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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 Form 10-K
 þ
    
    ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended December 31, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from            to
 Commission file number: 000-50865.
 MannKind Corporation
 (Exact name of registrant as specified in its charter)
 Delaware
    
    13-3607736(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)28903 North Avenue PaineValencia, California
    
    91355(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
(661) 775-5300
 Securities registered pursuant to Section 12(b) of the Act:
 Title of Class
    
    Name of Each Exchange on Which RegisteredCommon Stock, par value $0.01 per share
    
    The Nasdaq Global Market
 Securities registered pursuant to Section 12(g) of the Act:
None  (Title of Class)
 o þ
 o þ
 þ o
 o o
 o
  Large accelerated filer o
    
    Accelerated
filer þ
    
    Non-accelerated filer o
    
    Smaller reporting o(Do not check if a smaller reporting
company)
    
    company
  o þ
   DOCUMENTS INCORPORATED BY REFERENCE




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##### 



MANNKIND CORPORATION
 Annual Report on Form 10-K
For the Fiscal Year Ended December 31, 2010
 TABLE OF CONTENTS
 PagePART IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    23Item 1B.
    
    Unresolved Staff Comments
    
    
    42Item 2.
    
    Properties
    
    
    42Item 3.
    
    Legal Proceedings
    
    
    42Item 4.
    
    (Removed and Reserved)
    
    
    42PART IIItem 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    43Item 6.
    
    Selected Financial Data
    
    
    45Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    46Item 7A.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    55Item 8.
    
    Financial Statements and Supplementary Data
    
    
    55REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
    
    
    64CONSOLIDATED BALANCE SHEETS
    
    
    65CONSOLIDATED STATEMENTS OF OPERATIONS
    
    
    66CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
    
    
    67CONSOLIDATED STATEMENTS OF CASH FLOWS
    
    
    71NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    
    
    72Item 9.
    
    Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
    
    
    55Item 9A.
    
    Controls and Procedures
    
    
    55Item 9B.
    
    Other Information
    
    
    58PART IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    58Item 11.
    
    Executive Compensation
    
    
    58Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    58Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    58Item 14.
    
    Principal Accounting Fees and Services
    
    
    58PART IVItem 15.
    
    Exhibits, Financial Statement Schedules
    
    
    59Signatures
    
    
    
    
    62EX-23.1EX-31.1EX-31.2EX-32
  2




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Forward-Looking Statements
  ® ® ® ®
 
 PART I
 
 Item 1. Business
  OVERVIEW
     3




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Preclinical
    
    
    Clinical StudiesDevelopment
    
    
    Phase 1
    
    
    Phase 2
    
    
    Phase 3Technosphere PlatformAFREZZA (insulin)
    
    
    
    
    
    
    
    
    
    
    
    
    
    activeMKC253 (GLP-1)
    
    
    
    
    
    haltedMKC180 (obesity compound)
    
    haltedCancer ImmunotherapyMKC1106-MT
    
    
    
    
    
    
    
    
    
    activeMKC1106-PP
    
    
    
    
    
    haltedMKC1106-NS
    
    haltedCancer DrugsMKC204 (IRE-1 inhibitor)
    
    active
  AFREZZA
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
    
    Consistent decreases in A1C levels, comparable to current insulin therapies.In a
number of clinical studies involving patients with type 1 and type 2 diabetes, we have
evaluated levels of glycosylated hemoglobin, or A1C, which is a measure of average blood
glucose. A consistent finding was that AFREZZA produced decreases in A1C levels that were
essentially comparable to the decreases observed in the control arm of these studies,
including studies that compared AFREZZA to rapid-acting insulin analogs, to pre-mixed
insulin analogs and to metformin in combination with a sulfonylurea.
 
    
    Superior post-meal glucose control.AFREZZA Inhalation Powder has a shorter duration of
action than other insulin therapies, so its glucose-lowering effect better meets a
patients needs following a meal. Specifically, AFREZZA treatment produces lower blood
glucose levels than comparators in the first hour following meal ingestion with comparable
levels after two hours. Importantly, AFREZZA does not remain active for an extended period
of time, thereby reducing the risk of hypoglycemia between meals.
 
    
    Improved fasting glucose control.In clinical trials of both type 1 and type 2
diabetes, AFREZZA has consistently provided lower fasting blood glucose control than
comparator insulin therapies. As we reported with external authors in a report of one of
our earlier Phase 3 studies that was published in The Lancetin 2010, this observation might
be the result of greater suppression of endogenous glucose production
with AFREZZA combined with basal insulin than with a conventional insulin regimen.
 
    
    Less hypoglycemia due to better synchronization with glucose absorption from meals.In
clinical trials involving patients with type 2 diabetes, we observed that the incidence and
frequency of hypoglycemia was significantly reduced. Similar results were observed in
patients with type 1 diabetes. The overall hypoglycemic event rate was lower for AFREZZA at
all times of the day, but in particular, there were fewer nocturnal hypoglycemic events, a
condition much feared by patients with diabetes.
 
    
    Little or no weight gain.In our clinical trials, patients treated with AFREZZA
experienced weight reduction or significantly less weight gain compared to other insulin
therapies.
     Regulatory Approval Status
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
    
    information and currently available clinical data that support the clinical utility of
AFREZZA, a request that reflects a desire to understand the positioning of AFREZZA within
the range of available therapies for patients with diabetes and a desire to know how, in
whom and when in the course of therapy it should be used;
 
    
    information about the comparability of the commercial version of the inhaler, i.e.,
MedTone (model D), to the MedTone (model C) version of the device that was used in clinical
trials;
 
    
    changes to the proposed labeling of the MedTone cartridges, foil pouches and cartons; and
 
    
    updated safety data related to AFREZZA.
   in vitro
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
    
    the risk of respiratory difficulty immediately post-inhalation, especially in patients
with undiagnosed chronic lung disease;
 
    
    the risk of pulmonary function decline over time; and
 
    
    the potential risk of harm due to use by inappropriate patient populations, such as
smokers and patients with chronic lung disease.
  INVESTIGATIONAL CANCER THERAPIES
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
    
    It is a targeted therapeutic approach that aims to redirect patients immune response
to the tumor targets expressed by their cancer. The patients with a highest likelihood to
benefit from this treatment can be identified by histological analysis of their tumors.
 
    
    It involves an innovative and potent vaccination approach comprising direct
intra-lymphatic administration of the immunizing components using a prime-boost sequence
that is designed to achieve optimal response.
 
    
    The selected target antigens are molecules that play a key role in tumor progression
and migration and that display increased expression, or selective expression, in tumor
cells. Moreover, they are expressed in a range of tumors.
 
    
    The immunizing components are off-the-shelf formulations of DNA and peptides
containing excipients that are well recognized and generally regarded as safe. There is no
need to harvest any material from patients tumors or cells in order to manufacture our
immunotherapy products.
    8




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Cancer Drug Discovery
    in vitro
 OUR STRATEGY
  
    
    Seek a development and commercialization partner for AFREZZA.We intend to pursue
potential collaboration opportunities with large pharmaceutical companies in the United
States, Europe and elsewhere in order to provide the financial and operational resources to
develop, commercialize, market and sell AFREZZA. We have not licensed or transferred any of
our rights to this product or to our platform technology.
 
    
    Out-license our proprietary Technosphere formulation technology for the delivery of
active pharmaceutical ingredients.We believe that additional Technosphere formulations of
active pharmaceutical ingredients have the potential to demonstrate clinical advantages
over existing therapeutic options in a variety of therapeutic areas. We intend to pursue
opportunities to out-license our technology to pharmaceutical companies that are in need of
alternative formulations for their proprietary active pharmaceutical ingredients.
 
    
    Pursue transactional opportunities for our investigational cancer therapies.We are
currently conducting a Phase 2 clinical trial of one of our investigational cancer
immunotherapy products. As this program and the
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cancer drug discovery program reach
upcoming milestones that are expected to increase the perceived value of these programs, we
intend to pursue opportunities to enter into transactions with potential partners or
acquirers.
 SALES AND MARKETING
   MANUFACTURING AND SUPPLY
    10




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INTELLECTUAL PROPERTY AND PROPRIETARY TECHNOLOGY
      11




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COMPETITION
  12




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Diabetes Treatments
   Rapid-acting (Injected) Insulin
 ® ® ®
    Inhaled Insulin Delivery Systems
 ® ®
  ®
  13




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Non-insulin Medications
  
    
    Sulfonylureas, also called oral hypoglycemic agents, prompt the pancreas to secrete
insulin. This class of drugs is most effective in individuals whose pancreas still have
some working pancreas cells.
 
    
    Meglitinides are taken with meals and reduce the elevation in blood glucose that
generally follows eating. If these drugs are not taken with meals, blood glucose will drop
dramatically and inappropriately.
 
    
    Biguanides lower blood glucose by improving the sensitivity of cells to insulin (i.e.,
by diminishing insulin resistance).
 
    
    Thiazolidinedione improves the uptake of glucose by cells in the body.
 
