Mannkind Stock Volatility: Yesterday's Crash, Today's Rise, and Tomorrow's Crash

Yesterday's 10% drop in Mannkind stock is symptomatic of the volatility we can expect to see up until the 29th when the FDA rules on Mannkind's application for Afrezza.

For those of us who are longs -- I would advise against placing any stop-loss orders and also advice putting in place limit buys for where ever you have placed your stop-loss. 

The stop-loss was designed to allow people to limit their loss when a share's value decreases.  This mechanism does not work in volatile stocks like Mannkind coming up to a binary event (the FDA decision).  Many of the sudden drops in price are a result of shorts, hedgefunds, "big money" who are selling only to trigger the stop-losses resulting in a further drop in the price...ie they are leveraging the people who have put in stop-losses to drop the price.  Than, they buy before anyone realizes what has happened (ie when they stop selling and start buying while the stop-losses continue to be exercised). 

A day later what happens:
"Big Money" - lowers the cost of the stock to themselves
Average shareholders - end up with lower holdings and early profit taking -- all of which is not intentional.
Stock price: back to where it was before the drop.

The only way to counter this strategy (and reduce your own heartburn) is to either
1. not put in any stop-losses
2. put in limit buys for where-ever you have stop-losses -- which will let you partake in the uptick that the "big money" is planning on taking advantage of.

Will Doctors educate patients on needles or give them an inhaler?

A Response to The Curious And Complicated Case Of MannKind on Investopedia

Not All Good News, ThoughUnfortunately, Afrezza is not the slam-dunk its supporters want it to be. None of the clinical trials done to date have shown any superiority in efficacy (as measured by HbA1c) for inhaled insulin. In fact, every trial I have seen has shown a slight underperformance for Afrezza - not enough to be statistically significant or technically inferior, but enough to suggest that Afrezza is not demonstrably better at maintaining long-term glucose control. Moreover, I fear that some investors may overstate the benefits of an inhaled insulin delivery system. It is true that there is substantial needle-fear in patients who are starting insulin therapy, but that fear disappears. As part of my consulting work, I have seen several surveys of diabetics (covering thousands of respondents) and there is a remarkable and consistent curve - those who have never injected are very bothered by the idea, but that fear and anxiety declines rapidly once they begin therapy and become accustomed to it. Consequently, there may not be as much commercial demand for the product as people think - particularly if doctors spend time with patients to ease their anxieties about injections.

It almost doesn't matter whether diabetic patients are afraid of needles or not.  If they are afraid, the doctor has a choice--have a long conversation on needles and the fact that the patient need not fear or simply give them a prescription for an inhaler from Mannkind.  Everyone understands inhalers...everyone has seen asthmatics using them....no fear, no discussion (assuming all else is equal).

For current needle using diabetics, life has gotten much easier with the pens that are available on the market.  They can carry them in a pocket and go to the bathroom to give themselves a shot.  With the inhaler form-factor, they no longer need to go to the bathroom to give themselves a shot...and if they do it in public, than, the form-factor itself provides no big advantages.

However, all else is not equal.  Afrezza has a faster response time compared to any inject-able insulin which reduces all kinds of risk for patients.  Thus, I would imagine doctors, once exposed to Afrezza would consider having a conversation with existing needle users (who are comfortable with needles) about Afrezza especially if those patients have trouble controlling their insulin levels...

Disclaimer: I am long on Mannkind.