This could be epic

This could be epic

After testing new 52 week lows shares of MannKind (NASDAQ:MNKD) have been on a tear these past few trading sessions. Back on October 14th shares closed at $2.94 yet have since rallied back to $3.74 in trading today. Many of the MannKind/Afrezza supporters are taking this as a sign that the worst is over. As we noted earlier in the week Diabetic Investor doesn’t quite see it that way attributing this recent run to shorts covering their positions and bottom feeders looking for a quick gain.

This morning we learned that the company will be listing their shares on the Israeli stock exchange. According to a company issued press release;

“MannKind Corporation (NASDAQ:MNKD) today announced that the Tel Aviv Stock Exchange (TASE) has approved the new listing of MannKind’s common shares beginning on October 28, 2015 under the ticker symbol MNKD. Based on the current market capitalization, MannKind’s shares are anticipated to be included in five TASE equity indexes: TASE’s TA-75, TA-100, TA-BlueTech, TA-Tech-Elite and TA-Biomed.

“The new listing also offers an opportunity to expand and diversify our shareholder base by increasing our exposure and improving our accessibility to Israeli investors,” said Hakan Edstrom, President and CEO of MannKind. “This listing is also an extension of the long-standing relationship between our Executive Chairman, Alfred Mann, and the Israeli biotechnology industry, including the Alfred Mann Institute at the Technion (Israel Institute of Technology).”

Now just in case anyone doesn’t speak corporate bull crap allow Diabetic Investor to translate. As everyone knows MannKind is not in good shape financially. The company has undertaken several cost cutting measures and knows that the financing well here in the US has run dry. It’s also unlikely that their partner Sanofi (NYSE:SNY) will bail the company out. Therefore in a desperate attempt to find additional capital the company had to find new suckers, excuse us, investors.

Diabetic Investor suspects that these new investors plus those buying shares here in the US could be in for a very rude awakening. As we have noted next week Sanofi will report third quarter earnings and by every indication sales for Afrezza will once again disappoint. Even worse it looks as though new patient starts aren’t the only problem as existing Afrezza patents aren’t refilling their prescriptions. Also looming on the horizon is the Sanofi investor day when Olivier Brandicourt unveils his long-term strategy for Sanofi. A strategy which might not include Afrezza as the company can terminate the MannKind partnership in January.

Based on reports from the Sanofi sales team assigned to Afrezza the many issues identified by Diabetic Investor that would hamper Afrezza sales are very real. In a truly ominous sign Sanofi has initiated a hiring freeze and will not be adding to the Afrezza sales team. As we anticipated Sanofi is allocating diabetes resources towards Toujeo, again not a positive indicator for the future of Afrezza.

The harsh reality is even if the financial issues facing MannKind magically went away this would only delay the inevitable. While MannKind talks a good game the fact is they have nothing other than Afrezza. Afrezza is still not approved outside the US and even if approved overseas it will take time to see any material impact and time is something MannKind does not have. Diabetic Investor also doubts that outside that Afrezza would receive favorable reimbursement, an issue that plagues Afrezza here in the US.

The fact is the direct to consumer advertising campaign hasn’t helped. The fact is all the so-called positive buzz on social media hasn’t helped. The fact is Afrezza is nothing more than a niche drug plagued by higher than normal manufacturing costs. The fact is Sanofi basically doomed any chance Afrezza may have had by accepting Tier 3 formulary status.

As we noted earlier today when it comes to the insulin market Sanofi has some major issues. Their goose that laid the golden eggs, Lantus, is now a dead duck. Toujeo sales continue to disappoint and there is nothing in the diabetes pipeline that will come along and save the day.

One last thing as MannKind shares have seen epic collapses in the past. Back on June 30th 2014 shares closed at $10.96 four months later on October 13th, 2014 shares closed at $4.61. The only difference between then and now is that the collapse will occur at a lower starting point and will impact investors here and Israel.

The fat lady isn’t singing just yet but she’s warming up for the MannKind swan song.