MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD)
today reported financial results for the three and nine months
ended September 30, 2016.
For the three and nine months ended September
30, 2016, we recognized $161.8 million in net revenue from our
collaboration with Sanofi. This amount relates to activities from
prior periods previously deferred. In the third quarter of 2016,
due to the termination of the Sanofi license agreement, the
remaining costs under the Sanofi License Agreement were fixed or
determinable and future activity under the Sanofi Supply Agreement
was reasonably estimable, which allowed for the recognition of
revenue from collaboration this quarter. There are no future
obligations to Sanofi. The amount of net revenue -
collaboration recognized in the three and nine months ended
September 30, 2016 consists of the upfront payment of $150.0
million and milestone payments of $50.0 million, net of $64.8
million of net loss share with Sanofi, as well as $17.4 million in
sales of Afrezza and $9.2 million in sales of raw insulin, both to
Sanofi.
We began distributing MannKind branded Afrezza
products to wholesalers during the week of July 25, 2016. For
the three and nine months ended September 30, 2016, net revenue
from commercial product sales represents $0.6 million of net sales
of Afrezza dispensed to patients. In addition, as of
September 30, 2016, we recorded $2.0 million in deferred revenue,
of which $1.6 million is net of estimated gross-to-net adjustments
and represents product shipped to our third-party logistics
provider and wholesale distributors, but not dispensed to patients
as of that date. Estimated gross-to-net adjustments for the
third quarter of 2016 were approximately 32%, which includes
estimates of wholesaler distribution and logistics fees, prompt pay
discounts, estimated government rebates and patient discount
programs. Deferred revenue also includes $0.4 million that we
have received for the sale of surplus raw materials to a third
party, where delivery was made after September 30, 2016.
For the three and nine months ended September
30, 2016, we recognized $22.7 million of product costs –
collaboration which was previously deferred and consisted of $13.5
million in Afrezza manufacturing costs for product sold to Sanofi
and $9.2 million for a change in estimate in our recognized loss on
purchase commitments related to the sale of raw insulin to
Sanofi.
Cost of goods sold was approximately $4.3
million for the third quarter of 2016, a decrease of 47% from the
third quarter of 2015. This decrease is primarily due to a
decrease in under-absorbed labor and overhead due to decreased
depreciation as a result of the fixed asset impairment write-down
in 2015 and decreased salaries resulting from the reduction in
force in 2015 as well as a gain on purchase commitments for other
material related to a change in estimate associated with the
renegotiation of certain agreements and a reduction in inventory
write-offs offset by a foreign currency exchange loss on recognized
loss on purchase commitments for insulin purchases. Cost of
goods sold was $15.6 million for the nine months ended September
30, 2016, and included under-absorbed labor and overhead costs
expensed in the period, and a foreign currency exchange loss on the
recognized loss on purchase commitments for insulin offset by a
gain on purchase commitments for other materials related to a
change in estimate associated with the renegotiation of certain
agreements. Cost of goods sold for the three and nine months ended
September 30, 2016 also includes $0.1 million attributable to
commercial product sales, which consists of the manufacturing costs
for Afrezza dispensed to patients. This $0.1 million attributable
to commercial product sales only includes conversion cost as we
wrote off the cost of our raw materials held in inventory at the
end of 2015.
During the three and nine months ended September
30, 2015, the Company did not recognize any net revenue or product
costs – collaboration or net revenue – commercial product
sales.
Research and development expenses were $3.9
million for the third quarter of 2016, a decrease of 38% from the
third quarter of 2015, primarily due to expense associated with the
2015 reduction in force exceeding the expense associated with the
2016 reduction in force along with curtailing certain research and
development projects and facility spending offset by an increase in
development work done for third parties. Research and
development expenses were $13.4 million for the nine months ended
September 30, 2016, a decrease of 43% compared to the same period
in 2015, primarily due to expense associated with the 2015
reduction in force exceeding the expense associated with the 2016
reduction in force along with a decrease in research and
development projects and facility spending offset by an increase in
development work done for third parties and tax credits.
Selling, general and administrative expenses
were approximately $13.1 million for the third quarter of 2016, an
increase of 14% from the third quarter of 2015, mainly due to
increased costs for the support of sales and marketing of Afrezza
offset by a decrease in general and administrative expenses due to
the reduction in force in 2015. Selling, general and
administrative expenses for the nine months ended September 30,
2016 were $31.6 million, a decrease of 3% from the same period in
2015, primarily due to the 2015 reduction in force, lower
communication, facility and insurance costs and lower stock-based
compensation expense in general and administrative expenses offset
by increased costs for the support of sales and marketing of
Afrezza in selling expenses.
