MannKind Corporation (NASDAQ:MNKD) today reported
financial results for the fourth quarter and full year ended
December 31, 2019.
“We ended 2019 on a strong note with fourth quarter 2019 Afrezza
net revenue of $7.8 million, our best quarter to date,” said
Michael Castagna, Chief Executive Officer of MannKind
Corporation. He also noted, “Our collaboration with United
Therapeutics on TreT continues to make progress along the clinical
and commercial pathways that are expected to set up a filing with
the FDA within 12 months.”
Fourth Quarter 2019 Results
Total revenues were $16.0 million for the fourth
quarter of 2019, reflecting Afrezza net revenue of $7.8 million and
collaborations and services revenue of $8.2 million. Afrezza net
revenue increased 35% compared to $5.7 million in the fourth
quarter of 2018, primarily driven by higher product demand and
price. Collaborations and services revenue decreased $2.1
million compared to the fourth quarter of 2018, primarily due to
lower revenue from the United Therapeutics research agreement,
which was substantially completed by the second quarter of
2019.
On a GAAP basis, Afrezza gross profit was $3.1
million for the fourth quarter of 2019 compared to $0.7 million in
the same period in 2018. Afrezza cost of goods sold for the
fourth quarter of 2018 included a fee of $2.0 million recorded in
connection with the amendment of our insulin supply agreement with
Amphastar. As a result, on a non-GAAP basis, gross profit was $2.7
million or 48% gross margin for the fourth quarter of 2018,
compared to a GAAP basis gross margin of 40% for the fourth quarter
of 2019.
Research and development (R&D) expenses for
the fourth quarter of 2019 were $2.0 million compared to $1.1
million for the fourth quarter of 2018. This 82% increase was
primarily attributable to an increase of $0.6 million in personnel
costs associated with the United Therapeutics research agreement,
which was classified as a cost of collaborations and services
revenue in 2018, and to an increase of $0.3 million in maintenance
costs for our research facility in Danbury, Connecticut.
Selling, general and administrative (SG&A)
expenses for the fourth quarter of 2019 were $15.7 million compared
to $18.0 million for the fourth quarter of 2018. This decrease of
$2.3 million, or 13%, was primarily attributable to a $1.7 million
decrease in personnel related costs and a $1.1 million decrease in
Afrezza marketing costs, partially offset by an increase of $0.5
million in consulting and professional services costs.
Interest expense on debt for the fourth quarter
of 2019 was $2.3 million compared to $1.7 million for the fourth
quarter of 2018. This $0.6 million increase, or 35%, was primarily
attributable to the net increase in our debt balance as a result of
our debt restructuring in the third quarter of 2019.
The net loss for the fourth quarter of 2019 was
$14.3 million, or $0.07 per share compared to a $9.8 million net
loss in the fourth quarter of 2018 or $0.06 per share. The increase
in the net loss of $4.5 million was primarily the result of an
increased loss on foreign currency translation of $4.0 million
associated with our insulin supply agreement denominated in Euros
and of an increase of $0.6 million in interest expense.
Twelve Months Ended December 31,
2019
Total revenues were $63.0 million for the year
ended December 31, 2019, reflecting Afrezza net revenue of $25.3
million and collaborations and services revenue of $37.7 million.
Afrezza net revenue increased 46% compared to $17.3 million for the
year ended December 31, 2018, primarily due to higher product
demand, the first sale of Afrezza to our marketing partner in
Brazil (Biomm), price increases as well as a more favorable mix of
Afrezza cartridges. Collaborations and services revenue increased
$27.2 million compared to the full year ended December 31, 2018,
which was primarily attributed to the licensing and research
agreements with United Therapeutics, both of which began in the
fourth quarter of 2018.
On a GAAP basis, Afrezza gross profit was $5.2
million for the year ended December 31, 2019, an improvement of
$7.3 million or 347% compared to a gross loss of $2.1 million in
the same period in 2018, primarily due to an increase of $8.0
million in net revenue and a $2.2 million decrease in inventory
write-offs, partially offset by increased costs due to higher sales
and an increase of $0.8 million in fees paid to Amphastar for
amendments to our insulin supply agreement. As a result, on a
non-GAAP basis, gross profit was $8.0 million, or 32%, for the year
ended December 31, 2019 compared to a gross loss of $0.1 million,
or 1%, for the full year ended December 31, 2018.
