MannKind Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of biotech company MannKind (Nasdaq: MNKD  ) plummeted more than 20% in intraday trading Friday after the company posted a fourth-quarter loss and said it would lay off 179 workers, or about 40% of its staff.

So what: With its lead inhaled-insulin product Afrezza now having been rejected twice by the Food and Drug Administration, MannKind is naturally seeking to conserve cash as it continues to strive for that ever-elusive approval. Unfortunately, Afrezza's recent struggles also prompted management to terminate its human insulin supply agreement with Merck (NYSE: MRK  ) , costing MannKind an additional $22.7 million in termination fees.

Now what: I'd be really cautious about pouncing on today's plunge. While MannKind's distress isn't exactly a big surprise to many Fools, founder and CEO Al Mann's continuous capital backing has always been something die-hard bulls could count on. But with Mann stating on the conference call that he "can't make any commitments at this point," it's tough to understand why individual investors would.

Interested in more info on MannKind? Add it to your watchlist.

Fool contributor Brian Pacampara owns no position in any of the companies mentioned. Try any of our Foolish newsletter services free for 30 days.

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Read/Post Comments (3) | Recommend This Article (6)

Comments from our Foolish Readers

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  • Report this Comment On February 11, 2011, at 2:54 PM, OttawaGuy wrote:

    Brian:

    You may want to go back to the CC and giver a 2nd listen as your article has a couple of misinterpretation of what was said. Using the example of: "MannKind an additional $22.7 million in termination fees", this is worst case only and will depend on whether the supplier is unable to unload the product elsewhere and will not come to fruition until at least 2012. You may also want to clarrify why Afrezza has been denied twice, i.e. the 2nd time was based upon the trials done using a new device and not upon the acutal drug. As for Al Mann he stated that at this point he would not comment about further investment until affer consultation with the FDA regarding the path fwd. He just recently converted close to a $100M convertable bond for 16.5M shares so I wouldn't count him out just yet.

    Just my 2 cents worth (2.005 CAD).

  • Report this Comment On February 11, 2011, at 3:22 PM, DaveGruska wrote:

    I've got some mad money in it at this point - I love all the pessimism, anger, and the complete all-or-nothing nature of this company.

    I'd rather gamble on something like this than buy lottery tickets - much more fun. Though I'll probably achieve the same result (total loss) in two years :-)

  • Report this Comment On February 11, 2011, at 10:44 PM, markzzzzzz wrote:

    Why are you taking things out of context? He did not say that he would not invest anymore money.

    He said that they have many avenues.

    Besides check out how many times Al Mann has bought 700000 shares in the last 3 months including jan26th of this year at 5.25 this last time.

    He obviously puts his money where his mouth is

    and he obviously has alot of confidence in the company and their goals.

    Btw I counted 7 times 700,000 shares in the last 3 months or so.At much higher prices.

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