Market Overview

Can You Help Save Mannkind?

One small-cap company that is involved in biotech research and development is MannKind (NASDAQ: MNKD). MannKind has been operating since 2001, focusing primarily on cancer and diabetes drug development. Since January 2011, the company's stock has dropped from nearly $10 to below $3, outlining the market's unforgiving expectations for continued growth.

To understand the price movement, investors should consider MannKind's recent history. In February 2011, multiple law firms announced various class action lawsuits against MannKind. The firms alleged that MannKind did not disclose the full risks involved with Afrezza to investors. The lawsuits also alleged that the stock price was artificially inflated. The company waited one day to announce to its shareholders that the FDA delayed Afrezza trials.

MannKind faced more trouble in June 2011, when it settled a dispute with Merck for $16 million. The companies were arguing about arguing about a supply agreement and eventually agreed to an agreement in which MannKind will pay Merck in two installments after receiving unspecified quantities of human insulin.

Benzinga recently reached out to MannKind's president and COO Hakan Edstrom, who spoke about his company's business model and future expectations.

Edstrom attributes the performance of his company's stock in 2011 to market turbulence. Further, Edstrom stated "the market lacked clarity regarding MannKind's operations."

Since January, investors have apparently becoming impatient with the lack of announcements from the company. Without any confirmation that the firm will produce drugs that garner revenues, investors began to sell.

Fortunately for investors, MannKind announced good news on Friday, August 12. Its diabetes drug, Afrezza, can now commence with clinical trials for type 1 and type 2 patients. Edstrom stated that the markets now have confidence in MannKind and are awaiting news regarding the drug's success in clinical studies.

MannKind also has cancer drugs in preliminary studies, including one in a phase two trial, so the company and its investors may enjoy further success within the next few years. As far as the stock price goes, Edstrom stated "MannKind's operations might be able to push it back up to the $10 price range. If all goes well, the stock may even surpass its historical highs."

Regardless of what happened earlier in 2011, MannKind is starting to deliver tangible results to its investors. In a market driven by consistent growth, biotech companies face immense pressure to research and produce drugs as quickly as possible. After the company announced that it will proceed with clinical trials for its drug, Afrezza, investors started to believe in the stock again, driving it up over 17%. MannKind still has ideas in the pipeline, and may very well bring more fortune for itself and its investors.

Neither Benzinga nor its staff recommend that you buy, sell, or hold any security. We do not offer investment advice, personalized or otherwise. Benzinga recommends that you conduct your own due diligence and consult a certified financial professional for personalized advice about your financial situation.

Posted-In: FDASmall Cap Analysis FDA Legal Management Trading Ideas

 

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