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MannKind Corporation (MNKD): Short-Term Outlook, Long-Term Drivers

MannKind Corporation (NASDAQ:MNKD) has had a bit of a hard time over the past few months. However, about 2 weeks ago, that all changed as a Jefferies research note showed that 65% of the endocrinologists they surveyed stated that they not only knew about Afrezza, but plan to start using it more often. Unfortunately however, the stock peaked out on the 19th and started falling again. Nonetheless, it’s back up today; leading to a big question: Where will MNKD go next?

Today, we’ll take a look at what we’re seeing in the market and discuss what we can expect to see in both the short and long term outlooks.

What I Expect To See In The Short Term

When predicting the short term movements in stocks, I try my best to keep the fundamental data out of it. With that said, I tend to look for trends in the chart that are signs of a coming breakout in one direction or the other. Looking at the chart to the left, I see a breakout on the horizons. What we’re currently seeing from MannKind is a common pattern that we tend to see in the market called a flag. For a flag to happen, an asset has to have a great climb; then, the market stalls. As you can see, that’s exactly what we’re seeing from MNKD. What this means is that the market is taking a bit of a break before it starts to move again; and in this particular case, I think we can expect it to move in the positive direction when it does break.

What I Expect To See In The Long Run

If you follow my writing here or elsewhere, you already know that I’m a big time MannKind bull. While management needed work, it seems as though the company is working on that. However, when it comes to product, innovation, and potential, MannKind’s got it in the bag! Here’s how I see it:

  • Management – In an effort to strengthen their management, MannKind has elected James S. Shannon, MD, MRCP to their board. Dr. Shannon is incredibly talented and well known in the biopharmaceutical space, and is a great addition to the team. I wrote about this addition in detail recently. To learn more, click here.
  • Afrezza – MannKind is the producer of the world’s first inhaled insulin, known as Afrezza. While sales have started out a bit lack luster, I think this is going to change soon. First off, because Afrezza dissolves into the system faster than competing products, it will prove to be more effective for diabetics. Not to mention the fact that Jefferies released a research note showing that endocrinologists not only know about Afrezza, but plan on using it more in the future.
  • Beyond Afrezza – Afrezza represents far more than insulin. The inhaled powder represents a way to deliver medications that were once injection only. As a matter of fact, when announcing the new addition to the board, the following quote really caught my attention… “(Dr. Shannon’s) experience as a recognized pharmaceutical industry leader is invaluable to us as we accelerate the commercialization of Afrezza and build a pipeline of additional product opportunities that use our proprietary technologies.” One of those proprietary technologies being the powder that delivers insulin in Afrezza!

All of that being said, I’m expecting to see tremendous growth from MannKind in the long run.

  • T.H. Browne

    Afrezza may also be a game changer in how and when endos prescribe insulin to elderly diabetics who are more than 25% of the entire diabetic population. Seniors have a lot of trouble in injecting themselves due to a myriad of issues, the worst being that they often inject insulin about an hour before the meal (which is the way injected insulin is prescribed) and then forget to eat.

    That causes hypoglycemia and an emergency trip to the hospital. Bad. So the elderly say screw it and don’t use their insulin. Also, knowing this, doctors allow seniors to have dangerous blood sugar numbers, often with A1C over 8, before even thinking about injected insulin.

    Afrezza is inhaled during or just after a meal. If grandma forgets to eat then that’s OK because she has not taken her insulin anyway. Afrezza will save lives. Afrezza will allow doctors to start the elderly on Afrezza inhaled insulin while the senior citizen has reasonably normal A1C numbers thus helping them maintain healthier internal organs, avoid depression associated with elevated blood glucose, and avoid the pain associated with numbness in the legs and feet.

    Google”Afrezza: A Game Changer For Seniors” for more information.

    • reed1v

      NVO is in trials with an insulin pill. Old folks know about pills and may find that easier than ramming a fire hose up their sinuses. Delivery is everything and pills beat inhalers for old folks.

      • T.H. Browne

        There are a myriad of problems with attempting to have insulin digested in the stomach.

        I doubt that that method will be successful. Insulin through the lungs makes a lot more sense because of the nature of the design of the insulin molecule.

        That’s the simple but efficient genius in the creation of the delivery device, Technosphere.

        • reed1v

          Question: Who exactly owns the rights to Technosphere?

          • T.H. Browne

            Teschnosphere is the name for the technology inside the MannKind inhaler which allows a drug to be inhaled. It is owned by MannKind Corporation. They have a number of patents on the technology and it can be applied to certain types of drugs, but not all types.

            This link has more info:
            http://www.mannkindcorp.com/collateral/documents/english-us/101lr-technospheretechteaser-01.19.11.pdf

          • reed1v

            Thanks. Was wondering if they had also sold that technology along with the insulin inhaler. Could not find their name in the Patent Office’s records linked to “technosphere”.

          • T.H. Browne

            MannKind is working on several new drugs employing Technosphere, two of which they hope to have in trials by the end of the year. Rumors say they will be for migraine headaches and for women’s menstrual cramps.

            Although insulin will probably be worth the most because insulin needs to be used with every meal, the new drugs will also bring profits too.

            The ability to delivery medication safely through the lungs is a game changing technology. It’s much faster than orals. The digestive system, with its digestive acids, make delivering many drugs ineffective, less effective, or simply dangerous.

            Other possible uses expected to be developed may include heart medications (where time is critical), dental applications for people who can’t take novocaine shots, drugs to prevent a person from going into shock (battlefield and EMT use), and for sea sickness.

