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Mannkind (NASDAQ:MNKD) is a speculative buy. Two key pieces of information were needed to at least assure that an NDA would be filed for Afrezza. (1) Mannkind needed money to complete the phase 3 trials. Mannkind has registered a proposed offering on August 31, 2012 of up to $500 million in common and preferred stock, warrants, and debt securities. (2) Mannkind also needed to complete enrollment in another Phase III trial. There was difficulty with patient enrollment, but Mannkind announced on October 5, 2012, that "MannKind Completes Patient Recruitment in Two Phase III Clinical Studies of AFREZZA." It is now reasonable to conclude that Mannkind will be able to see Afrezza through another submission with the FDA.

Since the failure of Pfizer's (NYSE:PFE) Exubera, there has not been an inhalable insulin on the market. Lily (NYSE:LLY) and Novo Nordisk (NYSE:NVO) have dropped development of inhalable insulin. Mannkind's Afrezza would likely be the first inhalable insulin on the market. Aerogen and Dance have teamed up to develop an inhalable insulin, but that is much further behind in development. If approved, Alfrezza will be the only inhalable insulin on the market for the foreseeable future. Afrezza is an ultra rapid-acting insulin (see Seeking Alpha for a more detailed discussion of the potential for ultra rapid-acting insuin), but it will compete against existing injectable short acting insulins. Mannkind is likely to have a competitive price point that reflects entry into this short acting insulin market.

One area of potential risk arose with Exubera was a potential link with lung cancer. In April of 2008, Pfizer announced that Exubera may have been associated with lung cancer. The association was not statistically significant and the cases were in smokers, which would likely be a contraindication for Afrezza.

Mannkind received a complete response letter ((NYSE:CRL)) from the FDA following its last submission. The letter, according to Mannkind, focused mostly on obtaining in vivo data with the new inhaler and demonstrating at least 12 weeks of stable insulin dosing. What was noticeably lacking in the information released on the CRL is any indication of efficacy or safety concerns with Afrezza by the FDA. That bodes well for approval of Afrezza. The Phase III trails will be completed in early 2013, with submission to follow likely in 2013. With approval likely, that leaves only a few months left to make a speculative buy of Mannkind shares before information on the Phase III trials becomes available.

From Yahoo Finance

Chart forMannKind Corp.

Market capitalization of Mannkind is about 450 million, so the share dilution by offerings presumably detract from the value by perhaps 50%. There was a brief drop after the offering announcement, followed by recovery and most recently a downward trend.

The value of this stock is coupled to a single high stakes event, approval of Afrezza. Low entry points into a pool of high risk stocks is one way to manage the risk. That was a strategy that would have worked with the new obesity drug companies (buying all three before approvals). Vivus (NASDAQ:VVUS) and Arena (NASDAQ:ARNA) have had drugs approved and share appreciation whereas Orexigen (NASDAQ:OREX) awaits approval and has seen some correlated share appreciation. But take note, in the submission of these very same obesity drugs to the FDA in the first round, losses were likely for most investors. (All three obesity drugs were not approved by the FDA on the first submission.) So, if you think the speculation with Mannkind is reasonable, how cheap can you acquire it? My opinion, which is not based on technical analysis or anything else even remotely quantifiable, is Mannkind shares under $2 per share within the next 2 months is a speculative buying opportunity. Alternatively, a strategy with perhaps less risk is to wait until after the FDA decision, then buy on the first large dip in share price after the likely initial surge in share price.

Disclosure: I am long ARNA, VVUS. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I may buy MNKD within the next 2 months, but not within 72 hours.

Source: With Share Offering Registration And Trial Enrollment Complete, Time To Buy MannKind