MannKind Corporation Stock: Unloved and Unbelievably Attractive

Advertisement

To anyone who argues that markets are perfectly efficient, allow me to introduce you to a little biotech stock called MannKind (MNKD). For those unfamiliar with the company, it has a potentially revolutionary FDA-approved diabetes drug called Afrezza hitting the shelves in early 2015.

mannkind corporation stock mnkd stock afrezzaHere are some quick facts about diabetes that should give you some context about the scope of the problem that MNKD’s inhaled insulin product, Afrezza, will address:

  • As of October 2013, the WHO estimated that about 350 million people worldwide are afflicted with diabetes.
  • 2012 CDC estimates suggest nearly 30 million U.S. adults over the age of 20 have diabetes
  • The number of Americans with diabetes rose by about 13% between 2010 and 2012, according to the American Diabetes Association.
  • The WHO estimates that total deaths attributable to diabetes will rise by upwards of 50% in the next decade alone.

You get it. Those are some daunting, ugly statistics. Diabetes is a massive problem that needs to be addressed immediately.

In light of these facts, what makes the biotech stock such a special opportunity?

Quick Facts on MannKind, MNKD stock, and Afrezza

MannKind’s CEO is Alfred Mann, a billionaire entrepreneur and biophysicist who has “founded or largely funded” 17 companies in his lifetime. More than half of those were eventually acquired for a sum total of roughly $8 billion. Most of Alfred Mann’s net worth is tied up in MannKind. The point: Mann knows business.

As for Afrezza and the prospects for MNKD stock:

  • The future of MannKind hinges directly and solely on the commercial success of Afrezza, MNKD’s rapid-acting inhaled insulin product that is slated to hit the shelves in early 2015.
  • Afrezza treats both type 1 and type 2 diabetes.
  • Afrezza is administered through MannKind’s proprietary Technosphere technology, which resembles the size of an inhaler and makes insulin delivery easy and fast.
  • MannKind has a partnership with Sanofi (SNY), which will use its resources and marketing power to give Afrezza meaningful distribution potential.
  • After the FDA approved Afrezza in June, MNKD stock peaked at $11.48 per share.
  • The MNKD stock price today hovers around the $5.50 level.

I believe a dramatic run-up is likely in MNKD stock in the weeks and months leading up to Afrezza’s debut, and have put my money where my mouth is, investing a portion of my own portfolio in MNKD options.

Wall Street is absolutely missing the boat on MannKind right now. In fact, I wrote an article in early October explaining why I thought MannKind stock was a screaming buy, but warning investors that MNKD would likely go lower before realizing any gains. It went lower all right, falling as much as 20% in the span of about 10 days.

Having followed MNKD stock closely for more than two years, I’ve noticed that institutional money tends to flow in and out of the stock fairly quickly. It flows in before a major catalyst, and it flows out after a major catalyst.

Afrezza hitting the market in early 2015 is a major catalyst. And if you’re comfortable with a make-or-break short-term play like MNKD in your portfolio, you’d be hard-pressed to find a more attractive risk-reward profile than MannKind stock. It’s not often that the individual investor gets a chance to front-run Wall Street, which is why I’m not letting this opportunity slip away.

More from InvestorPlace

As of this writing John Divine held MNKD Jan 2015 $3 calls, Jan 17 2015 $5 calls and Jan 2016 $7 calls. You can follow him on Twitter at @divinebizkid.


Article printed from InvestorPlace Media, https://investorplace.com/2014/10/mannkind-corporation-mnkd-stock-afrezza/.

©2024 InvestorPlace Media, LLC