Mannkind: Overlooked Biotech With Excellent Prospects (Part VI)

Part VI: Conclusion – Summary, valuation, and risks

This is the final part of my six-part series on Mannkind (MNKD). Be sure to see Part 1, Part 2, Part 3, Part 4, and Part 5, if you have not done so already. I will now summarize the key points and get into valuation.

Mannkind is a development-stage biotech company, which is close to filing for FDA approval for its first product, Technosphere Insulin. (They have some other products in their pipeline, all in early stages, but they’re not so important. See Part 5 for more discussion about them.) Technosphere Insulin is an inhaled form of meal-time insulin with 4 key advantages. (See Part 1 and Part 3 for more details).

1. Insulin is used by diabetics to keep their blood sugar in check. However, as of now, insulin has to be injected. This is clearly a more inconvenient method than inhalation. There appear to be many diabetics who should really be taking insulin who refuse to do so because of the inconvenience, and more importantly the stigma, of injections. Technosphere Insulin has the clear advantage here of being inhaled instead of injected.
2. Technosphere Insulin starts to act quicker and peaks faster than injected insulin (as fast as 12 – 14 minutes compared to 45 minutes to an hour). Due to this, studies have shown that Technosphere Insulin keeps the post-meal blood sugars in check better than injected insulin, keeping the blood sugar from spiking as high.
3. Technosphere Insulin does not linger in the blood as long as injected insulin does. 75% of Technosphere Insulin’s action is finished after 3 hours (the normal time for digestion of a meal). This is very important because it greatly reduces the risk of blood sugar dropping too low (i.e. hypoglycemia) due to the insulin, a risk which diabetics are all too familiar with. In fact, there has not been even a single case of severe hypoglycemia in their trials – quite a feat. The rates of mild and moderate hypoglycemia have also been much less with Technosphere Insulin. This is a huge deal.
4. Due to this unique time profile of Technosphere Insulin, patients using it do not tend to gain weight as is usual with insulin use. In fact, patients using Technosphere Insulin tend to lose weight. This, too, is a huge deal.

All of Mannkind’s trials so far have overwhelmingly proven these key medical advantages. Mannkind is wrapping up their final Phase 3 trials on September 1 and is planning to file for FDA approval before the end of the year. So with such a seemingly powerful product, aimed at such a large market (i.e. diabetes), why has Mannkind’s stock fallen to $2.89? That’s down a whopping 87% from its March 2006 price of $22! The reason is due to 4 major events, given below in chronological order.

1. Pfizer’s (PFE) Exubera, a competing inhaled insulin which reached the market in late 2006/early 2007, was a miserable failure. It barely sold at all. (Date: Throughout first 9 months of 2007.
2. Pfizer announced that they are dropping Exubera, due to its poor sales. (Date: October 18, 2007.)
3.  Novo Nordisk (NVO) and Eli Lilly (LLY), the two heavyweights of the insulin market, announced that they are each discontinuing their own development of inhaled insulin. (Date: January 14, 2008 and March 7, 2008.)
4. Pfizer announced that there was a greater degree of lung cancer found in the clinical trials among those who took Exubera, compared to those in the control group taking regular insulin. (Date: April 9, 2008).

The first three events seem to indicate that there is little or no market for inhaled insulin. The fourth event seems to show that inhaled insulin is a health risk. It raises the question of whether the FDA would approve Technosphere Insulin at all (or at least require lengthy and costly additional trials). Even if they do approve it, would doctors and patients want to use it? So now the question is on the other foot. Why in the world would I suggest Mannkind as a company to invest in?!

The answer is that it is precisely these events that have made the stock so attractive – by making the stock fall so sharply, even when a careful analysis would show that these events were not as end-of-Mannkind-dump-everything-you-have as would appear. The first three events are really irrelevant. As I said before, there are 3 major medical advantages to using Technosphere Insulin over injected insulin. None of these advantages were present in Pfizer’s Exubera or in Novo Nordisks’s or Eli Lilly’s development-stage inhaled insulins. Therefore, the failure of these other three products in the marketplace is totally irrelevant. They only all happen to be similar in that they’re inhaled, a pretty superficial similarity when you think about it. In the long run, all that really happened is that Mannkind will have less competition in the marketplace if they are ultimately successful. (See Part 3 for more details and more differences between the ill-fated Exubera and Technosphere Insulin.)

On the face of it, the fourth event is quite serious. The FDA is certainly going to want to be cautious about lung cancer risk, especially with all the negative press the FDA has been getting in recent years on major blow-ups like Vioxx. Game, set, match…no? Again, we have to ignore the superficial and look behind the curtain.

