Investor Perception/ Why is the Market Wrong about MNKD?

[cusop]

In some respect we are our own worst enemies, there is so much useful information out there, the knowledge is having a negative effect on the stock. Obviously the biggest nugget of information is the number of prescriptions on a weekly basis. Not to mention that a senior member of the Mankind team eluded to the fact that the numbers were going to pick up, which has yet to happen. This the biggest drag on the stock value. but I now own more stock then ever so I remain positive.


once I hired a guy who had been in a start up that hand raised 40 million for some clinical diagnostic product, well the product did not deliver , but they were able to eck out a 3 million a year business fro the chemicals and other odds and ends. He could not understand why the investors took the loss sold off the assets and closed him down.. The ROI was going to take years!!

Mannkind has a number of futures the current one is based on US sales, but once the European market opens then the sales will double US sales in a short time and the sales in the US will naturally continue to double as the product penetrates more of the market. There will come a point where the value will be obvious and fears of product withdrawal will recede (exubra). We all can see the ROI is still possible with Mannkind hence we keep faith

see and I never even mentioned shorting!!

[sportsrancho]

Aug 5, 2015 13:39:13 GMT -5 lmj said:

So far 21 views and no one is willing to put down their thoughts. I don't want want to read something that everyone knows that is historical.

Why is the market wrong? That's what I want you to tell me and ask yourself for your own benefit.

I'm tired of taking hits on this stock day after day.

The market is wrong because they see Afrezza as a niche drug. I see first hand why Al thinks it will be a blockbuster! Most stocks are either under or over valued most of the time right? At some point, 16 months or so, we might be overvalued because we will have an increase in scripts and will have gone global. At that point the market will be foreword looking. Afrezza is a smart insulin. People once on it will never go back! Would you give up your smart phone?

[seanismorris]

The Market being right or wrong about Afrezza is less important than what Sanofi is doing to get Afrezza in the hands of patients.

 Giving out large quantities of Afrezza is great but doesn't address the pricing problem.  Sanofi can "fix" the issues with the insurance companies...but their strategy of pricing Afrezza higher than competing products is a mistake.  

Mannkind did many pre-market studies showing strong demand for Afrezza, but I think these were done with the understanding of price parity.  Mannkind always stated this when talking to investors and analysts...

There (I believe) is a strong pent up demand for Afrezza, and not just among patients with uncontrolled diabetes, but pricing is an enormous turnoff to trying it.  Diabetes is not something that can be kicked within 6 months with proper dosing (obviously) so a small pricing difference (stretching out into eternity) is extremely important.

And, yes I'm very aware of the science and the savings 'from avoiding hospital visits' but most people probably either think "it's not going to happen to me" or "I'll just do better watching my blood glucose". 

In other words, Mannkinds success or failure with Affrezza rests solely in the hands of Sanofi, not the Market, and that scares me more than a bit.  To date, Sanofi hasn't done a great job and getting it right might not be a priority (with the new CEO).  The lack of new clinical trials (to fix the label) and the lack of news about getting Afrezza approved in other countries elevates this concern.

Personally, I'm probably down (at a loss) on my MNKD but I haven't bothered trying to figure out by what percentage.  It's not as important as what Sanofi does in the next few months.  I have about 20K sitting on the sidelines waiting to add but MNKD right now is a HOLD until we get more clarity.  The Market seems to share my view, hence the subdued stock price.  I don't care about what the Shorts are doing...it just means I get more shares for my 20K or it doesn't matter because the Shorts were right. And, Yes that's painful to consider but as each month goes by the chances of the Shorts being right increases. (wince + shudder).

And yes, Sanofi is very capable of making a potential blockbuster drug into a niche product through mismanagement.  Al, as great as he's been, is no longer steering this ship.

[kc]

Sorry that my comments are a reposting of a thread from last week but they do seem to fit is this thread.  I am concerned that like many folks I have a big loss on my shares even with buying down as the share price dropped my avg cost is still at a loss.  But having reviewed the product, the partner and the fact that we are all potentially walking T2 diabetics convinces me that we have only begun our MannKind opportunity to see a positive return on our investment.   Diabetes is not going away or being cured anytime soon and Afrezza works well for T1D and T2D diabetics and potentially pre-diabetic T2.

