MNKD Investors

Technosphere®

One of the largest organs in your body are the lungs. Picture the size of a full tennis court and that is roughly the surface area of both lungs in a typical adult.

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NTM Lung Disease on the Rise

“I cough every morning upon waking, so I don’t feel rested.” “Imagine not being able to breathe.” “Anxiety ruins everything about you – it’s not a normal life.” “You just exist from day to day and week to week.”

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What exactly is the Technosphere® Platform?

One of the largest organs in your body are the lungs. Picture the size of a full tennis court and that is roughly the surface area of both lungs in a typical adult. Running through those lungs are airways whose total length measures 1,500 miles – that’s the distance between Chicago and Las Vegas, New York to Albuquerque, and Los Angeles to Nashville.

Simply put, the lungs create a wonderful platform for effective drug delivery. MannKind’s Technosphere technology recognizes this and provides the distinct advantage of rapid, deep lung drug delivery. The effect is similar to intravenous delivery (I.V.; within a vein) and has the added benefit of bypassing the liver which can be especially helpful in reducing systemic side effects.

Examining it closer, it helps to look at inhalation, air flow travel, and the exhale. When you breathe in, air is drawn into the lung and flows down curving, narrowing airways that end in the air sacs or alveoli. When air is exhaled, the flow is reversed. Between the end of an inhalation and the start of exhalation, the air in the lung is stationary. To reach the deep lung, inhaled particles must be carried by the air stream and have enough momentum to continue through the stationary air to collide with the lung surface.

Particles that can reach the lung have aerodynamic diameters between 0.5 µm and 5-6 µm (1 µm is 1 micro-meter or about 0.00004 inches). Particles that are larger than 6 µm will leave the air stream and hit the back of your mouth and throat; smaller than 0.5 µm wouldn’t have the ability to reach the lungs and would simply get exhaled.

“The average Technosphere particle is about 2-2.5 µm which is in the middle of the respirable range,” explains Marshall Grant, PhD, MSc, Executive Director, Clinical Pharmacology & Research for MannKind Corporation. “The particle size distribution is a major reason Technosphere powders are highly efficient in delivering drug to the lungs than other dry powder inhalers (DPIs).”

The Technosphere particles in FDA-approved Afrezza® (insulin human) Inhalation Powder and Tyvaso DPI™ (treprostinil) Inhalation Powder are manufactured by different processes and possess different characteristics. But both are made up of small crystals of FDKP (fumaryl diketopiperazine), MannKind’s proprietary molecule. FDKP provides high solubility and fast dissolution at physiologic pH – and more importantly – can crystallize and form particles in the range appropriate for optimum delivery to the lungs.

When Technosphere powder reaches the lung surface, the FDKP and drug dissolve. The FDKP is then rapidly cleared from the lung into systemic circulation. The FDKP is not metabolized, but rather excreted primarily in the urine. Another value of Technosphere powders has been their versatility – they are compatible with a wide range of doses with different types of drugs.

MannKind’s Technosphere powders are delivered into the lung’s airstream via an inhalation device or DPI (dry powder inhaler). The breath-powered inhalers (Dreamboat® being the most common version) provide excellent delivery efficiency and are proven to deliver up to 70% of the dry-powder dose deep into the lungs. Our DPI are designed to be simple, easy to use and discreet. For patients, imagine having a drug in the convenient form of an inhaler that fits in the palm of your hand. This approach allows patients to not only take control of their health but do it while going about their day and enjoying life more humann.

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NTM Lung Disease on the Rise

“I cough every morning upon waking, so I don’t feel rested.” “Imagine not being able to breathe.” “Anxiety ruins everything about you – it’s not a normal life.” “You just exist from day to day and week to week.” These are a sampling of comments about the most bothersome symptoms from living with Nontuberculous Mycobacteria (NTM) shared in a study from NTM Info & Research, Inc. The statements are unfortunately typical and those with NTM often have unpredictable day-to-day health functioning and reduced quality of life.

NTM lung disease is a serious infection that is caused by bacteria that are common in the environment and can cause lung damage. The reality is that we are all exposed to these bacteria in our day-to-day lives – more than 120 species of mycobacteria have been identified. These common bacteria exist in water and soil particles that are in the air, wet places like hot tubs, steamy bathrooms, dishwashers, and even the dewy ground we walk on at the park. But not everyone is at risk of getting NTM lung disease just because they are exposed.

