MannKind Corporation (NASDAQ:MNKD)
In the market, there are few stocks that can invoke quite as much emotion among investors as MannKind Corporation. There’s good reason for this. The truth is that there’s a strong case for both the bullish and bearish side opinions. At this point, we all know why those opinions are there. It all surrounds Afrezza. At the end of the day, the bears don’t believe that the company will be able to sell enough of the product to reach profitability before it runs out of money. On the other hand, the bulls argue that with the new commercialization efforts, this is possible. With that said, today, we’ll take a look at what it would take for the company to reach profitability and whether or not the efforts being made by MNKD at this point are too little too late.
What Would It Take For MNKD To Break Even With Afrezza Alone?
Earlier this morning, I came across an incredible article by Trent Welsh. In his article, Trent laid out all of the numbers in a break down that showed what we would need to see in Afrezza sales. In his article, Welsh pointed out that the company has about $10 million in costs per month. On top of that, MannKind projects spending on commercialization in the amount of $16 million to $18 million over the next 5 months. So, this brings the total cost of running the business to about $13.5 million per month.
Taking a look at Afrezza, we see that it’s going to take quite a few prescriptions to hit the break even point. At the moment, the average amount of money that MNKD brings in from each prescription is about $534. So, in order for all costs to be covered by Afrezza sales, the company would need to sell 25,281 active prescriptions. Considering that currently, prescription totals are at 276, the company has a very tall mountain to climb here.
Is It Possible For This To Happen Fast Enough?
At the moment, MannKind has enough money to get it into the new year. From there, we can expect that financing will depend on how strong sales growth has been. In his article on Seeking Alpha, Trent offered a break down of what 20% growth would look like. He found that if MNKD can maintain 20% growth in prescriptions weekly throughout the rest of the year, they will have had 12,664 prescriptions; about half of what is needed to reach the break even point.
However, if they were able to do so, the trends would be appealing enough to make fund raising relatively simple. So, if the company can show strong weekly growth, we can expect that they will survive just fine.
What I’m Expecting To See Moving Forward
Moving forward, I have a relatively mixed opinion here. First and foremost, while I maintain a relatively bullish opinion, it’s important that you understand the risk here. If MNKD does miss the mark, we can expect to watch as it goes down in flames. However, the first part of commercialization is proving to be positive. We’ve seen strong growth, and I’m expecting that this strong growth will continue. As a result, I’m expecting to see long run gains as MannKind makes its way to profitability some time in late 2017. However, I reiterate that I am cautiously optimistic here.