Conference Call to Begin Today at 9:00 AM
ET
MannKind Corporation (NASDAQ:MNKD) today reported
financial results for the fourth quarter and full year ended
December 31, 2018.
Fourth Quarter Results
For the fourth quarter of 2018, total revenues
were $16.0 million, reflecting Afrezza net revenue of $5.7 million
and collaboration and services revenue of $10.3 million.
Afrezza net revenue increased 28% on a GAAP basis compared to $4.5
million for the fourth quarter of 2017. In the fourth quarter of
2017, we recognized a $1.4 million change in estimate to Afrezza
net revenue; when this adjustment is excluded, Afrezza net revenue
increased 86% (non-GAAP) compared to the fourth quarter of 2017,
primarily driven by higher product demand and a more favorable mix
of cartridges. Collaborations and services revenue increased $10.2
million primarily attributable to the United Therapeutics licensing
and research agreements.
Afrezza cost of goods sold (COGS) was $5.0 million for the
fourth quarter of both 2018 and 2017. Afrezza COGS in the
fourth quarter of 2018 reflected a one-time charge of $2.0 million
related to an amendment fee associated with our insulin supply
agreement, offset by lower inventory write-offs in 2018 of $0.8
million and $0.7 million lower spending associated with
manufacturing absorption. Afrezza gross profit was $0.7 million for
the fourth quarter, the first quarterly gross profit recognized
from Afrezza sales. When the one-time charge of $2.0 million
related to the amendment fee is excluded, Afrezza gross profit was
$2.7 million (non-GAAP) for the fourth quarter.
Research and development (R&D) expenses for the fourth
quarter of 2018 were $1.1 million compared to $3.5 million for the
fourth quarter of 2017. The decrease of $2.4 million was primarily
due to $0.8 million associated with the United Therapeutics
research agreement, which was classified as a cost of
collaborations and services revenue, and a decrease in spending of
$0.8 million related to clinical trials.
Selling, general and administrative (SG&A) expenses were
$18.0 million for the fourth quarter of 2018 compared to $23.3
million for the fourth quarter of 2017. The decrease of $5.3
million was primarily due to $5.0 million in selling expenses
associated with our first direct-to-consumer television advertising
campaign in the fourth quarter of 2017.
Interest expense on notes (facility financing obligation and
senior convertible notes) was $0.6 million for the fourth quarter
of 2018 compared to $2.1 million for the fourth quarter of 2017.
The $1.5 million decrease was primarily due to a reduction in the
debt principal balances.
The net loss for the fourth quarter of 2018 was $9.7 million, or
$0.06 per share, compared to the $32.8 million net loss in the
fourth quarter of 2017, or $0.28 per share. The lower net
loss is mainly attributable to an increase in total revenues of
$11.5 million and a decrease in total expenses of $9.6 million.
Full Year 2018 Results
For the full year ended December 31, 2018, total revenues were
$27.9 million, reflecting Afrezza net revenue of $17.3 million and
collaborations and service revenue of $10.6 million. Afrezza
net revenue increased 88% compared to $9.2 million for the same
period in 2017, primarily reflecting increased product demand and a
more favorable mix of cartridges. Collaborations and services
revenue increased $10.3 million primarily attributable to the
United Therapeutics licensing and research agreements.
Afrezza COGS for the year ended December 31, 2018 was $19.4
million compared to $17.2 million for the year ended December 31,
2017. The increase of $2.2 million was primarily attributable
to an increase in costs associated with increased Afrezza sales and
a one-time charge of $2.0 million related to an amendment fee
associated with our insulin supply agreement, offset by a decrease
of $0.8 million in inventory write-offs.
R&D expenses for the year ended December 31, 2018 were $8.7
million compared to $14.1 million for the same period in 2017. This
$5.4 million decrease was primarily attributable to lower clinical
trials expenses of $2.2 million, a $1.7 million decrease in
salary-related expenses and a $0.8 million decrease in research and
development supply and services costs.
SG&A expenses were $79.7 million for the year ended December
31, 2018 compared to $75.0 million for the same period in
2017. The $4.7 million increase was primarily due to an
increase of $2.9 million in headcount-related expenses associated
with commercial operations, an increase in spending of $1.7 million
in our human resources, accounting, corporate communications, and
office support departments, a $1.4 million increase in medical
affairs support, a $1.3 million increase in stock-based
compensation expense, and a one-time $1.1 million expense to
transition corporate support functions from Connecticut to our
headquarters in California, which were partially offset by a
decrease in selling expenses of $4.7 million associated with our
2017 direct-to-consumer television advertising campaign.
