MannKind Corporation (NASDAQ:MNKD) shares lost roughly 8% in value yesterday after a third quarter outcome revealed the biotech firm’s inhalable insulin asset Afrezza yielded revenues that failed to hit $2 million, when Maxim analyst Jason Kolbert had been expecting third quarter sales to hit almost $3 million.
Predicting this biotech player will burn through its cash by the close of the first quarter of 2018, the analyst stands by his recent downgrade to the sidelines, reiterating a Hold rating on MNKD stock without listing a price target. (To watch Kolbert’s track record, click here)
Keep in mind, in a quarter were revenues fell “light,” the company was looking at expenses towering over $30 million, where the company’s cash was just $20 million by the end of September, notwithstanding the $57.7 million the team had raised.
“We spent a significant amount of time with the CEO this summer who suggested we should see a revenue build into the end of the year. As such, the revenues are disappointing,” writes Kolbert, who anticipates this drug maker will blow close to $100 million each year over the course of the next few years to “support” its diabetes drug. By the end of 2017, the analyst predicts MannKind’s balance sheet will circle $60 million.
Kolbert continues that the Afrezza problem will keep challenging the firm, explaining, “Weak sales and the weakness in the stock are now both concerns for 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.”
Even with approximately $58 million in capital raised, based on these underwhelming Afrezza sales, the analyst doubts that these funds are enough to fuel the marketing time and effort needed. In other words, this spells out trouble as to the success of the Afrezza launch.
“The hope had been with roughly $120M, the company would be able to show enough share gains to project a robust launch trajectory, setting the stage for additional capital, but at a higher valuation. We now see the opposite position,” Kolbert contends, underscoring: “The recent raise is for us ‘a band aid,’ and as such, does not solve the structural financial issues nor does it address the marketing issues required to re-launch what could be a successful (but incrementally so) drug in the billion-dollar diabetes marketplace.”
The word on the Street does not glitter with optimism for the drug maker these days, as according to TipRanks, out of 4 analysts polled in the last 12 months, 1 rates a Buy on MannKind stock, 1 maintains a Hold, while 2 issue a Sell on the stock. The 12-month average price target stands at $3.77, marking a nearly 28% upside from where the stock is currently trading.