    
    Alpha-glucosidase inhibitors lower the amount of glucose absorbed from the intestines,
thereby reducing the rise in blood glucose that occurs after a meal.
 
    
    Inhibitors of dipeptidyl peptidase IV are a class of drugs that work by blocking the
degradation of GLP-1, which is a naturally occurring incretin.
 
    
    Incretin mimetics work by several mechanisms including stimulating the pancreas to
secrete insulin when blood glucose levels are high.
 Cancer Treatments
 ® ® ® ®
 ® ®
  
    
    Provenge®, developed by Dendreon Corporation, is a vaccine composed of autologous APC
that are loaded with an antigen (prostate acid phosphatase) from prostate tumor cells then
re-injected into patients. In April 2010, the FDA approved Provenge for the treatment of
asymptomatic or minimally symptomatic metastatic castrate resistant (hormone refractory)
prostate cancer.
 
    
    MAGE-A3 is a tumor-specific antigen that is expressed in a large variety of cancers but
not in normal cells. GlaxoSmithKline plc is evaluating a cancer vaccine that combines
MAGE-A3, delivered as a purified recombinant protein, with certain immunostimulating
compounds that are intended to increase the anti-tumor immune response. This
investigational product is being evaluated in Phase 3 clinical trials for the treatment of
non-small cell lung cancer and melanoma.
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
    
    Rindopepimut (CDX-110) is an immunotherapy being developed by Celldex, Inc.
Rindopepimut targets a mutated form of epidermal growth factor receptor that is present in
multiple cancer types and is currently being evaluated for the treatment of glioblastoma
multiforme in a Phase 2 clinical trial.
 GOVERNMENT REGULATION AND PRODUCT APPROVAL
   
    
    Preclinical studies that include laboratory evaluation of product chemistry and
formulation, as well as animal studies to assess the potential safety and efficacy of the
product. Certain preclinical tests must be conducted in compliance with good laboratory
practice regulations. Violations of these regulations can, in some cases, lead to
invalidation of the studies, or requiring such studies to be repeated. In some cases,
long-term preclinical studies are conducted while clinical studies are ongoing.
 
    
    Submission to the FDA of an investigational new drug application, or IND, which must
become effective before human clinical trials may commence. The results of the preclinical
studies are submitted to the FDA as part of the IND. Unless the FDA objects, the IND
becomes effective 30 days following receipt by the FDA.
 
    
    Approval of clinical protocols by independent institutional review boards, or IRBs, at
each of the participating clinical centers conducting a study. The IRBs consider, among
other things, ethical factors, the potential risks to individuals participating in the
trials and the potential liability of the institution. The IRB also approves the consent
form signed by the trial participants.
 
    
    Adequate and well-controlled human clinical trials to establish the safety and efficacy
of the product. Clinical trials involve the administration of the drug to healthy
volunteers or to patients under the supervision of a qualified medical investigator
according to an approved protocol. The clinical trials are conducted in accordance with
protocols that detail the objectives of the study, the parameters to be used to monitor
participant safety and efficacy or other criteria to be evaluated. Each protocol is
submitted to the FDA as part of the IND. Human clinical trials are typically conducted in
the following four sequential phases that may overlap or be combined:
 
    
    In Phase 1, the drug is initially introduced into a small number of individuals
and tested for safety, dosage tolerance, absorption, metabolism, distribution and
excretion. Phase 1 clinical trials are often conducted in healthy human volunteers and
such cases do not provide evidence of efficacy. In the case of severe or
life-threatening diseases, the initial human testing is often conducted in patients
rather than healthy volunteers. Because these patients already have the target disease,
these studies may provide initial evidence of efficacy that would traditionally be
obtained in Phase 2 clinical trials. Consequently, these types of trials are frequently
referred to as Phase 1/2 clinical trials. The FDA receives reports on the progress of
each phase of clinical testing and it may require the modification, suspension or
termination of clinical trials if it concludes that an unwarranted risk is presented to
patients or healthy volunteers.
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
    
    Phase 2 involves clinical trials in a limited patient population to further
identify any possible adverse effects and safety risks, to determine the efficacy of the
product for specific targeted diseases and to determine dosage tolerance and optimal
dosage.
 
    
    Phase 3 clinical trials are undertaken to further evaluate dosage, clinical
efficacy and to further test for safety in an expanded patient population at
geographically dispersed clinical study sites. Phase 3 clinical trials usually include a
broader patient population so that safety and efficacy can be substantially established.
Phase 3 clinical trials cannot begin until Phase 2 evaluation demonstrates that a dosage
range of the product may be effective and has an acceptable safety profile.
 
    
    Phase 4 clinical trials are performed if the FDA requires, or a company pursues,
additional clinical trials after a product is approved. These clinical trials may be
made a condition to be satisfied after a drug receives approval. The results of Phase 4
clinical trials can confirm the effectiveness of a product candidate and can provide
important safety information to augment the FDAs voluntary adverse drug reaction
reporting system.
 
    
    Concurrent with clinical trials and preclinical studies, companies also must develop
information about the chemistry and physical characteristics of the drug and finalize a
process for manufacturing the product in accordance with drug cGMP requirements. The
manufacturing process must be capable of consistently producing quality batches of the
product and the manufacturer must develop methods for testing the quality, purity, and
potency of the final products. Additionally, appropriate packaging must be selected and
tested and chemistry stability studies must be conducted to demonstrate that the product
does not undergo unacceptable deterioration over its shelf-life.
 
    
    Submission to the FDA of an NDA, or Biologics License Application, or BLA, based on the
clinical trials. The results of product development, preclinical studies, and clinical
trials are submitted to the FDA in the
form of an NDA or BLA for approval of the marketing and commercial shipment of the product.
Under the Pediatric Research Equity Act of 2003, NDAs are required to include an assessment,
generally based on clinical study data, of the safety and efficacy of drugs for all relevant
pediatric populations. The statute provides for waivers or deferrals in certain situations
but we can make no assurances that such situations will apply to us or our product
candidates.
 e.g.
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
    
    product labeling regulations;
 
    
    general prohibition against promoting products for unapproved or off-label uses;
 
    
    corrections and removals (e.g., recalls);
 
    
    establishment registration and device listing;
 
    
    general prohibitions against the manufacture and distribution of adulterated and
misbranded devices; and
    
    the Medical Device Reporting regulation, which requires that manufacturers report to
the FDA if their device may have caused or contributed to a death or serious injury or
malfunctioned in a way that would likely cause or contribute to a death or serious injury
if it were to recur.
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Patent Restoration and Marketing Exclusivity
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EMPLOYEES
    SCIENTIFIC ADVISORS
  
    
    our research and development programs;
 
    
    the design and implementation of our clinical programs;
 
    
    our patent and publication strategies;
 
    
    market opportunities from a clinical perspective;
 
    
    new technologies relevant to our research and development programs; and
 
    
    specific scientific and technical issues relevant to our business.
  Name
    
    Primary AffiliationRichard Bergenstal, MD
    
    International Diabetes Center, Park Nicollet InstituteGeremia Bolli
    
    University of PerugiaAlan D. Cherrington, PhD
    
    Vanderbilt University Medical CenterDavid DAlessio, MD
    
    University of CincinnatiSteven Edelman, MD
    
    University of California, San DiegoAlexander Fleming, MD
    
    Kinexum Box LLCBrian Frier, MD, FECP, BS
    
    Edinburgh Royal InfirmaryIrl B. Hirsch, MD
    
    University of Washington Medical CenterLois Jovanovic, MD
    
    Sansum Medical Research InstituteDaniel Lorber, MD
    
    Diabetes Care & Information Center of New YorkSten Madsbad
    
    Hvidovre University Hospital, CopenhagenChantal Mathieu, MD, PhD
    
    Laboratorium voor Experimentele Geneeskunde en
EndocrinologieMark Peyrot, MD
    
    Loyola College CenterDaniel Porte, MD
    
    University of California, San DiegoJulio Rosenstock, MD
    
    Dallas Diabetes and Endocrinology Center
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Name
    
    Primary AffiliationJesse Roth, MD, FACP
    
    North Shore-Long Island Jewish Health SystemRichard Rubin, PhD, CDE
    
    Johns Hopkins University School of MedicineRobert Sherwin, MD
    
    Yale University School of MedicineJay Skyler, MD, MACP
    
    University of Miami, Diabetes Research Institute
  Name
    
    Primary AffiliationKenneth Anderson, M.D.
    
    Dana Farber Cancer Institute, BostonJames Berenson, M.D.
    
    Institute for Myeloma and Bone Cancer ResearchPhilippe Bey, Ph.D.
    
    Pharmaceutical consultantBernard Fox, Ph.D.
    
    Earle A. Chiles Research InstituteW. Martin Kast, Ph.D.
    
    University of Southern CaliforniaAntoni Ribas, M.D.
    
    University of California, Los AngelesFrank Sicheri, Ph.D.
    
