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Mannkind Falls on Stock and Debt Offerings

From Associated Press (February 1, 2012)

VALENCIA, Calif. -- Diabetes drug developer MannKind Corp. said Tuesday it plans to offer $50 million in stock and as much as $161 million in debt.

MannKind said it intends to sell units made up of one share of stock and a warrant that can be used to buy 0.6 shares. It said the underwriters of the stock offering will have the option to buy additional units to cover any overallotments. Jefferies & Co., Piper Jaffray & Co. and Cowen and Co. are the book-running managers for the stock offering.

MannKind also said it will issue restricted shares to The Mann Group, which is controlled by CEO and principal shareholder Alfred Mann, in exchange for the cancellation of some of its debts.

In a filing with the Securities and Exchange Commission, MannKind said it plans to sell up to $161 million in convertible senior notes due in 2019.

MannKind has no products on the market. It is seeking marketing approval for an inhaled insulin called Afrezza. It initially filed for approval in early 2009. Approval was delayed a second time in early 2011, as the Food and Drug Administration told MannKind it would need to run additional clinical trials to get the drug approved. MannKind said Tuesday that it is enrolling patients in two clinical trials. It hopes to complete the studies late this year and intends to file a new application for Afrezza in the first half of 2013.

The company said the proceeds from the stock sale and its available borrowings are enough to allow it to continue doing business through the third quarter of 2012, but said it plans to raise more money.

MannKind said it had $3.2 million in cash, cash equivalents and marketable securities as of Dec. 31, down from $23.3 million as of Sept. 30 and $70.4 million from the end of 2010. It had $277.2 million outstanding under a loan agreement with The Mann Group, and it had $45 million in available borrowings. It said it will enter into a separate agreement with the Mann Group issuing them restricted shares in exchange for the cancellation of the debt.

Shares of MannKind lost 47 cents, or 14.8 percent, to $2.70 on Tuesday.

Posted: February 2012