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: MannKind Corp. (NASDAQ:56400P706) stock shot up 12% today on heavy trading volume after two pieces of news related to the company were released.
So what: First, investment services group Jefferies affirmed its Buy rating on the stock with a $9 price target after conducting a survey of physicians about their use of MannKind's sole product on the market, an inhaled insulin called Afrezza. The survey found that 35% of physicians didn't even know that Afrezza was available for sale.
In addition, providers confirmed that the lung function testing that management mentioned on the most recent conference call was indeed a reason for slow initial adoption, and they rated it as a 5 out of 5 burden for prescribing the drug when the office did not own a spirometer, which is the device needed to perform the prerequisite lung tests. Jefferies sees expanded access to spirometers and the start of advertising in the third quarter as near-term catalysts that will lift sales.
Second, the FDA issued a warning that SGLT2 inhibitors for diabetes, which are competitors to Afrezza, may result in ketoacidosis, a serious condition that may require hospitalization. Brand name drugs mentionedin the report include Invokana, Farxiga, and Jardiance. The FDA is further investigating the safety issue and will determine if they need to alter the prescribing information for SGLT2 drugs.
Now what: MannKind's stock is heavily shorted and has shed more than 40% of its value in the last 3 months. Today's price bump may simply be related to shorts covering their positions after reading the news items released today. MannKind remains a very speculative stock, and this investor will remain on the sidelines until we know for sure that Afrezza is a hit with patients and providers.