360 Catalyst Keys
- The prior day's massive insider shares purchased lend support to investor's sentiment that Mannkind would finalize potential buyout or partnership negotiation soon, and this would unlock significant value for shareholders.
- Given that CVP Juergen sold significant shares prior to the 2010 and 2013 binary events yet Dr. Juergen purchased more than $1.2 million during Thursday, July 17 2014 which casted the VP's confidence regarding unfolding events going forward.
- Despite concerns about funding and dilution, Dr. Al Mann, CEO and Founder, put his money where his mouth as he bought shares at the market and also loaned Mannkind his own money at favorable terms.
- By closing the deal with a potential partner, Mannkind would have access to more capital, robust marketing as well as sales force to ensure a successful launch for Afrezza. Even in the worst-case scenario, Mannkind neither landed a partner nor getting bought out, investor should realize that Doctor Mann is a billionaire serial entrepreneur philanthropist, who will do whatever it takes to ensure Afrezza's success.
- Mannkind has been improving its balance sheet, including the reduction of both short terms and overall liability. Nonetheless, critical key for Mannkind is Afrezza's market performance, and research showed that Afrezza has highly favored odds in becoming a powerful blockbuster.
- Oral diabetes medicine indeed offers convenience. However, neither oral nor other injectable drugs are insulin per se. Consequently, they could not be used to treat Type 1 diabetes. Additionally, when Type 2 diabetes progress to advanced stage due to suboptimal glucose control, the pancreatic B-cell would not longer produce insulin, thus, limited any drug beside insulin as treatment.
- Intensively data driven research strongly supports Afrezza market success, as one top selling blockbuster to create pressure on other competing drugs, given Afrezza has super rapid acting kinetics to mimic the working of healthy pancreas, easy to use, user convenience, removing needles' stigma, and improving overall compliance. Current SP of $9.80 versus our calculated $38 PS based on ultra conservative CMA valuation presents Mannkind as the investing opportunity of a lifetime.
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- MNKD 15-Year Financial Data
- The intrinsic value of MNKD
- Peter Lynch Chart of MNKD
What is the Recent Story on Mannkind
As shareholders anticipated yesterday of news pertaining to Mannkind's acquisition or partnership, a Tsunami of insiders purchased yesterday in the after hours invigorated Mannkind bulls poised to charge ahead. Mannkind Corporation (NASDAQ: MNKD) is a small company based in Valencia, California, focusing on the development and commercialization of medicine to treat diabetes. The catalytic event of either a buyout or partnership, would unlock tremendous value for shareholders. Nonetheless, Mannkind has not issued any press releases since the Afrezza's FDA approval on June 27, 2014.
Interestingly, Mannkind filed eleven 4-Ks with the Security Exchange Commission (SEC) in the AH trading on July 17, 2014. The tide of unanimous insider stock accumulation, left investors pondering whether the event was a prelude to the ultimate reward of a buyout or partnership
Source: Open Insider
Investors should note that that Corporate Vice Present (VP), Doctor Marten Juergen, sold significant shares prior to the 2010 and 2013 binary events indirect, evidencing VP Juergen's diligence in risk deleveraging. It could also be the VP's previous disappointment at Nektar Therapeutics, the maker of another inhale insulin, Exubera, delivered through a bong and also lacking the superior kinetics intrinsic to Afrezza. Though considered a failed drug, Exubera was still able to recognize $200 million revenues for Pfizer. Despite Exubera inferiority to Afrezza, readers should be cognizant that the science pioneered at Exubera indeed contributed toward the development of Afrezza.
That being said, I was stoked as I was combing through the 4-Ks and saw that Dr. Juergen did not sell a single share in his $1.2 million shares purchased. Hence, these facts support investor's sentiments that Mannkind could finalize either a buyout or partnership deals any time going forward, now that insiders already built shares. As elucidated in my previous article, Mannkind shareholders are expecting major candidates, including Elli Lilly, Merck, Novo Nordisk, Pfizer, Roche, GlaxoSmithKline, or Johnson and Johnson.
How is the Stock Trading Recently
Perhaps Thursday's 4-Ks filing echoed an incoming tide in the affairs of Mannkind, because Mr. Market has been more optimistic in quoting Mannkind shares. During the July 18, 2014 trading session, 8.5 million shares traded hands in the range of $9.25 to $9.80 and closed with 5.5 percent gained at $9.80. During the past 52-weeks, shares traded from $3.80 to $11.48 having an average volume of 11.8 million shares.
