MannKind Corporation Reports 2019 Fourth Quarter and Full Year Financial Results

Conference Call to Begin Today at 9:00 AM ET
  • 2019 Total Revenue of $63.0 million

° 2019 Afrezza Net Revenue of $25.3 million; +46% vs. 2018
° 2019 Collaborations and Services Revenue of $37.7 million; +257% vs. 2018

  • 4Q 2019 Total Revenue of $16.0 million

° 4Q 2019 Afrezza Net Revenue of $7.8 million; +35% vs. 4Q 2018

▪ 4Q 2019 Afrezza Net Revenue grew 22% vs. 3Q 2019
▪ 4Q 2019 Afrezza Gross Profit $3.1 million; 40% Gross Margin

° 4Q 2019 Collaborations and Services Revenue of $8.2 million; -20% vs. 4Q 2018

  • $50.2 million of Cash, Cash Equivalents, Restricted Cash, and Short-term Investments at December 31, 2019

WESTLAKE VILLAGE, Calif., Feb. 25, 2020 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) today reported financial results for the fourth quarter and full year ended December 31, 2019.

“We ended 2019 on a strong note with fourth quarter 2019 Afrezza net revenue of $7.8 million, our best quarter to date,” said Michael Castagna, Chief Executive Officer of MannKind Corporation. He also noted, “Our collaboration with United Therapeutics on TreT continues to make progress along the clinical and commercial pathways that are expected to set up a filing with the FDA within 12 months.”

Fourth Quarter 2019 Results

Total revenues were $16.0 million for the fourth quarter of 2019, reflecting Afrezza net revenue of $7.8 million and collaborations and services revenue of $8.2 million. Afrezza net revenue increased 35% compared to $5.7 million in the fourth quarter of 2018, primarily driven by higher product demand and price.  Collaborations and services revenue decreased $2.1 million compared to the fourth quarter of 2018, primarily due to lower revenue from the United Therapeutics research agreement, which was substantially completed by the second quarter of 2019.

On a GAAP basis, Afrezza gross profit was $3.1 million for the fourth quarter of 2019 compared to $0.7 million in the same period in 2018.  Afrezza cost of goods sold for the fourth quarter of 2018 included a fee of $2.0 million recorded in connection with the amendment of our insulin supply agreement with Amphastar. As a result, on a non-GAAP basis, gross profit was $2.7 million or 48% gross margin for the fourth quarter of 2018, compared to a GAAP basis gross margin of 40% for the fourth quarter of 2019.

Research and development (R&D) expenses for the fourth quarter of 2019 were $2.0 million compared to $1.1 million for the fourth quarter of 2018. This 82% increase was primarily attributable to an increase of $0.6 million in personnel costs associated with the United Therapeutics research agreement, which was classified as a cost of collaborations and services revenue in 2018, and to an increase of $0.3 million in maintenance costs for our research facility in Danbury, Connecticut.

Selling, general and administrative (SG&A) expenses for the fourth quarter of 2019 were $15.7 million compared to $18.0 million for the fourth quarter of 2018. This decrease of $2.3 million, or 13%, was primarily attributable to a $1.7 million decrease in personnel related costs and a $1.1 million decrease in Afrezza marketing costs, partially offset by an increase of $0.5 million in consulting and professional services costs.

Interest expense on debt for the fourth quarter of 2019 was $2.3 million compared to $1.7 million for the fourth quarter of 2018. This $0.6 million increase, or 35%, was primarily attributable to the net increase in our debt balance as a result of our debt restructuring in the third quarter of 2019.

The net loss for the fourth quarter of 2019 was $14.3 million, or $0.07 per share compared to a $9.8 million net loss in the fourth quarter of 2018 or $0.06 per share. The increase in the net loss of $4.5 million was primarily the result of an increased loss on foreign currency translation of $4.0 million associated with our insulin supply agreement denominated in Euros and of an increase of $0.6 million in interest expense.

