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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2017	May 05, 2017
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q1
Trading Symbol	MNKD
Entity Registrant Name	MANNKIND CORP
Entity Central Index Key	0000899460
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		101,006,255

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 47,978	$ 22,895
Accounts receivable, net	438	302
Receivable from Sanofi		30,557
Inventory	3,698	2,331
Asset held for sale		16,730
Deferred costs from commercial product sales	472	309
Prepaid expenses and other current assets	3,508	4,364
Total current assets	56,094	77,488
Property and equipment - net	28,482	28,927
Other assets	609	648
Total assets	85,185	107,063
Current liabilities:
Accounts payable	1,519	3,263
Accrued expenses and other current liabilities	10,657	7,937
Facility financing obligation	71,795	71,339
Deferred revenue - net	1,844	3,419
Deferred payments from collaboration - current	250	1,000
Recognized loss on purchase commitments - current	6,984	5,093
Total current liabilities	93,049	92,051
Note payable to principal stockholder	49,521	49,521
Accrued interest - note payable to principal stockholder	9,995	9,281
Senior convertible notes	27,642	27,635
Recognized loss on purchase commitments - long term	95,062	95,942
Deferred payments from collaboration - long term	687
Warrant liability	752	7,381
Milestone rights liability and other liabilities	7,202	8,845
Total liabilities	283,910	290,656
Commitments and contingencies (Note 10)
Stockholders' deficit:
Undesignated preferred stock, $0.01 par value - 10,000,000 shares authorized; no shares issued or outstanding at March 31, 2017 and December 31, 2016
Common stock, $0.01 par value - 140,000,000 shares authorized, 95,776,297 and 95,680,831 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively	958	957
Additional paid-in capital	2,554,230	2,553,039
Accumulated other comprehensive loss	(24)	(24)
Accumulated deficit	(2,753,889)	(2,737,565)
Total stockholders' deficit	(198,725)	(183,593)
Total liabilities and stockholders' deficit	$ 85,185	$ 107,063

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2017	Dec. 31, 2016
Undesignated preferred stock, par value	$ 0.01	$ 0.01
Undesignated preferred stock, shares authorized	10,000,000	10,000,000
Undesignated preferred stock, shares issued	0	0
Undesignated preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	140,000,000	140,000,000
Common stock, shares issued	95,776,297	95,680,831
Common stock, shares outstanding	95,776,297	95,680,831

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Revenues:
Net revenue - collaboration	$ 63
Net revenue - commercial product sales	1,196
Revenue - bulk insulin sales	1,750
Total revenues	3,009
Expenses:
Cost of goods sold	2,548	$ 5,168
Research and development	3,129	5,130
Selling, general and administrative	15,389	7,351
Loss on foreign currency translation	1,545	2,364
Total expenses	22,611	20,013
Loss from operations	(19,602)	(20,013)
Other income (expense):
Change in fair value of warrant liability	6,629
Interest income	55	15
Interest expense on notes	(2,706)	(4,221)
Interest expense on note payable to principal stockholder	(714)	(721)
Other income	14	67
Total other income (expense)	3,278	(4,860)
Loss before benefit for income taxes	(16,324)	(24,873)
Income tax benefit	0	0
Net loss	$ (16,324)	$ (24,873)
Net loss per share - basic and diluted	$ (0.17)	$ (0.29)
Shares used to compute basic and diluted net loss per share	95,744	85,772

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Net loss	$ (16,324)	$ (24,873)
Other comprehensive loss:
Cumulative translation gain		1
Comprehensive loss	$ (16,324)	$ (24,872)

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (16,324)	$ (24,873)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation, amortization and accretion	908	1,023
Stock-based compensation expense	1,267	1,273
Loss on foreign currency translation	1,545	2,364
Interest incurred through borrowings under Sanofi Loan Facility		1,168
Interest on note payable to principal stockholder	714	721
Change in fair value of warrant liability	(6,629)
Other, net		696
Changes in operating assets and liabilities:
Accounts receivable, net	(136)	(121)
Receivable from Sanofi	30,557
Inventory	(1,367)
Deferred costs from commercial product sales	(163)
Prepaid expenses and other current assets	856	1,211
Other assets	39	(86)
Accounts payable	(1,665)	(14,799)
Accrued expenses and other current liabilities	1,077	488
Deferred payments from collaboration	(63)	177
Deferred revenue - net	(1,575)
Recognized loss on purchase commitments	(534)
Net cash provided by (used in) operating activities	8,507	(30,758)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment		(1,144)
Net proceeds from sale of property and equipment	16,651	17
Net cash provided by (used in) investing activities	16,651	(1,127)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of common stock		467
Payment of employment taxes related to vested restricted stock units	(75)	(3)
Net cash provided by (used in) financing activities	(75)	464
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	25,083	(31,421)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD	22,895	59,074
CASH AND CASH EQUIVALENTS, END OF PERIOD	47,978	27,653
SUPPLEMENTAL CASH FLOWS DISCLOSURES:
Interest paid in cash, net of amounts capitalized	$ 2,550	2,713
Cost incurred for construction in progress included in accounts payable and accrued liabilities		$ 558

Description of Business and Significant Accounting Policies

3 Months Ended

Mar. 31, 2017

Description of Business and Significant Accounting Policies

1. Description of Business and Significant Accounting Policies

The accompanying unaudited condensed consolidated financial statements of MannKind Corporation and its subsidiaries (“MannKind,” the “Company,” “we” or “us”), have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission (the “SEC”). Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. The information included in this quarterly report on Form 10-Q should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s annual report on Form 10-K for the fiscal year ended December 31, 2016 filed with the SEC on March 16, 2017 (the “Annual Report”).

In the opinion of management, all adjustments, consisting only of normal, recurring adjustments, considered necessary for a fair presentation of the results of these interim periods have been included. The results of operations for the three months ended March 31, 2017 may not be indicative of the results that may be expected for the full year.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates or assumptions. Management considers many factors in selecting appropriate financial accounting policies, and in developing the estimates and assumptions that are used in the preparation of the financial statements. Management must apply significant judgment in this process. The more significant estimates reflected in these accompanying condensed consolidated financial statements include revenue recognition, assessing long-lived assets and deferred product costs for impairment, accrued expenses, inventory recoverability, valuation of the facility financing obligation, loss on purchase commitments, warrant liability, milestone rights, stock-based compensation and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities and any valuation allowance recorded against net deferred tax assets. The estimation process often may yield a range of potentially reasonable estimates of the ultimate future outcomes and management must select an amount that falls within that range of reasonable estimates. This process may result in actual results differing materially from those estimated amounts used in the preparation of the financial statements.

Business — MannKind is a biopharmaceutical company focused on the discovery, development and commercialization of therapeutic products for diseases such as diabetes. The Company’s only approved product, Afrezza (insulin human [rDNA origin]) inhalation powder, is a rapid-acting inhaled insulin that was approved by the U.S. Food and Drug Administration (the “FDA”) on June 27, 2014 to improve glycemic control in adult patients with diabetes.

On August 11, 2014, the Company executed a license and collaboration agreement (the “Sanofi License Agreement”) with Sanofi-Aventis Deutschland GmbH, which subsequently assigned its rights and obligations under the agreement to Sanofi-Aventis U.S. LLC (“Sanofi”), pursuant to which Sanofi was responsible for global commercial, regulatory and development activities for Afrezza.

On January 4, 2016, the Company received written notification from Sanofi of its election to terminate in its entirety the Sanofi License Agreement. The effective date of termination was April 4, 2016, which was when the Company assumed responsibility for worldwide development and commercialization of Afrezza. Under the terms of the transition agreement, Sanofi continued to fulfill orders for Afrezza in the United States until the Company began distributing MannKind-branded Afrezza product to major wholesalers in late July 2016. The Company began recognizing commercial product sales revenue when MannKind-branded Afrezza was dispensed from pharmacies to patients in August 2016.

On November 9, 2016, the Company entered into a settlement agreement with Sanofi (the “Settlement Agreement”). Under the terms of the Settlement Agreement, the promissory note (the “Sanofi Loan Facility”) between the Company and Aventisub LLC (“Aventisub”), a Sanofi affiliate, was terminated with Aventisub agreeing to fully forgive the outstanding loan balance of $72.0 million. Sanofi also purchased $10.2 million of insulin from the Company in December 2016 under an existing insulin put option and made a cash payment of $30.6 million to the Company in early January 2017 as acceleration and in replacement of all other payments that Sanofi would otherwise have been required to make in the future pursuant to the insulin put option, without the Company being required to deliver any insulin for such payment. The Company was also relieved of its obligation to pay Sanofi $0.5 million in previously uncharged costs pursuant to the Sanofi License Agreement. The Company and Sanofi also agreed to a general release of potential claims against each other.

During their initial transition of the commercial responsibilities from Sanofi, the Company utilized a contract sales organization to promote Afrezza while the Company focused its internal resources on establishing a channel strategy, entering into distribution agreements and developing co-pay assistance programs, a voucher program, data agreements and payor relationships. In early 2017, the Company recruited its own sales force and intends to continue the commercialization of Afrezza in the United States through its own commercial organization. The Company’s current strategy for future commercialization of Afrezza outside of the United States, subject to receipt of the necessary foreign regulatory approvals, is to seek and establish partnerships in foreign jurisdictions where there are appropriate commercial opportunities.

As of and for the three months ended March 31, 2017, the Company has reported an accumulated deficit of $2.8 billion and has reported negative cash flow from operations for each year since inception, except for the current quarter, when the Company received the $30.6 million settlement payment from Sanofi and in 2014, when the Company received the $150.0 million upfront payment from Sanofi.

At March 31, 2017, the Company’s capital resources consisted of cash and cash equivalents of $48.0 million. The Company expects to continue to incur significant expenditures to support commercial manufacturing and sales and marketing of Afrezza and the development of their product candidates. The facility agreement (the “Facility Agreement”) with Deerfield Private Design Fund II, L.P. (“Deerfield Private Design Fund”) and Deerfield Private Design International II, L.P. (collectively, “Deerfield”) that resulted in the issuance of 9.75% Senior Convertible Notes due 2019 (“2019 notes”) and the First Amendment to Facility Agreement and Registration Rights Agreement (the “First Amendment”) that resulted in the issuance of an additional tranche of 8.75% Senior Convertible Notes due 2019 (“Tranche B notes”) (see Note 6 — Borrowings) requires the Company to maintain at least $25.0 million in cash and cash equivalents or available borrowings under the loan arrangement, dated as of October 2, 2007, between the Company and The Mann Group LLC (as amended, restated, or otherwise modified as of the date hereof, “The Mann Group Loan Arrangement”), as of the last day of each fiscal quarter.

Additional funding sources that are, or in certain circumstances may be, available to the Company include $30.1 million principal amount of available borrowings under The Mann Group Loan Arrangement. A portion of these available borrowings may be used to capitalize accrued interest into principal, upon mutual agreement of the parties, as it becomes due and payable under The Mann Group Loan Arrangement (see Note 5 — Related-Party Arrangements). The Company is seeking and will need to raise additional capital, whether through a sale of equity or debt securities, a strategic business collaboration with another company, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to continue the development and commercialization of Afrezza and other product candidates and to support its other ongoing activities. The Company cannot provide assurances that such additional capital will be available on acceptable terms or at all. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

On September 14, 2016, the Company received notice from the Listing Qualifications Department of the NASDAQ Stock Market indicating that in the previous 30 consecutive business days, the bid price for the common stock closed below the minimum of $1.00 per share required for continued inclusion on the NASDAQ Global Market. The notification letter stated that the Company would be afforded 180 calendar days, or until March 13, 2017, to regain compliance with the minimum bid price requirement. On March 16, 2017, the Company received a letter from the Listing Qualifications Department of the NASDAQ Global Market indicating that the Company had regained compliance with the $1.00 minimum closing bid requirement following completion of the reverse stock split described below.

On March 1, 2017, following stockholder approval, the Company’s board of directors approved a reverse stock split 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 the Company’s Amended and Restated Certificate of Incorporation to effect the 1-for-5 reverse stock split of the Company’s outstanding common stock and to reduce the authorized number of shares of the Company’s common stock from 700,000,000 to 140,000,000 shares. The Company’s common stock began trading on the NASDAQ Global Market on a split-adjusted basis when the market opened on March 3, 2017. As a result, all common stock share amounts included in these condensed consolidated financial statements have been retroactively reduced by a factor of five, and all common stock per share amounts have been increased by a factor of five, with the exception of the Company’s common stock par value.

On April 18, 2017, the Company entered into an Exchange Agreement with Deerfield resulting in the cash repayment of $4.0 million under the Tranche B notes and the conversion of $1.0 million and $5.0 million of the Tranche B notes and the 2019 notes, respectively to common shares (see Note 13, Subsequent Events for disclosure of the Exchange Agreement).

Reclassifications — Certain amounts from previous periods have been reclassified to conform to the 2017 presentation. Specifically, on the condensed consolidated statements of operations, product manufacturing has been renamed to costs of goods sold. The Company also reclassified (gain) loss on foreign currency translation from the previously reported classification of product manufacturing to loss on foreign currency translation in the accompanying condensed consolidated statements of operations. In addition, on the statements of cash flows, the Company reclassified interest expense on note payable to principal stockholder from other liabilities to conform to the 2017 presentation.

