Loss at MannKind Wider than Expected

MannKind Corporation’s ( MNKD - Analyst Report ) loss of 23 cents per share in the fourth quarter of 2012 was wider than the Zacks Consensus Estimate of a loss of 18 cents. Loss during the quarter was, however, narrower than the year-ago loss of 30 cents per share. A higher share count following the issuance of shares in Oct 2012 accounted for the lower year-over-year loss.

In Oct 2012, MannKind issued 46 million shares. The company also entered into a purchase agreement with The Mann Group LLC, which is controlled by MannKind’s chief executive officer and principal shareholder, Alfred E. Mann.

Quarter in Detail

MannKind did not generate any revenue in the final quarter of 2012 as in the year-ago quarter.

Research and development (R&D) expenses increased 25.2%% to $25.3 million in the reported quarter. The increase in R&D expenses was primarily attributable to higher costs for clinical trial-related activities during the quarter.

MannKind is primarily focusing on the development of its lead pipeline candidate Afrezza. An inhaled insulin, Afrezza, is being developed for the treatment of type I (MKC-171 study) or type II (MKC-175 study) diabetes.

General and administrative expenses decreased approximately 20.4% in the reported quarter to $8.2 million. The decrease was primarily attributable to lower legal expenses during the period.

MannKind’s cash burn during the fourth quarter of 2012 was $25.9 million as compared to $29.9 million in the third quarter of 2012.

Annual Results

For the full year 2012, MannKind suffered a loss of 94 cents, which was 6 cents wider than the Zacks Consensus Loss Estimate. However, the 2012 loss was narrower than the year-ago loss of $1.32 per share. MannKind generated revenues of $35,000 during full year 2012, as against $50,000 in 2011.

Our View

More than financial results, we expect investor focus to remain on Afrezza. MannKind expects to present results on Afrezza in mid-August this year. The company plans to resubmit the New Drug Application (NDA) for Afrezza in late September or early October this year with a final decision for the candidate expected in Apr/Mar 2014.

We expect investor focus to remain on Afrezza. MannKind currently carries a Zacks Rank #3 (Hold). However, other biopharmaceutical stocks such as Medivation, Inc. ( MDVN - Analyst Report ) and Alkermes plc ( ALKS - Analyst Report ) carry a Zacks Rank #2 (Buy). Another biopharmaceutical stock, Targacept Inc. ( TRGT - Snapshot Report ) carries a Zacks Rank #1 (Strong Buy).