MannKind Corporation Reports 2017 Second Quarter Financial Results

VALENCIA, Calif., Aug. 07, 2017 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD) today reported financial results for the second quarter and the six months ended June 30, 2017. Key results include:

  • Completed  commercial expansion
  • Afrezza net revenue and gross revenue grew 29% and 60%, respectively, vs. Q1 2017
  • Reduced Deerfield obligations by $15 million through equity conversion and cash payments
  • Increased cash by $19.4 million through The Mann Group loan arrangement
  • Positive pre-IND meeting with the FDA for treprostinil Technosphere

Second Quarter Results

For the second quarter of 2017, total net revenue of $2.2 million was comprised of $1.5 million of Afrezza product net sales, $0.1 million of collaboration revenues and $0.6 million of other revenues from the sale of certain oncology intellectual property. As of June 30, 2017, Afrezza product shipped to the wholesale and retail channel, but not yet recognized as revenue, was $2.6 million.  Afrezza net revenue and gross revenue grew 29% and 60%, respectively, compared to the first quarter of 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 quarterly period ended June 30, 2017.

Cost of goods sold was $5.1 million in the second quarter of 2017 compared to $4.0 million in the second quarter of 2016, an increase of approximately $1.1 million or 28%, primarily due to a write-down of inventory which was forecasted to become obsolete due to expiration.

Research and development expenses were $3.1 million in the second quarter of 2017 compared to $4.3 million in the second quarter of 2016, a decrease of $1.2 million or 28%, due to the reduction in workforce that took place in the fourth quarter of 2016.

Selling, general and administrative expenses were $18.6 million for the second quarter of 2017 compared to $11.1 million for the same quarter of 2016, an increase of $7.5 million or 68%. The increase in selling expense is primarily due to recruiting a MannKind-employee sales force and building the related commercial support.

The net loss for the second quarter of 2017 was $35.3 million, or $0.35 per share based on 99.9 million weighted average shares outstanding, compared to the net loss of $30.0 million, or $0.33 per share on 91.1 million weighted average shares outstanding in the second quarter of 2016.

Six Months Ended Results

For the six months ended June 30, 2017, total net revenue of $5.2 million was comprised of $2.7 million of Afrezza product net sales, $1.8 million from the sales of surplus bulk insulin to a third party and $0.6 million from the sale of certain oncology intellectual property.

Cost of goods sold was $7.6 million for the six months ended June 30, 2017 compared to $9.2 million for the same period in 2016, a decrease of approximately $1.6 million or 17%, primarily due to a decrease in under-absorbed labor and overhead as a result of the reduction in the workforce that took place in the fourth quarter of 2016.

Research and development expenses were $6.3 million for the six months ended June 30, 2017 compared to $9.4 million for the same period in 2016, a decrease of $3.1 million or 33%, due primarily to compensation expense resulting from the reduction in force in the fourth quarter of 2016.

Selling, general and administrative expenses were $34.0 million for the six months ended June 30, 2017 compared to $18.5 million for the same period in 2016, an increase of $15.5 million or 84%, primarily due to increased selling and marketing activities associated with recruiting a MannKind-employee sales force and building the related commercial support.   

The net loss for the six months ended June 30, 2017 was $51.7 million, or $0.53 per share based on 97.8 million weighted average shares outstanding, compared to the net loss of $54.8 million, or $0.62 per share on 88.4 million weighted average shares outstanding at June 30, 2016.

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2017 were $43.4 million, compared to $48.0 million at March 31, 2017. During the second quarter of 2017, we received net borrowings of $19.4 million from the Mann Group.

Product Pipeline

The Company had a positive pre-IND meeting with the FDA during June 2016 and, as a result, will be advancing treprostinil Technosphere for the treatment of pulmonary arterial hypertension with the intention of filing an investigational new drug application by the end of 2017. 

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 "Q2 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: 44096373.

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 6373#. A replay will also be available on MannKind's website for 14 days.

About MannKind Corporation

MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD) focuses on the discovery, development and commercialization of therapeutic products for patients with diseases such as diabetes. MannKind maintains a website at http://www.mannkindcorp.com to which MannKind regularly posts copies of its press releases as well as additional information about MannKind. Interested persons can subscribe on the MannKind website to e-mail alerts that are sent automatically when MannKind issues press releases, files its reports with the Securities and Exchange Commission or posts certain other information to the website.

