MannKind Corporation (NASDAQ:MNKD) today reported
financial results for the third quarter and the nine months ended
September 30, 2017. Third quarter highlights include:
- Afrezza net revenue grew 28% and 246% vs. 2Q 2017 and 3Q 2016,
respectively
- Cash burn of $23.3 million in 3Q 2017
- Exchanged all outstanding Series A and B Common Stock Warrants
for an aggregate of 1.3 million shares of the Company’s common
stock
- FDA approved label changes for Afrezza
Other recent highlights include:
- Issued 10.2 million shares of the Company’s common stock in a
registered direct offering resulting in receipt of net proceeds of
$57.7 million
- Exchanged senior convertible notes of $27.7 million due August
2018 for senior convertible notes of $23.7 million due October 2021
and 973,236 shares of the Company’s common stock
- Extended the maturity of $10 million of the Deerfield
obligation from October 31, 2017 to January 15, 2018
- Allowed for certain outstanding principal under the Deerfield
obligation to be converted into shares of the Company’s common
stock (including the $10 million due January 2018). 4 million
shares have been reserved for conversion.
Third Quarter Results
For the third quarter of 2017, Afrezza net
revenue of $2.0 million grew 28% vs. the second quarter of 2017 and
246% vs. the third quarter of 2016 (the first quarter for MannKind
sales and commercial support of Afrezza after the termination of
the Sanofi agreement). As of September 30, 2017, the amount
of Afrezza shipped to the wholesale and retail channels, but not
yet recognized as revenue, was $3.0 million, an increase of $0.4
million from June 30, 2017. A reconciliation of gross
to net revenues can be found in the Management’s Discussion and
Analysis of Financial Condition and Results of Operations section
of the Form 10-Q for the quarter ended September 30, 2017.
Cost of goods sold was $4.6 million in the third
quarter of 2017 compared to (i) $5.1 million in the second quarter
of 2017, a decrease of $0.5 million primarily related to a
write-down of inventory in the second quarter, and (ii) $4.4
million in the third quarter of 2016, an increase of $0.2
million.
Research and development expenses were $4.4
million in the third quarter of 2017 compared to (i) $3.1 million
in the second quarter of 2017, an increase of $1.3 million
primarily related to starting the Time in Range (“STAT”
study) and the pediatric study, and (ii) $4.0 million in the third
quarter of 2016, an increase of $0.4 million, primarily due to
increases in clinical trials partially offset by a decrease in
compensation expense related to a reduction in workforce in the
fourth quarter of 2016.
Selling, general and administrative expenses
were $17.7 million for the third quarter of 2017 compared to (i)
$18.6 million for the second quarter of 2017, a decrease of $1.1
million primarily from a reduction in commercial support expenses
and (ii) $13.1 million in the third quarter of 2016, an increase of
$4.6 million primarily due to scaling up the Afrezza commercial
infrastructure during the first quarter of 2017.
The net loss for the third quarter of 2017 was
$32.9 million, or a loss of $0.31 per share based on 104.7 million
weighted average shares outstanding, compared to net income of
$126.5 million, or $1.32 per share on 95.6 million weighted average
shares outstanding in the third quarter of 2016. The net
income in the third quarter of 2016 included net revenue –
collaboration of $161.8 million related to the termination of the
Sanofi agreement.
Nine Months Results
Due to the termination of the Sanofi agreement
in early 2016 and MannKind’s commencement of commercial activities
for Afrezza in the third quarter of 2016, a comparative analysis
for sales and commercial support between the nine months ended
September 30, 2017 and September 30, 2016 is not meaningful.
For the nine months ended September 30, 2017,
total net revenue of $7.2 million was comprised of $4.7 million of
Afrezza net sales, $1.7 million from the net sales of surplus bulk
insulin to a third party, $0.6 million from the sale of certain
oncology intellectual property, and $0.2 million from collaboration
net revenue.
Cost of goods sold was $12.2 million for the
nine months ended September 30, 2017 compared to $12.9 million for
the same period in 2016, a decrease of $0.7 million.
Research and development expenses were $10.6
million for the nine months ended September 30, 2017 compared to
$13.4 million for the same period in 2016, a decrease of $2.7
million or 21%, due primarily to a decrease in compensation expense
of $5.1 million as a result of the reduction in workforce in the
fourth quarter of 2016. This decrease was partially offset by a $2
million increase in clinical trial expense.
Selling, general and administrative expenses
were $51.7 million for the nine months ended September 30, 2017
compared to $31.6 million for the same period in 2016, an increase
of $20.1 million due to the change in the commercial support
structure after termination of the Sanofi agreement in
2016.