    University of Toronto
 EXECUTIVE OFFICERS
  Name
    
    Age
    
    Position(s)Alfred E. Mann
    
    
    85
    
    
    Chairman of the Board of Directors and Chief Executive
OfficerHakan S. Edstrom
    
    
    60
    
    
    President, Chief Operating Officer and DirectorMatthew J. Pfeffer
    
    
    53
    
    
    Corporate Vice President and Chief Financial OfficerJuergen A. Martens, Ph.D.
    
    
    55
    
    
    Corporate Vice President, Technical Operations and
Chief Technical OfficerDiane M. Palumbo
    
    
    57
    
    
    Corporate Vice President, Human ResourcesDr. Peter C. Richardson
    
    
    51
    
    
    Corporate Vice President and Chief Scientific OfficerDavid Thomson, Ph.D., J.D.
    
    
    44
    
    
    Corporate Vice President, General Counsel and Secretary
 Alfred E. Mann
 21




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Hakan S. Edstrom
 Matthew J. Pfeffer
 Juergen A. Martens, Ph.D.
 Diane M. Palumbo
 Dr. Peter C. Richardson
 David Thomson, Ph.D., J.D.
  22




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Item 1A. Risk Factors
 You should consider carefully the following information about the risks described below,
together with the other information contained in this Annual Report before you decide to buy or
maintain an investment in our common stock. We believe the risks described below are the risks that
are material to us as of the date of this Annual Report. Additional risks and uncertainties that we
are unaware of may also become important factors that affect us. If any of the following risks
actually occur, our business, financial condition, results of operations and future growth
prospects would likely be materially and adversely affected. In these circumstances, the market
price of our common stock could decline, and you may lose all or part of the money you paid to buy
our common stock.
 RISKS RELATED TO OUR BUSINESS
 We depend heavily on the successful development and commercialization of our lead product
candidate, AFREZZA, which is not yet approved.
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We have a history of operating losses, we expect to continue to incur losses and we may never
become profitable.
    If we fail to raise additional capital our financial condition and business would suffer.
   
    
    the rate of progress and costs of our clinical trials and research and development
activities, including costs of procuring clinical materials and operating our manufacturing
facilities;
 
    
    our success in establishing strategic business collaborations and the timing and amount
of any payments we might receive from any collaboration we are able to establish;
 
    
    actions taken by the FDA and other regulatory authorities affecting our products and
competitive products;
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
    
    our degree of success in commercializing AFREZZA;
 
    
    the emergence of competing technologies and products and other adverse market
developments;
 
    
    the timing and amount of payments we might receive from potential licensees;
 
    
    the costs of preparing, filing, prosecuting, maintaining and enforcing patent claims
and other intellectual property rights or defending against claims of infringement by
others;
 
    
    the level of our legal expenses, including those expenses associated with the
securities class actions and derivative lawsuits filed against us and certain of our
executive officers and directors and any settlement or damages payments associated with
litigation;
    
    the costs of the restructuring that we implemented following receipt of the Complete
Response letter from the FDA in January 2011;
 
    
    the costs of discontinuing projects and technologies;
 
    
    the costs of decommissioning existing facilities, if we undertake such activities; and
 
    
    the costs of performing additional clinical trials requested by the FDA.
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Deteriorating global economic conditions may have an adverse impact on the loan facility with an
entity controlled by our principal stockholder, which we currently cannot predict.
  If we do not achieve our projected development and commercialization goals in the timeframes we
announce and expect, our business would be harmed and the market price of our common stock could
decline.
  
    
    the rate of progress, costs and results of our clinical trial and research and
development activities, which will be impacted by the level of proficiency and experience
of our clinical staff;
 
    
    our ability to identify and enroll patients who meet clinical trial eligibility
criteria;
 
    
    our ability to access sufficient, reliable and affordable supplies of components used
in the manufacture of our product candidates, including insulin and other materials for
AFREZZA;
 
    
    the costs of expanding and maintaining manufacturing operations, as necessary;
 
    
    the extent of scheduling conflicts with participating clinicians and clinical
institutions;
 
    
    the receipt of approvals by our competitors and by us from the FDA and other regulatory
agencies;
 
    
    our ability to enter into sales and marketing collaborations for AFREZZA; and
 
    
    other actions by regulators.
  We face substantial competition in the development of our product candidates and may not be able
to compete successfully, and our product candidates may be rendered obsolete by rapid
technological change.
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If we fail to enter into a strategic collaboration with respect to AFREZZA, we may not be able to
execute on our business model.
   If we enter into collaborative agreements with respect to AFREZZA and if our third-party
collaborators do not perform satisfactorily or if our collaborations fail, development or
commercialization of AFREZZA may be delayed and our business could be harmed.
   Continued testing of AFREZZA or our other product candidates may not yield successful results, and
even if it does, we may still be unable to commercialize our product candidates.
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
    
    safety and efficacy results for AFREZZA obtained in our nonclinical and previous
clinical testing may be inconclusive or may not be predictive of results that we may obtain
in our Affinity 1, Affinity 2 or other clinical trials or following long-term use, and we
may as a result be forced to stop developing AFREZZA;
 
    
    the data collected from clinical trials of AFREZZA or our other product candidates may
not reach statistical significance or otherwise be sufficient to support FDA or other
regulatory approval;
    
    after reviewing test results, we or any potential collaborators may abandon projects
that we previously believed were promising; and
 
    
    our product candidates may not produce the desired effects or may result in adverse
health effects or other characteristics that preclude regulatory approval or limit their
commercial use if approved.
   If our suppliers fail to deliver materials and services needed for the production of AFREZZA in a
timely and sufficient manner, or they fail to comply with applicable regulations, our business and
results of operations would be harmed and the market price of our common stock could decline.
    We have never manufactured AFREZZA or any other product candidates in commercial quantities, and
if we fail to develop an effective manufacturing capability for our product candidates or to
engage third-party manufacturers with this capability, we may be unable to commercialize these
products.
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We and certain of our executive officers and directors have been named as defendants in recently
initiated securities class actions and a derivative lawsuit that could result in substantial costs
and divert managements attention.
  Our operations might be interrupted by the occurrence of a natural disaster or other catastrophic
event.
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We deal with hazardous materials and must comply with environmental laws and regulations, which
can be expensive and restrict how we do business.
    If we fail to enter into collaborations with third parties, we would be required to establish our
own sales, marketing and distribution capabilities, which could impact the commercialization of
our products and harm our business.
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If any product that we may develop does not become widely accepted by physicians, patients,
third-party payers and the healthcare community, we may be unable to generate significant revenue,
if any.
   
    
    claims for which FDA approval can be obtained, including superiority claims;
 
    
    perceived advantages and disadvantages of competitive products;
 
    
    willingness of the healthcare community and patients to adopt new technologies;
 
    
    ability to manufacture the product in sufficient quantities with acceptable quality and
cost;
 
    
    perception of patients and the healthcare community, including third-party payers,
regarding the safety, efficacy and benefits compared to competing products or therapies;
 
    
    convenience and ease of administration relative to existing treatment methods;
 
    
    pricing and reimbursement relative to other treatment therapeutics and methods; and
 
    
    marketing and distribution support.
  If third-party payers do not reimburse consumers for our products, our products might not be used
or purchased, which would adversely affect our revenues.
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If product liability claims are brought against us, we may incur significant liabilities and
suffer damage to our reputation.
  If we lose any key employees or scientific advisors, our operations and our ability to execute our
business strategy could be materially harmed.
    If our Chairman and Chief Executive Officer is unable to devote sufficient time and attention to
our business, our operations and our ability to execute our business strategy could be materially
harmed.
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If our internal controls over financial reporting are not considered effective, our business and
stock price could be adversely affected.
   RISKS RELATED TO REGULATORY APPROVALS
 Our product candidates must undergo rigorous nonclinical and clinical testing and we must obtain
regulatory approvals, which could be costly and time-consuming and subject us to unanticipated
delays or prevent us from marketing any products.
  
    
    product design, development, manufacture and testing;
 
    
    product labeling;
 
    
    product storage and shipping;
 
    
    pre-market clearance or approval;
 
    
    advertising and promotion; and
 
    
    product sales and distribution.
  33




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We have only limited experience in filing and pursuing applications necessary to gain regulatory
approvals, which may impede our ability to obtain timely approvals from the FDA or foreign
regulatory agencies, if at all.
  If we do not comply with regulatory requirements at any stage, whether before or after marketing
approval is obtained, we may be subject to criminal prosecution, fined or forced to remove a
product from the market or
 34




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experience other adverse consequences, including restrictions or delays
in obtaining regulatory marketing approval.
  Even if we obtain regulatory approval for our product candidates, such approval may be limited and
we will be subject to stringent, ongoing government regulation.
   e.g.
 Our suppliers will be subject to FDA inspection before the agency approves an NDA for AFREZZA.
  35




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##### Table of Contents



Reports of side effects or safety concerns in related technology fields or in other companies
clinical trials could delay or prevent us from obtaining regulatory approval or negatively impact
public perception of our product candidates.
   RISKS RELATED TO INTELLECTUAL PROPERTY
 If we are unable to protect our proprietary rights, we may not be able to compete effectively, or
operate profitably.
    36