My view from last week:

Good thread but I have to add the comment that no matter what the material event might be there is inherit value in MannKind. 

The heavy lifting was done by getting FDA approval. The slow start perhaps is a bit of a disappointment to the retail investor but is it to Sanofi? Perhaps we are too close to the daily grind of the stock. I have over 35 different stocks in my portfolio some of the that I have owned for over 35 years or longer. But MannKind is the only one that has really sucked me into watching it daily. Perhaps my expectations were wrong and I was looking for that one time Jewel that really exploded vs. the many bombs that I have also had over the years.

What is the real value of MannKind? My take is it's worth more than the market is giving it credit for today. Will Sanofi eventually be successful with Afrezza? You bet they will. Will it happen as quickly as we have hoped? Perhaps not. but the intrinsic value of MannKind is more than today's value. What is the real value? that depends on the commitment of Sanofi to see Afrezza develop into a strong viable alternative to the existing insulin's in the market today.

Do I think there is a chance for Sanofi to walk away from Afrezza? No. But than again I am a retail investor who has been fooled many times over the years. 

My view of Sanofi is this is another tool in their diabetes insulin portfolio. It's one that nobody else has available to them. Can they monetize properly? I am counting on it. When you have a product that is so unique it takes time and marketing to gain awareness of it. Let's hope that Sanofi understands this and will stay committed even if it takes a couple of years. Afrezza is just an infant and it will take years to raise this child to adult statue. Let's hope that our better days are ahead of us.

Getting back to Value. While we all want to see a 10X bagger it would not upset us to receive $15.00 or $20.00 and move from this risk of never knowing what tomorrow would bring That is why I really think that perhaps we as retail investors are tied to emotionally to MannKind. Today its life or death with a single product that is just beginning its marketing life and we are just a bunch of nerves waiting for a glimpse of what might be ahead for us as investors.


Read more: mnkd.proboards.com/thread/3134/mentally-prepared-material-event?page=1#ixzz3hzCveaG6

[xoxoxoxo]

seanismorris, I think sanofi's game all along was to price it high, then give insurers discounts for preferred tier status on their formularies. If social media/demand had skyrocketed off the bat they never would have had to lower prices, so they didn't want to miss out on that potential action. However, I think they knew that was a longshot and thus slow rolled things knowing they couldn't meet real demand until lines 2/3 were activated. That's why the DTC was delayed, etc.

It all makes sense, it's just investors who are impatient because they didn't become millionaires overnight. We just need to give it time for diabetics to pass the Good Word and insurers will come around when they see the financial benefit.

[gomnkd]

lmj
Let me take the bait and try to answer it. Many here wont like my answer.

First, if you know a thing or two about valuation, you'll realize that the current stock price already is pricing in billion $ or more of revenue. It (sales) hasn't happened it, but market is thinking it'll happen. When market slowly discounts the lower scripts, it reprices the stock lower. As simple as that. The stock today is cheap if you think Afrezza may one day make 10's of billions in revenue. It wont price it in until it sees proof of that.

I think that the market is an efficient pricing mechanism in long run. It always gets to the right value over time. Are you saying market is wrong because it is already pricing in a billion or is it wrong because it isn't pricing in 10's of billions? Note that, the entire forum members (=YMB+others)/retails own hardly 5% of stock. It is unlikely they can influence the price over longer run through any comments/articles/blogs etc.

I think that market's perception is correct. MNKD deserves to go down lower when scripts are too low. FWIW, I'm underwater too.
The looooooooooonger it takes for Afrezza to reach the peak potential, more is the cash burn and dilutions. Market efficiently prices it in too.
-----------------------------------------------------------
On the product: One thing is, this is Al Mann's first attempt at a mass market product. All his past inventions are ultra niche, high priced, high impact products that had absolutely no competition. They also take less $ to develop/market (due to fewer patients in trials etc). It is clear that Mann misjudged the time/effort it takes to develop/market Afrezza. In the process, he diluted the stock too much. I think it is 90+% dilution since IPO, including partnership. To add insult to injury, Afrezza label cant say anything about superiority, trials never proved superiority, label carries boxed warnings. for more insult, Exubera hangs over docs neck like a Damocles sword. So why is it so surprising that take off is slow?

