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The Good News and Bad News From MannKind's Q4 Results

By Keith Speights – Feb 25, 2020 at 1:00PM

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The biotech met or exceeded Wall Street expectations in Q4. But its top and bottom lines are headed in the wrong direction.

Few companies have undergone the ups and downs that MannKind Corporation (NASDAQ: MNKD) has. But after its shares jumped nearly 22% last year, they are off to a great start in 2020, and things are looking up for the biotech.

But MannKind now faces another downswing after the company announced its 2019 fourth-quarter and full-year results before the market opened on Tuesday. Here are the highlights from the biotech's Q4 update.

Scientist in lab holding a test tube.

Image source: Getty Images.

By the numbers

MannKind reported fourth-quarter revenue of $15.99 million, down slightly from $16.03 million in the prior-year period. However, this result topped the average analysts' Q4 revenue estimate of $15.04 million.

The company reported a net loss in the fourth quarter of $14.3 million, or $0.07 per share, based on generally accepted accounting principles (GAAP). This reflected deterioration from the GAAP net loss of $9.8 million, or $0.06 per share, posted in the same quarter of 2018. But MannKind still met the consensus analysts' estimate of a net loss of $0.07 per share.

MannKind ended the fourth quarter with cash, cash equivalents, short-term investments, and restricted cash of $50.2 million. This was down from the $71.7 million on hand as of Dec. 31, 2018.

Behind the numbers

First, the good news. Net revenue for MannKind's inhaled insulin product Afrezza totaled $7.8 million in the fourth quarter, its best quarterly performance to date. That sales amount reflected 35% year-over-year growth, which is certainly encouraging for the company.

Now, the bad news. MannKind's collaboration and services revenue fell by $2.1 million from the prior-year period, offsetting most of the sales growth for Afrezza. This decline stemmed primarily from lower revenue from the company's research agreement with United Therapeutics, which was largely wrapped up by the second quarter of 2019.

MannKind's research and development expenses increased to $2 million in Q4 from $1.1 million in the prior-year period. However, its selling, general, and administrative costs fell to $15.7 million from $18 million in the same quarter of 2018, thanks mainly to lower staffing costs and marketing costs for Afrezza.

While the company's operational spending declined, its net loss widened year over year for a couple of reasons. Most importantly, MannKind incurred a $4 million loss related to foreign currency translation for its insulin supply agreement. The company's interest expense also increased by $600,000 compared with the prior-year period.

Looking ahead

After MannKind's record-high sales in the fourth quarter, all eyes will be on its updates of how Afrezza performs in 2020. For now, at least, the insulin product is the main key to success for the biotech stock.

MannKind CEO Michael Castagna also said that the company's collaboration with United Therapeutics on Treprostinil Technosphere (TreT) in treating pulmonary arterial hypertension is making progress. He stated that the two companies could file for Food and Drug Administration approval for TreT within the next 12 months.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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