MannKind Corporation (NASDAQ:MNKD) today reported
financial results for the quarter and nine months ended September
30, 2020.
“Our employees continue to execute in a
tumultuous Covid-19 environment,” said Michael Castagna, Chief
Executive Officer. “As we head toward year-end, our focus remains
on two significant drivers of value for shareholders: enabling
healthcare providers to increase their prescribing of Afrezza and
supporting United Therapeutics as they move the TreT clinical
program to completion, including manufacturing TreT clinical
supplies.”
Third Quarter 2020
Results
Total revenues were $15.4 million for the third
quarter of 2020, reflecting Afrezza net revenue of $7.3 million and
collaboration and services revenue of $8.1 million. Afrezza U.S net
revenue of $7.3 million increased 27% compared to $5.7 million in
the third quarter of 2019, driven by higher product demand, a
favorable mix of cartridges, and price. The first sale of Afrezza
to the Company’s marketing partner in Brazil was completed in the
third quarter of 2019 for $0.7 million; there were no international
sales in the third quarter of 2020. Collaboration and services
revenue for the third quarter of 2020 decreased $0.1 million
compared to the third quarter of 2019.
Afrezza gross profit for the third quarter of
2020 was $3.7 million compared to a loss of $0.7 million in the
same period of 2019, an increase of $4.4 million that was driven
primarily by higher Afrezza revenue combined with a reduction in
cost of goods sold, primarily attributable to a $2.8 million
amendment fee associated with our insulin supply agreement in 2019.
Non-GAAP gross margin in the third quarter of 2020 increased to 51%
from 32% for the same quarter in 2019.
Selling, general and administrative expenses for
the third quarter of 2020 were $13.9 million compared to $16.7
million for the third quarter of 2019. This 17% decrease was
primarily due to a $1.2 million reduction in promotional and
marketing activities and a $0.8 million decrease in professional
costs.
Interest expense for the third quarter of 2020
was $2.4 million compared to $5.3 million for the third quarter of
2019. This $2.9 million decrease was primarily attributable to a
$3.4 million milestone obligation that occurred in the third
quarter of 2019, partially offset by interest expense from the
MidCap Credit Facility.
A loss on foreign currency translation for the
third quarter of 2020 was $3.9 million compared to a $3.8 million
gain for the third quarter of 2019. The fluctuation is related to
the change in the U.S. dollar to Euro foreign exchange rate on the
recognized loss on insulin purchase commitments, which are
denominated in Euros.
The net loss for the third quarter of 2020 was
$11.3 million, or $0.05 per share, compared to a $10.4 million net
loss, or $0.05 per share in the third quarter of 2019. The higher
net loss was mainly attributable to the change in foreign currency
translation from a gain in 2019 to a loss in 2020, partially offset
by the reduction in cost of goods sold, selling, general and
administrative expenses and interest expense.
Nine Months
Ended September 30,
2020
Total revenues were $46.7 million for the nine
months ended September 30, 2020, reflecting Afrezza net revenue of
$22.3 million and collaboration and services revenue of $24.4
million. Afrezza net revenue increased 27% compared to $17.5
million for the nine months ended September 30, 2019, primarily
driven by higher product demand, a more favorable mix of cartridges
and price, partially offset by a reduction in sales to Biomm
(Brazil). Collaboration and services revenue for the nine months
ended September 30, 2020 decreased $5.1 million compared to the
same period in the prior year, primarily due to a $5.7 million
decrease in revenue recognized from the UT Research Agreement,
which was substantially completed in 2019.
Afrezza gross profit for the nine months ended
September 30, 2020 was $10.8 million compared to $2.1 million in
the same period of 2019, an increase of $8.7 million, or +416%,
that was driven primarily by a reduction in cost of goods sold
combined with higher commercial product sales. Cost of goods sold
decreased by $4.0 million, primarily attributable to a $2.8 million
amendment fee associated with our insulin supply agreement in 2019,
$0.8 million of increased 2020 manufacturing activities which
resulted in a greater amount of costs capitalized to inventory and
$1.1 million in reduced 2020 manufacturing-related spending,
partially offset by $0.5 million of 2020 inventory write-offs and
$0.4 million in costs associated with higher commercial product
sales. Non-GAAP gross margin for the nine months ended September
30, 2020 increased to 49% from 28% for the same period in 2019,
primarily due to higher Afrezza revenue and lower cost of goods
sold.
