Why MannKind Corporation Stock Briefly Soared

MannKind stock is birefly a big gainer after announcing a long-awaited licensing deal for its lead drug, Afrezza. Find out what this means for shareholders.

Aug 11, 2014 at 1:58PM

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 MannKind (NASDAQ:MNKD), a biopharmaceutical company focused on developing inhalable therapies to treat diabetes, surged by as much as 32% after announcing a global licensing agreement with Sanofi (NYSE:SNY) for its newly approved inhalable diabetes drug, Afrezza. Shares have since cooled dramatically and are now up a little over 6%.


Source: MannKind.

So what: According to the company's early morning press release, Sanofi will be responsible for all commercial, regulatory and development activities, while MannKind will handle the manufacturing of the drug, under a separate agreement. In the interim, both companies will collaborate on how to best expand manufacturing capacity beyond just MannKind's Danbury, Conn., facility. The two plan to launch Afrezza in the first quarter of 2015.

Under the financial terms of the deal MannKind will receive $150 million upfront, which will help stem cash burn concerns by investors, and is eligible to receive another $775 million in milestone payments. Perhaps more importantly for the long term, Sanofi will retain 65% of all profits and losses with MannKind receiving the remaining 35%. Sanofi is also advancing MannKind $175 million in collaboration expenses.

Now what: I believe the phrase that was collectively uttered when MannKind shareholders read this news was "About time!" MannKind had been getting dangerously low on cash, but everyone sort of knew that a deal was around the corner with Afrezza now approved.

The real test now comes with the launch and the price of the inhalable insulin product compared to existing type 1 and type 2 diabetes therapies. From a factor of convenience there is no comparable product, therefore Afrezza has a step up on the competition in that respect. But, how quickly insurers and physicians jump on board remains to be seen. Having Sanofi in its corner is a definite step in the right direction, but I'd rather hold off and wait for concrete earnings growth and a discernable move toward profitability rather than risk being caught up in a drug that could just as easily stumble out of the gate.

Afrezza's opportunity is huge, but it may wind up eating the dust of this revolutionary new technology in terms of growth potential.
The best biotech investors consistently reap gigantic profits by recognizing true potential earlier and more accurately than anyone else. Let me cut right to the chase. There is a product in development that will revolutionize not just how we treat a common chronic illness, but potentially the entire health industry. Analysts are already licking their chops at the sales potential. In order to outsmart Wall Street and realize multi-bagger returns you will need The Motley Fool's new free report on the dream-team responsible for this game-changing blockbuster. CLICK HERE NOW.

Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

4 in 5 Americans Are Ignoring Buffett's Warning

Don't be one of them.

Jun 12, 2015 at 5:01PM

Admitting fear is difficult.

So you can imagine how shocked I was to find out Warren Buffett recently told a select number of investors about the cutting-edge technology that's keeping him awake at night.

This past May, The Motley Fool sent 8 of its best stock analysts to Omaha, Nebraska to attend the Berkshire Hathaway annual shareholder meeting. CEO Warren Buffett and Vice Chairman Charlie Munger fielded questions for nearly 6 hours.
The catch was: Attendees weren't allowed to record any of it. No audio. No video. 

Our team of analysts wrote down every single word Buffett and Munger uttered. Over 16,000 words. But only two words stood out to me as I read the detailed transcript of the event: "Real threat."

That's how Buffett responded when asked about this emerging market that is already expected to be worth more than $2 trillion in the U.S. alone. Google has already put some of its best engineers behind the technology powering this trend. 

The amazing thing is, while Buffett may be nervous, the rest of us can invest in this new industry BEFORE the old money realizes what hit them.

KPMG advises we're "on the cusp of revolutionary change" coming much "sooner than you think."

Even one legendary MIT professor had to recant his position that the technology was "beyond the capability of computer science." (He recently confessed to The Wall Street Journal that he's now a believer and amazed "how quickly this technology caught on.")

Yet according to one J.D. Power and Associates survey, only 1 in 5 Americans are even interested in this technology, much less ready to invest in it. Needless to say, you haven't missed your window of opportunity. 

Think about how many amazing technologies you've watched soar to new heights while you kick yourself thinking, "I knew about that technology before everyone was talking about it, but I just sat on my hands." 

Don't let that happen again. This time, it should be your family telling you, "I can't believe you knew about and invested in that technology so early on."

That's why I hope you take just a few minutes to access the exclusive research our team of analysts has put together on this industry and the one stock positioned to capitalize on this major shift.

Click here to learn about this incredible technology before Buffett stops being scared and starts buying!

David Hanson owns shares of Berkshire Hathaway and American Express. The Motley Fool recommends and owns shares of Berkshire Hathaway, Google, and Coca-Cola.We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

©1995-2014 The Motley Fool. All rights reserved. | Privacy/Legal Information