Source: MannKind.

Last year was truly special for MannKind (NASDAQ:56400P706) and its shareholders. For the first time since the company was founded in 1991 it received a drug approval from the Food and Drug Administration.

Afrezza's mammoth opportunity
The drug in question, Afrezza, is an inhaled therapy designed to help control glycemic balance in both type 1 and type 2 diabetics. The market potential is huge, with the Centers for Disease Control and Prevention estimating 29.1 million people in the United States have diabetes (90%-95% have type 2 diabetes), with another 86 million in the prediabetes stage. Furthermore, CDC statistics suggest 8.1 million of those 29.1 million people are unaware they have the disease. 

Source: MannKind.

Currently, diabetics are often staring down a lifetime of potentially painful injections. Afrezza could offer an alternative through an inhaled powder delivered through MannKind's proprietary DreamBoat device.

On top of a revolutionary drug, MannKind is also partnered on Afrezza with a world-class pharmaceutical company in Sanofi (NASDAQ:SNY). The deal, struck in August, turned the drug's marketing and commercialization over to Sanofi, and, more importantly, gave MannKind an immediate cash payment of $150 million. Without that money, MannKind would not have made it through 2015. In addition, Sanofi fronted MannKind $175 million for its portion of the collaboration expenses.

All in all, an exceptional year for MannKind. This year, however, might not be as remarkable.

Is Afrezza doomed?
That's because history suggests Afrezza is doomed to miss Wall Street's and investors' lofty sales expectations.

One caveat: the basis for my concern is Afrezza's pricing -- a figure we simply don't know yet. Afrezza could wind up priced in line with insulin injections, which would make my analysis largely moot. However, the implication of producing a novel inhaled powder that can treat type 1 and 2 diabetes is that it will be priced at a premium to existing injectable medications.

Will diabetics pony up more money for that added convenience? MannKind's faithful investors would say yes, but prior drug launches in comparable scenarios have not fared well.

Take Dendreon's metastatic castration-resistant prostate cancer drug Provenge as a shining example. Provenge was a new type of drug: a cancer immunotherapy that helped a patient's immune system better detect and combat specific cancer cells. It also offered a big improvement in treatment schedule, with just three doses given to patients in approximate two-week intervals.

Rival cancer therapies such as Johnson & Johnson's Zytiga and Medivation's and Astellas Pharma's Xtandi have an annual cost of roughly $66,000 and $89,400, respectively. The drugs target cancer in a fairly straightforward fashion.You might assume that more personalized and convenient treatment would mean strong sales for Provenge, but the immunotherapy treatment and its premium $93,000 price tag flopped badly, eventually leading to Dendreon seeking bankruptcy protection late last year.

Source: U.S. Army Corps of Engineers Europe District via Flickr.

If you think this is just a problem for high-priced drugs, think again. AstraZeneca's (NYSE:AZN) FluMist is the only FDA-approved nasal vaccination for the flu on pharmacy shelves. As a bit of a needle-phobe myself, the idea improved convenience without needles seems like it should make FluMist a big winner.

However, the added convenience of FluMist comes with a cost of about $23. Comparably, a flu shot ranges between $8 and $22. Could $1 to $15 in savings make that much of a difference? You bet! Annual vaccine sales show that FluMist has consistently lagged behind Sanofi's FluZone, and GlaxoSmithKline's duo of Fluarix and FluLaval.

Ultimately, convenience appears to take a bit of a backseat to final costs for consumers, which is why I suspect Afrezza could already be doomed.

One more thing to consider
Investors also need to consider that insurance coverage will play a role in Afrezza's eventual success or failure. For instance, recently approved weight management drugs from VIVUS (NASDAQ:VVUS) and Arena Pharmaceuticals (NASDAQ:ARNA) aren't particularly expensive on a monthly basis, but sales have proven extremely underwhelming while both companies struggle to get insurers to cover their products.

Once Afrezza's pricing is announced investors will want to keep a close eye on how successful MannKind and Sanofi are at landing on insurance plan formularies. It sounds like a simple step, but VIVUS and Arena have shown that securing FDA approval for a drug doesn't in itself guarantee success.

Yes, it's possible Afrezza's pricing will surprise Wall Street and myself and sales will indeed take off. But history and my gut feeling point in a completely different direction.