A careful analysis of Pfizer’s announcement and all the available data shows that all is not what it seems. Pfizer and the FDA specifically stated that the lung cancer data on Exubera was statistically insignificant. The amount of people that got lung cancer using Exubera was close to the amount from a random population sample that could be expected to get lung cancer, and they were all former smokers, which we know is a likely cause of lung cancer. The FDA did not withdraw Exubera from the market. It is still approved as a safe and effective drug. So, I don’t agree that Exubera has been shown to have a higher risk of cancer. But more importantly, all this talk is about Exubera. Every inhaled insulin is different due to the things added to make the insulin inhalable. Therefore, even if Exubera did have a lung cancer risk, that does not automatically mean that all inhaled insulins are equally problematic. Besides Technosphere Insulin, there have been 3 inhaled insulins, from various companies, that have been under development. None of them have found any sign of increased risk of lung cancer. Mannkind themselves have found much less lung cancer than the regular rate in the general population. Mannkind has conducted carcinogenicity studies in rats and mice and have found no signs of carcinogenic effect. With all this data on Technosphere Insulin’s side, including 2 years of Phase 3 data, and some patients having taken Technosphere Insulin for as long as 5 years, I firmly believe that Technosphere Insulin is a shoe-in for FDA approval. (See Part 2 for a very detailed look at the cancer issue and the numbers.)

Now, I admit that FDA approval isn’t everything. Mannkind will still have to convince doctors and patients to use Technosphere Insulin. This is a far more formidable task, being that we are dealing with humans and they don’t necessarily make all their decisions after extensive rational computations. My response to this is twofold. Firstly, I believe that the stock market is pricing in FDA refusal to approve Technosphere Insulin. When the FDA in due course approves Technosphere Insulin, as I am convinced they will, I believe that the stock will jump on that alone. Secondly, I think that with enough education and marketing, Mannkind can swing around the doctors to understand the enormous benefits of their product and its clean safety profile. Their job has definitely been made harder, but it is hardly insurmountable. I think that Mannkind will succeed.

What about valuation? What about risk? As of the close on Friday June 20, 2008, MNKD was holding at $2.89. That makes the market cap about $295 million. In other words, the stock market is valuing the company as a whole as being worth $295 million. Obviously, if Technosphere Insulin is indeed successful in the marketplace, $295 million is a ludicrously low valuation for Mannkind. That would probably leave potential for a rise in the stock of 5x – 10x. The most you can lose is your whole investment. That’s a 100% loss on one side vs. a 500% – 1000% gain on the other. Obviously, that is not a logical way to value this stock (or any other) because you also have to assess the probability of each side occurring. It is my contention that it is far more likely to succeed than to fail.

The risks here basically come down to three things – FDA approval, finding a pharmaceutical partner to market it with them, and actually selling well in the marketplace of doctors and patients. I firmly believe that the first risk is close to nil for all the reasons that I have already outlined. The second risk is more real and we don’t want Mannkind to have to give up too much of its future profits to a partner due to a poor bargaining position. However, I think that Mannkind will be able to find a suitable partner from the myriad of companies eager to expand their position in the diabetes market. (See Part 4 for a more detailed discussion of the partnership issues.) The third risk is the hardest to gauge – the madness of mice and men. As I said before, and I repeat, I think that Mannkind can succeed with sufficient education and marketing. I also think that Mannkind’s stock will rise on the news of finding a partner and on FDA approval. (They will probably occur in that order. Before FDA approval, the FDA is probably going to have an advisory committee meeting on Technosphere Insulin, as is common with most drugs, to advise the FDA whether to approve it or not. The FDA usually follows the committee’s advice and the announcement of the committee’s advice will probably also move the stock significantly.)

In conclusion, let me make clear that I am not claiming that Technosphere Insulin is a slam dunk and that there are no risks involved. Far from it. I am claiming that their stock has fallen so far that the risk-reward ratio is quite attractive. Obviously, this is a risky stock and you wouldn't want to put too much of your portfolio in it. Certainly not more than you could handle losing, both financially and emotionally. However, I don't think that there is much risk of not receiving FDA approval. There is definitely more risk of it not doing well in the marketplace, certainly something that is far harder to predict. However, between you and me, I think that it has a decent chance of doing well in the market. I also think that on FDA approval the stock would jump and you would be able to make a nice profit then and there even if you didn't wait to see how the market actually takes it.

This week, Mannkind is scheduled to speak at two conferences: Monday, 11:45 A.M. EST and Thursday 2:00 P.M. EST. The webcasts can be listened to live on Mannkind’s website and are going to be archived there for 14 days. I intend to listen to them. If any new information is mentioned there, which I deem to be significant, I hope to post it here on Seeking Alpha.

I hope you’ve found this series informative and useful. For my full, detailed 25-page report on Mannkind, covering all important aspects, see here. Adieu!

Disclosure: Author bought MNKD at $2.95 and is considering buying more. Author has no position in any other stock mentioned.

Comments

[Saturnator]

"Pfizer announced that there was a greater degree of lung cancer found in the clinical trials among those who took Technosphere Insulin, compared to those in the control group taking regular insulin. (Date: April 9, 2008). "

I think You meant "Exubera Insulin" instead of "Technosphere Insulin"!

[jaco]

I find Mannkind promising. But thinking rationally, why has there been so little insider buying or buying by Bill Miller since its stock price plunged in April. Any thoughts? Thanks.

