MannKind Corporation (NASDAQ:MNKD) today reported
financial results for the fourth quarter and full year ended
December 31, 2017.
Fourth Quarter 2017 Results
For the fourth quarter of 2017, Afrezza net revenue was $4.5
million, an increase of 125% compared to the third quarter of 2017
and 238% compared to the fourth quarter of 2016. Included in
the fourth quarter net revenue is a favorable adjustment for a
change in estimate of $1.4 million. The change in estimate relates
to obtaining new and more comprehensive data regarding the
inventory in the distribution channel – specifically inventory in
the retail channel. This data indicated that the amount of
inventory in the distribution channel was less than had been
previously estimated using syndicated prescription data. As
of December 31, 2017, the amount of Afrezza shipped to wholesale
and retail channels, but not yet recognized as net revenue, was
$3.0 million, the same amount as September 30, 2017. A
reconciliation of gross to net revenues can be found in the
Management’s Discussion and Analysis of Financial Condition and
Results of Operations section of the form 10-K for the year ended
December 31, 2017.
Cost of goods sold was $5.0 million in the fourth quarter of
2017 compared to $4.6 million in the third quarter of 2017 and $1.6
million in the fourth quarter of 2016, an increase of $0.4 million
and $3.4 million respectively. Cost of goods sold during
these periods is greater than the associated product sales due to
the under-utilization of our manufacturing facility.
Research and development expenses were $3.5 million in the
fourth quarter of 2017 compared to $4.4 million in the third
quarter of 2017. The $0.9 million decrease was primarily due
to a $0.6 million decrease in clinical study expenses and a $0.4
million decrease in compensation expenses. Research and
development expenses were $1.6 million in the fourth quarter of
2016, representing a period-over-period increase of $1.9 million
which was primarily due to a $1.3 million increase in compensation
costs, a $1.4 million increase in consultant and supply costs and a
$0.3 million increase in facilities costs, all due to increased
clinical studies, partially offset by a decrease of $1.0 million
related to a one-time FDA submission fee for a label expansion
incurred in 2016 that did not recur in 2017.
Selling, general and administrative (SG&A) expenses were
$23.3 million for the fourth quarter of 2017 compared to $17.7
million for the third quarter of 2017. The $5.6 million
increase was primarily due to $5.0 million in selling expenses
associated with our first direct-to-consumer television advertising
campaign in the fourth quarter of 2017. SG&A expenses in
the fourth quarter of 2016 were $15.3 million representing a
period-over-period increase of $8.0 million which was primarily due
to the $5.0 million DTC TV campaign and growth in our commercial
infrastructure.
The net loss for the fourth quarter of 2017 was $32.8 million,
or $0.28 per share based on 116.5 million weighted average shares
outstanding, compared to a $32.9 million net loss in the third
quarter of 2017 or $0.31 per share based on 104.7 million weighted
average shares outstanding. During the fourth quarter of
2016, we had net income of $54.0 million, or $0.56 per share based
on 95.7 million weighted average shares outstanding. The net income
in the fourth quarter of 2016 included net collaboration revenue of
$10.2 million related to our license and collaboration agreement
with Sanofi and a $72.0 million gain from the extinguishment of
debt owed to Sanofi pursuant to a settlement agreement.
Full Year 2017 Results
Due to the termination of the Sanofi license and collaboration
agreement in early 2016 and our commencement of commercial
activities for Afrezza in the third quarter of 2016, a comparative
analysis for Afrezza product revenue and commercial support between
the year ended December 31, 2017 and the prior year is not
meaningful.
For the year ended December 31, 2017, total net revenue of $11.7
million was comprised of $9.2 million of Afrezza net revenue, $1.7
million from the net revenue of surplus bulk insulin to a third
party, $0.6 million from the sale of certain oncology intellectual
property, and $0.3 million from collaboration net revenue.
