Mannkind: Slow, Methodical Short Covering, Or Will It Squeeze?

| About: MannKind Corporation (MNKD)

With all the big runners that have already left their mark during the opening weeks of 2012, Mannkind Corporation (NASDAQ:MNKD) has remained relatively silent.

That could all change in a hurry, however, as very heavy short interest and a fair amount of insider ownership have many looking at this one as a potential short squeeze candidate. We'll keep in mind, though, that it'll take relevant news to turn what has been slow and steady short covering into a big-money squeeze. The normal, "maybe this, maybe that" probably won't cut it.

Mannkind's Afrezza, an inhaled insulin product for diabetics, still needs to complete additional Phase III trials that were requested by the FDA after the product was denied for approval a year ago, but news relating to solid financing or a big partner coming on board with some up front money could be enough to spark that large-scale short covering.

Will either of those things occur?

Maybe, maybe not, but I'm hesitant to believe that the CEO and founder, Alfred Mann, would give too much in terms of royalties to another company given the huge investment that he already committed from his personal fortune.

It's possible that new interest will come in when the new trials start winding down.

This set of trials will test Afrezza with a next generation inhaler, as requested by the FDA, since the previously-completed trials were undertaken using an earlier model of the inhaler.

Insiders remain confident of an eventual approval, if the recent insider interest numbers are any indication, and that always goes a long way towards building a confident investor base, so it could be that now is buy time again - well before the shorts start to cover en masse.

Keep an eye on this one for the short squeeze potential, but the truth is that a squeeze may not be as imminent as some believe; but on the other hand, it's the unpredictability of the biotech and pharmaceutical sectors that make investing here fun.

So ya never know.

Any investment geared for the long term is one based on the potential of an Afrezza approval, which would likely take place in 2013, barring any trial setbacks.

Disclosure: Long MNKD.