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##### Table of Contents



If we become involved in lawsuits to protect or enforce our patents or the patents of our
collaborators or licensors, we would be required to devote substantial time and resources to
prosecute or defend such proceedings.
    If our technologies conflict with the proprietary rights of others, we may incur substantial costs
as a result of litigation or other proceedings and we could face substantial monetary damages and
be precluded from commercializing our products, which would materially harm our business.
     37




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We may not obtain trademark registrations for our potential trade names.
  RISKS RELATED TO OUR COMMON STOCK
 Our stock price is volatile.
  38




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##### Table of Contents




    
    the progress and results of our clinical trials;
 
    
    general economic, political or stock market conditions;
 
    
    legislative developments;
 
    
    announcements by us or our competitors concerning clinical trial results, acquisitions,
strategic alliances, technological innovations, newly approved commercial products, product
discontinuations, or other developments;
 
    
    the availability of critical materials used in developing and manufacturing AFREZZA or
other product candidates;
 
    
    developments or disputes concerning our patents or proprietary rights;
 
    
    the expense and time associated with, and the extent of our ultimate success in,
securing regulatory approvals;
 
    
    announcements by us concerning our financial condition or operating performance;
 
    
    changes in securities analysts estimates of our financial condition or operating
performance;
 
    
    general market conditions and fluctuations for emerging growth and pharmaceutical
market sectors;
 
    
    the issuance and sale of our common stock pursuant to the Seaside purchase agreement
and the Mann purchase agreement over the terms of these agreements;
 
    
    sales of large blocks of our common stock, including sales by our executive officers,
directors and significant stockholders;
 
    
    the status of litigation against us and certain of our executive officers and
directors;
 
    
    the existence of, and the issuance of shares of our common stock pursuant to, the share
lending agreement and the short sales of our common stock effected in connection with the
recently-completed sale of our 5.75% convertible notes due 2015; and
 
    
    discussion of AFREZZA, our other product candidates, competitors products, or our
stock price by the financial and scientific press, the healthcare community and online
investor communities such as chat rooms. In particular, statements about us and our
investigational products that appear on interactive websites that permit users to generate
content anonymously or under a pseudonym may be difficult to verify and statements
attributed to company officials may, in fact, have originated elsewhere.
  If other biotechnology and biopharmaceutical companies or the securities markets in general
encounter problems, the market price of our common stock could be adversely affected.
  39




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##### Table of Contents



Our Chairman and Chief Executive Officer and principal stockholder can individually control our
direction and policies, and his interests may be adverse to the interests of our other
stockholders. After his death, his stock will be left to his funding foundations for distribution
to various charities, and we cannot assure you of the manner in which those entities will manage
their holdings.
   The future sale of our common stock or the conversion of our senior convertible notes into common
stock could negatively affect our stock price.
    40




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##### Table of Contents



We have reserved for future issuance substantially all of our authorized but unissued shares of
common stock, which may impair our ability to conduct future financing and other transactions.
   Anti-takeover provisions in our charter documents and under Delaware law could make an acquisition
of us, which may be beneficial to our stockholders, more difficult and may prevent attempts by our
stockholders to replace or remove our current management.
  Because we do not expect to pay dividends in the foreseeable future, you must rely on stock
appreciation for any return on your investment.
  41




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##### Table of Contents



Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
    
 Item 3. Legal Proceedings
    
 Item 4. (Removed and Reserved)
 42




---



##### Table of Contents



PART II
 
 Item 5. Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases
of Equity Securities
 Common Stock Market Price
  High
    
    LowYear ended December 31, 2009First quarter
    
    $
    4.09
    
    
    $
    2.00Second quarter
    
    $
    9.25
    
    
    $
    3.35Third quarter
    
    $
    12.30
    
    
    $
    6.62Fourth quarter
    
    $
    9.94
    
    
    $
    5.02Year ended December 31, 2010First quarter
    
    $
    11.12
    
    
    $
    6.35Second quarter
    
    $
    7.33
    
    
    $
    4.76Third quarter
    
    $
    7.36
    
    
    $
    5.50Fourth quarter
    
    $
    9.23
    
    
    $
    5.07
  Performance Measurement Comparison
 The material in this section is not soliciting material, is not deemed filed with the SEC
and shall not be incorporated by reference by any general statement incorporating by reference this
Annual Report on Form 10-K into any of our filings under the Securities Act of 1933, as amended, or
the Securities Act, or the Exchange Act of 1934, as amended, or the Exchange Act, except to the
extent we specifically incorporate this section by reference.
 43




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##### Table of Contents



Performance Measurement Comparison
  
  Dividend Policy
  Recent Sales of Unregistered Securities
      44




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##### Table of Contents



Item 6. Selected Financial Data
  Year Ended December 31,Statement of Operations Data:
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(In thousands, except per share amounts)Revenue
    
    $
    100
    
    
    $
    10
    
    
    $
    20
    
    
    $
    
    
    
    $
    93Operating expenses:Research and development
    
    
    191,796
    
    
    
    256,844
    
    
    
    250,442
    
    
    
    156,331
    
    
    
    112,279General and administrative
    
    
    42,001
    
    
    
    50,523
    
    
    
    55,343
    
    
    
    53,447
    
    
    
    40,312Total operating expenses
    
    
    233,797
    
    
    
    307,367
    
    
    
    305,785
    
    
    
    209,778
    
    
    
    152,591Loss from operations
    
    
    (233,697
    )
    
    
    (307,357
    )
    
    
    (305,765
    )
    
    
    (209,778
    )
    
    
    (152,498
    )Other income (expense)
    
    
    208
    
    
    
    (197
    )
    
    
    (62
    )
    
    
    51
    
    
    
    (725
    )Interest expense on note payable to
principal stockholder
    
    
    (1,511
    )
    
    
    
    
    
    
    (12
    )
    
    
    (5,679
    )
    
    
    (10,249
    )Interest expense on senior convertible notes
    
    
    (222
    )
    
    
    (3,408
    )
    
    
    (2,327
    )
    
    
    (4,768
    )
    
    
    (7,128
    )Interest income
    
    
    4,679
    
    
    
    17,775
    
    
    
    5,129
    
    
    
    70
    
    
    
    40Loss before provision for income taxes
    
    
    (230,543
    )
    
    
    (293,187
    )
    
    
    (303,037
    )
    
    
    (220,104
    )
    
    
    (170,560
    )Income taxes
    
    
    (5
    )
    
    
    (3
    )
    
    
    (2
    )
    
    
    
    
    
    
    Net loss applicable to common stockholders
    
    $
    (230,548
    )
    
    $
    (293,190
    )
    
    $
    (303,039
    )
    
    $
    (220,104
    )
    
    $
    (170,560
    )Basic and diluted net loss per share
    
    $
    (4.52
    )
    
    $
    (3.66
    )
    
    $
    (2.98
    )
    
    $
    (2.07
    )
    
    $
    (1.50
    )Shares used to compute basic and diluted
net loss per share
    
    
    50,970
    
    
    
    80,038
    
    
    
    101,561
    
    
    
    106,534
    
    
    
    113,672
 December 31,Balance Sheet Data:
    
    2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(In thousands)Cash, cash equivalents and
marketable securities
    
    $
    436,479
    
    
    $
    368,285
    
    
    $
    46,492
    
    
    $
    32,494
    
    
    $
    70,431Working capital
    
    
    404,588
    
    
    
    311,154
    
    
    
    503
    
    
    
    8,813
    
    
    
    55,820Total assets
    
    
    539,737
    
    
    
    543,443
    
    
    
    282,459
    
    
    
    247,397
    
    
    
    277,256Other liabilities
    
    
    24
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    Senior convertible notes
    
    
    111,267
    
    
    
    111,761
    
    
    
    112,253
    
    
    
    112,765
    
    
    
    209,335Note payable to related party
    
    
    
    
    
    
    
    
    
    
    30,000
    
    
    
    165,000
    
    
    
    235,319Deficit accumulated during the
development stage
    
    
    (787,849
    )
    
    
    (1,081,039
    )
    
    
    (1,384,078
    )
    
    
    (1,604,182
    )
    
    
    (1,774,742
    )Total stockholders equity (deficit)
    
    
    383,487
    
    
    
    364,100
    
    
    
    86,734
    
    
    
    (59,221
    )
    
    
    (185,532
    )
 45




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Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations
  OVERVIEW
     
    
    continue the clinical development of AFREZZA for the treatment of diabetes;
    
    seek regulatory approval to sell AFREZZA in the United States and other markets; and
    
    pursue development and commercialization collaborations with other companies, if
available on commercially reasonable terms.
  RESEARCH AND DEVELOPMENT EXPENSES
   46