Research and development expenses were $14.1 million for the
year ended December 31, 2017 compared to $14.9 million for the
prior year. The $0.8 million decrease was primarily due to a $3.6
million decrease in research and development expenses associated
with a reduction in workforce in 2016, and a one-time FDA
submission fee for label expansion of $1.0 million incurred in
2016. These decreases were partially offset by a $2.5 million
increase in clinical trial expenses, a $0.7 million increase in
expenses incurred for the development of manufacturing
improvements.
Selling, general and administrative expenses were $75.0 million
for the year ended December 31, 2017 compared to $46.9 million for
the prior year, an increase of $28.1 million primarily due to the
creation of a commercial support infrastructure after termination
of the Sanofi license and collaboration agreement.
The loss on foreign currency translation is related to our
purchase commitment for insulin which is denominated in
Euros. For the year ended December 31, 2017, the loss was
$13.6 million as compared to a gain of $3.4 million in the prior
year, a $17.1 million change due to the unfavorable movement of the
U.S. dollar-Euro exchange rate.
The net loss for the year ended December 31, 2017 was $117.3
million, or $1.13 per share based on 104.2 million weighted average
shares outstanding, compared to net income for the prior year of
$125.7 million, or $1.37 per share based on 92.1 million weighted
average shares outstanding. The net income for the prior year
included net revenue – collaboration of $171.1 million and a gain
on the extinguishment of debt of $72.0 million due to the
recognition of previously deferred revenue following the
termination of the Sanofi license and collaboration agreement.
Cash and Cash Equivalents
Cash and cash equivalents at December 31, 2017 increased to
$43.9 million compared to $22.9 million at December 31, 2016,
primarily due to cash inflows of $57.7 million of net proceeds from
a registered direct offering of common stock, $0.5 million through
sales under the at-the-market equity offering facility, $30.6
million received from Sanofi pursuant to a settlement agreement,
$16.7 million from the sale of our Valencia, CA facility, $15.4
million from a net increase of debt, and cash received from revenue
of $12.5 million offset in part by commercial and general corporate
spending of $95.6 million. In addition to the $43.9 million in cash
and cash equivalents, the Company had $4.4 million of restricted
cash at December 31, 2017 of which $3.2 million was released in
January 2018 following a conversion of Facility Financing
Obligation debt to equity. The net cash used in operating
activities for the fourth quarter of 2017 was $30.0 million.
2H 2017 Results vs. Guidance
- Afrezza gross revenue was $8.3 million for the six months ended
December 31, 2017 compared with a range of $9-$14
million.
- Afrezza net revenue was $6.4 million for the six months ended
December 31, 2017 compared with a range of $6-$10 million.
- Net cash used in operating activities was $30.0 million in the
fourth quarter 2017 and $23.3 million in the third quarter 2017
totaling $53.3 million compared with a range of $48-$56
million.
Conference Call
MannKind will host a conference call and presentation webcast to
discuss these results today at 5:00 p.m. Eastern Time. To
participate in the live call by telephone, please dial (888)
771-4371 or (847) 585-4405 and use the participant passcode:
46307898. Those interested in listening to the conference call live
via the Internet may do so by visiting the Company’s website at
www.mannkindcorp.com.
A telephone replay of the call will be accessible for
approximately 14 days following completion of the call by dialing
(888) 843-7419 or (630) 652-3042 and use the participant
passcode: 4630 7898#. A replay will also be available on
MannKind’s website for 14 days.
About MannKind Corporation
MannKind Corporation (NASDAQ: MNKD) focuses on the development
and commercialization of therapeutic products for patients with
diseases such as diabetes and pulmonary arterial
hypertension. MannKind is currently commercializing Afrezza®
(insulin human) inhalation powder, the Company’s first FDA-approved
product and the only inhaled rapid-acting mealtime insulin in the
United States, where it is available by prescription from
pharmacies nationwide. MannKind is headquartered in Westlake
Village, California, and has a state-of-the art manufacturing
facility in Danbury, Connecticut. The Company also employs field
sales and medical representatives across the U.S. For further
information, visit www.mannkindcorp.com.
