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 Fourth Quarter and Year-End 2018 Earnings Call

02/26/19
PDF Version

Conference Call to Begin Today at 9:00 AM ET

  • 4Q 2018 Total Revenues were $16.0 million; 254% growth vs. 4Q 2017
    • 4Q 2018 Afrezza Net Revenue was $5.7 million; 28% growth vs. 4Q 2017 on a GAAP basis and 86% when adjusted for a one-time change in estimate recognized in 4Q 2017
    • 4Q 2018 Collaborations and Services Revenue was $10.3 million
  • 2018 Total Revenues were $27.9 million; 137% growth vs. 2017
    • 2018 Afrezza Net Revenue was $17.3 million; 88% growth vs. 2017
    • 2018 Collaborations and Services Revenue was $10.6 million
  • Ended 2018 with $71.7 million in cash, cash equivalents and restricted cash
  • Received $57.2 million in 2018 from license and research agreements with United Therapeutics and Cipla 
  • Achieved first-ever quarterly Afrezza gross profit in 4Q 2018
  • Reduced insulin purchase commitments for 2018 and 2019 by approximately $11.5 million

WESTLAKE VILLAGE, Calif., Feb. 26, 2019 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) today reported financial results for the fourth quarter and full year ended December 31, 2018.

Fourth Quarter Results

For the fourth quarter of 2018, total revenues were $16.0 million, reflecting Afrezza net revenue of $5.7 million and collaboration and services revenue of $10.3 million.  Afrezza net revenue increased 28% on a GAAP basis compared to $4.5 million for the fourth quarter of 2017. In the fourth quarter of 2017, we recognized a $1.4 million change in estimate to Afrezza net revenue; when this adjustment is excluded, Afrezza net revenue increased 86% (non-GAAP) compared to the fourth quarter of 2017, primarily driven by higher product demand and a more favorable mix of cartridges. Collaborations and services revenue increased $10.2 million primarily attributable to the United Therapeutics licensing and research agreements.

Afrezza cost of goods sold (COGS) was $5.0 million for the fourth quarter of both 2018 and 2017.  Afrezza COGS in the fourth quarter of 2018 reflected a one-time charge of $2.0 million related to an amendment fee associated with our insulin supply agreement, offset by lower inventory write-offs in 2018 of $0.8 million and $0.7 million lower spending associated with manufacturing absorption. Afrezza gross profit was $0.7 million for the fourth quarter, the first quarterly gross profit recognized from Afrezza sales.  When the one-time charge of $2.0 million related to the amendment fee is excluded, Afrezza gross profit was $2.7 million (non-GAAP) for the fourth quarter.

Research and development (R&D) expenses for the fourth quarter of 2018 were $1.1 million compared to $3.5 million for the fourth quarter of 2017. The decrease of $2.4 million was primarily due to $0.8 million associated with the United Therapeutics research agreement, which was classified as a cost of collaborations and services revenue, and a decrease in spending of $0.8 million related to clinical trials.

Selling, general and administrative (SG&A) expenses were $18.0 million for the fourth quarter of 2018 compared to $23.3 million for the fourth quarter of 2017. The decrease of $5.3 million was primarily due to $5.0 million in selling expenses associated with our first direct-to-consumer television advertising campaign in the fourth quarter of 2017.

Interest expense on notes (facility financing obligation and senior convertible notes) was $0.6 million for the fourth quarter of 2018 compared to $2.1 million for the fourth quarter of 2017. The $1.5 million decrease was primarily due to a reduction in the debt principal balances.

The net loss for the fourth quarter of 2018 was $9.7 million, or $0.06 per share, compared to the $32.8 million net loss in the fourth quarter of 2017, or $0.28 per share.  The lower net loss is mainly attributable to an increase in total revenues of $11.5 million and a decrease in total expenses of $9.6 million.

Full Year 2018 Results

For the full year ended December 31, 2018, total revenues were $27.9 million, reflecting Afrezza net revenue of $17.3 million and collaborations and service revenue of $10.6 million.  Afrezza net revenue increased 88% compared to $9.2 million for the same period in 2017, primarily reflecting increased product demand and a more favorable mix of cartridges. Collaborations and services revenue increased $10.3 million primarily attributable to the United Therapeutics licensing and research agreements.

