MannKind Corporation (MNKD) stock has seen better days, and MannKind itself is a company in turmoil. For those following the story, they can attest that it’s a sad one.
Unlike the detestable, megalomaniacal, attention-grabber Martin Shkreli, ousted CEO of Turing Pharmaceuticals and KaloBios Pharmaceuticals Inc (KBIOQ), MannKind’s founder Al Mann was a doer and a dreamer. He captained MannKind in its successful quest to research, develop and produce an inhalable insulin, which the FDA approved in the summer of 2014.
Afrezza was MNKD’s only FDA-approved product, and after it was approved, the cash-poor MannKind sought to license the product. It found a worthy partner in Sanofi SA (ADR) (SNY), one of the world’s biggest pharmaceutical companies with enormous resources, experience, brand recognition and an international network of salespeople.
MNKD stock would trade as high as $7.32 as investors rallied behind the shares, hoping Sanofi’s swag would lift MannKind.
It did not. Afrezza was a commercial failure, and Sanofi dropped MannKind as soon as it legally could.
So: Where does that leave MNKD stock as we approach fourth-quarter earnings today, according to Google Finance? In a very tough spot.
MNKD Earnings Not About the Numbers
Contrary to most names on Wall Street, MannKind stock will not really be impacted by its quarterly results. Yes, there are formal consensus figures: Analysts expect MNKD to lose five cents per share on revenue of $70,000. But all eyes (or rather, ears) will be on the conference call.
Investors will be listening for some sort of plan — at a bare minimum, they need anything that can help MNKD stave off bankruptcy and buy itself some time. The whole reason MNKD desperately sought a licensing partner in 2014 to begin with was its dismal financial situation: It was deeply indebted and low on cash after burning millions on R&D.
Today, post-Sanofi, the situation is much worse. MannKind’s only monetizable asset is a drug MNKD can’t afford to market, and it’s one no sane partner would agree to license after Sanofi’s failure. Furthermore, an acquisition — which MannKind reportedly began pursuing just weeks after the Sanofi breakup — is probably a pipe dream given the dire situation and huge debt load.
For MNKD stock, no news is bad news. It has got $120 million in long-term debt and just $33 million in cash. The company has to do something: restructure its debt, issue more stock and dilute shareholders (again), take its cash and play the lotto … at this point any revival is looking like a long shot.
About 30% of MNKD stock is shorted, and with the great Al Mann stepping down as executive chairman over the weekend (and leaving the board entirely), it looks like he sees the endgame and he doesn’t like it.
I myself was once an ardent believer in MNKD stock. But I fear that the end is nigh.
As of this writing, John Divine had no position in any stocks mentioned. You can follow him on Twitter at@divinebizkid or email him at editor@investorplace.com.
