MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Statements in this report that are not strictly historical in nature are "forward-looking statements" within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify forward-looking statements by terms such as "anticipate," "believe," "could," "estimate," "expect," "goal," "intend," "may," "plan," "potential," "predict," "project," "should," "will," "would," and similar expressions intended to identify forward-looking statements, though not all forward-looking statements contain these identifying words. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth below in Part II, Item 1A Risk Factors and elsewhere in this Quarterly Report on Form 10-Q. The preceding interim condensed consolidated financial statements and this Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the financial statements and related notes for the year ended December 31, 2025 and Management's Discussion and Analysis of Financial Condition and Results of Operations contained in the Annual Report. Readers are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made.
OVERVIEW
We are a biopharmaceutical company dedicated to transforming chronic disease care through innovative, patient-centric solutions. Focused on cardiometabolic and orphan lung diseases, we develop and commercialize treatments that address serious unmet medical needs, including diabetes, pulmonary hypertension, and fluid overload in heart failure and chronic kidney disease. With deep expertise in drug-device combinations, we aim to deliver therapies designed to fit seamlessly into daily life.
Our cardiometabolic business is currently comprised of three commercial products: Afrezza (insulin human) Inhalation Powder; Furoscix (furosemide injection); and the V-Go wearable insulin delivery device:
In the United States, we are solely responsible for the commercialization of Afrezza, Furoscix and V-Go. Outside of the U.S., our strategy has been to establish regional partnerships in foreign jurisdictions where there are commercial opportunities, subject to the receipt of necessary foreign regulatory approvals. In December 2025, we supplied our partner in India, Cipla, with an initial shipment of Afrezza to support their launch of Afrezza in India. We expect to supply Cipla with additional product in accordance with the annual purchase commitments in our supply agreement.
The proprietary formulation and inhaler technologies used in Afrezza have also been deployed in our efforts to develop products to treat orphan lung diseases. Our first product to address an orphan lung disease, Tyvaso DPI (treprostinil) inhalation powder, received FDA approval in May 2022 for the treatment of pulmonary arterial hypertension (or PAH) and pulmonary hypertension associated with interstitial lung disease (or PH-ILD). Our development and marketing partner, United Therapeutics, began commercializing Tyvaso DPI in June 2022 and is obligated to pay us a royalty on net sales of the product. We also receive revenue for the supply of Tyvaso DPI that we manufacture for UT. In August 2025, we announced the expansion of our collaboration, pursuant to which we are formulating ralinepag DPI (MNKD-1501) as a dry powder using our proprietary technologies. United Therapeutics will conduct nonclinical and clinical development activities of MNKD-1501. Per the agreement, we received an upfront payment and subsequent development payment and are eligible to receive milestone payments upon achievement of specified development milestones as well as royalties on net sales of MNKD-1501, if approved.
The other major program in our pipeline that will potentially address an orphan lung disease is MNKD-201, a dry-powder formulation of nintedanib for the treatment of idiopathic pulmonary fibrosis (or IPF). An oral dosage form of nintedanib has been available for more than a decade. However, a fairly large oral dose is required in order to achieve sufficient drug levels in lung tissue. High systemic levels of nintedanib are often associated with undesirable side effects. Our goal with an inhaled formulation is to deliver a therapeutic amount of nintedanib to the lungs while avoiding high levels of the drug in other tissues. In 2024, we conducted a Phase 1 clinical study of MNKD-201, which met its primary objective of demonstrating positive safety results and good tolerability in healthy volunteers. We recently reported top-line data from a Phase 1b study of MNKD-201 conducted in the United States, with additional results to be presented at a future scientific conference. We are currently conducting a global Phase 2 study to assess the potential safety and efficacy of this investigational product in patients with IPF.
MNKD-701 is another pipeline opportunity that we are exploring. This program is focused on bumetanide, a more potent loop diuretic than furosemide.
Our business is subject to significant risks, including but not limited to our ability to manufacture sufficient quantities of our products and Tyvaso DPI. Other significant risks also include the risk that our products may only achieve a limited degree of commercial success and the risks inherent in drug development, clinical trials and the regulatory approval process for our product candidates, which in some cases depends upon the efforts of our partners. Ongoing changes in tariff policy by the U.S. government may potentially raise the future cost to source the raw materials and components needed to manufacture our products. We are actively monitoring this situation and exploring strategies to mitigate the risks.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our critical accounting policies and estimates can be found in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended December 31, 2025. See Note 1 - Description of Business and Significant Accounting Policies in the condensed consolidated financial statements included in Part I - Financial Statements (Unaudited) for descriptions of the new accounting policies and impact of adoption.