Never ever expect stock to go up until scripts explodes upwards. No TS partnership will save the day. They wont amount to much in short term.
-----------------------------------------------------------
Another unrelated topic:
Why is MNKD such a cult stock and why are there haters? Given Al Mann's vision of Afrezza being used a therapy of choice, he believes it'll make tens of billions in revenue. If you subscribe to this vision (+ swayed by his past accomplishments), then nothing can bother you. The delays, dilutions, low scripts are of no concern. I call this alternate sense of reality. If you have this reality, you become part of this group. Anyone that shakes you out of this reality is a traitor. Any price down is due to the work of sinister forces that is out to destroy MNKD.

[patryn]

Aug 5, 2015 22:56:13 GMT -5 gomnkd said:

lmj
Let me take the bait and try to answer it. Many here wont like my answer.

First, if you know a thing or two about valuation, you'll realize that the current stock price already is pricing in billion $ or more of revenue. It (sales) hasn't happened it, but market is thinking it'll happen. When market slowly discounts the lower scripts, it reprices the stock lower. As simple as that. The stock today is cheap if you think Afrezza may one day make 10's of billions in revenue. It wont price it in until it sees proof of that.

I think that the market is an efficient pricing mechanism in long run. It always gets to the right value over time. Are you saying market is wrong because it is already pricing in a billion or is it wrong because it isn't pricing in 10's of billions? Note that, the entire forum members (=YMB+others)/retails own hardly 5% of stock. It is unlikely they can influence the price over longer run through any comments/articles/blogs etc.

I think that market's perception is correct. MNKD deserves to go down lower when scripts are too low. FWIW, I'm underwater too.
The looooooooooonger it takes for Afrezza to reach the peak potential, more is the cash burn and dilutions. Market efficiently prices it in too.
-----------------------------------------------------------
On the product: One thing is, this is Al Mann's first attempt at a mass market product. All his past inventions are ultra niche, high priced, high impact products that had absolutely no competition. They also take less $ to develop/market (due to fewer patients in trials etc). It is clear that Mann misjudged the time/effort it takes to develop/market Afrezza. In the process, he diluted the stock too much. I think it is 90+% dilution since IPO, including partnership. To add insult to injury, Afrezza label cant say anything about superiority, trials never proved superiority, label carries boxed warnings. for more insult, Exubera hangs over docs neck like a Damocles sword. So why is it so surprising that take off is slow?

Never ever expect stock to go up until scripts explodes upwards. No TS partnership will save the day. They wont amount to much in short term.
-----------------------------------------------------------
Another unrelated topic:
Why is MNKD such a cult stock and why are there haters? Given Al Mann's vision of Afrezza being used a therapy of choice, he believes it'll make tens of billions in revenue. If you subscribe to this vision (+ swayed by his past accomplishments), then nothing can bother you. The delays, dilutions, low scripts are of no concern. I call this alternate sense of reality. If you have this reality, you become part of this group. Anyone that shakes you out of this reality is a traitor. Any price down is due to the work of sinister forces that is out to destroy MNKD.

There's a huge difference between being unconcerned about delays, dilutions, and low script numbers, and being able to accept that *#@^ happens and build your investment thesis accordingly.  I doubt that there are any longs who are happy with the current rate of growth of prescriptions, but many are willing to see how events play out over the next few years rather than expecting the prescription numbers to skyrocket immediately.  If we act on the premise that the market is efficient, then the current market cap has already priced in the current prescription numbers.  Therefore selling right now means that you are expecting the status quo to remain the same.  Given that MNKD can last at least a year at the current levels with no secondary offering needed, I am willing to take a risk with my money for the potential upside of 10s of billions in future revenue.  No one can predict the future, but we can all take calculated risks depending on our own personal tolerances.  