The net loss for the nine months ended September
30, 2017 was $84.5 million, or a loss of $0.84 per share based on
100.1 million weighted average shares outstanding, compared to net
income of $71.7 million, or $0.79 per share on 90.8 million
weighted average shares outstanding at September 30, 2016.
Cash and Cash Equivalents
Cash and cash equivalents at September 30, 2017
decreased to $20.1 million from $43.4 million at June 30, 2017,
primarily due to cash burn for the third quarter of 2017 of $23.3
million. The cash balance as of September 30, 2017 does not
include $57.7 million of net proceeds received from the registered
direct offering of the Company’s common stock completed in October
2017.
Afrezza Label Change
On September 29, 2017, the U.S. FDA approved an
update to the Afrezza prescribing information for the inclusion of
study data that describes the time action profile by dosage
strength; clarity on “Starting” and “Adjusting” mealtime doses; and
updated pregnancy and lactation guidance.
Conference
Call
MannKind will host a conference call and
presentation webcast to discuss these results today at 5:00 p.m.
Eastern Time. To view and listen to the earnings call webcast,
visit MannKind's website at http://www.mannkindcorp.com and
click on the "Q3 2017 MannKind Earnings Conference Call" link in
the Webcast section of News & Events. To participate in the
live call by telephone, please dial (888) 771-4371 or (847)
585-4405 and use the participant passcode: 44096374.
A telephone replay will be accessible for
approximately 14 days following completion of the call by dialing
(888) 843-7419 or (630) 652-3042 and use the participant passcode:
4409 6374#. 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, 2016 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.
MANNKIND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per
share data) |
|
|
Three Months Ended
September 30, |
|
|
Nine Months Ended
September 30, |
|
|
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue - commercial product sales |
|
$ |
1,981 |
|
|
$ |
573 |
|
|
$ |
4,726 |
|
|
$ |
573 |
|
Net
revenue - collaboration |
|
|
62 |
|
|
|
161,781 |
|
|
|
187 |
|
|
|
161,781 |
|
Revenue -
other |
|
|
— |
|
|
|
— |
|
|
|
2,302 |
|
|
|
— |
|
Total
revenues |
|
|
2,043 |
|
|
|
162,354 |
|
|
|
7,215 |
|
|
|
162,354 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
|
4,575 |
|
|
|
4,394 |
|
|
|
12,210 |
|
|
|
12,912 |
|
Product
costs - collaboration |
|
|
— |
|
|
|
22,742 |
|
|
|
— |
|
|
|
22,742 |
|
Research
and development |
|
|
4,361 |
|
|
|
3,917 |
|
|
|
10,611 |
|
|
|
13,357 |
|
Selling,
general and administrative |
|
|
17,725 |
|
|
|
13,135 |
|
|
|
51,681 |
|
|
|
31,595 |
|
Property
and equipment impairment |
|
|
92 |
|
|
|
— |
|
|
|
203 |
|
|
|
695 |
|
Loss on
foreign currency translation |
|
|
3,684 |
|
|
|
1,012 |
|
|
|
12,077 |
|
|
|
3,035 |
|
Gain on
purchase commitment |
|
|
(215 |
) |
|
|
(1,075 |
) |
|
|
(215 |
) |
|
|
(1,075 |
) |
Total
expenses |
|
|
30,222 |
|
|
|
44,125 |
|
|
|
86,567 |
|
|
|
83,261 |
|
(Loss) income from
operations |
|
|
(28,179 |
) |
|
|
118,229 |
|
|
|
(79,352 |
) |
|
|
79,093 |
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
fair value of warrant liability |
|
|
(1,289 |
) |
|
|
13,185 |
|
|
|
5,488 |
|
|
|
7,879 |
|
Interest
income |
|
|
65 |
|
|
|
28 |
|
|
|
178 |
|
|
|
70 |
|
Interest
expense on notes |
|
|
(2,310 |
) |
|
|
(4,166 |
) |
|
|
(7,438 |
) |
|
|
(12,567 |
) |
Interest
expense on note payable to principal stockholder |
|
|
(1,173 |
) |
|
|
(729 |
) |
|
|
(2,608 |
) |
|
|
(2,172 |
) |
Loss on
extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
(830 |
) |
|
|
— |
