MannKind Corporation Reports 2016 Fourth Quarter and Full Year Financial Results

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Conference Call to Begin Today at 5:00 PM ET

VALENCIA, Calif., March 16, 2017 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD) today reported financial results for the fourth quarter and full year ended December 31, 2016.  Key results include:

  • Total revenue for the quarter of $12.4 million, including $10.2 million from insulin sales to Sanofi, and net income for the fourth quarter of $54.0 million including $72.0 million from the extinguishment of debt owed to Sanofi
  • Total revenue for 2016 of $174.8 million, including $172.0 million in revenue previously deferred from the collaboration with Sanofi, and net income for 2016 of $125.7 million, compared with a net loss of $368.4 million for 2015
  • Finished 2016 with $22.9 million of cash and cash equivalents, not including $30.6 million subsequently received from Sanofi and $16.7 million subsequently received from sale of surplus building

Fourth Quarter Results

For the fourth quarter of 2016, total net revenue of $12.4 million was comprised primarily of $10.2 million from the sale of bulk insulin to Sanofi under the terms of the settlement agreement, in addition to $1.3 million of recognized Afrezza product sales as dispensed to patients.  As of December 31, 2016, deferred net revenue included $1.7 million of Afrezza product shipped to the third-party logistics provider and wholesale distributors, but not yet recognized as revenue.

Research and development expenses were $1.6 million for the fourth quarter of 2016 compared to $6.2 million in the fourth quarter of 2015, a decrease of 74.2%, primarily due to $1.9 million in decreased collaboration development work and $1.6 million in decreased consulting support for research and development projects.

Selling, general and administrative expenses were $15.3 million for the fourth quarter of 2016 compared to $8.3 million for the same quarter of 2015, an increase of 84.3%, primarily due to $8.8 million in sales and marketing expense associated with the commercialization of Afrezza, offset by a $1.8 million decrease in general and administrative costs, mainly due to the effects of the 2015 and 2016 reductions in force.

Full Year 2016 Results

Total net revenue for 2016 of $174.8 million is comprised primarily of $172.0 million net revenue previously deferred from the collaboration with Sanofi.  Net revenue from commercial product sales by the Company was $1.9 million, after giving effect to gross to net adjustments on gross revenue of $2.7 million of Afrezza product dispensed to patients.  Commercial product sales commenced in August 2016, after Afrezza transitioned from Sanofi to MannKind.  During 2015, there was no recognition of revenue or cost of revenue related to the collaboration.

Research and development costs for 2016 were $14.9 million compared to $29.7 million for 2015, a decrease of 49.8%, primarily due to $6.2 million of reduced expenses associated with the reductions in force, $3.3 million of decreased facility spending, $3.1 million in lower project costs, and $2.1 million of reduced clinical trial costs.  These decreases were partially offset by the FDA filing fee of $1.0 million for the supplemental new drug application submitted in 2016.

Selling, general and administrative expenses for 2016 were $46.9 million compared to $41.0 million for 2015, an increase of 14.4%, primarily due to increased costs for the sales and marketing of Afrezza, offset by decreased general and administrative expenses.  Sales and marketing expenses were $19.8 million for 2016 compared to $1.6 million for 2015. General and administrative expenses for 2016 were $27.1 million compared to $39.4 million in 2015, a decrease of 31.2%, primarily due to decreased costs associated with the effects of the reductions in force of $9.0 million, $1.7 million in decreased professional fees and $1.7 million in reduced facility spending.

The $72.0 million gain from extinguishment of debt in 2016 resulted from the forgiveness of the full outstanding loan balance of the Sanofi Loan Facility as part of the settlement agreement with Sanofi.

Net income for 2016 was $125.7 million, or $1.37 net income per share, compared to the net loss of $368.4 million, or $4.54 net loss per share in 2015.

On March 1, 2017, following stockholder approval of the Reverse Split Proposal, the Company's board of directors approved a reverse stock split of the Company's common stock at a ratio of 1-for-5. On March 1, 2017, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment of its Amended and Restated Certificate to (i) implement a one-for-five reverse stock split of the Company's outstanding common stock and (ii) reduce the authorized number of shares of the Company's common stock from 700 million to 140 million shares.  As a result, all common stock share amounts included in this release were retroactively reduced by a factor of five and all common stock per share amounts were increased by a factor of five.

