MannKind Corporation (NASDAQ:MNKD) today reported financial results
for the quarter and six months ended June 30, 2019.
“We continue to execute our commercial strategy
for Afrezza, which resulted in product growth of 62% versus the
second quarter of 2018,” said Michael Castagna, Chief Executive
Officer of MannKind Corporation. “Our partner in Brazil,
Biomm, received marketing approval for Afrezza and expects to
launch in the second half of this year. Meanwhile, our
partnership with United Therapeutics continues to gain strength as
we celebrated the completed construction of a new high-potency
manufacturing suite in our Danbury facility in July.”
Second Quarter 2019
ResultsTotal revenues were $15.0 million for the second
quarter of 2019, reflecting Afrezza net revenue of $6.1 million and
collaboration and services revenue of $8.9 million. Afrezza net
revenue increased 62% compared to $3.8 million in the second
quarter of 2018, primarily driven by higher product demand, a more
favorable mix of Afrezza cartridges and price. Collaboration and
services revenue increased $8.9 million compared to the second
quarter of 2018, reflecting the licensing and research agreements
signed with United Therapeutics in September 2018.
Afrezza gross profit was $1.7 million for the
second quarter of 2019, an increase of $3.1 million, or 230%,
compared to a gross loss of $1.3 million for the same period in
2018, primarily due to an increase of $2.3 million in net revenue,
a $0.4 million decrease in realized currency loss associated with a
foreign exchange contract and a $0.2 million decrease in inventory
write-offs, partially offset by increased costs due to higher
sales.
Research and development (R&D) expenses for
the second quarter of 2019 were $1.6 million compared to $3.0
million for the second quarter of 2018. This 45% decrease was
primarily attributable to a $0.5 million decrease in clinical trial
spending and a $0.5 million decrease in personnel costs.
Selling, general and administrative (SG&A)
expenses for the second quarter of 2019 were $16.6 million compared
to $21.7 million for the second quarter of 2018. This
decrease of $5.1 million, or 24%, was primarily attributable to a
$2.3 million decrease in personnel related costs, a $1.3 million
decrease in professional fees and a $1.0 million decrease in
marketing spending.
Interest expense on notes (facility financing
obligation and senior convertible notes) for the second quarter of
2019 was $0.6 million compared to $1.7 million for the second
quarter of 2018. This $1.1 million decrease was primarily due to a
reduction in debt principal balances.
The net loss for the second quarter of 2019 was
$12.4 million, or $0.07 per share compared to a $22.7 million net
loss in the second quarter of 2018 or $0.16 per share. The
decrease was primarily the result of total revenues increasing from
higher Afrezza commercial demand and from our licensing and
research agreements with United Therapeutics.
Six Months Ended June 30, 2019
Total revenues were $32.5 million for the six months
ended June 30, 2019, reflecting Afrezza net revenue of $11.1
million and collaboration and services revenue of $21.3 million.
Afrezza net revenue increased 56% compared to $7.2 million for the
six months ended June 30, 2018, primarily due to higher product
demand, a more favorable mix of Afrezza cartridges and price.
Collaboration and services revenue increased $21.2 million compared
to the six months ended June 30, 2018, reflecting the licensing and
research agreements signed with United Therapeutics in September
2018.
Afrezza gross profit was $2.8 million for the
six months ended June 30, 2019, an increase of $4.7 million or 243%
compared to a gross loss of $1.9 million in the same period in
2018, primarily due to an increase of $4.0 million in net revenue,
a $0.8 million decrease in inventory write-offs, partially offset
by increased costs due to higher sales.
R&D expenses for the six months ended June
30, 2019 were $3.3 million compared to $5.6 million for the six
months ended June 30, 2018. This 41% decrease was primarily
attributable to a $1.0 million decrease in personnel related costs
and a $0.7 million decrease in clinical trial spending.
SG&A expenses for the six months ended June
30, 2019 and June 30, 2018 were both $42.3 million. The first half
of 2019 included a $9.3 million expenditure for a television
campaign for Afrezza offset by a $4.5 million decrease in personnel
related costs, a $2.0 million decrease in professional fees, a $1.6
million decrease in marketing spending and a $0.4 million decrease
in sponsorship expense.
Interest expense on notes (facility financing obligation and senior
convertible notes) for the six months ended June 30, 2019 was $1.2
million compared to $3.5 million for the six months ended June 30,
2018. This $2.3 million decrease was primarily due to a reduction
in debt principal balances.
