MannKind Corporation (NASDAQ: MNKD) is having an overwhelmingly rough start to the trading session this morning after announcing the pricing of a direct offering of 14,000,000 shares of common stock as well as warrants. Unfortunately, the pricing proved to be a point of concern for investors, sending the stock tumbling downward. Today, we’ll talk about:
- The direct offering news;
- what we’re seeing from MNKD as a result;
- risks to consider with regard to the stock;
- and what we’ll be watching for ahead.
MNKD Falls On Direct Offering News
As mentioned above, MannKind Corporation is having a rough start to the trading session after announcing the pricing of a direct offering. In a press release issued a press release early this morning announcing the pricing of a registered direct offering. During the offering the company intends on selling 14,000,000 shares of common stock as well as warrants to purchase up to an aggregate of 14,000,000 shares of common stock. The sale of stock will be made to select dedicated healthcare institutional investors with an interest in MNKD.
In the release, the company said that each share of common stock is being sold together with a warrant to purchase one share of common stock. The units come with a combined price of $2.00 each. As a result, MNKD is expecting to generate gross proceeds in the amount of $28 million. The warrants involved in the offering will be exercisable at a price of $2.38 per share. However, these warrants cannot be exercised until six months following the date of issuance and will expire six months after the exercise date.
In the release, MNKD said that after deducting fees and estimated offering expenses, it will raise approximately $26.3 million. MannKind said that it intends on using the net proceeds for general corporate purposes. These purposes include manufacturing expenses, clinical trial expenses, research and development expenses, sales and marketing expenses, general and administrative expenses, and other expenses associated with the commercialization of Afrezza as well as any other product candidate the company develops.
What We’re Seeing From The Stock
As investors one of the first lessons that we learn is that the news moves the market. This particular case is no different. At the end of the day, the news proved to be concerning to investors. After all, offerings generally lead to dilution, causing declines. So, it’s no surprise that we’re seeing declines in the value of the stock today. Currently (8:27), MNKD is trading at $1.95 per share after a loss of 18.07% thus far today.
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Risks Associated With MNKD
At the end of the day, every investment you make is going to come with some level of risk. However, an investment in MNKD will come with a high level. The truth of the matter is that the company has had an FDA approved treatment on the market for around 2 years now. The treatment is known as Afrezza. However, the company has displayed a fundamental lack of ability to sell this product. The risk here is that commercialization may never go as planned and MannKind may never turn a profit. While they are working on clinical development programs, the clinical development follows along the same technological lines of Afrezza. The technosphere inhalable powder will be used to deliver other treatments. However, even if these treatments make it to approval, they may not sell either. So, if you want to get involved in MNKD, make sure that you consider the risks.
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 watching how the company uses the funds from the direct listing, following the clinical development programs, and most importantly, following Afrezza to see if the company ever cracks the code to sales growth. Nonetheless, we’ll continue to keep a close eye on the story and bring the news to you as it breaks!
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