RESULTS OF OPERATIONS
Trends and Uncertainties
Our collaboration agreement with UT entitles us to receive a 10% royalty on net sales of Tyvaso DPI, subject to our sale of a 1% royalty on future net sales to a royalty purchaser (leaving us with a 9% royalty). Our royalty revenue reflects trends in demand for Tyvaso DPI in the marketplace. See Note 15 - Commitments and Contingencies in the condensed consolidated financial statements.
Our future success is dependent on our, and our current and future collaboration partners', ability to effectively commercialize approved products. Our future success is also dependent on our pipeline of new products and expansion opportunities for existing products, such as new formulations or expanded indications. There is a high rate of failure inherent in the R&D process for new drugs. As a result, there is a high risk that the funds we invest in research programs will not generate sufficient financial returns. Products may appear promising in development but fail to reach market within the expected or optimal timeframe, or at all.
Three and nine months ended September 30, 2026 and 2025
Revenues
The following table provides a comparison of the revenue categories for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
Three Months Ended September 30, | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Revenues | ||||||||||||||||
Commercial product sales: | ||||||||||||||||
Gross revenue from product sales | $ | 64,889 | $ | 32,420 | $ | 32,469 | 100 | % | ||||||||
Less: Wholesaler distribution fees, rebates and | 19,887 | 10,115 | 9,772 | 97 | % | |||||||||||
Net revenue from commercial product sales | $ | 45,002 | $ | 22,305 | 22,697 | 102 | % | |||||||||
Gross-to-net revenue adjustment percentage | 31 | % | 31 | % | ||||||||||||
Collaborations and services | 19,405 | 26,506 | (7,101 | ) | (27 | %) | ||||||||||
Royalties | 37,463 | 33,319 | 4,144 | 12 | % | |||||||||||
Total revenues | $ | 101,870 | $ | 82,130 | 19,740 | 24 | % | |||||||||
Nine Months Ended September 30, | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Revenues | ||||||||||||||||
Commercial product sales: | ||||||||||||||||
Gross revenue from commercial product sales | $ | 173,397 | $ | 95,894 | $ | 77,503 | 81 | % | ||||||||
Less: Wholesaler distribution fees, rebates and | 52,505 | 32,162 | 20,343 | 63 | % | |||||||||||
Commercial product sales | $ | 120,892 | $ | 63,732 | 57,160 | 90 | % | |||||||||
Gross-to-net revenue adjustment percentage | 30 | % | 34 | % | ||||||||||||
Collaborations and services | 77,941 | 78,727 | (786 | ) | (1 | %) | ||||||||||
Royalties | 102,583 | 94,552 | 8,031 | 8 | % | |||||||||||
Total revenues | $ | 301,416 | $ | 237,011 | 64,405 | 27 | % | |||||||||
Our commercial product sales are comprised of Afrezza, Furoscix and V-Go.
Afrezza - Gross revenue from sales of Afrezza increased by $1.5 million, or 6%, for the three months ended September 30, 2026 compared to the same period in the prior year. The increase was driven primarily by increased demand and a price increase. The gross-to-net adjustment was 30% of gross revenue, or $8.4 million, for the three months ended September 30, 2026 compared to 30% of gross revenue, or $7.8 million, for the same period in the prior year. As a result, net revenue from sales of Afrezza increased by $0.9 million, or 5%, for the three months ended September 30, 2026 compared to the same period in the prior year.
Gross revenue from sales of Afrezza decreased by $1.3 million, or 2%, for the nine months ended September 30, 2026 compared to the same period in the prior year. The decrease was driven primarily by lower demand and was partially offset by a price increase. The gross-to-net adjustment was 31% of gross revenue, or $23.6 million, for the nine months ended September 30, 2026 compared to 32% of gross revenue, or $24.8 million, for the same period in the prior year. The decreased gross-to-net percentage was primarily attributable to a decrease in anticipated product returns (as a percentage of gross sales) and partially offset the impact of lower gross revenue. As a result, net revenue from sales of Afrezza decreased by $0.1 million for the nine months ended September 30, 2026 compared to the same period in the prior year.
