Hedgie: This biotech stock is going to zero

Afrezza is a rapid-acting, inhaled insulin for the treatment of diabetes.
Damion Edwards Photography
Afrezza is a rapid-acting, inhaled insulin for the treatment of diabetes.

The hedge fund manager who has already made a killing betting against biotech company MannKind Corp. now says the stock will soon be worthless.

"After 14 weeks of a disastrous drug launch and with much more data and research, we now believe that MNKD will go to ZERO," Jason Karp and his $2.5 billion Tourbillon Capital Partners wrote in a May 5 letter to investors obtained by CNBC.com.

Karp is referring to the recent rollout of Afrezza, MannKind's signature diabetes treatment product. Afrezza's innovation is the ability to inhale insulin as opposed to injecting it. The drug has a licensing agreement with pharmaceutical giant Sanofi. It's in the early stages of its commercial launch.

The new, more negative thesis rests on what Tourbillon called low levels of prescriptions for Afrezza compared to competitor Exubera, and high spending from operating expenses and additional sales costs.

"We are struggling to envision a turn to profitability for MNKD," the letter said. "Our previous price target of $1 was predicated upon the notion that Afrezza could do better than break even in a few years; a notion that is becoming increasingly far-fetched."

A spokesman for MannKind did not immediately respond to requests for comment. Amy Zipper, Tourbillon's chief operating officer, declined to comment.

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CNBC.com reported in July that Tourbillon was short and had a $1 price target on the then-$10-a-share company.

"Only in a frothy, retail-driven (and now Tweet-driven) market can a stock like MannKind exist with a $4.3 BILLION valuation and in our view no clear prospects of revenue," Karp wrote at the time.

The stock has fallen more than 57 percent since late July to $4.15 a share today.

Cramer's Stop Trading: Goldman unkind to Mankind
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Matthew Pfeffer, MannKind's chief financial officer, has already strongly contested Karp's thesis.

"We think it's a much improved, next generation product," Pfeffer told CNBC.com in July.

Hakan Edstrom, MannKind's president and CEO, said in February that the product was just beginning to hit the market.

"With our flagship product, Afrezza, in the early stages of its commercial launch in the United States, we now enter a very exciting new phase for MannKind," Edstrom said in a statement along with 2014 financial results.

Read MoreSanofi launches inhaled insulin for diabetics

Tourbillon's main fund has performed well. It's up 8.26 percent net of fees this year through April, according to the letter. The fund also gained 10.05 percent in 2014.