Once again, Alfred Mann's quest to bring his Valencia company's inhaled insulin to market could be in jeopardy.

It turns out MannKind Corp. was in serious negotiations with an international pharmaceutical firm to market the potential blockbuster treatment when talks fell apart over the value of the drug, sending the biotech's stock into a tailspin last week.

Now, MannKind plans to wait to secure a marketing partner for its Afresa medication until after it receives Food and Drug Administration approval. But the turn of events, disclosed in a regulatory filing, has raised fresh questions on Wall Street as to whether the medication will actually reach pharmacy shelves.

"It was a significant disappointment," said Jon Ogg, the Houston-based editor of Biohealth Investor, an Internet publication that follows the pharmaceutical industry. "The fact that they disclosed that they don't expect to get a marketing partner for Afresa until after FDA approval of the drug means the whole pharmaceutical industry has told them, 'We're rooting for you, but call us when the FDA is on your side.'"

Investors didn't take kindly to the news. Shares, which had closed at $9.21 on Oct. 5, closed at $6.28 on Oct. 8.

Hakan Edstrom, MannKind's president, disputed Ogg's interpretation. He said the fact that the company could not secure a marketing partner had no bearing on the likelihood of Afresa gaining the FDA's OK.

"I have to say I feel very comfortable in regards to approval of product," he said.

Afresa could be worth billions of dollars if it makes it to market, but even if it gets FDA approval, it could be a bust. Pfizer Inc. pulled inhaled insulin product Exubera from store shelves in 2007 amid concerns it could cause lung cancer, and after receiving a weak reception from patients and doctors.

Mann has always maintained that his company's version of the drug is far superior to Exubera or other versions in development. MannKind has released clinical data supporting its position, but so far potential industry partners appear not entirely convinced.

In fact, the billionaire has been forced to pour more than $1 billion of his own money into company loans and stock purchases to keep clinical trials of Afresa float.

The company did not provide Mann for comment.

Potential partner

However, this summer investors were optimistic. In May, the company announced that the FDA had accepted Afresa for review, and in June it said talks had started with a potential marketing partner. MannKind shares hit an 18-month high of $12.30 in July, not long after trading as low as $1.83 in April.

In fact, talks with the potential partner progressed to the point where the two sides were drawing up a contract, Edstrom said. He declined to name the company, but said it was a significant pharmaceutical firm with worldwide operations.

However, the two sides could not agree on the marketing potential for Afresa. MannKind projects the drug could have $2 billion in annual sales in the United States, but the potential partner set its projections lower. MannKind agreed to the lower projections, but demanded a higher cut of the revenue if Afresa exceeded them, Edstrom said.

That proved to be a roadblock neither company could clear. The two sides then agreed to postpone further negotiations until after the FDA approves the drug.

"We certainly parted as friends," said Edstrom, who added that MannKind would consider bids from multiple potential partners if Afresa is approved.

He said other potential marketing partners had approached MannKind, but that they wanted to wait for Afresa to secure FDA approval before entering negotiations. With no other immediate partners in sight, MannKind conceded it would have to wait for FDA approval.

Wall Street, which still harbors bad memories of Pfizer's Exubera flop, will likely want to see solid news from the FDA on Afresa before it buys up more MannKind stock in significant amounts, Ogg said.

"Everyone's taking a wait-and-see approach to this. If investors were going to buy it, I would advise them to use 100 percent risk-based capital because it could literally be a $2 stock again," he said.

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