[thedivot]

Below is a Zack's report and sell recommendation. They mention the lung cancer risk which you've covered but their concern is more the cash burn rate until the 2011 possible commercialization and whether the market will be big enough.

From Zacks:
MannKind's (NasdaqGM: MNKD - News) lead drug, Technosphere Insulin (TI), is an inhaled insulin product and is in large phase III trials for the treatment of diabetes. The inhaled insulin market has witnessed a major upheaval in recent times with Pfizer (NYSE: PFE - News), Lilly (NYSE: LLY - News) and Novo Nordisk (NYSE: NVO - News) withdrawing their late-stage candidates citing lack of market prospectus for this class of drugs.

Occurrence of lung cancer in diabetic patients treated with Exubera has further cast a shadow over the future of TI. The company's cash burn is a matter of grave concern and the lack of any late-stage or approved product adds to the company's woes. Hence, we maintain our target price of $1.50.

Even if TI makes it through the approval process, we do not expect the drug to reach the market before 2011. Considering the $1.1 billion in cash burn incurred so far, coupled with the high SG&A costs necessitated to strategically position and distinguish the drug from other therapies, we do not expect the company to achieve profitability without TI achieving blockbuster status a status seemingly out of reach in the current market scenario.

We do believe that opportunity exists in adversity and given the current exodus of all late-stage competition in the inhaled insulin market, successful commercialization of TI may enable MannKind to reap benefits of the magnitude which earlier were not possible because of the competitive landscape. However, until the company is able to navigate through these tough times, we maintain our Sell rating.

[NEH]

Going back to the author's point 2 - Humalog begins working in 5 minutes, and point 3 - Humalog runs its full course in 90 minutes. And then there is the question, which I raised after his first post in the series, of what the real market share will be. IMO, the only measurable gain to be realized from inhaled insulin is better compliance from diabetics who are on oral meds but would be better treated on insulin. And finally, I would bet that the company is really banking on the device being effective - if the device is effective, it could be sold to any pharma whether the insulin feature works or not. But bless the man, I still hope it works, even if I sound like a spoiler.

[Daddy One]

For all the market prognosticators, try being a daddy with an 11 year old recently diagnosed diabetic before completely assessing demand. She is begging for it as are others with whom we have been in touch. This company's product when supplied in a reasonable sized provider will have demand if it is deemed safe. For any doubters, try giving yourself a minimum of 4 shots a day before being so sure of this products lack of demand. Try it for even one week and you may have a different view

[Mr BSG]

" Therefore, the failure of these other three products in the marketplace is totally irrelevant."

" why has Mannkind’s stock fallen to $2.89? That’s down a whopping 87% from its March 2006 price of $22! "


The only thing that's irrelvant is your senseless pumping of this stock. You contradict yourself throughout the 6 Part Pump, to the point of being totally laughable.

MNKD, PFE, NOVO and Lilly are all inhaled and all have or will (MNKD) FAIL.

PFE has the largest Pharma Salesforce in the world and they couldn't convince Dr.s or patients to use exubera.

MNKD has no salesforce

MNKD has no partner and will never find a partner to kick in $1 Billion.

MNKD has an inferior product that has already been rejected by the market.

MNKD will NEVER get FDA Approval.

MNKD will be out of cash by Nov. 2008

MNKD has 600 employees that do exactly WHAT all day!

I stick by my prediction of $1.00 by Dec 2008 and bankrupt in 2009. In fact, both may come sooner than expected.

Buyer beware of this dog, regardless of what you read on the internet.

[Daddy One]

To Mr BSG. Did you take my advice and try sticking a needle in yourself 4 times a day for a week? Hmmm. Just try it and revisit your opinion of the demand viability of an inhaled insulin.

[Mr BSG]

I would never allow my child to inhale insulin. The lungs are not designed to process insulin and PFE has already confirmed the demand does not exist.

There's a company out there called Generex - GNBT - that has a product that delivers insulin and is absorbed through the cheeks of the mouth - buccal delivery - where NOTHING EVER enters the lungs.

No health issues and their product Oral Lyn, is currently selling in India and is in Phase III in the US, Canada and Europe.

If interested there's a conference call on Tuesday.

investor.generex.com/r...

[Yong]

Mr BSG:

I doubt your ability to read and understand the context. Your argument is pointless here. PFE had a horrible prodct, and technosphere insulin is not processed in the lungs. It merely passes through the lungs in a matter of seconds.

SC injection is probably the biggest factor in diabetic treatment non-compliance. An inhaled form that pt can carry with them offers great advantage.

The only thing irrelavant of your poster is your senseless bashing. Every point you made in your poster is false, and it's a waste of my time to address.

[Mr BSG]

" It merely passes through the lungs in a matter of seconds. "


LOL and how exactly then, does it get into the bloodstream.

DUH !

$1.00 by Dec

You watch.

[philly]

Mr. BSG, Its a fact that inhalants enter the bloodstream quickly, sounds like you need to do a little biology homework here.

