If at first you don't succeed, try, try, and try again.

Kudos to Alfred Mann for finally getting FDA approval for MannKind's (NASDAQ:MNKD) inhaled insulin Afrezza even if at least one of the two previous rejections was arguably the company's fault. The namesake CEO put a lot of skin in the game to get Afrezza over the finish line.

Source: MannKind

You could even argue -- now that Afrezza is approved -- that the delay wasn't all that detrimental. The first rejection really didn't matter because the initial application was for a larger inhaler called MedTone. The new Dreamboat device should help sales given its smaller size.

The second rejection, after the switch, was more costly, but allowed the company to run additional trials showing that the drug was as good as Novo Nordisk's (NYSE:NVO) injected insulin Novolog in type 1 diabetics and better than placebo in type 2 diabetics. More data is always welcome by doctors, especially the data in type 2 diabetics that was a bit lacking going into the last approval decision.

Switch vs treatment naïve
The biggest question for MannKind, at this point, is whether it can convince patients currently taking Novolog and Eli Lilly's (NYSE:LLY) injected insulin Humalog to switch to inhaled insulin. Both drugs are megablockbusters, so there's potentially billions in annual sales at stake.

On the surface, it's a no-brainer. Stick yourself with a needle or puff on an inhaler? Most people would pick the latter.

In reality, it's not that simple. Both Novo Nordisk's and Eli Lilly's drugs are available in pen form, making injections relatively easy. And for type 1 diabetics, switching from injecting fast-acting meal-time insulin to an inhaled version doesn't avoid the injections from the long-acting insulin that patients still have to take. And there's those annoying finger pricks to test glucose levels that can't be avoided either.

Source: Eli Lilly

While capturing patients switching from injected insulin would be a boon for MannKind, investors should be realistic and expect the initial interest in Afrezza will come from patients that are new to insulin.

Those type 2 diabetics, who haven't been injecting themselves since they were kids, are the ideal candidates for Afrezza. Having only taken oral drugs for their adult-onset diabetes, it's easy to see how they might be timid about adding injected insulin and prefer to try an inhaled version. Unfortunately that's a much smaller market, but MannKind has to start somewhere.

Given the uncertainty with who might actually use Afrezza, it's a little difficult to properly value MannKind. Just witness its drop on approval on Friday followed by a pop above the previous close in after hours.

No doubt, MannKind is completely overvalued if Afrezza gets off to as slow a start as the last approved inhaled insulin, Pfizer and Nektar's Exubera, which managed just $12 million in sales during the first nine months of launch.

Afrezza is no doubt a better drug than Exubera. In addition to difference in size of the device -- Exubera's device was large and clunky -- Afrezza is a better insulin, leaving the system faster than Exubera or injected insulins. Insulin lowers glucose levels, potentially causing dangerously low blood sugar levels. Leaving the body quickly, mimicking natural insulin in non-diabetics, makes Afrezza safer.

But Exubera and Afrezza still have one thing in common: They're taken via the lungs even though they don't treat a lung disease. Doctors are likely to be timid about prescribing Afrezza to a large audience until they have more real-world experience.

With a market cap around $3.8 billion -- and higher if you add in outstanding options and warrants -- investors should be cautious buying shares in MannKind at this point. Consider taking a conservative stance, waiting until the details of a marketing agreement are announced and a few quarters of sales. Worst comes to worst, you miss a run up if Afrezza becomes an instant blockbuster, but you'll protect yourself from a huge post-marketing fall like we saw with the obesity drugmakers trying to go into a large untapped market where other drugs have failed.

Sometimes it really is "different this time", but this might not be one of those times.