This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

MannKind Talks Down Insider Selling While Executives Sell Shares

VALENCIA, Calif. ( TheStreet) -- Two MannKind (MNKD) executives sold company stock on the very same day MannKind tried to assure shareholders that key officers still had confidence in the company and were not selling stock.

MannKind vice president and general counsel David Thomson and Corporate Vice President Juergen Martens sold 19,000 and 20,000 Mannkind shares, respectively, on Aug. 26., according to regulatory filings released Wednesday night.

The insider sales are relatively small but the timing is hugely significant and damaging to MannKind's credibility because they occurred on the same day the company sought to convince regular shareholders to maintain their confidence in Afrezza, its experimental, inhaled fast-acting insulin.

MannKind's stock price is down 24 percent since the company announced controversial -- and some would say lackluster and potentially negative -- results from two phase III studies of Afrezza on Aug. 14. MannKind insists both Afrezza trials were positive. To reinforce its message and stem the decline in its stock price, the company issued an FAQ about the Afrezza studies on August. 26. The FAQ was filed as an 8K with the Securities and Exchange Commission.

The eighth and last question in the FAQ document pertains to SEC Forms 4s filed by company insiders during the week of August 19, just days after the Afrezza data were announced.

Here's the relevant text from MannKind's Afrezza FAQ:

I noticed in SEC filings the week of August 19 that most of your key officers had sold some of their stock, at what seems like a very low price. Have they lost faith in the company or its prospects based on the results of these trials?

The Form 4 filings with the SEC were not reporting sales of stock. There were no shares sold by any officers into the market during that week. What happened was that in recognition of their performance, the Board of Directors had granted all of our officers restricted stock, some of which vested that week. When this happens, it is considered compensation by the IRS, which requires the company to withhold taxes based on the market value of the stock on the date of vesting. But because no cash is being paid out, the company instead simply withholds some shares to "pay" the tax, which is then paid by the company. The surrender of those shares was what was being reported on the Form 4's. This can be seen in a footnote at the bottom of the Form 4. If you check, you will see similar filings at around this same time last year and years prior, for the same reason.

But on the same day MannKind shareholders were being reassured that company insiders were not selling stock, company insiders were selling stock.

On Aug. 26, MannKind attorney Thomson sold 9,204 shares of company stock at $5.75 per share. Two days later, Thomson sold another 10,000 shares at $5.80, according to a Form 4 filed Wednesday night.

In a bit or unintended irony, Thomson's electronic signature, as the company's top lawyer, is on the Afrezza FAQ submitted to the SEC.

Also on Aug. 26, Vice President Martens exercised or purhased 20,000 MannKind options at $2.41 per share. He immediately sold the 20,000 shares at $5.52 per share, according to a Form 4 filed Wednesday night.

MannKind has not yet responded to TheStreet's request for comment on this story.

MannKind shares closed Wednesday night trading at $5.80.

-- Reported by Adam Feuerstein in Boston.

Follow Adam Feuerstein on Twitter.

Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback; click here to send him an email.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
MNKD $5.10 0.10%
AAPL $124.24 0.70%
FB $83.01 0.11%
GOOG $555.17 -0.65%
TSLA $190.40 -2.00%


DOW 17,678.23 -40.31 -0.23%
S&P 500 2,056.15 -4.90 -0.24%
NASDAQ 4,863.3620 -13.1570 -0.27%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs