Struggling MannKind Hires Financial Advisor After Maxing Out Its Last Credit Line

June 30, 2017
By Alex Keown, BioSpace.com Breaking News Staff

VALENCIA, Calif. – Struggling MannKind Corporation continues to grasp at ways to move forward.

Following the hiring of a new chief executive officer, MannKind Corporation has now hired Greenhill & Co. as a financial and strategic adviser and has also drawn on the last of its available credit from the Mann Group. On June 28, the company said it was looking to drawn on the last of its available credit. From that money, MannKind will use $10.6 million of the proceeds to capitalize all accrued but unpaid interest, the company said. That will leave MannKind $19.4 million to fund its operations. The full loan amount of $79.7 million is expected to be repaid to the Mann Group by Jan. 5, 2020.

Chief Executive Officer Michael Castagna, who took on that role on May 31, said the loan proceeds will help the company secure its financial footing as it continues “explore potential opportunities to enhance our capital structure.”

Greenhill & Co. will serve as an adviser to provide Castagna with “independent advice” as he continues to transition into the CEO role, he said in a statement.

In addition to maxing out its credit with the Mann Group, the company was able to extend its $10 million principal maturity with Deerfield Management. The maturity had been due July 18. That has been extended to Oct. 31. The company also amended its facility agreement with Deerfield, which will require MannKind to maintain at least $10 million of cash and cash equivalents, down from $25 million, on the last day of the month from Oct. 31, 2017 to Dec. 31, 2017. On June 29, Castagna said the extension of the principal payment provides the company the “flexibility and time to explore additional measures to strengthen our financial position.”

So far, MannKind’s actions have not been too pleasing to investors. Shares of MannKind are down more than 3 percent in early trading this morning to $1.40. Since MannKind’s announcement on June 28 share prices have dropped from $1.55.

MannKind has struggled with sales of its lead product, Afrezza, a rapid-acting inhaled form of insulin to treat diabetes. The drug has had problems finding a niche in the market, which caused Paris-based Sanofi to terminate its partnership with MannKind due to its failures to meet sales expectations.

Part of Afrezza’s sales problems were related to insurance reimbursement issues. The drug was classified as a Tier 3 medication, which meant patients had to pay a higher co-pay for the drug. The higher tier status also means more restrictions can be placed on the drug. Another issue with the drug is that it cannot be prescribed to patients with asthma and other serious lung ailments. Some analysts suggested the novelty of inhaling the insulin rather than injecting it is not worth the additional price.

The company has made some headway with sales since it gained access for Afrezza with managed care providers like Aetna and Express Scripts.