R&D expenses for the year ended December 31,
2019 were $6.9 million compared to $8.7 million for the year ended
December 31, 2018. This decrease of $1.8 million, or 21%, was
primarily attributable to a $1.7 million decrease in personnel
related costs and a $0.9 million decrease in clinical trial
spending, partially offset by increased expenses of $0.2 million
related to the development of our BluHale inhalation profiling
apparatus and increased facility maintenance and equipment repair
costs of $0.5 million.
SG&A expenses for the year ended December
31, 2019 were $74.7 million compared to $79.7 million for the year
ended December 31, 2018. This decrease of $5.0 million, or 6%, was
primarily attributable to a $6.6 million decrease in personnel and
employee related costs, decreased consulting costs of $2.5 million
and a $1.2 million decrease in stock-based compensation costs,
which was partially offset by a $5.6 million increase in costs for
television advertising for Afrezza.
Interest income increased by $0.5 million, or
99%, for the year ended December 31, 2019 compared to the year
ended December 31, 2018, primarily due to a higher average balance
on money market funds and short-term investments.
Interest expense on debt for the year ended
December 31, 2019 was $10.9 million compared to $9.4 million for
the year ended December 31, 2018. This $1.5 million increase was
primarily attributable to a $3.4 million charge realized as a
result of achieving a sales milestone in the third quarter of 2019
under our milestone agreement with Deerfield, partially offset by
lower interest as a result of the repayment of the Deerfield credit
facility.
The net loss for the year ended December 31,
2019 was $51.9 million, or $0.27 per share, compared to $87.0
million net loss for the year ended December 31, 2018, or $0.60 per
share. The lower net loss was mainly attributable to a $35.2
million increase in total revenues.
Cash, Cash Equivalents, Restricted Cash
and Short Term Investments
Cash, cash equivalents, restricted cash, and
short-term investments at December 31, 2019 was $50.2 million
compared to $71.7 million at December 31, 2018.
Non-GAAP Measures
Certain financial information contained in this
press release is presented on both a reported basis (GAAP) and a
non-GAAP basis. Reported results were prepared in accordance
with GAAP whereas non-GAAP measures exclude items described in the
reconciliation tables below. Non-GAAP financial information
is intended to portray the results of our baseline performance,
supplement or enhance management, analysts and investors overall
understanding of our underlying financial performance and
facilitate comparisons among current and past periods. The
non-GAAP financial measures are in addition to, not a substitute
for, or superior to, measures of financial performance prepared in
accordance with GAAP.
|
|
Three Months Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
$ Change |
|
|
% Change |
|
Net revenue — Afrezza |
|
$ |
7,761 |
|
|
$ |
5,734 |
|
|
$ |
2,027 |
|
|
|
35 |
% |
Less cost of goods sold |
|
|
(4,632 |
) |
|
|
(4,986 |
) |
|
$ |
(354 |
) |
|
|
(7 |
%) |
GAAP gross profit — Afrezza |
|
|
3,129 |
|
|
|
748 |
|
|
$ |
2,381 |
|
|
|
318 |
% |
Exclude Amphastar amendment
fee |
|
|
— |
|
|
|
2,000 |
|
|
$ |
(2,000 |
) |
|
|
(100 |
%) |
Non-GAAP gross profit — Afrezza |
|
$ |
3,129 |
|
|
$ |
2,748 |
|
|
$ |
381 |
|
|
|
14 |
% |
Non-GAAP gross margin |
|
|
40 |
% |
|
|
48 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Twelve Months Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
$ Change |
|
|
% Change |
|
Net revenue — Afrezza |
|
$ |
25,304 |
|
|
$ |
17,276 |
|
|
$ |
8,028 |
|
|
|
46 |
% |
Less cost of goods sold |
|
|
(20,078 |
) |
|
|
(19,392 |
) |
|
$ |
686 |
|
|
|
4 |
% |
GAAP gross profit (loss) — Afrezza |
|
|
5,226 |
|
|
|
(2,116 |
) |
|
$ |
7,342 |
|
|
|
347 |
% |
Exclude Amphastar amendment
fee |
|
|
2,750 |
|
|
|
2,000 |
|
|
$ |
750 |
|
|
|
38 |
% |
Non-GAAP gross profit (loss) — Afrezza |
|
$ |
7,976 |
|
|
$ |
(116 |
) |
|
$ |
8,092 |
|
|
|
6,976 |
% |
Non-GAAP gross margin |
|
|
32 |
% |
|
|
(1 |
%) |
|
|
|
|
|
|
|
|
Conference Call
MannKind will host a conference call and
presentation webcast to discuss these results today at 9:00 a.m.
