Sometimes drama simply finds a company and latches onto it with an iron grip. MannKind (NASDAQ:MNKD) seems to be one such company. MannKind announced this afternoon that an investor update conference call that was to be held after the market closed was now being postponed a week due to the CEO suffering from a detached retina and undergoing emergency surgery.
The press release of the call cancellation came yesterday afternoon following an earlier press release that announced the hiring of two new upper management employees. MannKind stock had traded down throughout the day leading into the call.
For an update, perhaps it is best to cover the two new hires first. The company hired Joseph Saldanha as Vice President of Marketing and Agustin (TINO) Quintero as Vice President of Market Value, Access and Trade. Both of the new hires will report to will report to Michael Castagna, MannKind's Chief Commercial Officer. Castagna recently joined MannKind himself.
The telling signal in the hiring of these new employees is that it appears that MannKind will work toward marketing the diabetes treatment Afrezza itself rather than with a partner. MannKind's Afrezza was previously partnered with Sanofi (NYSE:SNY), but after a poor launch and troubling sales, Sanofi walked away from the drug leaving MannKind in a bit of a scramble as to what to do moving forward.
The second bit of news today was the delay of the investors conference call. The call has been delayed a week. This opens the door for the wild speculation to begin once again. Interestingly, any speculation that MannKind was going to ink a deal with a new partner is probably going to die off. In concept, such a deal would have been inked, an announcement made after the market closed, and an 8k to follow suit. If such a deal was happening, an 8K would then spoil the announcement in that an 8k needs to be filed in a timely manner. Thus, I feel it is a reasonable conclusion that indeed MannKind will be marketing Afrezza itself.
Example of the MannKind drama of 2016:
- Sanofi Walks Away From Afrezza - January 2016
- A CEO Shuffle - January 2016
- MannKind Inks Deal With Receptor Life Sciences - January 2016
- MannKind Founder Steps Down - February 2016
- Unfortunate Passing of Al Mann - February 2016
- Stock trading under $1 per share
- Stock rising to above $2 per share
- Stock falling back down below $2 per share
The MannKind story is interesting if nothing else. With a passionate cult-like retail investor following, there is no shortage of conspiracy theories with this equity. Savvy investors set aside the bullish players and bearish players and simply try to assess the real situation.
MannKind's Afrezza is a compelling product. It is compelling in the type of insulin it has, and it is compelling in the delivery method. The drug itself has many fans, and in concept, if marketed correctly, it could be a good seller. As yet, sales have been way below expectations.
The realities with MannKind still remain the same. The company has limited cash and its accountant has listed that issue as a going concern. Management itself has indicated that it has enough cash to make it through the second quarter. MannKind finds itself having to build a marketing force, and figure out a way to effectively market this drug on a shoestring budget. That is a tall order when you consider that competing diabetes products are with massive big pharma companies like Sanofi, Novo Nordisk (NYSE:NVO), etc.
This most recent bit of drama once again leaves the stock at the mercy of the active traders that play the rollercoaster which defines MannKind. The bulls will tow the line that an emergency happened and the delay was reasonable. The bears will point out that the new Chief Commercial Officer would be certainly qualified to give the update himself and that the delay is because of something nefarious in the air. The winners in that debate are the quiet ones who go long at the right time and then go short at the right time.
Investors wondering whether or not MannKind is a good bet need to consider that this remains a highly speculative play. A company that has not been set up to market a drug has severe challenges. I recall that the initial sales were slow and MannKind stated that Sanofi had only 5 or 6 months to prepare for launch because the deal between the two was struck so late. Sanofi is huge and was not really able to get Afrezza sales moving. For anyone to think that starting a brand new sales team is a cakewalk is fooling themselves.
The cash and debt situation with MannKind is far from optimal. High debt and minimal cash are never a good mix. MannKind can access more cash, but that move adds to debt. In concept, I feel that the purpose of this investor call is to set the groundwork for stability in the equity and perhaps parlay that confidence into a way to restructure debt, raise capital, or both.
The bottom line is that MannKind could be a decent winner in the next year, or could fall on its face. Savvy traders are lining up their bets while long-time holders are betting on hope and faith. I see this equity as a savvy play for investors that want to make a quick buck picking out the peaks and valleys, or a longer play for investors that want to place a small bet that MannKind can somehow navigate its hurdles. We now have another week of trading action prior to the conference call, and the recent trend has been downward. Stay Tuned!
Disclosure: I am/we are long NVO.
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.