Have they no shame?

Have they no shame?

Gustavo Agrait once wrote; “A rumor will travel fastest to the place it will cause the greatest harm.” It’s unlikely Agrait had MannKind (NASDAQ:MNKD) in mind when he wrote this, but given the rumors flying around about the company what he wrote could become fact. Although the stock has dipped recently shares of the company have been on quite the tear over the past year, trading as low as $1.82 while hitting a high of $8.70.

It should surprise no one that the price movement in the stock is directly linked to the prospects of Afrezza® being approved by the FDA. MannKind believers remain convinced that as Afrezza gets closer and closer to approval, still not a sure thing, the company will announce their long awaited partnership which will send shares in the stratosphere. There are even some who believe the company won’t need a partner as someone will come along and actually buy the company. This is where the rumors come in.

Over the past few weeks someone has been spreading rumors that has MannKind being bought by nearly every company in the diabetes sector. The first of these claimed that Novo Nordisk (NYSE:NVO) would be the buyer, next came that it was Novo’s arch rival Sanofi (NYSE:SNY) and today’s hot rumor has Roche buying the company. The way things are going it’s just a matter of time before Lilly (NYSE:LLY), GlaxoSmithKline (NYSE:GSK), Pfizer (NYSE:PFE) or Johnson and Johnson (NYSE:JNJ) will be buying the company.

Now rumors are nothing new to the street and yes sometimes rumors do turn out to be accurate; however the MannKind rumors almost border on stock manipulation.  Is it a mere coincidence that these rumors started spreading with greater frequency after company founder Al Mann converted the debt the company owed him to equity in the company, that’s almost a billion dollars’ worth of debt wiped off the company’s balance sheet. Based on the most figures Mr. Mann now owns either directly or indirectly over 75 million shares which is nearly 10 times the amount owned by the company’s largest institutional investor FMR, LLC. This also means as of yesterday’s closing price of $5.78 Mr. Mann’s stake is worth slightly north of $430 million.

Given that $430 million is still well below the nearly billion dollars he lent the company don’t expect Mr. Mann to sell anytime soon. In fact Diabetic Investor suspects these rumors about potential partners and/or buyers to continue with greater frequency. The ultimate goal drive shares higher so that when the FDA finally does approve Afrezza Mr. Mann will not just recoup his entire investment, but also show a tidy profit to boot.  Then watch out for as sure as the sun rises in the east and sets in the west the bottom will fall out.

Diabetic Investor isn’t sure how many times we need to say this but does anyone really think that any of the major diabetes companies haven’t already taken a look at MannKind and said thanks but no thanks. That they realize as Diabetic Investor does that even when approved Afrezza has a very tough road and the most optimistic estimates show this as nothing more than a niche product. Again this assumes that there are no further delays at the FDA and approval is forthcoming. Put another way how many companies want to spend nearly $2 billion plus to acquire MannKind and then invest millions more to promote a product which even by the most aggressive estimates will have $400 million in peak sales.

What’s even more laughable here is how MannKind supporters conventionally forget where the diabetes market is going. That Afrezza is targeted at insulin using Type 2 patients who will soon have the ability to use biosimilar short-acting insulin. That while Afrezza is not Exubera it is still an inhaled insulin and will carry the stigma of Exubera. That Afrezza because it is inhaled will likely carry a higher price tag at a time when payors are demanding price decreases.

Listen Afrezza is not a bad product and yes there are places where it will be used. However, it is not the greatest thing to come along since sliced bread and soft soap. It is not the wonder drug that will revolutionize diabetes management that the company claims it is. For heaven’s sake it’s rapid acting insulin that instead of being injected is inhaled and that one fact alone is not enough of an advantage to justify these crazy expectations or equally crazy claims being made by the company. The way MannKind supporters see it Afrezza is the next Lantus and nothing could be further from the truth.

Frankly what MannKind supporters have going for them is this is the wacky world of diabetes where history tells us that there are companies out there who are stupid enough to spend billions so they can make millions.