MannKind third quarter operating expenses decreases from $42.8 million to $42.5 million

MannKind CorporationOct 29 2010

MannKind Corporation (Nasdaq: MNKD) today reported financial results for the third quarter ended September 30, 2010.

“During this past quarter we were primarily focusing on preparations for commercial readiness and for an AFREZZA partnership”

For the third quarter of 2010 total operating expenses were $42.5 million, compared to $42.8 million for the third quarter of 2009, a decrease of $0.3 million. Research and development (R&D) expenses were $31.4 million for the third quarter of 2010 compared to $30.5 million for the same quarter in 2009, an increase of $0.9 million. This 3% increase in R&D expense was primarily due to increased raw material purchases in the third quarter of 2010 offset by decreased costs associated with the clinical development of AFREZZA® after the submission of its new drug application (NDA) in March 2009. General and administrative (G&A) expenses decreased by $1.2 million to $11.1 million for the third quarter of 2010 compared to $12.3 million in the third quarter of 2009. This 9% decrease in G&A expense was mainly due to decreased salary related costs and the non-recurrence of professional fees related to the insulin acquisition transaction with Pfizer which was completed during the second quarter of 2009.

For the first nine months of 2010, operating expenses totaled $120.5 million, compared to $154.0 million in the first nine months of 2009. R&D expenses for the first nine months of 2010 were $88.1 million, compared to $113.2 million in the first nine months of 2009, a decrease of $25.1 million. The 22% decrease in R&D expenses for the first nine months of 2010 was primarily due to decreased costs associated with the clinical development of AFREZZA, reduced salary-related and other research costs and decreased stock-based compensation expense as certain restricted stock units vested in the second quarter of 2009, which did not recur in 2010. G&A expenses decreased by $8.3 million or 20% to $32.4 million for the first nine months of 2010 as compared to $40.7 million in the same period in 2009. The decrease in G&A expenses for the first nine months of 2010 was primarily due to decreased salary related costs, the non-recurrence of professional fees related to the negotiation and completion of the insulin acquisition transaction with Pfizer during the first half of 2009, and decreased professional fees related to market studies conducted in 2009.

The net loss applicable to common stockholders for the third quarter of 2010 was $45.3 million, or $0.40 per share based on 113.5 million weighted average shares outstanding, compared with a net loss applicable to common stockholders of $45.6 million, or $0.42 per share based on 108.8 million weighted average shares outstanding for the third quarter of 2009.

The net loss applicable to common stockholders for the first nine months of 2010 was $132.3 million, or $1.17 per share based on 113.2 million weighted average shares outstanding, compared with a net loss applicable to common stockholders of $160.6 million, or $1.54 per share based on 104.4 million weighted average shares outstanding, for the first nine months of 2009.

Cash, cash equivalents and marketable securities were $98.0 million at September 30, 2010 and $32.5 million at December 31, 2009. As of September 30, 2010, the Company had $98.0 million of available borrowings under the loan agreement with The Mann Group, an entity controlled by the Company's principal stockholder. In August 2010, the Company sold $100.0 million of convertible notes in a Rule 144A offering. The net proceeds to the Company from the offering after expenses were $95.8 million.

"During this past quarter we were primarily focusing on preparations for commercial readiness and for an AFREZZA partnership," said Alfred Mann, Chairman and Chief Executive Officer. "In addition, we executed a multi-part strategy in which we added close to $100 million from an offering of convertible notes and put in place a series of equity sales intended to raise additional funds over the next year, provided our stock price exceeds the floor price that we set. Finally, paralleling that transaction we also established a mechanism, which is now being executed, to retire a portion of the debt under The Mann Group loan agreement."