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GENERAL AND ADMINISTRATIVE EXPENSES
  CRITICAL ACCOUNTING POLICIES
  Impairment of long-lived assets
  
    
    significant changes in our strategic business objectives and utilization of the assets;
    
    a determination that the carrying value of such assets cannot be recovered through
undiscounted cash flows;
    
    loss of legal ownership or title to the assets;
    
    a significant adverse change in legal factors or in the business climate that could
affect the value of a long-lived asset (asset group), including an adverse action or
assessment by a regulator; or
    
    the impact of significant negative industry or economic trends.
   47




---



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Clinical trial expenses
  Stock-based compensation
 Compensation- Stock
Compensation Accounting for Stock-Based Compensation
 Accounting for income taxes
  RESULTS OF OPERATIONS
 Years ended December 31, 2010 and 2009
 Revenues
  Research and Development Expenses
  48




---



##### Table of Contents



Year EndedDecember 31,2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeClinical
    
    $
    23,558
    
    
    $
    44,163
    
    
    $
    (20,605
    )
    
    
    (47
    )%Manufacturing
    
    
    67,146
    
    
    
    82,116
    
    
    
    (14,970
    )
    
    
    (18
    )%Research
    
    
    14,034
    
    
    
    19,259
    
    
    
    (5,225
    )
    
    
    (27
    )%Research and development tax credit
    
    
    (385
    )
    
    
    (1,322
    )
    
    
    937
    
    
    
    (71
    )%Stock-based compensation expense
    
    
    7,926
    
    
    
    12,115
    
    
    
    (4,189
    )
    
    
    (35
    )%Research and development expenses
    
    $
    112,279
    
    
    $
    156,331
    
    
    $
    (44,052
    )
    
    
    (28
    )%
   General and Administrative Expenses
  Year EndedDecember 31,2010
    
    
    2009
    
    
    $ Change
    
    
    % ChangeSalaries, employee related and other general expenses
    
    $
    34,658
    
    
    $
    45,343
    
    
    $
    (10,685
    )
    
    
    (24
    )%Stock-based compensation expense
    
    
    5,654
    
    
    
    8,104
    
    
    
    (2,450
    )
    
    
    (30
    )%General and administrative expenses
    
    $
    40,312
    
    
    $
    53,447
    
    
    $
    (13,135
    )
    
    
    (25
    )%
  Other Income (Expense)
  49




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Interest Income and Expense
  Years ended December 31, 2009 and 2008
 Revenues
  Research and Development Expenses
  Year EndedDecember 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeClinical
    
    $
    44,163
    
    
    $
    114,922
    
    
    $
    (70,759
    )
    
    
    (62
    )%Manufacturing
    
    
    82,116
    
    
    
    92,935
    
    
    
    (10,819
    )
    
    
    (12
    )%Research
    
    
    19,259
    
    
    
    30,081
    
    
    
    (10,822
    )
    
    
    (36
    )%Research and development tax credit
    
    
    (1,322
    )
    
    
    (1,846
    )
    
    
    524
    
    
    
    (28
    )%Stock-based compensation expense
    
    
    12,115
    
    
    
    14,350
    
    
    
    (2,235
    )
    
    
    (16
    )%Research and development expenses
    
    $
    156,331
    
    
    $
    250,442
    
    
    $
    (94,111
    )
    
    
    (38
    )%
   General and Administrative Expenses
  Year EndedDecember 31,2009
    
    
    2008
    
    
    $ Change
    
    
    % ChangeSalaries, employee related and other general expenses
    
    $
    45,343
    
    
    $
    44,900
    
    
    $
    443
    
    
    
    1
    %Stock-based compensation expense
    
    
    8,104
    
    
    
    10,443
    
    
    
    (2,339
    )
    
    
    (22
    )%General and administrative expenses
    
    $
    53,447
    
    
    $
    55,343
    
    
    $
    (1,896
    )
    
    
    (3
    )%
 50




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Interest Income and Expense
  LIQUIDITY AND CAPITAL RESOURCES
  Wall Street Journal
  51




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th
   52




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53




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Off-Balance Sheet Arrangements
  COMMITMENTS AND CONTINGENCIES
  Payments Due inLess Than
    
    
    
    
    
    
    
    
    
    
    More ThanContractual Obligations
    
    One Year
    
    
    1-3 Years
    
    
    3-5 Years
    
    
    5 Years
    
    
    TotalOpen purchase order and supply commitments(1)
    
    $
    42,202
    
    
    $
    57,971
    
    
    $
    1,281
    
    
    $
    
    
    
    $
    101,454Senior convertible notes(2)
    
    
    10,059
    
    
    
    135,432
    
    
    
    111,660
    
    
    
    
    
    
    
    257,151Note payable to principal stockholder(3)
    
    
    10,607
    
    
    
    248,600
    
    
    
    
    
    
    
    
    
    
    
    259,207Operating lease obligations
    
    
    626
    
    
    
    285
    
    
    
    
    
    
    
    
    
    
    
    911Total contractual obligations
    
    $
    63,494
    
    
    $
    442,288
    
    
    $
    112,941
    
    
    $
    
    
    
    $
    618,723
 
 (1)
    
    The amounts included in open purchase order and supply commitments are subject to performance
under the purchase order or contract by the supplier of the goods or services and do not
become our obligation until such performance is rendered. The amount shown is principally for
the purchase of materials for our clinical trials, the acquisition of manufacturing equipment,
and commitments related to the expansion of our manufacturing plant and the purchase of raw
materials under long-term supply agreements (including the Organon arrangement prior to termination). On February 8, 2011, we gave written notice to
Organon to terminate the supply agreement, effective March 10, 2011. Pursuant to the terms of
the supply agreement, we will be required to pay Organon a termination fee if Organon is
unable to sell certain quantities of insulin to other parties under
commercially viable terms within 12 months after termination.
While we cannot determine at this time the amount of the termination fee, if any, that we may
have to pay to Organon, we estimate that the maximum amount of the termination fee  is approximately $40.1 million based on the applicable exchange
rate and purchase price as of February 9, 2011 which is not included in the obligations above.(2)
    
    The senior convertible notes obligations include the Senior Notes due 2013 and the Senior
Notes due 2015. The amounts include future interest payments at fixed rates of 3.75% and
5.75%, respectively, and payment of the notes in full upon maturity in 2013 and 2015,
respectively.(3)
    
    The obligation for the note payable to the principal stockholder includes future principal
and interest payments related to the $235.3 million of borrowings as of December 31, 2010.
Interest is paid based on a fixed rate equal to the one-year LIBOR rate on the date of advance
plus 3% and the principal payment is due on December 31, 2012. RELATED PARTY TRANSACTIONS
  RECENT ACCOUNTING PRONOUNCEMENTS
 Improving
Disclosures About Fair Value Measurements
 54




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Milestone Method of Revenue Recognition,
 
 Item 7A. Quantitative and Qualitative Disclosures About Market Risk
 Wall Street Journal
 
 Item 8. Financial Statements and Supplementary Data
  
 Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Conclusion Regarding the Effectiveness of Disclosure Controls and Procedures
   55




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Managements Report on Internal Control Over Financial Reporting
 Internal Control  Integrated Framework Internal Control  Integrated Framework
 Changes in Internal Control Over Financial Reporting
  56




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Report of Independent Registered Public Accounting Firm
 
 Internal
Control  Integrated Framework
    Internal
Control  Integrated Framework
   
 57




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Item 9B. Other Information.
  
 PART III
  
 Item 10. Directors, Executive Officers and Corporate Governance.
 Executive Officers 
 Directors 
  www.mannkindcorp.com
 
 Item 11. Executive Compensation
  
 Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters
  
 Item 13. Certain Relationships, Related Transactions and Director Independence
  
 Item 14. Principal Accounting Fees and Services
   58




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PART IV
 
 Item 15. Exhibits, Financial Statement Schedules
   Report of Independent Registered Public Accounting Firm
    
    
    64Consolidated Balance Sheets
    
    
    65Consolidated Statements of Operations
    
    
    66Consolidated Statements of Stockholders Equity (Deficit)
    
    
    67Consolidated Statements of Cash Flows
    
    
    71Notes to Consolidated Financial Statements
    
    
    72
    59




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Exhibit Index
 ExhibitNumber
    
    Description of Document3.1(1)
    
    Amended and Restated Certificate of Incorporation.3.2(12)
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation.3.3(17)
    
    Certificate of Amendment of Amended and Restated Certificate of Incorporation.3.4(9)
    
    Amended and Restated Bylaws.4.1(10)
    
    Indenture, by and between MannKind and Wells Fargo Bank, N.A., dated November 1, 2006.4.2(3)
    
    First Supplemental Indenture, by and between MannKind and Wells Fargo Bank, N.A., dated
December 12, 2006.4.3(3)
    
    Form of 3.75% Senior Convertible Note due 2013.4.4(1)
    
    Form of common stock certificate.4.5(1)
    
    Registration Rights Agreement, dated October 15, 1998 by and among CTL ImmunoTherapies Corp.,
Medical Research Group, LLC, McLean Watson Advisory Inc. and Alfred E. Mann, as amended.4.6(19)
    