[Daddy One]

Mr BSG, please correct me if I'm wrong. Because all, I repeat ALL, I want is the health of our children. It sure sounds like you have a least as big a financial dog in this fight as the author does in his. Can you honestly disclose any financial interest you might have in the same way the author did his? I may be blinded by my hopes, but could your reference to the company in India be self absorbed and financially motivated? And when it comes to our children, any financial concerns are on the back burner for me. Only to the point it reflects future reality of better delivery methods. Pompous attitudes as exhibited in your blog really don't help anything. My real question is what gives you the professional certainty that your blogs exemplifies? But I am always, in the interest of my daughter, open to REAL points of concern.

[R J Steffens]

Daddy One: Upon FDA approval of TI, your eleven year old daughter would have to wait until she is 18 to take this inhalable insulin product. Mannkind is not studying TI on children, and Exubera was not approved for diabetics under age 18. The prevailing thought has been that their young lungs are not well suited for insulin delivery through this vital organ. Many would include adults in this category and that one of Mannkind's marketing hurdles which they will be hard pressed to overcome. It will take many more years of Phase IV testing for this barrier to be put to rest- 'if' long term post approval safety results prove positive. Oral-lyn, the buccal insulin spray that has been mentioned, is also a 'rapid' acting insulin with a short duration of action and has been successfully studied in Type 1 juveniles in 2007.

It appears that your daughter has a good dad on her side, so she is a lucky girl.

Ahithophel Weissberger has done a nice job presenting his opinions. But I don't think the market is pricing in a discount with the thought the FDA will not approve TI. I think the market feels even after approval, TI would require a massive and costly orientation effort and sales potential that do not match the high burn rate and cummalitive losses. Commercial success is not tested in a clinic. Unfortunatly, Exubera did not pave the way for inhalable delivery systems and burned downed the bridge. The marketing and orientation campaigns could restore some of what has been lost in the public percetption, but how much would a potential partner be willing to risk?

The efforts of these companies are impressive and worthy. Watching market reaction to Mannkind's Phase III studies will certainly be interesting. Maybe A.W. is right that this was a good time to buy, and all of the concerns do not matter when you take your POP and run. I'm not sure, and eagerly wait to see what a partner would pay and if one can be found. If I am not mistaken, Mannkind has an unused $500 mm SHELF available. This could help them 'go it alone". But continued dilution is a concern of all biotechs, and especially when the biotech burns close to $70 to $100 mm per quarter.

Thanks for your efforts, A.W. For this reader, you have provided a well written and interesting series of articles in an area I am very interested. Hopefully, in time, we will discuss the many novel insulin delivery options available to diabetics in a new age of care. At some point, those needles will be seen as a very unnatural way to deliver a protein and a relic of the medicinal past. These biotechnology companies, such as Mannkind and Generex, are trying to be one of the solutions and that is a respectable business goal.

Best of luck to us all, and especially the eleven year old diabetic.

[AhithophelWeissberger]

Satrunator:
"Pfizer announced that there was a greater degree of lung cancer found in the clinical trials among those who took Technosphere Insulin, compared to those in the control group taking regular insulin. (Date: April 9, 2008). "
I think You meant "Exubera Insulin" instead of "Technosphere Insulin"! -- Saturnator

Thanks for catching that mistake! My fault. I emailed Seeking Alpha with the correction and hopefully it will be corrected soon.

[AhithophelWeissberger]

NEH:
"Going back to the author's point 2 - Humalog begins working in 5 minutes, and point 3 - Humalog runs its full course in 90 minutes." -- NEH

I think that you are confusing different metrics. Humalog STARTS acting reasonably quick, but I was discussing how quickly the insulin PEAKS (i.e. reaches maximum effectiveness). Humalog peaks between 30 minutes to 90 minutes after injection (usually more like 45 minutes to 60 minutes after injection). As for running its FULL course, it takes much more than 90 minutes for Humalog to run its full course -- it barely peaks by then. Humalog lingers in the body for some time and as much as 60% of its blood sugar lowering action can carry on past 3 hours from injection, when the meal is no longer being digested and the patient doesn't need it.

[AhithophelWeissberger]

R. J. Steffens:
"Thanks for your efforts, A.W. For this reader, you have provided a well written and interesting series of articles in an area I am very interested." -- R. J. Steffens

Thanks for the compliment. I enjoyed your comments and perspective as well.

[scutchen]

BSG: "The lungs are not designed to process insulin"

Neither are holes in the skin.

[aracer]

Thanks for your efforts AW. Your writings gave me a good head start on my own DD. Your conclusions are in line with my own. I am impressed enough that I bought today at $2.86.

Although I wonder, as did RJ Steffens, the extent to which dilution will affect an investment in MNKD, I am hopeful that the strong market differentiators apparently possessed by TI will prove a strong enough incentive to lure a good partner for distribution on good terms. The position of Sanofi-Aventis and the three other strong potential partners in this market, combined with the benefits statement for TI compared to the alternatives (for example, predicted market killer Byetta generates nausea and sweats) give confidence that a good marketing partner can be attracted on good terms. The majority owner being so heavily invested personally, the extent of that investment, the total concession of the inhalable insulin market by larger competitors, and the drawbacks to alternatives give me hope that the Zack's report mentioned above is overly pessimistic.

