VALENCIA, Calif. (TheStreet) -- MannKind (MNKD) - Get Report is facing a cash shortfall unless it can settle with debt holders by August.

The looming issue for the inhaled drug delivery company is $100 million in convertible debt that must be repaid or renegotiated by Aug. 15. MannKind's delicate financial health, a result of years of delays and missteps in developing the inhaled insulin Afrezza, doesn't leave the company with good options for settling with its creditors.

MannKind cannot turn to its Afrezza marketing partner Sanofi (SNY) - Get Report for help, either.

The $100 million debt converts to MannKind stock at $6.80 per share, according to MannKind regulatory filings. But holders of the debt are likely to balk at accepting stock at that underwater price unless MannKind shares appreciate in value significantly. MannKind closed Tuesday at $5.45, which means if the debt were converted today, it would dilute existing shareholders by another 18.3 million shares, on top of the 409 million shares currently outstanding.

Image placeholder title

To convince debt holders to accept equity, MannKind will probably be required to offer considerably more shares at a discount. The company might also have to establish a stock lending agreement with an investment bank to facilitate short sales by creditors to hedge the risk of owning MannKind equity. (MannKind was forced to do exactly this in 2010 when it took on the $100 million in convertible debt.)

The cleanest solution would be to repay the $100 million convertible using available cash. But this option elevates the risk MannKind will be unable to pay other bills this year, unless it raises additional money.

MannKind is contractually obligated to pay various bills totaling $179 million in 2015, according to its annual report filed with the Securities and Exchange Commission. The biggest outlay is the $100 million convertible debt due in August, but the company must also spend $39 million for good and services related to Afrezza manufacturing and $28 million for insulin supply purchases via a contract with Amphastar (AMPH) - Get Report, according to the company's annual report.

On top of the $179 million in contractually obligated spending, MannKind has its own operating expenses. On its last call, the company forecast general and administrative and research and development expenses of about $90 million in 2015.

All in, MannKind is committed to spend almost $270 million in 2015, including the $100 million in convertible debt.

Currently, MannKind has about $170 million in cash on hand. The company can also borrow another $30 million from founder Al Mann under an existing loan agreement. MannKind also has a $50 million at-the-money equity sales agreement in place, which had not been tapped as of the end of 2014.

Total cash available to MannKind in 2015 right now: $250 million, according to the company's annual report.

MannKind has a $175 million loan agreement with Sanofi, but that money can be used only to fund its share of net losses under the Afrezza joint venture, according to MannKind's SEC filings. The Afrezza joint venture is not expected to be profitable in 2015.

Matt Pfeffer, MannKind's chief financial officer, did not respond to an email seeking comment. In its annual report, MannKind says its current operating plan forecasts cash sufficient for the next 12 months, but only if the $100 million in convertible debt due in August is converted into equity or refinanced.

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.