Selling, general and administrative expenses for
the nine months ended September 30, 2020 were $41.9 million
compared to $58.9 million for the same period in 2019. This 29%
decrease was primarily due to $9.3 million spent on
direct-to-consumer television advertising in 2019 (which was not
repeated in 2020), a $4.1 million decrease in promotional and
marketing activities, a $1.3 million decrease in consulting costs,
and a $1.2 million decrease in personnel and employee related
costs.
The loss on foreign currency translation for the
nine months ended September 30, 2020 was $4.0 million compared to a
$4.5 million gain for the same period in 2019. The fluctuation is
related to the change in the U.S. dollar to Euro foreign exchange
rate on the recognized loss on insulin purchase commitments, which
are denominated in Euros.
The net loss for the nine months ended September
30, 2020 was $30.8 million, or $0.14 per share, compared to a $37.6
million net loss, or $0.20 per share for the same period in 2019.
The lower net loss was mainly attributable to a decrease selling,
general and administrative expenses, partially offset by the change
in the foreign currency translation from a gain in 2019 to a loss
in 2020. The reduction in the net loss per share was also impacted
by a greater number of outstanding shares.
Cash, cash equivalents and restricted cash at
September 30, 2020 was $52.7 million compared to $50.2 million at
December 31, 2019, which also included short-term investments of
$20.0 million. The increase was primarily due to a milestone
payment from United Therapeutics of $12.5 million, $15.2 million of
net proceeds received from at-the-market offerings, $11.6 million
received from warrant exercises and the origination of a Paycheck
Protection Program loan for $4.9 million, offset by non-GAAP net
cash used in operating activities of $40.9 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.
|
|
Three Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
$Change |
|
|
%Change |
|
Net revenue — Afrezza |
|
$ |
7,275 |
|
|
$ |
6,402 |
|
|
$ |
873 |
|
|
|
14 |
% |
Less cost of goods sold |
|
(3,591 |
) |
|
|
(7,099 |
) |
|
$ |
(3,508 |
) |
|
|
(49 |
%) |
GAAP gross profit (loss) — Afrezza |
|
|
3,684 |
|
|
(697 |
) |
|
$ |
4,381 |
|
|
|
* |
|
Exclude Amphastar amendment
fee |
|
— |
|
|
|
2,750 |
|
|
$ |
(2,750 |
) |
|
|
(100 |
%) |
Non-GAAP gross profit — Afrezza |
|
$ |
3,684 |
|
|
$ |
2,053 |
|
|
$ |
1,631 |
|
|
|
79 |
% |
Non-GAAP gross margin |
|
|
51 |
% |
|
|
32 |
% |
|
|
|
|
|
|
|
|
* Not meaningful
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
$Change |
|
|
%Change |
|
Net revenue — Afrezza |
|
$ |
22,260 |
|
|
$ |
17,543 |
|
|
$ |
4,717 |
|
|
|
27 |
% |
Less cost of goods sold |
|
|
(11,432 |
) |
|
|
(15,446 |
) |
|
$ |
(4,014 |
) |
|
|
(26 |
%) |
GAAP gross profit — Afrezza |
|
|
10,828 |
|
|
|
2,097 |
|
|
$ |
8,731 |
|
|
|
416 |
% |
Exclude Amphastar amendment
fee |
|
— |
|
|
|
2,750 |
|
|
$ |
(2,750 |
) |
|
|
(100 |
%) |
Non-GAAP gross profit — Afrezza |
|
$ |
10,828 |
|
|
$ |
4,847 |
|
|
$ |
5,981 |
|
|
|
123 |
% |
Non-GAAP gross margin |
|
|
49 |
% |
|
|
28 |
% |
|
|
|
|
|
|
|
|
|
|
Nine Months Ended September 30, |
|
|
|
2020 |
|
|
2019 |
|
|
$Change |
|
|
%Change |
|
Net cash used in operating
activities |
|
$ |
(28,363 |
) |
|
$ |
(83,376 |
) |
|
$ |
55,013 |
|
|
|
66 |
% |
Exclude UT payment
received |
|
|
(12,500 |
) |
|
|
(12,500 |
) |
|
$ |
— |
|
|
|
— |
% |
Exclude payment-in-kind
interest on promissory notes |
|
— |
|
|
|
(32,822 |
) |
|
$ |
32,822 |
|
|
|
100 |
% |
Non-GAAP cash used in
operating activities |
|
$ |
(40,863 |
) |
|
$ |
(128,698 |
) |
|
$ |
87,835 |
|
|
|
68 |
% |
Conference Call
MannKind will host a conference call and
presentation webcast to discuss these results today at 5:00 p.m.
