MannKind Corporation Reports 2019 Second Quarter Financial Results and Recent Business Highlights

Date : 08/07/2019 @ 8:01PM
Source : GlobeNewswire Inc.
Stock : MannKind Corporation (MNKD)
Quote : 1.29  0.07 (5.74%) @ 10:44PM
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MannKind Corporation Reports 2019 Second Quarter Financial Results and Recent Business Highlights

MannKind (NASDAQ:MNKD)
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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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