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 2017 Fourth Quarter and Full Year Financial Results

02/27/18
PDF Version
Conference Call to Begin Today at 5:00 PM ET
  • Q4 and 2H 2017 Afrezza net revenue were $4.5 million (+238%) and $6.4 million (+240%) vs. 2016, respectively
  • Q4 and 2H 2017 net cash used in operating activities were $30.0 million and $53.3 million, respectively
  • Cash and Cash Equivalents were $43.9 million and Restricted Cash was $4.4 million at December 31, 2017   
  • Recapitalization plan gains momentum:
    • Raised $57.7 million (net) in a registered direct offering in Q4
    • Restructured $27.7 million principal amount of Senior Subordinated Convertible Notes due 2018 to extend the maturity date to October 2021, lower the conversion price to $5.15 and reduce outstanding principal by $4.0 million in exchange for the issuance of common stock
    • Restructured the Facility Financing Obligation by deferring $10.0 million principal amount due October 31, 2017 to January 15, 2018, and subsequently converting $8.8 million ($5.6 million in Q4; $3.2 million in January 2018) of such principal amount into common stock, with the maturity date for the remaining $1.2 million of principal extended to May 6, 2018; and allowing for additional debt to equity conversion at market prices subject to a conversion floor of $2.75 per share and a 10 million share cap
    • Increased the Company’s authorized shares from 140 million to 280 million
  • Treprostinil Technosphere® Investigational New Drug application filed with the U.S. FDA in January 2018
  • David M. Kendall, MD, a world renowned diabetes expert, joined MannKind as Chief Medical Officer in February 2018

WESTLAKE VILLAGE, Calif., Feb. 27, 2018 (GLOBE NEWSWIRE) -- MannKind Corporation(NASDAQ:MNKD) today reported financial results for the fourth quarter and full year ended December 31, 2017.

Fourth Quarter 2017 Results

For the fourth quarter of 2017, Afrezza net revenue was $4.5 million, an increase of 125% compared to the third quarter of 2017 and 238% compared to the fourth quarter of 2016.  Included in the fourth quarter net revenue is a favorable adjustment for a change in estimate of $1.4 million. The change in estimate relates to obtaining new and more comprehensive data regarding the inventory in the distribution channel – specifically inventory in the retail channel.  This data indicated that the amount of inventory in the distribution channel was less than had been previously estimated using syndicated prescription data.  As of December 31, 2017, the amount of Afrezza shipped to wholesale and retail channels, but not yet recognized as net revenue, was $3.0 million, the same amount as September 30, 2017. A reconciliation of gross to net revenues can be found in the Management’s Discussion and Analysis of Financial Condition and Results of Operations section of the form 10-K for the year ended December 31, 2017.

Cost of goods sold was $5.0 million in the fourth quarter of 2017 compared to $4.6 million in the third quarter of 2017 and $1.6 million in the fourth quarter of 2016, an increase of $0.4 million and $3.4 million respectively.  Cost of goods sold during these periods is greater than the associated product sales due to the under-utilization of our manufacturing facility.

Research and development expenses were $3.5 million in the fourth quarter of 2017 compared to $4.4 million in the third quarter of 2017.  The $0.9 million decrease was primarily due to a $0.6 million decrease in clinical study expenses and a $0.4 million decrease in compensation expenses.  Research and development expenses were $1.6 million in the fourth quarter of 2016, representing a period-over-period increase of $1.9 million which was primarily due to a $1.3 million increase in compensation costs, a $1.4 million increase in consultant and supply costs and a $0.3 million increase in facilities costs, all due to increased clinical studies, partially offset by a decrease of $1.0 million related to a one-time FDA submission fee for a label expansion incurred in 2016 that did not recur in 2017.

Selling, general and administrative (SG&A) expenses were $23.3 million for the fourth quarter of 2017 compared to $17.7 million for the third quarter of 2017.  The $5.6 million increase 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.  SG&A expenses in the fourth quarter of 2016 were $15.3 million representing a period-over-period increase of $8.0 million which was primarily due to the $5.0 million DTC TV campaign and growth in our commercial infrastructure.

