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Thursday, May 19, 2022

MannKind Wins on Q2 Income, But Stock Tanks

The stock of MannKind Corp. in Westlake Village has swung wildly in the days since the firm disclosed its second-quarter financial results, which were above Wall Street estimates for earnings but sharply below predictions for revenue. The pharmaceutical company reported Aug. 2 that it had a net loss of $22.7 million for the three months ended June 30, with earnings of -16 cents a share. The figure topped Wall Street estimates for earnings by a 16 percent margin – the sole analyst who follows MannKind expected -20 cents a share – and topped the prior year’s results by 19 cents. But its revenue missed expectations by 20 percent, coming in at $3.89 million compared to the estimated $4.8 million. MannKind stock plunged from $1.50 a share at market close on Aug. 2 to $1.15 on Aug. 3, falling further on the following Monday to end the day at $1 a share. It closed Aug. 15 at $1.11. In a conference call with investors on Aug. 2, Chief Executive Michael Castagna said that he felt the firm’s stock price was not an accurate reflection of the company’s value. “Unfortunately, the barometer that I measure shows we have failed to see any major appreciation in our stock price,” Castagna said. The firm announced earlier this year that it added a new drug to its pipeline that will use its proprietary drug delivery system, Technosphere, and said on July 27 that it had entered into new international distribution agreement for its inhalable insulin Afrezza with Tanner Pharma Group, a Charlotte, N.C. company that commercializes health care products. The deal with Tanner does not include an upfront payment, which does not work in MannKind’s favor since the company needs to improve its current cash situation. The firm had $26.7 million in cash and cash equivalents as of June 30; in order to stay in compliance with its agreement with its lender Deerfield, it must have at least $20 million. The loss of $22.7 million means it has already fallen below the requirement, Motley Fool writer George Budwell noted in a post on Aug. 3. In order to resolve the problem, the company would have to procure a licensing deal for its inhalable insulin, Afrezza, with an upfront cash payment to the company; initiate a reverse stock split and subsequent secondary offering; or file for bankruptcy, he said. “The bottom line is that Afrezza has been on the market for four years now,” Budwell wrote in the post. “This isn’t a new commercial launch that’s going through some early bumps.” Afrezza prescriptions have grown year over year; revenue from sales of the product to wholesale distributors was $3.8 million, compared to $1.5 million in the same quarter last year. “What we have here is modest improvement in trajectory that is slower than desired to deliver true equity appreciation based on the prospects of Afrezza sales,” Seeking Alpha blogger Spencer Osbourne noted in a post on Aug. 11.

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