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MannKind Corporation: Looking Past Afrezza And Down The Pipeline

MannKind released its latest earnings report after closing bell last night, posting net losses of 9 cents per share, which was in line with Wall Street’s consensus estimate. The drug maker just launched its first drug Afrezza, so the current quarter’s results will probably be of more interest to Wall Street than last night’s earnings report was.

MannKind

MannKind spends on research and development

In a report dated Feb, 25, RBC Capital Markets analyst Adnan Butt and associates Jeffrey Takimoto and John Chung noted that MannKind revealed greater-than-expected expenses in the fourth quarter. The drug maker spent more on research and development, which offset a decline in general and administrative spending. At the end of the quarter, MannKind had about $121 million in cash, and the company expects to receive $50 million more in the current quarter.

For this year, the company expects to spend between $10 million and $12 million in general and administrative expenses. Management expects no more than $12 million in research and development spending.

Updates on Afrezza

On the earnings call, MannKind management didn’t have much to say about how sales of Afrezza are going so far. They explained that they expect it to take some time to build up sales of the inhaled insulin because patients must first have a pulmonary function test before their doctor will prescribe it.

They also said that demand for samples has so far been greater than marketing partner Sanofi expected. As a result, Sanofi requested more sample packs from MannKind. The RBC team pointed out in their report that the 10-day sample packs with 30 cartridges might make early IMS data less reliable.

Will MannKind hit Afrezza sales targets?

As of the most recent week, they reported cumulative prescriptions of 132. In order to hit their sales estimate of $46.1 million, which is lower than consensus estimates, MannKind will have to see prescription rates grow by between 12.9% and 13.5% per week through the end of this year.

The RBC Capital team put together the following graph to compare the required growth rate for Afrezza to the lack of growth for Exubera, the previous inhaled insulin that flopped, and Apidra, an injectable rapid acting insulin.

mnkd1

What’s next for MannKind?

Looking down MannKind’s product pipeline, it’s expected that approval for a 12U cartridge will come in the second half of this year. Sanofi filed for that approval during the fourth quarter. Also it’s possible that a lower dose for children could be coming at some point.

In terms of other products, the RBC team said MannKind will be developing drugs based on whether they address a “serious unmet need.” Other factors in determining which drugs to develop include a short development time with low development costs, other inhaled delivery options and whether the addressable market is big enough.

The RBC analysts maintained their Outperform rating and $13 per share price target on MannKind.

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