    Indenture, by and between MannKind and Wells Fargo Bank, N.A., dated August 24, 2010.4.7(19)
    
    Form of 5.75% Senior Convertible Note due 2015.10.1(15)
    
    Promissory Note made by MannKind in favor of The Mann Group LLC dated February 26, 2009.10.2(18)
    
    Amended and Restated Promissory Note made by MannKind in favor of The Mann Group LLC, dated
August 10, 2010.10.3(19)
    
    Letter Agreement, dated August 18, 2010, related to Amended and Restated Promissory Note made
by MannKind in favor of The Mann Group LLC, dated August 10, 2010.10.4(12)
    
    Agreement, dated September 13, 2006, between MannKind and Torcon, Inc.10.5(2)
    
    Securities Purchase Agreement, dated August 2, 2005 by and among MannKind and the purchasers
listed on Exhibit A thereto.10.6**(4)
    
    Supply Agreement, dated December 31, 2004, between MannKind and Vaupell, Inc.10.7*(1)
    
    Form of Indemnity Agreement entered into between MannKind and each of its directors and
officers.10.8*(8)
    
    Description of Officers Incentive Program.10.9*(5)
    
    Description of 2006 executive officer salaries.10.10*(5)
    
    Description of 2006 non-employee director compensation.10.11*(11)
    
    Executive Severance Agreement, dated October 10, 2007, between MannKind and Hakan Edstrom.10.12*(11)
    
    Executive Severance Agreement, dated October 10, 2007, between MannKind and David Thomson.10.13*(11)
    
    Executive Severance Agreement, dated October 10, 2007, between MannKind and Peter Richardson.10.14*(11)
    
    Executive Severance Agreement, dated October 10, 2007, between MannKind and Juergen Martens.10.15*(11)
    
    Executive Severance Agreement, dated October 10, 2007, between MannKind and Diane Palumbo.10.16*(11)
    
    Executive Severance Agreement, dated April 21, 2008, between MannKind and Matthew J. Pfeffer.10.17*(11)
    
    Change of Control Agreement, dated October 10, 2007, between MannKind and Hakan Edstrom.10.18*(11)
    
    Change of Control Agreement, dated October 10, 2007, between MannKind and David Thomson.10.19*(11)
    
    Change of Control Agreement, dated October 10, 2007, between MannKind and Peter Richardson.10.20*(11)
    
    Change of Control Agreement, dated October 10, 2007, between MannKind and Juergen Martens.10.21*(11)
    
    Change of Control Agreement, dated October 10, 2007, between MannKind and Diane Palumbo.10.22*(11)
    
    Change of Control Agreement, dated April 21, 2008, between MannKind and Matthew J. Pfeffer.10.23*(13)
    
    Agreement dated December 20, 2007, between MannKind and Richard L. Anderson.10.24*(7)
    
    2004 Equity Incentive Plan, as amended.10.25*(1)
    
    Form of Stock Option Agreement under the 2004 Equity Incentive Plan.10.26*(6)
    
    Form of Phantom Stock Award Agreement under the 2004 Equity Incentive Plan.10.27*(8)
    
    2004 Non-Employee Directors Stock Option Plan and form of stock option agreement there under.10.28*(1)
    
    2004 Employee Stock Purchase Plan and form of offering document there under.10.29*(1)
    
    Pharmaceutical Discovery Corporation 1991 Stock Option Plan.10.30*(1)
    
    Pharmaceutical Discovery Corporation 1999 Stock Plan and form of stock option plan there under.10.31*(1)
    
    AlleCure Corp. 2000 Stock Option and Stock Plan.10.32*(1)
    
    CTL Immunotherapies Corp. 2000 Stock Option and Stock Plan.10.33*(1)
    
    2001 Stock Awards Plan.10.34**(16)
    
    Supply Agreement, dated November 16, 2007, between MannKind and N.V. Organon.10.35**(14)
    
    Insulin Maintenance and Call-Option Agreement, dated June 19, 2009, by and among Pfizer
Manufacturing Frankfurt GmbH, Pfizer Inc. and MannKind.10.36(19)
    
    Purchase Agreement, dated August 18, 2010, by and between MannKind and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, as representative for the initial purchasers named therein.
 60




---



##### Table of Contents



ExhibitNumber
    
    Description of Document10.37(19)
    
    Share Lending Agreement, dated August 18, 2010, by and between MannKind and Bank of America,
N.A.10.38(18)
    
    Common Stock Purchase Agreement, dated August 10, 2010, by and between MannKind and Seaside
88, LP.10.39(18)
    
    Letter Agreement, dated August 10, 2010, by and between MannKind and Omni Capital Corporation.10.40(18)
    
    Common Stock Purchase Agreement, dated August 10, 2010, by and between MannKind and The Mann
Group LLC.23.1
    
    Consent of Independent Registered Public Accounting Firm31.1
    
    Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934, as amended.31.2
    
    Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) of the
Securities Exchange Act of 1934, as amended.32
    
    Certifications of the Chief Executive Officer and Chief Financial Officer pursuant to Rules
13a-14(b) and 15d-14(b) of the Securities Exchange Act of 1934, as amended and Section 1350 of
Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350)
 
 *
    
    Indicates management contract or compensatory plan.**
    
    Confidential treatment has been granted with respect to certain portions of this exhibit.
Omitted portions have been filed separately with the SEC.(1)
    
    Incorporated by reference to MannKinds Registration Statement on Form S-1 (File No.
333-115020) filed with the SEC on April 30, 2004, as amended.(2)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on August 5, 2005.(3)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on December 12, 2006.(4)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on February 23, 2005.(5)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on February 22, 2006.(6)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on December 14, 2005.(7)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on June 9, 2009.(8)
    
    Incorporated by reference to MannKinds Annual Report on Form 10-K (File No. 000-50865) filed
with the SEC on March 16, 2006.(9)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865) filed
with the SEC on November 19, 2007.(10)
    
    Incorporated by reference to MannKinds Registration Statement on Form S-3 (File No.
333-138373) filed with the SEC on November 2, 2006.(11)
    
    Incorporated by reference to MannKinds Current Report on Form 8-K (File No. 000-50865), as
amended, filed with the SEC on October 16, 2007.(12)
    
    Incorporated by reference to MannKinds Quarterly Report on Form 10-Q (File No. 000-50865)
filed with the SEC on August 9, 2007.(13)
    
    Incorporated by reference to MannKinds Quarterly Report on Form 10-Q (File No. 000-50865)
filed with the SEC on December 20, 2007.(14)
    
    Incorporated by reference to MannKinds Quarterly Report on Form 10-Q (File No. 000-50865)
filed with the SEC on May 4, 2009.(15)
    
    Incorporated by reference to MannKinds Annual Report on Form 10-K (File No. 000-50865) filed
with the SEC on February 27, 2009.(16)
    
    Incorporated by reference to MannKinds Annual Report on Form 10-K (File No. 000-50865) filed
with the SEC on March 14, 2008.(17)
    
    Incorporated by reference to MannKinds Quarterly report on Form 10-Q (File No. 000-50865),
filed with the SEC on August 2, 2010.(18)
    
    Incorporated by reference to MannKinds current report on Form 8-K (File No. 000-50865),
filed with the SEC on August 11, 2010.(19)
    
    Incorporated by reference to MannKinds current report on Form 8-K (File No. 000-50865),
filed with the SEC on August 24, 2010. 61




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##### Table of Contents



SIGNATURES
  Mannkind CorporationBy:
    /s/ Alfred E. MannAlfred E. MannChief Executive Officer  POWER OF ATTORNEY
   Signature
    
    Title
    
    Date/s/ Alfred E. Mann

Alfred E. Mann
    
    Chief Executive Officer and Chairman of the
 Board of Directors(Principal Executive Officer)
    
    March 16, 2011/s/ Hakan S. Edstrom

Hakan S. Edstrom
    
    President, Chief Operating Officer and

Director
    
    March 16, 2011/s/ Matthew J. Pfeffer

Matthew J. Pfeffer
    
    Corporate Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
    
    March 16, 2011/s/ A. E. Cohen

A. E. Cohen
    
    Director
    
    March 16, 2011/s/ Ronald J. Consiglio

Ronald J. Consiglio
    
    Director
    
    March 16, 2011/s/ Michael Friedman

Michael Friedman, M.D.
    