Furoscix - Gross revenue from sales of Furoscix was $32.1 million for the three months ended September 30, 2026. The gross-to-net adjustment was 30% of gross revenue, or $9.7 million, resulting in net revenue of $22.4 million for the three months ended September 30, 2026. Gross revenue from sales of Furoscix was $84.1 million for the nine months ended September 30, 2026. The gross-to-net adjustment was 29% of gross revenue, or $24.0 million, resulting in net revenue of $60.1 million for the nine months ended September 30, 2026. There was no Furoscix revenue in the prior-year periods as we did not own or commercialize Furoscix until our acquisition of scPharma in October 2025. Furoscix ReadyFlow was approved by the FDA in the third quarter of 2026 and shipments commenced in mid-September.
V-Go - Gross revenue from sales of V-Go were $5.1 million and $14.1 million for the three and nine months ended September 30, 2026, respectively, compared to $6.1 million and $19.3 million for the same periods in the prior year, respectively.
Collaborations and Services and Royalties - Net revenue from collaborations and services decreased by $7.1 million, or 27%, for the three months ended September 30, 2026 compared to the same period in the prior year. Net revenue from collaborations and services decreased by $0.8 million, or 1%, for the nine months ended September 30, 2026 compared to the same period in the prior year. The decrease in revenue in both periods was primarily attributable to decreased product sold to UT. UT provides notice of their subsequent year purchase quantity on or prior to October 15th of each year and quarterly revenue fluctuations reflect delivery timing rather than changes in annual order volume. The decrease was partially offset by the recognition of revenue earned related to the development of ralinepag DPI. Royalty revenue from UT increased by $4.1 million, or 12%, for the three months ended September 30, 2026. Royalty revenue from UT increased by $8.0 million, or 8%, for the nine months ended September 30, 2026. The increases were due to UT's increase in net revenue from sales of Tyvaso DPI.
Commercial product gross profit
The following table provides a comparison of the commercial product gross profit categories for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
Three Months Ended September 30, | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Commercial product gross profit: | ||||||||||||||||
Commercial product sales | $ | 45,002 | $ | 22,305 | $ | 22,697 | 102 | % | ||||||||
Less: Cost of goods sold, commercial, excluding amortization of acquired intangible assets | 11,213 | 4,498 | 6,715 | 149 | % | |||||||||||
Commercial product gross profit: | $ | 33,789 | $ | 17,807 | 15,982 | 90 | % | |||||||||
Gross margin | 75 | % | 80 | % | ||||||||||||
Nine Months Ended September 30, | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Commercial product gross profit: | ||||||||||||||||
Commercial product sales | $ | 120,892 | $ | 63,732 | $ | 57,160 | 90 | % | ||||||||
Less: Cost of goods sold, commercial, excluding amortization of acquired intangible assets | 33,130 | 12,873 | 20,257 | 157 | % | |||||||||||
Commercial product gross profit: | $ | 87,762 | $ | 50,859 | 36,903 | 73 | % | |||||||||
Gross margin | 73 | % | 80 | % | ||||||||||||
Commercial product gross profit increased by $16.0 million, or 90%, for the three months ended September 30, 2026 compared to the same period in the prior year. Commercial product gross profit increased by $36.9 million, or 73%, for the nine months ended September 30, 2026 compared to the same period in the prior year. The increase in both periods was primarily attributable to the increase in total product revenues after adding Furoscix to our product portfolio following the acquisition of scPharma in October 2025. Gross margin as a percentage of revenue decreased by 5% and 7% for the three and nine months ended September 30, 2026, respectively, compared to the same periods in the prior years. The decrease in both periods was primarily attributable to the inclusion of Furoscix on-body infusor in our product portfolio which has a lower gross margin percentage than Afrezza. We expect margins to improve as Furoscix ReadyFlow is adopted into the market.
Expenses
The following table provides a comparison of the expense categories for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
Three Months | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Expenses: | ||||||||||||||||
Cost of goods sold - commercial, excluding amortization of acquired intangible assets | $ | 11,213 | $ | 4,498 | $ | 6,715 | 149 | % | ||||||||
Cost of revenue - collaborations and services | 12,299 | 15,705 | (3,406 | ) | (22 | %) | ||||||||||
Research and development | 14,360 | 14,063 | 297 | 2 | % | |||||||||||
Selling, general and administrative | 61,412 | 29,088 | 32,324 | 111 | % | |||||||||||
Amortization of acquired intangible assets | 5,160 | - | 5,160 | * | ||||||||||||
Gain on foreign currency transaction | (391 | ) | (120 | ) | (271 | ) | 226 | % | ||||||||
Total expenses | $ | 104,053 | $ | 63,234 | 40,819 | 65 | % | |||||||||
Nine Months | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Expenses: | ||||||||||||||||
Cost of goods sold - commercial, excluding amortization of acquired intangible assets | $ | 33,130 | $ | 12,873 | $ | 20,257 | 157 | % | ||||||||
Cost of revenue - collaborations and services | 37,393 | 45,414 | (8,021 | ) | (18 | %) | ||||||||||
Research and development | 49,592 | 38,760 | 10,832 | 28 | % | |||||||||||
Selling, general and administrative | 173,801 | 85,724 | 88,077 | 103 | % | |||||||||||
Amortization of acquired intangible assets | 13,895 | - | 13,895 | * | ||||||||||||
(Gain) loss on foreign currency transaction | (2,195 | ) | 7,752 | (9,947 | ) | * | ||||||||||
Total expenses | $ | 305,616 | $ | 190,523 | 115,093 | 60 | % | |||||||||
Cost of revenue - collaborations and services decreased by $3.4 million, or 22%, for the three months ended September 30, 2026 compared to the same period in the prior year. The decrease was primarily due to lower production and sales due to the timing of manufacturing activities. Cost of revenue - collaborations and services decreased by $8.0 million, or 18% for the nine months ended September 30, 2026 compared to the same period in the prior year. The decrease was due to less product sold.
Research and development expenses increased by $0.3 million, or 2%, for the three months ended September 30, 2026 compared to the same period in the prior year. Research and development expenses increased by $10.8 million, or 28%, for the nine months ended September 30, 2026 compared to the same period in the prior year. The increases in both periods were primarily attributable to the development of Furoscix ReadyFlow, higher personnel costs following the acquisition of scPharma, and increased clinical development costs for MNKD-201. These increases were partially offset by lower clinical development expenses resulting from the discontinuation of the ICoN-1 clinical study for MNKD-101 and the completion of the Afrezza pediatric study (INHALE-1).
Selling, general and administrative expenses increased by $32.3 million, or 111%, for the three months ended September 30, 2026 compared to the same period in the prior year. Selling, general and administrative expenses increased by $88.1 million, or 103%, for the nine months ended September 30, 2026 compared to the same period in the prior year. The increases in both periods were primarily attributable to costs associated with the promotion and support of Furoscix, which was acquired from scPharma in October 2025, expansion of our field-based teams, and launch activities related to Furoscix ReadyFlow and the pediatric indication for Afrezza.
Amortization of acquired intangible assets was $5.2 million for the three months ended September 30, 2026 and $13.9 million for the nine months ended September 30, 2026 and was primarily related to Furoscix developed technology, acquired from scPharma. Upon FDA approval of Furoscix ReadyFlow in July 2026, it was recognized as finite lived with the existing Furoscix developed technology and the combined balance will be amortized on a straight-line basis through December 31, 2040.
Gain on foreign currency transaction was $0.4 million for the three months ended September 30, 2026 compared to a gain of $0.1 million for the same period in the prior year. Gain on foreign currency transaction was $2.2 million for the nine months ended September 30, 2026 compared to a loss of $7.8 million for the same period in the prior year. These non-cash changes were due to fluctuations in U.S. dollar to Euro exchange rates. Under our Insulin Supply Agreement with Amphastar, payment obligations for future purchases are denominated in Euros. We record the foreign currency transaction impact of the U.S. dollar to Euro exchange rate associated with the future purchase commitments.
Other Income (Expense)
The following table provides a comparison of the other income (expense) categories for the three and nine months ended September 30, 2026 and 2025 (dollars in thousands):
Three Months | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Interest income, net | $ | 1,090 | $ | 2,628 | $ | (1,538 | ) | (59 | %) | |||||||
Interest expense | (7,642 | ) | (1,364 | ) | (6,278 | ) | (460 | %) | ||||||||
Interest expense on liability for sale of future royalties | (501 | ) | (3,514 | ) | 3,013 | 86 | % | |||||||||
Interest expense on financing liability | (2,434 | ) | (2,456 | ) | 22 | 1 | % | |||||||||
Impairment of available-for-sale investment | - | (6,409 | ) | 6,409 | * | |||||||||||
Other expense, net | (11,503 | ) | - | (11,503 | ) | * | ||||||||||
Total other expense, net | $ | (20,990 | ) | $ | (11,115 | ) | (9,875 | ) | (89 | %) | ||||||
Nine Months | ||||||||||||||||
2026 | 2025 | $ Change | % Change | |||||||||||||
Interest income, net | $ | 3,541 | $ | 6,416 | $ | (2,875 | ) | (45 | %) | |||||||
Interest expense | (27,015 | ) | (6,294 | ) | (20,721 | ) | (329 | %) | ||||||||
Interest expense on liability for sale of future royalties | (3,573 | ) | (10,564 | ) | 6,991 | 66 | % | |||||||||
Interest expense on financing liability | (7,241 | ) | (7,299 | ) | 58 | 1 | % | |||||||||
Impairment of available-for-sale investment | - | (6,409 | ) | 6,409 | * | |||||||||||
Loss on settlement of debt | (917 | ) | - | (917 | ) | * | ||||||||||
Other expense, net | (19,271 | ) | - | (19,271 | ) | * | ||||||||||
Total other expense, net | $ | (54,476 | ) | $ | (24,150 | ) | (30,326 | ) | (126 | %) | ||||||
Interest income, net, consisting of interest and accretion on investments net of amortization, decreased by $1.5 million for the three months ended September 30, 2026 compared to the same period in the prior year and decreased by $2.9 million for the nine months ended September 30, 2026 compared to the same period in the prior year. This was primarily due to a lower average balance on our securities portfolio.
Interest expense increased by $6.3 million for the three months ended September 30, 2026 compared to the same period in the prior year and increased by $20.7 million for the nine months ended September 30, 2026 compared to the same period in the prior year. The increase was primarily due to term loans with an aggregate principal amount of $325.0 million, which were drawn in August and October 2025 as well as the achievement of an Afrezza net sales milestone in the second quarter of 2026, which resulted in the recognition of $4.5 million of interest expense. See Note 15 - Commitments and Contingencies - Milestone Rights for additional information on the Afrezza net sales milestone.
Interest expense on liability for sale of future royalties decreased by $3.0 million and $7.0 million for the three and nine months ended September 30, 2026, respectively, compared to the same periods in the prior year. Interest consists of imputed interest and the amortization of debt issuance costs on the liability recorded in connection with the sale of 1% of our Tyvaso DPI royalties in December 2023. Imputed interest is based on third-party estimates of future royalties to be generated from Tyvaso DPI. See Note 15 - Commitments and Contingencies.
Interest expense on financing liability was $2.4 million and $2.5 million for the three months ended September 30, 2026 and 2025, respectively, and $7.2 million and $7.3 million for the nine months ended September 30, 2026 and 2025, respectively. Interest expense on financing liability represents interest incurred on the sale lease-back transaction for our manufacturing facility in Danbury, Connecticut.
Impairment of available-for-sale investment of $6.4 million for the three and nine months ended September 30, 2025 was a result of the write-off of the Thirona investment.
Loss on settlement of debt of $0.9 million for the nine months ended September 30, 2026 was incurred in connection with the settlement of the senior convertible notes in March 2026.
Other expense of $11.5 million for the three months ended September 30, 2026 and $19.3 million for the nine months ended September 30, 2026 was primarily the result of the remeasurement of the fair value of the contingent consideration liability obtained from the acquisition of scPharma. Milestone 1 under the CVR Agreement was achieved on July 23, 2026, which resulted in an aggregate payout of approximately $44.8 million in the third quarter of 2026. As of September 30, 2026, the liability related to the contingent consideration for Milestone 2 has been reduced to $0.0 million as a result of the remeasurement of the fair value. See Note 11 - Fair Value of Financial Instruments. The final payout amount, if any, related to Milestone 2 will be determined on December 31, 2026.
