VALENCIA, Calif. (
) -- Two
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
-- 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
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
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
MannKind has not yet responded to
request for comment on this story.
MannKind shares closed Wednesday night trading at $5.80.
-- Reported by Adam Feuerstein in Boston.
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