You've got to be a very trusting investor to buy shares in MannKind (Nasdaq: MNKD). Apparently there are fewer of you after MannKind announced that the Food and Drug Administration rejected (for now) its inhaled insulin drug, Afrezza; on that news, shares dropped 25% yesterday.

Its largest investor still trusts the company, but that's because he's the company's namesake, CEO Alfred Mann. It's a good thing the guy's a billionaire, because his nearly 44 million shares lost more than $100 million in value yesterday.

Don't feel bad for the guy, though: It's his own fault. Back in January, Mann was hyping the drug, talking about how the company was discussing the label with the FDA. Since that's usually the last thing done before approval, investors had certain expectations that an approval was imminent.

Instead the FDA wants a couple of items addressed before it can sign off on the drug. Some are rather routine -- requests for updated safety information, for instance -- while others have investors questioning the likelihood of approval.

After seeing Pfizer (NYSE: PFE) and Nektar Therapeutics' (Nasdaq: NKTR) bulky inhaled insulin device, Exubera, go down in flames, MannKind realized that smaller was better. Its current device is smaller than Exubera, but MannKind has developed an even smaller device named Dreamboat that it would like to see approved.

The plan was to get the current device, MedTone, approved and then file a supplemental approval for Dreamboat. Now that the FDA has rejected the MedTone, at least for the moment, the new plan might be to just get the Dreamboat approved. However, it's unclear whether the FDA will let them go down that river. In the worst case scenario, MannKind would have to submit another New Drug Application (NDA), instead of responding to the questions raised on the old one, which would reset the clock to 10 months instead of six.

The bigger question hanging over MannKind is the FDA's request for "data that support the clinical utility of Afrezza." It sounds like the FDA wants to know who MannKind thinks should use the product. For most drugs, that's clear-cut: For instance, Dendreon's (Nasdaq: DNDN) Provenge was tested as a first-line treatment for advanced prostate cancer, so it'll be approved to treat those patients, while sanofi-aventis' (NYSE: SNY) cabazitaxel was tested in prostate cancer patients that had already failed Taxotere, so it'll be approved to treat that indication.

For Afrezza, it's a little bit unclear because there's already a good treatment for diabetics: injected insulin. MannKind would obviously like the drug approved for all insulin-requiring diabetics, but if the FDA were to slap a stricter label on the drug, such as it should only be used for diabetics who can't give themselves shots, that would be a mighty big blow to MannKind.

At this point, MannKind's best shot at getting investors' confidence back is to find a marketing partner. A drug company willing to put up cash and help MannKind weave its way through the regulatory pathway would sure relieve some anxiety. Of course that may be easier said than done with both Novo Nordisk (NYSE: NVO) and Eli Lilly (NYSE: LLY) having stopped their own inhaled insulin projects shortly after Exubera's blowup.

Alfred Mann says that negotiations with one potential partner are proceeding, but it may be that big pharma will just watch from the sidelines until MannKind succeeds on its own or becomes cheap enough to buy without as much financial risk.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.