MannKind Corporation (NASDAQ: MNKD)
MannKind is a very interesting stock to watch. In fact, if you’ve followed my writing throughout the year, you know that it’s one of my favorite topics. While I still enjoy watching the stock, it’s becoming harder and harder. That’s because when we talk about MNKD, we’re talking about a company that has created an incredible treatment known as Afrezza. However, the company it contracted with, Sanofi SA (ADR) (NYSE: SNY) has failed miserably when it comes to commercializing the treatment. As a result, MNKD has plummeted in the market. Nonetheless, I still believe that the stock will grow in the long term. Today, I’ll explain why and more importantly, when I expect to see growth.
Understanding The Issues Surrounding MNKD
At one point, early this year, MannKind was on top of the world. The stock was trading at well over $7 per share and looked to be soaring in the market. However, that all ended very quickly on June 8th. So, why did the growth end? It all boils down to sales of Afrezza.
Afrezza is an inhaled insulin designed by MNKD. Investors were incredibly happy about this treatment throughout clinical studies and when the FDA approved it. However, when it came time to commercialize the treatment, MNKD decided to contract commercialization out to SNY. This in my opinion was a crucial mistake. While SNY is known for the commercialization of treatments, commercializing Afrezza would prove to be a conflict of interest. Nonetheless, SNY took the contract.
For several months following the agreement, Afrezza went into the pre-market phase. A marketing phase that was designed to inform physicians of the existence of MNKD and how it’s best used. However, throughout the pre-market phase, sales were null. With little to no sales, MNKD wasn’t making any money, leading to a sharp decline in the value of the stock. However, it didn’t end there.
Soon, the Direct to Consumer phase was rolled out. In this phase, SNY would work to build consumer awareness around MannKind’s incredible treatment. Generally in this phase of marketing for any treatment, we see radio, TV, online and printed ads. However, when it came to Afrezza, SNY held its punches. Unfortunately, there hasn’t been one television ad to date! While Afrezza is being advertised in magazines and online, these efforts simply aren’t doing much. So, here we sit with little to no sales, months after commercialization efforts started.
As a result of the poor sales volume, investors have lost interest, and a large percentage of the investors that have remained interested are shorting the stock, driving the price further and further down. Not to mention the fact that analysts continue to weigh in with negative opinions. Nonetheless, the story doesn’t end here.
Why MNKD Is Going To Climb In The Long Run & When It Might Start
MannKind hasn’t done well, that’s clear. While many investors and analysts are hopping the bear train, I’m not one of them. While I do agree that for a period of 6 months to a year to come, we’re going to continue to see a mix of downward and flat movement, I haven’t lost all faith in the stock. Ultimately, MNKD has created an incredible product and with the right advertising, that product can soar! I think that the tipping point here is going to be when television ads start. While there hasn’t been any discussion revolving around television ads, they are an important piece of the pharmaceutical marketing puzzle, and until we see them, sales aren’t likely to amaze. Unfortunately, this means that SNY is going to have to actually do something, which may take some time. Nonetheless, when consumer awareness does finally pick up, we can expect to see gains. Although positivity may be in the long run, I do still believe that there is positivity somewhere for MNKD.
What Do You Think?
Where do you think MNKD is headed and why? Let us know your opinion in the comments below!
[Image Courtesy of Wikipedia]