MannKind: Strengths, Weaknesses, Opportunities, Threats

One of the best ways to develop a picture of any company is with the SWOT analysis -- a look at a company's strengths, weaknesses, opportunities, and threats. Today, I'd like to focus on MannKind (Nasdaq: MNKD  ) as its inhaled insulin, Afrezza, prepares for a return trip in front of the Food and Drug Administration.

Strengths

  • Al Mann. The founder, chairman, and CEO has a lot riding on the company, considering he owns 42.5% of it.
  • A drug that works. Having passed its clinical trials many times over, the risk of failure in the clinic has been removed.

Weaknesses

  • Al Mann. From my prospective, the billionaire seems so confident that it could be detrimental to investors. Comments he made before the first FDA decision led many people -- me included -- to think an FDA approval was imminent.
  • Research and development. Long-term growth relies on expensive research to develop additional drugs.

Opportunities

  • Competition. Afrezza will have to compete with injected insulin, but the market for inhaled insulin is wide open after Pfizer (NYSE: PFE  ) stopped marketing Exubera, developed with Nektar Therapeutics (Nasdaq: NKTR  ) , and Eli Lilly (NYSE: LLY  ) and Novo Nordisk (NYSE: NVO  ) dropped their inhaled insulin programs.
  • Partnership. Licensing the rights to sell Afrezza in the U.S. and abroad should garner the company a large milestone payment. Waiting until after an FDA approval has increased the risk, but it also increases the potential reward.
  • Platform. The company's Technosphere technology, which helps the insulin get from the inhaler to the bloodstream, is a platform upon which other inhaled drugs could be developed.

Threats

  • FDA. Predicting whether the FDA will approve Afrezza is difficult. Another delay would be costly.
  • Demand. Exubera never caught on with diabetics. The device that delivers Afrezza is much smaller, which should help, but there's no guarantee that diabetics will trade in their needles and pumps for inhalers.

I think MannKind's strengths and opportunities outweigh its weaknesses and threats, but the company is still quite risky because there's no guarantee of an FDA approval no matter how confident its founder is. Proceed with caution, Fools.

What's your take? Are there parts of MannKind's SWOT that need more detail? Fill in the blanks in the comments section below.

Editor's note: An earlier version of this article said that both Pfizer and Nektar Therapeutics marketed Exubera. Under an agreement between the two companies, only Pfizer marketed that product. The Fool regrets this error.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Pfizer is a Motley Fool Inside Value selection. The Fool has a disclosure policy.


Read/Post Comments (3) | Recommend This Article (11)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 30, 2010, at 3:26 PM, jsbalaban wrote:

    A very good, and necessarily superficial assessment. Afreeza is in my view an absolute blockbuster candidate, which accounts for 85% of MNKD's share price. Without approval, the company has little real worth. I'm long on the stock though and have a significant investment in it, as I believe that Afreeza will gain approval on the next go round.

    JBB, M.D.

  • Report this Comment On July 30, 2010, at 3:34 PM, jsbalaban wrote:

    I neglected to mention that the the strength and vision of Al Mann in the MNKD equation cannot be overstated. There is no one out there, period, who I have greater respect, trust and faith in their abilities to bring a drug like Afreeza to market and to lead MNKD, than Al Mann. He is one of the very few, true, all around visionary engineers/inventors that I know of.

    JBB, M.D.

  • Report this Comment On July 30, 2010, at 5:06 PM, sscutchen wrote:

    I am also long in MNKD, for the reasons mentioned. I am constantly amazed at the chuckleheads that draw direct analogies to other inhaled insulin attempts. Not that Affrezza is without risk, but most of the critics seem to continue to dredge up tired, refuted, uninformed arguments. I'd bet a Coke they are simply attempting to yo-yo the stock. My biggest concern is literally Al Mann's health. Dood is getting up there. Is there anyone else besides Steve Jobs that means so much personally to the success of his company? What happens if we lose Al before FDA approval or consummation of a partnership? Are there others in the wings of MNKD with his acumen and charisma?

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