GlobeNewswire Inc | Nov 4, 2020 04:00PM EST

November 04, 2020

Conference Call to Begin Today at 5:00 PM ET

-- 3Q 2020 U.S. Afrezza Net Revenue of $7.3 million; +27% vs. 3Q 2019 -- 3Q YTD 2020 U.S. Afrezza Net Revenue of $22.1 million; +31% vs. 3Q YTD 2019 -- Cash and cash equivalents of $52.4 million at September 30, 2020 -- On track to complete Treprostinil Technosphere development activities in 4Q 2020 -- Expanded Afrezza commercial and medical teams -- YTD Afrezza scientific presentations and publications total 14

WESTLAKE VILLAGE, Calif., Nov. 04, 2020 (GLOBE NEWSWIRE) -- MannKind Corporation (NASDAQ:MNKD) today reported financial results for the quarter and nine months ended September 30, 2020.

Our employees continue to execute in a tumultuous Covid-19 environment, said Michael Castagna, Chief Executive Officer. As we head toward year-end, our focus remains on two significant drivers of value for shareholders: enabling healthcare providers to increase their prescribing of Afrezza and supporting United Therapeutics as they move the TreT clinical program to completion, including manufacturing TreT clinical supplies.

Third Quarter 2020 Results

Total revenues were $15.4 million for the third quarter of 2020, reflecting Afrezza net revenue of $7.3 million and collaboration and services revenue of $8.1 million. Afrezza U.S net revenue of $7.3 million increased 27% compared to $5.7 million in the third quarter of 2019, driven by higher product demand, a favorable mix of cartridges, and price. The first sale of Afrezza to the Companys marketing partner in Brazil was completed in the third quarter of 2019 for $0.7 million; there were no international sales in the third quarter of 2020. Collaboration and services revenue for the third quarter of 2020 decreased $0.1 million compared to the third quarter of 2019.

Afrezza gross profit for the third quarter of 2020 was $3.7 million compared to a loss of $0.7 million in the same period of 2019, an increase of $4.4 million that was driven primarily by higher Afrezza revenue combined with a reduction in cost of goods sold, primarily attributable to a $2.8 million amendment fee associated with our insulin supply agreement in 2019. Non-GAAP gross margin in the third quarter of 2020 increased to 51% from 32% for the same quarter in 2019.

Selling, general and administrative expenses for the third quarter of 2020 were $13.9 million compared to $16.7 million for the third quarter of 2019. This 17% decrease was primarily due to a $1.2 million reduction in promotional and marketing activities and a $0.8 million decrease in professional costs.

Interest expense for the third quarter of 2020 was $2.4 million compared to $5.3 million for the third quarter of 2019. This $2.9 million decrease was primarily attributable to a $3.4 million milestone obligation that occurred in the third quarter of 2019, partially offset by interest expense from the MidCap Credit Facility.

A loss on foreign currency translation for the third quarter of 2020 was $3.9 million compared to a $3.8 million gain for the third quarter of 2019. The fluctuation is related to the change in the U.S. dollar to Euro foreign exchange rate on the recognized loss on insulin purchase commitments, which are denominated in Euros.

The net loss for the third quarter of 2020 was $11.3 million, or $0.05 per share, compared to a $10.4 million net loss, or $0.05 per share in the third quarter of 2019. The higher net loss was mainly attributable to the change in foreign currency translation from a gain in 2019 to a loss in 2020, partially offset by the reduction in cost of goods sold, selling, general and administrative expenses and interest expense.

Nine Months Ended September 30, 2020

Total revenues were $46.7 million for the nine months ended September 30, 2020, reflecting Afrezza net revenue of $22.3 million and collaboration and services revenue of $24.4 million. Afrezza net revenue increased 27% compared to $17.5 million for the nine months ended September 30, 2019, primarily driven by higher product demand, a more favorable mix of cartridges and price, partially offset by a reduction in sales to Biomm (Brazil). Collaboration and services revenue for the nine months ended September 30, 2020 decreased $5.1 million compared to the same period in the prior year, primarily due to a $5.7 million decrease in revenue recognized from the UT Research Agreement, which was substantially completed in 2019.

Afrezza gross profit for the nine months ended September 30, 2020 was $10.8 million compared to $2.1 million in the same period of 2019, an increase of $8.7 million, or +416%, that was driven primarily by a reduction in cost of goods sold combined with higher commercial product sales. Cost of goods sold decreased by $4.0 million, primarily attributable to a $2.8 million amendment fee associated with our insulin supply agreement in 2019, $0.8 million of increased 2020 manufacturing activities which resulted in a greater amount of costs capitalized to inventory and $1.1 million in reduced 2020 manufacturing-related spending, partially offset by $0.5 million of 2020 inventory write-offs and $0.4 million in costs associated with higher commercial product sales. Non-GAAP gross margin for the nine months ended September 30, 2020 increased to 49% from 28% for the same period in 2019, primarily due to higher Afrezza revenue and lower cost of goods sold.