The net loss for the six months ended June 30,
2019 was $27.3 million, or $0.15 per share compared to a $53.1
million net loss for the six months ended June 30, 2018 or $0.41
per share. The lower net loss was mainly attributable to a $25.1
million increase in total revenues.
Cash and Cash EquivalentsCash,
cash equivalents, restricted cash, and short-term investments at
June 30, 2019 was $38.2 million compared to $71.7 million at
December 31, 2018. The decrease was primarily due to net cash used
in operating activities of $31.5 million for the six months ended
June 30, 2019, including the receipt of a $12.5 million milestone
payment from United Therapeutics, and a principal payment to
Deerfield of $2.5 million.
Business UpdateOn August 6,
2019, MannKind Corporation and MannKind LLC entered into a Credit
and Security Agreement with Apollo Investment Corporation, as
lender, and MidCap Financial Trust, as lender and agent, which
provides a secured term loan facility in an aggregate principal
amount of up to $75.0 million and which matures on August 1, 2024
(the “MidCap Credit Facility”). MannKind borrowed the first advance
of $40.0 million on August 6, 2019. In connection with the MidCap
Credit Facility, MannKind also entered into privately negotiated
exchange agreements with each of its existing creditors in order to
pay off (in the case of Deerfield as a secured creditor) and
restructure (in the case of Bruce & Co. and The Mann Group as
unsecured creditors) MannKind’s existing debt obligations. When
combined with a July 2019 exchange agreement with Deerfield, these
exchanges reduced the principal amount of existing debt by $28.4
million and extended the maturity until November 2024 for $75.1
million (out of $80.3 million) of the remaining debt.
Conference Call
MannKind will host a conference call and
presentation webcast to discuss these results today at 5:00 p.m.
Eastern Time. To participate in the live call by telephone, please
dial (866) 548-4713 or (323) 794-2093 and use the participant
passcode: 8241782. 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: 8241782#. 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 and subsequent periodic reports on Form 10-Q
and current reports on Form 8-K. 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.
Company Contact: Rose Alinaya Investor Relations
and Treasury 818-661-5000 ir@mannkindcorp.com
|
MANNKIND CORPORATION AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS |
(Unaudited) |
(In thousands, except per share
data) |
|
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenues: |
Net revenue - commercial product sales |
|
$ |
6,065 |
|
|
$ |
3,753 |
|
|
$ |
11,141 |
|
|
$ |
7,155 |
|
Revenue - collaborations and services |
|
|
8,937 |
|
|
|
87 |
|
|
|
21,309 |
|
|
|
150 |
|
Revenue – other |
|
|
— |
|
|
|
53 |
|
|
|
— |
|
|
|
53 |
|
Total revenues |
|
|
15,002 |
|
|
|
3,893 |
|
|
|
32,450 |
|
|
|
7,358 |
|
Expenses: |
Cost of goods sold |
|
|
4,327 |
|
|
|
5,095 |
|
|
|
8,347 |
|
|
|
9,103 |
|
Cost of revenue - collaborations and services |
|
|
2,139 |
|
|
|
— |
|
|
|
3,676 |
|
|
|
— |
|
Research and development |
|
|
1,632 |
|
|
|
2,967 |
|
|
|
3,299 |
|
|
|
5,611 |
|
Selling, general and administrative |
|
|
16,609 |
|
|
|
21,731 |
|
|
|
42,282 |
|
|
|
42,349 |
|
(Gain) loss on foreign currency translation |
|
|
1,247 |
|
|
|
(5,363 |
) |
|
|
(688 |
) |
|
|
(2,379 |
) |
Total expenses |
|
|
25,954 |
|
|
|
24,430 |
|
|
|
56,916 |
|
|
|
54,684 |
|
Loss from operations |
|
|
(10,952 |