Those predisposed often have underlying conditions such as asthma, COPD, and bronchiectasis, which makes them prone to NTM infection. NTM is not considered to be contagious. Women over the age of 65 make up the majority of those impacted, with a predominance in those of Caucasian and Asian descent.

A rare disease, NTM can often be difficult to diagnose. Many will experience coughing, fatigue, weight loss and shortness of breath – all of which are common with other lung disease symptoms and other conditions like tuberculosis. With NTM, symptoms often worsen, and that is a marker not to be ignored.

It is estimated that some 86,000 individuals are living with NTM lung diseases, and it is on the rise growing 8% each year. Coastal regions including Gulf States have higher rates of infection accounting for 70% of annual NTM cases.

While no cure is available, treatments to manage NTM are available. Treatment for NTM involves antibiotic and multidrug regimens with duration lasting from months to years with tolerability and adverse reactions to treatment which often leads to a lack of adherence to therapy.

There is a valuable need to develop medicines that are well tolerated and effective that lends to consistent patient use and alleviates symptoms of NTM lung disease. MannKind continues to progress MNKD-101 (Clofazimine) for the treatment of NTM.

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Release Details

MannKind Corporation Reports 2018 Third Quarter Financial Results

11/01/18
PDF Version

Conference Call to Begin Today at 9:00 AM ET

  • Executed license and collaboration agreement with United Therapeutics for up to $95 million in upfront and milestone payments plus royalties
  • Executed research agreement for a second Technosphere formulation with United Therapeutics for $10 million
  • Fifth consecutive quarter with triple digit year-over-year Afrezza Net Revenue growth
    • 3Q 2018 Afrezza Net Revenue was $4.4 million versus $2.0 million in 3Q 2017; 121% growth. Year-to-date Afrezza Net Revenue was $11.5 million versus $4.7 million; 144% growth.
    • 3Q 2018 Afrezza Gross Revenue was $8.2 million versus $2.8 million in 3Q 2017; 191% growth. Year-to-date Afrezza 2018 Gross Revenue was $20.1 million versus $7.1 million; 184% growth.
    • 3Q 2018 Afrezza TRx grew 51% versus 3Q 2017.

WESTLAKE VILLAGE, Calif., Nov. 01, 2018 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) today reported financial results for the third quarter ended September 30, 2018.

“In 3Q 2018, we executed on both of our corporate value drivers, Afrezza and Technosphere Platform, by signing a global licensing and collaboration agreement for Treprostinil Technosphere and a research agreement for an undisclosed Technosphere formulation with upfront payments from these deals received in the last two months. Our sales and marketing efforts continue to show progress in growing Afrezza sales as the 3Q revenues have more than doubled from 3Q 2017,” said Michael Castagna, Chief Executive Officer of MannKind Corporation.

Third Quarter Results

For the third quarter of 2018, Afrezza net revenue was $4.4 million, an increase of 121% compared to $2.0 million for the third quarter of 2017, reflecting increased product demand and pricing as well as a more favorable mix of cartridges.

Cost of goods sold was $5.3 million for the third quarter of 2018, an increase of 16% compared to $4.6 million for the same period in 2017, which was driven by an increased write-off of expiring inventory in the amount of $0.7 million.

Research and development (R&D) expenses for the third quarter of 2018 were $2.0 million compared to $4.4 million for the third quarter of 2017, a decrease of $2.4 million or 53%, reflecting $1.0 million in lower salary related expenses (for personnel who were engaged in research and development activities in 2017 but who have transitioned to Afrezza commercial support activities), lower clinical trial expense of $0.9 million, a decrease in headcount of $0.4 million and lower research and development supply costs of $0.2 million. These decreases were offset by increases in stock compensation expense and in travel expenses of $0.2 million.

Selling, general and administrative (SG&A) expenses were $19.4 million for the third quarter of 2018 compared to $17.7 million for the third quarter of 2017.  The $1.7 million or 9% increase was primarily due to a marketing and advertising cost increase of $1.2 million, an increase in commercial operations headcount of $0.9 million, an increase in sample spending of $0.3 million which were offset by lower facility costs of $0.5 million and a decrease in general and administrative personnel severance costs of $0.4 million.

