Better Days Ahead For MannKind Corp (NASDAQ:MNKD)

For over the past year, it's been all downhill for MannKind Corp (NASDAQ:MNKD). Nothing the company did worked. The biggest mistake it made was choosing Sanofi (NYSE:SNY) to market its insulin product Afrezza. Unfortunately, Sanofi is a competitor and made no serious effort to effectively market Afrezza. It seems Sanofi was looking for just a free ride and didn't want to invest any time, effort or money in marketing Afrezza.The good news for MNKD is that this month its collaboration agreement with sanofi-aventis U.S. LLC for the development and commercialization of Afrezza (insulin human) Inhalation Powder was terminated. The parties promptly commenced transition discussions in order to effect a smooth and orderly transition in the development and commercialization of Afrezza from Sanofi to MannKind. In any event, termination of the license agreement in its entirety will be effective no later than six months from the effective date of Sanofis notice of termination, or July 4, 2016. Furthermore, the company has the consolation that will not have to pay back the loans from Sanofi for 10 years. Management also stated that its current resources will be sufficient to fund operations into 2017.

MNKD has also just seen a shake up in the management ranks. Last November, Hakan Edstron stepped down as CEO due to the problems with Afrezza. A lot of shareholder wealth was lost under his direction and the move was the right one for the company. Then MannKind announced that Duane DeSisto, the CEO of medical device maker Insulet from 2003-2014, would serve as the new CEO. However, MannKind was forced to withdraw the offer after it became aware that the hiring would violate DeSisto's non-compete with Insulet. As a result, CFO Matthew Pfeffer was elevated to the CEO chair.

MannKind also just signed a deal with Receptor Life Sciences. Under the terms of the deal, MannKind will perform initial formulation studies and will work with Receptor to develop inhaled formulations of certain undisclosed compounds. It will transfer manufacturing technology to Receptor, who will be responsible for manufacturing and commercialization activities. The companies will collaborate on clinical development with Receptor footing the bill for all development costs. MannKind is eligible to receive up to $102M milestones plus mid-single to low-double-digit royalties on net sales.In regards to Afrezza, now that Sanofi is out of the picture, MNKD is in control of its own destiny and under the strategic vision of a new CEO. What MNKD needs to do is address the pricing. Sanofi was marketing Afrezza at a premium and that was a mistake. The company also needs to get both doctors and patients educated and understanding that Afrezza is a fundamentally different product with some significant advantages if used in the right way. MNKD needs to raise the awareness of inhaled insulin within the diabetic community over needles.

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New CEO Pfeffer said at the JP Morgan Healthcare Conference that he plans Specialized Diabetes Care Centers with Real Time Diabetes Management Powered by Afrezza. This will give diabetics a one stop shop for their insulin needs. Healthcare professionals educated and trained in the use of Afrezza will meet patients and provide them with information about Afrezza. Additionally, for patients interested in using Afrezza, there will be immediate spirometry testing available, on site prescriptions written, and possibly, on site health care insurance filers. The patient can walk out, conceivably, in less than an hour from start to finish.These diabetes care centers will be owned and operated by a third party company with no expense to MannKind. This could be the most potentially positive idea which Pfeffer spoke about. However, success of the diabetes care centers will be determined upon whether diabetics really want to use inhaled insulin for all or part of their meal time insulin needs. The first pilot centers are scheduled to open within weeks in New Jersey.In addition, before the Sanofi deal, MNKD was in discussion with foreign partners. Most likely, MNKD can restart those discussions and look at getting a foothold in Europe and Asia, particularly China which has one of the lowest rates of injection insulin in the world.

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The latest news from MNKD is that the company is exploring strategic options. With Sanofi out of the picture, MNKD is an attractive target for a company looking to get its hands on Afrezza. With Al Mann owning roughly 1/3 of the company and 120 million shares short (as of December 31, 2015), there's all the makings of a major move higher.

Currently trading at a market cap of around $394 million, we see the company worth significantly more. We think the worst is behind shareholders and think MNKD will command a buyout of $4 to $5 per share. We don't see founder Al Mann selling for less than that amount. We will be updating Insider Financial as soon as we know more on MNKD. Sign up today and stay on top of the latest developments from MNKD!

Disclosure: We have no position in MNKD either long or short. We have not been compensated for this article.