MannKind Corporation (NASDAQ: MNKD) is having a relatively strong start in the market this morning, and for good reason. The company announced that it has restructured its near-term debt obligations, leading to excitement among investors and prompting an alert from our partners at Trade Ideas. Currently (9:16), MNKD is trading at $4.23 per share after a gain of $0.12 per share (2.92%) thus far today.
MNKD Restructures Near-Term Debt Obligations
As mentioned above, MannKind is having a relatively strong start to the trading session this morning after the company released a press release informing investors that it has restructured its near-term debt obligations. In particular, there are a few obligations that have been restructured:
- Senior Convertible Notes Due August 2018 – MNKD announced that it has restructured about $27.7 million in senior convertible notes that were due August 2018. These notes have been restructured to senior convertible notes in the amount of approximately $23.7 million due on October 2021 and 973,235 shares of the company’s common stock.
- Deerfield Facility – The company also announced that it has extended the maturity date of a $10 million credit facility from Deerfield from October 31, 2017 to January 15, 2018. This part of the restructuring also allows for the principal to be converted into common stock.
- Additional Deerfield Principal – MNKD also announced that it has allowed for certain additional outstanding principal under the Deerfield credit facility to be converted into common stock.
In a statement, Michael Castagna, CEO at MannKind, had the following to offer:
“These transactions, in combination with the recent registered direct offering, are expected to enable us to execute our near-term business plan.”
Big Gains Could Be Just Around The Corner
If you’ve been following MNKD recently, you know that there has been quite a bit of news as of late. In fact, just over the past few weeks, the company has announced the approval of a label change by the FDA for Afrezza, it has announced a registered direct offering, and now, it has announced the restructuring of debt. All of these announcements are key at this critical juncture.
You see, the fact that the FDA has approved the label change for Afrezza will likely lead to stronger sales volume as patients and physicians alike will have a better understanding of the treatment and how it is to be used. However, in order for this label change to work out in the benefit of MNKD, the company needed funding to further its goals. The recent registered direct offering and the announcement of the restructuring of debt are both key pieces to the company’s plan, as this will allow the company the financial flexibility it needs to properly market Afrezza considering the recent change.
What Comes Next?
Moving forward, MannKind is likely to see some pretty strong gains. While the company has struggled in the past due to issues with getting Afrezza sold, the new label change will help the company in their sales efforts. This, in combination with new funding, puts the company in a much better position to further commercialize the treatment.
Moreover, the label change may do even more for the company. Because this will likely make sales easier, it wouldn’t be surprising to see other, larger companies start to vie for control of MNKD through a potential takeover. If this doesn’t happen, there is a strong chance that the company will license the treatment to further expand sales. However, this is all speculation on my part based on what we are seeing from the company. Nonetheless, regardless of which way this goes, chances are that it will lead to further gains in the stock.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on MNKD. In particular, we’re interested in following the Afrezza story, as recent news surrounding the treatment has been overwhelmingly positive. Nonetheless, we’ll continue to follow the story closely and bring the news to you as it breaks!
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