza. Does the company have any concerns going into its PDUFA date? Has the company sought out any preliminary partnerships should Afrezza receive approval?

MNKD Shares Outstanding Chart

MNKD Shares Outstanding data by YCharts

High-end estimates for Afrezza are for gross revenues of up to $1 billion/year.

With MannKind currently sporting just a $2.4 billion market cap, there is definitely room to run for the company should its PDUFA date go well and the company find a major pharmaceutical partner. As time goes by, like any start-up biotech company, MannKind continues to issue shares as currency, and the short interest continues to ramp up with each day revenue isn't coming in.

There doesn't seem to be much that MannKind can offer up between now and July that is likely going to move the needle in one direction or another with regard to the company's stock price. Again, all eyes should be on July's PDUFA date and MannKind finding a partnership for its flagship product.

Best of luck to all investors.

Source: MannKind: Forget Earnings, All Eyes On July