MannKind's Future Looks 'Grim,' Has 37% Downside Warns Piper Jaffray

• MannKind Corporation MNKD shares have lost 14 percent in the last one month, remaining below the $3 mark since November 4.
• Piper Jaffray’s Joshua E. Schimmer maintained an Underweight rating on the company, with a price target of $1.50.
• Both 3Q and outlook appear dismal, with liquidity concerns likely to persist, Schimmer mentioned.

MannKind has reported its 3Q15 results. While cost-cutting initiatives will arrest cash burn, the company is in desperate need to pursue new financing strategies in view of the disappointing Afrezza launch and rising net debt, analyst Joshua Schimmer said.

These new financing strategies could include opening up a Tel-Aviv listing to capitalize on index buying. Schimmer added, however, that there are “short-term fixes to a deeper, potentially critical liquidity concern.” MannKind’s problems could worsen if Sanofi SA (ADR) SNY return rights of Afrezza in 2016.

“MNKD expressed disappointment again at Afrezza's launch, noting challenges gaining reimbursement with payors, and the fact that the initial rollout was targeted at building awareness,” the analyst wrote.

MannKind’s share of Afrezza losses came in at $14.1M, with $43.7M outstanding on its loan agreement with Sanofi. MannKind would need to replay this loan by the middle of the next decade, Schimmer pointed out.

MannKind is seeking a partner to advance new Technosphere programs delivering new compounds for indications like PAH and pain. Management’s efforts to reach out to partners during its earnings call indicates that the company is “struggling to gain traction finding further support for its inhalaed platform,” the Piper Jaffray report stated.

“We are concerned that the challenging pulmonary dynamic with Afrezza will have negative connotations for any other potential applications,” Schimmer said, while adding, “We see little reason to own shares.”