MannKind Corporation (MNKD) Announces 2Q:17 Financial Results


MannKind Corporation (NASDAQ:MNKD) reported financial results for the second quarter and the six months ended June 30, 2017. Key results include:

  • Completed  commercial expansion
  • Afrezza net revenue and gross revenue grew 29% and 60%, respectively, vs. Q1 2017
  • Reduced Deerfield obligations by $15 million through equity conversion and cash payments
  • Increased cash by $19.4 million through The Mann Group loan arrangement
  • Positive pre-IND meeting with the FDA for treprostinil Technosphere

Second Quarter Results

For the second quarter of 2017, total net revenue of $2.2 million was comprised of $1.5 million of Afrezza product net sales, $0.1 million of collaboration revenues and $0.6 million of other revenues from the sale of certain oncology intellectual property. As of June 30, 2017, Afrezza product shipped to the wholesale and retail channel, but not yet recognized as revenue, was $2.6 million.  Afrezza net revenue and gross revenue grew 29% and 60%, respectively, compared to the first quarter of 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-Q for the quarterly period ended June 30, 2017.

Cost of goods sold was $5.1 million in the second quarter of 2017 compared to $4.0 million in the second quarter of 2016, an increase of approximately $1.1 million or 28%, primarily due to a write-down of inventory which was forecasted to become obsolete due to expiration.

Research and development expenses were $3.1 million in the second quarter of 2017 compared to $4.3 million in the second quarter of 2016, a decrease of $1.2 million or 28%, due to the reduction in workforce that took place in the fourth quarter of 2016.

Selling, general and administrative expenses were $18.6 million for the second quarter of 2017 compared to $11.1 million for the same quarter of 2016, an increase of $7.5 million or 68%. The increase in selling expense is primarily due to recruiting a MannKind-employee sales force and building the related commercial support.

The net loss for the second quarter of 2017 was $35.3 million, or $0.35 per share based on 99.9 million weighted average shares outstanding, compared to the net loss of $30.0 million, or $0.33 per share on 91.1 million weighted average shares outstanding in the second quarter of 2016.

Six Months Ended Results

For the six months ended June 30, 2017, total net revenue of $5.2 million was comprised of $2.7 million of Afrezza product net sales, $1.8 million from the sales of surplus bulk insulin to a third party and $0.6 million from the sale of certain oncology intellectual property.

Cost of goods sold was $7.6 million for the six months ended June 30, 2017 compared to $9.2 million for the same period in 2016, a decrease of approximately $1.6 million or 17%, primarily due to a decrease in under-absorbed labor and overhead as a result of the reduction in the workforce that took place in the fourth quarter of 2016.

Research and development expenses were $6.3 million for the six months ended June 30, 2017 compared to $9.4 million for the same period in 2016, a decrease of $3.1 million or 33%, due primarily to compensation expense resulting from the reduction in force in the fourth quarter of 2016.

Selling, general and administrative expenses were $34.0 million for the six months ended June 30, 2017 compared to $18.5 million for the same period in 2016, an increase of $15.5 million or 84%, primarily due to increased selling and marketing activities associated with recruiting a MannKind-employee sales force and building the related commercial support.

The net loss for the six months ended June 30, 2017 was $51.7 million, or $0.53 per share based on 97.8 million weighted average shares outstanding, compared to the net loss of $54.8 million, or $0.62 per share on 88.4 million weighted average shares outstanding at June 30, 2016.

Cash and Cash Equivalents

Cash and cash equivalents at June 30, 2017 were $43.4 million, compared to $48.0 million at March 31, 2017. During the second quarter of 2017, we received net borrowings of $19.4 million from the Mann Group.

Product Pipeline

The Company had a positive pre-IND meeting with the FDA during June 2016 and, as a result, will be advancing treprostinil Technosphere for the treatment of pulmonary arterial hypertension with the intention of filing an investigational new drug application by the end of 2017.

Shares of MannKind closed today at $1.17, down $0.05 or -4.10%. MNKD has a 1-year high of $5.05 and a 1-year low of $0.67. The stock’s 50-day moving average is $1.34 and its 200-day moving average is $1.22.

On the ratings front, MannKind has been the subject of a number of recent research reports. In a report issued on May 11, J.P. Morgan analyst Cory Kasimov reiterated a Sell rating on MNKD. Separately, on the same day, Piper Jaffray’s Joshua Schimmer reiterated a Sell rating on the stock and has a price target of $0.54.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Cory Kasimov and Joshua Schimmer have a yearly average return of 1.8% and 0.5% respectively. Kasimov has a success rate of 41% and is ranked #1838 out of 4628 analysts, while Schimmer has a success rate of 50% and is ranked #2353.

MannKind Corp. is a biopharmaceutical company. It focuses on the discovery, development and commercialization of therapeutic products for diseases, such as diabetes and cancer.