Shares of MannKind Inc. rose nearly 8 percent Thursday morning on news that the Valencia biotech’s founder and largest shareholder had significantly added to his stake by converting debt to stock.
Chief Executive Al Mann and the company in separate regulatory filings late Tuesday said Mann Group LLC on June 27 had acquired more than 31.2 million unregistered shares in a private sale by the company. The selling price of $2.47 a share, totaling $77 million, was part of a stock purchase agreement that helped repay some of the money that MannKind had borrowed from Mann through a $350 million promissory note.
The deal boosts Mann’s stake by 61 percent to 82.9 million shares. Mann Group is one of three entities through which Mann holds shares of MannKind, which is developing an insulin inhaler for diabetics. Before the deal, Mann controlled more than a quarter of MannKind shares.
Approval for the Afrezza inhaler was delayed last year after the Food & Drug Administration asked for tests comparing a revamped inhaler to the model originally submitted to the regulator for approval. MannKind, which significantly cut staff last year to save money, has borrowed money and sold shares to complete the additional clinical trials, which are expected to be submitted to the FDA early next year.
The amount MannKind can borrow on the promissory note was reduced as part of the deal. The company now owes Mann Group about $218 million and has almost $27 million available that it can borrow through the end of this year.
Shares were up 20 cents, or 7.8 percent, to $2.77 in midday trading on the Nasdaq.