The Story. MannKind (MNKD) closed its trading session on Wednesday, August 17, 2014 down by 37 percent from the stock's 52-weeks high despite showing signs of a rebound from last week's precarious trading sessions. The market has been highly pessimistic on MannKind despite Afrezza's positive Affinity Trials data, strong support from the experts Advisory Committee (ADCOM), approval of the US Food and Drug Administration (FDA), and recent commercial partnership with a Global Diabetes Powerhouse Pharma, namely Sanofi SA ADR (NYSE: SNY). According to the legendary fund manager, Peter Lynch, "investors who sold out when shares price drops will not be able to make money in the market, because the market demands conviction."

That said, MannKind is a stock for "visionary" investors, who after having performed rigorous data and field research are convinced to ignore market noises, rumors, and "what ifs." A prevailing market opinion is that MannKind is overvalued due to the small $6 billion rapid-acting analogues (RAA or mealtime insulin) market. That might be true now as injecting insulin (Novolog and Humalog) are dominating this market. In 2015, however, when Sanofi's robust sales/marketing teams launch Afrezza, the drug's strong demands will significantly increase that $6 billion figure per se. To fully appreciate this ramification, one should revisit the fundamental science pertains to Afrezza, insulin, and diabetes treatment.

More Insights. Afrezza is the only mealtime insulin possessing the pharmacokinetics that "mimics the action of healthy pancreases." Lyophilized into a dry powdered formulation via MannKind's proprietary Technosphere platform, the ultra rapid acting insulin is unhampered by normal temperature changes and delivers inhaled insulin through a small whistle-like cricket inhaler called DreamBoat, available in different sizes, shapes, and colors to capture users' aesthetic appeal. Revolutionary in designs and kinetics, Afrezza removes barriers to early insulin treatments including needles phobia, stigma, and inconveniences.

The culprit for diabetes complications is due to the extreme rise in blood sugar after meals, a process called "postprandial glucose excursion" and also late insulin treatment. To understand diabetes complications, investor should be cognizant that when a patient develops insulin resistance, which tends to occur with obesity, his or her pancreas initially compensates for the lowered efficacy of insulin by producing more insulin hormone – a period known as the "honeymoon" phase. Unfortunately, pancreatic Beta cells eventually expired and stopped producing insulin altogether. In trying to save the pancreatic beta cells, the American Diabetes Association (ADA) has been pushing for early insulin treatment. Nonetheless, the problem is that insulin naïve patients (those who never had insulin injection) are afraid of needles. Despite physicians wanting to prescribe insulin early, we still have to respect the patient's wishes and, instead, prescribe other oral medications like metformin, … and etcetera. As elucidated no oral medicine can, however, replace insulin.

Even More. As Afrezza will be available to the market as early as 2015, physicians and patients will heavily use Afrezza to facilitate the FDA's recommendation for early insulin treatment, and to improve patients' compliance as well as to improve the doctor-patient relationship. Medicine, after all, is still operating under Adam Smith's Law of Supply and Demand. When there are increasing demands for Afrezza, from both physicians and patients alike, the drug will significantly enlarge the estimated $6 billion RAA market.

Source: International Diabetes Federation

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