MannKind?

2-Star Stocks Poised to Plunge: MannKind?
February 2, 2010 5:04 AM ET advertisement

Based on the aggregated intelligence of 145,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, biotech company MannKind (Nasdaq: MNKD) has received a distressing two-star ranking.

With that in mind, let's take a closer look at MannKind's business and see what CAPS investors are saying about the stock right now.

MannKind facts

Headquarters (Founded)
Valencia, Calif. (1991)

Market Cap
$1.14 billion

Industry
Biotechnology

Trailing-12-Month Revenue
$0

Management
Founder/CEO Alfred Mann

CFO Matthew Pfeffer

Return on Capital (Average, Past 3 Years)
(71.5%)

3-Month Return
94.2%

Cash / Debt
$57 million / $263 million

Competitors
Amylin Pharmaceuticals (Nasdaq: AMLN)

Eli Lilly (NYSE: LLY)

Novo Nordisk (NYSE: NVO)

CAPS Members Bearish on MNKD Also Bearish on
Apple (Nasdaq: AAPL)

Bank of America (NYSE: BAC)

CAPS Members Bullish on MNKD Also Bullish on
Ford Motor (NYSE: F)

Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 25% of the 496 members who have rated MannKind believe the stock will underperform the S&P 500 going forward. These bears include quinpeung and All-Star zzlangerhans, who is ranked in the top 0.5% of our community.

Just last month, quinpeung warned that positive news for its inhaled insulin drug Afrezza may be more than priced into the stock:

All data I have seen looks terrific and approval seems a no brainer. But I have a hunch that the FDA will identify a flaw in the [new drug application] -- perhaps a manufacturing issue -- that prevents approval. The investors that have recently driven the stock up will withdraw, and the price will drop.

In a pitch from three days earlier, zzlangerhans expands on that line of reasoning. Here's an excerpt:

Mannkind could easily be over 25 within a week if the FDA suddenly announces approval of [Afrezza]. … [R]easons for this red thumb. ...

2. The PDUFA has passed without FDA commentary and the share price has moved higher. This is highly atypical and indicates that the market is not just drinking Al Mann's Kool-Aid but swimming in it.

3. A Complete Response will murder this stock. They didn't set up a partnership. ... What share price will they have to dilute at if they run out of funds?

4. Even with approval and a run to 25 the share price may not sustain. The company still has to make a licensing and distribution deal and with their cash position they don't have a lot of leverage. Also, Exubera got approved by the FDA too. Remember?

What do you think about MannKind, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!

Copyright 2010 Motley Fool