On The Road To Get Back

May 20th, 2009 – Comment

Bridget from Truro, NS writes about MNKD Mannkind Corporation: I am just wondering if you could let me know if this stock going to make a recovery to their previous levels? It has been trading low and seems to be trending higher recently and I am just wondering if this is a good stock to […]


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Bridget from Truro, NS writes about MNKD Mannkind Corporation:

I am just wondering if you could let me know if this stock going to make a recovery to their previous levels? It has been trading low and seems to be trending higher recently and I am just wondering if this is a good stock to invest in?

Thanks,

Bridget

Hi Bridget,

Thanks for the assignment and the heads up on Mannkind Corp. (MNKD NASDAQ). The stock has been on a tear from the March lows. The most recent spike in the stock has been driven by the announcement that the FDA has accepted a New Drug Application (NDA) for the company’s Afresa inhaled insulin product.

A NDA does not mean that a compound gets approved for sale automatically so some of the excitement may be over done. If Afresa gets approved for sale by the FDA its expected that major pharmaceutical companies will look to partner up and move the product aggressively.mnkd

The chart shows a couple of things that are of interest. First the breaking of the downtrend that MNKD was in since late 2006. When a stock stops going down it has a chance to move higher which it has.

The RSI is indicating that MNKD is getting overbought and start to see some resistance at $7.00. To answer your question regarding the return to previous highs this stock has a lot of work to do to make the move to the $20 penthouse of profit.

I would want to see MKND build a base at $6.00 and see if it can trade in a range to $8.00 for a period of time. Once it breaks through $8 there is resistance at $10.00 then $12.00 then $14.00.

What you have to keep in mind with stocks like Mannkind is that most of their efforts and resources are spent at the lab bench and at conferences. What they need is approval to sell a compound in the market place that has a large patient base. Afresa has the potential to be that product but it has to get there first.

If they are successful in getting their lead compound into the market the next question becomes how many more opportunities do they have in their development pipeline.

Happy Capitalism!

Categories: Pharmaceuticals
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