Market Overview

MannKind Corporation Reports 2019 Third Quarter Preliminary Financial Results

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  • 3Q 2019 Total Revenues of $14.6 million; +227% vs. 3Q 2018
    °  3Q 2019 Afrezza Net Revenue was $6.4 million; +46% vs. 3Q 2018
       •  Afrezza sold to our marketing partner in Brazil for launch was $0.7 million
    °  3Q 2019 Collaborations and Services Revenue was $8.2 million
  • Debt financing completed providing up to $75.0 million in non-dilutive capital
  • Received second $12.5 million milestone payment from United Therapeutics in November 2019
  • Advanced Technosphere® formulations of sumatriptan and tadalafil into nonclinical pharmacology studies

WESTLAKE VILLAGE, Calif., Nov. 06, 2019 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) today reported preliminary financial results for the quarter and nine months ended September 30, 2019.

"I am excited to see MannKind continue its transformation, with another quarter of double-digit growth in Afrezza revenue, year over year, and aggregate net revenue of $14.6 million," said Michael Castagna, Chief Executive Officer of MannKind Corporation. "In the third quarter, we completed our recapitalization and achieved several key milestones, such as booking our first international sale of Afrezza to Brazil, seeing the first PAH patient dosed with TreT and progressing two pipeline compounds into nonclinical testing."

Third Quarter 2019 Results

Net revenues were $14.6 million for the third quarter of 2019, reflecting Afrezza net revenue of $6.4 million and collaborations and services revenue of $8.2 million. Afrezza net revenue increased 46% compared to $4.4 million in the third quarter of 2018, primarily driven by higher product demand (including the first shipment to Brazil), a more favorable mix of Afrezza cartridges and price.

Collaborations and services revenue increased $8.1 million compared to the third quarter of 2018, primarily driven by the license agreement with United Therapeutics, which began in the fourth quarter of 2018.

On a GAAP basis, Afrezza gross loss was $0.7 million for the third quarter of 2019 compared to a gross loss of $0.9 million in the same period in 2018. Afrezza cost of goods sold for the third quarter of 2019 included a one-time fee of $2.75 million recorded in connection with the amendment of the Company's insulin supply agreement with Amphastar in August 2019. As a result, on a non-GAAP basis, gross profit was $2.1 million or 33% for the third quarter of 2019.

Research and development (R&D) expenses for the third quarter of 2019 were $1.6 million compared to $2.0 million for the third quarter of 2018. This 23% decrease was primarily attributable to a $0.4 million decrease in clinical trial spending. 

Selling, general and administrative (SG&A) expenses for the third quarter of 2019 were $16.7 million compared to $19.4 million for the third quarter of 2018. This decrease of $2.7 million, or 14%, was primarily attributable to a $0.8 million decrease in personnel-related costs and a $1.9 million decrease in Afrezza marketing costs. 

Interest expense on notes for the third quarter of 2019 was $4.1 million compared to $1.0 million for the third quarter of 2018. This $3.1 million increase or 316% was primarily attributable to a $3.4 million charge realized as a result of achieving of a sales milestone in the third quarter of 2019 under the Company's milestone agreement with Deerfield.

The net loss for the third quarter of 2019 was $10.4 million, or $0.05 per share compared to a $24.2 million net loss in the third quarter of 2018 or $0.16 per share. The decrease was primarily the result of increased total revenues from higher Afrezza commercial demand and from the licensing and research agreements with United Therapeutics.

Nine Months Ended September 30, 2019 

Net revenues were $47.0 million for the nine months ended September 30, 2019, reflecting Afrezza net revenue of $17.5 million and collaborations and services revenue of $29.5 million. Afrezza net revenue increased 52% compared to $11.5 million for the nine months ended September 30, 2018, primarily due to higher product demand (including the first shipment to Brazil), a more favorable mix of Afrezza cartridges and price. Collaborations and services revenue increased $29.3 million compared to the nine months ended September 30, 2018, which was primarily attributed to the licensing agreement ($23.3 million) and research agreement ($5.9 million) with United Therapeutics, both of which began in the fourth quarter of 2018.

On a GAAP basis, Afrezza gross profit was $2.1 million for the nine months ended September 30, 2019, an improvement of $5.0 million or 173% compared to a gross loss of $2.9 million in the same period in 2018, primarily due to an increase of $6.0 million in net revenue, a $1.8 million decrease in inventory write-offs, partially offset by increased costs due to higher sales and the Amphastar one-time amendment fee of $2.75 million in the third quarter of 2019. As a result, on a non-GAAP basis, gross profit was $4.9 million or 28% for the nine months ended September 30, 2019.

R&D expenses for the nine months ended September 30, 2019 were $4.9 million compared to $7.7 million for the nine months ended September 30, 2018. This $2.8 million or 36% decrease was primarily attributable to a $1.0 million decrease in personnel-related costs and a $1.1 million decrease in clinical trial spending.

SG&A expenses for the nine months ended September 30, 2019 were $58.9 million compared to $61.7 million for the nine months ended September 30, 2018. This decrease of $2.7 million or 5% was primarily attributable to a $6.1 million decrease in personnel related costs, $1.9 million decrease in professional fees, a $1.0 million decrease in stock-based compensation costs offset by a $6.8 million increase in costs for a television campaign for Afrezza.

Interest income increased by $0.5 million or 160% for the nine months ended September 30, 2019 primarily attributable to a higher balance on money market funds and other short-term investments.

Interest expense on notes for the nine months ended September 30, 2019 was $5.3 million compared to $4.5 million for the nine months ended September 30, 2018. This $0.8 million increase was primarily attributable to a $3.4 million charge realized as a result of achieving of a sales milestone in the third quarter of 2019 under the Company's milestone agreement with Deerfield, partially offset by a reduction in debt principal balances.

The net loss for the nine months ended September 30, 2019 was $37.6 million, or $0.20 per share compared to a $77.2 million net loss for the nine months ended September 30, 2018 or $0.56 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 September 30, 2019 was $50.4 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 September 30,
($ in million) 2019
  2018
   $ Chg
   % Chg 
Net Revenue - Afrezza $ 6.4     $ 4.4     $ 2.0     45 %
Cost of Goods Sold   (7.1 )     (5.3 )     (1.8 )   -34 %
 GAAP Gross Profit (Loss) - Afrezza $ (0.7 )   $ (0.9 )     0.2     22 %
Exclude Amphastar Amendment Fee   2.8             2.8      
 Non-GAAP Gross Profit (Loss) - Afrezza $ 2.1     $ (0.9 )   $ 3.0     333 %
 Non-GAAP Gross Margin   33 %     -20 %      
                     


   
  Nine Months Ended September 30,
($ in million)  2019    2018    $ Chg
   % Chg 
Net Revenue - Afrezza $ 17.5     $ 11.5     $ 6.0     52 %
Cost of Goods Sold   (15.4 )     (14.4 )     (1.0 )   -7 %
 GAAP Gross Profit (Loss) - Afrezza $ 2.1     $ (2.9 )     5.0     172 %
Exclude Amphastar Amendment Fee  
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