I don't know much about MNKD and Afrezza, other than it was very much a battleground stock, and relentlessly shorted. Shkreli used to openly brag about how he was attacking it and inviting others to join suit. I believe it was also another stock that AF used to regularly denigrate. For those reasons alone, I kind of want it to succeed. I have watched its price action for a few years, and would see it regularly go up 10 or 20% in a day, quickly followed by a similar decline a day or two later on no background news.
Basically all the share manipulation society acting in concert.
Before he became known for having the most punchable face in America, Martin Shkreli managed a hedge fund called MSMB Capital Management (10). Shkreli boasted about his success as a hedge fund manager, stating: “I have been short MannKind shares regularly for many years. This has generally resulted in fantastic profits for my partners and me (11).” In other words, MSMB Capital Management was profiting from MannKind’s declining stock price. This tactic, known as short-selling, was made famous by the movie The Big Short – which was based on true events. In The Big Short hedge fund manager Michael Burry used his extraordinary intellect to predict a pending financial crisis, which enabled him to bet against, or “short”, the housing market (12). In the case of MSMB Capital Management, hedge fund manager Martin Shkreli used his connections and position to sabotage the MannKind Corporation so its share price would plummet and he could bet against, or “short”, the company (13).
As a small biotech firm with no approved products on the market, MannKind was burning millions of dollars each month. The landscape was extremely competitive and, although 1,000+ biotech companies existed in North America, only the top 1% generated significant revenue (14). For most small biotech companies without approved products the major obstacle tended to be external funding, but this wasn’t the case for MannKind (15). CEO and founder Alfred Mann (hence the name “MannKind”) was a self-made billionaire who financed operations (16). Mann, a highly intelligent philanthropist, had already invented a glucose pump for diabetics. He aimed to do more for the diabetic community with the invention of Afrezza (15 & 16).
In 2010 MannKind completed clinical trials of Afrezza and filed for FDA approval (17). Management was confident the drug would be approved based on positive clinical trial data and ongoing interactions with the FDA (18). On Christmas day, ‘Pharma Grinch’ Martin Shkreli emailed the 12 FDA employees who were in charge of reviewing Afrezza’s application. Shkreli, who was completely transparent about his motives (e.g., he disclosed that he was short, or betting against, MannKind stock), urged them not to approve Afrezza (12 & 18). Despite the fact that his highest degree was a bachelor’s in business administration, Shkreli said he had performed an analysis of MannKind’s clinical data and concluded that their “clinical trial package was lacking” (9 & 10).
Management at MannKind was shocked when the FDA did not approve Afrezza due to flaws in the study design (18). This was highly unexpected because the FDA had previously approved the study design. Of note, the study design flaws were Shkreli’s main argument for why Afrezza should not be approved (12 & 15). The FDA’s decision meant MannKind had to run more clinical trials. For MannKind this meant spending millions more dollars, laying off 175+ employees, and obtaining major external financing in order to stay afloat (17 & 19).
Shkreli posted an article on investment site Seeking Alpha entitled: “MannKind Is Simply Running Out Of Cash” (11). In the article Shkreli recounted how much he had enjoyed profiting from short-selling MannKind stock. He also predicted the company would soon go bankrupt. What’s more, Shkreli claimed that “inhaled insulin (including Afrezza) is a bad idea conceptually, with marginal theoretical benefits compared to regular insulin and no actual benefits.” That was his opinion; diabetics who have to stick themselves with needles every day would surely disagree.
These actions prompted the Citizens for Responsibility and Ethics in Washington (CREW) to file a grievance with the Securities and Exchange Commission (SEC) accusing Shkreli of manipulating the public and the FDA for profit (13). In his characteristically smug and perverse tone, Shkreli fired back on the Seeking Alpha message board “I like CREW… Great peeps… I am an open book – everything CREW has they have because I gave it to them. Ask me anything.” (19). The SEC never launched a formal probe to investigate Shkreli’s actions, probably due to the fact that hedge funds are not regulated by the SEC (18 & 20)
