In recent news MNKD announced that they have completed the phase III study of their diabetes insulin Afrezza. The stock has seen an increase in its valuation within the last year by 330%, which is in part due to its results from Afrezza. The product is in the late phases of clinical investigation and would be used to treat adults with type 1 or type 2 diabetes. Although the drug has strong potential, the FDA has already rejected it twice and MannKind continues to look for ways to improve the insulin device. The positives for Afrezza are that if the drug is able to pass it has the potential to work better than any other insulin device on the market, which could create a strong demand for the product.
In other news, Deerfield Management Company has made an agreement with MNKD under which the company may receive up to $160 million in order to help finance the insulin product. The money that MannKind may receive is meant to support the regulatory process as well as commercialization of the product.
Possible Trade Set-Ups: The MNKD Aug 7 Put, Aug 8 Call is priced at $2
Measured Move Targets:
Upside: $8 + $2= $10
Downside: $7 – $2 = $5
Possible Bullish Set-Up: Buying the Aug 8-10-12 Bull Call Spread for $.25 debit
Risk: $25 per 1 lot
Reward: $175 per 1 lot
Breakeven: $8.25 and $11.75
Possible Bearish Set-Up: Buying the Aug 7-5-3 Bear Put Spread for $.45 debit
Risk: $45 per 1 lot
Reward: $155 per 1 lot
Breakeven: $3.45 and $6.55
(Full Disclaimer: I have no position on yet)