MannKind Corp. (MNKD)

[COO2002COO]

MannKind: What To Expect From Earnings

Summary

MannKind reports earnings November 3, which is this coming Monday.
As usual, earnings and revenue can pretty much be ignored.
The important thing to watch for in this earnings report is news concerning the all-important launch of Afrezza.
MannKind (NASDAQ:MNKD) reports earnings this coming Monday, November 3. Earnings per share and revenue are expected to come in at $0.04 and $66 million respectively, though this is not where investors will be focusing their attention. Even though MNKD will have a profitable quarter for the first time in the history of the company, that is not what's important. The only significant aspect of this profitability is that it may be the beginning of many more profitable quarters to come if Afrezza succeeds.


As is usually true with MNKD's earnings reports, and reports for small-cap biotechnology stocks in general, the focus will be on the news. So throw EPS and revenue out the window and watch for any positive or negative news that could affect the company and the stock.

Possible News to Watch For

The company could elaborate on the launch of Afrezza and give more details about the rollout, the drug's insurance coverage and maybe if the company has received any information from doctors about prescription of Afrezza. MNKD has no near-term catalysts because Afrezza is launching in Q1 2015, so the news, or lack thereof, in this earnings report could move the stock. I will list the possible news announcements and discuss the significance of each.

1) If MNKD provides more details on the rollout of Afrezza, such as how many pharmacies will receive the drug and what kind of pricing the drug will have, this could push the stock upward. It is assumed Afrezza's pricing will be competitive with insulin pens already on the market, so any other range could move the stock up or down. If Afrezza is priced higher than the competition, that could negatively affect sales of the drug in the future and the stock may drop. If the Afrezza is priced lower than competing drugs, then that would give Afrezza an edge and will boost sales. However, I believe Afrezza will be priced pretty much equal to currently available treatments.

2) The company may announce that insurance companies will cover Afrezza for patients that want to take the drug. This would be a good thing to get out of the way, though it wouldn't really be considered a positive catalyst as it is already expected that Afrezza will receive this coverage.

3) It's also possible that MNKD may announce some kind of feedback that the company has received from doctors about prescribing Afrezza. This probably goes hand in hand with the drug becoming covered under insurance plans, which must happen before doctors can prescribe it to their patients. Any indication about patient and doctor sentiment will be very important because the results could affect Afrezza's sales next year.

But the company may announce news that can't possibly be predicted and that may move the stock in either direction. Personally, I think the earnings report will be devoid of any big news, but small tidbits of information could have a big impact on the stock which is still very volatile. MNKD stock has performed very well in the past week, closing at $6.19 Tuesday, which is good for a 7% gain on the day. This upward momentum could continue if the earnings report reveals some good news, or at least as long as the company doesn't report any bad news.

As I mentioned in my last article, I predict a steady rise in MNKD's share price leading up to Afrezza's launch as speculative short sellers flee the stock. It appears from the last week that this rise has already begun, and, coupled with a good or uneventful earnings report, this trend should continue until at least early next year.

Conclusion

There are a few things investors should watch out for in this earnings report, but ultimately I expect an uneventful report. If this occurs, it should not derail MNKD's recent rally. As long as there is no bad news, the stock should continue to steadily rise as shorts retreat and as longs settle down for the long haul (pun intended).

http://seekingalpha.com/article/2610535-mannkind-what-to-expect-from-earnings