Updated with current stock price.

VALENCIA, Calif. ( TheStreet) -- In Al Mann We Trust -- No Longer.

The legendary healthcare entrepreneur made billions of dollars for himself and shareholders in the companies he founded and later sold. MannKind ( MNKD) was supposed to follow the same script. Mann poured $1 billion of his own money into MannKind to develop Afrezza, an inhaled insulin delivery device for diabetes. Lots of investors were more than happy to buy up shares of MannKind, too, confident that Mann would succeed again and make them all rich.

Yet U.S. regulators rejected Afrezza for the second time, telling MannKind to conduct at least two more clinical studies before resubmitting for approval. MannKind shares plunged 37% to $5.75 Thursday, wiping out almost $600 million in shareholder value and tarnishing -- perhaps forever -- Mann's reputation as a guaranteed money maker.

Mann is rich and stubborn, so he's not giving up on Afrezza. On a conference call Wednesday night, Mann tried to spin the FDA's rejection in the best possible light, insisting the company now has a "clear path" towards approval. Of course, this is pretty much what Mann said last March when FDA rejected Afrezza the first time.

The reality of the situation is that FDA has serious concerns about Afrezza and might never be assuaged enough to approve the diabetes device. The agency's latest complete response letter includes a demand for two new clinical trials of Afrezza to compare the efficacy and safety of the second-generation "Dreamboat" device to the older "MedTone" device MannKind used in previous phase III studies to deliver inhaled insulin to the lungs. The studies need to include at least 12 weeks of stable insulin dosing.

The interpretative spin of MannKind's press release tries to downplay the seriousness of FDA's request. On Wednesday night's conference call, Mann and his team, while smart enough not to offer a specific timeline, certainly suggested that these studies could be completed relatively quickly.

Don't be so sure. Has any drug or medical device company been able to design and conduct two new clinical trials in less than a year's time? Even if MannKind was capable of finishing both of the Afrezza studies by the end of the year, it could still take another few months for the data to be collected and readied for resubmission to FDA. After that, FDA would require six months to review the new data and issue a third approval decision. Best-case scenario for Afrezza's earliest approval: the second half of 2012.

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