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Alfred Mann Manning Up On Mannkind Corp. (MNKD)

 December 26, 2012 09:27 AM

(By Rich Bieglmeier) It was a good week for insider purchasing ideas last week. Insiders at Cyberonics Inc. (CYBX) continue to gobble up shares despite the stock trading near a 52-week high, and that says something about the CEO's and VP of Quality's view of the company's future.

There were plenty of good candidates for review. But, we are going to focus on a $103 million – WOW – buy of MannKind Corp. (MNKD) by CEO Alfred Mann. A man of those means doesn't toss a hundred mill away on a hunch, and you can believe ‘dat. iStock smells smoke.

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Mr. Mann does have a history of making big buys. In the last two years, the CEO has committed $197 million to MNKD shares – WOW! Since June 2012, Mann has he gotten super-duper aggressive, buying $187.8 million of the $197M.

MannKind is a development stage biopharmaceutical company, engages in the discovery, development, and commercialization of therapeutic products for diabetes and cancer in the United States. Its lead product candidate, AFREZZA inhalation powder, an ultra-rapid-acting insulin therapy that is in late-stage clinical investigation for the treatment of adults with type 1 or type 2 diabetes for the control of hyperglycemia. The company also develops MKC1106-MT, an investigational cancer immunotherapy product, which is in Phase II clinical trials; and MKC204, which is in preclinical development stage for the treatment of malignancies and inflammatory diseases.

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Fundamentals really don't matter for development stage biotechs. It's all about strategic partnerships, burn rates and FDA responses.

On November 13, 2012, MNKD signed an agreement with Colby Pharmaceuticals for exclusive worldwide rights to develop and commercialize disease-specific antigen compounds and intra-lymph node delivery technologies from MannKind's novel MKC1106 active immunotherapy programs, which are currently being developed for the treatment of melanoma, prostate, hematological disorders and other human cancers.

Under the terms of the deal, Colby will pay MannKind upfront and milestone payments linked to the development, approval and commercialization of products, with upfront and potential milestone payments of approximately $140 million total. MNKD will also receive tiered royalties on sales of products.

Prior to the Colby agreement, as September 30, 2012, management said, "We believe our existing cash resources, including the $21.9 million remaining available under our loan arrangement with The Mann Group, combined with proceeds received in October 2012 from the underwritten public offering, will be sufficient to fund our anticipated cash requirements at least into the third quarter of 2013."

The November alliance satisfies two of the three criteria above, a strategic alliance that provides enough money to burn until the FDA makes its decision.

According to many online sources, Afrezza was about to be approved at the end of 2010. In fact, an FDA employee, Chang Yi Liang traded on the "inside information" after reading the confidential approval notice on internal email.

The agency had a change of heart and issued a Complete Response Letter (CRL), asking for two additional trials.  Most believe the additional trials would last between 1.5 to two years. The tiny biotech resubmitted its NDA on June 29, 2010 after discussing the CRL with the FDA. The 1.5 to two-year window is closing fast.

On the eve of its almost approval, MannKind Corp. (MNKD) reached more than $10 per share. Since then, well, all you have to do is look at the quote above to know what happened. Many feel the commercial approval for MNKD's inhaler could be a "game changer."

In the last six-months, Alfred Mann has bet $187.8 million that the he'll be moving up Forbes richest in the world rankings sometime in 2013.


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