Interest expense on notes was $1.0 million for the third quarter of 2018 compared to $2.3 million for the third quarter of 2017. The $1.3 million or 57% decrease was primarily due to a reduction in the principal debt balances.

The net loss for the third quarter of 2018 was $24.2 million, or $0.16 per share, compared to the $32.9 million net loss in the third quarter of 2017 or $0.31 per share.  The lower loss per share is attributable to an increase in revenues, lower expenses and an increase in shares used to compute the basic and diluted net loss per share.

Nine Months Ended Results

For the nine months ended September 30, 2018, Afrezza net revenue was $11.5 million, an increase of 144% compared to $4.7 million for the same period in 2017, reflecting increased product demand and pricing as well as a more favorable mix of cartridges.

Cost of goods sold for the nine months ended September 30, 2018 was $14.4 million compared to $12.2 million for the nine months ended September 30, 2017.  This increase of $2.2 million or 18% was primarily attributable to a $1.2 million increase resulting from higher Afrezza sales, an increase of $0.9 million of excess capacity costs and a $0.4 million realized currency loss from insulin purchases which were offset by a $0.3 million settlement of a credit related to a purchase of insulin.  Inventory write-offs of $1.8 million for the nine months ended September 30, 2018 remained flat compared to 2017.

R&D expenses for the nine months ended September 30, 2018 were $7.7 million compared to $10.6 million for the same period in 2017. This $3.0 million or 28% decrease was primarily attributable to a $2.2 million decrease in salary-related expenses (for personnel who were engaged in research and development activities in 2017 but who have transitioned to Afrezza commercial support activities), a decrease in headcount of $0.7 million, a decrease in research and development supply costs of $0.5 million, and a decrease in salary related expenses for personnel supporting manufacturing and production activities of $0.4 million. These decreases were offset by an increase in relocation and recruiting fees of $0.6 million plus an increase in consulting services costs of $0.4 million in connection with international regulatory activities.

SG&A expenses were $61.7 million for the nine months ended September 30, 2018 compared to $51.7 million for the same period in 2017.  The $10.0 million or 19% increase was primarily due to an increase in headcount-related expenses associated with commercial operations of $3.5 million and general and administration personnel of $2.5 million, a $2.2 million increase in salary-related expenses (for personnel who were engaged in research and development activities in 2017 but who have transitioned to Afrezza commercial support activities), an increase in stock-based compensation expense of $1.9 million, a $1.1 million increase in the cost of transitioning corporate support functions from Connecticut to our headquarters in California and an increase in consulting fees in connection with corporate strategies of $0.9 million, which were offset by lower marketing expenses of $1.6 million and a decrease in facility expenses of $0.7 million.

Interest expense on notes was $4.5 million for the nine months ended September 30, 2018 compared to $7.4 million for the same period in 2017. The $2.9 million or 40% decrease was primarily due to a reduction in the principal debt balances.

The net loss for the nine months ended September 30, 2018 was $77.2 million, or $0.56 per share, compared to $84.5 million for the nine months ended September 30, 2017, or $0.84 per share.  The lower net loss per share is attributable to an increase in revenues, a decrease in expenses and an increase in shares used to compute basic and diluted net loss per share.

Cash and Cash Equivalents

Cash, cash equivalents and restricted cash at September 30, 2018 was $11.0 million compared to $48.4 million at December 31, 2017, primarily due to net cash used in operating activities of $62.7 million, inclusive of $10.0 million received from United Therapeutics in September 2018, primarily offset by $26.4 million of net proceeds from a registered direct offering of 14 million shares of common stock and warrants at a purchase price of $2.00 per share and accompanying warrant.

Conference Call

MannKind will host a conference call and presentation webcast to discuss these results today at 9:00 a.m. Eastern Time. To view and listen to the earnings call webcast live via the Internet, visit the Company's website at www.mannkindcorp.com and click on the “Q3 2018 MannKind Earnings Conference Call” link in the Webcasts section of News & Events.  To participate in the live call by telephone, please dial (888) 394-8218 toll-free or (323) 701-0225 toll/international and use the conference passcode: 5666425.

