MannKind (NASDAQ:MNKD) investors received news today that the founder, Executive Chairman, and Board of Directors member, Al Mann, has resigned as a company executive and as a board member. MannKind also announced that Kent Kresa will be promoted to Chairman of the Board of Directors.
News of the event was muted as far as the stock is concerned, but investors need to consider what these most recent events mean. With Al Mann on the sidelines in the boardroom, speculation will likely turn a bit wild. Was there contention on the board about the direction of the company? Did the board request such a move? Is there dissension on the board? There is certainly any number of possibilities.
Ever since the erosion of the partnership with Sanofi and the return of marketing rights of Afrezza to MannKind, the stock has been muddled in a cloud of uncertainty. Even a subsequent deal announced regarding MannKind technology seems to have more smoke and mirrors than a carnival fun house. After MannKind stating no connection with Receptor Life Sciences, we learn that a key MannKind employee was hired by the secretive group about 5 months prior to the consummation of a deal that brought no up-front cash to MannKind.
Reuters recently indicated that MannKind management had possibly engaged the services of an investment bank and that an outright sale of the company was a possibility. With rumors swirling and speculation running wild, it may well be that Al Mann simply decided to separate himself from the story.
Where does this leave investors?
Investors come in various forms and these days, MannKind seems to be a focal point for active traders and speculators. Meanwhile, long term investors that have lost their proverbial shirts are pinning hopes on anything that can bring about a sliver of a recovery. With each passing week, the relevance and potential of Afrezza seems to diminish. The longer that MannKind exists under a cloud of uncertainty, the more difficult it will be for longer term stock holders to see even modest recoveries. Meanwhile, all of the uncertainty helps active traders and speculators play swings that can be up or down 20%
As if all of this was not enough, MannKind remains at risk of falling out of compliance with NASDAQ trading rules. If the closing bid stays below $1.00 for 30 consecutive days, the company will get a de-listing notice. The stock was recently 15 days into that territory before closing above the required level and resetting the clock. It then spent 9 days out of compliance before resetting again. Over the last 32 trading days, the stock has been out of compliance for 26 days. Essentially the company is continuously flirting with compliance and non-compliance. This again helps active traders and speculators.
The reality is that MannKind may well be up for sale. It is not negotiating from a position of strength, so the company may ultimately sell for a small fraction of what some investors believe it is worth. Investors seeking value need to consider this stock with a lot of caution. Investors speculating often better understand the risk because they are trading on dynamics that are absent their own emotion but fully grasp the high level of emotion that passionate long -time investors have.
The bottom line is that Al Mann will likely no longer be the face or central figure with this company. Investors need to grasp that sooner rather than later. His remaining position as an employee with the title Chairman Emeritus is simply an honorary position of respect that likely carries no functional responsibility. This was most likely a way to clear him from the decision processes that may develop in the coming months. Stay Tuned and be careful with this stock.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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