Twelve Months Ended December 31, 2019 

Total revenues were $63.0 million for the year ended December 31, 2019, reflecting Afrezza net revenue of $25.3 million and collaborations and services revenue of $37.7 million. Afrezza net revenue increased 46% compared to $17.3 million for the year ended December 31, 2018, primarily due to higher product demand, the first sale of Afrezza to our marketing partner in Brazil (Biomm), price increases as well as a more favorable mix of Afrezza cartridges. Collaborations and services revenue increased $27.2 million compared to the full year ended December 31, 2018, which was primarily attributed to the licensing and research agreements with United Therapeutics, both of which began in the fourth quarter of 2018.

On a GAAP basis, Afrezza gross profit was $5.2 million for the year ended December 31, 2019, an improvement of $7.3 million or 347% compared to a gross loss of $2.1 million in the same period in 2018, primarily due to an increase of $8.0 million in net revenue and a $2.2 million decrease in inventory write-offs, partially offset by increased costs due to higher sales and an increase of $0.8 million in fees paid to Amphastar for amendments to our insulin supply agreement. As a result, on a non-GAAP basis, gross profit was $8.0 million, or 32%, for the year ended December 31, 2019 compared to a gross loss of $0.1 million, or 1%, for the full year ended December 31, 2018.

R&D expenses for the year ended December 31, 2019 were $6.9 million compared to $8.7 million for the year ended December 31, 2018. This decrease of $1.8 million, or 21%, was primarily attributable to a $1.7 million decrease in personnel related costs and a $0.9 million decrease in clinical trial spending, partially offset by increased expenses of $0.2 million related to the development of our BluHale inhalation profiling apparatus and increased facility maintenance and equipment repair costs of $0.5 million.

SG&A expenses for the year ended December 31, 2019 were $74.7 million compared to $79.7 million for the year ended December 31, 2018. This decrease of $5.0 million, or 6%, was primarily attributable to a $6.6 million decrease in personnel and employee related costs, decreased consulting costs of $2.5 million and a $1.2 million decrease in stock-based compensation costs, which was partially offset by a $5.6 million increase in costs for television advertising for Afrezza.

Interest income increased by $0.5 million, or 99%, for the year ended December 31, 2019 compared to the year ended December 31, 2018, primarily due to a higher average balance on money market funds and short-term investments.

Interest expense on debt for the year ended December 31, 2019 was $10.9 million compared to $9.4 million for the year ended December 31, 2018. This $1.5 million increase was primarily attributable to a $3.4 million charge realized as a result of achieving a sales milestone in the third quarter of 2019 under our milestone agreement with Deerfield, partially offset by lower interest as a result of the repayment of the Deerfield credit facility.  

The net loss for the year ended December 31, 2019 was $51.9 million, or $0.27 per share, compared to $87.0 million net loss for the year ended December 31, 2018, or $0.60 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 December 31, 2019 was $50.2 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 December 31,  
    2019     2018     $ Change     % Change  
Net revenue — Afrezza   $ 7,761     $ 5,734     $ 2,027       35 %
Less cost of goods sold     (4,632 )     (4,986 )   $ (354 )     (7 %)
GAAP gross profit  — Afrezza     3,129       748     $ 2,381       318 %
Exclude Amphastar amendment fee           2,000     $ (2,000 )     (100 %)
Non-GAAP gross profit  — Afrezza   $ 3,129     $ 2,748     $ 381       14 %
Non-GAAP gross margin     40 %     48 %                
                                 
    Twelve Months Ended December 31,  
    2019     2018     $ Change     % Change  
Net revenue — Afrezza   $ 25,304     $ 17,276     $ 8,028       46 %
Less cost of goods sold     (20,078 )     (19,392 )   $ 686       4 %
GAAP gross profit (loss)  — Afrezza     5,226       (2,116 )   $ 7,342       347 %
Exclude Amphastar amendment fee     2,750       2,000     $ 750       38 %
Non-GAAP gross profit (loss)  — Afrezza   $ 7,976     $ (116 )   $ 8,092       6,976 %
Non-GAAP gross margin     32 %     (1 %)                


