) recently announced that it will be looking to offer and sell
shares of its common stock and warrants to purchase shares of its
common stock in an underwritten public offering. MannKind did not
mention the size and terms of the offering.
MannKind also plans to issue to The Mann Group LLC restricted
shares and warrants to purchase shares of its common stock. The
Mann Group is controlled by MannKind's chief executive officer
and principal shareholder, Alfred E. Mann.
The issuance of restricted shares and warrants to purchase
shares of its common stock is aimed at canceling the outstanding
debt of the company. The public offering of common stock and
warrants and the private sale of common stock and warrants to its
principal entity are mutually exclusive to each other.
As of the second quarter of 2012, the company's debt was
approximately $429.3 million. MannKind's cash balance at the end
of the same period was $31.6 million. The company reported a
sequentially low cash bun of $24.7 million in the second
But the company forewarned that the expenses will increase
towards the end of 2012. MannKind expects cash burn of about
$10-$12 million per month in 2012.
We note that the company's principal pipeline candidate is
Afrezza, which received a second complete response letter (CRL)
from the US Food and Drug Administration (FDA) in January 2011.
While issuing the CRL, the US regulatory authority had asked
MannKind to conduct two additional trials, one for patients with
type I diabetes (MKC-171 study) and the other for type II
diabetes patients (MKC-175).
The requirement of additional trials has pushed up MannKind's
research and development expenses. Following the receipt of the
second CRL, MannKind already trimmed its workforce by
approximately 41% and cancelled its insulin supply deal with N.V.
Organon, a subsidiary of
Merck & Co. Inc.
We remind investors that the company recently completed the
enrollment process for both the trials. The trials are expected
to complete in the second quarter of 2013 and the company expects
to submit a new drug application by the third quarter of
Currently, we have a Neutral recommendation on MannKind, which
carries a Zacks #3 Rank (short-term Hold rating). MannKind is
primarily dependent on the successful development of Afrezza. The
company's decision to raise fund was expected given the cash
burn. We believe an inability to raise funds will affect
MANNKIND CORP (MNKD): Free Stock Analysis
MERCK & CO INC (MRK): Free Stock Analysis
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