) |
|
|
(20,537 |
) |
|
|
(24,466 |
) |
|
|
(47,326 |
) |
Other (expense)
income: |
Interest income |
|
|
255 |
|
|
|
55 |
|
|
|
573 |
|
|
|
161 |
|
Interest expense on notes |
|
|
(564 |
) |
|
|
(1,709 |
) |
|
|
(1,157 |
) |
|
|
(3,503 |
) |
Interest expense on note payable to related party |
|
|
(1,109 |
) |
|
|
(1,046 |
) |
|
|
(2,189 |
) |
|
|
(2,160 |
) |
Gain (loss) on extinguishment of debt |
|
|
— |
|
|
|
772 |
|
|
|
— |
|
|
|
(53 |
) |
Other income (expense) |
|
|
(17 |
) |
|
|
30 |
|
|
|
(31 |
) |
|
|
61 |
|
Total other expense |
|
|
(1,435 |
) |
|
|
(1,898 |
) |
|
|
(2,804 |
) |
|
|
(5,494 |
) |
Loss before provision for
income taxes |
|
|
(12,387 |
) |
|
|
(22,435 |
) |
|
|
(27,270 |
) |
|
|
(52,820 |
) |
Provision for income
taxes |
|
|
— |
|
|
|
(240 |
) |
|
|
— |
|
|
|
(240 |
) |
Net loss |
|
$ |
(12,387 |
) |
|
$ |
(22,675 |
) |
|
$ |
(27,270 |
) |
|
$ |
(53,060 |
) |
Net loss per share - basic and
diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.15 |
) |
|
$ |
(0.41 |
) |
Shares used to compute basic
and diluted net loss per share |
|
|
188,054 |
|
|
|
140,054 |
|
|
|
187,744 |
|
|
|
130,535 |
|
|
MANNKIND CORPORATION AND
SUBSIDIARIES |
CONDENSED CONSOLIDATED BALANCE
SHEETS |
(Unaudited) |
(In thousands, except per share
data) |
|
|
|
June 30, 2019 |
|
|
December 31, 2018 |
|
ASSETS |
Current
assets: |
Cash and cash equivalents |
|
$ |
7,968 |
|
|
$ |
71,157 |
|
Restricted cash |
|
|
5,316 |
|
|
|
527 |
|
Short-term investments |
|
|
24,909 |
|
|
|
— |
|
Accounts receivable, net |
|
|
4,974 |
|
|
|
4,017 |
|
Inventory |
|
|
3,963 |
|
|
|
3,597 |
|
Prepaid expenses and other current assets |
|
|
2,704 |
|
|
|
2,556 |
|
Total current assets |
|
|
49,834 |
|
|
|
81,854 |
|
Property and equipment,
net |
|
|
27,146 |
|
|
|
25,602 |
|
Right-of-use and other
assets |
|
|
4,815 |
|
|
|
249 |
|
Total assets |
|
$ |
81,795 |
|
|
$ |
107,705 |
|
|
LIABILITIES AND STOCKHOLDERS'
DEFICIT |
Current
liabilities: |
Accounts payable |
|
$ |
7,533 |
|
|
$ |
5,379 |
|
Accrued expenses and other current liabilities |
|
|
16,452 |
|
|
|
15,022 |
|
Facility financing obligation |
|
|
8,974 |
|
|
|
11,298 |
|
Deferred revenue - current |
|
|
32,370 |
|
|
|
36,885 |
|
Recognized loss on purchase commitments - current |
|
|
11,649 |
|
|
|
6,657 |
|
Total current liabilities |
|
|
76,978 |
|
|
|
75,241 |
|
Senior convertible notes |
|
|
19,031 |
|
|
|
19,099 |
|
Note payable to related
party |
|
|
71,981 |
|
|
|
72,089 |
|
Accrued interest - note
payable to related party |
|
|
9,132 |
|
|
|
6,835 |
|
Recognized loss on purchase
commitments - long term |
|
|
81,978 |
|
|
|
91,642 |
|
Deferred revenue - long
term |
|
|
8,399 |
|
|
|
10,680 |
|
Milestone rights
liability |
|
|
7,201 |
|
|
|
7,201 |
|
Operating lease
liabilities |
|
|
3,094 |
|
|
|
— |
|
Total liabilities |
|
|
277,794 |
|
|
|
282,787 |
|
Commitments and
contingencies |
Stockholders'
deficit: |
Common stock, $0.01 par value
- 280,000,000 shares authorized, |
|
|
1,894 |
|
|
|
1,870 |
|
189,447,055 and
187,029,967 shares issued and outstanding at |
June 30, 2019 and
December 31, 2018, respectively |
Additional paid-in
capital |
|
|
2,769,396 |
|
|
|
2,763,067 |
|
Accumulated other
comprehensive loss |
|
|
(19 |
) |
|
|
(19 |
) |
Accumulated deficit |
|
|
(2,967,270 |
) |
|
|
(2,940,000 |
) |
Total stockholders' deficit |
|
|
(195,999 |
) |
|
|
(175,082 |
) |
Total liabilities and stockholders' deficit |
|
$ |
81,795 |
|
|
$ |
107,705 |
|
|
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