MannKind Corporation (MNKD)’s Run to Glory

Shares of MannKind Corporation (NASDAQ:MNKD) have nearly tripled over the last year. The value of the biotech is up a whopping 584% when you look at the company’s market cap because of all the additional shares it’s sold.

MNKD Chart

MannKind data by YCharts.

What’s caused this increase?
Increased revenue? Nope, MannKind Corporation (NASDAQ:MNKD) doesn’t have any products for sale.

Clinical trial data? Not really. The company completed enrollment for two phase 3 trials testing its inhaled insulin Afrezza in October, but the trials aren’t expected to read out until this summer.

MannKind Corporation (NASDAQ:MNKD)Big licensing deal? No, MannKind Corporation (NASDAQ:MNKD) has been talking about one for years, but nothing has materialized yet.

Instead, it looks like the price increase is simply because investors are more interested in owning MannKind than they were a year ago. More buyers and fewer sellers means the price has to go up. Valuation be damned.

Why now?
It’s the typical run-up that biotechs see before data will be released or before the Food and Drug Administration is scheduled to make a decision about a marketing application. In MannKind Corporation (NASDAQ:MNKD)’s case, it’s those phase 3 trials that are being wrapped up and should report shortly.

With no binary event in the foreseeable future — and for some traders, foreseeable can be a month, often less — few investors want to own a biotech as it’s unlikely to change in value with no news. As the binary event approaches, more people want to own the company, which drives the shares higher.

Priced in
The problem with this run up, especially for events like MannKind Corporation (NASDAQ:MNKD)’s phase 3 trials that are widely expected to be positive, is that most of the upside is already gone.

Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA), for instance, fell more than 20% after receiving FDA approval for its leukemia drug Iclusig. Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) had more than doubled from the year before as it ran up to the decision. Shares still haven’t recovered to their pre-run-up level. Binary event traders have moved on. To add to its $3.6 billion valuation from here, Ariad Pharmaceuticals, Inc. (NASDAQ:ARIA) is going to have to do it the old-fashioned way: increasing sales.

There’s risk that, even with good data, we could see the same issue for MannKind Corporation (NASDAQ:MNKD). Unless the company signs a big marketing partnership, investors are going to be rightfully worried about the launch of Afrezza after Pfizer Inc. (NYSE:PFE)‘s flop with its inhaled insulin, Exubera, a few years ago. Afrezza is arguably a much better product than Exubera, but MannKind is still going to have the same problem Pfizer Inc. (NYSE:PFE) had; invoking a paradigm shift on how doctors treat diabetics that need insulin isn’t easy and will require a lot of marketing muscle.

The article MannKind’s Run to Glory originally appeared on Fool.com and is written by Brian Orelli.

Fool contributor Brian Orelli has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

Comments
Insider Monkey Small Cap Strategy
Insider Monkey Small Cap Strategy

Insider Monkey beat the market by 52 percentage points in 24 months. Our beta is only 1.2 (don't click this link if beating the market isn't important to you).

Lists

Cheapest Cities to Visit in the US

Most Expensive Summer Camps

Most Expensive Animals in the World

Most Expensive Specialty Crops in the World

Movies That Took Ages to Make

The Longest Hollywood Films Ever Made

Most Expensive Concert Stages

The Richest Bands of all Time

10 Most Corrupt Countries 2013 List

10 Countries with the Highest Quality of Life Index

Most Expensive Mattresses in the World

5 Smallest Countries by Land Area

The Ultimate Heartbreak Songs

Richest Teenagers in the World

10 Most Haunted Places in America

10 Best Places to Retire in Florida East Coast

Top 10 Places to See Before You Die

Top 8 Countries in the World Where Justice Prevails

10 Richest States in America

15 Wealthiest Countries in the World

Richest Singers in the World

Most Expensive Tasting Menu in New York City

Most Expensive Baby Items in the World

Most Expensive Hotel Suites in Vegas

Most Expensive Brunch in New York City

Most Expensive Beef Cuts in the World

25 Best Colleges to Get a Job

Top 10 US Supermarkets

The 25 Most Dangerous Cities in the World to Visit

Most Expensive Xbox Games

Top 11 Cities Where Billionaires Live

Top 10 Most Charitable Companies in America

Most Expensive Seafood in the World

The 10 Wildest Conspiracy Theories

The 10 Best Job Markets in the US

Top 10 Accounting Scandals of All Time

The 25 Biggest Cities in the World

Top 10 Best Paying Virtual Jobs

Most Expensive Leather Shoes in the World

Top 6 Things to Buy in March

The 10 Most Stressful Jobs in America – 2014 List

Top 10 Jobs for Introverted People

Top 10 Honeymoon Destinations in the World

Top 10 Highest Paying Jobs in the World

Most Expensive Day-Care in New York City

The 10 Cheapest Places to Retire Abroad

Top 10 Most Expensive Luxury Cars in the World – 2014

Killer Small Business Ideas

The 50 Best Personal Finance Blogs

Most Expensive Apartments in New York City

Subscribe

Enter your email:

Delivered by FeedBurner

X

Thanks! An email with instructions is sent to !

Your email already exists in our database. Click here to go to your subscriptions

Insider Monkey returned 47.6% in its first year! Wondering How?

Download a complete edition of our newsletter for free!