Short MNKD

December 21, 2010 6:01 AM

Direct me to the best Bear case on MannKind's (NASDAQ: MNKD) Afrezza prior to their expected PDUFA, 12/29/10.
posted by wallstreet1929 to Science & Nature (3 answers total)

Not sure I understand the question, but.... theoretically, the best Bear case would be bankruptcy, no? You sell them short at current bid of $8.25, and then they go bankrupt, and you can "buy" them back for $0.00.
posted by Grither at 6:34 AM on December 21, 2010

Presumably, he's looking for bearish analyst coverage.
posted by Admiral Haddock at 6:42 AM on December 21, 2010

Well, as the latest 10-Q indicates they've been hit with another lawsuit:

“Litigation — On September 16, 2010, John Arditi, the Company’s former Senior Director — GCP — Regulatory Affairs, filed a lawsuit in the Law Division of the Superior Court of New Jersey (Bergen County), against the Company and its Chief Scientific Officer and its Vice President — World Wide Regulatory Affairs. In the lawsuit, Arditi v. MannKind Corporation, Docket No. BER-L-8783-10, Mr. Arditi alleges that the Company terminated his employment in retaliation for his purported reporting of alleged unlawful practices in connection with the Company’s clinical trials. Mr. Arditi has asserted claims for violation of the New Jersey Conscientious Employee Protection Act, wrongful discharge, breach of contract, breach of the implied covenant of good faith and fair dealing and intentional infliction of emotional distress. Mr. Arditi is seeking, among other relief, compensatory and punitive damages and counsel fees, costs and interest. The Company’s deadline to respond to the complaint is December 3, 2010. Before Mr. Arditi filed his complaint, the Company had completed an internal investigation of his claims and retained an independent outside firm to conduct an independent investigation of his claims. Neither investigation found any basis for his claims. The Company believes that the allegations in the complaint are without merit and intends to defend against them vigorously.

I'd suggest ignoring the PDUFA and look at what happened after a case in 2007 was settled out of court; I seem to recall common got diluted as they did another round of capital. The PDUFA adds another level of risk to an already (as you're clearly aware) risky class of equity investment, so I hope you enjoy the ride and make some money no matter what you're up to.

Also the shares took a big whack on April 9th 2008, losing about 61% in one. Not sure what happened there (and I'm not in front of a Bloomberg terminal now) but about 21M shares traded vs an average of rougly 250K per day, so I'd try to find out.
posted by Mutant at 8:26 AM on December 21, 2010