Interest expense on notes (facility financing obligation and
senior convertible notes) was $5.1 million for the year ended
December 31, 2018 compared to $9.5 million for the same period in
2017. The $4.4 million decrease was primarily due to a reduction in
the debt principal balances.
The net loss for the year ended December 31, 2018 was $87.0
million, or $0.60 per share, compared to $117.3 million for the
year ended December 31, 2017, or $1.13 per share. The lower net
loss is mainly attributable to an increase in Afrezza net revenue
of $8.1 million, an increase in collaboration revenue of $10.3
million and a decrease in total expenses of $15.5 million.
“Our fourth quarter and full year 2018 results showed excellent
progress in executing against our Afrezza growth plan and
recognized for the first time revenues associated with our license
and collaboration agreement with United Therapeutics,” said Michael
Castagna, Chief Executive Officer of MannKind Corporation.
“The fourth quarter of last year was the first time we reported
gross profit for Afrezza and we ended the year with a strong cash
position thanks to the United Therapeutics deal and a public
offering of common stock and warrants in December.”
Cash and Cash Equivalents
Cash, cash equivalents and restricted cash at December 31, 2018
was $71.7 million compared to $48.4 million at December 31,
2017. The increase was primarily due to the net proceeds of
$26.4 million from a second quarter registered direct offering of
common stock and warrants and $37.5 million from a fourth quarter
public offering of common stock and warrants, partially offset by
the net cash used in operating activities of $37.7 million
(inclusive of two payments from United Therapeutics totaling $55.0
million).
Non-GAAP Measures
Certain financial information contained in this press release is
presented on both a reported basis (GAAP) and a non-GAAP
basis. Reported results were prepared in accordance with GAAP
whereas non-GAAP measures exclude items described in the
reconciliation tables below. Non-GAAP financial information
is intended to portray the results of our baseline performance,
supplement or enhance management, analysts and investors overall
understanding of our underlying financial performance and
facilitate comparisons among current and past periods. The
non-GAAP financial measures are in addition to, not a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP.
($ in millions) |
|
|
|
|
|
Net
Revenue - Afrezza 4Q 2017 |
|
|
Afrezza Gross Profit 4Q 2018 |
|
GAAP 4Q 2017 Net Revenue
- Afrezza |
$ |
4.5 |
|
|
Afrezza Net Revenue |
$ |
5.7 |
|
Change in
Estimate Recorded 4Q 2017 |
|
(1.4 |
) |
|
Afrezza
Cost of Goods Sold |
|
(5.0 |
) |
Non-GAAP 4Q
2017 Net Revenue - Afrezza |
$ |
3.1 |
|
|
GAAP
Afrezza Gross Profit |
$ |
0.7 |
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP % Increase in 4Q 2018 Afrezza Net
Revenue |
|
Non-GAAP Afrezza Gross Profit 4Q 2018 |
|
GAAP 4Q
2018 Net Revenue - Afrezza |
$ |
5.7 |
|
|
GAAP
Afrezza Gross Profit |
$ |
0.7 |
|
Non-GAAP 4Q
2017 Net Revenue - Afrezza |
$ |
3.1 |
|
|
Without
One-Time Fee |
|
2.0 |
|
% Increase
in 4Q 2018 Afrezza Net Revenue |
|
86% |
|
|
Non-GAAP
Afrezza Gross Profit |
$ |
2.7 |
|
|
|
|
|
|
|
|
|
|
Conference Call
MannKind will host a conference call and presentation webcast to
discuss these results today at 9:00 a.m. Eastern Time. To
participate in the live call by telephone, please dial (888)
394-8218 or (323) 701-0225 and use the participant passcode:
7809405. Those interested in listening to the conference call live
via the Internet may do so by visiting the Company's website at
http://www.mannkindcorp.com under News & Events.
A telephone replay of the call will be accessible for
approximately 14 days following completion of the call by dialing
(844) 512-2921 or (412) 317-6671 and use the participant passcode:
7809405#. A replay will also be available on MannKind's website for
14 days.
