Watch Out Below: 'Sluggish' MannKind Double-Downgraded By RBC Analyst

• MannKind Corporation MNKD shares are down 2 percent since October 5, after volatility through the month.
• RBC Capital Markets’ Adnan Butt downgraded the rating on the company from Outperform to Underperform, while reducing the price target from $9 to $1.
• Physician survey indicates sluggish Afrezza growth due to modest patient interest or awareness, cost and access issues, Butt commented.

RBC Capital Markets’ proprietary physician survey indicated that physicians are not overly concerned about Afrezza’s safety or efficacy and most are willing to prescribe it upon patient request. However, there seems to be low patient interest, or awareness.

Moreover, Afrezza prescriptions “appear to get lost due to payer hurdles,” analyst Adnan Butt said. Physicians perceive Afrezza and patient-out-of-pocket costs to be higher than other insulin products.

The survey indicates that market share growth in the future could be modest, in the 13-22 percent range annually. Butt added that Afrezza’s total addressable market opportunity does remain significant. IMS prescription data indicates that although Afrezza weekly prescriptions have continued to rise, its growth is modest and it has negligible market share.

Sales reported by Sanofi SA (ADR) SNY were about €1 million in 1Q15, €2 million in 2Q and €2 million in 3Q. The company indicated that its future sales could also be impacted by lower-than-expected Afrezza result.

“Hurdles include modest patient interest/ awareness, cost and access issues, and slow growth. SNY, if committed, could still deliver if it addresses overhangs identified. However, with uncertainty around when the collaboration achieves profitability and MNKD’s balance sheet, we reduce our PT to $1 and downgrade to UP,” Butt wrote.