Back to top

Analyst Blog

MannKind Corporation (MNKD - Analyst Report) reported a loss of 23 cents per share in the second quarter of 2012, narrower than the year-ago loss of 37 cents per share and the Zacks Consensus Estimate of a loss of 25 cents.

Quarter in Detail

MannKind did not generate any revenues in the second quarter of 2012 as well as in the year-ago period.

Research and development (R&D) expenses declined 12.1% to $26.6 million in the reported quarter. Despite an increase in trial-related costs, R&D expenses declined mainly due to the settlement of the insulin supply agreement with N.V. Organon, a subsidiary of Merck & Co. Inc. (MRK - Analyst Report), following the termination of the program in June 2011.

MannKind is primarily focusing on the development of its lead pipeline candidate Afrezza. Afrezza, an inhaled insulin, is being developed for the treatment of type I (MKC-171 study) or type II diabetes (MKC-175 study). The company has completed more than 87% screening for MKC 171 and 83% screening for MKC 175. MannKind screened more patients than it expected in both the trials due to a higher screen failure rate. MannKind expects to finish screening in both the trials by September 2012. The company believes it can complete both trials in the second quarter of 2013 and submit a new drug application by the third quarter of 2013.

General and administrative expenses increased approximately 95.5% in the reported quarter to $17.4 million. The increase was primarily attributable to a litigation settlement amount of $7.7 million during the reported quarter along with higher legal fees and financing transaction cost.

MannKind is looking for more financing agreements to fund its trials. Though the company believes its funds are sufficient to finance operations into the fourth quarter of 2012, we believe the company will look to raise funds again later this year. Inability to raise sufficient funds will jeopardize Afrezza’s future.

Our View

Currently, we have a Neutral recommendation on MannKind, which carries a Zacks #4 Rank (short-term Sell rating). MannKind is primarily dependent on the successful development of Afrezza and we expect investor focus to remain on it.

Please login to Zacks.com or register to post a comment.