mnkd-10q_20190930.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 .

Commission file number: 000-50865

 

MannKind Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

13-3607736

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

30930 Russell Ranch Road, Suite 300

Westlake Village, California

91362

(Address of principal executive offices)

(Zip Code)

(818) 661-5000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

MNKD

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes      No  

As of October 31, 2019, there were 206,408,240 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

 

 


 

MANNKIND CORPORATION

Form 10-Q

For the Quarterly Period Ended September 30, 2019

TABLE OF CONTENTS

 

 

Page

PART I: FINANCIAL INFORMATION

2

 

 

Item 1. Financial Statements (Unaudited)

2

Condensed Consolidated Balance Sheets: September 30, 2019 and December 31, 2018

2

Condensed Consolidated Statements of Operations: Three and nine months ended September 30, 2019 and 2018

3

Condensed Consolidated Statements of Comprehensive Loss: Three and nine months ended September 30, 2019 and 2018

4

Condensed Consolidated Statements of Stockholders’ Deficit: Three and nine months ended September 30, 2019 and 2018

5

Condensed Consolidated Statements of Cash Flows: Nine months ended September 30, 2019 and 2018

7

Notes to Condensed Consolidated Financial Statements

8

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

35

Item 4. Controls and Procedures

36

 

 

PART II: OTHER INFORMATION

37

 

 

Item 1. Legal Proceedings

37

Item 1A. Risk Factors

37

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

61

Item 3. Defaults Upon Senior Securities

61

Item 4. Mine Safety Disclosures

61

Item 5. Other Information

61

Item 6. Exhibits

62

 

 

SIGNATURES

65

 

1


 

PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

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

 

 

See notes to condensed consolidated financial statements.

2


 

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

 

 

See notes to condensed consolidated financial statements.

3


 

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

 

 

Three Months Ended September 30,

 

 

Nine Months Ended September 30,

 

 

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss

 

$

(10,370

)

 

$

(24,168

)

 

$

(37,640

)

 

$

(77,224

)

Other comprehensive income (loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation gain

 

 

(1

)

 

 

 

 

 

(1

)

 

 

(1

)

Comprehensive loss

 

$

(10,371

)

 

$

(24,168

)

 

$

(37,641

)

 

$

(77,225

)

 

See notes to condensed consolidated financial statements.

 

4


 

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

(In thousands, except per share data)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

BALANCE, JANUARY 1, 2018

 

 

119,053

 

 

$

1,191

 

 

$

2,638,992

 

 

$

(18

)

 

$

(2,854,898

)

 

$

(214,733

)

Adjustment to adopt ASU 2016-09

 

 

 

 

 

 

 

 

 

 

 

 

1,873

 

 

 

1,873

 

Issuance of common stock from the release of restricted

   stock units

 

60

 

 

 

1

 

 

 

(82

)

 

 

 

 

 

 

(81

)

Issuance of common stock under Employee Stock

   Purchase Plan

 

137

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

Stock-based compensation expense

 

 

 

 

 

 

1,943

 

 

 

 

 

 

 

1,943

 

Issuance of common stock pursuant to conversion of

   Facility Financing Obligation

 

 

3,549

 

 

 

35

 

 

 

9,372

 

 

 

 

 

 

 

9,407

 

Issuance of stock pursuant to conversion of former

   Related Party Notes

 

 

3,000

 

 

 

30

 

 

 

8,130

 

 

 

 

 

 

8,160

 

Cumulative translation gain

 

 

 

 

 

 

 

 

3

 

 

 

 

 

3

 

Amortization of shelf fees

 

 

 

 

 

 

(5

)

 

 

 

 

 

 

(5

)

Issuance of common stock in at-the-market offering

 

214

 

 

 

2

 

 

 

632

 

 

 

 

 

 

 

634

 

Issuance costs associated with at-the-market offering

 

 

 

 

 

 

(25

)

 

 

 

 

 

 

(25

)

Net loss

 

 

 

 

 

 

 

 

 

 

(30,385

)

 

 

(30,385

)

BALANCE, MARCH 31, 2018

 

 

126,013

 

 

$

1,260

 

 

$

2,658,957

 

 

$

(15

)

 

$

(2,883,410

)

 

$

(223,208

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock from the release of restricted

   stock units

 

 

108

 

 

 

1

 

 

 

(105

)

 

 

 

 

 

 

 

 

(104

)

Exercise of Stock Options

 

 

3

 

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

 

 

2

 

Stock-based compensation expense

 

 

 

 

 

 

2,209

 

 

 

 

 

 

 

2,209

 

Issuance of common stock pursuant to conversion of

   Facility Financing Obligation

 

 

3,061

 

 

 

31

 

 

 

5,969

 

 

 

 

 

 

 

6,000

 

Issuance of common stock pursuant to conversion of

   Senior Convertible Notes

 

 

2,250

 

 

 

22

 

 

 

4,420

 

 

 

 

 

 

 

4,442

 

Cumulative translation loss

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

(3

)

Amortization of shelf fees

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

(7

)

Issuance of common stock under Market Price Stock

   Purchase Plan

 

 

184

 

 

 

2

 

 

 

333

 

 

 

 

 

 

 

335

 

Issuance of common stock in direct placement

 

 

 

 

 

 

 

 

 

27,860

 

 

 

 

 

 

 

27,860

 

Issuance costs associated with direct placement

 

 

14,000

 

 

 

140

 

 

 

(1,610

)

 

 

 

 

 

 

(1,470

)

Net loss

 

 

 

 

 

 