It is also interesting to see the angst your report generates amongst touts and investors in alternatives. So far my DD supports your position over the mostly emotional response your article has elicited.

Success to everyone.

[User 214792]

I used to work at a hedge fund that focused on Biotech stocks. Everyone was really excited about inhaled insulin about 3 years ago, unfortunately it has turned out to be a dud of a market. Turns out that people don't really mind using needles as much as anticipated. If you don't believe me, just look at the actual sales numbers for approved products (Exubera). Exubera may be a inferior product, but does it really matter? They had the strength of PFE's Sales and Marketing department (traditionally the best and biggest one in Pharma) and still couldn't make it go. PFE dumped them for obvious reasons. This market is a dud and this stock is a value trap, has been for some time. Also, the FDA probably won't really see much of an urgent need to approve this product given that Exubera is already on the market and no one even seems to care. Inhaled Insulin was a nice idea but unfortunately it just doesn't really seem to scan in the real world. Don't fall victim to the typical biotech hype job. I find it funny/sad/ironic that the CEO and founder, Al Mann, dumped around $1bn into this company about two years ago, current value of that investment? About $120mm. He's still a very rich man, and much smarter than I am, but I'm guessing that he's probably a little bummed about the way things have turned out. He's a very smart accomplished person, and he got burned trying to make this idea work, I'd advise everyone else to learn that lesson without putting their hard earned dollars into a cash burning boondoggle like this.

[AhithophelWeissberger]

"Exubera may be a inferior product, but does it really matter? They had the strength of PFE's Sales and Marketing department (traditionally the best and biggest one in Pharma) and still couldn't make it go." -- User 214792

Two points. First, I think it does matter that Exubera had no medical advantages. It matters a lot. Market it all you want, but doctors are going to be cautious when prescribing a new treatment that has no medical advantages. You say that people don't mind injecting. Technosphere Insulin's advantages go far beyond dropping the injections. I outlined this clearly in this article and elsewhere in the series.

Secondly, although Pfizer is well known as having a great marketing machine, it has been widely acknowledged that Pfizer did an extremely poor job of marketing Exubera. People (including Nektar Therapeutics who were the original developers of Exubera and who partnered with Pfizer) were blaming Pfizer for this from the beginning, not just post-mortem after Pfizer dropped it. Pfizer themselves admitted as much in candid moments. Pfizer dragged their feet for a year after FDA approval before starting to sell Exubera, took even more time before rolling it out to general practitioners, and didn't even start direct-to-consumer advertising till shortly before dropping it (this for a product who's ONLY advantage was patient convenience). Say what you want about Pfizer's vaunted marketing team, but here they dropped the ball. But at risk of repeating myself, the main point is that Technosphere Insulin has medical advantages. Forget that it's inhaled -- the point isn't to cut out the injections.

[rabbimarketm]

The RabbiMarketMaker Pulpit Says...even though the market situation looks awful...& that i'll admit that iv got caught up in a few past situations thruout the decades that the trading tide turned against me...nomatter what...that in regards to this situation...that in the longer run, there will just be no competition, when these very extra $avy $mart dude$ get final approval on this product, which will "hopefully" not be far from now...& this thing at the very least will help the greater mannkind, anyway re-read the rehash below to get a good idea why i still like doubling & tripling up on & still chasing this "not yet dead" great horse of another coler...

anyway enjoy here are a couple of nice intresting links & research things for you scientific calculative $peculators & greedy gamblers to go take a good positive { flying well below the radar } close long term look @ &...on the world wide bourses...in fact by buying into a few of them...one mightinfact be buying into the cheapest form of BTU on the free market, without buying complicated future or option contracts...anyway G-D ble$$ you all...& especially almighty "AL" of mannkind...

community.investopedia...

uraniumstox.com/index....

& Generex is engaged in the research, development, and commercialization of drug delivery systems and technologies. Generex has developed a proprietary platform technology for the delivery of drugs into the human body through the oral cavity (with no deposit in the lungs). The company’s liquid formulations allow drugs typically administered by injection to be absorbed into the body by the lining of the inner mouth using the our proprietary RapidMist™ device.

The Company's flagship product, oral insulin (Generex Oral-lyn™), which is available for sale in Ecuador for the treatment of patients with Type-1 and Type-2 diabetes and which was approved for sale in India in October 2007, is in various stages of clinical development around the world. The Company announced that the global Phase III clinical trial of Generex Oral-lyn™ has commenced in the USA, Canada, Russia, The Ukraine, Romania, Bulgaria and Poland.

Listen To This Mornings Conference Call/Webcast 6/24/2008

investorcalendar.com/I...

Thank you,

Generex Biotechnology Corporation



seekingalpha.com/artic...

