It has been a rough five years for investors of diabetes-focused biotech MannKind (MNKD). Over the period, shares of the company have declined by 94%. However, according to H.C. Wainwright analyst Oren Livnat, there might be a two-pronged opportunity on the horizon.
MNKD has one FDA-approved treatment on the market, Afrezza. The device consists of a dry powder formulation of human insulin that is delivered through a portable inhaler.
Afrezza brought in sales of $8 million in the first quarter, up 58% year-over-year. The higher revenue drove a 263% gain in gross profit, with the figure increasing from $1.1 million in the prior-year quarter to $3.8 million.
Although the analyst projects “a sequential 2Q Afrezza volume and revenue decline,” with sales reps back in action and new hub-services brought into play in 3Q, sales should pick up again in 2H20.
That being said, Livnat believes MannKind has another opportunity that could “ultimately supplant Afrezza as the main MannKind value-driver.” The company has a partnership with United Therapeutics, with the two working together on TreT, a dry powder formulation of Treprostinil.
United is working with MannKind’s validated DPI (dry powder inhaler) platform to develop a next generation of Tyvaso, the company’s inhalable treprostinil solution for pulmonary arterial hypertension. The drug is currently bringing in more than $400 million in annual sales. It should be noted that United currently has two clinical studies in progress which were suspended due to COVID-19, but they are still expected to be completed by the end of the year. Should the studies prove successful, an NDA could be filed at the start of 2021.
Livnat says United has expressed “blockbuster aspirations” for the drug, and noted, “We believe TreT would be a far superior delivery system than Tyvaso, and potentially capably of tolerably dosing significantly higher. MannKind expects to receive another $25 million milestones from United this year, and could potentially receive double-digit royalties.”
Accordingly, Livnat keeps a Buy rating on MannKind and has a $2.50 price target in mind. Investors stand to pocket a 97% gain over the next 12 months should his thesis play out. (To watch Livnat’s track record, click here)
Only 2 other analysts have reviewed MannKind’s prospects over the past three months, both recommending a Buy. Therefore, MannKind has a Strong Buy consensus rating. The average price target lands at $2.67 and implies possible upside of a hefty 114%. (See Mannkind stock analysis on TipRanks)
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