MannKind getting $5M loan to avoid layoffs and tackle COVID-19
Westlake Village-based MannKind said it expects $4.9 million in federal forgivable loan relief, among other financial measures that will help it avoid furloughs and layoffs as it pursues potential therapies for the COVID-19 pandemic.
The company is currently exploring four potential anti-infective and antiviral therapies, said CEO Michael Castagna.
“These are high risk areas and a lot of lack of clarity on how to get to market,” Castagna said on a conference call with investors April 15. “A lot of people are focused on vaccines and we’re focused on therapeutic treatments, either to reduce the viral application or reduce the inflammation cascade with the acute respiratory distress syndrome. Once someone has a vaccine, we’d love for our technology to be considered for an inhaled vaccine, if that’s possible … we do have the ability to scale up millions of doses of a product.”
The company expects 90 percent of the loan, granted under the March Coronavirus Aid, Relief and Economic Security, or CARES Act, to be forgiven after the eight-week time period. The program coincides with a 20 percent salary reduction for workers making more than $100,000 that, along with expense reductions, are expected to add around $5 million more in savings for the company.
“This loan definitely saved jobs,” Castagna said. “We’ve worked really hard to build our company up and our capabilities up over the last three years, and reducing our jobs or furloughing employees would be the least thing that we preferred but an option we had to consider given everything we were facing.”
Shares for MannKind ended the day flat at $1.26, up 22 percent in April. Shares were down to $1.21 as of 10:50 a.m. April 16.
Current Afrezza production is expected to carry MannKind through 2021, Castagna said. Two milestone payments of $12.5 million each are also due to hit in the second and fourth quarters.
“The way we expect to come out of this is ultimately actually hiring people,” he said in a call with the Business Times.
That includes around 10-15 new employees in sales finance and quality control, among others.
“We’re looking to continue to grow through this and manage our expense base.”
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