Non-GAAP Measures
To supplement our condensed consolidated financial statements presented under GAAP, we are presenting non-GAAP financial measures for net (loss) income and net (loss) income per share - basic. We are providing these non-GAAP financial measures, which are among the indicators management uses as a basis for evaluating our financial performance, to disclose additional information to facilitate the comparison of past and present operations. We believe that these non-GAAP financial measures, when considered together with our GAAP financial results, provide management and investors with an additional understanding of our business operating results, including underlying trends.
These non-GAAP financial measures are not meant to be considered in isolation or as a substitute for comparable GAAP measures; should be read in conjunction with our condensed consolidated financial statements prepared in accordance with GAAP; have no standardized meaning prescribed by GAAP; and are not prepared under any comprehensive set of accounting rules or principles. In addition, from time to time in the future, there may be other items that we may exclude for purposes of our non-GAAP financial measures; and we may cease to exclude items that we have historically excluded for purposes of our non-GAAP financial measures. Likewise, we may determine to modify the nature of its adjustments to arrive at our non-GAAP financial measures. Because of the non-standardized definitions of non-GAAP financial measures, the non-GAAP financial measures as used by us in this Quarterly Report on Form 10-Q have limits in their usefulness to investors and may be calculated differently from, and therefore may not be directly comparable to, similarly titled measures used by other companies.
The following table reconciles our financial measures for net (loss) income and net (loss) income per share ("EPS") for basic weighted average shares as reported in our condensed consolidated statements of operations to a non-GAAP presentation as adjusted by certain items identified below.
Three Months | Nine Months | |||||||||||||||||||||||||||||||
2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||||||||
Net Loss | Basic EPS | Net Income | Basic EPS | Net Loss | Basic EPS | Net Income | Basic EPS | |||||||||||||||||||||||||
GAAP reported net (loss) income | $ | (23,224 | ) | $ | (0.07 | ) | $ | 7,985 | 0.03 | $ | (58,874 | ) | $ | (0.19 | ) | $ | 21,811 | $ | 0.07 | |||||||||||||
Non-GAAP adjustments: | ||||||||||||||||||||||||||||||||
Stock compensation | 6,444 | 0.02 | 4,318 | 0.01 | 23,125 | 0.07 | 17,223 | 0.06 | ||||||||||||||||||||||||
Interest expense on liability for sale of future royalties | 501 | 0.00 | 3,514 | 0.01 | 3,573 | 0.01 | 10,564 | 0.03 | ||||||||||||||||||||||||
Sold portion of royalty revenue (1) | (3,746 | ) | (0.01 | ) | (3,332 | ) | (0.01 | ) | (10,258 | ) | (0.03 | ) | (9,455 | ) | (0.03 | ) | ||||||||||||||||
(Gain) loss on foreign currency transaction | (391 | ) | 0.00 | (120 | ) | 0.00 | (2,195 | ) | (0.01 | ) | 7,752 | 0.03 | ||||||||||||||||||||
Amortization of intangible assets acquired | 5,160 | 0.01 | - | - | 13,895 | 0.05 | - | - | ||||||||||||||||||||||||
Expense related to contingent consideration | 11,641 | 0.04 | - | - | 19,409 | 0.07 | - | - | ||||||||||||||||||||||||
Loss on settlement of debt | - | - | - | - | 917 | 0.00 | - | - | ||||||||||||||||||||||||
Acquisition related expenses(2) | - | - | 3,673 | 0.01 | - | - | 3,673 | 0.01 | ||||||||||||||||||||||||
Impairment loss on available-for-sale investment | - | - | 6,409 | 0.02 | - | - | 6,409 | 0.02 | ||||||||||||||||||||||||
Non-GAAP adjusted net (loss) income | $ | (3,615 | ) | $ | (0.01 | ) | $ | 22,447 | $ | 0.07 | $ | (10,408 | ) | $ | (0.03 | ) | $ | 57,977 | $ | 0.19 | ||||||||||||
Weighted average shares used to compute net (loss) income per share - basic | 320,182 | 306,806 | 312,722 | 305,093 | ||||||||||||||||||||||||||||
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity are our cash, cash equivalents, and investments. Our primary uses of cash include development of our product pipeline, manufacturing and marketing of Afrezza, Furoscix and V-Go, manufacturing Tyvaso DPI, selling, general and administrative expenses, and principal and interest payments on our financing liability and debt.
