During the fourth quarter of 2009, MannKind (MNKD) lowered its loss per share to 53 cents compared to a loss of 82 cents in the year-ago period. However, the loss per share missed the Zacks Consensus Estimate of 41 cents. For the full year, MannKind reported a loss per share of $2.07, better than $2.98 in 2008.
The company does not have any marketed products, and hence does not generate any revenues. Afrezza (formerly known as Afresa) — inhaled insulin for the treatment of type I and type II diabetes, MNKD’s lead pipeline candidate — is currently under US Food and Drug Administration (FDA) review.
The primary reason behind the lower loss was a 32% year-over-year decline in operating expenses which came in at $55.8 million. While general and administrative expenses declined marginally (2.3%) to $12.7 million, research and development expenses recorded a 37% decline to $43.1 million due to the completion of Afrezza trials in 2008.
At the end of 2009, MannKind had cash and cash equivalents of $30 million, up from $27.6 million of 2008.
The approval of Afrezza is crucial for MannKind. While the original Prescription Drug User Fee Act (PDUFA) date was January 16, 2010, the FDA recently informed the company that they will not be able to review the new drug application (NDA) within the time frame as they have not yet completed the inspection of the insulin manufacturing facilities of N.V. Organon, a third-party supplier to MannKind.
Although we believe that Afrezza offers distinct advantages over the traditional needle-based insulin therapy that currently dominates the market, the path to approval is not easy. Many large pharmaceutical companies in the past have made unsuccessful attempts to launch such a product.
The delay in FDA approval will further hinder any possibility of striking a partnership deal. While the company is discussing with prospective partner players, we believe a concrete agreement is unlikely before approval. We have a Neutral recommendation on the stock.
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