MannKind Corporation (NASDAQ:MNKD) investors were finally successful, after multiple attempts, at obtaining FDA approval for Afrezza. There have recently been many different articles about the potential for partnerships for MannKind. However, I believe that these authors are missing an important point -- the hinderances to a partnership. The FDA labeling of Afrezza may have restricted a partnership, and may hobble the launch of Afrezza before it even started.

Post-approval requirements are troubling
One of the most notable parts about the FDA label was that it explicitly told doctors to not prescribe Afrezza to patients with respiratory issues. The FDA even went further requiring doctors to have spirometry tests before prescribing Afrezza, and every six months thereafter. Looking to long term effects, as a post approval commitment MannKind is required to educate doctors about this risk and to conduct additional post approval studies evaluating the long term effect of Afrezza on lung function and cardiovascular risk, as well as safety and efficacy in children. These post approval studies will likely cost any partner millions of dollars, and years in terms of the time needed to monitor all of the patients in the trial. And if data comes back negative in the cardiovascular and lung function study, it could give the FDA reason to withdraw marketing approval for Afrezza or slap it with stronger warnings.

Other warnings
The FDA was also concerned about the increased risk of lung cancer. This could be a hidden dagger for MannKind should Afrezza be shown to increase the risk of lung cancer in post-approval studies. This would be a substantial risk to any partner, as it would mean huge marketing efforts down the toilet. Even more importantly, it is a red flag for doctors. Even though the label notes that "in patients with a history of lung cancer or at risk for lung cancer, the benefit of Afrezza use should outweigh this potential risk," why take the risk? With a myriad of other treatment options available, I would expect doctors to turn to what they know works. Exubera encountered similar problems with its label, which helped to contribute to its downfall.

The FDA even required MannKind to include a risk of hypoglycemia in their labeling. All insulins carry this warning, however, the issue for MannKind is that, without labeling reflecting enhanced control of hypoglycemia, the risk/reward proposition for doctors may be further complicated. And again, there is the overhang of those post-marketing trials.

How partnerships are affected
MannKind is planning on bringing in a partner to market Afrezza. However, the less than favorable label and the fact that MannKind likely lacks the financial resources to launch the drug itself will likely weaken MannKind's hand in partnership negotiations. I also wonder if a partner will have some difficulty getting insurers to go along with recommending Afrezza. Regardless, the fact that a partner would likely have to pay millions of dollars to fund these trials upfront and also accept what appears to be a potentially risky launch will hurt the partnership discussions, potentially leaving MannKind in a weak position.

Bottom line
The labeling of Afrezza could make it tough to convince doctors to prescribe the product, and will make it hard for MannKind to attract a partner. Even though the FDA's approval was welcome news for MannKind investors, I wonder if they'll find the label to be a serious block for uptake and, by extension, partnership discussions.

Alexander Maxwell has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.