Correction of an Immaterial Error — Subsequent to the issuance of the Company’s financial statements for the year ended December 31, 2016 on Form 10-K, the Company determined that the common stock par value as of December 31, 2016 and 2015 should not have been adjusted for the impact of the reverse stock split on March 3, 2017 as described above. Management evaluated the materiality of the errors from a quantitative and qualitative perspective and concluded that this adjustment was not material to the Company’s financial position as of March 31, 2017 or December 31, 2016 and 2015 and that there was no impact to the results of operations for any periods presented. However, the Company has elected to correct the error in the current filing to conform to the current year presentation. Since the revisions were not material, no amendments to previously filed reports were required. The Company has revised the historical consolidated financial information presented herein to reflect the correction of this error for the prior period presented.


	2016 as
	Previously					2016 as
(In thousands)	Presented		Adjustments			Adjusted
Common stock	$	4,784	$	(3,827	)	$	957
Additional paid-in capital	$	2,549,212	$	3,827		$	2,553,039

Revenue Recognition — Revenue is recognized when the four basic criteria of revenue recognition are met: (1) persuasive evidence that an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectability is reasonably assured. When the accounting requirements for revenue recognition are not met, the Company defers the recognition of revenue by recording deferred revenue on the condensed consolidated balance sheets until such time that all criteria are met. To date, the Company has had revenue from collaborations, commercial sales of Afrezza, and from sales of bulk insulin, which are described more fully below.

Revenue Recognition – Net Revenue – Collaborations – The Company enters into collaborations under which the Company must perform certain obligations and receives periodic payments. The Company evaluates the collaborations under the multiple element revenue recognition accounting guidance. Revenue arrangements with multiple elements are divided into separate units of accounting if certain criteria are met, including whether the delivered elements have stand-alone value to the customer. When deliverables are separable, consideration received is allocated to the separate units of accounting based on the relative selling price of each deliverable and the appropriate revenue recognition principles are applied to each unit. The assessment of multiple element arrangements requires judgment in order to determine the appropriate units of accounting and the points in time that, or periods over which, revenue should be recognized. The terms of and the accounting for the Company’s collaborations are described more fully in Note 7 — Collaboration Arrangements.

Revenue Recognition – Net Revenue – Commercial Product Sales – Between July 1, 2016 and December 15, 2016, the Company sold Afrezza to Integrated Commercialization Solutions Direct (ICS) and title and risk of loss transferred to ICS upon shipment. After December 15, 2016, ICS became a third party logistics provider and stopped taking title and risk of loss upon shipment of Afrezza to ICS. The Company sells Afrezza in the United States to wholesale pharmaceutical distributors through ICS, and ultimately to retail pharmacies, which are collectively referred to as “customers”. The Company provides the right of return to its wholesale distributors and, through them, to its retail pharmacy customers for unopened product for a period beginning six months prior to and ending twelve months after its expiration date. Once the product has been prescribed and dispensed to the patient, any right of return ceases to exist.

Given the Company’s limited sales history for Afrezza, the Company cannot reliably estimate expected returns of the product at the time of shipment into the distribution channel. Accordingly, the Company defers recognition of revenue on Afrezza product shipments until the right of return no longer exists, which occurs at the earlier of the time Afrezza is dispensed from pharmacies to patients or expiration of the right of return. Deferred revenue is presented net of deferred product sales discounts which are further described in Gross-to-Net Adjustments below. The Company recognizes revenue based on Afrezza patient prescriptions dispensed as estimated by syndicated data provided by a third party. The Company also analyzes additional data points to ensure that such third-party data is reasonable, including data related to inventory movements within the channel and ongoing prescription demand.

For the three months ended March 31, 2017, net revenue from commercial product sales consisted of $1.2 million of net sales of Afrezza dispensed to patients. As of March 31, 2017 and December 31, 2016, the ending balances for deferred revenue were $1.8 million and $3.4 million, on its condensed consolidated balance sheets, of which $1.8 million and $1.6 million (net of estimated gross-to-net adjustments), respectively, represents product shipped to the Company’s third-party logistics provider and wholesale distributors, but not yet dispensed to patients. The difference, as of December 31, 2016, represented deferred revenue from bulk insulin sales, which is described more fully under the heading Revenue Recognition – Revenue – Bulk Insulin Sales below. For the three months ended March 31, 2017, shipments to three wholesale distributors represented 93% of total shipments.

Gross-to-net Adjustments – Estimated gross-to-net adjustments for Afrezza include wholesaler distribution fees, prompt pay discounts, estimated rebates and chargebacks and patient discount and co-pay assistance programs, and are based on estimated amounts owed or to be claimed on the related sales. These estimates take into consideration the terms of the Company’s agreements with its customers and the levels of inventory within the distribution and retail channels that may result in future rebates or discounts taken. In certain cases, such as patient support programs, the Company recognizes the cost of patient discounts as a reduction of revenue based on estimated utilization. If actual future results vary, the Company may need to adjust these estimates, which could have an effect on product revenue in the period of adjustment. The Company records product sales deductions in the condensed consolidated statements of operations at the time product revenue is recognized. Gross-to-net adjustments were approximately $0.4 million, which represents 27% of gross revenue from product sales for the three months ended March 31, 2017. There were no product sales and accordingly, no gross-to-net adjustments during the three months ended March 31, 2016. Gross-to-net items that are unpaid at the end of each period are presented in accrued expense and other current liabilities.

Wholesaler Distribution Fees – The Company pays distribution fees to certain wholesale distributors based on contractually determined rates. The Company accrues the distribution fees on shipment to the respective wholesale distributors and recognizes the distribution fees as a reduction of revenue in the same period the related revenue is recognized.

Prompt Pay Discounts – The Company offers cash discounts to its customers, generally 2% of the sales price, as an incentive for prompt payment. The Company accounts for cash discounts by reducing accounts receivable and deferred revenue by the prompt pay discount amount (at the time of shipment to the wholesale distributor). The Company recognizes the discount as a reduction of revenue in the same period the related revenue is recognized.

Rebates and Chargebacks – The Company participates in federal and state government-managed Medicare and Medicaid programs and, as such, is required to provide rebates under these programs. The Company continues to pursue participation in certain other qualifying federal and state government programs whereby discounts and rebates are provided to participating entities. Rebates provided through these other qualifying programs are included in the Medicaid and Medicare rebate accrual. Chargebacks are discounts that occur when contracted customers purchase directly from an intermediary wholesale purchaser. Contracted customers, which currently consist primarily of Federal government entities purchasing off the Federal Supply Schedule, generally purchase the product at its contracted price, plus a mark-up from the wholesaler. The wholesaler, in-turn, charges back to the Company the difference between the price initially paid by the wholesaler and the contracted price paid to the wholesaler by the customer.

The Company accounts for these rebates and chargebacks by establishing an accrual based on contractual discount rates, expected utilization under each contract and an estimate of the amount of inventory in the distribution channel that will become subject to such rebates and chargebacks based on historical payor data provided by a third-party vendor along with additional data including a forecasted participation rates. From that data, as well as input received from the commercial team, an estimated participation rate for each program is determined and applied at the rate for those sales. Any new information regarding changes in the programs’ regulations and guidelines or any changes in the Company’s government price reporting calculations that would impact the amount of the rebates will also be taken into account in determining or modifying the appropriate reserve. The time period between the date the product is sold into the channel and the date such rebates may be paid can be up to approximately six to nine months. As such, continuous monitoring of these estimates will be performed on a periodic basis, and if necessary, adjusted to reflect new facts and circumstances. Rebates and chargebacks are recognized as a reduction of gross revenue in the period the related revenue is recognized.

Other Rebates and Discounts – The Company has entered into agreements with certain third-party payors and with pharmacy benefit managers that act as an intermediary with certain third-party payors in the fulfillment of prescriptions. Under these agreements, the Company has agreed to provide certain contracted discounts to ease access to reimbursement for Afrezza patients including, but not limited to, the removal of prior authorization or step edit requirements or modifying the reimbursement tier under the payor’s formulary. The Company accounts for these charges by establishing an accrual based on the contracted discount rates and, with input received from management, estimated participation rates.

Patient Discount and Co-Pay Assistance Programs – The Company offers discount card programs to patients for Afrezza in which patients receive discounts on their prescriptions or a reduction in their co-pay amounts that are reimbursed by the Company. The Company estimates the total amount that will be redeemed based on levels of inventory in the distribution and retail channels and recognizes the discount as a reduction of gross revenue in the same period the related revenue is recognized.

Deferred Costs from Commercial Product Sales — Deferred costs from commercial product sales represents the cost of product (including labor, overhead and shipping costs to the third party logistics provider) shipped to wholesale distributors, but not dispensed by retail pharmacies to patients. If the Company estimates that inventory that has been shipped to wholesale distributors will be returned for credit because there is a risk of product expiry, deferred costs of commercial product sales is reduced and cost of goods sold is increased for the cost of such inventory.

Revenue Recognition — Revenue — Bulk Insulin Sales — Revenue from bulk insulin sales are recognized after delivery and customer acceptance of the bulk insulin. When the accounting requirements for revenue recognition of bulk insulin sales are not met, the Company defers recognition of revenue until such time that all criteria are met. The ending balance in deferred revenue related to bulk insulin sales was approximately $1.8 million as of December 31, 2016. There was no deferred revenue related to bulk insulin sales as of March 31, 2017.

Cost of Goods Sold — Cost of goods sold includes the costs related to Afrezza product dispensed by retail pharmacies to patients as the following costs which are recorded as expenses in the period in which they are incurred rather than as a portion of the inventory cost: under-absorbed labor and overhead, the impact of annual revaluations of inventory and deferred cost of commercial sales to standard cost, and write-offs of inventory and deferred costs of commercial sales.

Accounts Receivable and Allowances — Accounts receivable are recorded at the invoiced amount and are not interest bearing. The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. The Company makes ongoing assumptions relating to the collectability of its accounts receivable in its calculation of the allowance for doubtful accounts. If the Company estimates that inventory that has been shipped to wholesale distributors will be returned for credit because there is risk of product expiration, the Company reduces deferred revenue and increases the allowance for returns for such inventory. As of December 31, 2016, there was no allowance for returns. As of March 31, 2017, there was $0.3 million in allowance for returns. As of March 31, 2017 and December 31, 2016, there was no allowance for doubtful accounts. As of March 31, 2017 and December 31, 2016, the Company has three wholesale distributors representing approximately 92% and 95% of gross accounts receivable, respectively.

Inventories — Inventories are stated at the lower of cost or net realizable value. The Company determines the cost of inventory using the first-in, first-out, or FIFO, method. The Company capitalizes inventory costs associated with the Company’s products based on management’s judgment that future economic benefits are expected to be realized; otherwise, such costs are expensed as cost of goods sold. The Company periodically analyzes its inventory levels to identify inventory that may expire or has a cost basis in excess of its estimated net realizable value and writes down such inventories, as appropriate. In addition, the Company’s products are subject to strict quality control and monitoring which the Company performs throughout the manufacturing process. If certain batches or units of product no longer meet quality specifications or may become obsolete or are forecasted to become obsolete due to expiration, the Company will record a charge to write down such unmarketable inventory to its estimated net realizable value.

Recognized Loss on Purchase Commitments — The Company assesses whether losses on long term purchase commitments should be accrued. Losses that are expected to arise from firm, non-cancellable, commitments for the future purchases are recognized unless recoverable. When making the assessment, the Company also considers whether it is able to renegotiate with its vendors. The recognized loss on purchase commitments is reduced as inventory items are purchased. No new contracts were identified in 2017 or 2016 that required a new loss on purchase commitment accrual.

Fair Value of Financial Instruments — The carrying amounts reported in the accompanying condensed consolidated financial statements for cash, accounts receivable, accounts payable and accrued expenses and other current liabilities approximate their fair value due to their relatively short maturities. The fair value of the cash equivalents, note payable to principal stockholder, senior convertible notes, the facility financing obligation, the milestone rights liability and the warrant liability are disclosed in Note 8 — Fair Value of Financial Instruments.

Stock-Based Compensation — Share-based payments to employees, including grants of stock options, restricted stock units, performance-based awards and the compensatory elements of employee stock purchase plans, are recognized in the condensed consolidated statements of operations based upon the fair value of the awards at the grant date, subject to an estimated forfeiture rate. The Company uses the Black-Scholes option valuation model to estimate the grant date fair value of employee stock options and the compensatory elements of employee stock purchase plans. Restricted stock units are valued based on the market price on the grant date. The Company evaluates stock awards with performance conditions as to the probability that the performance conditions will be met and estimates the date at which the performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period.

Warrants — The Company has issued warrants to purchase shares of its common stock. The Company accounts for its warrants as either equity or liabilities based upon the characteristics and provisions of each instrument and evaluation of sufficient authorized shares available to satisfy the obligations. Warrants classified as derivative liabilities are recorded on the Company’s condensed consolidated balance sheets at their fair value on the date of issuance and are revalued at each subsequent balance sheet date, with fair value changes recognized in the condensed consolidated statements of operations. The Company estimates the fair value of its derivative liabilities using a third party valuation analysis that utilizes a Monte Carlo pricing valuation model and assumptions that are based on the individual characteristics of the warrants or instruments on the valuation date, as well as expected volatility, expected life, yield, and risk-free interest rate. Warrants classified as equity are recorded within additional paid-in capital at the issuance date and are not re-measured in subsequent periods, unless the underlying assumptions change to trigger liability accounting.

Net Loss Per Share of Common Stock — Basic net loss per share excludes dilution for potentially dilutive securities and is computed by dividing net loss by the weighted average number of common shares outstanding during the period. Diluted net loss per share reflects the potential dilution under the treasury method that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. For periods where the Company has presented a net loss, potentially dilutive securities are excluded from the computation of diluted net loss per share as they would be anti-dilutive.