|
Other
(expense) income |
|
|
— |
|
|
|
(27 |
) |
|
|
13 |
|
|
|
(613 |
) |
Total
other (expense) income |
|
|
(4,707 |
) |
|
|
8,291 |
|
|
|
(5,197 |
) |
|
|
(7,403 |
) |
(Loss) income before
benefit for income taxes |
|
|
(32,886 |
) |
|
|
126,520 |
|
|
|
(84,549 |
) |
|
|
71,690 |
|
Income tax benefit |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Net (loss) income |
|
$ |
(32,886 |
) |
|
$ |
126,520 |
|
|
$ |
(84,549 |
) |
|
$ |
71,690 |
|
Net (loss) income per
share - basic |
|
$ |
(0.31 |
) |
|
$ |
1.32 |
|
|
$ |
(0.84 |
) |
|
$ |
0.79 |
|
Net (loss) income per
share - diluted |
|
$ |
(0.31 |
) |
|
$ |
1.31 |
|
|
$ |
(0.84 |
) |
|
$ |
0.79 |
|
Shares used to compute
basic net (loss) income per share |
|
|
104,703 |
|
|
|
95,627 |
|
|
|
100,136 |
|
|
|
90,838 |
|
Shares used to compute
diluted net (loss) income per share |
|
|
104,703 |
|
|
|
96,549 |
|
|
|
100,136 |
|
|
|
90,873 |
|
|
MANNKIND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)(In thousands, except par value
and share data) |
|
|
September 30, 2017 |
|
|
December 31, 2016 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
20,092 |
|
|
$ |
22,895 |
|
Accounts
receivable, net |
|
|
1,804 |
|
|
|
302 |
|
Receivable from Sanofi |
|
|
— |
|
|
|
30,557 |
|
Inventory |
|
|
3,129 |
|
|
|
2,331 |
|
Asset
held for sale |
|
|
— |
|
|
|
16,730 |
|
Deferred
costs from commercial product sales |
|
|
543 |
|
|
|
309 |
|
Prepaid
expenses and other current assets |
|
|
3,061 |
|
|
|
4,364 |
|
Total
current assets |
|
|
28,629 |
|
|
|
77,488 |
|
Property and equipment
- net |
|
|
27,374 |
|
|
|
28,927 |
|
Other assets |
|
|
480 |
|
|
|
648 |
|
Total
assets |
|
$ |
56,483 |
|
|
$ |
107,063 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
5,283 |
|
|
$ |
3,263 |
|
Accrued
expenses and other current liabilities |
|
|
12,492 |
|
|
|
7,937 |
|
Facility
financing obligation |
|
|
57,942 |
|
|
|
71,339 |
|
Deferred
revenue – net |
|
|
3,021 |
|
|
|
3,419 |
|
Deferred
payments from collaboration - current |
|
|
250 |
|
|
|
1,000 |
|
Recognized loss on purchase commitments - current |
|
|
12,480 |
|
|
|
5,093 |
|
Total
current liabilities |
|
|
91,468 |
|
|
|
92,051 |
|
Note payable to
principal stockholder |
|
|
79,666 |
|
|
|
49,521 |
|
Accrued interest - note
payable to principal stockholder |
|
|
1,173 |
|
|
|
9,281 |
|
Senior convertible
notes |
|
|
27,657 |
|
|
|
27,635 |
|
Recognized loss on
purchase commitments - long term |
|
|
99,769 |
|
|
|
95,942 |
|
Deferred payments from
collaboration - long term |
|
|
563 |
|
|
|
— |
|
Warrant liability |
|
|
— |
|
|
|
7,381 |
|
Milestone rights
liability and other liabilities |
|
|
7,202 |
|
|
|
8,845 |
|
Total
liabilities |
|
|
307,498 |
|
|
|
290,656 |
|
|
|
|
|
|
|
|
|
|
Stockholders'
deficit: |
|
|
|
|
|
|
|
|
Undesignated preferred
stock, $0.01 par value - 10,000,000 shares authorized; no
shares issued or outstanding at September 30, 2017 and December
31, 2016 |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par
value - 140,000,000 shares authorized, 104,707,116 and
95,680,831 shares issued and outstanding at September 30,
2017 and December 31, 2016, respectively |
|
|
1,047 |
|
|
|
957 |
|
Additional paid-in
capital |
|
|
2,570,072 |
|
|
|
2,553,039 |
|
Accumulated other
comprehensive loss |
|
|
(20 |
) |
|
|
(24 |
) |
Accumulated
deficit |
|
|
(2,822,114 |
) |
|
|
(2,737,565 |
) |
Total
stockholders' deficit |
|
|
(251,015 |
) |
|
|
(183,593 |
) |
Total
liabilities and stockholders' deficit |
|
$ |
56,483 |
|
|
$ |
107,063 |
|
Company Contact: Rose Alinaya SVP, Investor Relations
818-661-5000 ir@mannkindcorp.com
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