UPDATE: Bank of America Merrill Lynch Resumes Coverage on MannKind Corporation with Buy Rating, $3 PO

In a report published Monday, Bank of America Merrill Lynch resumed coverage on MannKind Corporation MNKD with a Buy rating and $3.00 price objective. BofA Merrill Lynch noted, “We are resuming coverage of MNKD and upgrading to Buy. While the stock is not inexpensive (current enterprise value is $800mn), we see relatively modest risk in coming quarters, and believe the next meaningful catalyst (phase 3 read-out in mid-2013) has a high probability of being favorable. The type 2 study uses Afrezza as add-on therapy in patients on oral drugs and with A1c levels above 7.5%. With 90% power to show at least a 0.3% A1c reduction (our estimate), we believe these results will be statistically significant. The second trial in type 1 patients is a basal/bolus insulin non-inferiority study that utilizes an independent monitoring committee to review patient e-diaries to assure proper titration, which could leverage Afrezza's PK profile in our view. Our DCF-derived PO is $3/sh, based on 2% peak share of prandial insulin and 3% peak in oral combo patients.” MannKind Corporation closed on Friday at $1.98.