MannKind Corporation (NASDAQ: MNKD)
MannKind has had a rough time in the market over the past year, and that hard time has been exacerbated today. Earlier today, the company announced the termination of their license agreement with Sanofi SA (ADR) (NYSE: SNY). As a result, the stock is sinking. However, in the long run outlook, termination of the relationship with Sanofi isn’t necessarily a bad thing for MannKind. Today, we’ll talk about the termination of the agreement, why this isn’t necessarily a bad thing, and what we can expect to see from MNKD moving forward.
MannKind Terminates Relationship With Sanofi
As mentioned above, MannKind has had a rough time in the market as of late. However, quite a bit of the struggles the company has been facing are the result of their relationship with Sanofi. MNKD created an inhaled insulin that is known as Afrezza, then licensed commercialization to SNY. Unfortunately however, marketing efforts by Sanofi simply haven’t been positive. In fact, MannKind’s stock has been sinking because Afrezza sales just don’t seem to be picking up. As a result, MNKD made the decision to terminate the agreement they had with SNY. The termination of the agreement will be effective no later than July 4th, 2016.
How The Market Is Reacting To The News
Unfortunately, the reaction that we’re seeing today in the market is anything but positive. At the moment (10:10), MNKD is trading at $1.00 per share after a loss of 30.69% so far today.
This Isn’t Really Bad News!
If you judge the news based on the market reaction, you would think that the termination of the agreement between MNKD and SNY is a bad thing. However, in my opinion, this is actually a positive move. The reality is that Sanofi’s role in the agreement was to market Afrezza in a way that would be profitable. Unfortunately, due to a conflict of interest, Sanofi simply hasn’t put forth the efforts they should have in this partnership. As a result, Afrezza sales have suffered and MNKD has fallen dramatically in the market over the past several months.
Nonetheless, MNKD is a great company with a great product. They know that Afrezza is an overwhelmingly positive thing that has the potential to revolutionize the way we view the treatment of diabetes, and they know that commercialization can be much better. So, at this point, MannKind is going to be looking into different strategies that will give Afrezza the lime light it deserves… Sanofi simply isn’t making the cut!
What We Can Expect To See Moving Forward
After today’s dramatic decline, MNKD is trading at an incredibly low price. In my opinion, this creates opportunity. The reality is that Afrezza is a great treatment that is needed by a large percentage of the diabetic population. Without Sanofi, MannKind can focus on commercialization on their own. In all honesty, all it would likely take is a television advertisement to see sales climb in a big way. I believe that MannKind knows this and that the reason they terminated the agreement with Sanofi is so that they can do a better job. As a result, I’m expecting choppy movement over the next few months followed by solid gains in the long run!
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]