Source: 360 Biotech
Tell Me More About The Company
Mannkind has a market cap of $3.81 billion with 388 million common shares outstanding. Mannkind's lead drug, Afrezza was FDA-approved on June 27, as treatment indicated for both Type 1 and Type 2 diabetes.
Revolutionary in its ability to mimic the action of healthy pancreas, Afrezza is delivered through a tiny second-generation Cricket inhaler called Dreamboat immediately prior to mealtime. Further, it's imperative for readers to understand that Mannkind's proprietary Technosphere is an innovative drug delivery platform, having vast potential applications to deliver additional drugs. The Technosphere platform packaged drugs into a unique powder formulation, enabling fast drug delivery into the lungs' circulation, thus, bypassing the "first pass effect" characteristic of oral drugs.
The Dreamboat is available in different colors, simple to use, convenient, aesthetic appealing. As mentioned, Afrezza has superior kinetics enabling it to be superior to competitors. Despite many oral or injected anti-diabetes medications being available such as metformin, Victoza, Byetta, Avandia and etcetera, they are not insulin per se. Though oral medications are convenient to use, they are not insulin and could not replace insulin in general. These drugs undergo different mechanisms but they all have a common end point – improving insulin sensitivity to lower blood sugar. However, oral medicines work, if and only if, the pancreas is still making insulin. Given Type 1 diabetes predominantly affect young patients and these patients do not make insulin, oral medicines are indeed obsolete.
Pertaining to Type 2 diabetes, pancreatic Beta cells (or B-cells) increase insulin production during the "honey moon" phase as the pancreas compensating for the lowered insulin efficacy due to increased insulin resistance. Unfortunately, pancreatic B-cells eventually become fatigued and die, thus, stopped all insulin production. This explained the fact that the American Diabetes Association (ADA) is pushing for early insulin treatments to save the pancreas. Hence, this should favor healthcare providers such as MD, DO, NP, or PA to prescribe Afrezza over competitors. It's important to reiterate that Afrezza ease of use, patience centered, and superior kinetics would improve patients' compliance, thus, reducing the striking annual $245 billion spent on treating diabetes complications.
What About The Fundamentals
Given Afrezza has characteristics of an elite blockbuster –potentially procuring revenues surpassing the Illustrious Lipitor –Mannkind is fundamentally sound because the company's success is directly dependent on Afrezza. Further, Mannkind also exhibited reducing trends in both current and total debts.
Source: 360 Biotech
While Mannkind might appeared to have dilution concerns, the company actually only issues shares that are truly needed to raise capital needed for Afrezza's success. In assessing the big picture, Mannkind only increased 34 percent shares counts (from 289 million shares to 388 million shares) during the past several quarters to complete its huge Phase 3 Affinity Trials. This was not to mention Mannkind had to tie up loose end for Afrezza approval and preparation for its launch. It is luxurious to have a billionaire CEO and Founder to reassure shareholders that if cash is needed, CEO Mann would provide the company loans at highly favorable terms.
Similar to the Oracle of Omaha Mr. Buffett, CEO Mann, also "put his money where his mouth is" by purchasing most shares at the market price. Needless to say, the serial entrepreneur CEO has not sold a single share of his majority stake in the striking 45 percent insider ownership, which voted high confidence in the company prospect going forward.
Source: Open Insider
What is The Bottom Line for Investors
Based on 360 Biotech, Afrezza is poised to capture the enormous $29 billion insulin market, of which $9 billion constitute rapid acting insulin, and growing rapidly to reach $45 billion by 2020. The intelligent investors could take advantage of this "once in a lifetime" opportunity, as Mr. Market quoted Mannkind shares only $9.80 PS. This is a mouth-watering bargain is significantly lower than the $38 valuation calculated using highly conservative CMA. Investors can rest assured that CEO Al Mann would successfully navigate to capture the incoming tides for Afrezza blockbuster market entry.
The bottom line is that recent share accumulation by insiders, notably, corporate VP Marten Juergen as a risk averse and prudent investor purchased $1.2 million is likely a prelude to the favorable unfolding event. Investor should also note that I could not guarantee 100 percent accuracy due investing research's dual natures of art and science. As the final note, investors need to be realistic and convicted in holding Mannkind shares regardless of market fluctuations or whether buyout or partnerships indeed occur soon, or if occurring at all. Whether a partnership or buyout deal would close ultimately depends on Doctor Mann. We trust that the captain would make the right choice for loyal shareholders like the ADCOM patient advocate, Mr. Eric Fenar, and his daughter, Leila.
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