Here we go
Although the ADA conference does not officially begin until tomorrow the wackiness has started. File this under the category of karma or nuttiness but none other than Al Mann, the founder and main benefactor of MannKind (NASDAQ:MNKD) is staying at the same hotel as Diabetic Investor. Now Al must be feeling pretty good these days as shares of MannKind have been on a tear these past few days. Over the past five trading sessions shares are up almost 17% and continue to rise today.
Yes we’re sure the MannKind/Afrezza supporters are thrilled and has become standard operating procedure for them they will point to this move as proof they have been right and Diabetic Investor has been wrong. They will point to a recent buy recommendation by Jefferies analyst Shaunak Deepak who stated; “We look to advertising efforts in 3Q as a driver for Afrezza awareness and adoption, but we would not be overly concerned if the next few weeks of Afrezza prescription data look choppy”.
While we hate to rain on their parade this recent move upward is not a big deal as MannKind shares move up and down more than seats in a rollercoaster. Honestly reading a MannKind stock chart can make one’s head spin. The fact is given MannKind’s history this type of up and down movement is par for the course.
What gets lost by all the MannKind/Afrezza supporters is how smart investors just love to play this stock. They could care less about how Afrezza is really doing or whether or not it will ever become a successful product. It’s not an understatement to say that these smart investors have done just fine playing the ups and downs of MannKind.
It should also come as no surprise that analysts like Mr. Deepak have a vested interest in seeing their predictions come true. He also knows that what he writes can and does influence how shares of MannKind move, again this is not news.
The reality is the jury is still out on Afrezza and we really won’t know whose right or wrong for quite some time. This fact won’t stop the MannKind rollercoaster ride but it will provide some great copy for Diabetic Investor plus a heated twitter debate.
Even with the upcoming direct to consumer ad campaign Diabetic Investor continues to stand firm in our belief that Afrezza is nothing more than a niche product. We will not waver from our belief that Sanofi (NYSE:SNY) in the diabetes market couldn’t hit water if they fell off the Queen Mary. That formulary position combined with additional tests are more important than a handful of patients who love to blog about how Afrezza is the greatest thing since sliced bread and soft soap.
Yes its likely demand will increase when the ad campaign gets going. However no ad campaign can change poor formulary position, the need for additional tests and the reality that in spite of what MannKind/Afrezza supporters think this drug is not for everyone. No ad campaign no matter how successful will change the fact that Afrezza is very expensive to make and may never be profitable. No ad campaign will all of sudden correct the many issues at Sanofi nor will it erase their dismal history in diabetes for products not named Lantus.
Folks when it comes to MannKind/Afrezza this is all about money who makes it and who doesn’t. It would be extraordinarily foolish to believe that how MannKind shares move has anything to do with what’s actually going on in the real world. Stock price movements are based as much on perception as they are on actual results. For when the actual results for Afrezza come in it will be what we said it will be, nothing more than a niche product not the mega-blockbuster imagined by MannKind/Afrezza supporters. But let’s not let the facts get in the way of a good fantasy.