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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

Form 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2020

Or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                  to                 .

Commission file number: 000-50865

 

MannKind Corporation

(Exact name of registrant as specified in its charter)

 

 

Delaware

13-3607736

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

 

 

30930 Russell Ranch Road, Suite 300

Westlake Village, California

91362

(Address of principal executive offices)

(Zip Code)

(818) 661-5000

(Registrant’s telephone number, including area code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock, par value $0.01 per share

 

MNKD

 

The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes      No   

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

 

 

 

 

Non-accelerated filer

Smaller reporting company

 

 

 

 

 

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes      No  

As of July 13, 2020, there were 229,174,914 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

 

 


 

MANNKIND CORPORATION

Form 10-Q

For the Quarterly Period Ended June 30, 2020

TABLE OF CONTENTS

 

 

Page

PART I: FINANCIAL INFORMATION

2

 

 

Item 1. Financial Statements (Unaudited)

2

Condensed Consolidated Balance Sheets: June 30, 2020 and December 31, 2019

2

Condensed Consolidated Statements of Operations: Three and six months ended June 30, 2020 and 2019

3

Condensed Consolidated Statements of Comprehensive Loss: Three and six months ended June 30, 2020 and 2019

4

Condensed Consolidated Statements of Stockholders’ Deficit: Three and six months ended June 30, 2020 and 2019

5

Condensed Consolidated Statements of Cash Flows: Six months ended June 30, 2020 and 2019

6

Notes to Condensed Consolidated Financial Statements

7

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

29

Item 3. Quantitative and Qualitative Disclosures About Market Risk

37

Item 4. Controls and Procedures

37

 

 

PART II: OTHER INFORMATION

38

 

 

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

38

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

64

Item 3. Defaults Upon Senior Securities

64

Item 4. Mine Safety Disclosures

64

Item 5. Other Information

64

Item 6. Exhibits

65

 

 

SIGNATURES

67

 

1


 

PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MANNKIND CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except per share data)

 

 

 

June 30, 2020

 

 

December 31, 2019

 

ASSETS

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

63,222

 

 

$

29,906

 

Restricted cash

 

 

316

 

 

 

316

 

Short-term investments

 

 

 

 

 

19,978

 

Accounts receivable, net

 

 

3,366

 

 

 

3,513

 

Inventory

 

 

3,823

 

 

 

4,155

 

Prepaid expenses and other current assets

 

 

1,856

 

 

 

2,889

 

Total current assets

 

 

72,583

 

 

 

60,757

 

Property and equipment, net

 

 

26,187

 

 

 

26,778

 

Other assets

 

 

4,011

 

 

 

6,190

 

Total assets

 

$

102,781

 

 

$

93,725

 

 

 

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' DEFICIT

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

5,821

 

 

$

4,789

 

Accrued expenses and other current liabilities

 

 

14,706

 

 

 

15,904

 

Short-term notes payable

 

 

5,387

 

 

 

5,028

 

Deferred revenue — current

 

 

32,184

 

 

 

32,503

 

Recognized loss on purchase commitments — current

 

 

9,841

 

 

 

7,394

 

Total current liabilities

 

 

67,939

 

 

 

65,618

 

Promissory notes

 

 

70,024

 

 

 

70,020

 

Accrued interest — promissory notes

 

 

4,538

 

 

 

2,002

 

Long-term Midcap credit facility

 

 

39,304

 

 

 

38,851

 

Senior convertible notes

 

 

5,000

 

 

 

5,000

 

Paycheck Protection Program loan — long term

 

 

2,030

 

 

 

 

Recognized loss on purchase commitments — long term

 

 

81,027

 

 

 

84,639

 

Operating lease liability

 

 

1,843

 

 

 

2,514

 

Deferred revenue  — long term

 

 

4,860

 

 

 

8,344

 

Milestone rights liability

 

 

5,926

 

 

 

7,263

 

Total liabilities

 

 

282,491

 

 

 

284,251

 

Commitments and contingencies

 

 

 

 

 

 

 

 

Stockholders' deficit:

 

 

 

 

 

 

 

 

