Image source: Mannkind Corp.

MannKind (NASDAQ:56400P706) appointed Duane DeSisto as its president and CEO Wednesday, filling the hole left by Hakan Edstrom, who resigned last month.

DeSisto has his work cut out for him. The biotech hit an all-time low last week.

Lower than 2008, after Pfizer's earlier inhaled insulin Exubera was pulled from the market and subsequently reported lung cancer cases from patients taking the drug.

And lower than 2012, as investors waited for new clinical trials to be completed after seeing MannKind's inhaled insulin product Afrezza fail to gain FDA approval. Twice.

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It should be noted that while the stock is at an all-time low, MannKind's valuation is far from an all-time low. The difference, of course, comes from the increased share count as the company sold shares to raise capital, making existing shares worth less.

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A lesson from that spike
Whether you look at the stock-price chart or the market-cap chart, it's clear investors had a lot of post-approval enthusiasm for Afrezza last year that wasn't warranted.

Admittedly, a post-approval increase was somewhat justified simply because it wasn't completely clear that MannKind could gain FDA approval. It's easy to see in retrospect that the base it was building from was too high to begin with.

And then MannKind was able to sign up a major diabetes player, Sanofi (NASDAQ:SNY), to market Afrezza. I cheered the partnership with Sanofi, but only because it was a much better deal than I thought the company deserved. Sometimes big pharma gets it wrong.

The subsequent decline comes from lackluster sales of Afrezza. Despite the large potential market, Sanofi has had trouble getting patients onto Afrezza as doctors continue to worry about issues with delivering insulin via the lung without a clear clinical benefit over injected insulin. After the label was released, it was clear that MannKind was in for an uphill battle.

Why investors are freaking out now
The all-time low could be because investors have become sick of the lackluster sales or were worried about what Edstrom's departure says about the health of the company. But there's also a deadline approaching, one that new CEO DeSisto can't do anything about.

According the 10-Q MannKind filed with the SEC, the deal with Sanofi allows the French pharma to

terminate the Sanofi License Agreement at any time on or after January 1, 2016 (a) upon 90 days' written notice if Sanofi determines in good faith that the commercialization of Afrezza is no longer economically viable in the United States, and (b) without cause upon six months' written notice in its entirety or on a country-by-country basis other than with respect to the United States.

There's a case to be made for Afrezza being "no longer economically viable," but even if Sanofi doesn't want to try and make that claim, it can end the contract before the summer solstice without cause.

It's obviously unknown whether Sanofi will terminate the contract next year -- in January or "at any time" later -- but investors are right to factor the potential loss of the partnership into their valuation. Finding another partner would be next to impossible if Sanofi decided to end the deal, and MannKind would still be on the hook for the loss from their joint partnership that Sanofi has been fronting MannKind in the form of a loan.

In the long term, DeSito might be able to save MannKind by developing new medications using its Technosphere inhalation technology, but first, it's going to require a save from Sanofi's CEO, Olivier Brandicourt.