Diabetes & Insulin War About To Heat Up (MNKD, LLY, NVO, PFE, BMY, AZN, GERN)
MannKind Corp. (NASDAQ: MNKD) has not gone without its critics over the company’s inhaled insulin. The company has an upcoming review that will be a make or break event for the company. The company is about to face a potential do or die test next week as the FDA is set to decide the fate of the company’s inhaled insulin. MannKind’s Afresa is designed to deliver a fast acting insulin that is supposed to be more effective than the injected products. This would put the company in competition for insulin with Eli Lilly & Co (NYSE: LLY) and Novo Nordisk (NYSE: NVO) for their insulin delivery.
One of the biggest hurdles MannKind faces is that inhaled insulin products have been tried and tested by others, and they have failed or have fallen far short of the expectations set ahead of time. Pfizer Inc. (NYSE: PFE) discontinued its Exubera as an inhalable insulin.
- Lexicon Pharmacueticals (NASDAQ: LXRX) had a favorable Phase I reaction late last year in type 2 diabetes mellitus.
- These companies are all also fighting for their part of that next $170 billion market opportunity.
- Bristol-Myers Squibb (NYSE: BMY) and AstraZeneca (NYSE: AZN) already received FDA approval for Onglyza as an adjunct to diet and exercise to improve glycemic control in adults with type 2 diabetes.
- Geron Corporation (NASDAQ: GERN) is still a ways off for the stem cell angle here compared to its other stem cell endeavors, although you never know when stem cell companies will make periodic announcements.
The FDA is set to make a ruling on Afresa’s approval by January 16, which means that the JAN-2010 CALL options may or may not expire before such ruling is made. The FDA can always delay, and some reports hint at a later date now.
Many feel that Afresa will not get FDA approval or at least doubt that an approval will come. The short interest for the end of December is not yet out, but that was 15.978 million shares in mid-December. The end of November had a short interest of just over 16.08 million shares.
Shares of MannKind fell over $1.00 to $7.92 on Tuesday (on very strong trading volume of more than 8.6 million shares) as a research report from Hapoalim Securities cautioned against approval, cautione3d over partnerships, and cautioned about widespread market adoption even if it is approved.
Today’s PUT and CALL option activity as of NOON EST on Wednesday seems to indicate a belief that MannKind may not have a ‘binary event’ for its stock until after the close of business next Friday. That wouldn’t be so important except that next Friday is options expiration date. Suddenly, that makes this VERY important. We have seen approximately 2,500 Call options trade in the front month (JAN-2010) versus almost 8,000 Call options trade for FEB-2010.
The balance sheet as of September 30 shows some questions still exist here. MannKind had over $56 million in cash and short-term liquidity, but it had over $262 million in long-term debt. It raised over $50 million last August, and Alfred Mann bought 1 million of the 7.4 million shares sold.
MannKind is far from being a stranger to volatility. Alfred Mann is a controversial CEO, the stock has a large number of stock options in the open interest for Jan-2010 and Feb-2010 Puts and Calls, it has a huge short interest, and the stock’s 52-week trading range is $2.00 to $12.30.
To throw in one more wrench in this controversy, MannKind is set to present at the J.P.Morgan Healthcare Conference on January 12, 2010.
JON C. OGG
January 6, 2010
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2 Responses to “Diabetes & Insulin War About To Heat Up (MNKD, LLY, NVO, PFE, BMY, AZN, GERN)”
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I notice you do not include Biodel, Inc. (BIOD) in your article, in spite of its submission of VIAject insulin for FDA approval on December 30, 2009 with the FDA under section 505(b)(2) of the Federal Food Drug and Cosmetics Act. That suggests there could be a faster approval, since it is for modified form of a previously approved drug.
Author,
The word cautioned shouldn’t have a 3 in it.
In paragraph starting: Shares of MannKind fell over $1.00 to…