Undesignated preferred stock, $0.01 par value — 10,000,000 shares authorized;

   no shares issued or outstanding as of June 30, 2020 and December 31, 2019

 

 

 

 

 

 

Common stock, $0.01 par value - 400,000,000 and 280,000,000 shares

   authorized, 228,927,505 and 211,787,573 shares issued and outstanding

   at June 30, 2020 and December 31, 2019, respectively

 

 

2,289

 

 

 

2,118

 

Additional paid-in capital

 

 

2,829,478

 

 

 

2,799,278

 

Accumulated other comprehensive loss

 

 

 

 

 

(19

)

Accumulated deficit

 

 

(3,011,477

)

 

 

(2,991,903

)

Total stockholders' deficit

 

 

(179,710

)

 

 

(190,526

)

Total liabilities and stockholders' deficit

 

$

102,781

 

 

$

93,725

 

 

See notes to condensed consolidated financial statements.

2


 

MANNKIND CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

 

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenues:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net revenue — commercial product sales

$

6,985

 

 

$

6,065

 

 

$

14,985

 

 

$

11,141

 

Revenue — collaborations and services

 

8,129

 

 

 

8,937

 

 

 

16,364

 

 

 

21,309

 

Total revenues

 

15,114

 

 

 

15,002

 

 

 

31,349

 

 

 

32,450

 

Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of goods sold

 

3,677

 

 

 

4,327

 

 

 

7,841

 

 

 

8,347

 

Cost of revenue — collaborations and services

 

1,983

 

 

 

2,139

 

 

 

5,345

 

 

 

3,676

 

Research and development

 

1,464

 

 

 

1,632

 

 

 

3,219

 

 

 

3,299

 

Selling, general and administrative

 

13,670

 

 

 

16,609

 

 

 

28,020

 

 

 

42,282

 

Asset impairment

 

368

 

 

 

 

 

 

1,889

 

 

 

 

Loss (gain) on foreign currency translation

 

1,867

 

 

 

1,247

 

 

 

71

 

 

 

(688

)

Total expenses

 

23,029

 

 

 

25,954

 

 

 

46,385

 

 

 

56,916

 

Loss from operations

 

(7,915

)

 

 

(10,952

)

 

 

(15,036

)

 

 

(24,466

)

Other (expense) income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest income

 

14

 

 

 

255

 

 

 

147

 

 

 

573

 

Interest expense on notes

 

(1,084

)

 

 

(564

)

 

 

(2,155

)

 

 

(1,157

)

Interest expense on promissory notes

 

(1,281

)

 

 

(1,109

)

 

 

(2,540

)

 

 

(2,189

)

Other income (expense)

 

14

 

 

 

(17

)

 

 

10

 

 

 

(31

)

Total other expense

 

(2,337

)

 

 

(1,435

)

 

 

(4,538

)

 

 

(2,804

)

Loss before provision for income taxes

 

(10,252

)

 

 

(12,387

)

 

 

(19,574

)

 

 

(27,270

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

Net loss

$

(10,252

)

 

$

(12,387

)

 

$

(19,574

)

 

$

(27,270

)

Net loss per share - basic and diluted

$

(0.05

)

 

$

(0.07

)

 

$

(0.09

)

 

$

(0.15

)

Shares used to compute basic and diluted net loss per share

 

213,880

 

 

 

188,054

 

 

 

212,943

 

 

 

187,744

 

 

See notes to condensed consolidated financial statements.

3


 

MANNKIND CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

 

Three Months Ended June 30,

 

 

Six Months Ended June 30,

 

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss

$

(10,252

)

 

$

(12,387

)

 

$

(19,574

)

 

$

(27,270

)

Other comprehensive loss:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cumulative translation loss

 

 

 

 

 

 

 

(19

)

 

 

 

Comprehensive loss

$

(10,252

)

 

$

(12,387

)

 

$

(19,593

)

 

$

(27,270

)

 

See notes to condensed consolidated financial statements.