            My guess is that Afrezza will eventually be worth about half of all the revenue MannKind may garner, five to ten years up the road.

            This is a stock to buy today and forget about.

          • reed1v

            How many years left on their patent protection of Technosphere? Looks to me less than 10 years to go. So a buy and forget strategy might not be a wise move.

          • T.H. Browne

            They have over lapping new patents scheduled for the next ten years which I’ve read could easily spread the time line out over twenty years.

            In any event, I am confident that if an investor buys MNKD now at $5, in two years the p/s will be over $10, in three years it will be over $15, and in five to seven years, Afrezza will reach a tipping point.

            When that happens, we can see exponential rise taking the p/s over $50 and possibly up to $500 p/s.

            It all depends on the price to earnings ratio once the gates are kicked in.

            By the way, don’t just take my word for this. Check out what Marketocracy fund manger, Nate Pile, says. Nate is the 2nd most successful manager there and he averages over 20% return per tear over the last 12 years. That’s slightly better that Warren Buffet did in Warren’s glory years.

            http://seekingalpha.com/article/3093476-marketocracy-top-20-manager-nate-pile-invested-in-mannkind-and-afrezza

          • reed1v

            Thanks, appreciated your thoughts.

          • T.H. Browne

            Your welcome.

          • reed1v

            Based on your recommendation, am liquidating my position on Monday. Thanks again.

          • T.H. Browne

            To each his own, but you surely know that I am not recommending liquidating position, unless you are holding shares short. Shorting MNKD at this p/s is not wise.

          • reed1v

            Prefer not to handle the level of risk associated with the Technosphere approach. Even a hint of lung issues will doom the stock.The track record of medical innovations subsequent to p-3 trials and fda approval is not enviable.

            Plus, wearable injectors with real time monitoring of blood levels seems to be a much preferable approach. But, heck, I am just a country doctor. What do i know.

          • T.H. Browne

            If you prefer not to handle what you think of as “level of risk” then why did you buy shares in the first place before deciding to be “liquidating your position” on Monday?

            Nothing has changed and you surely understood that MannKind was a bio tech stock when you bought your position.

            As a doctor, you know that insulin is produced in every human being and that if insulin caused cancer, we as a species, would have disappeared a long, long time ago.

            The FDA panel of advisors voted unanimously, 14-0, in favor of FDA approval for Afrezza and there were some leading pulmonologists on that panel.

            For what it’s worth Al Mann, the genius behind Afrezza is also the man who brought us the Mini Med insulin pump now manufactured by Medtronic.

            There’s a very interesting presentation that Al Mann gave at Johns Hopkins in 2010 where he talks about the insulin pump and Afrezza.

            The whole lecture is worth watching but if you want to just hear his thoughts on the medical value of Afrezza, fast forward to 1:01:26 of the presentation.

            https://www.youtube.com/watch?v=muBuxTqxmQo

          • reed1v

            The Medical Letter basically says the drug is not very effective, produces coughs that can lead to medical intervention, and the long term effects are worrisome at the minimum. Basically advising us not to prescribe the drug. So we wont until more is known about this medicine. I will not use my patients as guinea pigs.

          • T.H. Browne

            You did not answer my question. If you prefer not to handle what you think of as “level of risk” then why did you buy shares in the first place before deciding to be “liquidating your position” on Monday?

            Nothing has changed and you surely understood that MannKind was a bio tech stock when you bought your position.

          • reed1v

            I buy a lot of medtech stocks for a private fund and then start culling the herd, so to speak. Kind of like trawling the oceans for fish. Not very elegant but effective. However, most of my colleagues are pointing to TML(kind of like consumers report to the medical field) as a warning sign. The plunge since FDA approval is a bad omen.

            IMHO TML does carry some weight in the medical world. This may be the greatest thing since sliced baloney but will wait till more field data becomes public.

          • T.H. Browne

            I am not here to tell you how to invest your money but I am here to set forth the reasons why I own and continue to add shares of MNKD at downturns in its various up/down cycles.

            I have been following their story for three years and I know, for me, that the unanimous support from the FDA convened ADCOM panel (14-0) trumps anything that one might find in The Medical Letter.

            But, I do accept and understand that with any new paradigm shift, there will be those who are early adopters and those who will prefer to wait and see what happens.

            Also, the early adopters who have been using Afrezza have been posting excellent results and are very happy with their lowered A1C numbers. They are the ones who are leading the way. And some of those folks were lucky enough to have been in the Afrezza clinical trial.

            As for the most recent downturn, I know that MNKD is heavily manipulated by those who know that it will still be awhile before Sanofi get their Direct To Consumer ads up and running so shorting was expected after the product launch.

            Folks who added shares three weeks ago have already made 25% on their money so far. But, this stock is a keeper and will go up and down and trade in higher ranges dozens of times before Afrezza becomes the dominant insulin in the next several years.

            Perhaps, we should leave the discussion at this point as we are obviously of very different mind sets.

          • reed1v

            You raise a lot of issues. Needless to say FDA approval does not signify safety nor effectiveness: which, by the way, is not all that clear as real world data comes in. There are real possibilities that genetic solutions may become available in the not too distant future to solve diabetes, thus effectively wiping out whole industries built around this problem.

          • T.H. Browne

            Let us end this discussion here.

  • Space Pikle

    Additional product opportunities that use our Proprietary technologies refers to utilizing the technsphere platform as a delivery mechanism to treat ailments other than diabetes, for instance pain. Proprietary technologies does not refer to the powder.