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business newsMannKind Rises on Bond Offering
By
Brett Chase
Sep 23, 2011 12:45 pm
The company hopes to raise $370 million to fund the studies of its inhaled insulin product Afrezza.
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The shares plunged in January after a second government rejection of the company’s experimental inhaled insulin product, Afrezza. (See MannKind’s Giant Misstep.) The stock crashed a month later after billionaire founder Alfred Mann said he won’t plow much more of his own fortune into the company. The shares fell again in May when it seemed the company wasn’t making progress toward eventual Food and Drug Administration approval.
The shares are moving up today, however, on news that the company plans to raise $370 million through a debt offering so it can finance studies of Afrezza and take another shot at getting US approval in early 2013. The company proposes to offer senior secured discount notes due 2017. The offering is subject to market conditions and there’s no word on timing.
The stock rose 15% to $3.67 in midday trading Friday, though shares are still down 54% this year. The stock has lost almost three-quarters of its value since MannKind began trading in 2004.
Obviously, there should be some concern over stacking on more debt to a money-losing company that has seen its lead product candidate rejected multiple times by the FDA. (Mann loaned his company $350 million in 2007.) But investors at least see movement toward getting US approval. Afrezza is a device with insulin powder. It’s a fast-acting treatment aimed at people with both type 1 and type 2 diabetes. The FDA said it won’t approve Afrezza until MannKind performs additional studies to make certain the product is safe and effective. The company needs to raise money to fund that research, which is why it plans to go forward with a bond offering.
If successful, the money raised will go toward finishing the human studies of Afrezza, preparation for the sale of the product, and expansion of a company plant in Danbury, Connecticut, MannKind says.
The company said earlier this year that it needed to raise money but it wasn’t specific how that would be accomplished. (See MannKind Hits Another Bump in the Road.) Mann has said other companies are interested in partnering with MannKind to help bring Afrezza to market but, so far, no such deal has been announced.
Mann, who is also chairman of MannKind, has said Afrezza is potentially one of the most valuable pharmaceutical products to ever be developed.
Twitter: @brettchase
No positions in stocks mentioned.
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