MannKind Stock Nearing The Final Collapse?

  • MannKind has told investor it has only enough cash to operate for two more quarters.
  • The marketing partner for its inhaled insulin, Affrezza, abandoned that agreement.
  • The company is exploring options and scheduled a February 3 conference call.

Mankind will continue, but MannKind may not.

MannKind (NASDAQ:MNKD) is the company behind the inhaled diabetes drug Affrezza. MannKind stock is up 15% over the past two weeks and has closed over $1, the point where delisting becomes a real threat, since Matthew Pfeffer became CEO on January 10.

MannKind stock  rose on January 27 on reports that management was exploring a sale of the company but it is increasingly hard to justify the company’s market cap of nearly $400 million.

The market cap is based on a single drug, Affrezza, an inhalable form of insulin that is fast-acting so it can be taken alongside meals. But an earlier inhaled insulin, marketed by Pfizer (NYSE:PFE), was a market failure and Affrezza’s marketing partner was having trouble getting prescriptions written for it as long ago as last summer. 

MannKind has been in big trouble ever since that marketing partner, Sanofi (NYSE:SNY), ended that marketing agreement. The company has tried to replace that relationship with a new company called Receptor Life Sciences, which it says is developing a line of inhalant drugs, but it lacks the sales force to generate major sales in the market. New CEO Pfeffer has also promised to cut the costs of the drug, work directly with diabetes care centers, and expand international distribution in an attempt to increase sales.

Pfeffer was a late replacement for Duane DeSisto, who was hired on December 22  but never took office, following a terse announcement that the offer of employment had been withdrawn and Pfeffer would step up from his Chief Financial Officer chair to run the company. The company is not due to report earnings until next month but has scheduled a February 3 conference call to “discuss Company developments.”

Even before all the drama started it was hard to see much value in MannKind, which is burning over $25 million in cash each quarter. As of September there was only $33 million in cash left, enough to keep it going until April, and almost 75% of the company’s assets were already subject to debt. More loans might be obtained, but they would need to be collateralized and would be at very high interest rate.

Even if it’s true that the company is for sale, the company’s acknowledgement at a recent investor conference that it only has enough cash to keep going until the second half of the year means there is a real sense of urgency in the current negotiations.

Rather than waiting for a great price, investors might be smart to take their losses here and count themselves lucky to be selling on the rumor rather than waiting and hoping for the news.

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Comments on this article and MNKD stock

user profile picture
createch
neutral
This is a fair article so long as you believe their marketing "partner" was anything other than a frogging moron from hell whose main objective was to destroy the company. They wildly overpriced Afrezza, lacked a strategy to sidestep Doctor paranoia over inhalation (remember the 4 out 5 Doctors who smoked Camels in the 50's? well now they're remorseful - but there's still that one!), and failed to the leverage the fanatical following of patients who experienced life-changing conditions thanks to Afrezza.

So now, freed of their imbecile partner, how are they unattractive? Price matters - that's why Apple's Lisa failed but the Mac took over the planet. The rest of the world does not have US Dr. Paranoia. Some countries have refrigeration problems where shelf-stable powdered inhalable medicines are a godsend. Others, such as in Asia generally, but China in particular are culturally disposed toward inhalable medications which have a long history in their traditional medicine.

So if you are a still talking Exubera which would be like saying that no one would use a smartphone because it requires a supercomputer to run it. Guess what - it does....that's what Technosphere, the underlying platform for Afrezza has done.

So if all you are doing is looking backwards and counting beans, then they are definitely doomed. But if you are looking forward and considering the players who understand this, $400 million is a rounding error in a disruptive technology's valuation proposition.
10 reply
user profile picture
EL
bullish
Another article by a paid basher... Shorts are desperate 123,892,191 shares (almost %45) and the longs are not selling... Waiting for that squeez to take place...
3 reply
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