MannKind(MNKD) - 2024 Q1 - Quarterly Results

Q1 2024 Financial and Operational Highlights Financial Highlights MannKind reported strong Q1 2024 financial performance, achieving its eighth consecutive quarter of revenue growth and positive net income | Metric | Q1 2024 (Millions USD) | Q1 2023 (Millions USD) | Change (Millions USD) | % Change | | :-------------------------------- | :--------------------- | :--------------------- | :-------------------- | :------- | | Total Revenues | $66.0 | $40.6 | +$25.4 | +63% | | Net Income (GAAP) | $11.0 | ($9.8) | +$20.8 | N/A | | Non-GAAP Net Income | $15.0 | ($5.2) | +$20.2 | N/A | | Cash & Cash Equivalents & Investments (as of March 31, 2024) | $304.0 | N/A | N/A | N/A | Key Business Developments The company advanced debt management and clinical development, repaying substantial debt and securing key regulatory designations for pipeline products - In early April, repaid Midcap senior-secured debt and Mann Group convertible debt totaling approximately $37 million[1] - FDA Fast Track designation and IND clearance received for MNKD-101, potentially accelerating its path to patients[1][2] Detailed Financial Performance Revenue Analysis Total revenues for Q1 2024 grew 63% year-over-year, primarily from increased collaboration royalties and services revenue, with modest Afrezza net revenue growth Q1 2024 Revenue Breakdown (Thousands USD) | Revenue Source | 2024 (Thousands USD) | 2023 (Thousands USD) | Change (Thousands USD) | % Change | | :-------------------------------- | :------------------- | :------------------- | :------------------- | :------- | | Royalties – collaborations | $22,651 | $11,678 | $10,973 | 94% | | Revenue – collaborations and services | $24,848 | $11,386 | $13,462 | 118% | | Net revenue – Afrezza | $14,438 | $12,423 | $2,015 | 16% | | Net revenue – V-Go | $4,326 | $5,139 | ($813) | (16%) | | Total revenues | $66,263 | $40,626 | $25,637 | 63% | - Royalties related to Tyvaso DPI increased 94% due to increased patient demand[3] - Collaborations and services revenue increased 118%, primarily due to increased manufacturing of Tyvaso DPI for United Therapeutics[3] - Afrezza net revenue increased 16% due to higher price, including a decrease in gross-to-net adjustments[3] - V-Go net revenue decreased 16% due to lower product demand[3] Cost of Revenues and Gross Margin Commercial product gross margin significantly improved, while collaboration and services cost of revenue increased due to higher volumes, partially offset by efficiency gains - Commercial product gross margin in Q1 2024 was 80%, up from 69% in Q1 2023, primarily due to an increase in Afrezza net revenue[3] - Cost of revenue – collaborations and services increased by $4.1 million to $14.8 million in Q1 2024, primarily due to increased manufacturing volume and related production activities; higher volumes led to lower effective cost per unit[4] Operating Expenses Operating expenses showed mixed trends: R&D increased for pipeline development, selling decreased due to restructuring, and G&A slightly rose from V-Go related returns Research and Development (R&D) Expenses R&D expenses notably increased, driven by intensified MNKD-101 development, ongoing Afrezza clinical studies, and higher personnel costs | Metric | Q1 2024 (Thousands USD) | Q1 2023 (Thousands USD) | Change (Thousands USD) | | :----------------------- | :---------------------- | :---------------------- | :--------------------- | | R&D Expenses | $10,013 | $5,605 | +$4,408 | - Increase primarily attributed to increased development activities for clofazimine inhaled suspension (MNKD-101), costs for an Afrezza post-marketing clinical study (INHALE-3), and personnel expenses due to increased headcount[5] Selling Expenses Selling expenses decreased year-over-year, reflecting the impact of sales force restructuring activities completed during the quarter | Metric | Q1 2024 (Thousands USD) | Q1 2023 (Thousands USD) | Change (Thousands USD) | | :--------------- | :---------------------- | :---------------------- | :--------------------- | | Selling Expenses | $11,601 | $13,310 | -$1,709 | - Decrease primarily due to reduced personnel and travel expenses related to sales force restructuring activities[5] General and Administrative (G&A) Expenses G&A expenses remained stable, with a slight increase from estimated V-Go pre-acquisition returns, partially offset by lower personnel costs | Metric | Q1 2024 (Thousands USD) | Q1 2023 (Thousands USD) | Change (Thousands USD) | | :-------------------------------- | :---------------------- | :---------------------- | :--------------------- | | G&A Expenses | $10,728 | $10,542 | +$186 | - Increase primarily attributable to a $1.2 million loss related to estimated returns associated with sales of V-Go that pre-date our acquisition, partially offset by reduced personnel costs[6] Other Income and Expenses Interest income significantly increased due to higher yields and investments, while new interest expense arose from the sale of future royalties | Metric | Q1 2024 (Thousands USD) | Q1 2023 (Thousands USD) | Change (Thousands