MannKind Corporation (NASDAQ: MNKD)
MannKind is having a rough day in the market today, and while many are ostracizing the stock, I believe that it is presenting quite the opportunity. The reality is that MNKD has done what I’ve thought they should do for quite some time now. MannKind cut ties with Sanofi! Today, we’ll talk about why the agreement between MannKind and Sanofi (NYSE: SNY) came to an end, why I believe this presents a strong opportunity, and what we can expect to see from MannKind moving forward.
Why MannKind And Sanofi Are Breaking Their Commercialization Agreement
MannKind created an incredible product called Afrezza. Afrezza is an insulin that is delivered through an inhaler rather than an injection. This is a product that is needed by millions of diabetics throughout the United States. Upon FDA approval, MNKD signed an agreement with SNY for the commercialization of Afrezza. However, shortly after commercialization started, it became clear that something was going wrong. Unfortunately, sales of Afrezza simply weren’t living up to expectations. Soon, MNKD would start to fall dramatically in the market.
Ultimately, Sanofi is in the process of commercializing another treatment for diabetes. As a result, working on Afrezza creates a conflict of interest, and many investors believe that this conflict of interest is the reason for the lack luster sales. After all, it’s been about a year and we haven’t even seen a simple television ad. At this point, MannKind has made the decision that Sanofi simply isn’t the right company for the commercialization of Afrezza and has decided to cut ties. So, the transfer of information has already started and the agreement between the two companies will come to an end by no later than July 4th.
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Why This Is A Good Thing For MNKD
If you look at the market reaction to the news, you would think that this move is a horrible thing for MannKind. Currently (1:24), the stock is trading at $0.75 per share after a loss of 48.31% so far today. However, regardless of the decline the company is facing, I don’t agree that the decision to cut ties with Sanofi was a bad decision. In fact, at this point, I believe that it’s one of the best decisions MNKD could have made.
As mentioned above, Sanofi is working with a competing diabetes treatment. As a result, we simply can’t expect for the company to put their all into Afrezza. Ultimately, Sanofi has done a horrible job with regard to the commercialization of Afrezza and it’s time for MNKD to start strategically moving things into another direction. In the end, if MannKind were to decide to handle the commercialization on their own, all they would need to do is run a television ad and make better choices with regard to online advertising and they would likely see much better sales volume than what they saw with Sanofi.
What We Can Expect To See Moving Forward
While we are likely to see heavy volatility in the short term as the result of the end of the MNKD/SNY agreement, in the long run, MannKind is likely to see growth. I know it seems as though the stock is in the dumps and not quite worth the time. However, when you read between the lines, it looks like an opportunity is coming. The bottom line is that it wouldn’t take very much to get Afrezza back on track, and when this happens, MNKD will start to climb again. So, I see the poor movement in the market as an opportunity for gains at a discount!
What Do You Think?
Where do you think MNKD is headed moving forward? Let us know your opinion in the comments below!