MannKind Corporation (NASDAQ: MNKD)
MannKind Corporation has had a rough time for more than a year now, and for good reason. Afrezza just doesn’t seem to be selling. Throughout this time, I’ve done everything I could to maintain a bullish opinion on the stock. In fact, I’ve even been asked if I was on the company’s payroll (no, I’m not nor have I ever been)! Nonetheless, there was a good reason for that opinion, an opinion that has changed dramatically. Today, we’ll talk about why I held such a bullish opinion, why my opinion has changed, and what I’m expecting to see from MNKD ahead.
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Why I Maintained Such A Bullish Opinion On MNKD For So Long
First and foremost, I have to say that, as a writer in the investing sector, maintaining a bullish opinion on MannKind for the past 2 years has proven to be one of the biggest mistakes in my career. Nonetheless, as mentioned above, there is a good reason that I maintained the opinion.
At the end of the day, I viewed Afrezza as a feat of medical innovation. The truth is, this is still my view on the treatment. During the first commercialization, I did a ton of research. Given the product, I expected it to fly off of the shelves. However, my research showed that Sanofi had a competing product. This made them a horrible commercialization partner. Given this finding, I predicted that the MNKD-SNY partnership would eventually come to an end, as it did in January.
When the agreement came to an end, I was overwhelmingly excited. This meant that MNKD would find a new commercialization partner or work on marketing the treatment themselves, both of which are better than dealing with a conflict of interest on such an important product. So, while by this point I had my reservations, I decided to see how the second commercialization round went for the company. Of course, I decided to maintain my bullish opinion throughout this entire process.
Unfortunately, It’s Time To Break Up!
While I still love the idea of an insulin that can be inhaled, I have to say that I’ve fallen out of love with MannKind, the company that created the product! When it was announced that the second commercialization of Afrezza was going to be in full swing, I got overwhelmingly excited. I knew that, this time around, things were going to be different. Nonetheless, I told myself that at the 12-week mark, I would re-evaluate the stock. This time, I decided to set aside my family’s experiences with diabetes as well as my own fear of needles. This time, I vowed to keep emotion out of the analysis.
Unfortunately, that wasn’t good for MNKD. At the end of the day, by week 12, the company had only filled around 250 Afrezza prescriptions. I started to remember back to my sales days. In the course of 3 months with AT&T as a young sales rep, I nearly cleared 250 contracts by myself – and these people weren’t treating an illness! Somehow, .MNKD can’t seem to give a needed treatment away. With a dedicated sales team, 250 prescriptions in 3 months is an insult to investors and people like myself. In order to avoid a conflict of interest, I refuse to invest in stocks that I discuss. However, I spent a lot of time trying to get the real potential of Afrezza out there. While I still do believe the potential is amazing, I no longer believe that MannKind has what it takes to bring this treatment anywhere near its real potential.
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What I’m Expecting To See Moving Forward
The reality is that Afrezza is MannKind’s only approved product. In order for the company to break even, they will need to get tens of thousands of patients actively using Afrezza. Considering the current numbers, it would take MNKD approximately 10 years to reach the break even point. Unfortunately, they will be out of business well before that if they can’t get things together. As a result, I’m expecting to see further declines. However, I will say that before the company calls it quits, they’re likely to try and sell Afrezza and return some shareholder value. While I don’t believe shareholder value will be returned in any meaningful way at this point, I do hold hopes that whoever buys Afrezza will know how to market it to bring this incredible treatment to the thousands upon thousands of patients who would benefit from it.
What Do You Think?
[Image Courtesy of Pixabay]