News

 MannKind announced early this morning that it was informed yesterday by the U.S. Food & Drug Administration that it would require approximately four additional weeks to complete the review of the company’s NDA (New Drug Application) for AFREZZA. MNKD shares traded in a relatively wide price range today, as investors reacted to both the company’s news and the analysis of same that emanated from various sources. Some saw the absence of another CRL (complete response letter) as a positive, while one analyst drew a very negative conclusion from the delay, citing a history of NDAs that weren’t reviewed by an advisory panel and had the decision delayed. We divined no significant predictive value in the company’s announcement, which mentioned only the delay; a CRL is certainly still possible and the history reviewed by the analyst constituted only four cases.

Based on the latest development, it now appears that the timeline for the high-impact event (decision) has been pushed out to around January 26, 2011. As such, investors who’ve taken positions in January options may eventually have to roll out to contracts that expire in later months to maintain their positions, whether it is puts to protect long positions in the stock or calls to cover shares that have been shorted. Ideally, the FDA renders its decision before the January expiration, obviating the need to make the rollout decision.