The computation of basic and diluted net loss per share for the three months ended March 31, 2017 and 2016 excludes the common stock equivalents of the following potentially dilutive securities because their inclusion would be anti-dilutive:


	Three Months Ended March 31,
	2017		2016
Restricted stock units		709,004		789,201
Senior convertible notes		814,561		814,561
Warrants		9,740,597		31,861
Stock options		5,941,408		4,820,494

		17,205,570		6,456,117

Recently Issued Accounting Standards – From time to time, new accounting pronouncements are issued by the Financial Accounting Standards Board (“FASB”) or other standard setting bodies that are adopted by the Company as of the specified effective date. Unless otherwise discussed, the Company believes that the impact of recently issued standards that are not yet effective will not have a material impact on the Company’s condensed consolidated financial position or results of operations upon adoption.

In May 2014, the FASB issued Accounting Standards Update (ASU) No. 2014-09, Revenue from Contracts with Customers (Topic 606), which requires an entity to recognize the amount of revenue when promised goods or services to customers. The standard requires a company to recognize revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration it expects to be entitled to receive in exchange for those goods or services. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which delayed the effective date of the new standard from January 1, 2017 to January 1, 2018. The FASB also agreed to allow entities to choose to adopt the standard as of the original effective date. In March 2016, the FASB issued additional ASU’s which clarified certain aspects of the new guidance.

The Company will adopt the new guidance for the year beginning January 1, 2018. The Company has the option to either apply the new guidance retrospectively for all prior reporting periods presented (full retrospective) or retrospectively with the cumulative effect of initially applying the guidance recognized at the date of initial application (modified retrospective). The Company currently anticipates it will apply the new guidance using the modified retrospective approach with the cumulative effect of initial application recognized as of January 1, 2018. The Company plans to continue analyzing the potential impacts of the application throughout 2017 and, depending on factors that may impact the results, could elect to apply the new guidance on a full retrospective basis.

Currently, for commercial sales of Afrezza, the Company has limited sales and returns history, and as such is unable to reliably estimate expected returns of the product at the time of shipment into the distribution channel. Accordingly, the Company defers recognition of revenue on Afrezza product shipments until the right of return no longer exists, which occurs at the earliest of the time Afrezza is dispensed form pharmacies to patients or expiration of the right of return. The Company recognizes revenue based on Afrezza patient prescriptions dispensed, a sell-through model, as estimated by syndicated data provided by a third party. The Company also analyzes additional data points to ensure that such third-party data is reasonable, including data related to inventory movements within the channel and ongoing prescription demand.

Upon adoption of the new guidance, the Company expects that it will move from its current sell-through model to a sell-to model for revenue related to commercial sales of Afrezza and will record revenue at the time title and risk of loss passes to its distributors (generally at shipment or delivery to the distributors) along with an estimate of potential returns as variable consideration. The Company also anticipates that its ability to estimate potential returns will improve with an additional 9 months of sales history that it will have obtained by January 1, 2018.

Additionally, the Company has historically entered into collaborative agreements with third-parties under which periodic payments have been received. Revenue recognition for certain payments received have been deferred until the price is fixed and determinable. Further, revenue for certain payments to be received in the future has been prohibited from recognition until received. The Company expects that some of these amounts will be considered variable consideration and may be able to be recognized earlier under the new guidance.

The Company has begun its evaluation of the impact of adoption and plans to continue its evaluation throughout 2017. The financial impact upon the adoption will be dependent upon a number of factors including; the amount of revenue that has been deferred under the sell-through model for Afrezza, the amount of the revenue deferred under collaborative arrangements and the Company’s estimate of variable consideration at the date of adoption. At this time, the Company has not completed its evaluation of the inputs, assumptions and methodologies that will be used recognize revenue related to variable consideration under the new guidance.

In January 2016, the FASB issued ASU No. 2016-01, Financial Instruments — Overall (Subtopic 825-10): Recognition and Measurement of Financial Assets and Financial Liabilities. The update is intended to improve the recognition and measurement of financial instruments. The update is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is evaluating the impact the adoption of ASU No. 2016-01 will have on its condensed consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842). The new standard requires that all lessees recognize the assets and liabilities that arise from operating leases on the balance sheet and disclose qualitative and quantitative information about its leasing arrangements. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. The new standard will be effective on January 1, 2019. The Company is evaluating the impact the adoption of ASU No. 2016-02 will have on its condensed consolidated financial statements.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. The new standard seeks to reduce diversity in practice related to the classification of certain transactions in the statement of cash flows. For public business entities, the amendments in this standard are effective for annual periods beginning after December 15, 2017, and interim periods within those annual periods. The Company is evaluating the impact the adoption will have on its condensed consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash and restricted cash equivalents. ASU 2016-08 is effective for fiscal years beginning after December 15, 2018, including interim periods within those periods, using a retrospective transition method to each period presented. The Company has evaluated the effect that this guidance will have on its condensed consolidated financial statements and related disclosures and has determined it will not result in a material impact.

Inventories

3 Months Ended

Mar. 31, 2017

Inventories

2. Inventories

Inventories consist of the following (in thousands):


	March 31, 2017		December 31, 2016
Work-in-process	$	3,296	$	2,120
Finished goods		402		211

Total inventory	$	3,698	$	2,331

Work-in-process and finished goods as of March 31, 2017 and December 31, 2016 include conversion costs but not materials cost because the materials used in its production were previously written off.

Property and Equipment

3 Months Ended

Mar. 31, 2017

Property and Equipment

3. Property and Equipment

Property and equipment consist of the following (in thousands):


	Estimated Useful Life (Years)		March 31, 2017			December 31, 2016
Land		—	$	875		$	875
Buildings		39-40		17,389			17,389
Building improvements		5-40		34,957			34,957
Machinery and equipment		3-15		62,992			62,992
Furniture, fixtures and office equipment		5-10		3,556			3,556
Computer equipment and software		3		8,531			8,531
Construction in progress		—		202			202

				128,502			128,502
Less accumulated depreciation				(100,020	)		(99,575	)

Total property and equipment, net			$	28,482		$	28,927

Depreciation and amortization expense related to property and equipment for the three months ended March 31, 2017 and 2016 was $0.4 million and $0.6 million, respectively.

On January 6, 2017, the Company and Rexford Industrial Realty, L.P. (“Rexford”) entered into an Agreement of Purchase and Sale and Joint Escrow Instructions (the “Purchase Agreement”), pursuant to which the Company agreed to sell and Rexford agreed to purchase certain parcels of real estate owned by the Company in Valencia, California and certain related improvements, personal property, equipment, supplies and fixtures (collectively, the “Property”) for $17.3 million. The sale and purchase of the aforementioned Property for $17.3 million pursuant to the terms of the Purchase Agreement, as amended, was completed on February 17, 2017. Net proceeds were $16.7 million after deducting broker’s commission and other fees of approximately $0.6 million paid by the Company. Net proceeds received approximated the carrying value of the asset held for sale.

Accrued Expenses and Other Current Liabilities

3 Months Ended

Mar. 31, 2017

Accrued Expenses and Other Current Liabilities

4. Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	March 31, 2017		December 31, 2016
Salary and related expenses	$	3,900	$	3,814
Current portion of milestone rights liability		1,643		—
Professional fees		1,505		875
Discounts and allowances for commercial product sales		996		754
Sales and marketing services		821		144
Restructuring		772		1,376
Accrued interest		221		619
Other		799		355

Accrued expenses and other current liabilities	$	10,657	$	7,937

Related-Party Arrangements

3 Months Ended

Mar. 31, 2017

Related-Party Arrangements

5. Related-Party Arrangements

In October 2007, the Company entered into The Mann Group Loan Arrangement, which has been amended from time to time. On October 31, 2013, the promissory note underlying The Mann Group Loan Arrangement was amended to, among other things, extend the maturity date of the loan to January 5, 2020, extend the date through which the Company can borrow under The Mann Group Loan Arrangement to December 31, 2019, increase the aggregate borrowing amount under The Mann Group Loan Arrangement from $350.0 million to $370.0 million and provide that repayments or cancellations of principal under The Mann Group Loan Arrangement will not be available for reborrowing.

As of March 31, 2017, the total principal amount outstanding under The Mann Group Loan Arrangement was $49.5 million, and the amount available for future borrowings was $30.1 million. Interest, at a fixed rate of 5.84%, is due and payable quarterly in arrears on the first day of each calendar quarter for the preceding quarter, or at such other time as the Company and The Mann Group mutually agree. All or any portion of accrued and unpaid interest that becomes due and payable may be paid-in-kind and capitalized as additional borrowings at any time and would be classified as non-current. The Mann Group can require the Company to prepay up to $200.0 million in advances that have been outstanding for at least 12 months, less approximately $105.0 million aggregate principal amount that has been cancelled in connection with two common stock purchase agreements. If The Mann Group exercises this right, the Company will have 90 days after The Mann Group provides written notice, or the number of days to maturity of the note if less than 90 days, to prepay such advances. However, pursuant to a letter agreement entered into in August 2010, The Mann Group has agreed to not require the Company to prepay amounts outstanding under the amended and restated promissory note if the prepayment would require the Company to use its working capital resources. In addition, The Mann Group entered into a subordination agreement with Deerfield pursuant to which The Mann Group agreed with Deerfield not to demand or accept any payment under The Mann Group Loan Arrangement until the Company’s payment obligations to Deerfield under the Facility Agreement have been satisfied in full. Subject to the foregoing, in the event of a default under The Mann Group Loan Arrangement, all unpaid principal and interest either becomes immediately due and payable or may be accelerated at The Mann Group’s option, and the interest rate will increase to the one-year LIBOR calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum. All borrowings under The Mann Group Loan Arrangement are unsecured. The Mann Group Loan Arrangement contains no financial covenants.

As of March 31, 2017 and December 31, 2016, the Company had accrued and unpaid interest related to the above note of $10.0 million and $9.3 million, respectively, and had $30.1 million of available borrowings. Interest expense on the Company’s note payable to the Company’s principal stockholder for the three months ended March 31, 2017 and 2016 were $0.7 million and $0.7 million, respectively.

In May 2015, the Company entered into a sublease agreement with the Alfred Mann Foundation for Scientific Research (the “Mann Foundation”), a California not-for-profit corporation. The lease is for approximately 12,500 square feet of office space in Valencia, California which expired in April 2017 and was renewed on a month-to-month basis at a rate of $21,000 per month. The office space contains the Company’s principal executive offices. Lease payments to the Mann Foundation for the three months ended March 31, 2017 and 2016 were $62,000 and $65,000, respectively.

The Company has entered into indemnification agreements with each of its directors and executive officers, in addition to the indemnification provided for in its amended and restated certificate of incorporation and amended and restated bylaws (see Note 10 — Commitments and Contingencies).

Borrowings

3 Months Ended

Mar. 31, 2017

Borrowings

6. Borrowings

Borrowings consist of the following (in thousands):


	March 31, 2017			December 31, 2016
Facility Financing Obligation (2019 Notes)
Principal amount	$	75,000		$	75,000
Unamortized debt discount		(3,205	)		(3,661	)

Net carrying amount	$	71,795		$	71,339

Senior Convertible Notes (2018 Notes)
Principal amount	$	27,690		$	27,690
Unamortized premium		367			426
Unaccreted debt issuance costs		(415	)		(481	)

Net carrying amount	$	27,642		$	27,635

Note payable to principal stockholder - net carrying amount	$	49,521		$	49,521

Facility Financing Obligation (2019 Notes) – As of March 31, 2017, there was $55.0 million principal amount of 2019 notes and $20.0 million principal amount of Tranche B notes outstanding. The 2019 notes accrue interest at an annual rate of 9.75% and the Tranche B notes accrue interest at an annual rate of 8.75%. Interest is paid quarterly in arrears on the last day of each March, June, September and December. The Facility Financing Obligation principal repayment schedule is comprised of annual payments beginning on July 1, 2016 and ending December 9, 2019. As of March 31, 2017, future payments for the years ended December 31, 2017, 2018, and 2019 are $20.0 million, $20.0 million and $35.0 million, respectively. On April 18, 2017, the Company entered into an Exchange Agreement resulting in the cash repayment of $4.0 million principal under the Tranche B notes and the conversion of $1.0 million and $5.0 million of principal under the Tranche B notes and the 2019 notes, respectively, to common shares (see Note 13, Subsequent Events for disclosure of the Exchange Agreement).

In conjunction with the Facility Agreement, the Company entered into a Milestone Rights Agreement with Deerfield which requires the Company to make contingent payments to Deerfield, totaling up to $90.0 million, upon the Company achieving specified commercialization milestones. As of March 31, 2017 and December 31, 2016, the remaining milestone rights liability balance was $8.9 million. The Company currently estimates that it will make the next milestone payment in the first quarter of 2018. Accordingly, $1.6 million in value related to the next milestone payment was recorded in accrued expenses and other current liabilities as of March 31, 2017, resulting in $7.3 million and $8.9 million being recorded in milestone rights liability and other liabilities, which is non-current, in the accompanying condensed consolidated balance sheets as of March 31, 2017 and December 31, 2016, respectively.

