Post by Chris on Sept 3, 2013 1:25:52 GMT -5
Mannkind Corporation (NASDAQ:MNKD)
This week MNKD issued a "Frequently Asked Questions" or FAQ via an 8-K filing. The ostensibly addresses many of the questions that MNKD Ir has been getting over the past two weeks, ever since releasing top-line results for their two latest phase 3 trials of Afrezza. The FAQ addresses a variety of issues including a negative report by Summer Street suggesting that the MedTone arm A1C results were withheld on purpose, as well as addressing posts on message oards by patients from the Affinity 1 and 2 trials. Addressing such message board posts is a highly unusual move by a public company.This FAQ was squarely directed at retail investors who have obviously gotten jittery after seeing MNKD stock sell-off after reporting positive top-line results. Buy side investors are more concerned with MNKD's balance sheet than with the subtitles of whether or not the Gen 2 inhaler outperformed the MedTone inhaler. Prior to the data release, on August 5th we sent our readers our analysis of MNKD suggesting that taking profits ahead of the data release, or very shortly after the data were announced would be a prudent move. It turns out that our piece correctly called the top for MNKD stock (except for a brief pop to $9.30 intra-day when data were announced).
We reiterate our view that, while the phase 3 data make Afrezza approvable, they have fallen short of the promise that MNKD held out prior to the data that Afrezza would be a game changer for diabetes patients by providing greater glycemic control. This simply has not proven to be the case even in a clinical trial with a forced titration treatment algorithm. When facts change, the investment thesis must change with them. The fact that significantly more patients in the insulin Aspart arm achieved HbA1c levels below 7% and 6.5% compared to the Afrezza arm is a big negative for marketability of Afrezza.
While the Mann group line of credit will not have to be repaid until the Deerfield debt is repaid, this does not strengthen MNKD's balance sheet enough for our view to change appreciably. We believe that at its current market capitalization, MNKD is overvalued given present facts. Should a major pharmaceutical partner step up with a partnership offer that is economically favorable to MNKD, our view may change; however, in the interim, a retest of the $5.50 to $5 level may be in order. The 200 day exponential moving average for MNKD is $5.01. should this level fail to hold, the next level of support would be in the $4 range.
In October MNKD will announce resubmission of the Afrezza New Drug Application. While this will be a mild positive for the stock, we still expect a further capital raise later this year unless a commercial partner steps up to sign a partnership agreement where the partner shoulders the bulk of the marketing expenses.
We have no position in MNKD.
This week MNKD issued a "Frequently Asked Questions" or FAQ via an 8-K filing. The ostensibly addresses many of the questions that MNKD Ir has been getting over the past two weeks, ever since releasing top-line results for their two latest phase 3 trials of Afrezza. The FAQ addresses a variety of issues including a negative report by Summer Street suggesting that the MedTone arm A1C results were withheld on purpose, as well as addressing posts on message oards by patients from the Affinity 1 and 2 trials. Addressing such message board posts is a highly unusual move by a public company.This FAQ was squarely directed at retail investors who have obviously gotten jittery after seeing MNKD stock sell-off after reporting positive top-line results. Buy side investors are more concerned with MNKD's balance sheet than with the subtitles of whether or not the Gen 2 inhaler outperformed the MedTone inhaler. Prior to the data release, on August 5th we sent our readers our analysis of MNKD suggesting that taking profits ahead of the data release, or very shortly after the data were announced would be a prudent move. It turns out that our piece correctly called the top for MNKD stock (except for a brief pop to $9.30 intra-day when data were announced).
We reiterate our view that, while the phase 3 data make Afrezza approvable, they have fallen short of the promise that MNKD held out prior to the data that Afrezza would be a game changer for diabetes patients by providing greater glycemic control. This simply has not proven to be the case even in a clinical trial with a forced titration treatment algorithm. When facts change, the investment thesis must change with them. The fact that significantly more patients in the insulin Aspart arm achieved HbA1c levels below 7% and 6.5% compared to the Afrezza arm is a big negative for marketability of Afrezza.
While the Mann group line of credit will not have to be repaid until the Deerfield debt is repaid, this does not strengthen MNKD's balance sheet enough for our view to change appreciably. We believe that at its current market capitalization, MNKD is overvalued given present facts. Should a major pharmaceutical partner step up with a partnership offer that is economically favorable to MNKD, our view may change; however, in the interim, a retest of the $5.50 to $5 level may be in order. The 200 day exponential moving average for MNKD is $5.01. should this level fail to hold, the next level of support would be in the $4 range.
In October MNKD will announce resubmission of the Afrezza New Drug Application. While this will be a mild positive for the stock, we still expect a further capital raise later this year unless a commercial partner steps up to sign a partnership agreement where the partner shoulders the bulk of the marketing expenses.
We have no position in MNKD.