Shares of MannKind rallied 18.92% to $2.64 on Thursday after the company revealed the pricing of the private placement of its common shares to select index funds in Israel. Earlier this week, MannKind had confirmed that its stock would start trading on the Tel Aviv Stock Exchange (TASE) on November 15. Many index funds in Israel are required to hold the stock due to the rules of the Israeli exchange.
Funds commit to buying 13.8 million shares
The investment funds have committed to buy about 13.8 million shares of the company at $2.61 apiece, adding $36.2 million to MannKind’s coffers. The US biotech company had initially planned to sell up to 50 million shares. However, the company said it would sell only about 40 million shares. While various funds have committed to snap up 13.8 million shares directly from the company, they may purchase more in open market transactions.
MannKind CFO Matt Pfeffer said in a statement that these transactions would give the company much-needed near-term liquidity to support its operations and the development of Technosphere. At the current burn rate, the fresh funds would keep MannKind operational for at least two quarters. However, the capital raise is only a temporary band-aid.
MannKind’s future still depends on Afrezza
Piper Jaffray analyst Joshua Schimmer said the offering is far short of what the Valencia-based company needs for long-term viability. MannKind is still burning cash. New investors would be disappointed if Afrezza sales continue at the current pace. Joshua Schimmer said his checks with primary care and endocrinology specialists suggested that Afrezza sales were unlikely to improve significantly anytime soon. Schimmer has an Underweight rating on the stock with $1.50 price objective, reflecting a 44% downside from current levels.
MannKind’s future still largely depends on Afrezza, its FDA-approved inhaled insulin treatment. MannKind’s marketing partner Sanofi sold only $2.2 million worth of Afrezza in the third-quarter, showing little QoQ growth. MannKind shares are still down almost 50% year-to-date amid concerns that Sanofi might exercise its option to stop selling Afrezza.
MannKind shares rose 1.14% to $2.67 in pre-market trading Friday.