Accretion of debt issuance cost and debt discount in connection with the Facility Agreement during the three months ended March 31, 2017 and 2016 are as follows (in thousands):


	Three Months Ended March 31,
	2017		2016
Accretion expense - debt issuance cost	$	9	$	9

Accretion expense - debt discount	$	447	$	419

The Facility Agreement includes customary representations, warranties and covenants, including a restriction on the incurrence of additional indebtedness, and a financial covenant which requires the Company’s cash and cash equivalents, which include available borrowings on the note payable to a principal stockholder, on the last day of each fiscal quarter to not be less than $25.0 million. As discussed in Note 1 – Description of Business and Summary of Significant Accounting Policies, the Company will need to raise additional capital to support its current operating plans. Due to the uncertainties related to maintaining sufficient resources to comply with the aforementioned covenant, the 2019 notes and Tranche B notes have been classified as current liabilities in the accompanying condensed consolidated balance sheets as of March 31, 2017 and December 31, 2016. In the event of non-compliance, Deerfield may declare all or any portion of the 2019 notes and/or Tranche B notes to be immediately due and payable.

Milestone Rights — The Milestone Agreement includes customary representations and warranties and covenants by the Company, including restrictions on transfers of intellectual property related to Afrezza. The Milestone Rights are subject to acceleration in the event the Company transfers its intellectual property related to Afrezza in violation of the terms of the Milestone Agreement. The Company has initially recorded the Milestone Rights at their estimated fair value.

Security Agreement — In connection with the Facility Agreement, the Company and its subsidiary, MannKind LLC, entered into a Guaranty and Security Agreement (the “Security Agreement”) with Deerfield and Horizon Santé FLML SÁRL (collectively, the “Purchasers”), pursuant to which the Company and MannKind LLC each granted the Purchasers a security interest in substantially all of their respective assets, including respective intellectual property, accounts, receivables, equipment, general intangibles, inventory and investment property, and all of the proceeds and products of the foregoing. The Security Agreement includes customary covenants by the Company and MannKind LLC, remedies of the Purchasers and representations and warranties by the Company and MannKind LLC. The security interests granted by the Company and MannKind LLC will terminate upon repayment of the 2019 notes and Tranche B notes, if applicable, in full. The Company’s obligations under the Facility Agreement and the Milestone Agreement are also secured by the Company’s facilities in Danbury, Connecticut, which has a carrying value of $28.5 million.

Embedded Derivatives — The Company identified and evaluated a number of embedded features in the notes issued under the Facility Agreement to determine if they represented embedded derivatives that are required to be separated from the notes and accounted for as freestanding instruments. In 2014, the Company analyzed the Tranche B notes and identified embedded derivatives which required separate accounting. However, all of the embedded derivatives were determined to have a de minimis value as of March 31, 2017 and December 31, 2016.

Conversion Option — During 2014, Deerfield elected to convert a total of $93.5 million of principal, which consisted of $20.0 million, $33.5 million, and $40.0 million of Tranche 1 notes, Tranche 2 notes, and Tranche 3 notes, respectively, into an aggregate 3,464,616 shares of common stock. Further, upon Deerfield converting $40.0 million of Tranche 3 notes and $20.0 million of Tranche 1 notes, Deerfield has reached the conversion limits (i.e., “Applicable Limits”) with respect to the Facility Agreement and therefore, no additional amount of the 2019 notes is convertible.

Issuance of new 5.75% Convertible Senior Subordinated Exchange Notes Due 2018 in Exchange for 2015 Notes — The 2018 notes are the Company’s general, unsecured, senior obligations, except that the 2018 notes were subordinated to the Sanofi Loan facility prior to the extinguishment of the facility on November 9, 2016. The 2018 notes rank equally in right of payment with the Company’s other unsecured senior debt. The 2018 notes bear interest at the rate of 5.75% per year on the principal amount, payable semiannually in arrears in cash on February 15 and August 15 of each year, beginning February 15, 2016, with interest accruing from August 15, 2015. The 2018 notes mature on August 15, 2018. Accrued interest related to these notes is recorded in accrued expenses and other current liabilities on the accompanying condensed consolidated balance sheets.

The 2018 notes are convertible, at the option of the holder, at any time on or prior to the close of business on the business day immediately preceding the stated maturity date, into shares of the Company’s common stock at an initial conversion rate of 29 shares per $1,000 principal amount of 2018 notes, which is equal to a conversion price of approximately $34.00 per share, the same conversion price as that of the 2015 notes on the date of exchange. The conversion rate is subject to adjustment under certain circumstances described in an indenture governing the 2018 notes dated August 10, 2015 with US Bank (as successor trustee to Wells Fargo, National Association), including in connection with a make-whole fundamental change. If certain fundamental changes occur, the Company will be obligated to pay a make-whole premium on any 2018 notes converted in connection with such fundamental change by increasing the conversion rate on such 2018 notes. If the Company undergoes certain fundamental changes, except in certain circumstances, each holder of 2018 notes will have the option to require the Company to repurchase all or any portion of that holder’s 2018 notes. The fundamental change repurchase price will be 100% of the principal amount of the 2018 notes to be repurchased plus accrued and unpaid interest, if any.

On or after the date that is one year following the original issue date of the 2018 notes, the Company will have the right to redeem for cash all or part of the 2018 notes if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for 20 or more trading days during the 30 consecutive trading day period ending on the trading day immediately prior to the date of the redemption notice. The redemption price will equal the sum of 100% of the principal amount of the 2018 notes to be redeemed, plus accrued and unpaid interest. Under the terms of the indenture, the conversion option can be net-share settled and the maximum number of shares that could be required to be delivered under the indenture, including the make-whole shares, is fixed and less than the number of authorized and unissued shares less the maximum number of shares that could be required to be delivered during the term of the 2018 notes under existing commitments. Applying the Company’s sequencing policy, the Company performed an analysis at the time of the offering of the 2018 notes and each reporting date since and has concluded that the number of available authorized shares at the time of the offering and each subsequent reporting date was sufficient to deliver the number of shares that could be required to be delivered during the term of the 2018 notes under existing commitments.

The 2018 notes provide that upon an acceleration of certain indebtedness, including the 2019 notes and the Tranche B notes issued to Deerfield pursuant to the Facility Agreement, the holders may elect to accelerate the Company’s repayment obligations under the notes if such acceleration is not cured, waived, rescinded or annulled. There can be no assurance that the holders would not choose to exercise these rights in the event such events were to occur.

The Company incurred approximately $0.8 million in issuance costs, which are recorded as an offset to the 2018 notes, in the accompanying condensed consolidated balance sheets. These costs are being accreted to interest expense using the effective interest method over the term of the 2018 notes.

Amortization of the premium related to the 2018 notes was $59,000 and $57,000 during the three months ended March 31, 2017 and 2016, respectively. Accretion of debt issuance costs related to the 2018 notes was $66,000 and $62,000 during the three months ended March 31, 2017 and 2016, respectively.

Collaboration Arrangements

3 Months Ended

Mar. 31, 2017

Collaboration Arrangements

7. Collaboration Arrangements

Receptor Collaboration and License Agreement — On January 20, 2016, the Company entered into a Collaboration and License Agreement (the “CLA”) with Receptor Life Sciences, Inc. (“Receptor”) pursuant to which the Company performed initial formulation studies on compounds identified by Receptor and Receptor obtained the option to acquire an exclusive license to develop, manufacture and commercialize certain products that use MannKind’s technology to deliver the compounds via oral inhalation.

The Company received $0.4 million in nonrefundable payments in 2016 prior to Receptor exercising the option. On December 30, 2016, following successful completion of the studies, Receptor exercised its option and paid the Company a $1.0 million nonrefundable option exercise and license fee. Under the CLA, the Company may receive the following additional payments:

•

Nonrefundable milestone payments upon the completion of certain technology transfer activities and the achievement of specified sales targets;

•

Royalties upon Receptor’s and its sublicensees’ sale of the product; and

•

Milestones upon total worldwide sales reaching certain agreed upon levels.

The Company evaluated the accounting for the payments received in 2016 under the multiple element accounting guidance and determined that the $0.4 million in payments received prior to Receptor exercising its option are separable from the other elements of the agreement and represented payments to offset costs incurred. Therefore, those payments reduced the Company’s research and development expense in 2016. The $1.0 million license fee received in 2016 does not have standalone value from the follow-on transfer of technology. Therefore, the license fee was recorded in deferred payments from collaboration as of December 31, 2016 and will be recognized in net revenue — collaboration over four years. Recognized revenue related to this license agreement amounted to $0.1 million for the three months ended March 31, 2017. See Note 1 — Description of Business and Summary of Significant Accounting Policies for additional information on the Company’s accounting for multiple element arrangements.

On March 15, 2017, the Company entered into a Manufacturing and Supply Agreement with Receptor pursuant to which the Company will provide certain raw materials to Receptor. On March 16, 2017, the Company agreed to provide certain additional research and formulation consulting services to Receptor.

Sanofi License Agreement and Sanofi Supply Agreement — On August 11, 2014, the Company executed a license and collaboration agreement (the “Sanofi License Agreement”) with Sanofi-Aventis Deutschland GmbH (which subsequently assigned its rights and obligations under the agreement to Sanofi-Aventis U.S. LLC (Sanofi)), pursuant to which Sanofi was responsible for global commercial, regulatory and development activities for Afrezza. The Company manufactured Afrezza at its manufacturing facility in Danbury, Connecticut to supply Sanofi’s demand for the product pursuant to a supply agreement dated August 11, 2014 (the “Sanofi Supply Agreement”).

During the term of the Sanofi License Agreement, worldwide profits and losses were determined based on the difference between the net sales of Afrezza and the costs and expenses incurred by the Company and Sanofi that were specifically attributable or related to the development, regulatory filings, manufacturing, or commercialization of Afrezza. These profits and losses were shared 65% by Sanofi and 35% by the Company. On January 4, 2016, the Company received a 90-day notification from Sanofi of its election to terminate in its entirety the Sanofi License Agreement. The effective date of termination was April 4, 2016. On April 5, 2016, the Company assumed responsibility for the worldwide development and commercialization of Afrezza from Sanofi. Under the terms of the transition agreement, Sanofi continued to fulfill orders for Afrezza in the United States until the Company began distributing MannKind-branded Afrezza product to major wholesalers during the week of July 25, 2016.

The Company analyzed the agreements entered into with Sanofi at their inception and determined that prior to December 31, 2015, because the Company did not have the ability to estimate the amount of costs that would potentially be incurred under the loss share provision related to the Sanofi License Agreement and the Sanofi Supply Agreement, the Company recorded the $150.0 million up-front payment and the two milestone payments of $25.0 million each as deferred payments from collaboration. In addition, as of December 31, 2015, the Company had recorded $17.5 million in Afrezza product shipments to Sanofi as deferred sales from collaboration and recorded $13.5 million as deferred costs from collaboration. Deferred costs from collaboration represented the costs of product manufactured and shipped to Sanofi, as well as certain direct costs associated with a firm purchase commitment entered into in connection with the collaboration with Sanofi.

During the three months ended September 30, 2016, Sanofi provided enough information to the Company to enable it to reasonably estimate the remaining costs under the Sanofi License Agreement and the Sanofi Supply Agreement. Accordingly, the fixed or determinable fee requirement for revenue recognition was met and there were no future obligations to Sanofi. Therefore, the Company recognized $172.0 million of net revenue — collaboration for the year ended December 31, 2016. The revenue recognized includes the upfront payment of $150.0 million and the two milestone payments of $25.0 million each, net of $64.9 million of net loss share with Sanofi, as well as $17.5 million in sales of Afrezza and $19.4 million from sales of bulk insulin, both to Sanofi. These payments and sales were made pursuant to the contractual terms of the agreements with Sanofi.

Sanofi Loan Facility — On September 23, 2014, the Company entered into the Sanofi Loan Facility, consisting of a senior secured revolving promissory note and a guaranty and security agreement (the “Security Agreement”) with an affiliate of Sanofi, which provided the Company with a secured loan facility of up to $175.0 million to fund the Company’s share of net losses under the Sanofi License Agreement.

Advances under the Sanofi Loan Facility bore interest at a rate of 8.5% per annum and were payable in-kind and compounded quarterly and added to the outstanding principal balance under the Sanofi Loan Facility. The Company was required to make mandatory prepayments on the outstanding loans under the Sanofi Loan Facility from its share of any profits (as defined in the Sanofi License Agreement) under the Sanofi License Agreement within 30 days of receipt of its share of any such profits.

The Company’s total portion of the loss sharing was $57.7 million for the year ended December 31, 2015, of which $44.5 million was borrowed under the Sanofi Loan Facility as of December 31, 2015. Subsequent to December 31, 2015, the Company borrowed $17.9 million under the Sanofi Loan Facility to finance the portion of the Company’s loss for the quarters ended December 31, 2015 and March 31, 2016. The total amount owed to Sanofi at September 30, 2016 was $71.2 million, which included $5.8 million of paid-in-kind interest.

On November 9, 2016, the Company entered into a settlement agreement with Sanofi (the “Settlement Agreement”). Under the terms of the Settlement Agreement, the promissory note between the Company and Aventisub LLC, a Sanofi affiliate, was terminated, with Aventisub agreeing to forgive the full outstanding loan balance of $72.0 million. Sanofi also agreed to purchase $10.2 million of insulin from the Company in December 2016 under an existing insulin put option as well as make a cash payment of $30.6 million to the Company in early January 2017 as acceleration and in replacement of all other payments that Sanofi would otherwise have been required to make in the future pursuant to the insulin put option, without the Company being required to deliver any insulin for such payment. The Company was also relieved of its obligation to pay Sanofi $0.5 million in previously uncharged costs pursuant to the Sanofi License Agreement. The Company and Sanofi also agreed to a general release of potential claims against each other.

The settlement was accounted for in the year ended December 31, 2016, except for the $30.6 million cash payment received under the insulin put option agreement which reduced the receivable from Sanofi between December 31, 2016 and March 31, 2017.

