MannKind Corporation (NASDAQ:MNKD) reports its second-quarter results after the market closes on Monday, Aug. 7. Don't expect a pretty picture.
The last time it provided a quarterly update, the company posted revenue of only $3 million. It lost more than $16 million. And MannKind had less than $48 million in cash. The main good news was that the company's cash position and debt load was better than in the prior-year period.
Many investors who have hung on to their MannKind stock are likely bracing for more bad news with the company's second-quarter results. The big question is: Just how bad will those results look?
The people involved in MannKind's second-quarter conference call will be different than three months ago. The only person from MannKind's last conference call who will likely be on the second-quarter call in the same role is the chief medical officer, Raymond Urbanski.
Former CEO Matthew Pfeffer is gone, replaced by Michael Castagna, who previously served as MannKind's chief commercial officer. Patrick McCauley was hired away from Astellas Pharma to take Castagna's former spot.
A new CFO, Steven Binder, joined the company just a couple of weeks ago and will have the fun job of leading the discussion of MannKind's financial status. Rose Alinaya, who had been serving as acting CFO, has transitioned to the role of leading MannKind's investor relations efforts.
But will those different messengers have a different story for investors in the second quarter than was heard in the first quarter? From a financial perspective, the answer is...maybe.
MannKind expanded its sales force earlier this year. It's possible that this move has led to more sales of the company's inhaled insulin product Afrezza during the second quarter.
Giant health insurer Anthem added Afrezza to its formulary on April 1. Anthem requires patients to receive a prior authorization before it will reimburse for the drug. However, that shouldn't be too huge a problem, since MannKind has seen a 90% approval rate on prior authorizations.
The company also kicked off a major marketing campaign that might have made an impact on its second-quarter results. MannKind cranked up its social media efforts. It partnered with Outcome Health to place Afrezza branding and ads in physicians' offices. And the biggie was MannKind's first Afrezza advertisement on the cable television show Reversed, which features celebrity chef Charles Mattocks and focuses on educating participants on the show and the audience about managing diabetes.
I don't know how big a difference all of these initiatives made for MannKind in the second quarter. You'd think that sales for Afrezza would have increased notably with more feet on the street selling the drug, with more patients having access to it, and with a higher visibility.
Even if revenue jumped significantly, there's no doubt that MannKind continued to lose a lot of money in the second quarter. That means the company's cash position likely deteriorated quite a bit.
The good news -- for now, at least -- is that MannKind's cash position now is probably better than what the second-quarter update will show. The company notified the Mann Group on June 29 requesting to draw the remaining $30.1 million under the current loan arrangement. MannKind planned to use $10.6 million of the proceeds to capitalize all accrued but unpaid interest, with $19.4 million left to bolster its cash stockpile. Unless that draw happened overnight, that money won't show up in MannKind's second-quarter results.
MannKind also struck a deal with Deerfield Management Company to push back repayment of $10 million originally due between July 18, 2017 and Oct. 31, 2017. While this doesn't have an impact on the second-quarter numbers, it helps MannKind hold on to its cash a little longer than it would have been able to do.
What to expect -- and not expect
What should investors expect in MannKind's second-quarter numbers? My guess is that the financial results will be better than in the past -- but still pretty bad. If you're the kind of person who sees a glass of water as half-full, you'll focus on the improving trend. If you see the glass as half-empty, you'll pay more attention to how far MannKind has to go to break even.
What shouldn't you expect? It's probably too early for anything substantive to have come from the company's efforts to explore options to advance its non-insulin Technosphere-based pipeline candidates. MannKind engaged Locust Walk, a company with experience in pharmaceutical partnering, to help find strategic partners and investors for its experimental Technosphere-based products for anaphylaxis, pulmonary arterial hypertension, and chemotherapy-induced nausea and vomiting.
MannKind has undergone more drama in its history than you'll find in most soap operas. Don't be surprised if there's yet another twist in the ongoing saga when the company provides its update on Monday.