Why Aren’t Investors Buying Up Shares of MannKind Corporation (NASDAQ:MNKD)?

MannKind Corporation (NASDAQ:MNKD)

MannKind Corporation (NASDAQ:MNKD)

Share volume for MannKind Corporation (NASDAQ:MNKD) was extremely light on Friday but the biotech firm still remains one of the most discussed stocks in social media trading forums. Barely more than 1.1 million shares of MNKD traded hands on Friday. MNKD has a listed daily volume average of close to 3.6 million which puts Friday’s activity about 70% below the average. Shares were up 3.13% despite the S&P 500 being slightly down, but this makes sense as MNKD has been more than three times as risky, historically speaking, to hold as the broader stock index.

MannKind Corporation (NASDAQ:MNKD)
Unadjusted one year MNKD candlebar graph

As far as the trader’s forums are concerned, few stocks generate as much chatter as MannKind Corporation (NASDAQ:MNKD). The two that battle for the lead are Delcath Systems, Inc.

(NASDAQ:DCTH) and CytRx Corporation (NASDAQ:CYTR). However, MannKind may be the better play when all is said and done. Their ground-breaking, diabetic-focused drug Afrezza has already received FDA approval and is being marketed in a variety of media. The real question for MannKind shareholders is whether or not the drug will see a rate of sales increase that would save the company from having to seek “strategic alternatives” such as a sale, merger, or licensing agreement.

Right now, the market appears to be unimpressed by Afrezza’s performance. For 2016 the company booked, for the first time ever, sales figures – but, in early March, it also had to undergo a 1:5 reverse split to maintain compliance with exchange regulations. Their annual revenue number came in at $ 176 million and resulted in a $1.37 per share profit. But here is what the market thought of that performance which was released to the public on March 16, 2017 – MNKD shares ended up by over 3% for the day to close at $2.22 then went on a massive slide over the next few weeks and on May 3 MNKD shares closed under $0.70.

Short-sellers have been relentless as they bet that the company will not be able to turn the business around and recoup its development expenses at a rate that justifies the investment. Since 2011, analysts have either downgraded or reiterated their ratings on MannKind Corporation (NASDAQ:MNKD) and most now have MNKD’s target price below $0.25. Sadly, at the end of the day, Mannkind developed a sought-after, ground-breaking drug but may have ignored, while developing it, the business economics required to create investor demand.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

Author: Steve Clark

Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

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