Included in the three months ended September 30,
2016 is a $13.2 million benefit from a decrease in the fair value
of the warrant liability from June 30, 2016. Included in the
nine months ended September 30, 2016 is a $7.9 million benefit from
a decrease in the fair value of the warrant liability from May 12,
2016, the date the warrants were issued.
The net income for the three and nine months
ended September 30, 2016 was $126.5 million and $71.7 million, or
basic net income of $0.26 and $0.16 per share, based on 478.1 and
454.2 million weighted average shares outstanding, compared with a
net loss of $31.9 million and $91.4 million for the same periods in
2015, or basic net loss of $0.08 and $0.23 per share, based on
405.2 and 401.7 million weighted average shares outstanding. The
number of common shares outstanding at September 30, 2016 was 478.4
million.
Cash and cash equivalents at September 30, 2016
were $35.5 million, compared to $59.1 million at December 31, 2015.
Currently, $30.1 million remains available for borrowing under the
amended loan arrangement with The Mann Group along with $50.0
million available under the at-the-market facility.
Conference Call and Presentation
Webcast
MannKind will host a conference call and
presentation webcast to discuss these results today at 5:00 p.m.
Eastern Time. To view and listen to the webcast, visit
MannKind’s website at http://www.mannkindcorp.com and click on the
“Q3 2016 MannKind Earnings Conference Call” link in the Webcast
section of News & Events. To participate in the live call
by telephone, please dial (888) 771-4371 or (847) 585-4405 and use
the participant passcode: 41477573.
A telephone replay 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:
4147 7573#. A replay will also be available on MannKind's
website for 14 days.
About MannKind Corporation
MannKind Corporation (NASDAQ:MNKD) (TASE:MNKD)
focuses on the discovery, development and commercialization of
therapeutic products for patients with diseases such as diabetes.
MannKind maintains a website at http://www.mannkindcorp.com to
which MannKind regularly posts copies of its press releases as well
as additional information about MannKind. Interested persons can
subscribe on the MannKind website to e-mail alerts that are sent
automatically when MannKind issues press releases, files its
reports with the Securities and Exchange Commission or posts
certain other information to the website.
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, 2015 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 and Subsidiaries |
Condensed
Consolidated Statements of Operations |
(Unaudited) |
(in thousands, except
par value and share data) |
|
|
|
Three Months EndedSeptember 30, |
|
Nine Months EndedSeptember 30, |
|
|
2016 |
|
2015 |
|
2016 |
|
2015 |
Revenue: |
|
|
|
|
|
|
|
|
Net revenue - collaboration |
|
$ |
161,781 |
|
|
$ |
- |
|
|
$ |
161,781 |
|
|
$ |
- |
|
Net revenue - commercial product
sales |
|
|
573 |
|
|
|
- |
|
|
|
573 |
|
|
|
- |
|
Total net revenue |
|
|
162,354 |
|
|
|
- |
|
|
|
162,354 |
|
|
|
- |
|
Expense: |
|
|
|
|
|
|
|
|
Product costs - collaboration |
|
|
22,742 |
|
|
|
- |
|
|
|
22,742 |
|
|
|
- |
|
Cost of goods sold |
|
|
4,331 |
|
|
|
8,115 |
|
|
|
15,567 |
|
|
|
15,688 |
|
Research and development |
|
|
3,917 |
|
|
|
6,341 |
|
|
|
13,357 |
|
|
|
23,455 |
|
Selling, general and
administrative |
|
|
13,135 |
|
|
|
11,547 |
|
|
|
31,595 |
|
|
|
32,649 |
|
Total expenses |