The net loss for the fourth quarter of 2017 was $32.8 million, or $0.28 per share based on 116.5 million weighted average shares outstanding, compared to a $32.9 million net loss in the third quarter of 2017 or $0.31 per share based on 104.7 million weighted average shares outstanding.  During the fourth quarter of 2016, we had net income of $54.0 million, or $0.56 per share based on 95.7 million weighted average shares outstanding. The net income in the fourth quarter of 2016 included net collaboration revenue of $10.2 million related to our license and collaboration agreement with Sanofi and a $72.0 million gain from the extinguishment of debt owed to Sanofi pursuant to a settlement agreement.

Full Year 2017 Results

Due to the termination of the Sanofi license and collaboration agreement in early 2016 and our commencement of commercial activities for Afrezza in the third quarter of 2016, a comparative analysis for Afrezza product revenue and commercial support between the year ended December 31, 2017 and the prior year is not meaningful.

For the year ended December 31, 2017, total net revenue of $11.7 million was comprised of $9.2 million of Afrezza net revenue, $1.7 million from the net revenue of surplus bulk insulin to a third party, $0.6 million from the sale of certain oncology intellectual property, and $0.3 million from collaboration net revenue.

Research and development expenses were $14.1 million for the year ended December 31, 2017 compared to $14.9 million for the prior year. The $0.8 million decrease was primarily due to a $3.6 million decrease in research and development expenses associated with a reduction in workforce in 2016, and a one-time FDA submission fee for label expansion of $1.0 million incurred in 2016. These decreases were partially offset by a $2.5 million increase in clinical trial expenses, a $0.7 million increase in expenses incurred for the development of manufacturing improvements.

Selling, general and administrative expenses were $75.0 million for the year ended December 31, 2017 compared to $46.9 million for the prior year, an increase of $28.1 million primarily due to the creation of a commercial support infrastructure after termination of the Sanofi license and collaboration agreement. 

The loss on foreign currency translation is related to our purchase commitment for insulin which is denominated in Euros.  For the year ended December 31, 2017, the loss was $13.6 million as compared to a gain of $3.4 million in the prior year, a $17.1 million change due to the unfavorable movement of the U.S. dollar-Euro exchange rate.

The net loss for the year ended December 31, 2017 was $117.3 million, or $1.13 per share based on 104.2 million weighted average shares outstanding, compared to net income for the prior year of $125.7 million, or $1.37 per share based on 92.1 million weighted average shares outstanding. The net income for the prior year included net revenue – collaboration of $171.1 million and a gain on the extinguishment of debt of $72.0 million due to the recognition of previously deferred revenue following the termination of the Sanofi license and collaboration agreement.

Cash and Cash Equivalents

Cash and cash equivalents at December 31, 2017 increased to $43.9 million compared to $22.9 million at December 31, 2016, primarily due to cash inflows of $57.7 million of net proceeds from a registered direct offering of common stock, $0.5 million through sales under the at-the-market equity offering facility, $30.6 million received from Sanofi pursuant to a settlement agreement, $16.7 million from the sale of our Valencia, CA facility, $15.4 million from a net increase of debt, and cash received from revenue of $12.5 million offset in part by commercial and general corporate spending of $95.6 million. In addition to the $43.9 million in cash and cash equivalents, the Company had $4.4 million of restricted cash at December 31, 2017 of which $3.2 million was released in January 2018 following a conversion of Facility Financing Obligation debt to equity.  The net cash used in operating activities for the fourth quarter of 2017 was $30.0 million.

2H 2017 Results vs. Guidance

  • Afrezza gross revenue was $8.3 million for the six months ended December 31, 2017 compared with a range of $9-$14 million. 
  • Afrezza net revenue was $6.4 million for the six months ended December 31, 2017 compared with a range of $6-$10 million.
  • Net cash used in operating activities was $30.0 million in the fourth quarter 2017 and $23.3 million in the third quarter 2017 totaling $53.3 million compared with a range of $48-$56 million.

Conference Call

MannKind will host a conference call and presentation webcast to discuss these results today at 5:00 p.m. Eastern Time. To participate in the live call by telephone, please dial (888) 771-4371 or (847) 585-4405 and use the participant passcode: 46307898. Those interested in listening to the conference call live via the Internet may do so by visiting the Company’s website at www.mannkindcorp.com.

