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MannKind Added to Nasdaq Biotech Index

The stock of MannKind Corp. – in danger of being delisted a year ago – got something of a vote of confidence Monday when it was announced the stock will be added to the Nasdaq Biotechnology Index effective Dec. 18. Being added to an index typically boosts share prices because some funds automatically buy all stocks on an index. However, investors in MannKind seemed unimpressed as the company’s stock closed down Monday. “We are pleased to see that the successful execution of our commercial strategy for Afrezza and our efforts to recapitalize the company have been recognized with our addition to the NASDAQ Biotechnology Index,” Steven Binder, MannKind’s chief financial officer, said in an emailed statement. MannKind, the maker of inhalable insulin Afrezza, is one of 54 newcomers to the index, which is comprised of securities of pharmaceutical and biotechnology companies. To qualify, the company must have a market capitalization of at least $200 million and an average daily trading volume of at least 100,000 shares, according to Nasdaq. The roster of securities listed on the index is updated every December. The development is a significant improvement over MannKind’s position this time last fall, when the Westlake Village biotech was at risk of being delisted from the exchange. After its stock price hovered below $1 a share for months, the company in February initiated a 1-for-5 reverse stock split that brought its share price to $2 and reduced the number of outstanding shares from 700 million to 140 million. Inclusion in the index is an indicator of a company’s present performance rather than its outlook, Spencer Osborne, a Seeking Alpha blogger and MannKind critic, told the Business Journal. However, it does give a security additional exposure and funnels shares into index funds, which tend to support share prices. “(That) can serve to drive the equity price up or limit the downside pressure while the required shares are acquired,” Osborne said. Those dynamics tend to soften with time, he added. However, MannKind (MKND) stock fell 13 cents, or about 4 percent, on Monday to close at $3.04 on the Nasdaq.

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