ALFRED AKA:{ALMIGHTY} MANNKIND, is really one true leap forward example, in this present time & space, continuim world...& a defacto ever of essence example, of one'$ money talks & bs walks & as it says many time over by moses, in the holy bible, "that the almightys actions will always speak louder then mere words...'' & that he is preci$ely right about the natural midas touch that he has been ble$$ed with in regards to his competition, that has naturally been taken out of his down the road potential rivalistic misery...& one less thing to think about when he does immenantly for $ure get fda approval...& $ales go off the hook...so please dont hold your horses or bulls from running away $hortly...& no multiple puns intented...& please try to humbly remember that thee "profiteering rabbimarketmaker" told you so, from his wall street {rabbimarketmakers} pulpit...almighty al, just from a statistically point of {charting} view & school, tht i am from...his public records $peak volumes for & all by themselves...so take that to the bank...& in regards to technosphere technology...as a fact...the data is now very clear in the effects, that this way of absorbing the meds is actually more significantly, & effectively more multi-dimentionally absorb-able, then any other form of insulin injectables...it is just that the other potentials just did have the brass balls needed to fight this tough battle , & not want to hang in there & fight a obviously huge uphill crowded pharma battle field on so many fronts...never mind trying to payola the Dr$, never ending greed for who i$ going to jockey for his $uppotive allegiance...anyway who needs & wants any competition, when it comes to buying this...on the cheap...me & my friends hope & prey...you all continue to jump ship & bail & even run for the hills, never mind staying on the sidelines awaiting for the i should of, could, & would of...like the lion & the tin man song goes, "if i only had some heart..." & for all the karma religous types that like to believe in, what goes around {must} comes around...almighty al, has over a prolonged period of time, invested & pumped hundred$ of million$ U$D into the spread spectrum aqious wave-guide sea of humanity less fortunate economys of $cale, especially in the promi$ed land...so go continue to further speculate for your greedy $elve$...mazel tov & hatz-lucha & a joyes shushan purim...oye gevalt, i just cant believe it is over & cant wait for pass-over with non geh'bruxed matzoh like balls in my soup...shalom & yeh'chee. & enjoy the prayer link thekotel.org

[rabbimarketm]

The Bakken Shale Story (CLR, EAC, WLL) & With oil above $135, the bulk of investors and money managers are looking for new ways to profit from the rise in the black gold. One strategy has been to find energy stocks that can take advantage of drilling on American soil. The most popular area, believe it or not, just happens to be located in North Dakota.

The Bakken Shale, as it is known, is located in the heart of North Dakota and by some estimates could be the most important area in the country as far as oil production. The U.S. Geological Survey published a report on the Bakken Shale that cites 3-4.3 billion barrels of undiscovered oil are technically recoverable with current technology. This would make the Bakken Shale the largest continuous oil accumulation in the contiguous 48 states. The report goes on to say the total oil-in-place could be as high as 200 to 400 billion barrels. (Before jumping into this hot sector, learn how these companies make money in our Oil And Gas Industry Primer.)

The Players
Continental Resources (NYSE:CLR) - The company currently has 350,000 acres in North Dakota with six rigs up and working and another three expected to go online by the third quarter of 2008. In the first quarter the boepd (barrels of equivalent per day) was 1,532, an 11% increase from Q4. The stock has been a trader's delight, gaining over 150% in 2008 through the middle of June.

Encore Acquisition (NYSE:EAC) - The company sits with 178,000 acres in the Bakken, more than double the number from Q3 2007. It only has one rig in the area, but there are plans for two more by August 2008. On May 22, the company announced the board has authorized management to seek out strategic alternatives including a sale of the company. In the month following the announcement the stock was up 17% and hit a new historic high. With the stock gaining over 100% since the January low, it is not likely someone will jump in to pay a premium on top of the recent stock rally.

Whiting Petroleum (NYSE:WLL) -Whiting currently has 96,500 net acres in the Bakken with five rigs up and working and another four expected to come online by the end of 2008. Production for the company has surged to 4,153 boepd in March, triple that of the average Q4 number. Whiting has been another favorite of traders and momentum investors. After going sideways for two years, the stock exploded in the forth quarter of 2007 and has not looked back. The company has tremendous growth in the Bakken Shale, but the beauty of this stock is the diversity it has throughout the Rocky Mountain region.

Kodiak Oil & Gas (AMEX:KOG) - This is a very aggressive play that is new to the Bakken Shale. The company has 45,000 net acres, with another 8,000 pending. Kodiak's first well was drilled recently and should be producing by Q3 of 2008. With the stock trading below $5 per share and up over 100% in the last two months, this is the riskiest of the stocks mentioned by far.

XTO Energy (NYSE:XTO) - In late May 2008, XTO announced a major purchase in the Bakken Shale that would cost the company $1.85 billion. The purchase included 352,000 acres of net leasehold of the Bakken Shale in North Dakota and Montana. The company estimates the proven reserves to be 68 million barrels of oil equivalent. According to the company's president Keith Hutton, the $3 per-barrel production cost makes the new acquisition a superb addition to the XTO portfolio.