A telephone replay of the call 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: 4630  7898#. 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 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 
Condensed Consolidated Statements of Operations 
(Audited) 
(In thousands, except per share amounts)
  
  Three months ended
December 31,		   Twelve months ended
December 31, 
  2017     2016     2017     2016
Revenues:                            
Net revenue – commercial product sales $ 4,466     $ 1,322      $ 9,192     $ 1,895   
Net revenue – collaboration   63       10,184        250       171,965   
Revenue – other   1       898        2,303       898   
                             
Total net revenues   4,530       12,404        11,745       174,758   
                             
Expenses:                            
Cost of goods sold   5,018       1,553       17,228       17,121  
Cost of revenue - collaboration   --       10,230       --       32,971  
Research and development   3,507       1,559       14,118       14,917  
Selling, general and administrative   23,278       15,333       74,959       46,928  
Property and equipment impairment   --       1,259       203       1,259  
Loss (gain) on foreign currency translation    1,564       (3,433 )     13,641       (3,433 )
(Gain) on purchase commitments   --       (2,265       (215 )     (2,265 )
                               
Total expenses   33,367       24,236       119,934       107,498  
                               
(Loss) income from operations   (28,837 )      (11,832 )     (108,189 )     67,260  
Other (expense) income:                            
Change in fair value of warrant liability   --       (2,510 )     5,488       5,369  
Interest income   115       15       293       85  
Interest expense on notes   (2,056 )     (3,010 )     (9,494 )     (15,576 )
Interest expense on note payable to principal stockholder   (1,174 )      (729 )     (3,782 )     (2,901 )
(Loss) gain on extinguishment of debt   (781 )      72,024       (1,611 )     72,024  
Other (expense) income   --       18       13       (597 )
                               
Provision for income taxes   51       --       51       --  
Net (loss) income $ (32,784 )    $ 53,976     $ (117,333 )   $ 125,664  
                               
Net (loss) income per share — basic $ (0.28 )    $ 0.56     $ (1.13 )   $ 1.37  
                               
Net (loss) income per share — diluted $ (0.28 )    $ 0.56     $ (1.13 )   $ 1.36  
                               
Shares used to compute basic net (loss) income per share   116,451       95,676       104,245       92,053  
                               
Shares used to compute diluted net (loss) income per share   116,451       96,510       104,245       92,085  
 

 

 
MannKind Corporation 
Condensed Consolidated Balance Sheets
(Audited)
(In thousands)
 
    December 31,
2017		     December 31,
2016		  
Assets                
Current assets:                
Cash and cash equivalents   $ 43,946     $ 22,895  
Restricted cash     4,409       --  
Accounts receivable, net     2,789       302  
Receivable from Sanofi     --       30,557  
Inventory     2,657       2,331  
Asset held for sale     --       16,730  
Deferred costs from commercial product sales     405       309  
Prepaid expenses and other current assets     3,010       4,364  
                 
Total current assets     57,216       77,488  
Property and equipment, net     26,922       28,927  
Other assets     437       648  
Total assets   $ 84,575     $ 107,063  
                 
Liabilities and Stockholders’ Deficit                
Current liabilities                
Accounts payable   $ 6,984     $ 3,263  
Accrued expenses and other current liabilities     12,449       7,937  
Facility financing obligation     52,745       71,339  
Deferred revenue, net     3,038       3,419  
Deferred payments from collaboration - current     250       1,000  
Recognized loss on purchase commitments — current     12,131       5,093  
                 
Total current liabilities     87,597       92,051  
Note payable to principal stockholder     79,666       49,521  
Accrued interest — note payable to principal stockholder     2,347       9,281  
Senior convertible notes     24,411       27,635  
Recognized loss on purchase commitments — long term     97,585       95,942  
Warrant liability     --       7,381  
Deferred payments from collaboration – long term     500       --  
Milestone rights liability and other liabilities     7,201       8,845  
                 
Total liabilities     299,307       290,656  
Total stockholders’ deficit     (214,732 )     (183,593 )
                 
Total liabilities and stockholders’ deficit   $ 84,575     $ 107,063  
         

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

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Source: MannKind