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mnkd-10q_20220331.htm

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 March 31, 2022

☐	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.)

1 Casper Street Danbury, Connecticut	06810
(Address of principal executive offices)	(Zip Code)

(818) 661-5000

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

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 Exchange Act). Yes ☐ No ☒

As of April 29, 2022, there were 252,565,400 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

MANNKIND CORPORATION

Form 10-Q

For the Quarterly Period Ended March 31, 2022

TABLE OF CONTENTS

	Page
PART I: FINANCIAL INFORMATION	2

Item 1. Financial Statements (Unaudited)	2
Condensed Consolidated Balance Sheets: March 31, 2022 and December 31, 2021	2
Condensed Consolidated Statements of Operations: Three months ended March 31, 2022 and 2021	3
Condensed Consolidated Statements of Comprehensive Loss: Three months ended March 31, 2022 and 2021	4
Condensed Consolidated Statements of Stockholders’ Deficit: Three months ended March 31, 2022 and 2021	5
Condensed Consolidated Statements of Cash Flows: Three months ended March 31, 2022 and 2021	6
Notes to Condensed Consolidated Financial Statements	7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	31
Item 3. Quantitative and Qualitative Disclosures About Market Risk	36
Item 4. Controls and Procedures	36

PART II: OTHER INFORMATION	37

Item 1. Legal Proceedings	37
Item 1A. Risk Factors	37
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	65
Item 3. Defaults Upon Senior Securities	65
Item 4. Mine Safety Disclosures	65
Item 5. Other Information	65
Item 6. Exhibits	66

SIGNATURES	68

PART 1: FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(In thousands, except share and per share data)

	March 31, 2022			December 31, 2021
ASSETS
Current assets:
Cash and cash equivalents	$	67,243		$	124,184
Short-term investments		95,203			79,932
Accounts receivable, net		9,823			4,739
Inventory		8,044			7,152
Prepaid expenses and other current assets		3,952			3,482
Total current assets		184,265			219,489
Property and equipment, net		41,453			36,612
Long-term investments		70,542			56,619
Other assets		12,058			8,441
Total assets	$	308,318		$	321,161

LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable	$	8,702		$	6,956
Accrued expenses and other current liabilities		27,131			27,419
Financing liability — current		9,410			6,977
Deferred revenue — current		1,307			827
Recognized loss on purchase commitments — current		6,944			6,170
Total current liabilities		53,494			48,349
Senior convertible notes		224,307			223,944
Midcap credit facility		38,939			38,833
Promissory notes		18,425			18,425
Accrued interest — promissory notes		520			404
Financing liability — long term		93,463			93,525
Recognized loss on purchase commitments — long term		72,400			76,659
Operating lease liability		826			1,040
Deferred revenue — long term		26,116			19,543
Milestone rights liability		4,838			4,838
Deposits from customer		7,054			4,950
Total liabilities		540,382			530,510
Commitments and contingencies (Note 13)
Stockholders' deficit:
Undesignated preferred stock, $0.01 par value — 10,000,000 shares authorized; no shares issued or outstanding as of March 31, 2022 and December 31, 2021		—			—
Common stock, $0.01 par value - 400,000,000 shares authorized, 252,413,434 and 251,477,562 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively		2,524			2,515
Additional paid-in capital		2,922,555			2,918,205
Accumulated other comprehensive loss		(1,076	)		—
Accumulated deficit		(3,156,067	)		(3,130,069	)
Total stockholders' deficit		(232,064	)		(209,349	)
Total liabilities and stockholders' deficit	$	308,318		$	321,161

See notes to condensed consolidated financial statements.

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(In thousands, except per share data)

	Three Months Ended March 31,
	2022			2021
Revenues:
Net revenue — commercial product sales	$	9,826		$	8,099
Revenue — collaborations and services		2,166			9,337
Total revenues		11,992			17,436
Expenses:
Cost of goods sold		2,284			4,315
Cost of revenue — collaborations and services		8,714			3,295
Research and development		3,536			2,442
Selling, general and administrative		20,697			17,413
Gain on foreign currency translation		(1,983	)		(3,838	)
Total expenses		33,248			23,627
Loss from operations		(21,256	)		(6,191	)
Other (expense) income:
Interest income, net		377			3
Interest expense on financing liability		(2,371	)		—
Interest expense on notes		(2,748	)		(6,452	)
Other expense		—			(276	)
Total other expense		(4,742	)		(6,725	)
Loss before provision for income taxes		(25,998	)		(12,916	)
Provision for income taxes		—			—
Net loss	$	(25,998	)	$	(12,916	)
Net loss per share - basic and diluted	$	(0.10	)	$	(0.05	)
Shares used to compute net loss per share - basic and diluted		251,887			246,631

See notes to condensed consolidated financial statements.

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2022			2021
Net loss	$	(25,998	)	$	(12,916	)
Other comprehensive loss:
Unrealized loss on available-for-sale securities		(1,076	)		—
Comprehensive loss	$	(27,074	)	$	(12,916	)

See notes to condensed consolidated financial statements.