We fund our operations primarily through sales of Afrezza, Furoscix and V-Go, and royalties, development and manufacturing revenue from UT. Historically, we have funded our operations primarily through the sale of equity and convertible debt securities, from the receipt of upfront and milestone payments from collaborations, from borrowings, from the sale of certain assets and from the sale of a portion of our future royalties that we receive from UT. In combination with our cash, cash equivalents and investments on hand, we believe that these sources of revenue will allow us to meet our liquidity needs over the next 12 months and in the longer term.
As of September 30, 2026, we had $63.7 million in insulin purchase commitments and $325.0 million aggregate principal amount under the Blackstone Credit Facility. The Blackstone Credit Facility will mature on August 6, 2030. As of September 30, 2026, the effective interest rate was 9.18% per annum. The SOFR Loans borrowed under the Blackstone Credit Facility are subject to the Adjusted Term SOFR plus margin of 5.00%. We have the option to prepay the loans under the Blackstone Credit Facility in whole or in part, subject to early prepayment fees on or prior to the third anniversary of the Closing Date. See Note 9 - Borrowings for further information related to the Blackstone Credit Facility.
In July 2013, we granted Milestone Rights to the original purchasers under the Milestone Rights Agreement. The original purchasers later assigned those rights to new holders. As of September 30, 2026, $40.0 million remains payable upon the occurrence of specified
strategic and sales milestones under the Milestone Rights Agreement. During the second quarter of 2026, the Company achieved an Afrezza net sales milestone which resulted in a $5.0 million payment to the Original Milestone Purchasers in the third quarter of 2026. See Note 15 - Commitments and Contingencies for further information related to the Milestone Rights.
In October 2025, we entered into the CVR Agreement with the rights agent party thereto, which governs the terms of the CVRs issued to the former stockholders of scPharma in the acquisition transaction. Milestone 1 under the CVR Agreement was achieved on July 23, 2026, which resulted in an aggregate payout of approximately $44.8 million in the third quarter of 2026. Following the payout for the achievement of Milestone 1, the maximum aggregate amount payable with respect to the remaining CVR is $14.9 million, subject to the achievement of certain net sales milestones on or prior to December 31, 2026, in accordance with the CVR Agreement. As of September 30, 2026, management does not expect a payout under this milestone. See Note 2 - Business Combinations - Contingent Value Right ("CVR") for further information related to the CVR Agreement.
In addition to the above, we also expect to have material cash requirements relating to paying our employees and consultants, professional services fees, marketing expenses, manufacturing expenditures, and clinical trial expenses. In addition, we make substantial and often long-term investments in our supply chain in order to ensure we have enough inventory and drug product to meet current and future revenue forecasts, as well as clinical trial needs.
On July 24, 2026, we completed a private placement to certain institutional investors in which we sold and issued 10,440,838 shares of our common stock at a purchase price of $3.89 per share and pre-funded warrants exercisable for 2,412,632 shares of common stock at a purchase price of $3.88 per share underlying the pre-funded warrants, for total net proceeds to us of approximately $49.8 million, after deducting estimated offering expenses. The proceeds from the private placement funded our $44.8 million CVR payment obligation that was triggered by the FDA's approval of Furoscix ReadyFlow.
Pursuant to the CF Sales Agreement with Cantor Fitzgerald, we may offer and sell, from time to time, through Cantor Fitzgerald, shares of our common stock. Under the CF Sales Agreement, Cantor Fitzgerald may sell shares by any method deemed to be an "at-the-market offering" as defined in Rule 415 under the Securities Act of 1933, as amended. On February 26, 2025, we filed a sales agreement prospectus under a registration statement on Form S-3, which became effective upon filing, covering the sale of up to $200.0 million of our common stock through Cantor Fitzgerald under the CF Sales Agreement, of which $200.0 million remained available as of September 30, 2026.
