The Dreaded S Word

The Dreaded S Word

In a stunning move for Goldman Sachs the company downgraded shares of MannKind (NASDAQ:MNKD) from neutral to sell. Now for anyone familiar with any investment bank and Goldman is no different downgrading a stock to sell happens about as often as the Chicago Cubs winning a World Series. Not surprisingly shares of MannKind are getting hammered in early trading which makes Diabetic Investor wonder how Ken, Gomer and the other MannKind pump and dumpers feel today.

According to an article posted on TheStreet.com Goldman analyst Jay Olson issued a research report today which contained the following;

“Diabetes market dynamics have deteriorated as reflected by growing pressure on prices and slow launch uptakes — both of which have been unfavorably influenced by payors as they leverage their formularies,”

The post goes onto to state;

“The downward pricing pressure exacted by insurers is likely to force Sanofi, which is selling Afrezza in the U.S. under a partnership with MannKind, to offer discounts up to 40% off the product’s list price — double what Goldman originally expected, Olson wrote. The commercial launch of Afrezza — about one month old — “has also fallen short of our expectations,” according to Olson.”

Now Diabetic Investor does not know Mr. Olson nor have we checked to see if he is a subscriber but one thing we do know is he is one smart guy. He understands that the success or failure of Afrezza has nothing to do with the fact that it’s inhaled rather than injected. That things like pricing and formulary placement matter. Since we have not read the report we have no idea if he also noted that Sanofi (NYSE:SNY) has a less than impressive track record for diabetes products not named Lantus.

Far be it from Diabetic Investor to do any gloating as this would be premature and heavens knows anything that comes premature is not good. This sell rating on MannKind once again reminds Diabetic Investor of how the walls started to crumble when analysts who were once bullish on Exubera started believing that heaven forbid they may have been wrong and Exubera wasn’t going to be the next major diabetes blockbuster.

Whether or not this sell rating is a turning point for MannKind is too early to tell but one thing is becoming abundantly clear Brandicourt, no matter what the French are saying, is not making enough money. For a guy who hasn’t even taken office yet his job keeps getting tougher. One has to wonder if after rethinking this if Brandicourt has an opt-out provision in his contract. Honestly the only people who deserve to suffer because of Sanofi’s stupidity is the Sanofi management team, our buddy Serge, Ken , Gomer and all the MannKind zealots.

Brandicourt did not create this mess but it is his job to clean it up. Hope he has a big shovel.