Cash and cash equivalents at December 31, 2016 were $22.9 million, compared to $35.5 million at the end of the third quarter of 2016. During the fourth quarter of 2016, cash receipts were $10.2 million from the sale of insulin to Sanofi, $4.8 million from shipments of Afrezza, $2.2 million from sales of insulin to a third party and $1.1 million from the collaboration with Receptor. Currently, $30.1 million remains available to borrow under the amended loan arrangement with The Mann Group.

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 "Q4 2016 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: 44096370.

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 6370#.  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
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except per share amounts)
             
  Three months ended
December 31,
 Twelve months ended
December 31,
  2016 2015 2016 2015
Revenue:            
Net revenue — collaboration $ 10,184  $   $ 171,965  $  
Net revenue — commercial product sales   1,322      —    1,895      — 
Revenue — bulk insulin sales   898      —    898      — 
Total net revenue   12,404      —    174,758      — 
Expenses:            
Cost of revenue - collaboration   10,230      —    32,971      — 
Cost of goods sold   1,553    49,057    17,121    64,745 
Research and development   1,559    6,218    14,917    29,674 
Selling, general and administrative   15,333    8,311    46,928    40,960 
Property and equipment impairment     1,259    140,412      1,259    140,412 
(Gain) loss on foreign currency translation   (3,433)   2,697    (3,433)   2,697 
(Gain) loss on purchase commitments   (2,265)   66,167    (2,265)   66,167 
Total expenses   24,236    272,862    107,498    344,655 
Income (loss) from operations   (11,832)   (272,862)   67,260    (344,655
Other income (expense):            
Change in fair value of warrant liability   (2,510)     —    5,369      — 
Interest income   15    10    85    18 
Interest expense on notes   (3,010   (3,331   (15,576   (21,231)
Interest expense on note payable to principal stockholder     (729)   (729)   (2,901   (2,894)
Gain (loss) on extinguishment of debt   72,024      —    72,024    (1,049)
Other income (expense)   18    (106)   (597)   1,366 
Net income (loss) $ 53,976  $ (277,018 $ 125,664  $ (368,445)
Net income (loss) per share — basic $   0.56  $   (3.30) $   1.37  $   (4.54)
Net income (loss) per share — diluted $ 0.56  $ (3.30 $ 1.36  $ (4.54
Shares used to compute basic net income (loss) per share   95,676    83,862    92,053    81,233 
Shares used to compute diluted net income (loss) per share   96,510    83,862    92,085    81,233 
             


MannKind Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)
         
   December 31,
2016
  December 31,
2015
Assets        
Current assets:        
Cash and cash equivalents  $22,895   $59,074 
Accounts receivable   302     
Receivable from Sanofi   30,557    23 
Inventory   2,331     
Asset held for sale   16,730     
Deferred costs from commercial product sales   309     
Deferred costs from collaboration       13,539 
Prepaid expenses and other current assets   4,364    4,018 
Total current assets   77,488    76,654 
         
Property and equipment — net   28,927    48,749 
Other assets   648    1,009 
Total assets  $107,063   $126,412 
         
Liabilities and Stockholders' Deficit        
Current liabilities        
Accounts payable  $3,263   $15,599 
Accrued expenses and other current liabilities   7,937    7,929 
Facility financing obligation   71,339    74,582 
Deferred revenue - net   3,419     
Deferred payments from collaboration   1,000    140,231 
Deferred sales from collaboration       17,503 
Recognized loss on purchase commitments - current   5,093    12,475 
Total current liabilities   92,051    268,319 
         
Note payable to principal stockholder   49,521    49,521 
Accrued interest — note payable to principal stockholder   9,281    6,380 
Senior convertible notes   27,635    27,613 
Sanofi loan facility and loss share obligation       62,371 
Recognized loss on purchase commitments — long term   95,942    53,692 
Warrant liability   7,381     
Milestone rights liability   8,845    8,845 
Total liabilities   290,656    476,741 
Total stockholders' deficit   (183,593)   (350,329)
Total liabilities and stockholders' deficit  $107,063   $126,412 
         


Company Contact:

Rose Alinaya
SVP, Finance
661-775-5300
ralinaya@mannkindcorp.com

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