MannKind Corporation (MNKD) Stock: Bears Are Sorely Mistaken

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MannKind Corporation (NASDAQ: MNKD)

MannKind Corporation has been a hot topic among biotechnology investors for some time now, and for good reason. In late 2014, the company’s treatment, Afrezza inhalation powder, was approved. While investors thought that the inhaled insulin would fly off of the shelves, it has done nothing of the sort. As a result, the bears have been all over this one. However, I believe that the bears are sorely mistaken. Today, we’ll take a look at the bearish argument, the bullish argument, and what I’m expecting to see from MNKD moving forward.

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The Bears Do Have A Valid Argument On MNKD

First and foremost, lets discuss the bearish opinions that many have with regard to MannKind. The reality is that the bears do have an incredibly valid argument. Following the news that the FDA had approved Afrezza, investors sent the value of MNKD skyrocketing upward in hopes that sales volume would be incredibly strong. After all, it’s the first insulin that doesn’t need to be injected. However, sales didn’t quite go as well as they should have. The fact of the matter is that Afrezza didn’t sell very much at all. The bears on MNKD look at Afrezza and say, “If the company can’t sell its flagship product, it’s in for a world of hurt.” This, is an incredibly valid argument. Nonetheless, there’s more to the story than this.

The Bullish Argument

While the bearish argument on MannKind Corporation is definitely an understandable one, it’s not the only argument. There are, of course, plenty of bulls on the stock as well, and their arguments are valid, too. Here’s the bullish argument:

  • Why Sales Didn’t Go Well Last Year – The bulls argue that while Afrezza didn’t sell nearly as well as investors thought, it’s important to look into why. Shortly after approval from the FDA, MannKind contracted the commercialization of Afrezza to Sanofi. Unfortunately, Sanofi had a competing product and, ultimately, dragged their feet through the commercialization process. So, the bulls argue that the problem isn’t that Afrezza can’t be sold. The problem is that the commercialization partner simply didn’t put in the effort to sell Afrezza. Nonetheless, MNKD still has an incredible product, that, if commercialized properly, will sell.
  • What Has Changed This Year – Early this year, MNKD released big news. The company’s agreement with Sanofi had been canceled. This gives MannKind the rights to commercialize Afrezza on their own, or find other commercialization partners. So far, we have heard about a partnership with Specialized Diabetes Care Centers. The company is also looking for new commercialization partners to help with the mass commercialization of the treatment.
  • Looking Forward – Moving forward, the bulls argue that MNKD has an incredible treatment, and that, with the right amount of effort, the treatment will fly off of the shelves. The bulls also argue that technosphere will likely be a profit driver moving forward, as the technology is being contracted out with regard to development of new treatments.

What I Believe

I have to say that I’m on the bullish side of the argument. The reality is that no company has been able to do what MNKD has been able to do with Afrezza. Providing the diabetic community with the ability to inhale insulin is amazing. After all, who wants to give themselves a shot if it can be avoided? It’s my opinion that, while the first commercialization partner dragged its feet, if MNKD does find a commercialization partner that shares the goal of success with Afrezza, the product will likely fly off of the shelves. At this point, patience is a virtue.

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What Do You Think?

Where do you think MNKD is headed moving forward? Join the discussion at the CNA Finance forum!

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1 COMMENT

  1. Afrezza being inhaled is just a fortunate coincidence – Afrezza mimics the pancreas (PK/PD profile) and THAT is what makes a paradigm shift. It appears Afrezza consistently lowers patients A1Cs to 6s in 3 months. As a world-first in/out most of the ‘slippery slope’ side effects (neuropathy, high/lows, lethargy etc) of diabetes are no longer a concern (assuming patient is in compliance)

    Sometime I wonder is Afrezza was injected and had same PK/PD it would have been more readily accepted!

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