Oil Outlook
The key to the Bakken Shale stocks continuing their meteoric rise will be two-fold. First, the price of oil needs to remain high and warrant more money for exploration. Second, they must pull back in the next few weeks because they have become momentum trades versus fundamental investments. When the stocks come back to reasonable valuations, they will offer true long-term investors an opportunity to play the future growth of the Bakken Shale.

[Mr BSG]

Are there any companies or segments of biotech you would recommend investors stay away from in the near term?

We are currently negative on the inhaled insulin segment. Therefore, we have a Sell rating on Mannkind Corporation (MNKD), which develops inhaled insulin.

The inhaled insulin program was once thought to be the garden of blockbusters for diabetes treatment. But things all changed since October 2007 when Pfizer (PFE) withdrew its marketing support of Exubera, the first FDA-approved inhaled insulin on the market.

Following the withdrawal of marketing support of Exubera from Pfizer, Novo Nordisk (NVO)/Aradigm and Eli Lilly (LLY)/Alkermes (ALKS) discontinued their late stage inhaled insulin programs respectively in early 2008. The reason for the withdrawal or discontinuation is apparently the lack of market prospectus for inhaled insulin products which has been evidenced by the very slow uptake of Exubera sales (only $12 million in the first three quarters of 2007). Another reason is the potential risk for lung cancer of inhaled insulin products.

We have a Sell rating on Mannkind based on our general negative view on the inhaled insulin segment. MNKD relies heavily on its inhaled insulin program with a very weak pipeline. Also, the company is burning cash at too high a rate and cash position is a matter of great concern.

[Orlon]

I recently spoke with my 41 year old niece in Scotland who has type 1 diabetes, and asked her what she thought about an inhalant delivery system. She has been injecting insulin four times a day for the past eleven years. Her response was, 'Uncle Orlon, try injecting water in your leg four times a day for a week, then ask your silly question again. I've been doing this for eleven years and have never gotten used to it.' I simply disagree with those non-diabetics who look beyond the feelings and well being of the user of insulin. I'm convinced that people who have to inject insulin do mind! This type of argument reminds me of ELAN pharma..when they developed Tysabri for the treatment of MS. An analyst for Piper decried with horror the terrible results of the two people who died of brain diseases allegedly as a result of using the combined Idec Biogen/Elan therapies. Once Idec stepped aside and the FDA again approved tysabri for use, it proved to be a godsend, monthly use for my nephew in Norwood instead of daily injections. The alternative was injecting yourself 2X daily with a drug from an Israeli firm. The interest of the ill must have prime consideration.

[Mr BSG]

Ask your niece which product she would prefer to use;


1 - a product that inhales insulin into her lungs (MNKD)

or

2 - a product that sprays insulin into her mouth/cheeks
(GNBT)

[Daddy One]

Mr BSG, you left out the third alternative in your last comment....continued needle punctures 4 or 5 times a day. In judging demand, and therefore market viability, all alternatives need to be brought to the table. Your original blog simply took to task inhaled insulin as compared to injections. Later you referred to other alternatives. I again ask for your financial involvement with what you propose as a better system of delivery. For everyone to know, when you have a daughter with this condition, the money that used to matter doesn't. But for those to whom it still does, I do offer the novel idea that those involved in the situation have a lot more pertinent information about real time demand than those who are just speculating. May I offer my legal "inside information" from someone truly on the inside? Come up with a better method of delivery that replaces a needle in your skin 5 times a day, and start counting the money. And even more so when given the chance that it is medically superior to the present method.

AW, I appreciate the time invested in your submissions. And I enjoyed your reasonable responses to the blogs. And I proudly sign out as
Daddy One

[retiredpharma]

AW,

Again I commend you on a fine series and admittedly you are one of the best to respond to "bloggers" concerns.Certainly many have been raised over your 6 part series. I have saved a chunk of money to commit to MNKD eventually this year but wanted to tell you "Thanks" for an enlightening series.The fact that you own shares and divulge this openly only confirms your entegrity/editorial Alpha compliance. I particularly like your quiet educated non-hostle demeanor! I do not believe you are a "Pumper", but I believe you have conviction/passion for MNKD! There is NO FAULT in that and I am one in the same!

Before I recommend personal holdings such as MLNM or KOSN two of my better picks over the years I first did my DD, committed personal funds and than tryed in vain as you do to give fair and balanced thoughts on my holdings and why I like them.

Currently I am long/and own shares in FOLD,EPIX,INFI,AVAN,CR... in bios, MHS in PBM's, and SGP,MRK,JNJ,BMY,LLY,an... PFE in large pharma.

I would be curious to read your thoughts particularly on any of my BIO's!

Thanks!

Frank

[aracer]

AW-
I'd like to read your thoughts, if you are willing to share them, regarding TI's prospects in light of recent news that the FDA is considering tougher standards, regarding impact on cardiovascular disease, for new and current diabetes drugs, potentially increasing time and cost needed to reach approval.

From the WSJ, "Still, this draft of questions to be considered at next week’s [first week in June '08] panel meeting suggests that the discussion could be pretty wide-ranging. The first question on the list gets to heart of the matter: 'What specific cardiovascular assessments should be required as part of the approval process for drugs and biologics developed for the treatment of type 2 diabetes, and why?'"