A telephone replay of the call will be accessible for approximately 14 days following completion of the call by dialing (844) 512-2921 toll-free or (412) 317-6671 toll/international and use the replay passcode: 5666425.  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, 2017 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,  
    2018     2017     2018     2017  
Revenues:                                
Net revenue - commercial product sales   $ 4,387     $ 1,981     $ 11,542     $ 4,726  
Net revenue - collaborations     82       62       232       187  
Revenue - other     —       —       53       2,302  
Total revenues     4,469       2,043       11,827       7,215  
Expenses:                                
Cost of goods sold     5,303       4,575       14,406       12,210  
Research and development     2,043       4,361       7,653       10,611  
Selling, general and administrative     19,394       17,725       61,740       51,681  
Property and equipment impairment     —       92       —       203  
(Gain) Loss on foreign currency translation     (728 )     3,684       (3,107 )     12,077  
Gain on purchase commitments     —       (215 )     —       (215 )
Total expenses     26,012       30,222       80,692       86,567  
Loss from operations     (21,543 )     (28,179 )     (68,865 )     (79,352 )
Other (expense) income:                                
Change in fair value of warrant liability     —       (1,289 )     —       5,488  
Interest income     144       65       305       178  
Interest expense on notes     (993 )     (2,310 )     (4,496 )     (7,438 )
Interest expense on note payable to related party     (1,074 )     (1,173 )     (3,234 )     (2,608 )
Loss on extinguishment of debt     (712 )     —       (765 )     (830 )
Other income     10       —       71       13  
Total other expense     (2,625 )     (4,707 )     (8,119 )     (5,197 )
Loss before provision for income taxes     (24,168 )     (32,886 )     (76,984 )     (84,549 )
Income tax expense     —       —       (240 )     —  
Net loss   $ (24,168 )   $ (32,886 )   $ (77,224 )   $ (84,549 )
Net loss per share - basic and diluted   $ (0.16 )   $ (0.31 )   $ (0.56 )   $ (0.84 )
Shares used to compute basic and diluted net loss per share     153,597       104,703       138,307       100,136  
                                 


   
MANNKIND CORPORATION AND SUBSIDIARIES  
CONDENSED CONSOLIDATED BALANCE SHEETS  
(Unaudited)  
(In thousands, except per share data)  
   
    September 30, 2018     December 31, 2017  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 10,446     $ 43,946  
Restricted cash     527       4,409  
Accounts receivable, net     2,752       2,789  
Inventory     2,785       2,657  
Deferred costs from commercial product sales     —       405  
Prepaid expenses and other current assets     3,015       3,010  
Total current assets     19,525       57,216  
Property and equipment, net     25,632       26,922  
Other assets     199       437  
Total assets   $ 45,356     $ 84,575  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
Accounts payable   $ 5,815     $ 6,984  
Accrued expenses and other current liabilities     13,434       12,449  
Facility financing obligation     14,202       52,745  
Deferred revenue, net     —       3,038  
Deferred payments from collaboration - current     10,095       250  
Recognized loss on purchase commitments - current     16,081       12,131  
Total current liabilities     59,627       87,597  
Note payable to related party     72,143       79,666  
Accrued interest - note payable to related party     5,692       2,347  
Senior convertible notes     19,133       24,411  
Recognized loss on purchase commitments - long term     84,362       97,585  
Deferred payments from collaboration - long term     2,638       500  
Milestone rights liability     7,202       7,201  
Total liabilities     250,797       299,307  
Commitments and contingencies                
Stockholders' deficit:                
Undesignated preferred stock, $0.01 par value - 10,000,000 shares authorized;
  no shares issued or outstanding at September 30, 2018 and December 31, 2017		     —       —  
Common stock, $0.01 par value - 280,000,000 shares authorized, 159,497,573
  and 119,053,414 shares issued and outstanding at September 30, 2018 and
  December 31, 2017, respectively		     1,594       1,192  
Additional paid-in capital     2,723,232       2,638,992  
Accumulated other comprehensive loss     (18 )     (18 )
Accumulated deficit     (2,930,249 )     (2,854,898 )
Total stockholders' deficit     (205,441 )     (214,732 )
Total liabilities and stockholders' deficit   $ 45,356     $ 84,575  
                 

Company Contact:
Rose Alinaya
SVP, Investor Relations and Treasury
818-661-5000
ir@mannkindcorp.com

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Source: MannKind