Eastern Time. To participate in the live call by telephone, please
dial (800) 289-0438 or (323) 794-2423 and use the participant
passcode: 1233728. Those interested in listening to the conference
call live via the Internet may do so by visiting the Company's
website at http://www.mannkindcorp.com under News &
Events.
A telephone replay of the call will be
accessible for approximately 14 days following completion of the
call by dialing (844) 512-2921 or (412) 317-6671 and use the
participant passcode: 1233728. 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 inhaled 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, 2019 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.
Company Contact: 818-661-5000ir@mannkindcorp.com
MANNKIND CORPORATION AND
SUBSIDIARIES CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited) (In thousands, except per
share data)
|
|
Three Months Ended December 31, |
|
|
Twelve Months Ended December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net revenue — commercial product sales |
|
$ |
7,761 |
|
|
$ |
5,734 |
|
|
$ |
25,304 |
|
|
$ |
17,276 |
|
Revenue — collaborations and services |
|
|
8,232 |
|
|
|
10,351 |
|
|
|
37,734 |
|
|
|
10,583 |
|
Revenue — other |
|
|
— |
|
|
|
(53 |
) |
|
|
— |
|
|
|
— |
|
Total revenues |
|
|
15,993 |
|
|
|
16,032 |
|
|
|
63,038 |
|
|
|
27,859 |
|
Expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of goods sold |
|
|
4,632 |
|
|
|
4,986 |
|
|
|
20,078 |
|
|
|
19,392 |
|
Cost of revenue — collaborations and services |
|
|
2,389 |
|
|
|
1,077 |
|
|
|
7,901 |
|
|
|
1,077 |
|
Research and development |
|
|
2,021 |
|
|
|
1,084 |
|
|
|
6,900 |
|
|
|
8,737 |
|
Selling, general and administrative |
|
|
15,721 |
|
|
|
17,976 |
|
|
|
74,669 |
|
|
|
79,716 |
|
Loss (gain) on foreign currency translation |
|
|
2,582 |
|
|
|
(1,361 |
) |
|
|
(1,913 |
) |
|
|
(4,468 |
) |
Total expenses |
|
|
27,345 |
|
|
|
23,762 |
|
|
|
107,635 |
|
|
|
104,454 |
|
Loss from operations |
|
|
(11,352 |
) |
|
|
(7,730 |
) |
|
|
(44,597 |
) |
|
|
(76,595 |
) |
Other (expense) income: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
|
204 |
|
|
|
196 |
|
|
|
997 |
|
|
|
501 |
|
Interest expense on notes |
|
|
(1,021 |
) |
|
|
(620 |
) |
|
|
(6,304 |
) |
|
|
(5,116 |
) |
Interest expense on promissory notes |
|
|
(1,251 |
) |
|
|
(1,089 |
) |
|
|
(4,602 |
) |
|
|
(4,323 |
) |
Gain (loss) on extinguishment of debt |
|
|
— |
|
|
|
— |
|
|
|
3,529 |
|
|
|
(765 |
) |
Other expense |
|
|
(843 |
) |
|
|
(508 |
) |
|
|
(926 |
) |
|
|
(437 |
) |
Total other expense |
|
|
(2,911 |
) |
|
|
(2,021 |
) |
|
|
(7,306 |
) |
|
|
(10,140 |
) |
Loss before income tax
expense |
|
|
(14,263 |
) |
|
|
(9,751 |
) |
|
|
(51,903 |
) |
|
|
(86,735 |
) |
Provision for income
taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
240 |
|
Net loss |
|
$ |
(14,263 |
) |
|
$ |
(9,751 |
) |
|
$ |
(51,903 |
) |
|
$ |