[AhithophelWeissberger]

"AW, I appreciate the time invested in your submissions. And I enjoyed your reasonable responses to the blogs." -- Daddy One

"Again I commend you on a fine series and admittedly you are one of the best to respond to "bloggers" concerns.Certainly many have been raised over your 6 part series. I have saved a chunk of money to commit to MNKD eventually this year but wanted to tell you "Thanks" for an enlightening series.The fact that you own shares and divulge this openly only confirms your entegrity/editorial Alpha compliance. I particularly like your quiet educated non-hostle demeanor!" -- Retired pharma

Thanks for the compliments and thanks for reading!

[AhithophelWeissberger]

Aracer:
Having given a cursory glance to the pre-briefing background information that the FDA released (available at www.fda.gov/ohrms/dock...), I am not overly concerned that they intend to be any more strict than they already indicated with their February draft guidance (which Mannkind fulfills in full). The meeting is scheduled for Tuesday, July 1 and Wednesday, July 2, later this week. It is really fruitless to speculate endlessly on an outcome which will soon be known. We can wait until the end of the week, when the transcript of the meeting will be available. Then we will know for sure.

[NEH]

Daddy One,

Further to disclosure, I've been insulin dependent for over 45 years. Started out with one shot per day and moved to two shots and blood testing in 1980. Now take four to five injections a day since 1983 plus blood testing four to five times a day. You'd be surprised at what you can get used to.... Fact is, the shots don't bother me, they are just an inconvenient truth. (Though if I'd known as a young person that an alternative inhalable product was available I'd be yelping for it too.)

What DOES bother me is the blood testing, which is a downright nuisance, yet I follow my regimen every day (working full-time with a house and family as well). And even with TI, the diabetic is not relieved of blood-testing. (Mannkind developed and sold the first glucometer to Medtronic if I recall correctly - hence my earlier post about the device being most important.)

My doubtful view on TI is based upon return on investment only, and I have purposefully screened out the emotional component.
Posters here, and the broader investment community, are looking out for their money. As I said in my earlier posts, I truly hope Mannkind succeeds. There is definitely a market for this, but from an investment point of view, I just don't think TI will be the "cash-cow" people expect it will be.

I personally think stem-cell options are the only answer. If Mannkind sank all that dough into stem-cell research, might we be closer to a cure? There are private companies developing stem-cell banks for private buyers who have the money. Until then, I'm waiting for the unit to be developed that does it all. Continuous glucose-monitoring and insulin delivery through a patch on the skin -all in one device. Now that's convenience.

AW - your comment about the duration of Humalog is well-taken. However, doctors have instructed me about that "90-minute" window. Every person's biology is different and each reacts differently to insulin, or any other medicine for that matter. There is always a residual effect from insulin, but from experience I don't think there are any "rules" about it. Heck, when it comes to diabetes, there are no rules. Period. I still think the device is what Mannkind is banking on, and if there is a cash-cow, this is it. You have succeeded in engaging a very wide audience here. Congratulations, AW.

[Daddy One]

NEH & AW,

Great comments. All points I am in agreement. I also believe stem cell research is absolutely the way out of the woods. But....I always prioritize my hopes and dreams. In the near term, inhaled insulin makes sense. If my daughter has to wait until she's 18, cool. That's the light up ahead we focus on. In the long term, I am hoping stem cell progress provides the relief that would be a God send for each diabetic, especially type 1. Concerning the testing procedure, I am also in total agreement. The endocrinologist we first met with stated the same belief. It's the continual checking that is such an invasion to normal life. "Non invasive blood checks" along combined with "non invasive insulin treatment" is the answer until the answer is a "cure." But journeys are accomplished one step at a time, so let's give the first step a chance for approval with TI. Again, I repeat, money used to matter, until it didn't. I am thankful for Mr. Mann's effort and his courage to back up his belief with his pocketbook and to AW for his treatises on the subject, and even to the bloggers who help define the issues that will ultimately provide some relief for my daughter.
To Mr. BSG, besides my desire for you to try sticking yourself with a needle 5 times a day before pompously passing judgment, I also hope someone sticks an extra 10 dollar bill in your coffin, so you can leave here happy. The sooner the better.

[NEH]

Daddy One - "Again, I repeat, money used to matter, until it didn't." No one could say it any better, Daddy. And for sure, I agree, god bless the man for the sheer drive and passion he has devoted, for a very long time, to diabetes care. BTW, if it is any help - even after 45 years I have no cardiovascular complications - eyes, kidneys, heart, etc. are all 100%. So, monitoring blood sugar, along with regular cardio exercise, are absolutely key. Good luck to you and yours!

[Daddy One]

Thank you NEH for your health update. It is comforting. It is truly good to know my daughter can maintain her health, as you have done, with proper and diligent oversight. I am happy for you that you have your health. Nothing is more important. And I wish for you, as I do my daughter, a better delivery system, a better method of non invasive checking of glucose levels, and ultimately......being able to breathe fresh air knowing there is a "cure."