MannKind (MNKD) - Stock stays up after FDA delay (for now). Time to buy or sell?!?!

FDA Delays Key Decision Date

Mannkind Corporation (MNKD), the inhaled insulin-developing biotech led by billionaire entrepreneur Alfred E. Mann, was supposed to hear from the FDA tomorrow regarding the potential marketing approval of the company's experimental diabetes medicine.  However, the drug regulator announced that it will postpone the announcement for another 4 weeks.

Stock Trend

MannKind (MNKD) traded up ~12% in early session, peaking at $8.88, before settling in the $8.20 - $8.25 range.  The tremendous bearish sentiment around MNKD's inhaled insulin product candidate, Afrezza, is being counteracted by investors who are not ready to give up yet.

Outlook/Trading Strategy

It appears that the bulls are reluctant to throw away their shares before the rescheduled PDUFA action date in 4 weeks (~ Jan. 25, 2011).  There's just been too much invested leading up to this critical point!!!  This may create a mini bump in share price, pushing it above $9 in the next few weeks.  I'm hoping to purchase some beaten up January call options ($9 strike) with the expiry date just prior to Jan. 25, 2011.  These options have taken a hit this morning, falling 80% from $1.54 to $0.31.  My target price is $0.25.  Then, in the unexpected case of Afrezz's approval, I'll be playing my post-approval drop strategy by racking up some cheap put options.  Keep your eyes open in the next several weeks to see how Alfred Mann's quest for alternative insulin winds down!