MannKind Corporation Dives After Earnings, Looks Desperate

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MannKind appears to be pretty desperate to keep the boat afloat as the focus now shifts from Afrezza sales to cash flow. There are also questions now about whether Sanofi will stick with Afrezza or if it will abandon the sinking ship, and MannKind is taking on more debt in an effort to buy some more time.

MannKind posts wider than expected loss

Shares of MannKind took a nosedive today following last night’s earnings report. The stock declined by as much as 10.84% to $2.35 per share in afternoon trading today.

MannKind reported losses of 8 cents per share, which was slightly worse than the consensus estimate of 7 cents per share in losses. The Afrezza maker is also burning through cash more quickly than analysts would like. Jay Olson of Goldman Sachs had been expecting MannKind to spend $10.5 million in general and administrative expenses, but the drug maker reported $11.5 million. The company said it spent $14.5 million on research and development costs during the quarter, compared to Olson’s estimate of $12.8 million.

MannKind’s cash in focus

The Afrezza maker had a cash balance of about $32.9 million, which was slightly better than his estimate of $30 million and much lower than the cash balance of $107.2 million at the end of the second quarter. Part of the reason for that was payments to cover 2015 notes. In the press release announcing the third quarter earnings, MannKind noted that it still has $30.1 million left available to borrow from the Mann Group.

Also the insulin maker has $37.5 million worth of common stock in an at-the-market sales facility. Additionally, MannKind listed itself on the Tel-Aviv stock exchange in an effort to get more cash through index-fund mandated purchasing, which would add up to $50 million to its balance sheet.

Will Afrezza make it?

MannKind management again expressed disappointment with the performance of Afrezza, their only available product at this time. They mentioned challenges in securing reimbursement from payors. The company’s share of the loss on Afrezza was $14.1 million, leaving $43.7 million left on the loan agreement with Sanofi, which will need to be paid back by 2025.

Of course financing will buy time, but it may only delay the inevitable, especially if marketing partner Sanofi decides to end its partnership with MannKind for its Afrezza inhaled insulin. Piper Jaffray analyst Dr. Joshua Schimmer suggests it’s possible that Sanofi could end the partnership by early next year. He noted that the company said on its investor call that it will take time to build awareness for Afrezza but also excluded the insulin from its list of “key launches.” Of course if Sanofi does leave the party, he says it could spell the end of MannKind.

MannKind seeks partners

Of course MannKind isn’t ready to throw in the towel just yet, and the company is looking for new Technosphere programs that could deliver new compounds for other uses like pain and PAH. However, it needs a partner.

Interestingly, they reached out to potential partners for future products that are in the pipeline. Dr. Schimmer said this is the first time he has ever heard a management attempt to do this on an earnings call, and he thinks this indicates that they are struggling to gain traction for more support on its inhaled platform. He’s concerned that Afrezza’s “challenging pulmonary dynamic” will bear negative connotations for other possible applications.

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