MannKind Corp. (MNKD) filed Quarterly Report for the period ended 2009-09-30.
Mannkind Corporation is a biopharmaceutical company focused on the discovery development and commercialization of therapeutic products for diseases such as diabetes cancer inflammatory and autoimmune diseases. The Company's lead product the Technosphere Insulin System consists of the Company's dry-powder Technosphere formulation of insulin and the Company's MedTone inhaler through which the powder is inhaled into the deep lung. Mannkind Corp. has a market cap of $579.66 million; its shares were traded at around $5.22 with and P/S ratio of 28983.
Highlight of Business Operations:
Interest income for the three and nine months ended September 30, 2009 decreased by $0.7 million and $4.8 million, respectively, as compared to the same period in the prior year primarily due to a lower investment balance and lower market interest rates.
Interest expense for the three and nine months ended September 30, 2009 increased by $2.8 million and $6.6 million as compared to the same period in the prior year primarily due to the interest expense related to amounts outstanding under the borrowing arrangement with an entity controlled by our principal stockholder (See Note 11 — Related-party loan arrangement, of the Notes to the accompanying financial statements) and a decrease in capitalized interest related to the completion of the Danbury, Connecticut plant expansion.
In October 2007, we entered into a loan arrangement with our principal stockholder allowing us to borrow up to a total of $350.0 million On February 26, 2009, as a result of our principal stockholder being licensed as a finance lender under the California Finance Lenders Law, the promissory note underlying the loan arrangement was revised to reflect the lender as The Mann Group LLC, an entity controlled by our principal stockholder. Interest will accrue on each outstanding advance at a fixed rate equal to the one-year LIBOR rate as reported by the Wall Street Journal on the date of such advance plus 3% per annum and will be payable quarterly in arrears. Principal repayment is due on December 31, 2011. At any time after January 1, 2010, the lender can require us to prepay up to $200.0 million in advances that have been outstanding for at least 12 months. If the lender exercises this right, we will have until the earlier of 180 days after the lender provides written notice or December 31, 2011 to prepay such advances. In the event of a default, all unpaid principal and interest either becomes immediately due and payable or may be accelerated at the lender’s option, and the interest rate will increase to the one-year LIBOR rate calculated on the date of the initial advance or in effect on the date of default, whichever is greater, plus 5% per annum. Any borrowings under the loan arrangement will be unsecured. The loan arrangement contains no financial covenants. There are no warrants associated with the loan arrangement, nor are advances convertible into our common stock. As of September 30, 2009, the amount borrowed and outstanding under the arrangement was $150.0 million.
During the nine months ended September 30, 2009, we used $146.7 million of cash for our operations compared to using $201.0 million for our operations in the nine months ended September 30, 2008. We had a net loss of $160.6 million for the nine months ended September 30, 2009, of which $32.0 million consisted of non-cash charges such as depreciation and amortization, and stock-based compensation. We expect our negative operating cash flow to continue at least until we obtain regulatory approval and achieve commercialization of AFRESA.
We used $0.9 million of cash in investing activities during the nine months ended September 30, 2009, compared to $135.9 million for the nine months ended September 30, 2008. For the nine months ended September 30, 2009 and 2008, $16.7 million and $72.3 million, respectively, were used to purchase machinery and equipment to expand our manufacturing operations and our quality systems that support clinical trials for AFRESA.
As of September 30, 2009, we had $56.6 million in cash, cash equivalents and marketable securities. Although we believe our existing cash resources, including the $200.0 million remaining available under our loan arrangement with an entity controlled by our principal stockholder, will be sufficient to fund our anticipated cash requirements through at least the end of 2010, we will require significant additional financing in the future to fund our operations and if we are unable to do so, there will be substantial doubt about our ability to continue as a going concern. Accordingly, we expect that we will need to raise additional capital, either through the sale of equity and/or debt securities, the entry into a strategic business collaboration with a pharmaceutical or biotechnology company or the establishment of other funding facilities, in order to continue the development and commercialization of AFRESA and other product candidates and to support our other ongoing activities.
MNKD is in the portfolios of Bill Miller of Legg Mason Value Trust.
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