Executives with MannKind Corp. have high hopes for Afrezza – the inhalable insulin that is the main revenue generator for the biotech firm – while also keeping their eyes on collaborative projects where the company expects to see its future growth.
Michael Castagna, chief executive of the Westlake Village company, said in a conference call with analysts to discuss first-quarter earnings that shareholders and analysts need to pay attention to the collaborative revenue line.“That is where additional revenues are going to start to show up … whether it’s the Thyquidity fees that come in or additional formulation work we’re doing or formulation work that we’re making for the pipeline for partners such as Receptor Life Sciences,” Castagna said referencing two of the company’s collaborations.
Vertice Pharma in New Jersey owns FDA-approved Thyquidity, an oral replacement therapy for hypothyroidism, while Receptor Life in Seattle has licensed MannKind’s Technosphere dry powder inhalation system to base its RLS103 drug, an investigational inhaled cannabidiol used for the treatment of acute panic attacks.MannKind also is collaborating with United Therapeutics Corp. in Silver Spring, Md. to make Tyvaso DPI, an inhalable dry powder to treat pulmonary arterial hypertension and interstitial lung disease.In an agreement with Vertice reached in February, MannKind has its sales force promoting Thyquidity to adult and pediatric endocrinologists and other doctors who treat hyperthyroidism. With Tyvaso DPI, the company is responsible for manufacturing clinical and commercial supplies of the drug.Steve Binder, chief financial officer of the biotech firm, said during the conference call that collaboration revenue increased by 13 percent to $9.3 million compared to the first quarter of the prior year.
“The increase was mainly due to higher revenue related to our United Therapeutics collaboration as we prepare for the commercial manufacturing launch of Tyvaso DPI, as well as revenue from the Thyquidity co-promotion agreement,” Binder said.
Oren Livnat, an analyst with H.C. Wainwright & Co., asked during the call about the manufacturing of Tyvaso and how much revenue it could bring if the Food and Drug Administration approves the drug by the end of the year.
Both Binder and Castagna responded that manufacturing agreements were still being worked out and would be completed in the current quarter.“We know there are a few different ways that the revenues can possibly be reported, and we want to make sure we get it right,” Binder answered. “So once we get that done, which will be in the second quarter, we’ll provide that feedback to you.”Share price gainsMannKind reported on May 12 a net loss of $12.9 million (-5 cents a share) for the quarter ending March 31, as compared to a net loss of $9.3 million (-4 cents) in the same period a year earlier. Revenue increased 7 percent to $17.4 million.Shares in MannKind have increased in value by 174 percent over the past 52 weeks through May 26. Shares closed at $3.71 on June 2.
Steven Lichtman, an analyst with Oppenheimer & Co. in New York, noted in a research report on May 13 that MannKind’s revenue in the first quarter beat his firm’s and Wall Street’s estimates.
While noting that collaboration revenue had gone up in the quarter, the $8.1 million in Afrezza revenue, while 1 percent higher than the first quarter of the prior year, still fell short of the $8.4 million that Oppenheimer had forecast.
“(Management) noted distributor inventory workdown in the first quarter as (MannKind) ended its free goods program in the fourth quarter of 2020,” Lichtman said in the report. “(Year over year) growth was also impacted by first quarter 2020 pull-forward of prescriptions as COVID restrictions began.” MannKind has been “quite busy” raising capital and restructuring its balance sheet to make itself finically stronger, Binder said during the conference call.
“In early March we raised $230 million by issuing 2.5 percent senior convertible debt, taking advantage of strong market conditions and demand for MannKind convertible debt reflected in a substantially oversubscribed offering,” he said.
Binder added that some of the proceeds of that sale were used to pay down debt.The company broke down the debt reduction as follows: $10 million paid to MidCap Financial Trust, $35.1 million paid to the principal balance of its Mann Group non-convertible note and $4.4 million paid in accrued interest for the same note.“Overall, in April, we decreased higher interest rate debt by almost $50 million. In addition to reducing debt, we also renegotiated terms on the MidCap and Mann debt,” Binder said.