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Image source: Getty Images.

What: Shares of MannKind Corporation (NASDAQ:MNKD), a small-cap biotech company focused on the development of diabetes treatments, slid 15% in July, according to S&P Global Market Intelligence. Although no specific news events stood out in July that can be pointed to for the decline, two unanswered questions surrounding MannKind were likely the culprits weighing on its valuation.

So what: First, as has been a question for months, is whether or not MannKind can survive over the long run. MannKind does have a novel Food and Drug Administration-approved, inhalable type 1 and 2 diabetes product in Afrezza. Unfortunately, its licensing partner Sanofi (NYSE:SNY) walked away from their deal, leaving Afrezza holding the bag.

Once expected to reach billion-dollar blockbuster status, Afrezza sales haven't even reached $10 million annually. This has left MannKind buried in debt and losing money hand-over-fist. The company ended the first quarter with only $27.7 million in the bank, but this doesn't count the up to $50 million in at-the-market shares it can issue, or the $30.1 million in credit it could borrow from The Mann Group.

The second question is whether MannKind can do a better job of marketing Afrezza than its licensing partner Sanofi did. It could certainly be argued that MannKind can, because Sanofi was quick to the trigger to abandon its deal as not economically viable by Jan. 2016. However, marketing a drug can be costly, and it often takes an experienced sales force. In other words, MannKind's losses could accelerate before Afrezza sales have an opportunity to pick up.

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Image source: Getty Images.

Now what: On the flip side, there have been a few positives that have kept MannKind's valuation from falling off a cliff.

In June, the company presented at the American Diabetes Association's Scientific Sessions, noting that Afrezza had a 25- to 35-minute faster onset of action than competing insulin Lispro, as well as a shorter acting duration of nearly two hours. The fact that Afrezza is fast-acting, convenient, and quick to metabolize through the body, are easily its best selling points.

Also in June, MannKind announced a collaboration with JDRF, a juvenile diabetes research foundation that funds type 1 diabetes research. With a focus on using Afrezza to reach pediatric patients, this partnership could prove meaningful for MannKind and its shareholders.

Still, the Achilles' heel of MannKind is the company's balance sheet, and I don't see an easy fix. The company created a dual-listing of its stock in Tel Aviv last year that only raised around a quarter of the capital it was hoping for, and in domestic markets its only hope for cash seems to be diluting existing shareholders with at-the-market offerings. Since 2012, MannKind's shares outstanding have more than tripled to from around 125 million to nearly 429 million. In my personal opinion, I don't believe MannKind has enough capital to survive a turnaround. For that reason, I would strongly suggest keeping your distance from MannKind stock.

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

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