MannKind Corporation is a company that has created an incredible product – an insulin that can be inhaled rather than injected. However, in my opinion, the company has been handed the short end of the stick. While MNKD has created an incredible product, they’ve had a hard time with commercialization which has led many investors to short the stock and drive the price down. However, I still love MannKind and, more importantly, I think their stock is going to do well in the long run. Here’s why…
Starting With Afrezza
Afrezza is MannKind’s inhaled insulin product and, in my opinion, it’s worth more than gold, but MNKD has been struggling as the result of poor sales. While sales are the job of Sanofi in their partnership, ultimately MNKD won’t do well until commercialization starts going well and sales have been anything but positive. Nonetheless, there are a few reasons for the lackluster sales. The reasons are all being solved at the moment. Here they are…
- Insurance Coverage – First and foremost, consumers simply don’t buy their medication out of pocket anymore, that’s the job of insurance. Therefore, if insurance doesn’t cover a medication and that medication can be lived without, most people simply aren’t going to buy it. That turns out to be the case for MNKD with regard to Afrezza. Unfortunately, to this point, insurers simply aren’t covering the drug. However, that is likely to change, and likely to change fast! The reality is that recent reports have pointed out that nearly 80% of the larger insurance companies will be adding Afrezza coverage to their plans in a relatively short amount of time. Once coverage is there, consumers are more likely to buy, which will pick up prescriptions!
- Advertisement – When was the last time you went actively seeking something that you didn’t even know existed? I know, that question makes no sense right? Well, the reality is that most diabetics still don’t even know that Afrezza exists. Therefore, they’re not likely to ask their doctors about it. However, that is going to change, albeit slowly. MannKind and Sanofi have launched the Direct to Consumer phase, placing ads in top notch magazines and other media. However, this still isn’t the biggest part of marketing and that’s a good thing because these ads only reach a small percentage of their demographic. As new advertising campaigns start to arise, consumer awareness will slowly but surely improve. This will lead to more sales in the long run as well.
MNKD Goes Far Beyond Afrezza
While there is no discounting the fact that Afrezza is an incredible insulin, it’s important to realize that MannKind goes far beyond Afrezza. In fact, I believe that the true value of MNKD lies in technosphere, the company’s proprietary technology. Technosphere allows insulin to be inhaled. It’s the same technology that MannKind is working to expand. While we don’t have any specifics on exactly what’s in the pipeline at the moment, there has been talk of a pain management indication which could be a big hit for MNKD. I’m sure that over time the pipeline will become more clear and that investors will be impressed with what’s hiding behind the curtains.
Few stocks invoke as much emotion as MannKind. Also, few stocks have such wide-spread, split opinions. For example, 9 analysts are currently covering MNKD. 3 rate it a sell, 3 rate it a hold, and 3 rate it a buy! In my opinion, the stock is a buy. While no one can look into the future, from the data that I’ve found the future is seemingly good for this company and its stock.
What Do You Think?
Where do you think MNKD is headed and why? Let us know in the comments below!