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Top Picks 2018: Is MannKind Worth the Volatility?

The turnaround story is in getting attention.

After receiving a very positive label change for its lead product, Afrezza (an inhalable form of insulin), late in the year, MannKind (MNKD) also raised a sizable chunk of cash, notes Nate Pile, editor of Nate’s Notes.

The company has been putting that money to work running television ads in a number of select regions around the country as part of a campaign to raise awareness of the product among both Type1 and Type2 diabetics.

Not only is Afrezza inhalable rather than injectable (all other insulins are injected), it also acts more quickly in the body than existing insulins.

Because of this, diabetics who are using Afrezza are reporting that not only are they able to maintain better control of their blood sugar levels on the high side, they are doing so with less fear that they might cause things to spiral out of control on the low side.

Along with Afrezza, the company also owns the rights to the technology platform upon which Afrezza was created (called Technosphere).

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As more of the large pharmaceutical companies look to turn their existing pill and injection products into inhalable, it would not surprise me at all if at least a few of them decide to license MannKind’s technology.

The company has also identified and begun work on its own formulations of a number of pharmaceutical compounds that it has discovered are especially good candidates for pairing with the Technosphere platform.

The company got a new CEO in May, and though there is still plenty of work to be done, the story is starting to look more and more like the sort of turnaround story that Wall Street likes to get excited about.

With roughly one-third of the float currently sold short, things could get interesting in a hurry once awareness of the product finally hits critical mass and doctors and diabetics.

I am a big believer in always scaling-in or scaling-out of positions with several small trades over a long period of time rather than doing it all at once.

Given the volatility of the stock, investors are encouraged to be especially disciplined about scaling into a position over time. Provided you are willing to take such an approach, Mannkind is considered a Strong Buy under $5 and a Buy under $10.

Nate Pile is editor of Nate’s Notes.

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