Again, my apologies to those of you who have chosen to avoid MannKind (MNKD – $4.68) for one reason or another, but a great many of my subscribers are involved in the story, and in the face of what has been going on with the stock over the past three months, I feel compelled to keep people up-to-date in terms of how I see the story unfolding.

First off, it is important to keep in mind that it is actually quite common for the share prices of “biotech” stocks to become completely de-coupled from the actual story that is unfolding for the underlying company… and, though it is never fun to watch a company’s stock decline even though its fundamentals are improving, it is important to recognize that a) such things happen in the sector, and b) they actually represent tremendous opportunities for investors willing to look at the big, long-term picture rather than get caught up in short-term emotional swings.

In the case of MannKind, not only do we have the usual patterns of “post-approval trading” to take into account, we also have the influence a very large and very vocal group of short sellers affecting the share price… a situation perhaps made even worse by the fact that the CEO running the company has nothing to prove at this stage of his career and knows there is no point spending too much time worrying about the share price since “in the long run, the fundamentals will take care of the situation” [my words, not Al Mann’s, mind you!].

As mentioned a number of times before, I don’t think MannKind could have found a better partner for Afrezza than Sanofi (SNY – $52.43), and I am anxiously looking forward to seeing what sort of advertising campaign they end up putting together to promote Afrezza as part of the impressive line-up of products that Sanofi has put together as part of its game plan when it comes to addressing the diabetes market.

To be sure, touting all the benefits of “fewer needle sticks” is an easy and obvious component of the story to get a lot of mileage out of (especially when it comes to TV advertising where “ease of use” and “no more pain from shots” can be shown to potential customers in “real life” situations), but I want to remind you yet again that the real value in Afrezza is the fact that it acts much more like “regular” insulin in the body than many of the products it will be competing with… and, because this ought to make it that much easier for patients to avoid the sorts of swings in blood sugar levels that get folks into trouble, I believe doctors and insurance companies are going to be extremely excited about the product too.

Of course, if management is going to take a “hands off” approach to the situation, we may have to wait several quarters before we get rewarded for our patience… and I know that might be a difficult thing for some of you to endure.

Consequently, I want to offer the following set of thoughts for those of you trying to figure out what to do with your position: a) if you’re nervous, by all means, “sell down to the sleeping point;” b) if you’re comfortable with the long-term prospects for the company, patiently add to your position from time to time; and, c) know that I really do believe this is the sort of situation that only comes along once every decade or so, and I have a great deal of my own money involved alongside yours… here’s to hoping the tide turns soon!

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MannKind

As you can see in the chart to the left, MannKind’s stock has done nothing but slide since the FDA approved Afrezza back at the end of June, and I have to admit that I am as puzzled, surprised, and disappointed by the price action as you.  As discussed above, I continue to believe there are a number of reasons to believe our best bet continues to be on the long side of the situation, and as part of our approach to always averaging-in and -out of positions, you are encouraged to patiently add to your position as time goes by (especially if you own most of your shares at higher prices); however, as always, “don’t own more than you can comfortably sleep with at night.”  MNKD is now a strong buy under $6 and a buy under $9.

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The Aggressive Portfolio will buy 15,000 MNKD using the closing price on Monday 10/13/14.