    Director
    
    March 16, 2011/s/ Kent Kresa

Kent Kresa
    
    Director
    
    March 16, 2011/s/ David H. MacCallum

David H. MacCallum
    
    Director
    
    March 16, 2011/s/ Henry L. Nordhoff

Henry L. Nordhoff
    
    Director
    
    March 16, 2011/s/ James S. Shannon

James S. Shannon, M.D., MRCP(UK)
    
    Director
    
    March 16, 2011
 62




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 INDEX TO FINANCIAL STATEMENTS
 Report of Independent Registered Public Accounting Firm
    
    
    64Consolidated Balance Sheets
    
    
    65Consolidated Statements of Operations
    
    
    66Consolidated Statements of Stockholders Equity (Deficit)
    
    
    67Consolidated Statements of Cash Flows
    
    
    71Notes to Consolidated Financial Statements
    
    
    72
 63




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##### Table of Contents



Report of Independent Registered Public Accounting Firm
 
    Internal Control  Integrated Framework
  
 64




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 
 CONSOLIDATED BALANCE SHEETS
 December 31,2009
    
    
    2010(In thousands, exceptshare data)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    30,019
    
    
    $
    66,061Marketable securities
    
    
    2,475
    
    
    
    4,370State research and development credit exchange receivable  current
    
    
    1,500
    
    
    
    674Prepaid expenses and other current assets
    
    
    3,672
    
    
    
    2,849Total current assets
    
    
    37,666
    
    
    
    73,954Property and equipment  net
    
    
    208,229
    
    
    
    202,356State research and development credit exchange receivable  net of current portion
    
    
    918
    
    
    
    629Other assets
    
    
    584
    
    
    
    317Total
    
    $
    247,397
    
    
    $
    277,256LIABILITIES AND STOCKHOLDERS DEFICITCurrent liabilities:Accounts payable
    
    $
    6,519
    
    
    $
    3,294Accrued expenses and other current liabilities
    
    
    22,334
    
    
    
    14,840Total current liabilities
    
    
    28,853
    
    
    
    18,134Senior convertible notes
    
    
    112,765
    
    
    
    209,335Note payable to related party
    
    
    165,000
    
    
    
    235,319Total liabilities
    
    
    306,618
    
    
    
    462,788Commitments and contingencies
Stockholders deficit:Undesignated preferred stock, $0.01 par value  10,000,000 shares authorized; no
shares issued or outstanding at December 31, 2009 and 2010
    
    
    
    
    
    
    Common stock, $0.01 par value 150,000,000 and 200,000,000 shares authorized at
December 31, 2009 and 2010, respectively; 113,025,291 and 127,793,178 shares
issued and outstanding at December 31, 2009 and 2010, respectively
    
    
    1,130
    
    
    
    1,278Additional paid-in capital
    
    
    1,544,112
    
    
    
    1,587,858Accumulated other comprehensive income (loss)
    
    
    (281
    )
    
    
    74Deficit accumulated during the development stage
    
    
    (1,604,182
    )
    
    
    (1,774,742
    )Total stockholders deficit
    
    
    (59,221
    )
    
    
    (185,532
    )Total
    
    $
    247,397
    
    
    $
    277,256
  65




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
 CumulativePeriod fromFebruary 14,1991 (Date ofInception) toYear Ended December 31,
    
    
    December 31,2008
    
    
    2009
    
    
    2010
    
    
    2010(In thousands, except per share data)Revenue
    
    $
    20
    
    
    $
    
    
    
    $
    93
    
    
    $
    3,081Operating expenses:Research and development
    
    
    250,442
    
    
    
    156,331
    
    
    
    112,279
    
    
    
    1,266,092General and administrative
    
    
    55,343
    
    
    
    53,447
    
    
    
    40,312
    
    
    
    339,601In-process research and development costs
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,726Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,428Total operating expenses
    
    
    305,785
    
    
    
    209,778
    
    
    
    152,591
    
    
    
    1,776,847Loss from operations
    
    
    (305,765
    )
    
    
    (209,778
    )
    
    
    (152,498
    )
    
    
    (1,773,766
    )Other income (expense)
    
    
    (62
    )
    
    
    51
    
    
    
    (725
    )
    
    
    (2,617
    )Interest expense on note payable to related party
    
    
    (12
    )
    
    
    (5,679
    )
    
    
    (10,249
    )
    
    
    (17,451
    )Interest expense on senior convertible notes
    
    
    (2,327
    )
    
    
    (4,768
    )
    
    
    (7,128
    )
    
    
    (17,853
    )Interest income
    
    
    5,129
    
    
    
    70
    
    
    
    40
    
    
    
    36,971Loss before provision for income taxes
    
    
    (303,037
    )
    
    
    (220,104
    )
    
    
    (170,560
    )
    
    
    (1,774,716
    )Income taxes
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    (26
    )Net loss
    
    
    (303,039
    )
    
    
    (220,104
    )
    
    
    (170,560
    )
    
    
    (1,774,742
    )Deemed dividend related to beneficial conversion feature of convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (22,260
    )Accretion on redeemable preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (952
    )Net loss applicable to common stockholders
    
    $
    (303,039
    )
    
    $
    (220,104
    )
    
    $
    (170,560
    )
    
    $
    (1,797,954
    )Net loss per share applicable to common stockholders  basic and diluted
    
    $
    (2.98
    )
    
    $
    (2.07
    )
    
    $
    (1.50
    )Shares used to compute basic and diluted net loss per share applicable to common stockholders
    
    
    101,561
    
    
    
    106,534
    
    
    
    113,672
  66




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 Series CSeries C
    
    
    Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeficitSeries B
    
    
    Series C
    
    
    Convertible
    
    
    Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes
    
    
    Notes
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Convertible
    
    
    Preferred
    
    
    Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Receivable
    
    
    Receivable
    
    
    Other
    
    
    During thePreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Subscriptions
    
    
    Common Stock
    
    
    Paid-In
    
    
    from
    
    
    from
    
    
    Comprehensive
    
    
    Development(In thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Issuable
    
    
    Receivable
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Officers
    
    
    Income (Loss)
    
    
    Stage
    
    
    TotalIssuance of common stock for cash
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    
    998
    
    
    $
    10
    
    
    $
    890
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    900Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (911
    )
    
    
    (911
    )BALANCE, FEBRUARY 29, 1992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    998
    
    
    
    10
    
    
    
    890
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (911
    )
    
    
    (11
    )Issuance of common stock for cash and services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73
    
    
    
    1
    
    
    
    887
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    888Capital contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,175
    )
    
    
    (1,175
    )BALANCE, FEBRUARY 28, 1993
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,071
    
    
    
    11
    
    
    
    1,797
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,086
    )
    
    
    (278
    )Issuance of common stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    11
    
    
    
    
    
    
    
    526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    526Issuance of stock for notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    400
    
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,156
    )
    
    
    (1,156
    )BALANCE, FEBRUARY 28, 1994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,090
    
    
    
    11
    
    
    
    2,723
    
    
    
    (400
    )
    
    
    
    
    
    
    
    
    
    
    (3,242
    )
    
    
    (908
    )Issuance of common stock for cash and services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    1,805
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,805Collection of stock subscription
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    400Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,004
    )
    
    
    (2,004
    )BALANCE, DECEMBER 31, 1994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,126
    
    
    
    11
    
    
    
    4,528
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,246
    )
    
    
    (707
    )Issuance of common stock for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,815
    )
    
    
    (2,815
    )BALANCE, DECEMBER 31, 1995
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,127
    
    
    
    11
    
    
    
    4,942
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (8,061
    )
    
    
    (3,108
    )Issuance of common stock for cash and services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    59
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    126Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,570
    )
    
    
    (2,570
    )BALANCE, DECEMBER 31, 1996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,131
    
    
    
    11
    
    
    
    5,139
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (10,631
    )
    
    
    (5,481
    )Issuance of common stock for cash and services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    548
    
    
    
    6
    
    
    
    190
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    196Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27
    
    
    
    
    
    
    
    135
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    135Conversion of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,280
    )
    
    
    (2,280
    )BALANCE, DECEMBER 31, 1997
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,718
    
    
    
    17
    
    
    
    5,526
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (12,911
    )
    
    
    (7,368
    )Issuance of common stock for cash and services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,253
    
    
    
    23
    
    
    
    12,703
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,726Stock compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    150Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    68
    
    
    
    1
    
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25Conversion of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    215
    
    
    
    2
    
    
    
    1,200
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,202Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,331
    )
    
    
    (3,331
    )BALANCE, DECEMBER 31, 1998
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,254
    
    
    
    43
    
    
    
    19,603
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (16,242
    )
    
    
    3,404Issuance of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    162
    
    
    
    2
    
    
    
    532
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    534Conversion of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    1
    
    
    
    994
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    995Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,679
    )
    
    
    (5,679
    )BALANCE, DECEMBER 31, 1999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,496
    
    
    
    46
    
    
    
    21,129
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (21,921
    )
    
    
    (746
    )Conversion of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    63
    
    
    
    1
    
    
    
    1,073
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,074Issuance of Series B preferred stock for cash
    
    
    193
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Issuance of common stock for cash, services and notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,690
    
    
    
    46
    
    
    
    33,945
    
    
    
    (2,358
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,633Discount on notes below market rate
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    241Accrued interest on notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (117
    )Purchase of Series A redeemable convertible
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (993
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (993
    )Amount in excess of redemption obligation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    999
 67




---



##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)  (Continued)
 Series CSeries C
    
    
    Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeficitSeries B
    
    
    Series C
    
    
    Convertible
    
    
    Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes
    
    
    Notes
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Convertible
    
    
    Preferred
    
    
    Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Receivable
    
    
    Receivable
    
    
    Other
    
    
    During thePreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Subscriptions
    
    
    Common Stock
    
    
    Paid-In
    
    
    from
    
    
    from
    
    
    Comprehensive
    
    
    Development(In thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Issuable
    
    
    Receivable
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Officers
    
    
    Income (Loss)
    
