MannKind Corporation (NASDAQ:MNKD) today reported
preliminary financial results for the quarter and nine months ended
September 30, 2019.
“I am excited to see MannKind continue its
transformation, with another quarter of double-digit growth in
Afrezza revenue, year over year, and aggregate net revenue of $14.6
million,” said Michael Castagna, Chief Executive Officer of
MannKind Corporation. “In the third quarter, we completed our
recapitalization and achieved several key milestones, such as
booking our first international sale of Afrezza to Brazil, seeing
the first PAH patient dosed with TreT and progressing two pipeline
compounds into nonclinical testing.”
Third Quarter 2019 Results
Net revenues were $14.6 million for the third
quarter of 2019, reflecting Afrezza net revenue of $6.4 million and
collaborations and services revenue of $8.2 million. Afrezza net
revenue increased 46% compared to $4.4 million in the third quarter
of 2018, primarily driven by higher product demand (including the
first shipment to Brazil), a more favorable mix of Afrezza
cartridges and price.
Collaborations and services revenue increased
$8.1 million compared to the third quarter of 2018, primarily
driven by the license agreement with United Therapeutics, which
began in the fourth quarter of 2018.
On a GAAP basis, Afrezza gross loss was $0.7
million for the third quarter of 2019 compared to a gross loss of
$0.9 million in the same period in 2018. Afrezza cost of goods sold
for the third quarter of 2019 included a one-time fee of $2.75
million recorded in connection with the amendment of the Company’s
insulin supply agreement with Amphastar in August 2019. As a
result, on a non-GAAP basis, gross profit was $2.1 million or 33%
for the third quarter of 2019.
Research and development (R&D) expenses for
the third quarter of 2019 were $1.6 million compared to $2.0
million for the third quarter of 2018. This 23% decrease was
primarily attributable to a $0.4 million decrease in clinical trial
spending.
Selling, general and administrative (SG&A)
expenses for the third quarter of 2019 were $16.7 million compared
to $19.4 million for the third quarter of 2018. This decrease of
$2.7 million, or 14%, was primarily attributable to a $0.8 million
decrease in personnel-related costs and a $1.9 million decrease in
Afrezza marketing costs.
Interest expense on notes for the third quarter
of 2019 was $4.1 million compared to $1.0 million for the third
quarter of 2018. This $3.1 million increase or 316% was primarily
attributable to a $3.4 million charge realized as a result of
achieving of a sales milestone in the third quarter of 2019 under
the Company’s milestone agreement with Deerfield.
The net loss for the third quarter of 2019 was
$10.4 million, or $0.05 per share compared to a $24.2 million net
loss in the third quarter of 2018 or $0.16 per share. The decrease
was primarily the result of increased total revenues from higher
Afrezza commercial demand and from the licensing and research
agreements with United Therapeutics.
Nine Months Ended September 30,
2019
Net revenues were $47.0 million for the nine
months ended September 30, 2019, reflecting Afrezza net revenue of
$17.5 million and collaborations and services revenue of $29.5
million. Afrezza net revenue increased 52% compared to $11.5
million for the nine months ended September 30, 2018, primarily due
to higher product demand (including the first shipment to Brazil),
a more favorable mix of Afrezza cartridges and price.
Collaborations and services revenue increased $29.3 million
compared to the nine months ended September 30, 2018, which was
primarily attributed to the licensing agreement ($23.3 million) and
research agreement ($5.9 million) with United Therapeutics, both of
which began in the fourth quarter of 2018.
On a GAAP basis, Afrezza gross profit was $2.1
million for the nine months ended September 30, 2019, an
improvement of $5.0 million or 173% compared to a gross loss of
$2.9 million in the same period in 2018, primarily due to an
increase of $6.0 million in net revenue, a $1.8 million decrease in
inventory write-offs, partially offset by increased costs due to
higher sales and the Amphastar one-time amendment fee of $2.75
million in the third quarter of 2019. As a result, on a non-GAAP
basis, gross profit was $4.9 million or 28% for the nine months
ended September 30, 2019.
R&D expenses for the nine months ended
September 30, 2019 were $4.9 million compared to $7.7 million for
the nine months ended September 30, 2018. This $2.8 million or 36%
decrease was primarily attributable to a $1.0 million decrease in
personnel-related costs and a $1.1 million decrease in clinical
trial spending.
SG&A expenses for the nine months ended
September 30, 2019 were $58.9 million compared to $61.7 million for
the nine months ended September 30, 2018. This decrease of $2.7
million or 5% was primarily attributable to a $6.1 million decrease
in personnel related costs, $1.9 million decrease in professional
fees, a $1.0 million decrease in stock-based compensation costs
offset by a $6.8 million increase in costs for a television
campaign for Afrezza.
Interest income increased by $0.5 million or
160% for the nine months ended September 30, 2019 primarily
attributable to a higher balance on money market funds and other
short-term investments.