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 June 30,   Six Months Ended June 30,    
    2017       2016       2017       2016      
Revenues:                  
Net revenue - commercial product sales $ 1,548     $ --     $ 2,745     $ --      
Net revenue - collaboration   63       --       125       --      
Revenue - other   552       --       2,302       --      
                   
Total revenues   2,163       --       5,172       --      
Expenses:                  
Cost of goods sold   5,086       4,045       7,635       9,213      
Research and development   3,123       4,310       6,251       9,440      
Selling, general and administrative   18,566       11,110       33,956       18,460      
Property and equipment impairment   111       --       111       --      
(Gain) loss on foreign currency translation   6,848       (341 )     8,392       2,023      
Total expenses   33,734       19,124       56,345       39,136      
                   
Loss from operations   (31,571 )     (19,124 )     (51,173 )     (39,136 )    
                   
Other income (expense):                  
Change in fair value of warrant liability     147         (5,306 )       6,776         (5,306 )    
Interest income     58         26         114         41      
Interest expense on notes     (2,422 )       (4,181 )       (5,128 )       (8,401 )    
Interest expense on note payable to principal stockholder      (721 )       (721 )       (1,435 )       (1,443 )    
Loss on extinguishment of debt     (830 )       --         (830 )       --      
Other income     --         (653 )       13         (586 )    
                   
Total other expense     (3,768 )       (10,835 )       (490 )       (15,695 )    
                   
Loss before benefit for income taxes     (35,339 )       (29,959 )       (51,663 )       (54,831 )    
Income tax benefit     --         --         --         --      
                   
Net loss $   (35,339 )   $   (29,959 )   $   (51,663 )   $   (54,831 )    
                   
Net loss per share - basic and diluted $   (0.35 )   $   (0.33 )   $   (0.53 )   $   (0.62 )    
                   
Shares used to compute basic and diluted net loss per share     99,864         91,061         97,816         88,416      
                   

 

           
MANNKIND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
    (Unaudited)
    (In thousands, except par value and share data)
           
      June 30, 2017   December 31, 2016
           
ASSETS      
Current assets:      
  Cash and cash equivalents $ 43,384     $ 22,895  
  Accounts receivable, net   1,312       302  
  Receivable from Sanofi   --       30,557  
  Inventory   3,172       2,331  
  Asset held for sale   --       16,730  
  Deferred costs from commercial product sales   500       309  
  Prepaid expenses and other current assets   2,563       4,364  
    Total current assets   50,931       77,488  
Property and equipment - net   27,920       28,927  
Other assets   523       648  
    Total assets $ 79,374     $ 107,063  
           
    LIABILITIES AND STOCKHOLDERS' DEFICIT      
Current liabilities:      
  Accounts payable $   6,541     $   3,263  
  Accrued expenses and other current liabilities     9,076         7,937  
  Facility financing obligation     57,484         71,339  
  Deferred revenue - net     2,592         3,419  
  Deferred payments from collaboration - current     250         1,000  
  Recognized loss on purchase commitments - current     9,926         5,093  
    Total current liabilities     85,869         92,051  
Note payable to principal stockholder     79,666         49,521  
Accrued interest - note payable to principal stockholder     -          9,281  
Senior convertible notes     27,649         27,635  
Recognized loss on purchase commitments - long term     99,001         95,942  
Deferred payments from collaboration - long term     625         -   
Warrant liability     605         7,381  
Milestone rights liability and other liabilities     7,202         8,845  
    Total liabilities     300,617         290,656  
           
Commitments and contingencies (Note 11)      
           
Stockholders' deficit:      
Undesignated preferred stock, $0.01 par value - 10,000,000 shares authorized;       
  no shares issued or outstanding at June 30, 2017 and December 31, 2016    --       --  
Common stock, $0.01 par value - 140,000,000 shares authorized,      
  104,615,982 and 95,680,831 shares issued and outstanding at      
  June 30, 2017 and December 31, 2016, respectively     1,046         957  
Additional paid-in capital     2,566,960         2,553,039  
Accumulated other comprehensive loss     (21 )       (24 )
Accumulated deficit     (2,789,228 )       (2,737,565 )
    Total stockholders' deficit     (221,243 )       (183,593 )
    Total liabilities and stockholders' deficit $   79,374     $   107,063  
           

 

Company Contact:
Rose Alinaya
SVP, Investor Relations
661-775-5300
ir@mannkindcorp.com

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