Fair Value of Financial Instruments

3 Months Ended

Mar. 31, 2017

Fair Value of Financial Instruments

8. Fair Value of Financial Instruments

The Company applies various valuation approaches in determining the fair value of its financial assets and liabilities within a hierarchy that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs are inputs that reflect the Company’s assumptions about the inputs that market participants would use in pricing the asset or liability and are developed based on the best information available in the circumstances. The fair value hierarchy is broken down into three levels based on the source of inputs as follows:

Level 1— Quoted prices for identical instruments in active markets.

Level 2— Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3— Significant inputs to the valuation model are unobservable.

The availability of observable inputs can vary among the various types of financial assets and liabilities. To the extent that the valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for financial statement disclosure purposes, the level in the fair value hierarchy within which the fair value measurement is categorized is based on the lowest level input that is significant to the overall fair value measurement.

Cash Equivalents — Cash equivalents consist of highly liquid investments with original or remaining maturities of 90 days or less at the time of purchase, that are readily convertible into cash. As of March 31, 2017 and December 31, 2016, the Company held cash equivalents of $47.4 million and $20.5 million, respectively, comprised of money market funds. The fair value of these money market funds was determined by using quoted prices for identical investments in an active market (Level 1 in the fair value hierarchy).

Note Payable to Principal Stockholder — The fair value of the note payable to principal stockholder cannot be reasonably estimated as the Company would not be able to obtain a similar credit arrangement in the current economic environment. Therefore the fair value is based upon carrying value.

Financial Liabilities — The following tables set forth the fair value of the Company’s financial instruments (in millions):


	As of March 31, 2017
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	27.6	$	—	$	—	$	23.1	$	23.1
Facility financing obligation		71.8		—		—		74.8		74.8
Milestone rights		8.9		—		—		18.9		18.9
Warrant liability (at recurring fair value)		0.8		—		—		0.8		0.8

Total financial liabilities	$	109.1	$	—	$	—	$	117.6	$	117.6


	As of December 31, 2016
	Carrying Value		Level 2		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	27.6	$	—	$	—	$	22.9	$	22.9
Facility financing obligation		71.3		—		—		74.5		74.5
Milestone rights		8.9		—		—		18.4		18.4
Warrant liability (at recurring fair value)		7.4		—		—		7.4		7.4

Total financial liabilities	$	115.2	$	—	$	—	$	123.2	$	123.2

As of March 31, 2017 and December 31, 2016, the fair value of the warrant liability was $0.8 million and $7.4 million, respectively. The fair value of the warrants liability as of March 31, 2017 was estimated using a Monte Carlo valuation pricing model with the following underlying assumptions: (a) a risk-free interest rate of 1.24%; (b) an assumed dividend yield of zero percent; (c) an expected term of 1.1 years; and (d) an expected volatility of 100%. The following table provides a roll forward of the fair value of the warrant liability which is the only Level 3 financial instrument that is carried at fair value (in millions):


	Warrants
Fair value, January 1, 2017	$	7.4
Additions		—
Changes in fair value		(6.6	)
Payments		—

Fair value, March 31, 2017	$	0.8

Senior Convertible Notes — The estimated fair value of the 2018 notes was calculated based on model-derived valuations whose inputs were observable, such as the Company’s stock price and yields on U.S. Treasury notes and actively traded bonds, and non-observable, such as the Company’s longer-term historical volatility, and estimated yields implied from any available market trades of the Company’s issued debt instruments. As there is no current active and observable market for the 2018 notes, the Company determined the estimated fair value using a convertible bond valuation model within a lattice framework. The convertible bond valuation model combined expected cash flows based on terms of the notes with market-based assumptions regarding risk-free rate, risk-adjusted yields (20%), stock price volatility (115%) and recent price quotes and trading information regarding Company issued debt instruments and shares of common stock into which the notes are convertible (Level 3 in the fair value hierarchy).

Facility Agreement — As discussed in Note 6 — Borrowings, the Company issued 2019 notes and subsequently issued Tranche B notes (the “Facility Financing Obligation”) in connection with the Facility Agreement. As there is no current observable market for the 2019 notes or Tranche B notes, the Company determined the estimated fair value using a bond valuation model based on a discounted cash flow methodology. The bond valuation model combined expected cash flows associated with principal repayment and interest based on the contractual terms of the debt agreement discounted to present value using a selected market discount rate. On March 31, 2017, the market discount rate was recalculated at 12% for the principal for the facility financing obligation. Under the terms of the Facility Agreement, the Company is restricted from distributing any of its assets or declaring and distributing a dividend to its stockholders.

Milestone Rights Liability — In addition to the Facility Financing Obligation, the Company also issued certain rights to receive payments of up to $90.0 million upon occurrence of specified strategic and sales milestones (the “Milestone Rights”). These rights are not reflected in the Facility Financing Obligation. The estimated fair value of the Milestone Rights was calculated using the income approach in which the cash flows associated with the specified contractual payments were adjusted for both the expected timing and the probability of achieving the milestones, discounted to present value using a selected market discount rate (Level 3 in the fair value hierarchy). The expected timing and probability of achieving the milestones, starting in 2014, was developed with consideration given to both internal data, such as progress made to date and assessment of criteria required for achievement, and external data, such as market research studies. The discount rate (14.5%) was selected based on an estimation of required rate of returns for similar investment opportunities using available market data. As of March 31, 2017, the carrying value of the milestone rights liability was $8.9 million and the fair value was estimated at $18.9 million. The fair value measurement of the liability is sensitive to the discount rate and the timing and probability of making milestone payments. If the achievement of each of the milestones which require payments were to be six months earlier or later than in the current forecast, the fair value of the liability would increase by 8% or decrease by 7%, respectively. If the probabilities of meeting the milestones were to decrease by 5% or 10%, the fair value of the liability would decrease by 17% and 30%, respectively. Over the long term, these inputs are interrelated because if the Company’s performance improves, the timing of meeting the milestones would likely be earlier, the probability of making payments on the milestones would likely be higher and the discount rate would likely decrease, all of which would increase the fair value of the liability. The inverse is also true.

Warrant Liability — Warrant liabilities are measured at fair value using a Monte Carlo pricing valuation model. The assumptions used in the valuation model for the common stock warrant liabilities were: (a) a risk-free interest rate based on the rates for U.S. Treasury zero-coupon bonds with maturities similar to those of the remaining contractual term of the warrants; (b) an assumed dividend yield of zero percent based on the Company’s expectation that it will pay no dividends in the foreseeable future; (c) an expected term based on the remaining contractual term of the warrants; and (d) an expected volatility based upon the Company’s historical volatility over the remaining contractual term of the warrants and (e) probability of a dilutive financing that may trigger a price protection clause. The significant unobservable input used in measuring the fair value of the common stock warrant liabilities is the expected volatility. Significant increases in volatility would result in a higher fair value measurement (Level 3 in the fair value hierarchy).

Embedded Derivatives — The Company identified and evaluated a number of embedded features in the notes issued under the Facility Agreement to determine if they represented embedded derivatives that are required to be separated from the notes and accounted for as freestanding instruments. The Company analyzed the Tranche B notes and identified embedded derivatives, which required separate accounting. However, all of the embedded derivatives were determined to have a de minimis value at March 31, 2017 and December 31, 2016.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Stock-Based Compensation Expense

3 Months Ended

Mar. 31, 2017

Stock-Based Compensation Expense

9. Stock-Based Compensation Expense

In March 2016, the FASB issued ASU No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The new standard involves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. For public business entities, the amendments in this standard are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. The Company implemented the standard on January 1, 2017 and the standard did not have a material impact on the Company’s financial statements as:

•

The Company, as of December 31, 2016, had not recognized $11.6 million of excess tax benefits related to windfalls. As a result of adoption, it will now recognize these benefits as deferred tax assets. However, after assessment for realizability, the Company has also recorded a full valuation allowance against the deferred tax assets. This resulted in a zero cumulative effect adjustment to accumulated deficit as a result of the adoption. For the quarter ended March 31, 2017, all shortfalls related to non-qualified options and restricted stock units have been recorded as an income tax expense for the period, offset by a full valuation allowance.

•

Due to the full valuation allowance for the Company’s deferred tax assets, the excess income tax benefits have never been recorded in additional paid-in-capital. The Company does not contemplate any impact going forward as any amounts to be recorded in the condensed consolidated statements of operations would be fully offset by the valuation allowance nor result in a related classification in cash flows for operating activities.

•

The Company will continue to recognize forfeitures through estimates consistent with our past practices as opposed to when they occur.

•

The Company already classifies cash paid to taxing authorities arising from the withholding of shares from employees in cash flows from financing activities.

Total stock-based compensation expense recognized in the accompanying condensed consolidated statements of operations for the three months ended March 31, 2017 and 2016 was $1.3 million for both periods.

During the three months ended March 31, 2017, the Company issued 77,680 restricted units to certain employees which vest over a four-year period. The grant date fair value of the restricted stock units was $0.2 million with a weighted average grant date fair value per share of $2.70.

During the three months ended March 31, 2017, the Company granted certain employees stock options to purchase an aggregate of 583,180 shares of common stock at a weighted average exercise price of $2.70 per share of which 463,000 of these awards vest in four equal tranches upon the achievement of certain product sales targets. The remaining 120,180 options vest over a four year period. The grant date fair value of these awards is $1.1 million with a weighted average grant date fair value of $1.86 per share, as determined using a Black-Scholes option pricing model.

As of March 31, 2017, there was $4.1 million, $3.3 million and $3.8 million of unrecognized compensation expense related to restricted stock units, options with performance conditions and options that vest over the vesting period, respectively, which are expected to be recognized over the weighted average vesting period of 2.8 years. The Company evaluates stock awards with performance conditions as the probability that the performance conditions will be met and uses that information to estimate the date at which those performance conditions will be met in order to properly recognize stock-based compensation expense over the requisite service period.

On a period basis and as of March 31, 2017, the Company reviewed the probability of achieving the performance conditions for each of the four vesting tranches of the performance-based stock options that were granted during the three months ended March 31, 2017 and in prior years and determined that it was probable that the Company would achieve the first vesting tranche in December 2017. Therefore, the Company recorded compensation expense related to performance-based stock options of $0.1 million during the three months ended March 31, 2017. The Company further determined that no compensation costs would be recognized for the second, third and fourth vesting tranches as the probability of achieving those performance conditions has not been determined.

- Definition

The entire disclosure for compensation-related costs for equity-based compensation, which may include disclosure of policies, compensation plan details, allocation of equity compensation, incentive distributions, equity-based arrangements to obtain goods and services, deferred compensation arrangements, employee stock ownership plan details and employee stock purchase plan details.

+ References + Details

Commitments and Contingencies

3 Months Ended

Mar. 31, 2017

Commitments and Contingencies

10. Commitments and Contingencies

Guarantees and Indemnifications — In the ordinary course of its business, the Company makes certain indemnities, commitments and guarantees under which it may be required to make payments in relation to certain transactions. The Company, as permitted under Delaware law and in accordance with its Bylaws, indemnifies its officers and directors for certain events or occurrences, subject to certain limits, while the officer or director is or was serving at the Company’s request in such capacity. The term of the indemnification period is for the officer’s or director’s lifetime. The maximum amount of potential future indemnification is unlimited; however, the Company has a director and officer insurance policy that may enable it to recover a portion of any future amounts paid. The Company believes the fair value of these indemnification agreements is minimal. The Company has not recorded any liability for these indemnities in the accompanying condensed consolidated balance sheets. However, the Company accrues for losses for any known contingent liability, including those that may arise from indemnification provisions, when future payment is probable and the amount can be reasonably estimated. No such losses have been recorded to date.

Litigation — The Company is subject to legal proceedings and claims which arise in the ordinary course of its business. As of March 31, 2017, the Company believes that the final disposition of such matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company and no accrual has been recorded. The Company maintains liability insurance coverage to protect the Company’s assets from losses arising out of or involving activities associated with ongoing and normal business operations. The Company records a provision for a liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. The Company’s policy is to accrue for legal expenses in connection with legal proceedings and claims as they are incurred.

Following the public announcement of Sanofi’s election to terminate the Sanofi License Agreement and the subsequent decline in our stock price, two motions were submitted to the district court at Tel Aviv, Economic Department for the certification of a class action against MannKind and certain of our officers and directors. In general, the complaints alleged that MannKind and certain of our officers and directors violated Israeli and U.S. securities laws by making materially false and misleading statements regarding the prospects for Afrezza, thereby artificially inflating the price of its common stock. The plaintiffs are seeking monetary damages. In November 2016, the district court dismissed one of the actions without prejudice. In the remaining action, the district court will be asked to determine whether Israeli or U.S. law is applicable before the case can be certified as a class action. The deadline for plaintiff’s motion regarding the applicable law is due on May 14, 2017. The Company will vigorously defend against the claims advanced.

Contingencies — In connection with the Facility Agreement, on July 1, 2013, the Company also entered into a Milestone Rights Purchase Agreement (the “Milestone Agreement”) with Deerfield Private Design Fund and Horizon Santé FLML SÁRL (collectively, the “Milestone Purchasers”), pursuant to which the Company sold the Milestone Purchasers the Milestone Rights to receive payments up to $90.0 million upon the occurrence of specified strategic and sales milestones, including the first commercial sale of an Afrezza product in the United States and the achievement of specified net sales figures (see Note 6 – Borrowings).