Forward-Looking Statements
This press release contains forward-looking statements that
involve risks and uncertainties, including statements regarding
MannKind’s ability to directly commercialize pharmaceutical
products. Words such as “believes”, “anticipates”, “plans”,
“expects”, “intend”, “will”, “goal”, “potential” and similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are based upon the MannKind’s
current expectations. Actual results and the timing of events could
differ materially from those anticipated in such forward-looking
statements as a result of these risks and uncertainties, which
include, without limitation, the ability to generate significant
product sales for MannKind, MannKind’s ability to manage its
existing cash resources or raise additional cash resources, stock
price volatility and other risks detailed in MannKind’s filings
with the Securities and Exchange Commission, including the Annual
Report on Form 10-K for the year ended December 31, 2017 and
subsequent periodic reports on Form 10-Q and current reports on
Form 8-K. You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in
their entirety by this cautionary statement, and MannKind
undertakes no obligation to revise or update any forward-looking
statements to reflect events or circumstances after the date of
this press release.
|
MannKind Corporation |
Condensed Consolidated Statements of
Operations |
(Audited) |
(In thousands, except per share amounts) |
|
|
Three months ended December 31, |
|
Twelve months ended December
31, |
|
2017 |
|
|
2016 |
|
|
2017 |
|
|
2016 |
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
revenue – commercial product sales |
$ |
4,466 |
|
|
$ |
1,322 |
|
|
$ |
9,192 |
|
|
$ |
1,895 |
|
Net
revenue – collaboration |
|
63 |
|
|
|
10,184 |
|
|
|
250 |
|
|
|
171,965 |
|
Revenue –
other |
|
1 |
|
|
|
898 |
|
|
|
2,303 |
|
|
|
898 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total net
revenues |
|
4,530 |
|
|
|
12,404 |
|
|
|
11,745 |
|
|
|
174,758 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
goods sold |
|
5,018 |
|
|
|
1,553 |
|
|
|
17,228 |
|
|
|
17,121 |
|
Cost of
revenue - collaboration |
|
-- |
|
|
|
10,230 |
|
|
|
-- |
|
|
|
32,971 |
|
Research
and development |
|
3,507 |
|
|
|
1,559 |
|
|
|
14,118 |
|
|
|
14,917 |
|
Selling,
general and administrative |
|
23,278 |
|
|
|
15,333 |
|
|
|
74,959 |
|
|
|
46,928 |
|
Property
and equipment impairment |
|
-- |
|
|
|
1,259 |
|
|
|
203 |
|
|
|
1,259 |
|
Loss
(gain) on foreign currency translation |
|
1,564 |
|
|
|
(3,433 |
) |
|
|
13,641 |
|
|
|
(3,433 |
) |
(Gain) on
purchase commitments |
|
-- |
|
|
|
(2,265 |
|
|
|
(215 |
) |
|
|
(2,265 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
expenses |
|
33,367 |
|
|
|
24,236 |
|
|
|
119,934 |
|
|
|
107,498 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(Loss) income from
operations |
|
(28,837 |
) |
|
|
(11,832 |
) |
|
|
(108,189 |
) |
|
|
67,260 |
|
Other (expense)
income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Change in
fair value of warrant liability |
|
-- |
|
|
|
(2,510 |
) |
|
|
5,488 |
|
|
|
5,369 |
|
Interest
income |
|
115 |
|
|
|
15 |
|
|
|
293 |
|
|
|
85 |
|
Interest
expense on notes |
|
(2,056 |
) |
|
|
(3,010 |
) |
|
|
(9,494 |
) |
|
|
(15,576 |
) |
Interest
expense on note payable to principal stockholder |
|
(1,174 |
) |
|
|
(729 |
) |
|
|
(3,782 |