This is why I advised lmj to do his own assessment of his risk tolerance and figure out how much he needs the money he has put into MNKD and what he would do if he lost it all should the investment not pan out.  If he determines (or anyone determines) that selling now would allow him to sleep better at night, then I consider it money well spent.  There's nothing that anyone here can say to change the stock performance of MNKD.  That lies mostly in the hands of MNKD management, and SNY management, partly in the hands of doctors and endos, and partly in the hands of the patients themselves.  The retail investors, hedge funds, and institutional investors have almost no direct impact on MNKD performance except in the case where MNKD needs to raise funds.   With the resolution one way or another to this $100 million convertible bond, we just need to wait to see how the sales and marketing engine kicks in to drive revenue.  

[jpg]

Aug 5, 2015 22:56:13 GMT -5 gomnkd said:

lmj
Let me take the bait and try to answer it. Many here wont like my answer.

First, if you know a thing or two about valuation, you'll realize that the current stock price already is pricing in billion $ or more of revenue. It (sales) hasn't happened it, but market is thinking it'll happen. When market slowly discounts the lower scripts, it reprices the stock lower. As simple as that. The stock today is cheap if you think Afrezza may one day make 10's of billions in revenue. It wont price it in until it sees proof of that.

I think that the market is an efficient pricing mechanism in long run. It always gets to the right value over time. Are you saying market is wrong because it is already pricing in a billion or is it wrong because it isn't pricing in 10's of billions? Note that, the entire forum members (=YMB+others)/retails own hardly 5% of stock. It is unlikely they can influence the price over longer run through any comments/articles/blogs etc.

I think that market's perception is correct. MNKD deserves to go down lower when scripts are too low. FWIW, I'm underwater too.
The looooooooooonger it takes for Afrezza to reach the peak potential, more is the cash burn and dilutions. Market efficiently prices it in too.
-----------------------------------------------------------
On the product: One thing is, this is Al Mann's first attempt at a mass market product. All his past inventions are ultra niche, high priced, high impact products that had absolutely no competition. They also take less $ to develop/market (due to fewer patients in trials etc). It is clear that Mann misjudged the time/effort it takes to develop/market Afrezza. In the process, he diluted the stock too much. I think it is 90+% dilution since IPO, including partnership. To add insult to injury, Afrezza label cant say anything about superiority, trials never proved superiority, label carries boxed warnings. for more insult, Exubera hangs over docs neck like a Damocles sword. So why is it so surprising that take off is slow?

Never ever expect stock to go up until scripts explodes upwards. No TS partnership will save the day. They wont amount to much in short term.
-----------------------------------------------------------
Another unrelated topic:
Why is MNKD such a cult stock and why are there haters? Given Al Mann's vision of Afrezza being used a therapy of choice, he believes it'll make tens of billions in revenue. If you subscribe to this vision (+ swayed by his past accomplishments), then nothing can bother you. The delays, dilutions, low scripts are of no concern. I call this alternate sense of reality. If you have this reality, you become part of this group. Anyone that shakes you out of this reality is a traitor. Any price down is due to the work of sinister forces that is out to destroy MNKD.

Once again you may not like what I have to say (sounds familiar?) but I think one of the reasons why some people may react negatively to what you are say (now and historically) is that you are maybe using loaded language (i.e. traitor: isn't that a harsh word?) and build your arguments/ sentences as if designed to provoke. You assume you understand how others analyze information. I for one knew it would take time and that mentalities and patterns of practice are hard to change (but when they do they are sticky) so although I would obviously like to see higher scripts I am more then willing to see how things go in a year. It's part of the analysis and not cultish.

We all have more or less the same facts but come to very different conclusions as to the future relevance of this past information (dilution, delays etc). A lot of what you are saying is now water under the bridge. Some (so far...) have done very well with the situation while others did poorly. The perception of all this is probably or possibly directly related to the average cost of shares? Yours isn't so good. Some picked up shares mostly in the low 2s and even high 1s. Very different perspective (but it shouldn't be really). I get it that you have been at this a long time and have lost the 'Mann groupie glow' you had almost a decade ago... You were historically one of the biggest cult Al Mann/ MNKD fans. Now you are underwater you seem more bitter than anything else? I get that. I hope this investment isn't causing you to lose sleep. If so how long can you keep on going?
Were you one of those that thought this would fly off the shelves without any marketing and didn't expect it to take time? Sanofi clearly told us early: this will take time.

