MannKind Corporation (NASDAQ:MNKD) stock has been highly volatile this year. The stock fell to as low as $4 in April before rising to $11 in May. Since October, the euphoria has cooled and it’s been trading in the range of $5-$6. MannKind witnessed a 3.3% decline in the short interest between Nov.14 and Nov.28. According to Nasdaq, a total of 79.73 million MannKind shares are held short, down 3.3% from 82.43 million on Nov. 14.
Is MannKind dealing with a shady partner?
The average daily trading volume also fell from 4.78 million shares to 3.62 million in the same period. As a result, the number of days it takes to cover short positions increased from 17.23 days on Nov.14 to 22 days on Nov.28. Currently, more than 31.6% of MannKind’s total float is short sold. That means a large number of investors are still betting against the stock, despite the FDA approval of Afrezza.
Michael Mauboussin: Here’s what active managers can do
Over the past few months, there have been speculations that Sanofi SA (ADR) (NYSE:SNY) (EPA:SAN) might not be the right partner for MannKind. Recently, a former Sanofi employee filed a lawsuit against the French drugmaker. She alleged that the pharma company fired her after she refused to approve nine contracts worth an estimated $34 million. She had refused because she thought the money would go to doctors and pharmacists’ kickbacks for prescribing Sanofi’s diabetes drugs.
Goldman Sachs reiterates a ‘Neutral’ rating on MannKind
It raises a serious concern about the French company’s business practices. Sanofi had faced a similar lawsuit from the U.S. Department of Justice a few years ago. The company settled it by paying $109 million. Anyway, Goldman Sachs analyst Jay Olson said in a research note that Sanofi continues to support Afrezza. Goldman Sachs has a Neutral rating on MannKind with $6 price objective.
Goldman Sachs’ London analyst Steve Chesney met with Sanofi chairman and interim CEO Serge Weinberg. During their meeting, Weinberg assured Chesney that Afrezza was an important part of Sanofi’s diabetes portfolio and the company remained fully committed to MannKind’s drug. However, Sanofi recently guided a flat to little growth in its diabetes revenue through 2018, which could be due to pricing pressure.
MannKind shares fell 0.58% to $5.10 at 10:52 AM EST on Tuesday.