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT

(Unaudited)

(In thousands)

	Common Stock				Additional Paid-In			Accumulated Other		Accumulated
	Shares		Amount		Capital			Comprehensive Loss		Deficit			Total
BALANCE, JANUARY 1, 2021		242,118	$	2,421	$	2,866,303		$	—	$	(3,049,143	)	$	(180,419	)
Net issuance of common stock associated with stock options and restricted stock units		390		4		393			—		—			397
Issuance of common stock under Employee Stock Purchase Plan		293		3		387			—		—			390
Stock-based compensation expense		—		—		1,935			—		—			1,935
Issuance of common stock pursuant to conversion of the Mann Group convertible note		3,830		38		9,535			—		—			9,573
Issuance of common stock pursuant to conversion of the Mann Group convertible note interest		170		2		425			—		—			427
Issuance of common stock pursuant to conversion of the 2024 convertible notes		1,667		17		4,983			—		—			5,000
Issuance of common stock pursuant to payoff of the 2024 convertible note interest		27		—		143			—		—			143
Issuance of at-the-market placement		578		6		1,880			—		—			1,886
Issuance costs associated with at-the- market placement		—		—		(38	)		—		—			(38	)
Net loss		—		—		—			—		(12,916	)		(12,916	)
BALANCE, MARCH 31, 2021		249,073	$	2,491	$	2,885,946		$	—	$	(3,062,059	)	$	(173,622	)

	Common Stock				Additional Paid-In		Accumulated Other			Accumulated
	Shares		Amount		Capital		Comprehensive Loss			Deficit			Total
BALANCE, JANUARY 1, 2022		251,478	$	2,515	$	2,918,205	$	—		$	(3,130,069	)	$	(209,349	)
Net issuance of common stock associated with stock options and restricted stock units		450		4		125		—			—			129
Issuance of common stock under Employee Stock Purchase Plan		233		2		738		—			—			740
Stock-based compensation expense		—		—		2,806		—			—			2,806
Issuance of common stock from market price stock purchase plan		252		3		681		—			—			684
Cumulative loss on available-for-sale securities		—		—		—		(1,076	)		—			(1,076	)
Net loss		—		—		—		—			(25,998	)		(25,998	)
BALANCE, MARCH 31, 2022		252,413	$	2,524	$	2,922,555	$	(1,076	)	$	(3,156,067	)	$	(232,064	)

See notes to condensed consolidated financial statements.

MANNKIND CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

	Three Months Ended March 31,
	2022			2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(25,998	)	$	(12,916	)
Adjustments to reconcile net loss to net cash used in operating activities:
Stock-based compensation expense		2,806			1,935
Interest expense on financing liability		2,371			—
Depreciation and amortization		1,324			655
Amortization of right-of-use assets		289			309
Interest expense on promissory notes		116			1,028
Gain on foreign currency translation		(1,983	)		(3,838	)
Changes in operating assets and liabilities:
Accounts receivable, net		(4,829	)		645
Inventory		(892	)		(77	)
Prepaid expenses and other current assets		(470	)		356
Other assets		(320	)		(97	)
Accounts payable		1,745			1,124
Accrued expenses and other current liabilities		510			8,288
Deferred revenue		7,053			(7,431	)
Operating lease liabilities		(572	)		(333	)
Recognized loss on purchase commitments		(1,502	)		(2,379	)
Customer deposits		2,104			—
Net cash used in operating activities		(18,248	)		(12,731	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of debt securities		(55,988	)		(30,442	)
Proceeds from maturity of debt securities		26,538			—
Purchase of property and equipment		(5,056	)		(976	)
Purchase of available-for-sale securities		(5,000	)		—
Net cash used in investing activities		(39,506	)		(31,418	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from the Senior convertible notes		—			230,000
Issuance costs associated with Senior convertible notes		—			(7,268	)
Proceeds from at-the-market offering		—			1,886
Issuance costs associated with at-the-market offering		—			(38	)
Payment of employment taxes related to vested restricted stock units and exercise of stock options		129			397
Proceeds from market price stock purchase plan		684			—
Net cash provided by financing activities		813			224,977
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH		(56,941	)		180,828
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, BEGINNING OF PERIOD		124,184			67,163
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH, END OF PERIOD	$	67,243		$	247,991
SUPPLEMENTAL CASH FLOWS DISCLOSURES:
Interest paid in cash	$	3,600		$	1,094
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Reclassification of investments from long-term to current		14,813			—
Common stock issuance to settle employee stock purchase plan liability		740			390
Non-cash construction in progress and property and equipment		383			124
Payment on Mann Group convertible note through issuance of common stock		—			9,573
Payment of 2024 convertible notes through common stock issuance		—			5,000
Reclassification of the PPP Loan from current to long-term		—			609
Payment of Mann Group convertible note interest through issuance of common stock		—			427
Payment of interest on 2024 convertible notes through common stock issuance		—			143

See notes to condensed consolidated financial statements.

MANNKIND CORPORATION AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Description of Business and Significant Accounting Policies

The 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, 2021, filed with the SEC on February 24, 2022 (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, 2022 may not be indicative of the results that may be expected for the full year.

Financial Statement Estimates — 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 and the COVID-19 pandemic has increased the level of judgment used by management in developing these estimates and assumptions. The COVID-19 pandemic continues to evolve and the ultimate impact of the COVID-19 pandemic is uncertain and subject to change. These effects could have a material impact on the estimates and assumptions used in the preparation of the condensed consolidated financial statements. The more significant estimates include revenue recognition, including gross-to-net adjustments, stand-alone selling price considerations for recognition of collaboration revenue, assessing long-lived assets for impairment, clinical trial expenses, inventory costing and recoverability, recognized loss on purchase commitment, milestone rights liability, stock-based compensation and the determination of the provision for income taxes and corresponding deferred tax assets and liabilities, and the valuation allowance recorded against net deferred tax assets.

Business — MannKind is a biopharmaceutical company focused on the development and commercialization of inhaled therapeutic products for patients with endocrine and orphan lung diseases. The C