MannKind leads PAH market with Q1 revenue surge
Mankind Co., Ltd. (Nasdaq:MNKD) is up 21.4% since I Last look During February. What I was looking at at the time was that the company would sell him 10% of sales (1% of the 10% royalties). Tyvaso DPI stock is valued at $150 million up front (with the potential for an additional $50 million). To me, this suggested that MNKD’s remaining Tivaso DPI shares were worth over $1.8 billion. This suggested an undervaluation, as Mankind was valued at just under $1 billion at the time. After that, my rating changed to “buy”.
I remember that united therapeutics (UTHR) developed Tyvaso DPI using MannKind’s “technosphere technology.” Therefore, his total stake in MannKind was 10% before he sold part of it to Sagard Healthcare. Tyvaso DPI is used to treat pulmonary arterial hypertension (PAH).
Last week, MannKind reported 1st quarter revenue.Let’s take look. Total revenue was $66.26 million, an increase of 63% year over year. Royalties related to Tyvaso DPI increased by 94% to $22.65 million. Cost of goods sold/Cost of goods sold was $18,598,000 (gross margin 71.9%). Research and development expenses and selling, general and administrative expenses were $10 million and $22,329,000, respectively. Net income was $10.63 million (EPS 0.04) and net loss for the first quarter of 2023 was $9.795 million.
United reported 1st quarter revenue Tyvaso DPI posted a 92% increase to $227.5 million. Even though many patients are switching from nebulized Tyvaso to his Tyvaso DPI (for convenience and other reasons), the nebulized version is also seeing a 21% year-over-year increase. Therefore, Mr. Tibaso is very interested in: $7 billion PAH market Patients often require a combination of treatments.
The market is expected to experience the following disruptions: Merckx (MRK) winreairwhich one approved Towards PAH in March. Winrevair addresses vascular remodeling by inhibiting activin signaling, a different mechanism of action than Tyvaso. Winrevair’s clinical trials also showed efficacy in patients receiving several of his PAH therapies. So while Winrevair is unlikely to eat into the market share of Tyvaso, which is specifically useful for improving athletic performance, it is expected to become a cornerstone of PAH treatment.
Legally, United Continue to battle liquida (LQDA) Regarding Tivaso’s “generic version”, Yutrepia (Dry powder version of treprostinil). Yutrepia, scheduled to launch later this year, is expected to take market share from Tyvaso DPI. Exactly how much is ultimately unknown. In my view, Utrepia offers no clear advantage over Tivaso DPI, and Tivaso DPI’s second market share in a relatively established market is due to the following factors: Tivaso DPI) is expected to form a market share of approximately 80/20 in favor of Tivaso DPI. First mover advantage, brand loyalty, etc.
financial health
the current March 31st, MannKind reported cash and cash equivalents of $193.27 million and short-term investments of $107.457. His total current assets were $383.1 million, and his total current liabilities (due within 12 months) were $99,896,000. This is good considering its current ratio is almost 4, indicating that MannKind can reasonably cover its short-term debt.
Mankind has some notable long-term debt on its balance sheet, including $227.2 million in senior convertible notes, $137.4 million in debt for future royalty sales, and $94.2 million in financing debt. As a result, total debt ($710.8 million) exceeds total assets ($480,879,000), suggesting that the company is highly leveraged and Concerns may be heightened.
The company was profitable last quarter, so estimates of historical cash runway based solely on burn rate don’t mean much. However, it is important to note that unanticipated changes in earnings or increases in short-term debt could materially impact Mankind’s ability to remain solvent. Stability of profitability does not guarantee future financial health if external factors or operating costs change unexpectedly.
About February financial statement, MannKind directly addressed analyst and investor concerns about its balance sheet. Regarding royalty agreements:
Many of you asked if we should have sold more. Why didn’t they sell more? And in reality, there was no need to sell any more. We wanted to make sure we were comfortable with having some debt and cash on our balance sheet to control our future.
Risk-reward analysis and investment recommendations
When weighing the risks and benefits, there are significant financial risks going forward. However, it’s clear that the company is happy with its current balance sheet and there are no major concerns in the short term. Additionally, MannKind’s Tyvaso DPI stock reduces financial risk (rated “medium/high”).
Operationally, I remain bullish on Tyvaso DPI’s prospects in the PAH market despite the recent approval of Winrevair and the expected arrival of Yutrepia. Additionally, MannKind’s technosphere technology may offer some platform options, as seen in other developments such as Afrezza, the company’s inhaled insulin product (although it has little NPV). Is not).
Overall, MannKind remains buyBut it’s probably best suited to a barbell portfolio strategy, where investors allocate 90% of their funds to low-risk investments such as U.S. Treasuries or broad-market ETFs, and the remaining 10% to high-alpha investments such as MNKD.