MannKind Corporation has entered into a secured debt financing with affiliates of Deerfield Management Company, who have committed to purchase up to $160 million in senior secured notes.
Under the terms of the debt financing, Deerfield committed to provide up to four tranches of $40 million each on the following schedule: at closing; following the release of certain results in MannKind’s two current Phase 3 clinical studies of Afrezza; concurrently with repayment of MannKind’s 3.75% Senior Convertible Notes due 2013; and following FDA approval of Afrezza.
The notes will accrue interest at a rate of 9.75% per annum until maturity in 2019.
A portion of the principal amount of the debt financing facility may be convertible into shares of MannKind’s common stock at the Deerfield’s option after a specified period following the release of data from the aforementioned clinical trials.
The conversion price of the debt financing will be determined by the volume weighted average price of the common stock during the 20 trading days immediately preceding the conversion date.
If the conversion price exceeds $6.67, no more than 6 million shares may be issued upon conversion; if the conversion price is less than $3.33, no more than 12 million shares may be issued upon conversion; and if the conversion price is between these dollar amounts, no more than $40 million worth of common stock may be issued upon conversion.
As part of the debt financing transaction, Deerfield received from MannKind milestone rights that provide for the payment of up to $90 million upon the occurrence of certain strategic and sales milestones.
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