Piper Jaffray Remains Bearish on MannKind Corporation (MNKD) Amid 2Q Update; Sees 90% Downside for the Stock

MannKind Corporation (NASDAQ:MNKD) just reported second-quarter results. Recently, MNKD has begun to distribute to major wholesalers its pipeline drug Afrezza, a fast-acting inhalant insulin that is effective for type I and type II diabetes.

However, in light of finding the company’s cash flow at risk and seeing the company as climbing an “uphill battle” when it comes to making the pipeline a real commercial success, Piper Jaffray analyst Joshua Schimmer reiterates an Underweight rating on MNKD, with a price target of $0.10, marking a nearly 90% decrease from where the stock is currently trading.

For Schimmer, MannKind’s cash flow of $63.7 million at the close of the quarter will sustain the company through the first quarter of 2017. However, Schimmer highlights MNKD’s problem, explaining, “We still struggle to see how cash strapped MNKD will be able to adequately inflect rather abysmal Afrezza sales rapidly enough to offset its burn before having to turn back to shareholders for multiple incrementally dilutive financings.”

Currently, MannKind is at work in intent renegotiation for contracts with payers. From the analyst’s perspective, the issue arises with Afrezza swimming in insulin competition without enough urgency for practitioners to want to adopt the pipeline into practice. Fresh sampling packaging might help, but Schimmer points to a cash burn in the range of $10-12M/M and $220 million in total debt obligation to be portioned out in 2017, 2018, and 2019. Thus, the analyst remains bearish while MannKind must meet various “formidable challenges ahead.”

According to TipRanks, Joshua Schimmer is ranked #3,972 out of 4,110 analysts. Schimmer has a 40% success rate and faces a loss of 7.0% in his average returns. However, when recommending MNKD, Schimmer earns 21.5% in average profits on the stock.

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