MannKind Corporation (NASDAQ:MNKD): Expect A Very High Volatility With Positive Bias
Shares of MannKind Corporation(NASDAQ:MNKD) have become the biotech darlings among the biotech traders as the stock has gained sharply or over 36% in the past one month from about $8 to $11.11. The stock made a 5-year high of $11.11 on Jun 5, 2014.
What Drove The Stock Higher?
The recent rally was driven by host of reasons like strong expectations for the company’s only drug, rumors and analysts upgrade.
Firstly, the company will come to know about the FDA’s decision on Afrezza in about 3 weeks. There are high hopes that the company will get an approval and hence traders are buying the stock aggressively.
Just few weeks ago, there were rumors that the company might be acquired by some large pharma company.
On June 14, RBC Capital started coverage on the stock with an “outperform” rating in response to reports that MannKind is only six to eight weeks away from announcing a partnership to market its breakthrough Afrezza insulin inhaler.
“Multiple potential partners” are said to be courting MannKind on this deal, despite the FDA not having yet given final approval for the product. And RBC thinks this news could help drive MannKind shares up as much as 60%, to a new target price of $16 a share within a year.
Aggressive Approach From Management:
Recent the company made several positive comments in the Goldman Sachs 35th Annual Healthcare Conference.
Directors have noted that the company is seeking to move into other markets, such as pain management, vaccines, and possibly, hygiene.
COO Edstrom made it clear that MannKind is in serious negotiations with multiple potential partners and many of these companies are currently in the diabetic market. Knowing that the diabetic market is controlled by 3 main Big Pharma companies, it could be concluded that Big Pharma is very interested in Afrezza. He also made it clear that the company was NOT in a poor cash-strapped negotiating condition, where it needs to take any deal available. In turn, this means the company has negotiating power when it comes to Afrezza, and it will certainly take its time and get the best deal available.
From, the technical prospective the stock is trading well above its 50-Day Moving Average and 200-Day Moving Average of $8.74 and $6.52. Even after the solid rally, the stock has spent about three weeks within the range of $10-10.80. So a consolidation after the solid rally is always a healthy sign.
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