Is history getting ready to repeat itself?
Way back on February 10, 2011 shares of MannKind (NASDAQ:MNKD) closed at $5.06. A significant date as it wasn’t until May 15, 2013 that shares surpassed the $5 level closing at $5.13 on that date. Think about that for moment as after falling below $5 per share it took 826 days or 2 years 3 months 6 days for shares to close above that level again.
We mention this as shares of MannKind are once again approaching this danger zone trading below the $5 threshold today. Now we have no idea where shares are going to close today but one thing is clear shares of MannKind have not been trending upward since they announced their partnership with Sanofi (NYSE:SNY). Nor has the launch of Afrezza helped MannKind’s share price this in spite of a spirited effort by MannKind zealots who believe that Afrezza is the greatest thing to happen in diabetes since the discovery of insulin.
As we mentioned just last week support for MannKind is crumbling as analysts are revising their Afrezza sales estimates and not in the right direction. These more respected analysts have not yet abandoned MannKind entirely but the trend is clear, Afrezza isn’t the drug everyone thought it was. That the issues identified by Diabetic Investor long ago are very real. That Sanofi isn’t helping matters and in typical Sanofi fashion is micromanaging Afrezza to death.
Now some may point to the fact that shares of MannKind once back over the $5 level went onto to hit $10.52 back in June of 2014. True enough but what they won’t state is another fact, since that time shares have done nothing but fall. This is why Diabetic Investor is convinced that once shares close below $5 it just might be the beginning of the end. That with partnership already in place and Afrezza already on the market there is no major event coming down the pipe that will reverse this slide.
The fact is MannKind has nothing of substance in its pipeline and has a $100 million convertible debt payment coming up on August 15th. Barring some sort of miracle it is unlikely these debt holders who can convert their debt into MannKind shares at $6.80 will do so. About the only way this happens would be for Sanofi to acquire MannKind and quite frankly Sanofi as screwed up as they are isn’t that stupid. Frankly it would be easier and less costly for the company to terminate their partnership.
Something that’s becoming a more realistic scenario now that Afrezza has been on the market. Add in the fact that Toujeo is also on the market and Sanofi could well decide better to allocate resources to Toujeo than to continue to allocate resources to Afrezza.
When the last chapter is written in the MannKind Afrezza saga this is going to be a story about being a day late and dollar short. Yes there was a time when inhaled insulin could have become a blockbuster product, a time that ended after the Exubera failure. Yes Afrezza is a far superior product than Exubera but it is not a better short-acting insulin when it comes to glycemic control. The only difference is Afrezza is inhaled rather than injected and as nice as that might be it’s not reason enough for the drug to become a blockbuster, not in today’s environment anyway.
As we have said all along there is a place for Afrezza in the treatment paradigm. That a narrow group of patients will benefit from using Afrezza. That Afrezza will be a nice little niche product. However as we have seen since the drug hit the market this is no blockbuster, not today or 5 years from today. Afrezza will just join a long list of failures from our wine drinking friends in France. Or as the French like to say “Tant pis”.