About MannKind Corporation
MannKind Corporation (NASDAQ: MNKD) focuses on the development
and commercialization of inhaled therapeutic products for patients
with diseases such as diabetes and pulmonary arterial
hypertension. MannKind is currently commercializing Afrezza®
(insulin human) Inhalation Powder, the Company’s first FDA-approved
product and the only inhaled rapid-acting mealtime insulin in the
United States, where it is available by prescription from
pharmacies nationwide. MannKind is headquartered in Westlake
Village, California, and has a state-of-the art manufacturing
facility in Danbury, Connecticut. The Company also employs field
sales and medical representatives across the U.S. For further
information, visit www.mannkindcorp.com.
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties, including statements regarding
MannKind’s ability to directly commercialize pharmaceutical
products. Words such as “believes”, “anticipates”, “plans”,
“expects”, “intend”, “will”, “goal”, “potential” and similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are based upon the MannKind’s
current expectations. Actual results and the timing of events could
differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which
include, without limitation, the ability to generate significant
product sales for MannKind, MannKind’s ability to manage its
existing cash resources or raise additional cash resources, stock
price volatility and other risks detailed in MannKind’s filings
with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2018. You
are cautioned not to place undue reliance on these forward-looking
statements, which speak only as of the date of this press release.
All forward-looking statements are qualified in their entirety by
this cautionary statement, and MannKind undertakes no obligation to
revise or update any forward-looking statements to reflect events
or circumstances after the date of this press release.
MANNKIND CORPORATION AND
SUBSIDIARIES CONSOLIDATED STATEMENTS OF
OPERATIONS (In thousands expect per share data)
|
Three months ended December 31, |
|
|
Twelve months ended December 31, |
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue - commercial product
sales |
$ |
5,734 |
|
|
$ |
4,466 |
|
|
$ |
17,276 |
|
|
$ |
9,192 |
|
Revenue - collaborations and
services |
|
10,298 |
|
|
|
63 |
|
|
|
10,583 |
|
|
|
250 |
|
Revenue - other |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
2,303 |
|
Total revenues |
|
16,032 |
|
|
|
4,530 |
|
|
|
27,859 |
|
|
|
11,745 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
4,996 |
|
|
|
5,018 |
|
|
|
19,402 |
|
|
|
17,228 |
|
Cost of revenue - collaborations
and services |
|
1,077 |
|
|
|
— |
|
|
|
1,077 |
|
|
|
— |
|
Research and development |
|
1,083 |
|
|
|
3,507 |
|
|
|
8,737 |
|
|
|
14,118 |
|
Selling, general and
administrative |
|
17,973 |
|
|
|
23,278 |
|
|
|
79,716 |
|
|
|
74,959 |
|
Property and equipment
impairment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
203 |
|
(Gain) loss on foreign currency
translation |
|
(1,361 |
) |
|
|
1,564 |
|
|
|
(4,468 |
) |
|
|
13,641 |
|
Gain on purchase commitments |
|
(10 |
) |
|
|
— |
|
|
|
(10 |
) |
|
|
(215 |
) |
Total expenses |
|
23,758 |
|
|
|
33,367 |
|
|
|
104,454 |
|
|
|
119,934 |
|
(Loss) income from operations |
|
(7,726 |
) |
|
|
(28,837 |
) |
|
|
(76,595 |
) |
|
|
(108,189 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in fair value of warrant
liability |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
5,488 |
|
Interest income |
|
196 |
|
|
|
115 |
|
|
|
501 |
|
|
|
293 |
|
Interest expense on notes |
|
(620 |
) |
|
|
(2,056 |
) |
|
(5,116 |
) |
|
|
(9,494 |
) |
Interest expense on note payable to
related party |
|
(1,089 |
) |
|
|
(1,174 |
) |
|
(4,323 |
