Incoming: Michael E. Castagna

Valencia biomed MannKind Corp. announced Monday that Michael E. Castagna, Pharm.D., has joined the company as its Chief Commercial Officer, effective immediately. Dr. Castagna will lead commercialization efforts for Afrezza, reporting to Matthew Pfeffer, Chief Executive Officer, and will serve on MannKind’s executive leadership team.

Dr. Castagna has over 20 years of experience in healthcare, pharmaceutical, biotech and specialty pharmacy industries. He joins MannKind from Amgen Inc., where he spent over three years as Vice President, Global Commercial Lead for a portfolio of nine biosimilar drugs, and Vice President, Global Lifecycle Management. Prior to Amgen, Dr. Castagna, was Executive Director of Bristol-Myers Squibb’s Immunology franchise, where he served as co-lead to relaunch Orencia IV and launch Orencia SC, both rheumatoid arthritis drugs. Before BMS, Dr. Castagna was with Sandoz (Novartis) as Vice President and Division Head for Biopharmaceuticals, North America, where he established the US Biologics Business Unit and relaunched its lead product, Omnitrope, a human growth hormone. Prior to Sandoz, Dr. Castagna held a variety of positions with EMD (Merck), Serono, Pharmasset and DuPont Pharmaceuticals. Dr. Castagna received his Bachelors of Science – Pharmacy degree from Philadelphia College of Pharmacy, his Doctor of Pharmacy from Massachusetts College of Pharmacy, and his MBA from the Wharton School of Business at the University of Pennsylvania.

“I’m very pleased to welcome Michael to the MannKind team in this important new role,” said Matthew Pfeffer, Chief Executive Officer of MannKind Corporation. “His extensive pharma background, including driving sales and marketing for so many new and relaunched products, will be invaluable as we prepare to reintroduce Afrezza to the market in the coming months.”

Dr. Castagna said, “I am excited to be joining MannKind at this critical intersection as we transform our future. I am enthusiastic about the commercial opportunity for Afrezza and the potential it has to help adults with diabetes manage this difficult disease.”

MannKind also announced today that Juergen A. Martens has resigned as its Chief Operating Officer, effective March 18, 2016.

Mr. Pfeffer added, “Juergen was instrumental in building the commercial manufacturing infrastructure that we have today in Danbury. We thank Juergen for his many contributions to the company, and we wish him the very best. Operationally, MannKind’s Chief Technology Officer and Senior Vice President for Technical Operations, Joseph Kocinsky, will continue his existing responsibilities for the manufacture of Afrezza.”

4th and Full-Year Earnings

Valencia biomed MannKind Corp. reported financial results Monday for the fourth quarter and full year ended December 31, 2015.

For the fourth quarter of 2015, research and development expenses decreased 64.8%, from $17.6 million to $6.2 million, reflecting effects of our restructuring measures taken in 2015 and the transition from development to commercial activities. General and administrative costs declined 33.6%, from $12.5 million to $8.3 million, mainly due to a decrease in non-cash stock compensation expense. Sales of Afrezza continued to be lower than expected during the fourth quarter of 2015, culminating in a decision by Sanofi on January 4, 2016 to return the Afrezza rights to MannKind after a notice period, all of which impacted the value and recoverability of long-lived assets in accordance with accounting guidance. As a result, non-cash impairment charges of $206.6 million were recorded for the fourth quarter of 2015, of which $140.4 million related to impairment of fixed assets and $66.2 million related to loss on future purchase commitments, primarily for insulin. No such impairment charge was recognized in 2014. Product manufacturing costs for the fourth quarter of 2015 were $51.8 million related to under absorbed labor and overhead and inventory write-offs. We did not recognize any product manufacturing costs in the fourth quarter of 2014 as we had not yet commenced commercialization of Afrezza.

For the full year 2015, our total operating expenses, excluding fixed asset impairment and loss on purchase commitments, were $138.1 million compared to $179.6 million for the full year 2014, a decrease of 23.1%. Total research and development costs for 2015 were $29.7 million compared $100.2 million for 2014, a decrease of 70.4%, primarily due to decreased development expenses resulting from the shift to commercial production of Afrezza, decreased clinical trial-related expenses and the effects of restructuring measures, in addition to reduced non-cash stock compensation expense resulting from the non-recurring achievement of performance and modification events in 2014 and the first quarter of 2015. General and administrative expenses for 2015 were $41.0 million compared to $79.4 million in 2014, a decrease of 48.4%, primarily due to reduced non-cash stock compensation expense resulting from the modification and achievement of performance-based awards in 2014 and in the first quarter of 2015 and the effects of restructuring measures, in addition to the non-recurrence of professional fees incurred in the third quarter of 2014 associated with the entry into the Sanofi License Agreement. Product manufacturing costs for 2015 were $67.4 million related to under absorbed labor and overhead and inventory write-offs. We did not recognize any product manufacturing costs in 2014 as we had not yet commenced commercialization of Afrezza.

The net loss for 2015 was $368.4 million, including total non-cash impairment charges of $206.6 million, or $0.91 per share based on 406.2 million weighted average shares outstanding, higher than the net loss of $198.4 million, or $0.51 per share on 385.2 million weighted average shares outstanding in 2014. The number of common shares outstanding at December 31, 2015 was 428.7 million.

Cash and cash equivalents at December 31, 2015 were $59.1 million, compared to $32.9 million in the third quarter of 2015. During the fourth quarter of 2015, we received $34.7 million in net proceeds from sale of stock on the Tel Aviv Stock Exchange, $0.7 million in proceeds from warrants and options exercised, $2.6 million in payments from Sanofi for product shipments, and $13.6 million in net proceeds from the sale of stock pursuant to our at-the-market sales facility. Currently, $30.1 million remains available to borrow under our amended loan arrangement with The Mann Group.

“Our financial results for 2015 were not what we expected going into the year, but we are looking forward to the next twelve months with optimism and great excitement,” said Matthew Pfeffer, Chief Executive Officer of MannKind Corporation. “Afrezza will soon be back under our control and we are all energized about the opportunity to launch a lean, focused commercial effort that highlights the differentiating qualities of our lead product. With Michael Castagna now on board as our Chief Commercial Officer, as announced earlier today, we have taken another tangible step in building our commercial infrastructure. Other activities are planned to follow quickly, as we finalize additional hires and line up assets for a variety of roles. There is still much to do in the coming months, but we are all highly motivated by the positive feedback we have received from enthusiastic Afrezza patients and we want to do all we can to ensure that more adults with diabetes have an opportunity to receive the same benefits.”

About MannKind Corporation

MannKind Corp. focuses on the discovery, development and commercialization of therapeutic products for patients with diseases such as diabetes. MannKind maintains a website at http://www.mannkindcorp.com to which MannKind regularly posts copies of its press releases as well as additional information about MannKind. Interested persons can subscribe on the MannKind website to e-mail alerts that are sent automatically when MannKind issues press releases, files its reports with the Securities and Exchange Commission or posts certain other information to the website.