What’s Holding Back MannKind Corporation’s (MNKD) Valuation? Maxim Sees a Company Poised for Growth

Analyst says MannKind's Afrezza revenues can surpass debt, if investors can be patient for adoption.


MannKind Corporation (NASDAQ:MNKD) investors have eagerly welcomed news that the FDA has handed over approval for a label update to its label for inhalable insulin treatment Afrezza in diabetes, sending shares on an 8% upturn today.

This is just another way the drug maker is “heading in the right direction,” as Maxim analyst Jason Kolbert commends MNKD’s fresh management at the helm, a re-launch of its lead asset Afrezza, and “a platform inhalation technology that could expand to multiple indications beyond insulin.”

In fact, for those bears who point to the firm’s debt concerns, Kolbert warns: “Don’t miss the forest because of a few paper trees,” reiterating a Buy rating on MNKD stock with a price target of $4, which represents a 70% increase from current levels. (To watch Kolbert’s track record, click here)

“So what’s holding back the valuation?” questions the analyst, who believes, “The bears will bang on debt drums, but do the analysis and you should see what we do…a company positioned to grow.” While the analyst acknowledges some investors question whether or not the firm will need to file for or “be pushed into” bankruptcy, he truly does not believe this will be the case, explaining that while the debt burden is grave, “the analysis of who holds what and against what assets gives us confidence that it can be managed.”

Moreover, “The Mann family, the fundamental funds, or the supplier should have no interest in forcing a negative outcome,” the analyst writes, anticipating revenues from MannKind’s inhalable insulin asset will down the line extinguish all debt fires.

Overall, the bullish case for MannKind hinges upon persistence, as “[…] it’s going to take time (& additional capital – equity and/or debt) to drive patient adoption,” and there will be “a learning curve but adoption will happen. Ease of use and rapid onset are great features vs. injection (time to see levels adjust),” highlights the analyst.

When answering “what’s next” for MannKind, the analyst predicts Afrezza “could be disruptive to the diabetes market,” expecting this biotech player will prove to “find its way through the paper forest.”

Additionally, according to TipRanks, in the past 12 months, Kolbert is contested by the bears, with Cory Kasimov of J.P. Morgan rating a Sell on MannKind stock without listing a price target and Joshua Schimmer of Evercore ISI rating a Sell on MannKind stock with a $0.54 price target, which signifies a 77% downside from where the stock is currently trading.Chart