 

 

 

 

(22,675

)

 

 

(22,675

)

BALANCE, JUNE 30, 2018

 

 

145,619

 

 

$

1,456

 

 

$

2,698,028

 

 

$

(18

)

 

$

(2,906,085

)

 

$

(206,619

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of Stock Options

 

 

2

 

 

 

 

 

 

2

 

 

 

 

 

 

 

 

 

2

 

Issuance of common stock under Employee Stock

   Purchase Plan

 

 

263

 

 

 

2

 

 

 

341

 

 

 

 

 

 

 

 

 

343

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,562

 

 

 

 

 

 

 

 

 

1,562

 

Issuance of common stock pursuant to conversion of

   Facility Financing Obligation

 

 

13,117

 

 

 

131

 

 

 

22,590

 

 

 

 

 

 

 

 

 

22,721

 

Issuance of common shares from the release of restricted

   stock units

 

 

20

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Issuance of common stock pursuant to conversion of

   Senior Convertible Notes

 

 

476

 

 

 

5

 

 

 

533

 

 

 

 

 

 

 

 

 

538

 

Issuance of common stock in at-the-market offering

 

 

 

 

 

 

 

 

183

 

 

 

 

 

 

 

 

 

183

 

Issuance costs associated with at-the-market offering

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

 

 

 

(7

)

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(24,164

)

 

 

(24,164

)

BALANCE, SEPTEMBER 30, 2018

 

 

159,497

 

 

$

1,594

 

 

$

2,723,232

 

 

$

(18

)

 

$

(2,930,249

)

 

$

(205,441

)

 

5


 

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

(In thousands, except per share data)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

BALANCE, JANUARY 1, 2019

 

 

187,030

 

 

$

1,870

 

 

$

2,763,067

 

 

$

(19

)

 

$

(2,940,000

)

 

$

(175,082

)

Exercise of stock options

 

3

 

 

 

 

 

3

 

 

 

 

 

 

 

3

 

Issuance of common stock from the release of restricted

   stock units

 

63

 

 

1

 

 

 

(2

)

 

 

 

 

 

 

(1

)

Issuance of common stock under Employee Stock

   Purchase Plan

 

296

 

 

3

 

 

 

314

 

 

 

 

 

 

 

317

 

Stock-based compensation expense

 

 

 

 

 

 

1,104

 

 

 

 

 

 

 

1,104

 

Issuance of common stock pursuant to conversion of

   Senior Convertible Notes

 

386

 

 

4

 

 

 

534

 

 

 

 

 

 

 

538

 

Net loss

 

 

 

 

 

 

 

 

 

 

(14,883

)

 

 

(14,883

)

BALANCE, MARCH 31, 2019

 

 

187,778

 

 

$

1,878

 

 

$

2,765,020

 

 

$

(19

)

 

$

(2,954,883

)

 

$

(188,004

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

14

 

 

 

 

 

15

 

 

 

 

 

 

 

15

 

Issuance of common stock from the release of

   restricted stock units

 

 

87

 

 

 

1

 

 

 

(1

)

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

2,568

 

 

 

 

 

 

 

2,568

 

Issuance of common stock in at-the-market offering

 

 

1,568

 

 

 

15

 

 

 

1,835

 

 

 

 

 

 

 

1,850

 

Issuance costs associated with at-the-market placement

 

 

 

 

 

 

(41

)

 

 

 

 

 

 

(41

)

Net loss

 

 

 

 

 

 

 

 

 

 

(12,387

)

 

 

(12,387

)

BALANCE, JUNE 30, 2019

 

 

189,447

 

 

$

1,894

 

 

$

2,769,396

 

 

$

(19

)

 

$

(2,967,270

)

 

$

(195,999

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

29

 

 

 

 

 

31

 

 

 

 

 

 

$

31

 

Issuance of common stock from the release of restricted

   stock units

 

 

547

 

 

 

6

 

 

 

(6

)

 

 

 

 

 

 

 

Issuance of common stock under Employee Stock

   Purchase Plan

 

 

356

 

 

 

4

 

 

 

335

 

 

 

 

 

 

 

339

 

Stock-based compensation expense

 

 

 

 

 

 

 

1,640

 

 

 

 

 

 

 

1,640

 

Issuance of common stock pursuant to conversion of

   Senior Convertible Notes

 

 

4,525

 

 

 

45

 

 

 

4,992

 

 

 

 

 

 

 

5,037

 

Issuance of common stock pursuant to conversion of

   Facility Financing Obligation

 

 

4,193

 

 

 

42

 

 

 

4,533

 

 

 

 

 

 

 

4,575

 

Issuance of common stock pursuant to

   conversion of Promissory Notes

 

 

7,143

 

 

 

71

 

 

 

7,929

 

 

 

 

 

 

 

8,000

 

Issuance of common stock in at-the-market offering

 

 

168

 

 

 

2

 

 

 

186

 

 

 

 

 

 

 

188

 

Issuance of warrants pursuant to Credit facility

 

 

 

 

 

 

1,854

 

 

 

 

 

 

 

1,854

 

Net loss

 

 

 

 

 

 

 

 

 

(1

)

 

 

(10,370

)

 

 

(10,371

)

BALANCE, SEPTEMBER 30, 2019

 

 

206,408

 

 

$

2,064

 

 

$

2,790,890

 

 

$

(20

)

 

$

(2,977,640

)

 

$

(184,706

)

 

See notes to condensed consolidated financial statements.  

6


 

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

 

 

Nine Months Ended September 30,

 

 

 

2019