It's Seeking Alpha's turn...
The Retail Madness With Low Institutional Support
More importantly than companies with high ownership, are those that have traded significantly higher due to retail investors --as it could indicate a lousy investment. Remember, we are using this ownership as a tool, a way to assess risk according to the actions of institutional investors --those who have access to the best sell-side reports.
MannKind Corporation (MNKD) has a market cap of $2.2 billion and has seen its valuation increase by 330% in the last year. The stock has seen its run-up into top-line results from its Phase 3 drug, Afrezza, with trials being conducted for both type 1 and 2 diabetes. Those who are optimistic will argue that Afrezza works better than any other inhaled insulin on the market and that its inhaled insulin device will attract high demand.
Afrezza has already been rejected twice by the FDA, and the company continuously attempts to modify its trials to achieve the best response to the drug (which is perfectly acceptable). In the process, the company has racked up an accumulated deficit of more than $2.1 billion (which is not acceptable) - and there are many who believe that the drug will be a commercial failure even if approved.
These bears point to the wide use of Exubera and those other drugs, such as Sanofi's (SNY) Apidra, have been unable to make a dent in a market that is already well developed with preferred therapies. Yet despite these concerns, bullish retail investors don't want to hear anything about potential risks. The retail investment community has single handily driven the price of this stock, as its institutional ownership sits at just 18%!
When a bearish position is presented to the bulls, it is met with heavy offense. Seeking Alpha contributor Brian Wilson's clinical assessment of Afrezza and his belief that it will fail one of its Phase III trials, created 114 comments (many of them offensive). Martin Shkreli's fundamental analysis concluded that MannKind is running out of cash --racked up 81 comments from the retail investment community (most of which were negative). This volume of feedback is even more than we typically see for an Apple article, yet these companies are only a fraction the size. Personally, I don't own MannKind shares, although I have no opinion of whether or not it will succeed or fail. My observation is simply to show the "retail cult" that exists and the lack of confidence among institutional investors, which is in fact evident.
The True Retail Madness
While MannKind's 18% ownership might look bleak compared to that of ACADIA Pharmaceuticals or others, such as Celldex Therapeutics, its ownership looks superb compared to that of Galena Biopharma (GALE).......
http://seekingalpha.com/article/1538492-a-leading-indicator-of-success-failure-and-risk-in-biotechnology?source=google_news