USD) | | :----------------------- | :---------------------- | :---------------------- | :--------------------- | | Interest Income, net | $3,434 | $1,302 | +$2,132 | - Interest income, net, increased primarily due to higher yields on the securities portfolio and an increase in underlying investments from the proceeds of the sale of 1% of Tyvaso DPI royalties in December 2023[6] - Interest expense on liability for sale of future royalties was $4.2 million in Q1 2024, due to imputed interest and amortization of debt issuance costs on the liability recorded in connection with the December 2023 royalty sale[7] Net Income (Loss) The company achieved a positive GAAP net income in Q1 2024, a significant improvement from a net loss in the prior year period | Metric | Q1 2024 (Thousands USD) | Q1 2023 (Thousands USD) | | :---------------- | :---------------------- | :---------------------- | | Net Income (Loss) | $10,630 | ($9,795) | Non-GAAP Financial Measures Non-GAAP financial measures provide additional insight into operating results by adjusting for non-cash items, resulting in a higher adjusted net income for Q1 2024 - Non-GAAP financial measures (net income/loss and EPS) are presented to supplement GAAP results, providing additional understanding of business operating results and underlying trends by adjusting for select non-cash items[8][9] Non-GAAP Reconciliation (Thousands USD, except EPS) | Metric | Q1 2024 (GAAP, Thousands USD) | Adjustments (Thousands USD) | Q1 2024 (Non-GAAP, Thousands USD) | Q1 2023 (GAAP, Thousands USD) | Adjustments (Thousands USD) | Q1 2023 (Non-GAAP, Thousands USD) | | :-------------------------------------------------------------------------------- | :---------------------------- | :-------------------------- | :-------------------------------- | :---------------------------- | :-------------------------- | :-------------------------------- | | Net Income (Loss) | $10,630 | $4,469 | $15,099 | ($9,795) | $4,609 | ($5,186) | | Diluted EPS | $0.04 | $0.01 | $0.05 | ($0.04) | $0.02 | ($0.02) | | Weighted Average Shares (Diluted) | 324,733 | N/A | 324,733 | 263,969 | N/A | 263,969 | - Adjustments include sold portion of royalty revenue, interest expense on liability for sale of future royalties, stock compensation, and (gain) loss on foreign currency transaction[10][11] Financial Position and Liquidity Cash and Investments As of March 31, 2024, MannKind maintained a strong cash and investments position, providing financial flexibility Cash and Investments (Millions USD) | Metric | As of March 31, 2024 (Millions USD) | | :------------------------------------ | :---------------------------------- | | Cash, cash equivalents and investments | $304.5 | Debt Repayment Subsequent to the quarter end, the company successfully repaid approximately $37 million in senior-secured and convertible debt, strengthening its balance sheet - In early April, repaid Midcap senior-secured debt and Mann Group convertible debt totaling approximately $37 million[1] Clinical Development Updates Afrezza Clinical Trials Afrezza INHALE-1 and INHALE-3 clinical trials reached Q1 2024 milestones, with upcoming data read-outs and planned FDA submission for label expansion - Afrezza INHALE-1 (pediatric phase 3): Patient enrollment and randomization completed in 1Q 2024; primary endpoint analysis expected in 4Q 2024, full results in 1H 2025, and FDA submission for label expansion in 2025[12] - Afrezza INHALE-3 (T1DM, phase 4): Last participant completed randomized treatment phase in 1Q 2024; top-line data/primary endpoints to be presented at ADA conference in June 2024, with additional data at ADCES August conference[12] MNKD-101 (clofazimine inhalation suspension) MNKD-101 received crucial regulatory designations, paving the way for its clinical trial initiation in the near future - Received Fast Track designation from the FDA and FDA clearance of Investigational New Drug Application (IND)[13] - First patient expected to enroll in 2Q 2024 across up to 120 global sites, with co-primary endpoints of sputum conversion and patient-reported outcomes[13] MNKD-201 (nintedanib DPI) MNKD-201 is advancing to Phase 1 clinical trials, with the first patient expected to be dosed in Q2 2024 and results anticipated by late 2024 - Received FDA clearance to proceed to Phase 1 clinical trial[14] - Phase 1 development program in healthy volunteers expected to dose first patient in 2Q 2024, with results expected in late 2024[14] Company Information About MannKind MannKind is a biopharmaceutical company focused on innovative inhaled therapeutics and devices for endocrine and orphan lung diseases, utilizing dry-powder formulations - Focuses on development and commercialization of innovative inhaled therapeutic products and devices for serious unmet medical needs in endocrine and orphan lung diseases[16] - Committed to addressing diseases like diabetes, nontuberculous mycobacterial (NTM) lung disease, pulmonary fibrosis, and pulmonary hypertension[16] - Utilizes signature technologies: dry-powder formulations and inhalation devices for rapid and convenient delivery of medicines to the deep lung[16] Forward-Looking Statements This section cautions on forward-looking