Company Update (NASDAQ:MNKD): MannKind Corporation Announces Q4 and Full Year 2016 Results


MannKind Corporation (NASDAQ:MNKD) reported financial results for the fourth quarter and full year ended December 31, 2016. Key results include:

  • Total revenue for the quarter of $12.4 million, including $10.2 million from insulin sales to Sanofi, and net income for the fourth quarter of $54.0 million including $72.0 million from the extinguishment of debt owed to Sanofi
  • Total revenue for 2016 of $174.8 million, including $172.0 million in revenue previously deferred from the collaboration with Sanofi, and net income for 2016 of $125.7 million, compared with a net loss of $368.4 million for 2015
  • Finished 2016 with $22.9 million of cash and cash equivalents, not including $30.6 million subsequently received from Sanofi and $16.7 million subsequently received from sale of surplus building

Fourth Quarter Results

For the fourth quarter of 2016, total net revenue of $12.4 million was comprised primarily of $10.2 million from the sale of bulk insulin to Sanofi under the terms of the settlement agreement, in addition to $1.3 million of recognized Afrezza product sales as dispensed to patients.  As of December 31, 2016, deferred net revenue included $1.7 million of Afrezza product shipped to the third-party logistics provider and wholesale distributors, but not yet recognized as revenue.

Research and development expenses were $1.6 million for the fourth quarter of 2016 compared to $6.2 million in the fourth quarter of 2015, a decrease of 74.2%, primarily due to $1.9 million in decreased collaboration development work and $1.6 million in decreased consulting support for research and development projects.

Selling, general and administrative expenses were $15.3 million for the fourth quarter of 2016 compared to $8.3 million for the same quarter of 2015, an increase of 84.3%, primarily due to $8.8 million in sales and marketing expense associated with the commercialization of Afrezza, offset by a $1.8 million decrease in general and administrative costs, mainly due to the effects of the 2015 and 2016 reductions in force.

Full Year 2016 Results

Total net revenue for 2016 of $174.8 million is comprised primarily of $172.0 million net revenue previously deferred from the collaboration with Sanofi.  Net revenue from commercial product sales by the Company was $1.9 million, after giving effect to gross to net adjustments on gross revenue of $2.7 million of Afrezza product dispensed to patients.  Commercial product sales commenced in August 2016, after Afrezza transitioned from Sanofi to MannKind.  During 2015, there was no recognition of revenue or cost of revenue related to the collaboration.

Research and development costs for 2016 were $14.9 million compared to $29.7 million for 2015, a decrease of 49.8%, primarily due to $6.2 million of reduced expenses associated with the reductions in force, $3.3 million of decreased facility spending, $3.1 million in lower project costs, and $2.1 million of reduced clinical trial costs.  These decreases were partially offset by the FDA filing fee of $1.0 million for the supplemental new drug application submitted in 2016.

Selling, general and administrative expenses for 2016 were $46.9 million compared to $41.0 million for 2015, an increase of 14.4%, primarily due to increased costs for the sales and marketing of Afrezza, offset by decreased general and administrative expenses.  Sales and marketing expenses were $19.8 million for 2016 compared to $1.6 million for 2015. General and administrative expenses for 2016 were $27.1 million compared to $39.4 million in 2015, a decrease of 31.2%, primarily due to decreased costs associated with the effects of the reductions in force of $9.0 million, $1.7 million in decreased professional fees and $1.7 million in reduced facility spending.

The $72.0 million gain from extinguishment of debt in 2016 resulted from the forgiveness of the full outstanding loan balance of the Sanofi Loan Facility as part of the settlement agreement with Sanofi.

Net income for 2016 was $125.7 million, or $1.37 net income per share, compared to the net loss of $368.4 million, or $4.54 net loss per share in 2015.

On March 1, 2017, following stockholder approval of the Reverse Split Proposal, the Company’s board of directors approved a reverse stock split of the Company’s common stock at a ratio of 1-for-5. On March 1, 2017, the Company filed with the Secretary of State of the State of Delaware a Certificate of Amendment of its Amended and Restated Certificate to (i) implement a one-for-five reverse stock split of the Company’s outstanding common stock and (ii) reduce the authorized number of shares of the Company’s common stock from 700 million to 140 million shares.  As a result, all common stock share amounts included in this release were retroactively reduced by a factor of five and all common stock per share amounts were increased by a factor of five.

Cash and cash equivalents at December 31, 2016 were $22.9 million, compared to $35.5 million at the end of the third quarter of 2016. During the fourth quarter of 2016, cash receipts were $10.2 million from the sale of insulin to Sanofi, $4.8 million from shipments of Afrezza, $2.2 million from sales of insulin to a third party and $1.1 million from the collaboration with Receptor. Currently, $30.1 million remains available to borrow under the amended loan arrangement with The Mann Group.

Shares of MannKind closed today at $2.07, up $0.05 or 2.48%. MNKD has a 1-year high of $11.20 and a 1-year low of $1.74. The stock’s 50-day moving average is $0.93 and its 200-day moving average is $0.69.

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

 

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