Afrezza COGS for the year ended December 31, 2018 was $19.4 million compared to $17.2 million for the year ended December 31, 2017.  The increase of $2.2 million was primarily attributable to an increase in costs associated with increased Afrezza sales and a one-time charge of $2.0 million related to an amendment fee associated with our insulin supply agreement, offset by a decrease of $0.8 million in inventory write-offs.

R&D expenses for the year ended December 31, 2018 were $8.7 million compared to $14.1 million for the same period in 2017. This $5.4 million decrease was primarily attributable to lower clinical trials expenses of $2.2 million, a $1.7 million decrease in salary-related expenses and a $0.8 million decrease in research and development supply and services costs.

SG&A expenses were $79.7 million for the year ended December 31, 2018 compared to $75.0 million for the same period in 2017.  The $4.7 million increase was primarily due to an increase of $2.9 million in headcount-related expenses associated with commercial operations, an increase in spending of $1.7 million in our human resources, accounting, corporate communications, and office support departments, a $1.4 million increase in medical affairs support, a $1.3 million increase in stock-based compensation expense, and a one-time $1.1 million expense to transition corporate support functions from Connecticut to our headquarters in California, which were partially offset by a decrease in selling expenses of $4.7 million associated with our 2017 direct-to-consumer television advertising campaign.

Interest expense on notes (facility financing obligation and senior convertible notes) was $5.1 million for the year ended December 31, 2018 compared to $9.5 million for the same period in 2017. The $4.4 million decrease was primarily due to a reduction in the debt principal balances.

The net loss for the year ended December 31, 2018 was $87.0 million, or $0.60 per share, compared to $117.3 million for the year ended December 31, 2017, or $1.13 per share. The lower net loss is mainly attributable to an increase in Afrezza net revenue of $8.1 million, an increase in collaboration revenue of $10.3 million and a decrease in total expenses of $15.5 million.

“Our fourth quarter and full year 2018 results showed excellent progress in executing against our Afrezza growth plan and recognized for the first time revenues associated with our license and collaboration agreement with United Therapeutics,” said Michael Castagna, Chief Executive Officer of MannKind Corporation.  “The fourth quarter of last year was the first time we reported gross profit for Afrezza and we ended the year with a strong cash position thanks to the United Therapeutics deal and a public offering of common stock and warrants in December.”

Cash and Cash Equivalents

Cash, cash equivalents and restricted cash at December 31, 2018 was $71.7 million compared to $48.4 million at December 31, 2017.  The increase was primarily due to the net proceeds of $26.4 million from a second quarter registered direct offering of common stock and warrants and $37.5 million from a fourth quarter public offering of common stock and warrants, partially offset by the net cash used in operating activities of $37.7 million (inclusive of two payments from United Therapeutics totaling $55.0 million).

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.

($ in millions)          
Net Revenue - Afrezza 4Q 2017     Afrezza Gross Profit 4Q 2018  
GAAP 4Q 2017 Net Revenue - Afrezza $   4.5     Afrezza Net Revenue $   5.7  
Change in Estimate Recorded 4Q 2017     (1.4 )   Afrezza Cost of Goods Sold     (5.0 )
Non-GAAP 4Q 2017 Net Revenue - Afrezza $   3.1     GAAP Afrezza Gross Profit $   0.7  
         
         
Non-GAAP % Increase in 4Q 2018 Afrezza Net Revenue   Non-GAAP Afrezza Gross Profit 4Q 2018  
GAAP 4Q 2018 Net Revenue - Afrezza $   5.7     GAAP Afrezza Gross Profit $   0.7  
Non-GAAP 4Q 2017 Net Revenue - Afrezza $   3.1     Without One-Time Fee     2.0  
% Increase in 4Q 2018 Afrezza Net Revenue   86%     Non-GAAP Afrezza Gross Profit $   2.7  
                 

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 (888) 394-8218 or (323) 701-0225 and use the participant passcode: 7809405. 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: 7809405#. 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, 2018. 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
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands expect per share data)

