MannKind Corporation (O:MNKD) has been a big topic of conversation as of late, and for very good reason. The company came up with an incredible product, only to be shot down by poor sales. As I do my research on the stock, I've come across several conflicting views. While some experts believe that this is the end for MNKD, others believe that we've turned a page to a new beginning. So, which one is correct? In my opinion, what we're looking at here is a new beginning. Today, I'll go over the argument from both sides and explain why I believe MNKD is headed upward!
The Bearish Argument On MNKD
When it comes to MannKind, the bears definitely have a valid argument. You see, the company's claim to fame has been its product known as Afrezza. Afrezza is an insulin that can be inhaled, rather than injected. The bears have no qualms with the fact that this is a product that has the ability to revolutionize the way we treat diabetes. However, they do have an issue with the ability of MNKD to sell the product, and I'll be the first to admit that their concerns are warranted. After creating Afrezza, MNKD was a bit strapped for cash. As a result, they didn't have the funding needed to commercialize the treatment and reached out to a pharmaceutical giant to do so, signing a contract with Sanofi (PA:SASY). However, Sanofi had it's own competing treatment, and properly commercializing Afrezza would be bad for the company's bottom line. So, Sanofi dragged its feet, leading to poor sales and declining values on MNKD. Now, the agreement between Sanofi and MannKind is coming to an end, and the bears simply don't believe that MNKD has the money to commercialize Afrezza properly. Therefore, they believe that the stock will fall and that we are seeing the end of the company.
The Bullish Argument
While the bears do have very valid arguments, I believe that the bullish argument is the one that takes the cake. When it comes to MNKD, the bulls have a few arguments...
- Afrezza – The bulls argue that Afrezza is a great product, and if marketed properly, the product will fly off of the shelves. After all, about 10% of the population is afraid of needles. So, taking injections out of the equation with regard to diabetes treatment will do great things for consumers. On top of that the product is great for children as well as those that work in areas without access to a public restroom. Ultimately, the bulls argue that Afrezza is a much needed treatment.
- Ability To Market Afrezza – As mentioned above, the bears argue that MNKD doesn't have the money to really market Afrezza how it should. The bulls beg to differ. In fact, MannKind has made several announcements since the cancellation of its agreement with Sanofi. One of the most impressive plans for marketing is Specialized Diabetes Care Centers. These centers will focus on real time diabetes care using Afrezza, and most importantly, will cost MNKD absolutely nothing to set up. On top of that, the company is looking for other commercialization partners, which will likely be a fruitful hunt.
- Technosphere – Another important part of the argument here is the technology that makes Afrezza possible. MNKD has created a technology known as technosphere. This allows injection only medications to be absorbed into the body through an inhaled powder. MannKind is currently working on expanding indications for technosphere and has already signed a licensing agreement with a company to do so.
All in all, poor sales in the beginning are concerning for many. However, the bulls argue that now that Sanofi is getting out of the picture, MNKD will be able to pick things up through stronger Afrezza sales and further developments with regard to technosphere.
The Bottom Line
The bottom line here is that there's no arguing the fact that MNKD is having a rough time. Those on both sides of the equation can see that. However, I believe that the bulls are missing something. While there is a very valid reason to be concerned, there have been several developments since the cancellation of the agreement with Sanofi that say Afrezza sales are likely to climb. That combined with technosphere tells us that we're likely to see gains once MNKD makes it over this hurdle.