Selling, general and administrative expenses for the nine months ended September 30, 2020 were $41.9 million compared to $58.9 million for the same period in 2019. This 29% decrease was primarily due to $9.3 million spent on direct-to-consumer television advertising in 2019 (which was not repeated in 2020), a $4.1 million decrease in promotional and marketing activities, a $1.3 million decrease in consulting costs, and a $1.2 million decrease in personnel and employee related costs.

The loss on foreign currency translation for the nine months ended September 30, 2020 was $4.0 million compared to a $4.5 million gain for the same period in 2019. The fluctuation is related to the change in the U.S. dollar to Euro foreign exchange rate on the recognized loss on insulin purchase commitments, which are denominated in Euros.

The net loss for the nine months ended September 30, 2020 was $30.8 million, or $0.14 per share, compared to a $37.6 million net loss, or $0.20 per share for the same period in 2019. The lower net loss was mainly attributable to a decrease selling, general and administrative expenses, partially offset by the change in the foreign currency translation from a gain in 2019 to a loss in 2020. The reduction in the net loss per share was also impacted by a greater number of outstanding shares.

Cash, cash equivalents and restricted cash at September 30, 2020 was $52.7 million compared to $50.2 million at December 31, 2019, which also included short-term investments of $20.0 million. The increase was primarily due to a milestone payment from United Therapeutics of $12.5 million, $15.2 million of net proceeds received from at-the-market offerings, $11.6 million received from warrant exercises and the origination of a Paycheck Protection Program loan for $4.9 million, offset by non-GAAP net cash used in operating activities of $40.9 million.

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, 2020 2019 $ % Change ChangeNet revenue ? Afrezza $ 7,275 $ 6,402 $ 873 14 %Less cost of goods sold (3,591 ) (7,099 ) $ (3,508 ) (49 %)GAAP gross profit (loss) ? 3,684 (697 ) $ 4,381 * AfrezzaExclude Amphastar amendment fee ? 2,750 $ (2,750 ) (100 %)Non-GAAP gross profit ? Afrezza $ 3,684 $ 2,053 $ 1,631 79 %Non-GAAP gross margin 51 % 32 %

* Not meaningful

Nine Months Ended September 30, 2020 2019 $ % Change ChangeNet revenue ? Afrezza $ 22,260 $ 17,543 $ 4,717 27 %Less cost of goods sold (11,432 ) (15,446 ) $ (4,014 ) (26 %)GAAP gross profit ? Afrezza 10,828 2,097 $ 8,731 416 %Exclude Amphastar amendment ? 2,750 $ (2,750 ) (100 %)feeNon-GAAP gross profit ? $ 10,828 $ 4,847 $ 5,981 123 %AfrezzaNon-GAAP gross margin 49 % 28 %

Nine Months Ended September 30, 2020 2019 $ % Change ChangeNet cash used in operating $ (28,363 ) $ (83,376 ) $ 55,013 66 %activitiesExclude UT payment (12,500 ) (12,500 ) $ ? ? %receivedExclude payment-in-kindinterest on promissory ? (32,822 ) $ 32,822 100 %notesNon-GAAP cash used in $ (40,863 ) $ (128,698 ) $ 87,835 68 %operating activities

Conference Call

MannKind will host a conference call and presentation webcast to discuss these results today at 5:00 p.m. Eastern Time. Those interested in listening to the conference call live via the Internet may do so by visiting the Company's website at http://www.mannkindcorp.com under News & Events.

A telephone replay of the call will be accessible for approximately 14 days following completion of the call by dialing (844) 512-2921 or (412) 317-6671 and use the participant passcode: 3965498#. A replay will also be available on MannKind's website for 14 days.

About MannKind Corporation

MannKind Corporation (NASDAQ: MNKD) focuses on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and orphan lung diseases. MannKind is currently commercializing Afrezza (insulin human) Inhalation Powder, the Companys first FDA-approved product and the only inhaled ultra rapid-acting mealtime insulin in the United States, where it is available by prescription from pharmacies nationwide. MannKind is headquartered in Westlake Village, California, and has a state-of-the art manufacturing facility in Danbury, Connecticut. The Company also employs field sales and medical representatives across the U.S. For further information, visit www.mannkindcorp.com.

