Bull Case for MNKD

Jockey CEO

Al Mann is a billionaire with a series of startups that he has successfully exited from including Minimed which made insulin pumps. He also owns something akin to 40% of the company and has a line of debt open to the company as well.

FDA 

• Clinical Trials: They have completed Phase III clinical trials and have not had any CRLs where the FDA pushed back on Afrezza (the actual drug). 2 more Phase III clinical trials under way (catalyst 3)
• CRLS: this is where the company has fallen short to date. The last CRL was a result of MNKD management making a decision to switch inhalers from Gen 1 to Gen 2 (a big mistake in my mind). The Gen 2 inhaler is much superior (less drug required, better design) but got roadblocked due to an inter-departmental issue at the FDA...and hence, the current Phase III trails are aimed at proving that the amount of Afrezza delivered between the two inhalers are equivalent (and this essentially has nothing to do with the efficacy of the drug)! Interesting note on this...as a side note: an FDA insider  got caught on insider trading had traded with the expectation that MNKD to be approved at the last submission...

Partnership

Al has a reputation of being an extremely hard-nosed at negotiations...so where others would have partnered earlier, I expect the partnership for Afrezza to come closer to FDA approval. (catalyst 2a)

Pipeline

They have a few cancer drugs in the pipeline. No one (including me) give this any value because if Affrezza doesn't come to market, the company will go under.

Funding

A huge question mark as to how this will happen. They currently have funding through the end of 2012 (combination of cash on hand and the $38M remaining on Al Mann's line of credit). The next round of funding, if equity or debt will likely see Al Mann also adding more money as he has in each past round of equity based funding. (This catalyst can go either way depending on whether the additional funds are equity or debt or partnership).

Product

• AFREZZA - is an inhalable insulin. The FDA has had no issues with this drug at all through clinical trials and has recommended a study on kids as young as 4 years old. This addresses the Type 1 & 2 diabetes market and has shown amazing results..ie blood glucose response similar to normal insulin produced in non-diabetic people and fast acting response (approx 15 minutes or less). It also has shown an ability to blunt weight gain ( a common problem with diabetics). The inhaler is the size of a whistle (unlike Pfizer's which was the size of a tennis ball can).
• Technosphere - this is the wildcard. It is the excipient used to deliver AFREZZA but could be used with a large number of other drugs. No one gives this any value (just like the cancer drugs in the pipeline). However, this technology provides MNKD interesting non-Afrezza related partnership opportunities. (Catalyst 2b)

Competition

All competitors for inhalable insulin have essentially dropped out of the race. Competition is now only with pills, below-tongue dissolving tablets, skin patches and needles. The under-tongue tablets and skin patches are still early in their developmental cycle.