MannKind Corp said on Wednesday that U.S. regulators rejected Afrezza, its experimental device to treat diabetes, and have asked for two more clinical trials.

MannKind’s shares fell 43 percent to $5.15 in afterhours trading. The shares were halted pending the news at $9.10.

Afrezza is a whistle-sized inhaler designed to deliver more effective, rapid-acting insulin than injectable products such as Eli Lilly & Co’s Humalog and Novo Nordisk’s NovoLog.

The Valencia, California-based company said the U.S. Food and Drug Administration wants MannKind to run two new clinical trials, one in Type 1 diabetes and one in the more common Type II form of the disease.

The agency wants MannKind to prove that a second-generation version of the device, known as the Dreamboat, is equivalent to a first-generation inhaler known as MedTone.

MannKind initially filed for marketing approval based on data from the MedTone device, but later updated the package and asked for approval for the Dreamboat.

“It’s not the worst case scenario, but it’s pretty bad,” said Jon Lecroy of Hapoalim Securities “You’re looking at least a year delay before they can refile, would be my expectation. And that would start a new review cycle, so I would say it’s probably delayed two years.”

The device is the small company’s most advanced product. MannKind’s founder and biggest shareholder is Alfred Mann, 85, an entrepreneur who has pumped roughly $925 million of his personal fortune into the company to keep it afloat.

As of December 31, roughly 28 percent of the company’s regularly traded shares, or 21.5 million, were held “short” by investors betting the stock would fall.

The company said the FDA requested additional information about the performance characteristics, usage, handling, shipment and storage of the device, an update of safety information and information on proposed user training.

“While we are disappointed with the complete response letter, we are encouraged that the FDA is asking for clinical studies only to confirm the bridging and handling of the next-generation device in order to compare it to the device used in our extensive clinical program,” said Mann in a statement. “We remain committed to working with the FDA to make Afrezza available to people with diabetes.”

The FDA issues “complete response letters” when it has reviewed a file but requires more information and will not approve it based on current information.

MannKind said it has begun work on additional clinical trials that it believes will partially meet the FDA’s requirements. But it must modify one study to add a cohort that will compare MedTone and Dreamboat directly.

“This will delay Afrezza’s launch and hasten the cash burn of an already highly unprofitable company,” said Lauren Migliore of Morningstar. “The positive side is that we don’t think this dramatically changes Afrezza’s chances of eventually making it to the market.”

Brad Loncar, a MannKind investor who declined to reveal how many shares he owns, said the FDA seems to be “throwing curveballs” into the process.

“In my view the FDA seems to be unreasonably stalling on this,” he said. “You would think that the regulatory pathway for something would be much clearer after multiple meetings with the agency and multiple delays.”

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By Toni Clarke and Bill Berkrot

BOSTON/NEW YORK