Mannkind (MNKD) Q3 Earnings Beat, Inks Deal With Sanofi
Zacks Investment Research | Nov 10, 2016 03:32AM ET
MannKind Corp (NASDAQ:MNKD) reported earnings of 26 cents per share in the third quarter of 2016, as against a loss of 8 cents in the prior-year quarter. The Zacks Consensus Estimate was a loss of 6 cents.
In April, MannKind regained the rights to develop and commercialize Afrezza, the company’s only product, following the termination of a license agreement with Sanofi (NYSE:SNY) . MannKind began distributing the product during the week of Jul 25.
In the third quarter, following the termination of the Sanofi license agreement, MannKind recognized certain items related to the collaboration that was previously deferred.
In the quarter, MannKind recognized total revenue of $162.4 million, which included $161.8 million in net revenue from the Sanofi collaboration, relating to previously deferred prior-period activities. Commercial sales of Afrezza generated $0.6 million in the quarter. In third-quarter 2015, the company did not generate any revenues.
The Zacks Consensus Estimate was $2.0 million.
Also, of the previously deferred costs from the collaboration, $22.7 million were recognized in the third quarter. This included $13.5 million of Afrezza’s manufacturing cost for products sold to Sanofi in 2015, and $9.2 million for a change in estimate in the recognized loss on purchase commitments due to the sale of raw insulin to Sanofi.
Quarter in Detail
Research and development expenses decreased 38.2% year over year to $3.9 million following a reduction in force along with curtailing certain research and development projects.
General and administrative expenses were up 13.7% from the year-ago quarter to $13.1 million due to increased costs for the support of sales and marketing of Afrezza.
Sanofi Agreement
MannKind and Sanofi entered into an agreement per which the latter forgave Mannkind of the entire loan ($71.6 million) and terminated the associated note and security agreement. Also, MannKind has been released from its obligation to pay $0.5 million in previously uncharged costs related to the collaboration.
Sanofi will purchase $10.2 million worth of insulin from MannKind in early December. Further, Sanofi will pay an additional $30.6 million in cash to MannKind in early January, cancelling and settling MannKind’s insulin put agreement without it having to deliver any further insulin.
The agreement improved MannKind’s liquidity by over a $130 million, thereby significantly boosting its financial position. This can help it to increase investments to grow Afrezza sales faster. MannKind expects its current financial resources to carry it through the third quarter of 2017. Shares of the company rose almost 9% in response.
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