MannKind Wants A No Vote

MannKind Wants A No Vote

Today could mark a watershed event in diabetes as right this very moment an FDA panel is considering Afrezza, the inhaled insulin from MannKind (NASDAQ:MNKD). Typically in situations such as this the company will attempt to put their best foot forward hoping the panel gives their drug thumbs up. Anyone who’s been to one of these meetings understands this is not an easy task, especially in today’s regulatory environment when one never knows what the FDA will do or why they do it. It’s not an understatement given the recent string of decisions handed down by the agency that it’s actually easier to figure out a Rubik cube than what the FDA will do.

Yet, in marked twist from past panel meetings when the presenting company actually wants a yes vote, Diabetic Investor has learned that MannKind officials actually want a no vote. According to a well-placed source with deep knowledge of the situation, MannKind stakeholders have a vested interest in a no vote as they have shorted their own shares and know that a no vote will result in huge personal profits. Unlike a long-position in a company when stakeholders want good news to drive share price upwards, in a short-sale stakeholder want bad news which will drive share prices lower so they can replace the shares they shorted at a cheaper price.

Now anyone who’s followed MannKind over the years understands that shares of the company have on one of the longest roller coaster rides in diabetes history. It’s also well known that company founder, Al Mann, has invested much of his vast personal fortune into the company. Although Diabetic Investor cannot say with 100% certainty that Mr. Mann is behind this effort to sabotage the panel vote in desperate attempt to recover the millions he’s invested in the company, some see this as a distinct possibility.

One source, who we can only identify as Loop, told Diabetic Investor that Mr. Mann has become rather snarky these past few weeks leading up to the panel meeting.  In private conversations with Loop Mr. Mann has confided that Afrezza even if approved doesn’t stand an ice-cubes chance in hell of being commercially successful and the many so-called potential partners know this. Funny how these potential partners can be so pesky and picky about a minor thing like a drug being commercially successful.

Keep in mind that Diabetic Investor cannot confirm this as according to Loop the executives have been pretty smooth in how they have set this up. Think plausible deniability, as according to Loop these executives have arrangements with third-party non-affiliated individuals who actually hold the short positions in MannKind shares. Once the shares tank after a no-vote by the panel these third-party individuals will pass along their profits, after a nice little cut for themselves, onto MannKind executives. Now if all this sounds like stock manipulation, which of course is illegal, it is. However actually proving stock manipulation isn’t that easy.

Quite frankly this is what MannKind executives are counting on. They know full well that a no-vote by the panel is not beyond the realm of possibility and can easily be explained away. Keep in mind that Afrezza has been around for years and has seen more than its share of regulatory issues. That this drug once hailed as the greatest thing since the invention of red wine or Miller Lite is actually more like boxed-wine or cheap beer. That everyone who has sniffed around the company for a possible partnership sees that even if the drug is actually approved, it will take a Herculean effort to make it successful in the marketplace.

Now in case anyone is wondering why Loop, our source for much of this story, hasn’t gone to the Fed’s with this information, we had the same question. According to Loop, “Believe me this is something I’ve considered but I hate to say this I can also blackmail MannKind executives and make a nice little sum for myself. I have a very good friend who’s been out of work, another who’s lost his job and another who’s in law school struggling with tuition payments. Not that I’m Robin Hood but I would really like to help these people and quite frankly I can always go the Feds after I have the money.”

In a desperate attempt to get more information on this story Diabetic Investor has reached out to numerous sources on Wall Street to see if they could add some credibility to Loop’s accusations.  Not surprisingly no one would go on the record; although one did mention that it wouldn’t be surprising to see a high short position in MannKind as most sophisticated investors who have done their homework have already shorted the company as they anticipate even with a yes vote today the company won’t make it.

The irony of this entire situation is that other than the FDA panel meeting which is actually taking place today, one never knows what’s factual here or whether this is just Diabetic Investor’s annual April Fool’s joke.