Money-losing diabetes drug researcher MannKind caught a financial lifeline Monday, announcing that investment advisor Deerfield Management Company has committed to loan it $160 million.
Deerfield's support comes in the form of four $40 million tranches of senior secured notes the company will buy from MannKind. The first tranches will be bought, and monies disbursed, after closing of the loan agreement. The second, after the release of results from MannKind's two phase 3 clinical studies of Afrezza. The third, at the time MannKind repays its 3.75% senior convertible notes. And the final disbursement will be after FDA approval is granted for Afrezza.
The notes will pay 9.75% interest, and some but not all of their value may also be converted into common stock of MannKind at Deerfield's election.
Additionally, MannKind explained in an SEC filing that it has sold Deerfield, in exchange for an $18.9 million up-front payment, the right to receive up to $90 million worth of MannKind's own milestone payments due to the company on the occasion of its first commercial sale of an Afrezza product, and upon reaching certain levels of Afrezza sales. MannKind has the right to terminate this turnover of milestone payments to Deerfield in the event it pays back the first tranche of senior secured notes before they come due in 2019.
The article MannKind Secures $160 Million in Funds originally appeared on Fool.com.
Fool contributor Rich Smith has no position in any stocks mentioned, and neither does The Motley Fool. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.