  Three months ended December 31,     Twelve months ended December 31,  
  2018     2017     2018     2017  
Revenues:                              
Net revenue - commercial product sales $ 5,734     $ 4,466     $ 17,276     $ 9,192  
Revenue - collaborations and services   10,298       63       10,583       250  
Revenue - other   —       1       —       2,303  
Total revenues   16,032       4,530       27,859       11,745  
Expenses:                              
Cost of goods sold   4,996       5,018       19,402       17,228  
Cost of revenue - collaborations and services   1,077       —       1,077       —  
Research and development   1,083       3,507       8,737       14,118  
Selling, general and administrative   17,973       23,278       79,716       74,959  
Property and equipment impairment   —       —       —       203  
(Gain) loss on foreign currency translation   (1,361 )     1,564       (4,468 )     13,641  
Gain on purchase commitments   (10 )     —       (10 )     (215 )
Total expenses   23,758       33,367       104,454       119,934  
(Loss) income from operations   (7,726 )     (28,837 )     (76,595 )     (108,189 )
Other (expense) income:                              
Change in fair value of warrant liability   —       —       —       5,488  
Interest income   196       115       501       293  
Interest expense on notes   (620 )     (2,056 )   (5,116 )     (9,494 )
Interest expense on note payable to related party   (1,089 )     (1,174 )   (4,323 )     (3,782 )
(Loss) gain on extinguishment of debt   —       (781 )   (765 )     (1,611 )
Other income (expense)   (508 )     —       (437 )     13  
Total other (expense) income   (2,021 )     (3,896 )     (10,140 )     (9,093 ) 
 (Loss) income before income tax expense   (9,747 )     (32,733 )   (86,735 )     (117,282 )
Provision for income taxes   —       51       240       51  
Net (loss) income $ (9,747 )   $ (32,784 )   $ (86,975 )   $ (117,333 )
Net (loss) income per share - basic $ (0.06 )   $ (0.28 )   $ (0.60 )   $ (1.13 )
Net (loss) income per share - diluted $ (0.06 )   $ (0.28 )   $ (0.60 )   $ (1.13 )
Shares used to compute basic net (loss) income per share   161,397       116,451       144,136       104,245  
Shares used to compute diluted net (loss) income per share   161,397       116,451       144,136       104,245  
                               

MANNKIND CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands expect per share data)

    December 31,  
    2018     2017  
    (In thousands except per share data)  
ASSETS                
Current assets:                
Cash and cash equivalents   $ 71,157     $ 43,946  
Restricted cash     527       4,409  
Accounts receivable, net     4,017       2,789  
Inventory     3,597       2,657  
Deferred costs from commercial product sales     —       405  
Prepaid expenses and other current assets     2,556       3,010  
Total current assets     81,854       57,216  
Property and equipment, net     25,602       26,922  
Other assets     249       437  
Total assets   $ 107,705     $ 84,575  
                 
LIABILITIES AND STOCKHOLDERS' DEFICIT                
Current liabilities:                
Accounts payable   $ 5,379     $ 6,984  
Accrued expenses and other current liabilities     15,022       12,449  
Facility financing obligation     11,298       52,745  
Deferred revenue, net     —       3,038  
Deferred payments from collaborations - current     36,885       250  
Recognized loss on purchase commitments - current     6,657       12,131  
Total current liabilities     75,241       87,597  
Note payable to related party     72,089       79,666  
Accrued interest - note payable to related party     6,835       2,347  
Senior convertible notes     19,099       24,411  
Recognized loss on purchase commitments - long term     91,642       97,585  
Deferred payments from collaborations - long term     10,680       500  
Milestone rights liability     7,201       7,201  
Total liabilities     282,787       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 December 31, 2018 and 2017		     —       —  
Common stock, $0.01 par value - 280,000,000 shares authorized,
  187,029,967 and 119,053,414 shares issued and outstanding at December 31, 2018
  and 2017, respectively		     1,870       1,192  
Additional paid-in capital     2,763,067       2,638,992  
Accumulated other comprehensive loss     (19 )     (18 )
Accumulated deficit     (2,940,000 )     (2,854,898 )
Total stockholders' deficit     (175,082 )     (214,732 )
Total liabilities and stockholders' deficit   $ 107,705     $ 84,575  
                 

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

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Source: MannKind