) |
|
|
(2,901 |
) |
(Loss)
gain on extinguishment of debt |
|
(781 |
) |
|
|
72,024 |
|
|
|
(1,611 |
) |
|
|
72,024 |
|
Other
(expense) income |
|
-- |
|
|
|
18 |
|
|
|
13 |
|
|
|
(597 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision for income
taxes |
|
51 |
|
|
|
-- |
|
|
|
51 |
|
|
|
-- |
|
Net (loss) income |
$ |
(32,784 |
) |
|
$ |
53,976 |
|
|
$ |
(117,333 |
) |
|
$ |
125,664 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share — basic |
$ |
(0.28 |
) |
|
$ |
0.56 |
|
|
$ |
(1.13 |
) |
|
$ |
1.37 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net (loss) income per
share — diluted |
$ |
(0.28 |
) |
|
$ |
0.56 |
|
|
$ |
(1.13 |
) |
|
$ |
1.36 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute
basic net (loss) income per share |
|
116,451 |
|
|
|
95,676 |
|
|
|
104,245 |
|
|
|
92,053 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares used to compute
diluted net (loss) income per share |
|
116,451 |
|
|
|
96,510 |
|
|
|
104,245 |
|
|
|
92,085 |
|
|
|
MannKind Corporation |
Condensed Consolidated Balance
Sheets |
(Audited) |
(In thousands) |
|
|
|
December 31, 2017 |
|
|
December 31, 2016 |
|
Assets |
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
|
Cash and
cash equivalents |
|
$ |
43,946 |
|
|
$ |
22,895 |
|
Restricted cash |
|
|
4,409 |
|
|
|
-- |
|
Accounts
receivable, net |
|
|
2,789 |
|
|
|
302 |
|
Receivable from Sanofi |
|
|
-- |
|
|
|
30,557 |
|
Inventory |
|
|
2,657 |
|
|
|
2,331 |
|
Asset
held for sale |
|
|
-- |
|
|
|
16,730 |
|
Deferred
costs from commercial product sales |
|
|
405 |
|
|
|
309 |
|
Prepaid
expenses and other current assets |
|
|
3,010 |
|
|
|
4,364 |
|
|
|
|
|
|
|
|
|
|
Total
current assets |
|
|
57,216 |
|
|
|
77,488 |
|
Property and equipment,
net |
|
|
26,922 |
|
|
|
28,927 |
|
Other assets |
|
|
437 |
|
|
|
648 |
|
Total
assets |
|
$ |
84,575 |
|
|
$ |
107,063 |
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Deficit |
|
|
|
|
|
|
|
|
Current
liabilities |
|
|
|
|
|
|
|
|
Accounts
payable |
|
$ |
6,984 |
|
|
$ |
3,263 |
|
Accrued
expenses and other current liabilities |
|
|
12,449 |
|
|
|
7,937 |
|
Facility
financing obligation |
|
|
52,745 |
|
|
|
71,339 |
|
Deferred
revenue, net |
|
|
3,038 |
|
|
|
3,419 |
|
Deferred
payments from collaboration - current |
|
|
250 |
|
|
|
1,000 |
|
Recognized loss on purchase commitments — current |
|
|
12,131 |
|
|
|
5,093 |
|
|
|
|
|
|
|
|
|
|
Total
current liabilities |
|
|
87,597 |
|
|
|
92,051 |
|
Note payable to
principal stockholder |
|
|
79,666 |
|
|
|
49,521 |
|
Accrued interest — note
payable to principal stockholder |
|
|
2,347 |
|
|
|
9,281 |
|
Senior convertible
notes |
|
|
24,411 |
|
|
|
27,635 |
|
Recognized loss on
purchase commitments — long term |
|
|
97,585 |
|
|
|
95,942 |
|
Warrant liability |
|
|
-- |
|
|
|
7,381 |
|
Deferred payments from
collaboration – long term |
|
|
500 |
|
|
|
-- |
|
Milestone rights
liability and other liabilities |
|
|
7,201 |
|
|
|
8,845 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities |
|
|
299,307 |
|
|
|
290,656 |
|
Total
stockholders’ deficit |
|
|
(214,732 |
) |
|
|
(183,593 |
) |
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ deficit |
|
$ |
84,575 |
|
|
$ |
107,063 |
|
|
Company Contact: Rose Alinaya SVP, Investor Relations and
Treasury 818-661-5000 ir@mannkindcorp.com
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