Shares of MannKind (NASDAQ: MNKD), a commercial-stage biotech focused on diabetes, declined 26% during December, according to data from S&P Global Market Intelligence. Investors can blame the big drop on weak Afrezza script volume and a shareholder vote.
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Investors have been watching weekly script volume for Afrezza like a hawk. While the general trend has headed in a positive direction since CEO Michael Castagna took over in May, the data from December was discouraging. The upward trend appeared to have stalled, which makes sense given the distraction of the holidays. However, investors were not in a forgiving mood, so they slammed the company's shares on the news.
The second gut punch related to a special shareholder meeting on Dec. 13. At the event, shareholders voted on whether they should increase the company's authorized share count from 140 million to 280 million. The vast majority voted "yes" on the proposal, giving management the green light to continue diluting existing shareholders like crazy.
Given the updates, it isn't hard to figure out why shares plunged.
While the company has come a long way over the last few months, there's no doubt that it remains in a precarious financial position. For that reason, investors should probably expect an announcement of yet another capital raise within the next couple of months.
On the bright side, investors recently learned that Afrezza's script volume exceeded 500 during the last week of December. That suggests that the company's upward trajectory did continue after the holidays subsided, which is good news.
However, even 500 scripts a week don't represent enough volume to generate a meaningful amount of revenue. That number has to double a few times before investors can breathe easy on that front.
Will 2018 finally be the year that demand for Afrezza takes off? That's certainly a possibility given the recent label change, but I still wouldn't put any capital behind this extremely speculative biotech.
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