Interest expense on notes for the nine months
ended September 30, 2019 was $5.3 million compared to $4.5 million
for the nine months ended September 30, 2018. This $0.8 million
increase was primarily attributable to a $3.4 million charge
realized as a result of achieving of a sales milestone in the third
quarter of 2019 under the Company’s milestone agreement with
Deerfield, partially offset by a reduction in debt principal
balances.
The net loss for the nine months ended September
30, 2019 was $37.6 million, or $0.20 per share compared to a $77.2
million net loss for the nine months ended September 30, 2018 or
$0.56 per share. The lower net loss was mainly attributable to a
$35.2 million increase in total revenues.
Cash, Cash Equivalents, Restricted Cash
and Short Term Investments
Cash, cash equivalents, restricted cash, and
short-term investments at September 30, 2019 was $50.4 million
compared to $71.7 million at December 31, 2018.
Non-GAAP Measures
Certain financial information contained in this
press release is presented on both a reported basis (GAAP) and a
non-GAAP basis. Reported results were prepared in accordance with
GAAP whereas non-GAAP measures exclude items described in the
reconciliation tables below. Non-GAAP financial information is
intended to portray the results of our baseline performance,
supplement or enhance management, analysts and investors overall
understanding of our underlying financial performance and
facilitate comparisons among current and past periods. The non-GAAP
financial measures are in addition to, not a substitute for, or
superior to, measures of financial performance prepared in
accordance with GAAP.
|
|
|
Three Months Ended September 30, |
($ in million) |
2019 |
|
2018 |
|
$ Chg |
|
% Chg |
Net Revenue - Afrezza |
$ |
6.4 |
|
|
$ |
4.4 |
|
|
$ |
2.0 |
|
|
45 |
% |
Cost of Goods Sold |
|
(7.1 |
) |
|
|
(5.3 |
) |
|
|
(1.8 |
) |
|
-34 |
% |
GAAP Gross Profit (Loss) - Afrezza |
$ |
(0.7 |
) |
|
$ |
(0.9 |
) |
|
|
0.2 |
|
|
22 |
% |
Exclude Amphastar Amendment Fee |
|
2.8 |
|
|
|
- |
|
|
|
2.8 |
|
|
|
Non-GAAP Gross Profit (Loss) - Afrezza |
$ |
2.1 |
|
|
$ |
(0.9 |
) |
|
$ |
3.0 |
|
|
333 |
% |
Non-GAAP Gross Margin |
|
33 |
% |
|
|
-20 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
($ in million) |
2019 |
|
2018 |
|
$ Chg |
|
% Chg |
Net Revenue - Afrezza |
$ |
17.5 |
|
|
$ |
11.5 |
|
|
$ |
6.0 |
|
|
52 |
% |
Cost of Goods Sold |
|
(15.4 |
) |
|
|
(14.4 |
) |
|
|
(1.0 |
) |
|
-7 |
% |
GAAP Gross Profit (Loss) - Afrezza |
$ |
2.1 |
|
|
$ |
(2.9 |
) |
|
|
5.0 |
|
|
172 |
% |
Exclude Amphastar Amendment Fee |
|
2.8 |
|
|
|
- |
|
|
|
2.8 |
|
|
|
Non-GAAP Gross Profit (Loss) - Afrezza |
$ |
4.9 |
|
|
$ |
(2.9 |
) |
|
$ |
7.8 |
|
|
269 |
% |
Non-GAAP Gross Margin |
|
28 |
% |
|
|
-25 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 (866) 548-4713 or (323) 794-2093 and use the participant
passcode: 8987532. 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: 8987532. 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: 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 September 30, |
|
|
Nine Months Ended September 30, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue - commercial product sales |
|
$ |
6,402 |
|
|
$ |
4,387 |
|
|
$ |
17,543 |
|
|
$ |
11,542 |
|
Revenue - collaborations and services |
|
|
8,193 |
|
|
|
82 |
|
|
|
29,502 |
|
|
|
232 |
|
Revenue - other |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
53 |
|
Total revenues |
|
|
14,595 |
|
|
|
4,469 |
|
|
|
47,045 |
|
|
|
11,827 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
7,099 |
|
|
|
5,303 |
|
|
|
15,446 |
|
|
|
14,406 |
|
Cost of revenue - collaborations and services |
|
|
1,836 |
|
|
|
— |
|
|
|
5,512 |
|
|
|
— |
|
Research and development |
|
|
1,580 |
|
|
|
2,043 |
|
|
|
4,879 |
|
|
|
7,653 |
|