Commitments — On July 31, 2014, the Company entered into a supply agreement (the “Insulin Supply Agreement”) with Amphastar France Pharmaceuticals S.A.S., a French corporation (“Amphastar”), pursuant to which Amphastar manufactures for and supplies to the Company certain quantities of recombinant human insulin for use in Afrezza. Under the terms of the Insulin Supply Agreement, Amphastar is responsible for manufacturing the insulin in accordance with the Company’s specifications and agreed-upon quality standards.

On November 9, 2016, the supply agreement with Amphastar was amended to extend the term over which the Company is required to purchase insulin, without reducing the total amount of insulin to be purchased. Under the amendment, annual minimum quantities of insulin to be purchased for calendar years 2017 through 2023 total an aggregate purchase price of €93.0 million at March 31, 2017. The Insulin Supply Agreement specifies that Amphastar will be deemed to have satisfied its obligations with respect to quantity, if the actual quantity supplied is within plus or minus ten percent (+/- 10%) of the quantity set forth in the applicable purchase order. In addition, the aggregate cancellation fees that the Company would incur in the event that the above insulin quantities are not purchased was lowered from $5.3 million for the period October 1, 2016 through 2018 to $3.4 million over the same period. The Company has not yet purchased any insulin under the amended agreement in 2017. The annual purchase requirements under the contract are as follows:


2017		€ 2.7 million
2018		€ 8.9 million
2019		€ 11.6 million
2020		€ 15.5 million
2021		€ 15.5 million
2022		€ 19.4 million
2023		€ 19.4 million

Unless earlier terminated, the term of the Insulin Supply Agreement with Amphastar expires on December 31, 2023 and can be renewed for additional, successive two year terms upon 12 months’ written notice given prior to the end of the initial term or any additional two year term. The Company and Amphastar each have normal and customary termination rights, including termination for material breach that is not cured within a specific time frame or in the event of liquidation, bankruptcy or insolvency of the other party. In addition, the Company may terminate the Insulin Supply Agreement upon two years’ prior written notice to Amphastar without cause or upon 30 days’ prior written notice to Amphastar if a controlling regulatory authority withdraws approval for Afrezza, provided, however, in the event of a termination pursuant to either of the latter two scenarios, the provisions of the Insulin Supply Agreement require the Company to pay the full amount of all unpaid purchase commitments due over the initial term within 60 calendar days of the effective date of such termination.

At March 31, 2017, the Company has other firm commitments with suppliers for an aggregate of $0.8 million.

Income Taxes

3 Months Ended

Mar. 31, 2017

Income Taxes

11. Income Taxes

Management of the Company has evaluated the positive and negative evidence bearing upon the realizability of its deferred tax assets and concluded, in accordance with the applicable accounting standards, that net deferred tax assets should be fully reserved.

The Company has assessed their position with regards to uncertainty in tax positions and believes that its income tax filing positions and deductions will be sustained on audit and does not anticipate any adjustments that will result in a material change to its financial position. Therefore, no reserves for uncertain income tax positions have been recorded pursuant to this guidance. Tax years since 2012 remain subject to examination by the major tax jurisdictions in which the Company is subject to tax.

The Company adopted ASU 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting in the current quarter. The adoption had no net impact on its income tax expense for the quarter and net deferred tax assets as of the date of adoption (See Note 9 – Stock-Based Compensation Expense).

Restructuring Charges

3 Months Ended

Mar. 31, 2017

Restructuring Charges

12. Restructuring Charges

As of March 31, 2017 and December 31, 2016, the Company had a remaining restructuring accrual balance of $0.8 million and $1.4 million, respectively which is recorded in accrued expenses and other current liabilities in the condensed consolidated balance sheets. The Company expects to substantially pay out the remainder of this obligation by the third quarter of 2017.

A reconciliation of beginning and ending liability balances for the restructuring charges is as follows (in thousands):


Description	2016 Restructuring			2015 Restructuring			Total
Accrual - January 1, 2017	$	209		$	1,167		$	1,376
Costs paid or settled		(185	)		(419	)		(604	)

Accrual - March 31, 2017	$	24		$	748		$	772

Subsequent Events

3 Months Ended

Mar. 31, 2017

Subsequent Events

13. Subsequent Events

Amendment to Facility Arrangement — On April 18, 2017, the Company entered into an Exchange Agreement with Deerfield pursuant to which the Company agreed to, among other things, (i) repay $4.0 million principal amount under the Tranche B notes, (ii) exchange $1.0 million principal amount under the Tranche B notes for 869,565 shares of the Company’s common stock (the “Tranche B Exchange Shares”) and (iii) exchange $5 million principal amount under the 2019 notes for 4,347,826 shares of the Company’s common stock (together with the “Tranche B Exchange Shares”, the “Exchange Shares”). The exchange price for the Exchange Shares is $1.15 per share. The principal amount being repaid and exchanged under the Tranche B notes and the principal amount being exchanged under the 2019 notes represents the principal amount that would have otherwise become due and payable in May 2017 and July 2017 under the Tranche B Notes and 2019 notes, respectively. The financial statements do not include the impacts of the Exchange Agreement as it occurred subsequent to March 31, 2017 and will be accounted for in April 2017.

Office Lease — On May 5, 2017, the Company executed an office lease with Russell Ranch Road II LLC to lease office space for the Company’s corporate headquarters in Valencia, California. The office lease commences on the earlier of (i) the date the Company commences business from the leased space or (ii) the later of the date of substantial completion of the build out by the landlord or August 1, 2017. The lease requires monthly payments of $40,951, increased by 3% annually, plus the estimated cost of maintaining the property by the landlord. The lease expires sixty-five months from the commencement date and contains a five year renewal option.

Description of Business and Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2017

Business

Reclassifications

Correction of an Immaterial Error


	2016 as
	Previously					2016 as
(In thousands)	Presented		Adjustments			Adjusted
Common stock	$	4,784	$	(3,827	)	$	957
Additional paid-in capital	$	2,549,212	$	3,827		$	2,553,039

Revenue Recognition

Revenue Recognition- Net Revenue - Collaborations

Revenue Recognition - Net Revenue - Commercial Product Sales

Gross-to-net Adjustments

Wholesaler Distribution Fees

Prompt Pay Discounts

Patient Discount and Co-Pay Assistance Programs

Deferred costs

Revenue Recognition - Revenue - Bulk Insulin Sales

Cost of Goods Sold

Accounts Receivable and Allowances

Inventories

Recognized Loss on Purchase Commitments

Fair Value of Financial Instruments

Stock-Based Compensation

Warrants

Net Income (Loss) Per Share of Common Stock


	Three Months Ended March 31,
	2017		2016
Restricted stock units		709,004		789,201
Senior convertible notes		814,561		814,561
Warrants		9,740,597		31,861
Stock options		5,941,408		4,820,494

		17,205,570		6,456,117

Recently Issued Accounting Standards

Description of Business and Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2017

Summary of Correction of Error for Prior Period Presented

The Company has revised the historical consolidated financial information presented herein to reflect the correction of this error for the prior period presented.


	2016 as
	Previously					2016 as
(In thousands)	Presented		Adjustments			Adjusted
Common stock	$	4,784	$	(3,827	)	$	957
Additional paid-in capital	$	2,549,212	$	3,827		$	2,553,039

Schedule of Potentially Dilutive Common Stock Equivalent Securities


	Three Months Ended March 31,
	2017		2016
Restricted stock units		709,004		789,201
Senior convertible notes		814,561		814,561
Warrants		9,740,597		31,861
Stock options		5,941,408		4,820,494

		17,205,570		6,456,117

Inventories (Tables)

3 Months Ended

Mar. 31, 2017

Components of Inventories

Inventories consist of the following (in thousands):


	March 31, 2017		December 31, 2016
Work-in-process	$	3,296	$	2,120
Finished goods		402		211

Total inventory	$	3,698	$	2,331

Property and Equipment (Tables)

3 Months Ended

Mar. 31, 2017

Property and Equipment, Net

Property and equipment consist of the following (in thousands):


	Estimated Useful Life (Years)		March 31, 2017			December 31, 2016
Land		—	$	875		$	875
Buildings		39-40		17,389			17,389
Building improvements		5-40		34,957			34,957
Machinery and equipment		3-15		62,992			62,992
Furniture, fixtures and office equipment		5-10		3,556			3,556
Computer equipment and software		3		8,531			8,531
Construction in progress		—		202			202

				128,502			128,502
Less accumulated depreciation				(100,020	)		(99,575	)

Total property and equipment, net			$	28,482		$	28,927

Accrued Expenses and Other Current Liabilities (Tables)

3 Months Ended

Mar. 31, 2017

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consist of the following (in thousands):


	March 31, 2017		December 31, 2016
Salary and related expenses	$	3,900	$	3,814
Current portion of milestone rights liability		1,643		—
Professional fees		1,505		875
Discounts and allowances for commercial product sales		996		754
Sales and marketing services		821		144
Restructuring		772		1,376
Accrued interest		221		619
Other		799		355

Accrued expenses and other current liabilities	$	10,657	$	7,937

Borrowings (Tables)

3 Months Ended

Mar. 31, 2017

Summary of Borrowings

Borrowings consist of the following (in thousands):


	March 31, 2017			December 31, 2016
Facility Financing Obligation (2019 Notes)
Principal amount	$	75,000		$	75,000
Unamortized debt discount		(3,205	)		(3,661	)

Net carrying amount	$	71,795		$	71,339

Senior Convertible Notes (2018 Notes)
Principal amount	$	27,690		$	27,690
Unamortized premium		367			426
Unaccreted debt issuance costs		(415	)		(481	)

Net carrying amount	$	27,642		$	27,635

Note payable to principal stockholder - net carrying amount	$	49,521		$	49,521

Accretion of Debt Issuance Cost and Debt Discount

Accretion of debt issuance cost and debt discount in connection with the Facility Agreement during the three months ended March 31, 2017 and 2016 are as follows (in thousands):


	Three Months Ended March 31,
	2017		2016
Accretion expense - debt issuance cost	$	9	$	9

Accretion expense - debt discount	$	447	$	419

Fair Value of Financial Instruments (Tables)

3 Months Ended

Mar. 31, 2017

Fair Value of Financial Instruments

The following tables set forth the fair value of the Company’s financial instruments (in millions):


	As of March 31, 2017
	Carrying Value		Level 1		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	27.6	$	—	$	—	$	23.1	$	23.1
Facility financing obligation		71.8		—		—		74.8		74.8
Milestone rights		8.9		—		—		18.9		18.9
Warrant liability (at recurring fair value)		0.8		—		—		0.8		0.8

Total financial liabilities	$	109.1	$	—	$	—	$	117.6	$	117.6


	As of December 31, 2016
	Carrying Value		Level 2		Level 2		Level 3		Total
Financial liabilities:
Senior convertible notes	$	27.6	$	—	$	—	$	22.9	$	22.9
Facility financing obligation		71.3		—		—		74.5		74.5
Milestone rights		8.9		—		—		18.4		18.4
Warrant liability (at recurring fair value)		7.4		—		—		7.4		7.4

Total financial liabilities	$	115.2	$	—	$	—	$	123.2	$	123.2

Fair Values of Warrant Liability which Include Level 3 Instruments

The following table provides a roll forward of the fair value of the warrant liability which is the only Level 3 financial instrument that is carried at fair value (in millions):


	Warrants
Fair value, January 1, 2017	$	7.4
Additions		—
Changes in fair value		(6.6	)
Payments		—

Fair value, March 31, 2017	$	0.8

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2017

Annual Purchase Requirements under Contract

The annual purchase requirements under the contract are as follows:


2017		€ 2.7 million
2018		€ 8.9 million
2019		€ 11.6 million
2020		€ 15.5 million
2021		€ 15.5 million
2022		€ 19.4 million
2023		€ 19.4 million

Restructuring Charges (Tables)

3 Months Ended

Mar. 31, 2017

Reconciliation of Beginning and Ending Liability Balances for Restructuring Charges

A reconciliation of beginning and ending liability balances for the restructuring charges is as follows (in thousands):


Description	2016 Restructuring			2015 Restructuring			Total
Accrual - January 1, 2017	$	209		$	1,167		$	1,376
Costs paid or settled		(185	)		(419	)		(604	)

