Please ensure Javascript is enabled for purposes of website accessibility

Why MannKind Corporation Stock Broke Down in April

By George Budwell - May 8, 2018 at 7:28AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Investors didn't take kindly to MannKind's latest secondary offering last month.

What happened

MannKind Corporation (NASDAQ: MNKD), the maker of the inhaled insulin product Afrezza, had yet another bad month in April. Specifically, the biotech's shares lost a quarter of their value last month, according to S&P Global Market Intelligence

What sent MannKind's stock spiraling downwards? On April 6, the biotech announced another secondary offering of common stock and warrants in an effort to raise a mere $28 million. The company has now tapped the public markets for funds three times in just the past seven months, according to MannKind's SEC filings. 

A person in a lab coat holding a sign with the word "diabetes" written on it.

Image source: Getty Images.

So what

Raising capital via a public offering when your share price is hovering around $2 is never a good sign. Long story short, MannKind is running out of ways to avoid either another reverse split or an outright bankruptcy filing due to Afrezza's exceedingly poor sales. As things stand now, the company has maybe two more quarters of cash on hand, implying that even more dilution is on the way. 

Now what

MannKind is set to report its first-quarter results this Wednesday, May 9, where the Street is expecting Afrezza's sales to come in at $4.24 million for the three-month period. Although that consensus estimate would represent a stellar 40% jump in sales compared to the same period a year ago, it's simply not enough to change the company's downward trajectory.

In short, Afrezza's sales need to make a quantum leap in the next two quarters or MannKind will have to take additional value-destroying measures to keep its doors open. Given this stock's sky-high risk profile, investors may want to search elsewhere for more compelling growth opportunities. 

 

George Budwell has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
402%
 
S&P 500 Returns
129%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/18/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.