MannKind (MNKD) Stock: Is It Time To Buy?

MannKind Corporation (NASDAQ: MNKD)

If you follow my writing here or elsewhere, you know that MannKind is one of my favorite stocks. However, the stock has been having a hard time for quite some time. Nonetheless, I believe that recent declines are drawing the stock to support and that a big catalyst is coming relatively soon. Today, we’ll talk about why I maintain such a bullish opinion of MNKD and what I believe the next catalyst for the stock is likely to be. So, let’s get right to it…

Why MNKD Has Become So Bearish

MannKind is the inventor and producer of Afrezza, an inhaled insulin. When the FDA approved Afrezza, investors, analysts, and just about everyone else expected the insulin to fly off the shelves. Unfortunately however, that hasn’t quite happened. In the pre-market phase, Afrezza sales were incredibly low, leading investors to believe that the product isn’t quite as great as most people thought. However, that’s not the case – not by a long shot!

Afrezza’s Problems Are Slowly Fading

The good news for MNKD is that there’s not only an explanation for the struggles they’ve faced, but there are solutions to each and every one of them. Here’s how I see it:

  • Advertising – First and foremost, few products do well without advertising. That proved to be the case for Afrezza in the pre-launch phase. However, the Direct to Consumer phase is now in motion and this is going to lead to better consumer awareness, ultimately leading to stronger sales.
  • Insurance – Another thing for MNKD investors to remember is the fact that the average consumer doesn’t generally pay out of pocket for medication. In fact, most people have insurance these days, and they depend on their insurance to cover the cost of their treatments. Unfortunately, in the beginning, Afrezza wasn’t being covered at all by insurance companies. Now, about 80% of the larger insurance companies are covering the inhaled insulin. Also, Sanofi (NYSE: SNY) is currently working with insurance companies to bring Afrezza into a tier without restrictions that will brings costs lower for consumers. This is also likely to lead to higher sales volume.
  • Defining an Audience – An important part of marketing any product is defining an audience. MNKD is starting to realize exactly who their audience is. First and foremost, there are several consumers, about 10% of the population, that are afraid of taking shots. Afrezza allows these consumers to receive insulin without an injection. It’s also estimated that about 14 million Americans work in areas where they don’t have access to a public restroom, making injecting themselves with insulin incredibly difficult. Considering the fact that about 9% of the population is diabetic, that means that 1,260,000 people likely have a direct need for insulin based on their working conditions. Finally, a pediatric endocrinologist recently weighed in on Afrezza stating that the trial designs for non-inferiority don’t tell the entire story and that adolescents suffering from diabetes are actually primary candidates for Afrezza.

There’s A Catalyst Coming!

MNKD was expected to report earnings on November 2nd. However, the company recently issued a press release stating that they will be reporting earnings on November 9th. The delay in the report proved to be a cause for concern, sending the value of MNKD down dramatically. However, I have a different opinion. Recently, we’ve seen increasing prescriptions, cost cutting, and more positive news out of MNKD. Nonetheless, analyst haven’t revised their expectations with regard to earnings. With that said, I’m expecting MNKD to beat the loss of $0.06 per share that’s expected upon releasing their earnings report. This is likely to act as a catalyst that will put the stock back on a bullish path.

What Do You Think?

Where do you think MNKD is headed and why? Let us know your opinion in the comments below!

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