[gomnkd]

patryn I agree 100%
-------------------------------
Am I bitter? wow, I'm a rational & professional investor. I diversify and take calculated risks. Yesterday I slept very well because my biggest investment RTRX showed great results. My combined profits in SRPT, XON, BLUE & RTRX alone are a multiple of my investment in MNKD. Critiquing or being critical of management's actions is not being bitter. I can afford to see MNKD go to zero and still handle it. At the moment, I'm neither selling nor buying. If scripts aren't in 1000's by end of this year, I'll be selling a lot.

Being able to analyze pros and cons of an investment (or an argument) is a sign of intelligence and emotional maturity.

[joeypotsandpans]

Aug 5, 2015 23:45:29 GMT -5 patryn said:

Right now I'm convinced it lies mostly in the hands of the insurance companies. The patient demand and physicians (that have been targeted up to now) are there more than most think/realize, there is definitely a backlog of scripts waiting/building for approval...this directly from one of the top SNY reps in a particular region.

[greg]

Aug 5, 2015 13:30:10 GMT -5 lmj said:

I'm long MNKD with not enough research and not enough of a margin of safety. Consequently I've take an over 20% hit on the downside on a speculative bet. 

For the LT holders who are bullish on this stock, I want to ask you why you think the market's perception of the stock is wrong?

I don't want to read posts about shorts manipulation etc. because that doesn't matter. It gets back to perception versus why you think the market is wrong.

I spoke to my general practitioner doctor about MNKD. His response was no one ever approached him with the drug for samples. He had no patient asking for it. And his view is if the insurance companies are not willing to pay, a drug has a very
hard time gaining any traction. Why do you think the company will turn this around?

Focus on perception versus why you think the market is wrong. 

Only when the market realizes it is wrong will this stock trade up IMO. It's as simple as that. What is your edge on why you think you are right?

Without answers to this, I'm about to unload my shares. Thanks in advance.

If you don't think there's enough research out there on MNKD, you're in trouble. There probably isn't a stock out there that has been scrutinized as much as this one. If you let the stock price or market dictate your investment strategy, you're in trouble. GMCR is down 29.9% this morning. Was the market right yesterday or is it right today??? The same question can be asked of the tulip mania, pre and post crash. Ditto NASDAQ's cratering in 2000 and the market's slump in 2007/2008.
If you think talking to one general practitioner represents a meaningful field survey, you're in trouble, for obvious reasons.

All that said, if you truly are long the stock, I wish you would unload all of them. The fewer weak hands on deck, the better. Quite frankly, I'd also be happier with fewer obnoxious fellow shareholders. Just in case you don't already know, your post couldn't have been more annoying, I'm surprised you've received as many responses as you have. Undoubtedly a reflection of too many shareholders having way too much time on their hands. This includes yours truly.

[taylor810dn]

All good points but if you look at this strictly from a stock trading view, from June 4th to June 15th there were over 150 MILLION shares traded and the average stock price for that volume was above $6.  It took a significant motivator to move 150 million shares with an average above $6, even though that motivator was not apparent other than it seemed the market felt MNKD was worth at least $6.  And now we sit close to $4, and the volume to get there has not been much more in total for well over a month than the 150 million from those 8 high volume days in June.  Unless the 150 million traded shares was a lot of funny business, there are a whole lot of folks under water right now.  And it is difficult to believe that the recent script numbers and hit pieces have scarred that many folks out of MNKD.

[mssciguy]

Aug 6, 2015 9:33:34 GMT -5 taylor810dn said:

All good points but if you look at this strictly from a stock trading view, from June 4th to June 15th there were over 150 MILLION shares traded and the average stock price for that volume was above $6.  It took a significant motivator to move 150 million shares with an average above $6, even though that motivator was not apparent other than it seemed the market felt MNKD was worth at least $6.  And now we sit close to $4, and the volume to get there has not been much more in total for well over a month than the 150 million from those 8 high volume days in June.  Unless the 150 million traded shares was a lot of funny business, there are a whole lot of folks under water right now.  And it is difficult to believe that the recent script numbers and hit pieces have scarred that many folks out of MNKD.