 

4


 

MANNKIND CORPORATION AND SUBSIDIARY

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

(In thousands)

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

BALANCE, JANUARY 1, 2019

 

 

187,030

 

 

$

1,870

 

 

$

2,763,067

 

 

$

(19

)

 

$

(2,940,000

)

 

$

(175,082

)

Net issuance of common stock associated

   with stock options and restricted stock

   units

 

66

 

 

1

 

 

 

1

 

 

 

 

 

 

 

2

 

Issuance of common stock under Employee

   Stock Purchase Plan

 

296

 

 

3

 

 

 

314

 

 

 

 

 

 

 

317

 

Stock-based compensation expense

 

 

 

 

 

 

999

 

 

 

 

 

 

 

999

 

Issuance of common stock pursuant to

   conversion of Senior Convertible Notes

 

386

 

 

4

 

 

 

534

 

 

 

 

 

 

 

538

 

Restricted stock unit award

 

 

 

 

 

 

105

 

 

 

 

 

 

 

105

 

Net loss

 

 

 

 

 

 

 

 

 

 

(14,883

)

 

 

(14,883

)

BALANCE, MARCH 31, 2019

 

 

187,778

 

 

$

1,878

 

 

$

2,765,020

 

 

$

(19

)

 

$

(2,954,883

)

 

$

(188,004

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net issuance of common stock associated

   with stock options and restricted stock

   units

 

 

101

 

 

 

1

 

 

 

14

 

 

 

 

 

 

 

15

 

Stock-based compensation expense

 

 

 

 

 

 

2,568

 

 

 

 

 

 

 

2,568

 

Issuance of common stock in at the market

   offering

 

 

1,568

 

 

 

15

 

 

 

1,835

 

 

 

 

 

 

 

1,850

 

Issuance costs associated with at the

   market offering

 

 

 

 

 

 

(41

)

 

 

 

 

 

 

(41

)

Net loss

 

 

 

 

 

 

 

 

 

 

(12,387

)

 

 

(12,387

)

BALANCE, JUNE 30, 2019

 

 

189,447

 

 

$

1,894

 

 

$

2,769,396

 

 

$

(19

)

 

$

(2,967,270

)

 

$

(195,999

)

 

 

 

 

Common Stock

 

 

Additional

Paid-In

 

 

Accumulated

Other

Comprehensive

 

 

Accumulated

 

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Loss

 

 

Deficit

 

 

Total

 

BALANCE, JANUARY 1, 2020

 

 

211,788

 

 

$

2,118

 

 

$

2,799,278

 

 

$

(19

)

 

$

(2,991,903

)

 

$

(190,526

)

Issuance of common stock under Employee

   Stock Purchase Plan

 

 

334

 

 

 

3

 

 

 

315

 

 

 

 

 

 

 

 

 

318

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

1,128

 

 

 

 

 

 

 

 

 

1,128

 

Issuance of common stock associated

   with debt interest payment

 

 

99

 

 

 

1

 

 

 

143

 

 

 

 

 

 

 

 

 

144

 

Net issuance of common stock associated

   with stock options and restricted stock

   units

 

 

504

 

 

 

5

 

 

 

(322

)

 

 

 

 

 

 

 

 

(317

)

Issuance of common stock in at the market

   offering

 

 

413

 

 

 

4

 

 

 

518

 

 

 

 

 

 

 

 

 

522

 

Issuance cost associated with at the market

   offering

 

 

 

 

 

 

 

 

(16

)

 

 

 

 

 

 

 

 

(16

)

Cumulative translation loss

 

 

 

 

 

 

 

 

 

 

 

19

 

 

 

 

 

 

19

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(9,322

)

 

 

(9,322

)

BALANCE, MARCH 31, 2020

 

 

213,138

 

 

$

2,131

 

 

$

2,801,044

 

 

$

 

 

$

(3,001,225

)

 

$

(198,050

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

2,185

 

 

 

 

 

 

 

 

 

2,185

 

Issuance of common stock from the

   exercise of warrants

 

 

7,250

 

 

 

73

 

 

 

11,527

 

 

 

 

 

 

 

 

 

11,600

 

Issuance of common stock pursuant to

   conversion of the June 2020 note

 

 

1,235

 

 

 

12

 

 

 

2,618

 

 

 

 

 

 

 

 

 

2,630

 

Net issuance of common stock associated

   with stock options and restricted stock

   units

 

 

297

 

 

 

3

 

 

 

114