) |
|
|
(3,782 |
) |
(Loss) gain on extinguishment of
debt |
|
— |
|
|
|
(781 |
) |
|
(765 |
) |
|
|
(1,611 |
) |
Other income (expense) |
|
(508 |
) |
|
|
— |
|
|
|
(437 |
) |
|
|
13 |
|
Total other (expense) income |
|
(2,021 |
) |
|
|
(3,896 |
) |
|
|
(10,140 |
) |
|
|
(9,093 |
) |
(Loss) income before income tax
expense |
|
(9,747 |
) |
|
|
(32,733 |
) |
|
(86,735 |
) |
|
|
(117,282 |
) |
Provision for income taxes |
|
— |
|
|
|
51 |
|
|
|
240 |
|
|
|
51 |
|
Net (loss) income |
$ |
(9,747 |
) |
|
$ |
(32,784 |
) |
|
$ |
(86,975 |
) |
|
$ |
(117,333 |
) |
Net (loss) income per share - basic |
$ |
(0.06 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.13 |
) |
Net (loss) income per share - diluted |
$ |
(0.06 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.60 |
) |
|
$ |
(1.13 |
) |
Shares used to compute basic net (loss) income
per share |
|
161,397 |
|
|
|
116,451 |
|
|
|
144,136 |
|
|
|
104,245 |
|
Shares used to compute diluted net (loss) income
per share |
|
161,397 |
|
|
|
116,451 |
|
|
|
144,136 |
|
|
|
104,245 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MANNKIND CORPORATION AND
SUBSIDIARIES CONSOLIDATED BALANCE SHEETS
(In thousands expect per share data)
|
|
December 31, |
|
|
|
2018 |
|
|
2017 |
|
|
|
(In thousands except per share
data) |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
71,157 |
|
|
$ |
43,946 |
|
Restricted
cash |
|
|
527 |
|
|
|
4,409 |
|
Accounts
receivable, net |
|
|
4,017 |
|
|
|
2,789 |
|
Inventory |
|
|
3,597 |
|
|
|
2,657 |
|
Deferred
costs from commercial product sales |
|
|
— |
|
|
|
405 |
|
Prepaid
expenses and other current assets |
|
|
2,556 |
|
|
|
3,010 |
|
Total
current assets |
|
|
81,854 |
|
|
|
57,216 |
|
Property and equipment,
net |
|
|
25,602 |
|
|
|
26,922 |
|
Other assets |
|
|
249 |
|
|
|
437 |
|
Total
assets |
|
$ |
107,705 |
|
|
$ |
84,575 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
5,379 |
|
|
$ |
6,984 |
|
Accrued
expenses and other current liabilities |
|
|
15,022 |
|
|
|
12,449 |
|
Facility
financing obligation |
|
|
11,298 |
|
|
|
52,745 |
|
Deferred
revenue, net |
|
|
— |
|
|
|
3,038 |
|
Deferred
payments from collaborations - current |
|
|
36,885 |
|
|
|
250 |
|
Recognized
loss on purchase commitments - current |
|
|
6,657 |
|
|
|
12,131 |
|
Total
current liabilities |
|
|
75,241 |
|
|
|
87,597 |
|
Note payable to related
party |
|
|
72,089 |
|
|
|
79,666 |
|
Accrued interest - note
payable to related party |
|
|
6,835 |
|
|
|
2,347 |
|
Senior convertible
notes |
|
|
19,099 |
|
|
|
24,411 |
|
Recognized loss on
purchase commitments - long term |
|
|
91,642 |
|
|
|
97,585 |
|
Deferred payments from
collaborations - long term |
|
|
10,680 |
|
|
|
500 |
|
Milestone rights
liability |
|
|
7,201 |
|
|
|
7,201 |
|
Total
liabilities |
|
|
282,787 |
|
|
|
299,307 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders'
deficit: |
|
|
|
|
|
|
|
|
Undesignated preferred
stock, $0.01 par value - 10,000,000 shares authorized; no
shares issued or outstanding at December 31, 2018 and 2017 |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par
value - 280,000,000 shares authorized, 187,029,967 and
119,053,414 shares issued and outstanding at December 31,
2018 and 2017, respectively |
|
|
1,870 |
|
|
|
1,192 |
|
Additional paid-in
capital |
|
|
2,763,067 |
|
|
|
2,638,992 |
|
Accumulated other
comprehensive loss |
|
|
(19 |
) |
|
|
(18 |
) |
Accumulated deficit |
|
|
(2,940,000 |
) |
|
|
(2,854,898 |
) |
Total
stockholders' deficit |
|
|
(175,082 |
) |
|
|
(214,732 |
) |
Total
liabilities and stockholders' deficit |
|
$ |
107,705 |
|
|
$ |
84,575 |
|
|
|
|
|
|
|
|
|
|
Company Contact: Rose Alinaya SVP, Investor Relations and
Treasury 818-661-5000 ir@mannkindcorp.com
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