MannKind Corporation (NASDAQ: MNKD)
MannKind is having an incredibly hard day in the market today, and for good reason. On a conference call last night, Matt Pfeffer, the CEO of the company raised questions among investors with regard to his level of financial literacy. Today, we’ll talk about how these questions were raised, how the market reacted to the news, and what we can expect to see from MNKD moving forward. So, let’s get right to it…
How Matt Pfeffer Raised Questions About MNKD
Yesterday was a very important day for MannKind. For quite some time now, investors have been wondering about how the company was going to commercialize its flagship product, Afrezza. Yesterday, was the day of an analyst call held by the company to discuss this topic. However, toward the end of the call, the tone shifted away from Afrezza and toward the financial literacy displayed by Matt Pfeffer. This happened when a sell-side analysts asked a simple question. He wanted to know how much money MNKD owed to Sanofi, the company’s previous commercialization partner on Afrezza. Matthew Pfeffer’s answer was a simple and very concerning one. Here’s how he replied…
“We don’t owe any money to Sanfoi… other than a piece of debt.”
It’s relatively easy to see how Pfeffer went wrong here. If you don’t owe any money, you don’t owe a “piece of debt”. If you do owe money, you owe what Pfeffer considered to be a “piece of debt”. There’s no in between here. The truth is that either Pfeffer was unaware of the amount owed or he just didn’t want to be very truthful with investors and analysts on the call with regard to MannKind’s position. The truth is that MNKD owes Sanofi a total of $62 million in debt. This is its share in the amount owed as a result of the failed joint venture.
How Investors Reacted To The News
As investors, one of the first things we learn is that any time there is news released with regard to a publicly traded company, we can expect to see movement in the market as a result. Positive news released will generally lead to positive movement while negative news will lead to declines. So naturally, following the question that raised concerns with regard to Pfeffer’s financial literacy as the leader of MNKD, the stock is falling in the market. Currently (11:52), the stock is trading at $1.52 per share after a loss of $0.10 per share or 5.86% thus far today.
What We Can Expect To See Moving Forward
Moving forward, I have a relatively mixed opinion of what we can expect to see from MNKD. First and foremost, I’ve tried to maintain a very bullish opinion on the stock. However, Pfeffer’s answer with regard to debt is a very concerning one, considering that he is the CEO of a publicly traded company. However, there are still reasons to look at the company in a positive light. When it comes down to it, the cancellation of the relationship between Sanofi and MannKind is an overwhelmingly positive piece of information. This allows MNKD to commercialize Afrezza as it sees fit. On top of that, I’m excited with regard to recent movements in technosphere, the company’s relationship with Specialized Diabetes Care Centers, and the prospect of growing sales to come for Afrezza. With all of that said, MNKD is not a strong investment at the moment, but it could become one in the relatively near future.
What Do You Think?
Where do you think MNKD is headed moving forward and why? Let us know your opinion in the comments below!