MannKind (NASDAQ: MNKD)

There is a global multibillion dollar market for insulin products. It is a life drug for patients suffering from type 1 and type 2 diabetes. Insulin is administered through an injection-based mechanism, which is a major drawback for patients having to use it multiple times a day. A few years back Pfizer invested billions of dollars in an inhalable insulin product called Exubera. The analysts were very optimistic about the product and forecasted annual sales in the billions. The tough safety guidelines, especially its adverse effect on the lungs, was the eventual downfall of the drug and Pfizer canceled it due to miserable sales.

MannKind is also promising the market an inhalable alternative for inconvenient injection-based insulin products. The Street is not optimistic about the future of its product AFREZZA due to past failures of Exubera. This is also the reason the stock is trading at a 100% discount to its mean sell side price target. I believe the market is incorrect in discounting the potential of AFREZZA for the following two reasons:

i) AFREZZA is an ultra-rapid insulin product, therefore it peaks within minutes of administration. This increased effectiveness gives it an edge over existing treatments for diabetes.

ii) A major issue with Exubera was its low absorption rates, which deposited the drug in the lungs and resulted in high costs as a lot of insulin was wasted. Due to the higher absorption rates of AFREZZA, it's only 10%-15% more expensive than other insulin treatments, and is therefore commercially far more viable.

http://beta.fool.com/smartequity/2013/01/31/100-upside-these-bio-techs/22798/