Alfred Mann's purchase creates false hype because:
1. He doesn't know the fate of Afrezza (like you and I)
2. The type of purchase was 'indirect'
3. He is restricted by a 'black out' period
--> His purchase was involuntary
Mannkind Corp (MNKD), maker of a new inhaled insulin product candidate (Afrezza), is up more than 10% on news that Alfred Mann, the founder & CEO of the biotech, had purchased 2,800,000 shares of his own company for a total of $22.7 million in 2 months. Lots of investors see this as a positive indication of Afrezza's potential near term approval and hope to jump on the bandwagon last minute. In addition, in a recent interview with Bloomberg at the JP Morgan Healthcare conference in San Francisco, Mann indicated that the FDA's delay in December was not surprising and reiterated his optimism in his company's invention. However, he did say that the FDA's expanded audit process "seems optimistic but [he doesn't] think [one] cannot read too much into it". This shows that even Al Mann doesn't know the fate of Alfrezza and therefore his 'buying spree' should not be taken as if he has any more information than you and I do.
Most importantly, what most people fail to notice is that the type of Mann's transaction was 'indirect'. This means that over time the company automatically converts part of Mann's salary and bonuses into a share purchase program, which acquires Mannkind's shares at certain periods of time. Also, insiders are constrained by a 'black out' period around sensitive time points such that they are prevented from manipulating stock price. Therefore, Mann did NOT voluntarily make the trade and may NOT have been willing to do so. Are you still as excited? I'm not!
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