MNKD Investors

Technosphere®

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.

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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.”

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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 Reports Second Quarter Financial Results

09/01/04
MannKind Reports Second Quarter Financial Results

VALENCIA, Calif.--(BUSINESS WIRE)--Sept. 1, 2004-- MannKind Corporation (Nasdaq:MNKD) today reported financial results for the second quarter and six months ended June 30, 2004.

For the second quarter of 2004, total operating expenses were $18.4 million, compared with $13.2 million in the second quarter of 2003. Research & Development (R&D) expenses increased by $5.0 million to $14.3 million primarily due to the increased expenses associated with expanded clinical trials and related support for the Company's Technosphere® Insulin product. General and administrative (G&A) expenses increased by $0.2 million to $4.1 million. The net loss for the second quarter of 2004 was $18.2 million versus a net loss of $13.1 million in the second quarter of 2003. Net loss per share was $0.91 in the second quarter of 2004 compared with a net loss of $0.79 for the comparable 2003 period. Net loss per share, when calculated on a pro forma basis to give effect to the conversion of preferred stock into common stock upon the closing of MannKind's initial public offering on August 2, 2004, was $0.73 in the second quarter of 2004.

For the first six months of 2004, operating expenses totaled $35.0 million compared with $33.6 million in the first half of 2003. R&D expenses were $27.1 million, up $6.2 million, again related primarily to the expansion of clinical trials of MannKind's Technosphere® Insulin program. G&A expenses were $7.8 million, a decrease of $4.9 million from the first half of 2003, when the Company consolidated its California operations into a single facility. For the first half of 2004, the net loss was $34.7 million, versus a net loss of $33.4 million in the first half of 2003.

Cash, cash equivalents and marketable securities at June 30, 2004 were $41.3 million, compared with $55.9 million at December 31, 2003. Subsequent to June 30, 2004, MannKind completed its initial public offering, resulting in net proceeds of approximately $83.6 million, including $4.0 million in proceeds from the exercise of the underwriter's over-allotment option.

About MannKind Corporation

MannKind focuses on the discovery, development and commercialization of therapeutic products for diseases including diabetes, cancer, inflammatory and autoimmune diseases. The Company's lead product, the Technosphere® Insulin System, which is currently in late Phase II clinical trials for the treatment of diabetes, consists of a proprietary dry powder Technosphere® formulation of insulin that is inhaled into the deep lung using MannKind's MedTone™ inhaler. Early indications show MannKind's proprietary Technosphere® Insulin System's performance characteristics, convenience and ease of use have the potential to change the way diabetes is treated. For more information on MannKind Corporation and its technology, visit www.mannkindcorp.com.

Forward-Looking Statements

This press release contains forward-looking statements, including statements related to our clinical trials and product candidates. Words such as "believes," "anticipates," "plans," "expects," "intend," "will," "goal" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based upon our current expectations. Forward-looking statements involve risks and uncertainties. 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, risks related to the progress, timing and results of clinical trials, intellectual property matters, difficulties or delays in obtaining regulatory approval, manufacturing our lead product candidate, competition from other pharmaceutical or biotechnology companies, our ability to obtain additional financing to support our operations and other risks detailed in our filings with the SEC, including our Registration Statement on Form S-1. 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 release.

                         MannKind Corporation
                 Consolidated Statements of Operations
                              (Unaudited)

(In thousands, except share
and per share amounts)         Three Months Ended    Six Months Ended
                               -------------------  ------------------
                               June 30,  June 30,  June 30,  June 30,
                                   2004      2003      2004      2003
                               --------- --------- --------- ---------

Revenue                              $-        $-        $-        $-
                               --------- --------- --------- ---------

OPERATING EXPENSES:
Research & development           14,311     9,321    27,110    20,884
General & administrative          4,071     3,903     7,840    12,710
                               --------- --------- --------- ---------
Total operating expenses         18,382    13,224    34,950    33,594
                               --------- --------- --------- ---------
Loss from operations            (18,382)  (13,224)  (34,950)  (33,594)
Interest income                     123       119       221       204
Other income (expense)               14        17        75       (33)
                               --------- --------- --------- ---------
Loss before provision for
 income taxes                   (18,245)  (13,088)  (34,654)  (33,423)
Income taxes                          -         -         -         -
                               --------- --------- --------- ---------
Net loss                        (18,245)  (13,088)  (34,654)  (33,423)
Deemed dividend related to
 beneficial conversion feature
 of convertible preferred stock       -      (875)     (612)     (875)
Accretion on redeemable
 preferred stock                      4       (63)      (60)     (123)
                               --------- --------- --------- ---------
Net loss applicable to common
 stockholders                  $(18,241) $(14,026) $(35,326) $(34,421)
                               ========= ========= ========= =========
Net loss per share:
Basic and diluted                $(0.91)   $(0.79)   $(1.77)   $(2.01)
                               ========= ========= ========= =========
Basic and diluted - pro forma    $(0.73)             $(1.44)
                               =========           =========
Shares used to compute basic
 and diluted net loss per
 share:
Basic and diluted                19,975    17,760    19,975    17,117
                               ========= ========= ========= =========
Basic and diluted - pro forma    24,907              24,562
                               =========           =========


Condensed balance sheet data (in thousands):        6/30/04  12/31/03
                                                   --------- ---------

 Cash, cash equivalents and marketable securities   $41,260   $55,945
 Working capital                                     35,865    49,097
 Total assets                                       110,778   125,876
 Deferred compensation and other liabilities            130       404
 Redeemable convertible preferred stock               5,248     5,188
 Deficit accumulated during the development stage  (401,625) (366,971)
 Total stockholders' equity                          97,352   111,577

CONTACT: MannKind Corporation
Dick Anderson, 661-775-5302
danderson@mannkindcorp.com
or
Investor Relations:
Lippert/Heilshorn & Associates
Ina McGuinness or Bruce Voss, 310-691-7100
imcguinness@lhai.com
SOURCE: MannKind Corporation