Selling, general and administrative |
|
|
16,666 |
|
|
|
19,394 |
|
|
|
58,948 |
|
|
|
61,740 |
|
Gain on foreign currency translation |
|
|
(3,807 |
) |
|
|
(728 |
) |
|
|
(4,495 |
) |
|
|
(3,107 |
) |
Total expenses |
|
|
23,374 |
|
|
|
26,012 |
|
|
|
80,290 |
|
|
|
80,692 |
|
Loss from operations |
|
|
(8,779 |
) |
|
|
(21,543 |
) |
|
|
(33,245 |
) |
|
|
(68,865 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
220 |
|
|
|
144 |
|
|
|
794 |
|
|
|
305 |
|
Interest expense on notes |
|
|
(4,126 |
) |
|
|
(993 |
) |
|
|
(5,283 |
) |
|
|
(4,496 |
) |
Interest expense on promissory notes |
|
|
(1,162 |
) |
|
|
(1,074 |
) |
|
|
(3,351 |
) |
|
|
(3,234 |
) |
Gain (loss) on extinguishment of debt |
|
|
3,529 |
|
|
|
(712 |
) |
|
|
3,529 |
|
|
|
(765 |
) |
Other income (expense) |
|
|
(52 |
) |
|
|
10 |
|
|
|
(84 |
) |
|
|
71 |
|
Total other expense |
|
|
(1,591 |
) |
|
|
(2,625 |
) |
|
|
(4,395 |
) |
|
|
(8,119 |
) |
Loss before provision for
income taxes |
|
|
(10,370 |
) |
|
|
(24,168 |
) |
|
|
(37,640 |
) |
|
|
(76,984 |
) |
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(240 |
) |
Net loss |
|
$ |
(10,370 |
) |
|
$ |
(24,168 |
) |
|
$ |
(37,640 |
) |
|
$ |
(77,224 |
) |
Net loss per share - basic and
diluted |
|
$ |
(0.05 |
) |
|
$ |
(0.16 |
) |
|
$ |
(0.20 |
) |
|
$ |
(0.56 |
) |
Shares used to compute basic
and diluted net loss per share |
|
|
199,906 |
|
|
|
153,597 |
|
|
|
191,786 |
|
|
|
138,307 |
|
MANNKIND CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited)(In thousands,
except per share data)
|
|
September 30, 2019 |
|
|
December 31, 2018 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
30,173 |
|
|
$ |
71,157 |
|
Restricted cash |
|
|
316 |
|
|
|
527 |
|
Short-term investments |
|
|
19,885 |
|
|
|
— |
|
Accounts receivable, net |
|
|
4,093 |
|
|
|
4,017 |
|
Inventory |
|
|
3,692 |
|
|
|
3,597 |
|
Prepaid expenses and other current assets |
|
|
3,584 |
|
|
|
2,556 |
|
Total current assets |
|
|
61,743 |
|
|
|
81,854 |
|
Property and equipment,
net |
|
|
27,126 |
|
|
|
25,602 |
|
Right-of-use and other
assets |
|
|
6,271 |
|
|
|
249 |
|
Total assets |
|
$ |
95,140 |
|
|
$ |
107,705 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
11,664 |
|
|
$ |
5,379 |
|
Accrued expenses and other current liabilities |
|
|
14,298 |
|
|
|
15,022 |
|
Facility financing obligation |
|
|
— |
|
|
|
11,298 |
|
Senior convertible notes - current |
|
|
2,520 |
|
|
|
— |
|
Deferred revenue - current |
|
|
32,212 |
|
|
|
36,885 |
|
Recognized loss on purchase commitments - current |
|
|
3,593 |
|
|
|
6,657 |
|
Total current liabilities |
|
$ |
64,287 |
|
|
$ |
75,241 |
|
Senior convertible notes |
|
|
7,437 |
|
|
|
19,099 |
|
Credit facility |
|
|
38,798 |
|
|
— |
|
Promissory notes |
|
|
70,019 |
|
|
|
72,089 |
|
Accrued interest - promissory
notes |
|
|
807 |
|
|
|
6,835 |
|
Recognized loss on purchase
commitments - long term |
|
|
85,858 |
|
|
|
91,642 |
|
Deferred revenue - long
term |
|
|
2,631 |
|
|
|
10,680 |
|
Milestone rights
liability |
|
|
7,263 |
|
|
|
7,201 |
|
Operating lease
liabilities |
|
|
2,746 |
|
|
|
— |
|
Total liabilities |
|
$ |
279,846 |
|
|
$ |
282,787 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders' deficit: |
|
|
|
|
|
|
|
|
Common stock, $0.01 par value
- 280,000,000 shares authorized, 206,407,551 and 187,029,967
shares issued and outstanding at September 30, 2019 and
December 31, 2018, respectively |
|
$ |
2,064 |
|
|
$ |
1,870 |
|
Additional paid-in
capital |
|
|
2,790,890 |
|
|
|
2,763,067 |
|
Accumulated other
comprehensive loss |
|
|
(20 |
) |
|
|
(19 |
) |
Accumulated deficit |
|
|
(2,977,640 |
) |
|
|
(2,940,000 |
) |
Total stockholders' deficit |
|
$ |
(184,706 |
) |
|
$ |
(175,082 |
) |
Total liabilities and stockholders' deficit |
|
$ |
95,140 |
|
|
$ |
107,705 |
|
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