Drug firm MannKind’s shares fall 16%
A Valencia-based pharmaceutical start-up that is attempting to develop an inhaled form of insulin saw its shares plunge 16% on Friday amid news that it was depleting its cash reserves and was unlikely to find new investors soon.
MannKind Corp. also postponed its earnings report to Thursday and said Chief Financial Officer Richard L. Anderson, 68, would retire by the end of 2008. The results had been scheduled to be released Friday.
Shares fell $1.73 to $8.87, a two-year low.
MannKind President Hakan Edstrom called the sell-off an overreaction.
“We are very much on our timeline” for bringing the new insulin drug, Technosphere, to market, Edstrom said. He said MannKind planned to seek approval for the medication from the Food and Drug Administration by the end of next year.
MannKind has spent more than $700 million developing the inhaled medicine, which it hopes will claim a chunk of the world’s $21-billion-a-year insulin market.
MannKind had been seeking a financial partner to infuse new money into the venture. But the company said Friday that wasn’t likely to happen in the near future because potential investors want to see further results from Technosphere’s ongoing clinical trials. The poor sales performance of Pfizer Inc.’s Exubera, an inhaled form of insulin already on the market, was also a factor.
MannKind’s cash reserves were down to $284 million at the end of June, the company said, from $365.6 million the previous quarter and $436.5 million in December.
Edstrom said a new financial partner was being sought to help fund MannKind’s worldwide marketing strategy if the drug was approved, but that the money was not as crucial for the development of Technosphere.
Company founder and chairman, billionaire Alfred E. Mann, has extended a $150-million credit line to MannKind, which offers the company a cushion while it seeks more funding, Edstrom said.
He added that Anderson’s departure had been long in the planning, not a sign that the CFO had lost confidence in the company. And the earnings report was postponed because “we wanted review some numbers and make sure that what we present is accurate.”
Wachovia Capital Markets maintained its “market outperform” rating for the firm, after a Friday conference with Edstrom and other MannKind executives.
Pharmaceutical companies have long sought to develop a form of insulin that is more practical and effective than injections. Given the growing number of diabetics in the world, such a drug holds huge profit potential. Although Exubera has not met sales expectations, MannKind says Technosphere, which comes in a smaller packet than the Pfizer drug, will be more effective and easier to use.