Accrual - March 31, 2017	$	24		$	748		$	772

Description of Business and Significant Accounting Policies - Additional Information (Detail)				1 Months Ended	3 Months Ended		12 Months Ended
	Apr. 18, 2017 USD ($)	Mar. 01, 2017 shares	Nov. 09, 2016 USD ($)	Jan. 31, 2017 USD ($)	Mar. 31, 2017 USD ($) Distributor $ / shares shares	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($) Distributor shares	Sep. 30, 2016 shares	Dec. 31, 2015 USD ($)	Sep. 23, 2014
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Net revenue from collaboration					$ 63,000
Accumulated deficit					(2,753,889,000)		$ (2,737,565,000)
Cash and cash equivalents					$ 47,978,000	$ 27,653,000	$ 22,895,000		$ 59,074,000
Stock market bidding requirements, description					On September 14, 2016, the Company received notice from the Listing Qualifications Department of the NASDAQ Stock Market indicating that in the previous 30 consecutive business days, the bid price for the common stock closed below the minimum of $1.00 per share required for continued inclusion on the NASDAQ Global Market.
Minimum closing bid requirement, price per share \| $ / shares					$ 1.00
Stock split of common stock		0.2
Common stock, shares authorized \| shares		140,000,000			140,000,000		140,000,000	700,000,000
Reverse stock split, description					The Company’s board of directors approved a reverse stock split 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 the Company’s Amended and Restated Certificate of Incorporation to effect the 1-for-5 reverse stock split of the Company’s outstanding common stock and to reduce the authorized number of shares of the Company’s common stock from 700,000,000 to 140,000,000 shares. The Company’s common stock began trading on the NASDAQ Global Market on a split-adjusted basis when the market opened on March 3, 2017. As a result, all common stock share amounts included in these condensed consolidated financial statements have been retroactively reduced by a factor of five, and all common stock per share amounts have been increased by a factor of five, with the exception of the Company’s common stock par value.
Deferred revenue					$ 1,844,000		$ 3,419,000
Net revenue - commercial product sales					$ 1,196,000
Number of wholesale distributors \| Distributor					3
Percentage of product shipments to wholesale distributors					93.00%
Product sales					$ 3,009,000
Cash discount as incentive for prompt payment					2.00%
Deferred revenue from sale of raw insulin					$ 0		$ 1,800,000
Number of wholesale distributors accounted for gross accounts receivable \| Distributor					3		3
Allowance for doubtful accounts					$ 0		$ 0
Percentage of accounts receivable from major wholesale distributors					92.00%		95.00%
Loss on purchase commitments, number of contracts recognized					0		0
License and Collaboration Agreement with Sanofi
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Gain on extinguishment of debt			$ 500,000
Senior notes, effective interest rate										8.50%
Third party logistics
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Deferred revenue					$ 1,800,000		$ 1,600,000
Insulin Put
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Net revenue from collaboration							10,200,000
AFREZZA product sales
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Product sales revenue gross to net adjustments					$ 400,000	0
Product sales revenue gross to net adjustments percentage					27.00%
Product sales						$ 0
Less portion of commitment asset
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Cash repayment of senior notes under exchange agreement					$ 4,000,000
Conversion of notes to common shares, value					$ 1,000,000
Minimum \| AFREZZA product sales
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Sales return right following product expiration in months					6 months
Maximum \| AFREZZA product sales
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Sales return right following product expiration in months					12 months
Senior convertible notes due December 31, 2019
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Conversion of notes to common shares, value					$ 5,000,000
Allowance for Sales Returns
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Allowance for returns					300,000		0
Principal stockholder \| Loan Arrangement
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Amount available for future borrowings					30,100,000		30,100,000
Principal stockholder \| Senior convertible notes due December 31, 2019 \| Loan Arrangement
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Amount available for future borrowings					30,100,000
Sanofi-Aventis Deutschland GmbH \| License and Collaboration Agreement with Sanofi
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Net revenue from collaboration					172,000,000
Up-front fee					150,000,000
Sanofi-Aventis Deutschland GmbH \| Insulin Put \| License and Collaboration Agreement with Sanofi
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Net revenue from collaboration					19,400,000
Sanofi-Aventis Deutschland GmbH \| AFREZZA product sales \| License and Collaboration Agreement with Sanofi
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Net revenue from collaboration					$ 17,500,000
Sanofi-Aventis Deutschland GmbH \| Put Option
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Payment for insulin put option				$ 30,600,000			$ 30,600,000
Aventisub LLC
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Outstanding loan balance forgive			$ 72,000,000
Deerfield \| Senior convertible notes due December 31, 2019
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Senior notes, effective interest rate					9.75%
Deerfield \| Senior convertible notes due December 31, 2019 \| Less portion of commitment asset
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Senior notes, effective interest rate					8.75%
Deerfield \| Senior convertible notes due December 31, 2019 \| Less portion of commitment asset \| Subsequent Event
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Cash repayment of senior notes under exchange agreement	$ 4,000,000
Conversion of notes to common shares, value	1,000,000
Deerfield \| Senior convertible notes due December 31, 2019 \| Tranche 1 Notes \| Subsequent Event
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Conversion of notes to common shares, value	$ 5,000,000
Deerfield \| Senior convertible notes due December 31, 2019 \| Minimum \| Less portion of commitment asset
Organization, Consolidation and Presentation of Financial Statements Disclosure [Line Items]
Available amount of credit facility under covenant restrictions					$ 25,000,000

Description of Business and Significant Accounting Policies - Summary of Correction of Error for Prior Period Presented (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Common stock	$ 958	$ 957
Additional paid-in capital	$ 2,554,230	2,553,039
Previously Presented
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Common stock		4,784
Additional paid-in capital		2,549,212
Adjustments
Error Corrections and Prior Period Adjustments Restatement [Line Items]
Common stock		(3,827)
Additional paid-in capital		$ 3,827

Schedule of Potentially Dilutive Common Stock Equivalent Securities (Detail) - shares	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	17,205,570	6,456,117
Restricted Stock Units
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	709,004	789,201
Senior Convertible Notes
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	814,561	814,561
Warrants
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	9,740,597	31,861
Stock Options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Anti-dilutive securities excluded from computation of earnings per share	5,941,408	4,820,494

Components of Inventories (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Inventory [Line Items]
Work-in-process	$ 3,296	$ 2,120
Finished goods	402	211
Total inventory	$ 3,698	$ 2,331

Property and Equipment, Net (Detail) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 128,502	$ 128,502
Less accumulated depreciation	(100,020)	(99,575)
Total property and equipment, net	28,482	28,927
Land
Property, Plant and Equipment [Line Items]
Property and equipment - gross	875	875
Buildings
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 17,389	17,389
Buildings \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	39 years
Buildings \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	40 years
Building Improvements
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 34,957	34,957
Building Improvements \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	5 years
Building Improvements \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	40 years
Machinery and Equipment
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 62,992	62,992
Machinery and Equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	3 years
Machinery and Equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	15 years
Furniture, fixtures and office equipment
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 3,556	3,556
Furniture, fixtures and office equipment \| Minimum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	5 years
Furniture, fixtures and office equipment \| Maximum
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	10 years
Computer Equipment and Software
Property, Plant and Equipment [Line Items]
Estimated Useful Life (Years)	3 years
Property and equipment - gross	$ 8,531	8,531
Construction in Progress
Property, Plant and Equipment [Line Items]
Property and equipment - gross	$ 202	$ 202

Property and Equipment - Additional Information (Detail) - USD ($) $ in Thousands			3 Months Ended
	Feb. 17, 2017	Jan. 06, 2017	Mar. 31, 2017	Mar. 31, 2016
Depreciation and Other Amortization Expenses [Line Items]
Depreciation and amortization expense			$ 400	$ 600
Cash received from property, plant and equipment			$ 16,651	$ 17
Land, Buildings and Improvements \| California
Depreciation and Other Amortization Expenses [Line Items]
Amount of divestiture of long-lived		$ 17,300
Cash received from property, plant and equipment	$ 17,300
Net cash received from property, plant and equipment		16,700
Payments for commissions and other fees		$ 600

Accrued Expenses and Other Current Liabilities (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Accrued Expenses and Other Current Liabilities [Line Items]
Salary and related expenses	$ 3,900	$ 3,814
Current portion of milestone rights liability	1,643
Professional fees	1,505	875
Discounts and allowances for commercial product sales	996	754
Sales and marketing services	821	144
Restructuring	772	1,376
Accrued interest	221	619
Other	799	355
Accrued expenses and other current liabilities	$ 10,657	$ 7,937

Related-Party Arrangements - Additional Information (Detail)	1 Months Ended			3 Months Ended
	May 31, 2015 USD ($) ft²	Oct. 31, 2013 USD ($)	Oct. 31, 2007 USD ($)	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Related Party Transaction [Line Items]
Accrued interest of related party debt				$ 10,000,000		$ 9,300,000
Interest expense on note payable principal stockholder				$ 714,000	$ 721,000
Principal stockholder
Related Party Transaction [Line Items]
Loan agreement with related party		$ 370,000,000	$ 350,000,000
Principal stockholder \| Amended Agreement
Related Party Transaction [Line Items]
Maturity date				Jan. 05, 2020
Principal stockholder \| Loan Arrangement
Related Party Transaction [Line Items]
Principal amount outstanding under credit facility				$ 49,500,000
Amount available for future borrowings				$ 30,100,000		$ 30,100,000
Fixed borrowing rate				5.84%
Related party transaction prepayment period				90 days
Aggregate principal amount cancelled				$ 105,000,000
Principal stockholder \| Loan Arrangement \| Maximum
Related Party Transaction [Line Items]
Amount prepaid for cancellation of indebtedness				$ 200,000,000
Principal stockholder \| Loan Arrangement \| Minimum
Related Party Transaction [Line Items]
Number of months advances outstanding				12 months
Related Party Debt \| Letter Agreement
Related Party Transaction [Line Items]
Description of variable rate interest				The interest rate will increase to the one-year LIBOR calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum.
Related Party Debt \| Letter Agreement \| LIBOR
Related Party Transaction [Line Items]
Interest rate (LIBOR)				5.00%
Mann Foundation \| Sublease Agreement
Related Party Transaction [Line Items]
Area of office space leased \| ft²	12,500
Lease expiration period				2017-04
Lease payment				$ 62,000	$ 65,000
Amount of leases renewed per month	$ 21,000

Summary of Borrowings (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Debt Instrument [Line Items]
Note payable to principal stockholder - net carrying amount	$ 49,521	$ 49,521
Senior convertible notes due December 31, 2019
Debt Instrument [Line Items]
Principal amount	75,000	75,000
Unamortized debt discount	(3,205)	(3,661)
Net carrying amount	71,795	71,339
5.75% Senior convertible notes due August 15, 2018
Debt Instrument [Line Items]
Principal amount	27,690	27,690
Unamortized premium	367	426
Unaccreted debt issuance costs	(415)	(481)
Net carrying amount	$ 27,642	$ 27,635

Borrowings - Additional Information (Detail)		3 Months Ended		12 Months Ended
Borrowings - Additional Information (Detail)	Aug. 10, 2015 d $ / shares	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)	Dec. 31, 2014 USD ($) shares	Dec. 31, 2016 USD ($)	Jul. 28, 2015 USD ($)	Jul. 01, 2013 USD ($)
Debt Instrument [Line Items]
Facility Agreement, total principle payment in 2017		$ 20,000,000
Facility Agreement, total principle payment in 2018		20,000,000
Facility Agreement, total principle payment in 2019		35,000,000
Other liabilities		117,600,000			$ 123,200,000
Milestone Rights Liability
Debt Instrument [Line Items]
Other liabilities		18,900,000			18,400,000
Less portion of commitment asset
Debt Instrument [Line Items]
Cash repayment of senior notes under exchange agreement		4,000,000
Conversion of debt		$ 1,000,000
Deerfield
Debt Instrument [Line Items]
Principal repayment schedule, start date		Jul. 01, 2016
Principal repayment schedule, end date		Dec. 09, 2019
Conversion Option, value				$ 93,500,000
Conversion Option, shares \| shares				3,464,616
Amortization of notes premium		$ 447,000	$ 419,000
Deerfield \| Milestone Rights Liability
Debt Instrument [Line Items]
Long term liability		8,900,000
Deerfield \| Milestone Rights Liability \| Maximum
Debt Instrument [Line Items]
Contingent liability for milestone payments		90,000,000					$ 90,000,000
Deerfield \| Tranche 1 Notes
Debt Instrument [Line Items]
Conversion Option, value				$ 20,000,000
Deerfield \| Tranche 2 note
Debt Instrument [Line Items]
Conversion Option, value				33,500,000
Deerfield \| Tranche 3 note
Debt Instrument [Line Items]
Conversion Option, value				$ 40,000,000
Senior convertible notes due December 31, 2019
Debt Instrument [Line Items]
Debt facility principal amount		75,000,000			75,000,000
Conversion of debt		5,000,000
Carrying value		71,795,000			71,339,000
Senior convertible notes due December 31, 2019 \| Deerfield
Debt Instrument [Line Items]
Debt facility principal amount		$ 55,000,000
Senior notes, effective interest rate		9.75%
Accrued expenses		$ 1,600,000
Other current liabilities		1,600,000
Other liabilities		8,900,000
Senior convertible notes due December 31, 2019 \| Deerfield \| Milestone Rights Liability
Debt Instrument [Line Items]
Long term liability		7,300,000			8,900,000
Senior convertible notes due December 31, 2019 \| Deerfield \| Milestone Rights Liability \| Danbury Facility
Debt Instrument [Line Items]
Carrying value		28,500,000
Senior convertible notes due December 31, 2019 \| Deerfield \| Less portion of commitment asset
Debt Instrument [Line Items]
Debt facility principal amount		$ 20,000,000
Senior notes, effective interest rate		8.75%
Senior convertible notes due December 31, 2019 \| Deerfield \| Less portion of commitment asset \| Minimum
Debt Instrument [Line Items]
Available amount of credit facility under covenant restrictions		$ 25,000,000
Senior convertible notes due December 31, 2019 \| Deerfield \| Less portion of commitment asset \| Minimum \| Facility Agreement
Debt Instrument [Line Items]
Available amount of credit facility under covenant restrictions		25,000,000
5.75% Senior convertible notes due August 15, 2018
Debt Instrument [Line Items]
Debt facility principal amount		27,690,000			27,690,000
Senior notes, effective interest rate	5.75%
Carrying value		$ 27,642,000			$ 27,635,000
No of convertible shares	29
Principal amount per share \| $ / shares	$ 1,000
Conversion price of shares \| $ / shares	$ 34.00
Percentage of repurchase price	100.00%
Debt Instrument, redemption description		On or after the date that is one year following the original issue date of the 2018 notes, the Company will have the right to redeem for cash all or part of the 2018 notes if the last reported sale price of its common stock exceeds 130% of the conversion price then in effect for 20 or more trading days during the 30 consecutive trading day period ending on the trading day immediately prior to the date of the redemption notice. The redemption price will equal the sum of 100% of the principal amount of the 2018 notes to be redeemed, plus accrued and unpaid interest.
Percentage of conversion price equaling stock price	130.00%
Number of trading days \| d	20
Consecutive trading days	30 days
Debt Issuance Cost						$ 800,000
Amortization of notes premium		$ 59,000	57,000
Accretion of debt issuance costs		$ 66,000	$ 62,000