Forward-Looking Statements

This press release contains forward-looking statements that involve risks and uncertainties. Words such as "believes," "anticipates," "plans," "expects," "intends," "will," "goal," "potential" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based uponMannKind'scurrent expectations. Actual results and the timing of events could differ materially from those anticipated in such forward-looking statements as a result of various risks and uncertainties detailed inMannKind'sfilings with theSEC, including risks related to the COVID-19 pandemic. For a discussion of these and other factors, please refer to MannKinds annual report on Form 10-K for the year endedDecember 31, 2019 as well as MannKinds other filings with theSEC. 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, andMannKindundertakes no obligation to revise or update any forward-looking statements to reflect events or circumstances after the date of this press release.

Company Contact:

818-661-5000ir@mannkindcorp.com

MANNKIND CORPORATION AND SUBSIDIARY CONDENSEDCONSOLIDATED BALANCE SHEETS (Unaudited)(In thousands, except per share data)

September30, December31, 2020 2019ASSETS Current assets: Cash and cash equivalents $ 52,398 $ 29,906 Restricted cash 316 316 Short-term investments ? 19,978 Accounts receivable, net 4,135 3,513 Inventory 4,881 4,155 Prepaid expenses and other current assets 4,616 2,889 Total current assets 66,346 60,757 Property and equipment, net 25,736 26,778 Other assets 3,599 6,190 Total assets $ 95,681 $ 93,725 LIABILITIES AND STOCKHOLDERS' DEFICIT Current liabilities: Accounts payable $ 5,797 $ 4,789 Accrued expenses and other current 15,814 15,904 liabilitiesShort-term notes payable 45,379 5,028 Deferred revenue ? current 28,867 32,503 Recognized loss on purchase commitments ? 10,267 7,394 currentTotal current liabilities 106,124 65,618 Promissory notes 70,025 70,020 Accrued interest ? promissory notes 5,854 2,002 Long-term Midcap credit facility ? 38,851 Senior convertible notes 5,000 5,000 Paycheck Protection Program loan ? long term 1,421 ? Recognized loss on purchase commitments ? 84,529 84,639 long termOperating lease liability 1,523 2,514 Deferred revenue ? long term 1,699 8,344 Milestone rights liability 5,926 7,263 Total liabilities 282,101 284,251 Stockholders' deficit: Undesignated preferred stock, $ par value ?shares authorized; ? ? shares issued or outstanding as ofSeptember 30, 2020 and December 31, 2019Common stock, $ par value - 400,000,000 and280,000,000 sharesauthorized, 230,922,513 and 211,787,573 2,309 2,118 shares issued and outstandingat September 30, 2020 and December 31, 2019,respectivelyAdditional paid-in capital 2,834,003 2,799,278 Accumulated other comprehensive loss ? (19 )Accumulated deficit (3,022,732 ) (2,991,903 )Total stockholders' deficit (186,420 ) (190,526 )Total liabilities and stockholders' deficit $ 95,681 $ 93,725

MANNKIND CORPORATION AND SUBSIDIARY CONDENSEDCONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) (In thousands, except per share data)

Three Months Ended Nine Months Ended September30, September30, 2020 2019 2020 2019 Revenues: Net revenue ? commercial $ 7,275 $ 6,402 $ 22,260 $ 17,543 product salesRevenue ? collaborations 8,077 8,193 24,441 29,502 and servicesTotal revenues 15,352 14,595 46,701 47,045 Expenses: Cost of goods sold 3,591 7,099 11,432 15,446 Cost of revenue ?collaborations and 1,581 1,836 6,926 5,512 servicesResearch and development 1,484 1,580 4,703 4,879 Selling, general and 13,899 16,666 41,919 58,948 administrativeAsset impairment ? ? 1,889 ? Loss (gain) on foreign 3,927 (3,807 ) 3,998 (4,495 )currency translationTotal expenses 24,482 23,374 70,867 80,290 Loss from operations (9,130 ) (8,779 ) (24,166 ) (33,245 )Other (expense) income: Interest income 18 220 165 794 Interest expense on notes (1,057 ) (4,126 ) (3,212 ) (5,283 )Interest expense on (1,318 ) (1,162 ) (3,858 ) (3,351 )promissory notesGain on extinguishment of ? 3,529 ? 3,529 debtOther income (expense) 14 (52 ) 24 (84 )Total other expense (2,343 ) (1,591 ) (6,881 ) (4,395 )Loss before provision for (11,473 ) (10,370 ) (31,047 ) (37,640 )income taxesBenefit for income taxes 218 ? 218 ? Net loss $ (11,255 ) $ (10,370 ) $ (30,829 ) $ (37,640 )Net loss per share - $ (0.05 ) $ (0.05 ) $ (0.14 ) $ (0.20 )basic and dilutedShares used to computebasic and diluted net 229,668 199,906 218,559 191,786 loss per share