MannKind: How Much Longer Should It Wait for FDA Approval?

| About: MannKind Corporation (MNKD)

Just weeks ago, the future -- both short and long term -- looked bright for MannKind (NASDAQ:MNKD), even given the FDA setback from earlier this year when Afrezza was denied for approval yet again. Optimism was there from the investor base that some of the long road to an Afrezza approval would be shortened after a recent meeting with the FDA, and at the very least, investors were looking for an update on a potential partnership deal.

After Afrezza's latest denial, a potential partnership was mentioned by MannKind as a logical course of action to bring the product to market, and the quarterly conference call seemed as good a time as any to update investors on any progress made on that front.

During the earnings call, however, investors got neither good news on the FDA front, as the FDA continued to insist on additional trials (it had been speculated by some that the FDA would allow a conditional approval utilizing the first generation inhaler), nor good news on the partnership front. In fact, the company mentioned in the call that a partnership had not been seriously pursued as of yet, since the FDA follow-up meeting had not yet taken place.

That being said, speculation is now geared towards a partnership deal being worked out over the short term. I wouldn't quite hold my breath on that one, because not only do these things take time -- and the company admitted that discussions are not yet serious -- but also because there is a lot of time between now and the completion of the necessary trials.

Additionally, I don't think anyone has a warm, fuzzy feeling that the FDA is in a hurry to approve an insulin delivery method that doesn't include a needle, and it's also perceived that MannKind is being treated like a second-class citizen by the regulator, a status usually reserved for tiny companies like BioElectronics (OTCPK:BIEL) that wait years for a review.

The potential of Afrezza, or Generex's (OTCPK:GNBT) Oral-lyn, on the market is huge, as inhaled or spray-delivered insulin would seem a much more preferable method of insulin delivery than the needle for diabetics. However, until it looks like the FDA is taking it seriously, I think that potential partners will have reservations and MannKind might get short-changed in any deal.

The MNKD market cap has taken a hit since the denial, and skepticism will be high, but a buy here with an eye towards "Take 3" still looks pretty attractive -- although investors might get let down by setting the short term expectations too high.

A partnership deal may develop, but I believe that it would be more beneficial for the company to wait until the skepticism subsides and the trials are well underway. If that's the case, however, MNKD may need to raise some additional funds on its own. In that case, the question would be, "Is Mr. Mann paying? Again?"

Worth watching, and a buy the dips play as long as expectations are set over the mid to long term.

Disclosure: I am long MNKD, OTCPK:BIEL.