Eastern Time. 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: 3965498#. 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 orphan
lung diseases. MannKind is currently commercializing Afrezza®
(insulin human) Inhalation Powder, the Company’s first FDA-approved
product and the only inhaled ultra 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. Words such as
"believes," "anticipates," "plans," "expects," "intends," "will,"
"goal," "potential" and similar expressions are intended to
identify forward-looking statements. These forward-looking
statements are based upon 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 various risks and uncertainties detailed
in MannKind's filings with the SEC, including risks
related to the COVID-19 pandemic. For a discussion of these and
other factors, please refer to MannKind’s annual report on Form
10-K for the year ended December 31, 2019 as well as
MannKind’s other filings with the SEC. 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:
818-661-5000ir@mannkindcorp.com
MANNKIND CORPORATION AND
SUBSIDIARY CONDENSED CONSOLIDATED
BALANCE SHEETS (Unaudited)(In
thousands, except per share data)
|
|
September 30, 2020 |
|
|
December 31, 2019 |
|
ASSETS |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
52,398 |
|
|
$ |
29,906 |
|
Restricted cash |
|
|
316 |
|
|
|
316 |
|
Short-term investments |
|
|
— |
|
|
|
19,978 |
|
Accounts receivable, net |
|
|
4,135 |
|
|
|
3,513 |
|
Inventory |
|
|
4,881 |
|
|
|
4,155 |
|
Prepaid expenses and other current assets |
|
|
4,616 |
|
|
|
2,889 |
|
Total current assets |
|
|
66,346 |
|
|
|
60,757 |
|
Property and equipment, net |
|
|
25,736 |
|
|
|
26,778 |
|
Other assets |
|
|
3,599 |
|
|
|
6,190 |
|
Total assets |
|
$ |
95,681 |
|
|
$ |
93,725 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
5,797 |
|
|
$ |
4,789 |
|
Accrued expenses and other current liabilities |
|
|
15,814 |
|
|
|
15,904 |
|
Short-term notes payable |
|
|
45,379 |
|
|
|
5,028 |
|
Deferred revenue — current |
|
|
28,867 |
|
|
|
32,503 |
|
Recognized loss on purchase commitments — current |
|
|
10,267 |
|
|
|
7,394 |
|
Total current liabilities |
|
|
106,124 |
|
|
|
65,618 |
|
Promissory notes |
|
|
70,025 |
|
|
|
70,020 |
|
Accrued interest — promissory
notes |
|
|
5,854 |
|
|
|
2,002 |
|
Long-term Midcap credit
facility |
|
|
— |
|
|
|
38,851 |
|
Senior convertible notes |
|
|
5,000 |
|
|
|
5,000 |
|
Paycheck Protection Program loan
— long term |
|
|
1,421 |
|
|
|
— |
|
Recognized loss on purchase
commitments — long term |
|
|
84,529 |
|
|
|
84,639 |
|
Operating lease liability |
|
|
1,523 |
|
|
|
2,514 |
|
Deferred revenue — long term |
|
|
1,699 |
|
|
|
8,344 |
|
Milestone rights liability |
|
|
5,926 |
|
|
|
7,263 |
|
Total liabilities |
|
|
282,101 |
|
|
|
284,251 |
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit: |
|
|
|
|
|
|
|
|
Undesignated preferred stock, $ par value — shares
authorized; shares issued or outstanding as of
