) recently entered into a Facility Agreement with investment
management firm Deerfield Management Company L.P. (Deerfield). As
per the agreement, MannKind has ensured financing worth $160
million from Deerfield. Deerfield has agreed to provide the loan
through its purchase of four equal tranches of senior secured
notes from MannKind. The notes, due to mature in 2019, will carry
a yearly interest of 9.75%.
Deerfield will be paying the first of the four $40 million
tranches following the closure of the deal. The next tranche will
be received following the announcement of certain results from
MannKind's two phase III studies (Study 171 and Study 175) on its
diabetes candidate Afrezza. MannKind is expected to receive its
third tranche on the repayment of its 3.75% Senior Convertible
Notes due 2013.
The last and final payment will be received on approval of
Afrezza. MannKind further stated in its press release that a
portion of the loan amount can be converted to shares of its
common stock after a specified time following the publication of
data from the Afrezza studies. As per the agreement, Deerfield
received milestone rights from MannKind. Deerfield will receive
up to $90 million on the achievement of some strategic and sales
MannKind is yet to decide the conversion price, which will be
decided by the volume weighted average price of the common stock
during the next 20 trading days following the conversion date.
MannKind stated that less than 6 million shares will be issued on
conversion if the conversion price is more than $6.67.
Moreover, less than 12 million shares will be issued on
conversion if the price is below $3.33. MannKind also mentioned
that if the conversion price is between $3.33 and $6.67, not more
than $40 million of common stock will be issued on conversion.
CADENCE PHARMA (CADX): Free Stock Analysis
JAZZ PHARMACEUT (JAZZ): Free Stock Analysis
MANNKIND CORP (MNKD): Free Stock Analysis
SANTARUS INC (SNTS): Free Stock Analysis
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We are encouraged by MannKind's efforts to raise funds. We expect
the company utilise the amount raised on Afrezza. MannKind is
totally dependent on the success of the diabetes candidate.
Meanwhile, MannKind completed both the phase III studies (Study
171 and Study 175) on Afrezza. MannKind intends to resubmit the
New Drug Application to the FDA for Afrezza in late September or
early October this year. MannKind intends to get Afrezza approved
for treating adults suffering from type 1 or type 2 diabetes. We
expect investor focus to remain on Afrezza going forward.
MannKind, a biopharmaceutical company, currently carries a Zacks
Rank #3 (Hold). Other biopharma stocks, such as
Cadence Pharmaceuticals Inc.
) are comparatively well placed. While Jazz Pharma and Santarus
carry a Zacks Rank #1 (Strong Buy), Cadence carries a Zacks Rank