MannKind's Countdown to Liftoff?


Perennial underdog MannKind could be on its countdown to liftoff. The company announced its first-quarter results after the market closed on Thursday. Here is the countdown of the highlights -- from least to most important.

3. Financial
At this stage in the game, investors know that the company is still incurring losses. They know there will be little, if any, revenue. There weren't any surprises on those fronts.

MannKind reported a net loss of $41 million, or $0.15 per share. That's only slightly worse in absolute terms than the $38.2 million, or $0.27 per share, loss reported in the same quarter last year. The difference stemmed largely from an increase in operational expenses related to clinical studies.

No revenue was reported for first quarter. However, MannKind does conveniently toss in the cumulative amount of revenue that the company has made since its founding in 1991. That total is just shy of $3.2 million. In case you're wondering, this calculates to an average of around $143,000 per year. My hunch is CEO Alfred Mann made more than that in interest payments from his savings accounts.

The most important financial figure for the company is its cash balance. MannKind announced cash and cash equivalents of $28 million as of the end of the first quarter. That's down from $61.8 million at the end of 2012 as cash burn rates increase with two clinical studies under way. The company also still has $125.4 million available for future borrowing.

MannKind expects that its current cash reserves will take it into the fourth quarter. However, this doesn't factor in another $90 million of warrants that the company will almost certainly exercise. This added amount should tide MannKind over well into next year.

2. Afrezza clinical studies
Status of the two ongoing clinical studies of Afrezza easily trumps financial results in terms of importance. The news from MannKind is: So far, so good.

Both studies appear to be on track to complete as scheduled, with the first wrapping up in May and the other in June. The company still expects to share data from the studies in mid-August and resubmit the New Drug Application for Afrezza by early October.

While MannKind's Senior Vice President of Clinical Sciences, Robert Baughman, said that the dropout rate in the studies is slightly higher than that of the original protocol in the type 1 diabetes study, there are no real concerns. Baughman noted that the dropout rate is tracking along well with projections and that the company overenrolled patients included in the studies. When asked about how well physicians are adhering to protocols in the studies, Baughman responded that the company is "comfortable" that all is in order.

1. Potential partners
The most important information that was announced related to potential partners for commercializing Afrezza. MannKind is currently in discussions with multiple potential partners. Alfred Mann also stated that several others indicated they would resume discussions and due diligence in August when the clinical results are announced.

The company is talking with global and regional organizations. MannKind might even contemplate tackling the endocrine market on its own, but hasn't made a final decision yet.

At this point, no names have been mentioned. There has been plenty of speculation for a long time about who might be a good fit. My Foolish colleague Max Macaluso suggested last year that Pfizer should get over its Exubera failure from years ago and snatch up MannKind. Max also pointed out that Pfizer needs a new blockbuster drug and offered up the idea that the inhalation technology used for Afrezza could potentially be used for other products -- including Viagra.

I would put Lilly in the same category for the reasons that Max listed for Pfizer. Lilly also gave up on its attempt to market an inhalable insulin product. It also needs a new blockbuster drug. And I don't doubt the company could find some other uses for MannKind's inhalation technology.

However, I think that Sanofi could be an even better fit. The company is a leader in the insulin market and has the sales heft to launch Afrezza globally. It also doesn't carry the baggage of a past failure with inhalable insulin.

No one knows which company or companies will ultimately partner with MannKind or when they will do so. A partner might not be signed up until Afrezza gains approval.

I do expect that Afrezza will gain regulatory approval, though. And I think MannKind will find one or more partners rather than attempt to market the drug itself. Will this countdown ultimately result in liftoff after all these years? Let us know what you think in the comments below.

The future of MannKind?
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