Though I had hoped that we might get some news (or even just some dramatic price action in the stock) related to MannKind during the week last week that would have provided a springboard for an updated conversation and outlook, I am afraid it turned out to be a very quiet week on both fronts after all.

However, while this lack of action can certainly be considered boring (and perhaps even frustrating), I think we can also interpret it as useful information for two main reasons.

The first is that, as we have gotten closer and closer to the upcoming FDA meeting without any word from the company regarding a partnership for Afrezza, the more likely it has become (in my opinion) that the terms of a such a partnership have probably already been tentatively negotiated but are contingent on the outcome of the meeting… and thus, while there is always a chance that one side or the other will actually flinch at the last minute ahead of the ruling, with just over two weeks to go until the AdCom meeting on April 1st, I think the fact that we heard nothing on this front over the course of the last week has greatly increased the odds that we won’t hear anything at all until the fate of Afrezza is finally known.

Of course, before moving on from this topic, I would be remiss if I didn’t also acknowledge two other possibilities – namely, that perhaps the company has not been able to find a potential partner, or, at the other end of the spectrum, perhaps there is no partnership agreement yet because rather than partnering for the drug, Al Mann has already lined up someone to buy the company outright IF he can deliver an approved product.

Based on the fact that the company has stated on numerous occasions that it is very pleased with the work that has been done by its advisor on this front over the past several quarters, I think the odds are very low that “nobody is interested in the product.”  However, this does not guarantee that MannKind and its potential suitors have, in fact, reached a tentative agreement (as hypothesized above), and thus we have no choice but to chalk this up as one of the pieces of uncertainty that is still preventing investors from getting more enthusiastic about the story this close to the FDA’s decision date.

The second reason I actually find the price action over the past week to be useful (and somewhat encouraging) is the fact that, while it is true the stock was down rather than up, biotech stocks were down pretty much across the board last week… and thus, I do not think we can read too much into the gentle slide experienced by MannKind’s stock over the course of the past week.

In addition, while I would naturally see the stock headed up rather than down, not only can its gentle slide be at least partially explained by the tone of the overall market, I find it especially noteworthy that the drop has taken place on much lighter than normal volume… and when I put this observation together with the idea that pretty much anyone who owns a sizable position in the stock at this stage of the game is probably a long-term holder who knows they can be patient about adding to their positions (in contrast to traders and nervous longs who tend to use a declining stock price as an excuse to sell in situations like this), I cannot help but feel good about the fact that the stock is “following the script” almost perfectly for us as long-term investors who are patiently building positions ahead of the FDA ruling (for example, it would be much, much harder to know what to do at this point in time if the stock was trading at $12 as we head into the panel meeting).

That being said, I want to remind you yet again that while I personally believe the data that has been generated by the company has been more than sufficient to warrant an approval of Afrezza, the FDA has disagreed with me in the past… and thus we cannot assume that approval is a sure thing.

However, given how closely MannKind worked with the FDA in designing the additional studies that the FDA asked for… and given that the FDA basically said “we would like to see you demonstrate X” and MannKind delivered X… and given that not only has the FDA approved inhalable insulin in the past, but MannKind has publicly stated they “have not seen any safety flags in the data”… I continue to believe that the odds are in are favor that the drug will be approved.

As stated in a previous edition of Nate’s Notes, I believe that IF Afrezza is approved with anything more than a very limited indication, the stock should trade up to at least $12 on the news… and will likely be on its way to $25 by the end of the year (and perhaps much higher, given the large short position in the stock).

In addition, I think it is extremely important to keep in mind that while Afrezza is clearly going to be the most important thing for MannKind to focus on over the near-term, there is also a tremendous amount of potential in the company’s Technosphere platform… and, while it remains to be seen where and how the company will choose to exploit or partner this technology, the development of ultra-fast acting versions of inhalable migraine drugs, pain drugs, and erectile dysfunction drugs (among others) clearly represent additional very large opportunities to be exploited in and of themselves.  This, in turn, suggests to me that MannKind’s stock could trade north of $100 by 2020 (if not sooner) if the company finds itself in a position to bring additional products to market behind Afrezza.

Though anything could happen between now and the AdCom meeting on April 1st, the next known event we can look forward to will be on March 28th when the agenda for the panel meeting April 1st will be made available to the public and we will get a much better sense of what sorts of questions and concerns will be brought up at the panel meeting.  The panel will make a recommendation at the end of the meeting that day, and, at least at this point in time, the FDA is expected to render a final decision on Afrezza by April 15th.

It has been a long (very long!) journey for us since we first got into this stock in June 2009… but the finish line is now in sight, and I hope you are as excited as I am that the waiting game will soon be over!  MNKD remains a strong buy under $6 and a buy under $8.