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MannKind Corporation (MNKD), Incyte Corporation (INCY): Will This Large Biotech Pop Experience Analyst Backlash?

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While I do think it’s possible that MannKind Corporation (NASDAQ:MNKD)‘s inhaled insulin device, Afrezza, will be approved by the Food and Drug Administration, I do have serious questions as to whether it will be a marketing success. As the controversy builds and analysts doubt the company’s phase 3 trial, there is another biotech with even more outstanding stock gains that could face a similar series of questions regarding its phase 2 data.

MannKind Corporation (NASDAQ:MNKD)

Why not present all data?
In data presented earlier this month, Afrezza proved to be more effective than insulin and oral diabetic therapies in two phase 3 studies. However, questions about trial design, undisclosed data, and its likelihood of success has caused the stock to crash by more than 20% since announcing this data.

MannKind Corporation (NASDAQ:MNKD)’s disclosed data looks good. But then, there is the third arm of the study. MannKind only released details on two arms, which is something that I originally missed when assessing the trial results.

Research firm Summer Street makes note of MannKind Corporation (NASDAQ:MNKD)’s failure to disclose “certain data,” and says, “If the results on the Medtone C-arm aren’t worthy of presenting and inhalers aren’t equivalent, then there’s not enough safety information to approve Dreamboat.” It seems like Summer Street is accusing MannKind Corporation (NASDAQ:MNKD) of hiding data, and rumors are starting to spread that regulators may not have the patience to deal with any shenanigans on behalf of the company, following two previous FDA rejections for Afrezza.

After a 165% return in 2013, MannKind Corporation (NASDAQ:MNKD) has a market capitalization of $1.85 billion. For an investigational stage company, a near $2 billion market cap suggests a terrific deal of promise and confidence on behalf of investors. If Summer Street is right, shares of MannKind Corporation (NASDAQ:MNKD) could take a turn for the worse as investors likely expect the release of all data prior to the FDA decision date.

Is it happening again?
Just a week after MannKind’s data, another promising biotech, Incyte Corporation (NASDAQ:INCY), is trading higher by more than 30% following its data. The company presented phase 2 data on its drug Jakafi for the treatment of pancreatic cancer. Jakafi is already FDA approved to treat a type of blood cancer, but robust data in the pancreatic cancer study suggests it may have more potential in other indications as well.

Incyte Corporation (NASDAQ:INCY) presented compelling data for a subgroup of patients. There was one subgroup deemed “most likely to benefit from treatment” where Jakofi with chemotherapy produced a 42% survival rate at six months. When treated with chemotherapy alone, survival was just 11% at six months.

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