MannKind Corporation (NASDAQ:MNKD) is off 5% to its lowest point in a couple of weeks, as Maxim analyst Jason Kolbert downgrades shares to Hold after a recent capital raise. (To watch Kolbert’s track record, click here)
Put into the proper context, the analyst had anticipated a larger offering that would provide a longer capital runway to get the Afrezza launch off the ground; one that would provide adequate support to launch a new product in a mature market. This would have set the stage for even more capital but at a higher valuation.
“Based on our model and assumptions, Mannkind today has less than two operating quarters of cash. The weakness in the stock post-raise concerns us, in terms of the company’s ability to go back to the market on strong fundamental terms – that is, the next raise will likely be dilutive,” the analyst warned.
Kolbert continued, “Most Importantly, know that Afrezza is both a promotionally sensitive and an educationally-driven product. Changing user awareness and habits will take time. Our revenue forecast assuming MannKind has the needed capital to invest in marketing suggests breakeven is possible by 2020. We assume Mannkind will need to raise at least an additional $150M-$300M in capital before there is sufficient free cash flow to support operations. These factors, combined with a promotionally sensitive product that requires a lot of patient education and behavioral modifications translates into gradual uptake.”
Most of Wall Street is growing impatient with this biotech player. Based on four analysts polled by TipRanks in the last 12 months, one rates a Hold on MannKind stock, two maintain a Sell, and one is bullish. The 12-month average price target stands at $3.77, marking an 20% upside from where the stock is currently trading.
MannKind is a biopharmaceutical company. It focuses on the discovery, development and commercialization of therapeutic products for diseases, such as diabetes and cancer.