MannKind (Nasdaq: MNKD) is hoping that it won't strike out with its inhalable insulin drug Afrezza.

After two rejections by the FDA in the last two years, more clinical studies are under way, and MannKind aims to get Afrezza approved in 2013. In the meantime, however, its share price has already dropped more than 80% since its IPO in 2004 and is currently trading near an all-time low at $2.55.

With approval -- or another rejection -- at least a year away, MannKind is certainly a risky investment. Nevertheless, three key strengths make this a company to consider for your portfolio.

Why you should inhale
Afrezza has the potential to be a game-changer for diabetes treatment. Today, patients typically inject insulin like Eli Lilly's (NYSE: LLY) Humalog or Novo Nordisk's (NYSE: NVO) NovoLog to regulate their blood sugar levels. However, many patients find injections inconvenient, and some even postpone treatment because they hate syringes. Afrezza, on the other hand, is a dry powder form of rapid-acting human insulin that is inhaled through a device called the Dreamboat. If approved, Afrezza would be the only inhalable insulin on the market and provide a convenient option for the more than 340 million worldwide people with Type I and II diabetes.

Despite Afrezza's strengths, the product has been controversial due to the previous commercial failure of Exubera, a different inhalable insulin developed by Pfizer (NYSE: PFE) and Nektar Therapeutics (Nasdaq: NKTR). Exubera hit the market with a lot of hype in 2006 and quickly disappeared in a puff of smoke, causing Pfizer to lose $2.8 billion from the venture.

It initially seemed that patients simply preferred injections, but closer analysis suggests that Exubera's price premium compared to Eli Lilly and Novo Nordisk's insulin products was just too high. Additionally, the device was inconvenient to use, as large as a water bottle, and looked like ... well, let's just say it looked like something you might see at a college frat party.

Afrezza, by contrast, has none of these disadvantages: It is inexpensive to manufacture, the entire unit is about the size of a kazoo, and it is easy to use.

Sailing the Dreamboat to profit
While getting Afrezza to market is the key to MannKind's success, the company is also starting to generate revenue through out-licensing. For instance, it recently licensed several inhibitors that can be used to fight inflammatory diseases to Tolero Pharmaceuticals. This deal can be worth a hearty $130 million if certain milestones are met. MannKind could potentially license another compound that is in phase 2 clinical trials for the treatment of melanoma or its collection of IRE-1α inhibitors, which are being developed for the treatment of cancer, inflammatory diseases, and metabolic diseases.

MannKind is also interested in licensing its Dreamboat inhaler and dry powder formulation technology to other companies. Since preliminary clinical studies have shown that this delivery system can work for insulin, the same technology may also be used to administer a variety of other drugs that are currently injected. Licensing this device is a viable long-term play for MannKind and could be very lucrative, but that potential hinges on both the commercial success of Afrezza and patient preference for inhalers.

Mann is THE man
MannKind's founder and CEO, billionaire Alfred Mann, is a legendary entrepreneur who has started 17 companies in fields ranging from aerospace engineering to medical devices. He has invested more than $925 million of his own money into MannKind and owns a 31.3% stake in the company. In February of this year, Mann put more skin in the game and purchased an additional $77.2 million worth of stock through his subsidiary The Mann Group LLC.

It is unlikely that MannKind can continue to reach into its CEO's pockets if Afrezza is not approved. However, Mann is heavily invested in this company and will undoubtedly do everything he can to get this product to market in the coming year.

MannKind, like many stocks in this sector, is a coin toss: FDA approval and successful marketing can lead to huge share price appreciation, but a rejection may shut the company down for good. A forthcoming article will examine the bear case for MannKind -- but don't worry, I won't shortchange you. I'll reveal my personal opinion about this stock and make a call on my CAPS page.

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