statements, highlighting inherent risks and uncertainties that could cause actual results to differ materially from projections - Statements in the press release that are not historical facts are forward-looking and involve risks and uncertainties[18] - Forward-looking statements include expected timing of patient enrollment and dosing, potential for expedited review, timing of data read-outs, and planned FDA submissions[18] - Actual results could differ due to risks associated with manufacturing, product development, clinical trial delays, safety, regulatory review, and other risks detailed in SEC filings[18] Condensed Consolidated Financial Statements Condensed Consolidated Statements of Operations The unaudited condensed consolidated statements of operations for the three months ended March 31, 2024, and 2023, detailing revenues, expenses, and net income (loss) Condensed Consolidated Statements of Operations (Thousands USD, except per share data) | | Ended March 31, 2024 (Thousands USD) | Ended March 31, 2023 (Thousands USD) | | :------------------------------------------------------------------------------------ | :----------------------------------- | :----------------------------------- | | Revenues: | | | | Net revenue – commercial product sales | $18,764 | $17,562 | | Revenue – collaborations and services | $24,848 | $11,386 | | Royalties – collaborations | $22,651 | $11,678 | | Total revenues | $66,263 | $40,626 | | Expenses: | | | | Cost of goods sold | $3,819 | $5,530 | | Cost of revenue – collaborations and services | $14,779 | $10,683 | | Research and development | $10,013 | $5,605 | | Selling | $11,601 | $13,310 | | General and administrative | $10,728 | $10,542 | | (Gain) loss on foreign currency transaction | ($1,399) | $954 | | Total expenses | $49,541 | $46,624 | | Income (loss) from operations | $16,722 | ($5,998) | | Other income (expense): | | | | Interest income, net | $3,434 | $1,302 | | Interest expense on financing liability | ($2,447) | ($2,424) | | Interest expense | ($2,567) | ($2,786) | | Interest expense on liability for sale of future royalties | ($4,248) | — | | Other income | — | $111 | | Total other expense | ($5,828) | ($3,797) | | Income (loss) before income tax expense | $10,894 | ($9,795) | | Income tax expense | $264 | — | | Net income (loss) | $10,630 | ($9,795) | | Net income (loss) per share – basic | $0.04 | ($0.04) | | Weighted average shares used to compute net income (loss) per share – basic | 270,356 | 263,969 | | Net income (loss) per share – diluted | $0.04 | ($0.04) | | Weighted average shares used to compute net income (loss) per share – diluted | 324,733 | 263,969 | Condensed Consolidated Balance Sheets The unaudited condensed consolidated balance sheets as of March 31, 2024, and December 31, 2023, presenting the company's assets, liabilities, and stockholders' deficit Condensed Consolidated Balance Sheets (Thousands USD) | | March 31, 2024 (Thousands USD) | December 31, 2023 (Thousands USD) | | :------------------------------------------------------------------------------------ | :----------------------------- | :-------------------------------- | | ASSETS | | | | Current assets: | | | | Cash and cash equivalents | $193,272 | $238,480 | | Short-term investments | $107,457 | $56,619 | | Accounts receivable, net | $19,912 | $14,901 | | Inventory | $26,442 | $28,545 | | Prepaid expenses and other current assets | $36,019 | $34,848 | | Total current assets | $383,102 | $373,393 | | Property and equipment, net | $83,620 | $84,220 | | Goodwill | $1,931 | $1,931 | | Other intangible asset | $1,053 | $1,073 | | Long-term investments | $3,726 | $7,155 | | Other assets | $7,447 | $7,426 | | Total assets | $480,879 | $475,198 | | LIABILITIES AND STOCKHOLDERS' DEFICIT | | | | Current liabilities: | | | | Accounts payable | $7,149 | $9,580 | | Accrued expenses and other current liabilities | $42,291 | $42,036 | | Financing liability – current | $9,872 | $9,809 | | Midcap credit facility – current | $20,000 | — | | Liability for sale of future royalties – current | $10,537 | $9,756 | | Deferred revenue – current | $7,601 | $9,085 | | Recognized loss on purchase commitments – current | $2,446 | $3,859 | | Total current liabilities | $99,896 | $104,125 | | Mann Group convertible note | $8,829 | $8,829 | | Accrued interest – Mann Group convertible note | $55 | $56 | | Financing liability – long term | $94,207 | $94,319 | | Midcap credit facility – long term | $8,105 | $13,019 | | Senior convertible notes | $227,214 | $226,851 | | Liability for sale of future royalties – long term | $137,418 | $136,054 | | Recognized loss on purchase commitments – long term | $60,287 | $60,942 | | Operating lease liability | $3,645 | $3,925 | | Deferred revenue – long term | $67,741 | $69,794 | | Milestone liabilities | $3,452 | $3,452 | | Total liabilities | $710,849 | $721,366 | | Stockholders' deficit: | | | | Common stock | $2,703 | $2,700 | | Additional paid-in capital | $2,986,104 | $2,980,539 | | Accumulated deficit | ($3,218,777) | ($3,229,407) | | Total stockholders' deficit | ($229,970) | ($246,168) | | Total liabilities and stockholders' deficit | $480,879 | $475,198 |