MannKind Corporation (MNKD)  stock has been all over the place in the last six months, and it looks like the volatility will continue, at least for now. The great debate is whether the drug maker’s only product on the market will be a hit or a flop.

MannKind

MannKind investors waiting for a catalyst

Shares of MannKind Corporation have been relatively quiet recently, although today they slipped by as much as 2.02% to $5.82 per share. Wall Street is clearly in “watch and wait” mode to see how Afrezza, the company’s inhalable insulin product, will do. There’s been little news to move MannKind shares, although short interest has quietly surged.

Seeking Alpha contributor Kumquat Research (which it should be noted is long MannKind) noted that all of a sudden, short interest surpassed half of the company’s float. As of June 10, the Afrezza maker was the fifth most-shorted stock on all of the major stock exchanges.

Why is short interest in MannKind rising?

The numbers clearly show that physicians are slow in their uptake of Afrezza, as the number of prescriptions for the insulin remains quite small. MannKind bulls maintain that the ramp in Afrezza sales is just getting off to a slow start but believe that the drug will take off—eventually.

Because of how slowly Afrezza is moving, investors apparently are expecting the drug to flop, which is why short interest has gotten so high in the last few weeks.

MannKind now a battleground stock

Kumquat Research is on the bullish side of MannKind and does expect Afrezza to be a hit. The firm also believes that the success of Afrezza will mean that MannKind is a success as well. For now, however, the Seeking Alpha contributor suggests that volatility will remain a key problem in MannKind shares, mainly because of how high short interest has gotten in such a short amount of time.

The author suggests that investors interested in remaining long on MannKind for the long term be prepared for a bumpy ride. Yahoo! Finance gives the stock’s beta a score of 2.97, which means that it is nearly 200% more volatile than the average stock on the market.

MannKind short interest hits a new high

Short interest in MannKind has been significant for quite some kind, but according to Kumquat, it’s never been this high before. Any little bit of news on the company or on Afrezza threatens to send the stock into wild swings in either direction.

The Seeking Alpha contributor reiterated the standard bullish argument for MannKind that Afrezza will eventually be a hit but will take off gradually. Kumquat expects downward pressure on the drug maker’s shares in the near term because Wall Street will probably be disappointed again with the next Afrezza sales number.

On the other hand, if there’s a positive catalyst for MannKind, a short squeeze will be in order, and with short interest being as high as it is now, any short squeeze that happens soon could shoot shares up to new highs amid short covering.