How Much Could MannKind Fetch? (MNKD, LLY, NVO, PFE)

September 29, 2010 · Filed Under Acquisitions, Diabetes, Financial, M&A, obesity, Rumor 

MannKind Corporation (NASDAQ: MNKD) is not without controversy. So what happens when you hear ‘buyout rumors’ driving the stock higher?

Barron’s reported a rumor first being published by TheFlyOnTheWall that MannKind could be a takeout buyout candidate.  Eli Lilly & Co. (NYSE: LLY) was noted as the buyer, and $12.50 was the price hinted at.

The problem is that it is still an outstanding issue over whether or not MannKind will get its inhaled insulin approved by the FDA.  The company has raised money and it has even gone as far as changing the name for AFREZZA.

To make matters even more complicated, MannKind is a highly-shorted stock.  The most recent settlement date of September 15, 2010 showed that the short interest was down to 14.215 million shares.  That was actually the lowest short interest since mid-April, but that represented 13 days to cover at the most recent time.

Recent financing has not been without criticism, and share lending arrangements are often hated by shareholders.  The big catch here is that the inhalable insulin market will be huge if the safety risks can ever be overcome.  Imagine no more needles for diabetics taking insulin.  Pfizer Inc. (NYSE: PFE) has gone down this path before.  It failed.

Novo Nordisk A/S (NYSE: NVO) has one monster insulin franchise, and it would likely do anything it could to protect its market share and its market cap is a whopping $57+ billion.  Not bad for a Danish company, not bad at all.  Its shares hit a new 52-week high of $99.75 today.

Options trading has been elevated today as well in MannKind trading, but the options expirations of JAN-2011 are the first month where the options start to price in any FDA event decisions.

In late-day trading, MannKind shares were up over 8% at $6.59, but the 52-week trading range is $4.76 to $11.12.  The bet is an obvious one: inhalable insulin, if ever approved, is an easy blockbuster treatment.

Keep in mind that rumors have been out on MannKind before.  Of course, most rumors turn out to be nothing more than unfounded rumors.  The risks of acquiring a company without FDA approval are often too large for a large for a Big Pharma player.  With a sub-$1 billion market cap, anything is possible.

JON C.  OGG

September 29, 2010 (3:30 PM EST)

Comments

7 Responses to “How Much Could MannKind Fetch? (MNKD, LLY, NVO, PFE)”

  1. Charlie on September 29th, 2010 3:36 pm

    I don’t want inhaled insulin in my adult son’s lungs, nor in any child’s lungs.

  2. Brian on September 29th, 2010 4:15 pm

    Oh lord, I hope this happens. I’ve been sticking myself for years.

  3. Yong on September 30th, 2010 12:18 am

    It’s a lot safer than smoking cigarette:)

    The pollutants you inhale every day is a lot worse than Afrezza.

  4. Troy on September 30th, 2010 12:38 am

    Afrezza
    No hypoglycemic events in all cases even when you eat nothing if used alone in a small study. Experts say it might be halting the progression of the diesease.
    No carbohydrate counting
    No dialy titration
    No weight gain
    No pulmonary issues
    No lung function issues
    No shot
    No side effects except a slight cough in a few that subsides, and a slight risk of a hypoglycemic event when using Afrezza with a basil insulin and the basil is suspect for the cause
    Superior Hyperglycemic controls to the gold standard of care
    Superior Glycemic controls to the standard of care
    comparible H1A1c’s
    To be Tier II insured
    There are currently 285 Million diabetics in the world growing to 430 million by 2030
    Now I imagine they will be paying $1,500~ each for a year supply to $2,000~ (guessing) still
    lets do the math… what is 285million X 2000 equal? and that is every year and growing to 430 million over the life of the patent..globally..
    and that is just Afrezza! Mannkind has a Monopoly on inhaled insulin!

  5. Troy on September 30th, 2010 12:43 am

    570billion? and lets say I am off by 1000 and it cost 1000 per year thats still 285billion or lets reduce that down to 500 per year thats still 142billion..so I dunno..what was that offer rumored at? 2billion? Bwaaahahahaaa! GET REAL!
    speculating and guessing all!

  6. brian goodwin on October 3rd, 2010 11:25 am

    good math troy!I also crunched some rough hypothetical numbers, but i like net dollars and closing ratios. 30% net profit and closing 20% of diabetics per year……it’s still billions of dollars world wide…and in 5 years the product growth cycle keeps going up with new diabetics and existing customers living longer! If fda approved, this will be like microsoft of the 80′s kind of stock.people will say “if only I owned 1000 shares of mnkd in 2010″.al mann-smart guy.

  7. Rob on October 5th, 2010 4:26 am

    Its going to go more then we all hope ive been checking this stock from the I.p.o. everyday. we just need to endure good things come to….

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