MannKind's stock plummets despite strong TYVASO DPI royalty revenue
MannKind's stock (MNKD) has tanked 48% since my "Buy" rating last October. The biopharma is in a bit of a quagmire. A key partner, United Therapeutics (UTHR), revealed its intention to seek approval for its own soft mist inhaler ("TreSMI") later this year, potentially cannibalizing TYVASO DPI. One of the goals of TreSMI is to reduce the cough that is commonly associated with dry powder inhalation (DPI).
My past "Buy" ratings on MannKind were anchored to TYVASO DPI. MannKind retains a 9% royalty on TYVASO DPI sales. So, this is a concerning development for a company that, outside of TYVASO DPI, doesn't have a lot to fall back on (in my humble opinion).
During a Barclays conference, MannKind's management played defense, citing a "minimum supply agreement" that includes a large sum of revenues at least for another few years. Given that TYVASO DPI's IP was positioned to permit royalties up to 2042 (before Orange Book-listed patents expire), the TreSMI development is still a major bummer, even if a few more years are still on the books.
So, I wanted to take a closer look at said supply agreement, as well as recalibrate forward expectations for MNKD.
TYVASO DPI
United's plans for TreSMI have turned MannKind's TYVASO DPI royalty revenues from "steady, high-margin revenue" with a high ceiling to a "reliable floor."
Judging by MannKind's stock reaction, the stock market appears to have already accounted for this new reality. Technically, it's still possible that TreSMI will never hit the market (insulating TYVASO DPI), but this is unlikely.
MannKind is still due for at least ~$350M in high-margin revenue (royalties). And it does have some catalysts ahead to help it get over the TYVASO DPI heartache.
While an expansion into pediatrics for AFREZZA makes sense (those are the patients who'd be more averse to conventional insulin shots), I don't think it's going to awaken MannKind's wholly-owned asset from its slumber. We're talking about an "over one decade-old asset" that generated a measly $23M in net sales in Q4 2025.
I've already acknowledged that FUROSCIX is likely a "niche product with upside optionality if friction can be limited and its story resonates." While the acquisition made sense for MannKind, I wouldn't count on FUROSCIX surprising anyone too much. At least, that is my opinion.
I've expressed optimism for MannKind's internal pipeline in the past, namely nintedanib DPI (IPF) and clofazimine inhalation (NTM). But, MannKind axed the latter asset following a futility determination in its Phase 3 trial. This happened only a month after my last "Buy" rating on MNKD.
Fortunately, nintedanib DPI was the asset that was "particularly interesting to me." Although this one is just in a Phase 1b trial (NCT07344558), with Phase 2 enrolling patients very soon, I think positive data could move MannKind's stock.
Nintedanib is already known to work in IPF, but oral administration (OFEV) is associated with notorious side effects (leading to discontinuation rates as high as 30%). If nintedanib DPI can demonstrate safety and PK in this Phase 1b trial, I think the asset would become meaningfully more de-risked.
Valuation Assumptions
Unfortunately for MannKind, United's "change of heart" has major implications for its valuation assumptions.
Inputs
Year 1 Revenue of $450M is management's guided "run-rate" for FY26. It's also in the range of the consensus revenue estimates (n=8).
I project MNKD for 12% base (realized 11.7% CAGR) Revenue Growth (Yrs 1-3: 14.4% → Yrs 4-6: 12.0% → Yrs 7-9: 9.6%) and 12% FCF Margin.
Beta was set to 1.35, which gets the WACC discount rate under 10% (@ 9.67%).
Most everything else was derived from MannKind's most recent financials (e.g., Interest-Bearing Debt) or is standard DCF methodology (e.g., Terminal Growth).
Outputs
Outputs weren't provided in the text.
Conclusion
With TYVASO DPI now hanging in the balance, it's hard to make sense of MannKind's valuation. It's totally possible that the market is still pricing in a decent chance that TYVASO DPI continues to be a major contributor for the company after its minimum supply agreement. It's also understandable if some are lulled by the ~$750M+ in contracted/visibility-backed TYVASO DPI-related revenue remaining. But, to me, given MannKind's rising opex, this merely gives it some time to find the "next" TYVASO DPI.
To put it another way, while MannKind is receiving a generous "severance package," they are still losing their best "job." Because I don't think AFREZZA and/or FUROSCIX are long-term solutions, MannKind will need to search for another one. And drug development (as evidenced by clofazimine's clinical failure) is not an easy "job market."
So I'm inclined to downgrade MNKD to "Hold" until there is more clarity on its ability to generate cash post-TYVASO DPI.
Why not "Sell" just yet?
It's possible that United is overselling TreSMI, and I also don't think it's going to take the market easily. TYVASO DPI sales were near $1.3B in 2025 and stable patients may not be quick to switch. So, I view this development as a gradual cannibalization risk over several years.