|
|
44,125 |
|
|
|
26,003 |
|
|
|
83,261 |
|
|
|
71,792 |
|
Income
(loss) from operations |
|
|
118,229 |
|
|
|
(26,003 |
) |
|
|
79,093 |
|
|
|
(71,792 |
) |
Change
in fair value of warrant liability |
|
|
13,185 |
|
|
|
- |
|
|
|
7,879 |
|
|
|
- |
|
Interest
income |
|
|
28 |
|
|
|
2 |
|
|
|
70 |
|
|
|
8 |
|
Interest expense on
notes |
|
|
(4,166 |
) |
|
|
(4,145 |
) |
|
|
(12,567 |
) |
|
|
(17,899 |
) |
Interest expense on
note payable to our principal stockholder |
|
|
(729 |
) |
|
|
(729 |
) |
|
|
(2,172 |
) |
|
|
(2,164 |
) |
Loss on
extinguishment of debt |
|
|
- |
|
|
|
(1,049 |
) |
|
|
- |
|
|
|
(1,049 |
) |
Other
(expense) income |
|
|
(27 |
) |
|
|
67 |
|
|
|
(613 |
) |
|
|
1,470 |
|
Net income (loss) |
|
$ |
126,520 |
|
|
$ |
(31,857 |
) |
|
|
71,690 |
|
|
|
(91,426 |
) |
|
|
|
|
|
|
|
|
|
Net
income (loss) per share - basic |
|
$ |
0.26 |
|
|
$ |
(0.08 |
) |
|
$ |
0.16 |
|
|
$ |
(0.23 |
) |
|
|
|
|
|
|
|
|
|
Net
income (loss) per share - diluted |
|
$ |
0.26 |
|
|
$ |
(0.08 |
) |
|
$ |
0.16 |
|
|
$ |
(0.23 |
) |
|
|
|
|
|
|
|
|
|
Shares used to compute
basic net income (loss) per share |
|
|
478,137 |
|
|
|
405,199 |
|
|
|
454,188 |
|
|
|
401,734 |
|
|
|
|
|
|
|
|
|
|
Shares used to compute
diluted net income (loss) per share |
|
|
482,744 |
|
|
|
405,199 |
|
|
|
454,366 |
|
|
|
401,734 |
|
|
MannKind
Corporation and Subsidiaries |
Condensed
Consolidated Balance Sheets |
(Unaudited) |
(in thousands, except par
value and share data) |
|
|
|
September 30,2016 |
|
December 31,2015 |
|
|
|
|
|
ASSETS |
|
|
|
|
Current assets: |
|
|
|
|
Cash and cash equivalents |
|
$ |
35,530 |
|
|
$ |
59,074 |
|
Accounts receivable |
|
|
3,137 |
|
|
|
23 |
|
Inventory |
|
|
5,124 |
|
|
|
- |
|
Deferred costs from
collaboration |
|
|
- |
|
|
|
13,539 |
|
Deferred costs from commercial
product sales |
|
|
279 |
|
|
|
- |
|
Prepaid expenses and other current
assets |
|
|
4,534 |
|
|
|
4,018 |
|
Total current assets |
|
|
48,604 |
|
|
|
76,654 |
|
Property and equipment
- net |
|
|
46,825 |
|
|
|
48,749 |
|
Other assets |
|
|
702 |
|
|
|
1,009 |
|
Total assets |
|
$ |
96,131 |
|
|
$ |
126,412 |
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT |
|
|
|
|
Current
liabilities: |
|
|
|
|
Accounts payable |
|
$ |
5,093 |
|
|
$ |
15,599 |
|
Accrued expenses and other current
liabilities |
|
|
14,164 |
|
|
|
7,929 |
|
Facility financing obligation |
|
|
70,888 |
|
|
|
74,582 |
|
Deferred sales from
collaboration |
|
|
- |
|
|
|
17,503 |
|
Deferred payments from
collaboration |
|
|
462 |
|
|
|
140,231 |
|
Deferred revenue |
|
|
2,014 |
|
|
|
- |
|
Recognized loss on purchase
commitments - current |
|
|
8,340 |
|
|
|
12,475 |
|
Warrant liability |
|
|
4,871 |
|
|
|
- |
|
Total current liabilities |
|
|
105,832 |
|
|
|
268,319 |
|
Note payable to our
principal stockholder |
|
|
49,521 |
|
|
|
49,521 |
|
Sanofi loan facility
and loss share obligation |
|
|
71,210 |
|
|
|
62,371 |
|
Senior convertible
notes - long term |
|
|
27,629 |
|
|
|
27,613 |
|
Recognized loss on
purchase commitments - long term |
|
|
63,229 |
|
|
|
53,692 |
|
Other liabilities |
|
|
17,397 |
|
|
|
15,225 |
|
Total liabilities |
|
|
334,818 |
|
|
|
476,741 |
|
|
|
|
|
|
Stockholders' deficit |
|
|
(238,687 |
) |
|
|
(350,329 |
) |
Total liabilities and stockholders'
deficit |
|
$ |
96,131 |
|
|
$ |
126,412 |
|
Company Contact:
Rose Alinaya
SVP, Finance
661-775-5300
ralinaya@mannkindcorp.com
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