Accretion of Debt Issuance Cost and Debt Discount in Connection with Facility Financing Agreement (Detail) - Deerfield - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2017	Mar. 31, 2016
Debt Instrument [Line Items]
Accretion expense - debt issuance cost	$ 9	$ 9
Accretion expense - debt discount	$ 447	$ 419

Collaboration Arrangements - Additional Information (Detail) - USD ($)					1 Months Ended		3 Months Ended		12 Months Ended
	Dec. 30, 2016	Nov. 09, 2016	Feb. 10, 2016	Jan. 04, 2016	Jan. 31, 2017	Sep. 30, 2016	Mar. 31, 2017	Mar. 31, 2016	Dec. 31, 2016	Dec. 31, 2015	Sep. 23, 2014
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration							$ 63,000
Paid-in-kind interest								$ 1,168,000
Insulin Put
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration									$ 10,200,000
Sanofi-Aventis Deutschland GmbH \| Put Option
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Payment for insulin put option					$ 30,600,000				$ 30,600,000
Aventisub LLC
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Outstanding loan balance forgiven		$ 72,000,000
License and Collaboration Agreement with Sanofi
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Profits and losses sharing percentage							35.00%
Termination date				Apr. 04, 2016
Maximum secured loan facility											$ 175,000,000
Senior notes, effective interest rate											8.50%
Gain on extinguishment of debt		$ 500,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue - nonrefundable license fee							$ 150,000,000
Net revenue from collaboration							$ 172,000,000
Profits and losses sharing percentage							65.00%
Milestone receivable							$ 25,000,000
Deferred cost										$ 13,500,000
Secured loan facility, amount borrowed			$ 17,900,000							44,500,000
Secured loan facility, amount owed						$ 71,200,000
Paid-in-kind interest						$ 5,800,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Up Front Payment [Member]
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration							150,000,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Milestone Payment One
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration							25,000,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Milestone Payment Two
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration							25,000,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| AFREZZA product sales
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Deferred revenue - nonrefundable license fee										17,500,000
Net revenue from collaboration							17,500,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Insulin Put
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration							19,400,000
License and Collaboration Agreement with Sanofi \| Sanofi-Aventis Deutschland GmbH \| Operating loss Sharing
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Net revenue from collaboration							(64,900,000)
Company's total portion of loss sharing										$ 57,700,000
Receptor
Collaborative Arrangements and Non-collaborative Arrangement Transactions [Line Items]
Nonrefundable payments							400,000
Nonrefundable option exercise and license fee	$ 1,000,000
Reduction in research and development expense							400,000
Deferred revenue - nonrefundable license fee							$ 1,000,000
Deferred revenue recognition period							4 years
Net revenue from collaboration							$ 100,000

Fair Value of Financial Instruments - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Jul. 01, 2013
Fair Value of Financial Instruments [Line Items]
Cash equivalents, money market funds	$ 47,400,000	$ 20,500,000
Fair value of the liability, percentage increase	8.00%
Fair value of the liability, percentage decrease	7.00%
Maximum
Fair Value of Financial Instruments [Line Items]
Probabilities of meeting the milestones, percentage decrease	10.00%
Fair value of the liability, percentage decrease	30.00%
Minimum
Fair Value of Financial Instruments [Line Items]
Probabilities of meeting the milestones, percentage decrease	5.00%
Fair value of the liability, percentage decrease	17.00%
Milestone Rights Liability \| Deerfield
Fair Value of Financial Instruments [Line Items]
Long term liability	$ 8,900,000
Milestone Rights Liability \| Deerfield \| Maximum
Fair Value of Financial Instruments [Line Items]
Contingent liability for milestone payments	90,000,000		$ 90,000,000
Milestone Rights Liability \| Senior convertible notes due December 31, 2019 \| Deerfield
Fair Value of Financial Instruments [Line Items]
Long term liability	7,300,000	8,900,000
Warrant Liability
Fair Value of Financial Instruments [Line Items]
Fair value of warrants liability	$ 800,000	$ 7,400,000
Valuation technique	Monte Carlo valuation pricing model
Fair value assumption, risk-free rate	1.24%
Warrant liability fair value assumptions, dividend yield	0.00%
Warrant liability fair value assumptions, remaining term	1 year 1 month 6 days
Fair value assumption, stock price volatility	100.00%
Fair Value, Inputs, Level 3 \| Milestone Rights Liability
Fair Value of Financial Instruments [Line Items]
Fair value of warrants liability	$ 18,900,000
Fair Value, Inputs, Level 3 \| Market Approach Valuation Technique \| 5.75% Senior convertible notes due August 15, 2018 \| Senior Convertible Notes
Fair Value of Financial Instruments [Line Items]
Fair value assumption, risk-free rate	20.00%
Fair value assumption, stock price volatility	115.00%
Fair Value, Inputs, Level 3 \| Income Approach Valuation Technique \| Senior convertible notes due December 31, 2019
Fair Value of Financial Instruments [Line Items]
Market discount rate	12.00%
Fair Value, Inputs, Level 3 \| Income Approach Valuation Technique \| Milestone Rights Liability
Fair Value of Financial Instruments [Line Items]
Market discount rate	14.50%

Fair Value of Financial Instruments (Detail) - USD ($) $ in Millions	Mar. 31, 2017	Dec. 31, 2016
Financial liabilities:
Financial liabilities fair value	$ 117.6	$ 123.2
Warrant Liability
Financial liabilities:
Financial liabilities fair value	0.8	7.4
Milestone Rights Liability
Financial liabilities:
Financial liabilities fair value	18.9	18.4
Senior Convertible Notes \| Senior Convertible Notes
Financial liabilities:
Financial liabilities fair value	23.1	22.9
Facility Financing Obligation
Financial liabilities:
Financial liabilities fair value	74.8	74.5
Carrying Value
Financial liabilities:
Financial liabilities fair value	109.1	115.2
Carrying Value \| Warrant Liability
Financial liabilities:
Financial liabilities fair value	0.8	7.4
Carrying Value \| Milestone Rights Liability
Financial liabilities:
Financial liabilities fair value	8.9	8.9
Carrying Value \| Senior Convertible Notes \| Senior Convertible Notes
Financial liabilities:
Financial liabilities fair value	27.6	27.6
Carrying Value \| Facility Financing Obligation
Financial liabilities:
Financial liabilities fair value	71.8	71.3
Estimate of Fair Value Measurement \| Fair Value, Inputs, Level 3
Financial liabilities:
Financial liabilities fair value	117.6	123.2
Estimate of Fair Value Measurement \| Fair Value, Inputs, Level 3 \| Warrant Liability
Financial liabilities:
Financial liabilities fair value	0.8	7.4
Estimate of Fair Value Measurement \| Fair Value, Inputs, Level 3 \| Milestone Rights Liability
Financial liabilities:
Financial liabilities fair value	18.9	18.4
Estimate of Fair Value Measurement \| Senior Convertible Notes \| Fair Value, Inputs, Level 3 \| Senior Convertible Notes
Financial liabilities:
Financial liabilities fair value	23.1	22.9
Estimate of Fair Value Measurement \| Facility Financing Obligation \| Fair Value, Inputs, Level 3
Financial liabilities:
Financial liabilities fair value	$ 74.8	$ 74.5

Fair Value of Warrant Liability Carried at Fair Value (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2017 USD ($)
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair values of financial liabilities, beginning balance	$ 123.2
Fair values of financial liabilities, ending balance	117.6
Warrant Liability
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items]
Fair values of financial liabilities, beginning balance	7.4
Additions	0.0
Changes in fair value	(6.6)
Payments	0.0
Fair values of financial liabilities, ending balance	$ 0.8

Stock-Based Compensation - Additional Information (Detail)	3 Months Ended		12 Months Ended
	Mar. 31, 2017 USD ($) Tranche $ / shares shares	Mar. 31, 2016 USD ($)	Dec. 31, 2016 USD ($)
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Excess tax benefits related to windfalls			$ 11,600,000
Stock-based compensation expense	$ 1,300,000	$ 1,300,000
Number of restricted stock units issued \| shares	77,680
Weighted average grant date fair value of the stock options granted \| $ / shares	$ 1.86
Number of equal tranches \| Tranche	4
Weighted average vesting period for unrecognized compensation expense	2 years 9 months 18 days
Vest in Four Equal Tranches
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate number of shares granted to awards, share-based compensation arrangements \| shares	463,000
Vest Over Four Year Period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate number of shares granted to awards, share-based compensation arrangements \| shares	120,180
Tranche One
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to options	$ 100,000
Tranche achievement date	2017-12
Tranche Two
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, share-based compensation arrangements	$ 0
Tranche Three
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, share-based compensation arrangements	0
Tranche Four
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation cost, share-based compensation arrangements	$ 0
Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Weighted average grant date fair value of the stock options granted \| $ / shares	$ 2.70
Aggregate number of shares granted to awards, share-based compensation arrangements \| shares	583,180
Stock Options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	4 years
Unrecognized compensation expense related to options	$ 3,300,000
Stock Options \| Common Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of stock granted, share-based compensation arrangements	1,100,000
Restricted Stock Units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of Restricted stock options granted , value	$ 200,000
Weighted average grant date fair value of the stock options granted \| $ / shares	$ 2.70
Unrecognized compensation expense related to non-option	$ 4,100,000
Options vest over vesting period
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unrecognized compensation expense related to options	$ 3,800,000

Commitments and Contingencies - Additional Information (Detail) € in Millions	3 Months Ended	24 Months Ended
	Mar. 31, 2017 EUR (€)	Oct. 01, 2018 USD ($)	Mar. 31, 2017 USD ($)	Jul. 01, 2013 USD ($)
Commitments and Contingencies [Line Items]
Purchase commitment amount under Insulin Supply Agreement \| €	€ 93.0
Supply Agreement expiration period	Dec. 31, 2023
Supply Agreement renewal period	2 years
Scenario Forecast
Commitments and Contingencies [Line Items]
Purchase commitment cancellation fees		$ 3,400,000
Scenario Forecast \| Before Amendment
Commitments and Contingencies [Line Items]
Purchase commitment cancellation fees		$ 5,300,000
Supply Commitment
Commitments and Contingencies [Line Items]
Purchase commitment obligation			$ 800,000
Deerfield \| Milestone Rights Liability \| Maximum
Commitments and Contingencies [Line Items]
Contingent liability for milestone payments			$ 90,000,000	$ 90,000,000

Annual Purchase Requirements under Contract (Detail) € in Millions	Mar. 31, 2017 EUR (€)
Annual Purchase Requirements under Contract
2017	€ 2.7
2018	8.9
2019	11.6
2020	15.5
2021	15.5
2022	19.4
2023	€ 19.4

Restructuring Charges - Additional information (Detail) - USD ($) $ in Thousands	Mar. 31, 2017	Dec. 31, 2016
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 772	$ 1,376
Accrued Expenses and Other Current Liabilities
Restructuring Cost and Reserve [Line Items]
Restructuring	$ 800	$ 1,400

Reconciliation of Beginning and Ending Liability Balances for Restructuring Charges (Detail) $ in Thousands	3 Months Ended
	Mar. 31, 2017 USD ($)
Restructuring Cost and Reserve [Line Items]
Accrual - Beginning balance	$ 1,376
Costs paid or settled	(604)
Accrual - Ending balance	772
Twenty Sixteen Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Accrual - Beginning balance	209
Costs paid or settled	(185)
Accrual - Ending balance	24
Twenty Fifteen Restructuring Plan
Restructuring Cost and Reserve [Line Items]
Accrual - Beginning balance	1,167
Costs paid or settled	(419)
Accrual - Ending balance	$ 748

Subsequent Events - Additional Information (Detail) - USD ($)			3 Months Ended	12 Months Ended
	May 05, 2017	Apr. 18, 2017	Mar. 31, 2017	Dec. 31, 2014
Senior convertible notes due December 31, 2019
Subsequent Event [Line Items]
Conversion of notes to common shares, value			$ 5,000,000
Less portion of commitment asset
Subsequent Event [Line Items]
Cash repayment of senior notes under exchange agreement			4,000,000
Conversion of notes to common shares, value			$ 1,000,000
Deerfield
Subsequent Event [Line Items]
Conversion of notes to common shares, shares				3,464,616
Deerfield \| Less portion of commitment asset \| Senior convertible notes due December 31, 2019 \| Subsequent Event
Subsequent Event [Line Items]
Cash repayment of senior notes under exchange agreement		$ 4,000,000
Conversion of notes to common shares, value		$ 1,000,000
Deerfield \| Tranche B Exchange Shares \| Senior convertible notes due December 31, 2019 \| Subsequent Event
Subsequent Event [Line Items]
Conversion of notes to common shares, shares		869,565
Exchange price per share		$ 1.15
Deerfield \| Tranche 1 Notes \| Senior convertible notes due December 31, 2019 \| Subsequent Event
Subsequent Event [Line Items]
Conversion of notes to common shares, value		$ 5,000,000
Conversion of notes to common shares, shares		4,347,826
Russell Ranch Road II LLC [Member] \| Subsequent Event
Subsequent Event [Line Items]
Lease monthly rental payments	$ 40,951
Percentage of annual increase in lease payment	3.00%
Lease expiration period	65 months
Lease renewal option	5 years