This stock is manipulated, Matt even said so. My advice is to watch the 300day moving average (dma).  It does not change much, currently $6+
Also watch RSI, MFI and other indicators, as well as Jan 16 $5 call open interest.  One explanation for the heavy shorting and stock price manipulation would be that shorts were looking to cover at $4-5 and so they've picked up a lot of cheap call options.

It took over a decade to get to this point (maybe much more), mgmt at both mnkd and sny has done a great job, ins. coverage is now in place, DTC has been rolled out, and yahoo message board is full of full-time professional bashers.  Every indication is that we'll recover and then some over the next few months.

Looking forward to nRx and tRx numbers tomorrow...

[savzak]

Aug 6, 2015 9:33:34 GMT -5 taylor810dn said:

All good points but if you look at this strictly from a stock trading view, from June 4th to June 15th there were over 150 MILLION shares traded and the average stock price for that volume was above $6.  It took a significant motivator to move 150 million shares with an average above $6, even though that motivator was not apparent other than it seemed the market felt MNKD was worth at least $6.  And now we sit close to $4, and the volume to get there has not been much more in total for well over a month than the 150 million from those 8 high volume days in June.  Unless the 150 million traded shares was a lot of funny business, there are a whole lot of folks under water right now.  And it is difficult to believe that the recent script numbers and hit pieces have scarred that many folks out of MNKD.

I'm first to admit I could be wrong, but I think the reason we are at $4 is some because of timing issues. The longer it takes for scripts to show some propensity to ramp, the further we go into the time period of the launch and the closer we get to January of 2015 when SNY can walk if it wants to.  Add to this time frame analysis the fact that SNY yields precious little in terms of talking up its commitment to Afrezza or its confidence in its success and you have a recipe for nervous longs. Mix in a little well timed FUD and manipulation and voila, we're at $4.

If we get either obviously ramping scripts OR a clear statement from SNY that it is committed beyond January, I think the pps will move up very quickly.

[greg]

Aug 6, 2015 9:51:47 GMT -5 savzak said:

Aug 6, 2015 9:33:34 GMT -5 taylor810dn said:

All good points but if you look at this strictly from a stock trading view, from June 4th to June 15th there were over 150 MILLION shares traded and the average stock price for that volume was above $6.  It took a significant motivator to move 150 million shares with an average above $6, even though that motivator was not apparent other than it seemed the market felt MNKD was worth at least $6.  And now we sit close to $4, and the volume to get there has not been much more in total for well over a month than the 150 million from those 8 high volume days in June.  Unless the 150 million traded shares was a lot of funny business, there are a whole lot of folks under water right now.  And it is difficult to believe that the recent script numbers and hit pieces have scarred that many folks out of MNKD.

I'm first to admit I could be wrong, but I think the reason we are at $4 is some because of timing issues. The longer it takes for scripts to show some propensity to ramp, the further we go into the time period of the launch and the closer we get to January of 2015 when SNY can walk if it wants to.  Add to this time frame analysis the fact that SNY yields precious little in terms of talking up its commitment to Afrezza or its confidence in its success and you have a recipe for nervous longs. Mix in a little well timed FUD and manipulation and voila, we're at $4.

If we get either obviously ramping scripts OR a clear statement from SNY that it is committed beyond January, I think the pps will move up very quickly.

I wish MNKD longs, I'm assuming you are one, would stop talking about SNY walking away, or wanting it to make a clear statement about commitment. It's tough enough having to deal with the shorts constantly harping on that nonsense. Drug companies spend a decade or more trying to develop a drug, for which it has very little idea about its ultimate commercial success. Moreover, the typical drug costs about a billion dollars from lab to patient. Did you know Pfizer spent almost 12 years in the development of Exubera and spent almost $3 billion?? So, why are we even thinking about SNY walking away from a likely huge blockbuster just a few months into the launch?

George Rho detailed the slow ramp of Lantus. How rapid do you think the ramp up of Novolog was??? And just for the record, Novolog was launched 14 months after it was approved in the United States. So, to all those bellyaching about SNY's sandbagging, slow to move, or whatever, please do your research before complaining about things you know little about.