MannKind Corporation (MNKD): Buyout Rumors Run Rampant

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MannKind Corporation (NASDAQ:MNKD) is approaching a key date, and investors are getting excited. The U.S. Food and Drug Administration expects to issue a decision about approval for MannKind’s one and only drug—Afrezza. Meanwhile investors on a popular online community are starting to speculate that a buyout could be in the company’s future.

MannKind speculations running wild

Today shares of MannKind Corporation (NASDAQ:MNKD) hit a new 52-week high. The FDA is expected to announce on July 15 whether it will approve the company’s drug for use in the U.S. Wall Street is buzzing not only with anticipation of approval for the diabetes drug, but also buyout rumors and a possible short squeeze.

More than double the number of MannKind Corporation (NASDAQ:MNKD) shares that normally change hands in a day have already traded, and there are still hours left in the day. As of this writing, more than 22.1 million shares of MannKind had been traded, compared to the average daily volume of nearly 7.9 million shares.

MannKind shorts getting squeezed out?

It’s possible we’re starting to see a short squeeze as short sellers begin to worry. MannKind Corporation (NASDAQ:MNKD) shares have closed out 17 of the last 21 trading sessions higher, marking an approximate 63% increase in share price.

At the time of the last set of data, short interest in MannKind Corporation (NASDAQ:MNKD) was quite high at around 29% of the float, which amounted to 68 million shares. The latest set of short interest data from NASDAQ showed 11 days to cover that entire short position.

Anticipation about Afrezza

In spite of expectations that MannKind Corporation (NASDAQ:MNKD)’s drug will receive FDA approval, some investors appear to be remaining cautious about the company. The drug maker’s market capitalization is now over $4 billion thanks to today’s share price increase—and MannKind doesn’t even have any revenue yet. In addition, Street Insider notes that money flow on MannKind is -$1.7 million, setting an uptick-to-downtick ratio of .92 times.

Nonetheless, the general consensus regarding sentiment for MannKind Corporation (NASDAQ:MNKD) is bullish, according to analytics from StockTwits. Some users of StockTwits say the concern about buying MannKind stock at its current price is whether or not the drug maker can market and sell Afrezza fast enough to justify its soaring valuation.

Buyout speculations for MannKind

Others say it isn’t the valuation that attracts them to MannKind because they believe approval for Afrezza will make the company an attractive acquisition target for a larger pharmaceutical company. Some big names that are being floated on the online community are Merck & Co., Inc. (NYSE:MRK).

This speculation actually makes some sense, as Merck management has already said they might consider looking for outside opportunities to grow, a.k.a., potential acquisitions. Indeed, the number of mergers and acquisitions that has been happening in the pharmaceutical industry late has been rapidly increasing.

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