(86,975 |
) |
Net loss per share — basic and
diluted |
|
$ |
(0.07 |
) |
|
$ |
(0.06 |
) |
|
$ |
(0.27 |
) |
|
$ |
(0.60 |
) |
Shares used to compute net
loss per share — basic and diluted |
|
|
206,689 |
|
|
|
161,397 |
|
|
|
195,584 |
|
|
|
144,136 |
|
MANNKIND CORPORATION AND
SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE
SHEETS (Unaudited)(In thousands,
except per share data)
|
|
December 31, |
|
|
|
2019 |
|
|
2018 |
|
|
|
|
|
|
|
|
|
|
(In thousands except per share data) |
|
ASSETS |
|
|
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
29,906 |
|
|
$ |
71,157 |
|
Restricted cash |
|
|
316 |
|
|
|
527 |
|
Short-term investments |
|
|
19,978 |
|
|
|
— |
|
Accounts receivable, net |
|
|
3,513 |
|
|
|
4,017 |
|
Inventory |
|
|
4,155 |
|
|
|
3,597 |
|
Prepaid expenses and other current assets |
|
|
2,889 |
|
|
|
2,556 |
|
Total current assets |
|
|
60,757 |
|
|
|
81,854 |
|
Property and
equipment, net |
|
|
26,778 |
|
|
|
25,602 |
|
Other
assets |
|
|
6,190 |
|
|
|
249 |
|
Total assets |
|
$ |
93,725 |
|
|
$ |
107,705 |
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
4,789 |
|
|
$ |
5,379 |
|
Accrued expenses and other current liabilities |
|
|
15,904 |
|
|
|
15,022 |
|
Facility financing obligation |
|
|
— |
|
|
|
11,298 |
|
Short-term note payable |
|
|
5,028 |
|
|
|
— |
|
Deferred revenue — current |
|
|
32,503 |
|
|
|
36,885 |
|
Recognized loss on purchase commitments — current |
|
|
7,394 |
|
|
|
6,657 |
|
Total current liabilities |
|
|
65,618 |
|
|
|
75,241 |
|
Promissory
notes |
|
|
70,020 |
|
|
|
72,089 |
|
Accrued interest
— promissory notes |
|
|
2,002 |
|
|
|
6,835 |
|
Long-term Midcap
credit facility |
|
|
38,851 |
|
|
|
— |
|
Senior
convertible notes |
|
|
5,000 |
|
|
|
19,099 |
|
Recognized loss
on purchase commitments — long term |
|
|
84,639 |
|
|
|
91,642 |
|
Operating lease
liability |
|
|
2,514 |
|
|
|
— |
|
Deferred
revenue — long term |
|
|
8,344 |
|
|
|
10,680 |
|
Milestone rights
liability |
|
|
7,263 |
|
|
|
7,201 |
|
Total liabilities |
|
|
284,251 |
|
|
|
282,787 |
|
Commitments and
contingencies |
|
|
|
|
|
|
|
|
Stockholders'
deficit: |
|
|
|
|
|
|
|
|
Undesignated
preferred stock, $0.01 par value — 10,000,000 shares
authorized; no shares issued or outstanding at December 31,
2019 and 2018 |
|
|
— |
|
|
|
— |
|
Common stock,
$0.01 par value — 280,000,000 shares authorized, 211,787,573
and 187,029,967 shares issued and outstanding at December 31,
2019 and 2018, respectively |
|
|
2,118 |
|
|
|
1,870 |
|
Additional
paid-in capital |
|
|
2,799,278 |
|
|
|
2,763,067 |
|
Accumulated
other comprehensive loss |
|
|
(19 |
) |
|
|
(19 |
) |
Accumulated
deficit |
|
|
(2,991,903 |
) |
|
|
(2,940,000 |
) |
Total stockholders' deficit |
|
|
(190,526 |
) |
|
|
(175,082 |
) |
Total liabilities and stockholders' deficit |
|
$ |
93,725 |
|
|
$ |
107,705 |
|
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