During the nine months ended September 30, 2026, we used a net $58.3 million of cash for our operating activities. Cash used in operating activities consisted of a net loss of $58.9 million offset by non-cash adjustments of $58.8 million and a net decrease in cash flow from operating assets and liabilities of $58.2 million. Non-cash items primarily included stock-based compensation of $23.1 million, depreciation and amortization of $20.0 million, the change in fair value of the contingent consideration liability of $18.5 million and interest on the liability for sale of future royalties of $3.6 million. These charges were partially offset by the sold portion of royalty revenue of $10.3 million. The net decrease in cash flows from operating assets and liabilities was primarily due to an increase of $16.2 million in inventory associated with the addition of Furoscix into our product portfolio, recognition of $11.1 million in deferred revenue primarily related to Ralinepag DPI and increase of $7.8 million in prepaid expenses and other current assets. The net decrease in cash flows from operating assets and liabilities was partially offset by an increase of $5.3 million in accounts payable.
During the nine months ended September 30, 2025, we generated a net $26.2 million of cash from our operating activities. Cash used in operating activities consisted of net income of $21.8 million offset by non-cash adjustments of $47.0 million and a net decrease in cash flows from operating assets and liabilities of $42.6 million. Non-cash items primarily included stock-based compensation of $17.2 million, loss on foreign currency transactions of $7.8 million and interest on liability for sale of future royalties of $10.6 million. These charges were partially offset by the sold portion of royalty revenue of $9.5 million. The net decrease in cash flows from operating assets and liabilities was primarily due to a decrease of $12.4 million in prepaid expenses and other current assets and a decrease of $10.1 million in accrued expenses and other current liabilities.
Cash provided by investing activities of $36.4 million for the nine months ended September 30, 2026 was primarily due to $90.3 million of proceeds from maturities of available-for-sale securities. Cash provided was partially offset by the purchase of $43.8 million of available-for-sale securities as well as $10.2 million of property and equipment.
Cash used in investing activities of $12.8 million for the nine months ended September 30, 2025 was primarily due to the $10.0 million issuance of a note receivable related to our acquisition of scPharma and the purchase of $144.1 million of debt securities, partially offset by the maturity of $143.8 million of debt securities.
Cash used in financing activities of $11.7 million for the nine months ended September 30, 2026 was primarily due to payments made to settle our senior convertible notes and the payment of contingent consideration related to acquisition of scPharma. Cash used in
financing activities was partially offset by net proceeds of $49.8 million from the issuance of common stock and pre-funded warrants pursuant to our private placement offering.
Cash provided by financing activities of $67.7 million for the nine months ended September 30, 2025 was primarily due to proceeds from a term loan of $75.0 million under the Blackstone Credit Facility, partially offset by $5.1 million of payments to taxing authorities from equity withheld upon vesting of RSUs and stock options and loan issuance costs of $2.3 million.
Future Liquidity Needs
We believe that we will be able to meet our near-term liquidity needs based on our cash, cash equivalents and investments on hand, sales of Afrezza, Furoscix and V-Go, royalties and manufacturing revenue from the production and sale of Tyvaso DPI and, if necessary, borrowings under the Blackstone Credit Facility, as well as through debt or equity financing, for our long-term liquidity needs. We expect to continue to incur expenditures for the foreseeable future in support of our manufacturing operations, sales and marketing costs for our products and development costs for other product candidates in our pipeline. As of September 30, 2026, we had capital resources comprised of cash, cash equivalents and investments totaling $96.6 million.
To date, we have been able to timely make required interest payments under our outstanding indebtedness, including the total principal amount of outstanding borrowings of $325.0 million, but we cannot guarantee that we will be able to do so in the future. If we fail to repay our outstanding indebtedness when required, we will be in default under the applicable instrument for such indebtedness and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time. Any of these events could have a material adverse effect on our business, results of operations and financial condition, up to and including the noteholders initiating bankruptcy proceedings or causing us to cease operations altogether.
We believe our resources will be sufficient to fund our operations for at least the next 12 months from the date of issuance of our condensed consolidated financial statements included in Part I - Financial Statements (Unaudited).
Contractual Obligations
There were no material changes outside of the ordinary course of business in our contractual obligations from those disclosed within "Management's Discussion and Analysis of Financial Condition and Results of Operations," as contained in our Annual Report on Form 10-K for the year ended December 31, 2025.