MannKind Corp.’s share price fell by nearly a quarter on Thursday after the biotech confirmed plans to sell up to 140 million shares of stock and warrants. Proceeds will help finance final studies of its experimental inhaled diabetes drug Afrezza and cancel some debt owed to its founder.

The Valencia company, which now has market cap of about $395 million and roughly 199 million shares outstanding, priced the offering of stock and warrants at about a 23 percent discount to Wednesday’s closing price.

The offering is in two parts. The first part is a public offering of 40 million shares at $2 each and 30 million warrants with an exercise price of $2.60.

In the second part, MannKind will give Mann Group LLC – an entity controlled MannKind Chief Executive Alfred Mann – 40 million shares of restricted stock and warrants to buy another 30 million restricted shares. In return, the group will cancel more than $224 million in MannKind debt. Alfred Mann is the company’s largest shareholder with a nearly 42 percent stake.

MannKind has become cash-strapped in recent years as the U.S. approval process for Afrezza, its first product, has dragged on. The U.S. Food and Drug Administration has called for more testing.

Jefferies & Co. Inc. and Piper Jaffray & Co. are joint managers for the offering, and have the option to buy an additional 6 million shares and 4.5 million warrants.

Shares on Thursday closed down 63 cents, or 24 percent, to $1.97 on the Nasdaq.