Well the pump has arrived, watch out for the dump

Well the pump has arrived, watch out for the dump

Shares of MannKind (NASDAQ:MNKD) have been on a roll these past few days jumping over 20% in the last 5 trading sessions. Frankly Diabetic Investor isn’t all that surprised by this move given how the shares have been aggressively touted by our friends at Forbes, Ken and Gomer. It’s also pretty obvious that shares are benefiting now that Afrezza is officially on the market. Yes MannKind believers are drinking the kool-aid and for the moment living large.

Now before everyone starts jumping for joy a word of caution as Diabetic Investor has seen this movie before. Honestly it would be a major understatement to say that being a MannKind shareholder has nothing short of a roller coaster ride. Over the past five MannKind shares have traded anywhere between less than $2 per share on the low side, while also trading over $10 per share, albeit briefly. The simple fact is MannKind is the poster child for volatility. Go back even further in time and shares actually trading above $20 only to come crashing down below $5 per share.

Diabetic Investor will not venture to guess when the next crash in shares will come but we do know this it’s going to happen. The MannKind story is one of unquestioned belief, an almost blind faith that there is no way inhaled insulin can fail. A belief that was reinforced when the company partnered with our wine drinking friends in France. Yet time and time again just when it looked like everything was great the rug got pulled from under and shares plummet.

Given the turmoil at Sanofi (NYSE:SNY) don’t be surprised if it is none other than Sanofi who pulls the rug out this time around. As our favorite acting CEO Serge Weinberg noted during the company’s last earnings call it won’t be much longer before the company names a new CEO. Yes the rumor mill is rampant with possible candidates and many Sanofi insiders believe this announcement will come soon. Lost in all this speculation over who is crazy enough to accept this mission, is what the new CEO has to deal with and the steps this yet unnamed person might take to turn Sanofi back into a pharmaceutical company from the current soap opera it has become.

Considering the many public comments made by our good friend Serge it would not surprise Diabetic Investor if the new CEO ends the MannKind partnership just as Afrezza is being launched. Crazy, perhaps but maybe not as crazy as it seems. As everyone knows the diabetes franchise is in a world of hurt and the situation will likely get worse before it gets better. Yet for all the bluster over Afrezza no one seems to mention a minor detail about the drug, it’s highly unlikely Sanofi will make any money on the drug.

Now we know something as mundane as making a profit may not be important to the MannKind faithful but even Serge and his fellow board members understand that profits are what count. They also know that the company has another major diabetes launch coming with Toujeo awaiting FDA approval. And while they do sometimes seem blind to the fact that Sanofi’s diabetes track record for products not named Lantus is less than stellular, they have already publicly acknowledged that the diabetes franchise is facing an uphill battle.

Recently the diabetes franchise underwent a major restructuring replacing a third of their sales managers. It’s also known that Novo Nordisk (NYSE:NVO) has been particularly aggressive with sales of Levemir taking share away from Lantus. Waiting in the wings is Lilly’s Biosimilar Lantus plus their own long acting branded insulin which seems as good as or better than Lantus.

The new CEO could easily decide better to cut loses now rather than wait around and confirm what we’ve been saying all along; basically that Afrezza is nothing more than niche product.  Nor would it surprise us if this person went even further sold the entire diabetes franchise. As we noted on many occasions with the Lantus patent soon to expire and a pipeline full of less than impressive me too late to market compounds the future is not much brighter than the present. The new CEO could easily believe better to sell now while the franchise still has value.

Regardless Diabetic Investor remains convinced that shares of MannKind will do what they always do and tank after a nice run. Yes shares are rising now as the pump is in full effect. Yet as history tells us it’s just a matter of time before the dump comes along. Now if Ken and Gomer are as smart as they claim to be they would warn those they have deluded into believing that this run will last forever and somehow shares will magically hit levels they haven’t seen in almost 10 years. An unlikely event as like most pump and dumpers they will be long gone after taking their profits, bragging about their stock picking ability should they actually be smart enough to get out with a profit.

Like we’ve said before we’ve seen this movie before and the ending isn’t pretty nor will it change just because the name has changed from Exubera to Afrezza.