MannKind (NYSE: MNKD - option chain) stock is trading lower today after the company said it will be unable to strike a partnership deal for its inhaled insulin product, Afresa, by the end of the year. The delay is due to a lag in obtaining FDA approval for Afresa, which may not come until January 2010. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on MNKD.

This morning, MNKD opened at $8.03. So far today the stock has hit a high of $8.03 and a low of $6.52. As of 12:55, MNKD is trading at $6.77, down $2.44 (-26.5%). The chart for MNKD looks bullish.

"In looking for a highly speculative stock for our portfolio, I have settled on MannKind Corp. (NASDAQ: MNKD), a company that is developing an inhaled insulin product," says Nate Pile.

In his growth-oriented Nate's Notes, the advisor cautions, "I believe we are looking at a situation in which we will either lose most of our money, or triple (or better) our investment in a fairly short period of time."

"In a nutshell, the company's near-term fate hinges upon AFRESA, a novel, ultra rapid acting mealtime insulin therapy being studied for use in adult patients with type 1 and type 2 diabetes mellitus for the treatment of hyperglycemia.

"Working against the company is the fact that there has never been an inhaled insulin product approved for commercial use that has worked very well.

MOST NOTEWORTHY: Patterson Companies, Virgin Media and MannKind were today's noteworthy downgrades:

• Patterson (NASDAQ:PDCO) was downgraded to Neutral from Outperform at Baird, as the firm's checks indicate industry fundamentals have softened and it sees greater near-term risk for dental consumables than dental equipment.
  
• Virgin Media (NASDAQ:VMED) was cut to Hold from Buy at Jefferies as they believe the company's results could be under pressure given the continued competitive activity and potential weakening of the UK economy.
  
• Piper downgraded shares of MannKind (NASDAQ:MNKD) to Neutral from Buy and lowered their target to $1.50 after Pfizer (NYSE:PFE) discontinued inhaled insulin Exubera due to an increase in lung cancer cases.

OTHER DOWNGRADES:

• Lehman cut Cheniere Energy (LNG) to Equal Weight from Overweight.
  
• Pantry (PTRY) was cut to Market Perform from Outperform at Friedman Billings.
  
• JP Morgan lowered Watsco (WSO) to Neutral from Overweight.

MannKind (NASDAQ: MNKD) is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic products for diabetes and cancer.

MNKD lead product, Technosphere insulin (TI) an inhaled insulin in phase three data is expected in 2010.

MNKD May option implied volatility is at 68; January 2010 option implied volatility is at 96 according to Track Data, suggesting larger price movement in 2010.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com