Mannkind Corp 3.750s of 12/15/2013 ($MNKD)

These Mannkind Corp (MNKD) 3.750s of 12/15/2013 are trading at 57 to yield 50%. Notably, the 5.75s of 2015 trade at 52.691 to yield only 29% - meaning the yield curve is inverted and pricing in a restructuring.

The 2013s are $115mm face ($66mm market) and the 2015s are $100mm face ($53mm market) for a total of $215 face and $119 market. Against this is $343 million market cap at the current $2.16 share price.

It is a biopharmaceutical company whose main product candidate, AFREZZA, is an ultra rapid-acting insulin therapy that is in late-stage clinical investigation for the treatment of adults with type 1 or type 2 diabetes for the control of hyperglycemia. The company also develops MKC1106-MT, an investigational cancer immunotherapy product, which is in Phase II clinical trials.

The tricky part is that the company has a $284 million loan due to its principal stockholder, The Mann Group. This loan is due before the notes are. I wonder whether the notes and equity will just get hosed and Mann will own everything? The trade would be much more attractive if not for the loan, as the 2013s would almost certainly get paid.