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Shares of MannKind (NASDAQ:56400P706), the biotechnology company behind the revolutionary inhaled diabetes drug Afrezza, plunged by double-digits yet again on a monthly basis, dropping 15% in September based on data from S&P Capital IQ.

There were two big catalysts that weighed on MannKind this past month. First, a downgrade from research firm Piper Jaffray took MannKind to the woodshed. Covering analyst Joshua Schimmer downgraded his firm's rating on the stock to "underweight" from "neutral," and reduced the firm's price target to just $1.50 per share. Based on the month-end closing price, this would imply a further 53% decline.

According to a note from Schimmer, MannKind overestimated the commercial potential for the product; he views it as mainly a recourse for needle-phobic diabetes patients. Schimmer also says that learning how to use the device is "very challenging." Schimmer lowered full-year EPS estimates for MannKind to $0.25 in 2015 and $0.17 in 2016 from a prior forecast of $0.28 in 2015 and $0.19 in 2016.

The other big issue for MannKind is the proposal of prescription drug reform from presidential candidate Hillary Clinton. Although MannKind's Afrezza isn't particularly "expensive" in the traditional sense of the term, Afrezza does price at a premium over traditional injections, and a proposed $250 out-of-pocket maximum for eligible therapies per Clinton could prove troublesome for MannKind (as well as dozens of other drug developers).

Source: Afrezza users. 

The question that investors need to ask here is whether or not MannKind has the tools needed to rebound, or if it's doomed to continue heading lower.

Based on the short interest in MannKind, and its initial sales totals through a quarter-and-a-half on pharmacy shelves, I'm inclined to side with the pessimists.

One of the biggest challenges for MannKind to potentially overcome is that over 120 million shares are held by short-sellers, or investors who are betting against MannKind's stock. With such a large base of pessimists, it can be difficult for MannKind's stock to gain any upside traction.

Another major problem for MannKind is that Afrezza just isn't selling. We are seeing a modest uptick in Afrezza prescriptions in recent weeks as the marketing effort between MannKind and licensing partner Sanofi steps up, and as physician education of the inhalable drug improves. However, through the first quarter and a half just $3.3 million of the product was sold. Worst of all, MannKind gets only around a third of this total, with the remainder going to SAnofi.

However, the real nail in the coffin comes from MannKind having to borrow money to cover its share of operating losses from the MannKind collaboration with Sanofi. As MannKind's debt grows, the chances of Afrezza succeeding and pulling MannKind's stock higher dwindle.

As has been my suggestion for quite some time now, I'd keep my distance from MannKind stock.