MannKind Corporation (NASDAQ: MNKD)
MannKind stock has had a bad run over the last few months. Following a Goldman Sachs downgrade a while back, the stock plummeted; and we’ve seen the same thing this week following a JPMorgan downgrade. However, I’ve got to be honest here…I still see MannKind as a long term gainer despite the recent analyst downgrades that have been driving the stock down. Here’s why…
Why Analysts Are Downgrading MNKD
The downgrades we’ve seen recently all revolve around Afrezza. Both Goldman Sachs and JPMorgan note that poor Afrezza sales are a major hit point for why they’ve decided to downgrade the stock. Most recently, JPMorgan noted the fact that while analysts expected to see $3 to $4 million in sales of Afrezza in the first quarter, the inhaled insulin only generated little more than $1 million. Now, I can see how this can be a big deal for some investors; however, I think a big part of the story is being lost between the lines of the downgrades.
Afrezza & What It Represents
There’s no doubt that Afrezza sales are poor. Just look at the numbers and you can see that very clearly. However, there are a couple of things that are hindering sales. Also, it’s important to note that Afrezza represents far more than an inhaled insulin…
- Sales Hindrances – First off, I’d like to point out that Afrezza isn’t necessarily getting a fair shake when it comes to sales. The simple fact is that the insulin can’t be prescribed like most other insulin. Instead, if a patient wants to be prescribed Afrezza, they’ll need to jump through hoops set in place by the FDA. Also, MNKD and Sanofi Inc (NYSE: SNY) haven’t started really marketing the drug quite yet. There have been no commercials, no print ads, nothing! However, I think that they may be waiting on this until labeling issues are worked out.
- What Afrezza Represents – Beyond the fact that there are clear roadblocks in place currently that will slow sales of Afrezza, the inhaled insulin represents far more than a single drug. The technology used to deliver the insulin through the inhaled powder is expected to be effective in delivering a wide range of medications that are only currently administered via injection. This technology could have incredible implications for the medical industry as a whole in the future.
Where I Think MNKD Will Go Long Term
It’s clear that thanks to downgrades, MannKind stock is likely to struggle in the short term. However, in the long run, I think the story will play out quite differently. With regard to Afrezza, the insulin seems to be far more stable than other options; reducing spikes and adding to the quality of life for diabetics. In my opinion, this will surely be an easy sell once marketing starts. Also, with the technology needed to deliver injection only medications through inhalers, MNKD has a foot in the door for several other applications of the technology; this too should yield great long term results!
What Do You Think?
Where do you think MNKD is headed and why? Let us know in the comments below!