The company's unique platform technology has attracted big pharmaceutical companies such as Bayer Healthcare and Sanofi-Aventis for partnerships. The company also has a FDA approved product on the market. We believe the company has potential for long term investors and our price target is $28 per share.
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 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 inhaled insulin program with a very weak pipeline. Also, the company is burning cash at a too high rate and cash position is a matter of great concern.
Grant Zeng, CFA is a senior analyst covering the biotechnology industry for Zacks Equity Research.