September 30, 2020 and December 31, 2019 |
|
|
— |
|
|
|
— |
|
Common stock, $ par value - 400,000,000 and 280,000,000 shares
authorized, 230,922,513 and 211,787,573 shares issued and
outstanding at September 30, 2020 and December 31, 2019,
respectively |
|
|
2,309 |
|
|
|
2,118 |
|
Additional paid-in capital |
|
|
2,834,003 |
|
|
|
2,799,278 |
|
Accumulated other comprehensive loss |
|
|
— |
|
|
|
(19 |
) |
Accumulated deficit |
|
|
(3,022,732 |
) |
|
|
(2,991,903 |
) |
Total stockholders' deficit |
|
|
(186,420 |
) |
|
|
(190,526 |
) |
Total liabilities and stockholders' deficit |
|
$ |
95,681 |
|
|
$ |
93,725 |
|
MANNKIND CORPORATION AND
SUBSIDIARY CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
|
Three Months Ended September 30, |
|
|
Nine Months
EndedSeptember 30, |
|
|
2020 |
|
|
2019 |
|
|
2020 |
|
|
2019 |
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue — commercial product sales |
$ |
7,275 |
|
|
$ |
6,402 |
|
|
$ |
22,260 |
|
|
$ |
17,543 |
|
Revenue — collaborations and services |
|
8,077 |
|
|
|
8,193 |
|
|
|
24,441 |
|
|
|
29,502 |
|
Total revenues |
|
15,352 |
|
|
|
14,595 |
|
|
|
46,701 |
|
|
|
47,045 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
3,591 |
|
|
|
7,099 |
|
|
|
11,432 |
|
|
|
15,446 |
|
Cost of revenue — collaborations and services |
|
1,581 |
|
|
|
1,836 |
|
|
|
6,926 |
|
|
|
5,512 |
|
Research and development |
|
1,484 |
|
|
|
1,580 |
|
|
|
4,703 |
|
|
|
4,879 |
|
Selling, general and administrative |
|
13,899 |
|
|
|
16,666 |
|
|
|
41,919 |
|
|
|
58,948 |
|
Asset impairment |
|
— |
|
|
|
— |
|
|
|
1,889 |
|
|
|
— |
|
Loss (gain) on foreign currency translation |
|
3,927 |
|
|
|
(3,807 |
) |
|
|
3,998 |
|
|
|
(4,495 |
) |
Total expenses |
|
24,482 |
|
|
|
23,374 |
|
|
|
70,867 |
|
|
|
80,290 |
|
Loss from operations |
|
(9,130 |
) |
|
|
(8,779 |
) |
|
|
(24,166 |
) |
|
|
(33,245 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
18 |
|
|
|
220 |
|
|
|
165 |
|
|
|
794 |
|
Interest expense on notes |
|
(1,057 |
) |
|
|
(4,126 |
) |
|
|
(3,212 |
) |
|
|
(5,283 |
) |
Interest expense on promissory notes |
|
(1,318 |
) |
|
|
(1,162 |
) |
|
|
(3,858 |
) |
|
|
(3,351 |
) |
Gain on extinguishment of debt |
|
— |
|
|
|
3,529 |
|
|
|
— |
|
|
|
3,529 |
|
Other income (expense) |
|
14 |
|
|
|
(52 |
) |
|
|
24 |
|
|
|
(84 |
) |
Total other expense |
|
(2,343 |
) |
|
|
(1,591 |
) |
|
|
(6,881 |
) |
|
|
(4,395 |
) |
Loss before provision for income
taxes |
|
(11,473 |
) |
|
|
(10,370 |
) |
|
|
(31,047 |
) |
|
|
(37,640 |
) |
Benefit for income taxes |
|
218 |
|
|
|
— |
|
|
|
218 |
|
|
|
— |
|
Net loss |
$ |
(11,255 |
) |
|
$ |
(10,370 |
) |
|
$ |
(30,829 |
) |
|
$ |
(37,640 |
) |
Net loss per share - basic and
diluted |
$ |
(0.05 |
) |
|
$ |
(0.05 |
) |
|
$ |
(0.14 |
) |
|
$ |
(0.20 |
) |
Shares used to compute basic and
diluted net loss per share |
|
229,668 |
|
|
|
199,906 |
|
|
|
218,559 |
|
|
|
191,786 |
|
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