Published on 360 Biotech: Thursday, 31 July 2014 03:44 by Doctor Hung V. Tran, MD, MS. Disclosure: I am long on MNKD.
As the next earnings report is approaching for MannKind Corporation, loyal shareholders are anxiously waiting for the management's announcement regarding Afrezza commercialization. MannKind Corporation is a small company based in Valencia, California, with its FDA approved lead drug Afrezza indicated for diabetes mellitus treatment.
Recent negative opinions by Tourbillon's manager, Mr. Jason Karp, during his appearance on CNBC also added stress for shareholders awaiting Mannnkind's fate. While the merits of the SAC fund manager are debatable, Mr. Karp's opinions indeed had negative impact on MannKind's shares price.
Source: Guru Focus
Since the July 25th article detailing Mr. Karp's statement on a blog called Value Walk, which consistently posted negative articles on MannKind the stock seemed to lost its steam and traded 10 percent lower to close at $8.66.
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Mannkind shareholders on various social media platforms, including Stock Twits, Twitters, and Facebook fought hard to bring truth regarding MannKind and Afrezza.
On Wednesday, July 30th, I called Tourbillon hoping Mr. Karp would clarify his position on MannKind in double checking whether I missed certain facts from my long thesis. The answer I received was rather disappointed.
"We do not schedule interviews for positions that Mr. Karp has taken. It was an opinion that was published and we can't comment on it based on our policy," said Tourbillon spokesperson. Tourbillion reiterated that it was simply an "opinion." Mr. Karp, however, was strongly opined that Mannkind would lose 90 percent of its value.
In response to Mr. Karp's assertion, MannKind shareholders and writers questioned the validity of his opinion. Readers criticized Mr. Karp's failure to deliver value as evidenced by Tourbillon's underperformance and questioned Mr. Karp's licensing issues with FINRA. It's interesting to note that Mr. Karp is currently holding hundred millions of dollars in stock options that would expire in the foreseeable future.
While it's possible that Tourbillon could be right regarding MannKind, as well as, profiting from stock options, but even Warren Buffet is unable to predict the short term price movement of stocks.
Yesterday, I pushed diligence a bit further by calling MannKind to learn when the company would announce Afrezza's commercialization strategy going forward. "Mr. Pfeffer is out of town until next Monday," said Mrs. Roberta, a spokesperson from MannKind. Leading by inquisitive nature, I pondered where could CFO Pfeffer go.
While MannKind commercialization strategy for Afrezza still remained uncertain. It's anyone's guess at this point regarding whether MannKind chooses to form a partnership and with what firm, or whether Doctor Mann, CEO and founder, would sell the company at a premium.
Nonetheless, what is certain is that Afrezza is a potential game changer, to take complete dominance in the diabetes market that is poised to grow as large as $45 billion dollars by 2020 based on Granville Research. Though inhaled insulin is not a new concept, Afrezza is completely different from Exubera -- a failed inhaled mealtime insulin being delivered through an archaic bong-like device.
Afrezza exhibits superior kinetics that resemble the kinetics of healthy pancreas, as well as, being able to deliver right before mealtime in a small and inconspicuous device that is easy to use. The perfect blend of beauty and ingeniousdesigned, Afrezza offered unparalleled user convenience, thus, facilitating patient compliances and helping to reduce the debilitating effects as well as the costly $245 billion spent on treating diabetes annually.
Despite research indicated highly favored odds that the market would welcome Afrezza, the drug's market success remained to be seen. I would recommend Mannkind investors to sit tight and tune out of market noises. Instead, you could read research on the company to reaffirm your thesis. According to Mohnish Pabrai (Trades, Portfolio), investors do not make money by buying and selling stocks but rather by patiently waiting. I concurred with the Dhando Investor's advice.
"Interity, ingenuity, essence, and essentially all else follow."