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 (800) 289-0438 or (323) 794-2423 and use the participant passcode: 1233728. 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: 1233728. 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, 2019 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 December 31,     Twelve Months Ended December 31,  
    2019     2018     2019     2018  
                                 
Revenues:                                
Net revenue — commercial product sales   $ 7,761     $ 5,734     $ 25,304     $ 17,276  
Revenue — collaborations and services     8,232       10,351       37,734       10,583  
Revenue — other           (53 )            
Total revenues     15,993       16,032       63,038       27,859  
Expenses:                                
Cost of goods sold     4,632       4,986       20,078       19,392  
Cost of revenue — collaborations and services     2,389       1,077       7,901       1,077  
Research and development     2,021       1,084       6,900       8,737  
Selling, general and administrative     15,721       17,976       74,669       79,716  
Loss (gain) on foreign currency translation     2,582       (1,361 )     (1,913 )     (4,468 )
Total expenses     27,345       23,762       107,635       104,454  
Loss from operations     (11,352 )     (7,730 )     (44,597 )     (76,595 )
Other (expense) income:                                
Interest income     204       196       997       501  
Interest expense on notes     (1,021 )     (620 )     (6,304 )     (5,116 )
Interest expense on promissory notes     (1,251 )     (1,089 )     (4,602 )     (4,323 )
Gain (loss) on extinguishment of debt                 3,529       (765 )
Other expense     (843 )     (508 )     (926 )     (437 )
Total other expense     (2,911 )     (2,021 )     (7,306 )     (10,140 )
Loss before income tax expense     (14,263 )     (9,751 )     (51,903 )     (86,735 )
Provision for income taxes                       240  
Net loss   $ (14,263 )   $ (9,751 )   $ (51,903 )   $ (86,975 )
Net loss per share — basic and diluted   $ (0.07 )   $ (0.06 )   $ (0.27 )   $ (0.60 )
Shares used to compute net loss per share — basic and diluted     206,689       161,397       195,584       144,136  


MANNKIND CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands, except per share data)

    December 31,  
    2019     2018  
             
    (In thousands except per share data)  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 29,906     $ 71,157  
Restricted cash     316       527  
Short-term investments     19,978        
Accounts receivable, net     3,513       4,017  
Inventory     4,155       3,597  
Prepaid expenses and other current assets     2,889       2,556  
Total current assets     60,757       81,854  
Property and equipment, net     26,778       25,602  
Other assets     6,190       249  
Total assets   $ 93,725     $ 107,705  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
Accounts payable   $ 4,789     $ 5,379  
Accrued expenses and other current liabilities     15,904       15,022  
Facility financing obligation           11,298  
Short-term note payable     5,028        
Deferred revenue — current     32,503       36,885  
Recognized loss on purchase commitments — current     7,394       6,657  
Total current liabilities     65,618       75,241  
Promissory notes     70,020       72,089  
Accrued interest — promissory notes     2,002       6,835  
Long-term Midcap credit facility     38,851        
Senior convertible notes     5,000       19,099  
Recognized loss on purchase commitments — long term     84,639       91,642  
Operating lease liability     2,514        
Deferred revenue  — long term     8,344       10,680  
Milestone rights liability     7,263       7,201  
Total liabilities     284,251       282,787  
Commitments and contingencies                
Stockholders' deficit:                
Undesignated preferred stock, $0.01 par value — 10,000,000 shares authorized;
  no shares issued or outstanding at December 31, 2019 and 2018
           
Common stock, $0.01 par value — 280,000,000 shares authorized,
  211,787,573 and 187,029,967 shares issued and outstanding at December 31, 2019
  and 2018, respectively
    2,118       1,870  
Additional paid-in capital     2,799,278       2,763,067  
Accumulated other comprehensive loss     (19 )     (19 )
Accumulated deficit     (2,991,903 )     (2,940,000 )
Total stockholders' deficit     (190,526 )     (175,082 )
Total liabilities and stockholders' deficit   $ 93,725     $ 107,705  

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