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A.J. Watkinson
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A.J cut his teeth while working for more than 12 years on the corporate side of the financial services industry in the suburbs of New York City. In addition, A.J. has successfully traded stocks, options and currencies as an independent trader since the late 90's. Eventually A.J. moved out of... More
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  • Buy Shares Of MNKD? Yes... 4 comments
    May 21, 2014 1:38 PM | about stocks: MNKD

    Everyone's searching for that next great Penny Stocks To Buy. With markets trading near all-time highs, finding a stock with huge potential for return is certainly difficult.

    But not impossible…

    There are always stocks ready to take off, just waiting for investors to buy up shares. Amazingly, there's one out there now that's just barely preparing to take off- even after a huge news announcement last month that can change the course of the diabetes industry forever.

    If you've invested in biotech stocks in the past, there's a better chance than not you've been burned. Waiting for the various stages of testing and trial results to be announced can be trying. Then there's the almighty FDA approval of a commercial product which always send a stock on a roller coaster ride.

    Shareholders get tossed about pretty hard and many times those very investors who would have been rewarded if they had just held on in the bad times end up brutally burned. They end up giving up when short sellers crush their dreams causing them to do what they believe is the "conservative" thing - sell their shares before they were worthless.

    But this time around for shareholders in MNKD, things are looking up. There are 3 reasons why this penny stock is poised to take off. And for starters, we will see a sharp move upon the release of the FDA's approval decision of Afreeza.

    But should you be investing in this company now?

    I say there's no doubt about it. Let me dive into those three reasons I mentioned...

    1. MNKD is in position to benefit from the massive short position that still remains in the stock. Currently, over 28% of the float… or more than 65 million shares of MNKD are being held short. I just don't know what in the world these folks are thinking. The FDA is on the verge of approving their blockbuster drug. And this very product about to be approved could revolutionize the multi-billion insulin market.

    Seriously...

    Even if you believe that the nearly unanimous voting by the FDA's advisory committee earlier this year won't hold any weight in the FDA's decision, where is the financial risk management? The upside potential for MannKind on good news, which by the way is widely expected (just read other expert opinions)... is massive.

    2. If the FDA announces approval of Afreezza, MNKD will then need to find a big-phara partner for the product. Some bearish analysts see this as a big hurdle to clear. But seriously, can you imagine anyone currently in the diabetes marketplace not wanting to get in on this new insulin tech?

    It would be like massive oil companies ignoring clean, natural gas and other alternative fuels they can resell under their current business model (or a similar one). It would be bad business to ignore this product. It seems clear to me that some pharma giant will pickup a piece of MannKind's product - and the big pharma company that sees this value can only hope there isn't a biding war already ensuing.

    Now onto my final point...

    3. If and when all these event come to pass, investors will want confirmation that Afreeza is a commercial success. Will patients switch over to the certain-to-be more expensive… and more than likely not-covered-by-insurance Afreeza. That's the billion dollar question!

    But given the reasons stated by the FDA's advisory committee as to the populations that this drug can help, we may end up seeing a government subsidy on it. Hell, if that little blue pill can end up covered by Medicare, I sure hope a life altering inhaler-based insulin would end up making the cut.

    In summary...

    I believe MNKD could see a short-term move from $7 to $11 immediately following a positive FDA decision. Additionally, the announcement of a commercial partner could drive this penny stock even higher - say to the tune of $13-$15 per share.

    And after the first initial quarter where Afreeza sales are tracked by the company, we will see the stock move pretty aggressively once again.

    Even as positive as I am on this stock, trying to pretend I can see that far out would be absurd... there are potential issues out there. Nothing's a guarantee. Should the FDA fail to approve Afreeza at this stage of the game - the shorts could be proven right, and the stock could absolutely tank.

    I wouldn't think there's much recovering at this point.

    But from what I've seen so far this year, and heard during the advisory board's meeting… I wouldn't bet against MNKD from here out.

    Now, for those of you wondering how I can substantiate my overly optimistic price targets- well... have you seen shares of AMZN lately? What's that P/E again? And what's supporting the price right now... it's surely not profits.

    PS. I'm personally long this stock- and you should be too. There are fewer "good bets" in the small cap world than MNKD right now.

    Disclosure: I am long MNKD. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Themes: long-ideas Stocks: MNKD
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Comments (4)
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  • Keith_69
    , contributor
    Comments (175) | Send Message
     
    Interesting article. But I believe that your FDA approval numbers are low. Upon FDA approval I believe this stock with get to 3x its valuation, and then an additional .75 or dbl depending on the partners. Notice the (S) There is not only US but also foreign markets for this. And there is a market no one is cashing in on. The T2 diabetics who don't treat because of the 'hassle' of treating.
    21 May, 04:17 PM Reply Like
  • alexyardev
    , contributor
    Comments (20) | Send Message
     
    Nice article but just like Keith said, Maybe the evaluation is a little low. The short Squeeze itself will make this guy go over 20, leaving aside the approval and partnership news. i am looking at 20+
    21 May, 05:03 PM Reply Like
  • pilot fish
    , contributor
    Comments (115) | Send Message
     
    I need a digital detox....I've reasearched this position more than any other I my history of investing. What all this has told me is that (1) I believe in the product and (2) I believe in management. I personally plan on holding this one for a few years at least. This will be a bumpy road, but when the sales numbers begin to come in, the sky is the limit.

     

    Buying a stock is the easiest part of my decision process, figuring when to begin reducing or exit entirely never has a good time...
    22 May, 08:02 AM Reply Like
  • MagicQuote2014
    , contributor
    Comments (76) | Send Message
     
    MQ here:
    Anyone out there tried to purchase $MNKD on a margin account at Scottrade?It was refused. I just included the inquiry in stock talk for $MNKD. I would appreciate other traders' experience with their broker.
    Thank you, MQ here
    Good luck traders
    3 Jun, 01:11 AM Reply Like
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