    
    Stage
    
    
    TotalAccretion to redemption value on Series A redeemable
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (149
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,609
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,609Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (24,661
    )
    
    
    (24,661
    )BALANCE, DECEMBER 31, 2000
    
    
    193
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,249
    
    
    
    93
    
    
    
    65,613
    
    
    
    (2,234
    )
    
    
    
    
    
    
    
    
    
    
    (46,582
    )
    
    
    31,890Issuance of common stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,052
    
    
    
    30
    
    
    
    78,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    78,030Cash received for common stock to be issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,900
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,900Issuance of common stock for services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    60
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    60Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13Accrued interest on notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (189
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (189
    )Payments on notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28Accretion to redemption value on Series A redeemable
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (239
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (239
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,565
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,565Issuance of put option by stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,949
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,949
    )Record merger of entities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,154
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,154Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,245
    )
    
    
    (48,245
    )BALANCE, DECEMBER 31, 2001
    
    
    193
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,305
    
    
    
    123
    
    
    
    317,117
    
    
    
    (2,395
    )
    
    
    
    
    
    
    
    
    
    
    (94,827
    )
    
    
    235,018Issuance of common stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,922
    
    
    
    40
    
    
    
    58,775
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58,815Issuance of common stock for cash already received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    234
    
    
    
    2
    
    
    
    (2
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of stock award to employee
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3
    
    
    
    
    
    
    
    84
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    84Cash received for common stock issuable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    98Accrued interest on notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (229
    )Payments on notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,314Beneficial conversion feature of Series B
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,421
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,421Deemed dividend related to beneficial conversion
feature of Series B convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,421
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,421
    )Accretion to redemption value on Series A redeemable
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (251
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (251
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    268Put option redemption by stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,921Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (206,265
    )
    
    
    (206,265
    )BALANCE, DECEMBER 31, 2002
    
    
    193
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,464
    
    
    
    165
    
    
    
    378,010
    
    
    
    (1,310
    )
    
    
    
    
    
    
    
    
    
    
    (301,092
    )
    
    
    90,773Issuance of Series C convertible preferred stock
subscriptions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    (50,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cash collected on Series C convertible preferred
stock subscriptions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,847
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,847Issuance of common stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,494
    
    
    
    35
    
    
    
    49,965
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Non-cash compensation expense of officer resulting
from stockholder contribution
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    70Issuance of common stock for cash already received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes receivable by stockholder issued to officers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    225
    
    
    
    
    
    
    
    (225
    )
    
    
    
    
    
    
    
    
    
    
    Accrued interest on notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (102
    )
    
    
    (3
    )
    
    
    
    
    
    
    
    
    
    
    (105
    )Beneficial conversion feature of Series B
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,017
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,017Deemed dividend related to beneficial conversion
feature of Series B convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,017
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,017
    )Accretion to redemption value on Series A redeemable
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (253
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (253
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,501
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,501Put shares sold to majority stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    623
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    623Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65,879
    )
    
    
    (65,879
    )
 68




---



##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)  (Continued)
 Series CSeries C
    
    
    Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeficitSeries B
    
    
    Series C
    
    
    Convertible
    
    
    Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes
    
    
    Notes
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Convertible
    
    
    Preferred
    
    
    Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Receivable
    
    
    Receivable
    
    
    Other
    
    
    During thePreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Subscriptions
    
    
    Common Stock
    
    
    Paid-In
    
    
    from
    
    
    from
    
    
    Comprehensive
    
    
    Development(In thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Issuable
    
    
    Receivable
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Officers
    
    
    Income (Loss)
    
    
    Stage
    
    
    TotalBALANCE, DECEMBER 31, 2003
    
    
    193
    
    
    
    15,000
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    
    (18,153
    )
    
    
    19,975
    
    
    
    200
    
    
    
    433,141
    
    
    
    (1,412
    )
    
    
    (228
    )
    
    
    
    
    
    
    (366,971
    )
    
    
    111,577Issuance of Series C convertible preferred stock for
cash
    
    
    
    
    
    
    
    
    
    
    356
    
    
    
    18,153
    
    
    
    (18,153
    )
    
    
    18,153
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    18,153Issuance of Series C convertible preferred stock for
cash already received
    
    
    
    
    
    
    
    
    
    
    624
    
    
    
    31,847
    
    
    
    (31,847
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    
    
    
    
    1,079
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,079Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    46
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    46Accrued interest on notes
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (107
    )Repayment of notes receivable by stockholder issued
to officers
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (225
    )
    
    
    
    
    
    
    228
    
    
    
    
    
    
    
    
    
    
    
    3Repayment of stock note receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (90
    )
    
    
    (1
    )
    
    
    (1,518
    )
    
    
    1,519
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion of Series A convertible preferred stock
to common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    891
    
    
    
    9
    
    
    
    5,239
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5,248Conversion of Series B convertible preferred stock
to common stock
    
    
    (193
    )
    
    
    (15,000
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    811
    
    
    
    8
    
    
    
    14,992
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Conversion of Series C convertible preferred stock
to common stock
    
    
    
    
    
    
    
    
    
    
    (980
    )
    
    
    (50,000
    )
    
    
    
    
    
    
    
    
    
    
    4,464
    
    
    
    45
    
    
    
    49,955
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common shares in exchange for warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    36
    
    
    
    
    
    
    
    430
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    430Net proceeds from initial public offering
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,557
    
    
    
    66
    
    
    
    83,110
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    83,176Beneficial conversion feature of Series B
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,822
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,822Deemed dividends related to beneficial conversion
feature of Series B and Series C convertible
preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,822
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (19,822
    )Accretion to redemption value on Series A redeemable
convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (60
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,810
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,810Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (75,992
    )
    
    
    (75,992
    )BALANCE, DECEMBER 31, 2004
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    32,756
    
    
    
    327
    
    
    
    592,999
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (442,963
    )
    
    
    150,363Issuance of common shares in exchange for warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24
    
    
    
    
    
    
    
    245
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    245Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    58
    
    
    
    1
    
    
    
    494
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    495Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    304
    
    
    
    3
    
    
    
    1,948
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,951Issuance of stock awards to consultants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40
    
    
    
    1
    
    
    
    (146
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (145
    )Issuance of stock and warrants for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,132
    
    
    
    171
    
    
    
    170,063
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    170,234Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,828
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,828
    )Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (114,338
    )
    
    
    (114,338
    )BALANCE, DECEMBER 31, 2005
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,314
    
    
    
    503
    
    
    
    763,775
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (557,301
    )
    
    
    206,977Exercise of warrants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    339
    
    
    
    3
    
    
    
    2,691
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,694Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    86
    
    
    
    1
    
    
    
    980
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    981Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    263
    
    
    
    3
    
    
    
    2,309
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,312Cancellation of common shares for stock notes
receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (844
    )
    
    
    (8
    )
    
    
    8
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Issuance of stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    23,000
    
    
    
    230
    
    
    
    384,440
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    384,670Issuance of common shares from the release of
restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102
    
    
    
    1
    
    
    
    (341
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (340
    )Issuance of common shares pursuant to research
agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    1
    
    
    
    2,073
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,074Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,667
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,667Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (230,548
    )
    
    
    (230,548
    )BALANCE, DECEMBER 31, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    73,360
    
    
    
    734
    
    
    
    1,170,602
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (787,849
    )
    
    
    383,487Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    124
    
    
    
    1
    
    
    
    1,064
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,065Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    607
    
    
    
    6
    
    
    
    4,917
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,923Issuance of stock awards to consultants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    123
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    123
 69




---



##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)  (Continued)
 Series CSeries C
    
    
    Convertible
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    DeficitSeries B
    
    
    Series C
    
    
    Convertible
    
    
    Preferred
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Notes
    
    
    Notes
    
    
    
    
    
    
    AccumulatedConvertible
    
    
    Convertible
    
    
    Preferred
    
    
    Stock
    
    
    
    
    
    
    
    
    
    
    Additional
    
    
    Receivable
    
    
    Receivable
    
    
    Other
    
    
    During thePreferred Stock
    
    
    Preferred Stock
    
    
    Stock
    
    
    Subscriptions
    
    
    Common Stock
    
    
    Paid-In
    
    
    from
    
    
    from
    
    
    Comprehensive
    
    
    Development(In thousands)
    
    Shares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Issuable
    
    
    Receivable
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stockholders
    
    
    Officers
    
    
    Income (Loss)
    
    
    Stage
    
    
    TotalIssuance of stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    27,014
    
    
    
    270
    
    
    
    249,480
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    249,750Issuance of common shares from the release of
restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    146
    
    
    
    2
    
    
    
    (526
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (524
    )Issuance of common shares pursuant to research
agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100
    
    
    
    1
    
    
    
    943
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    944Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,522
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    17,522Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (293,190
    )
    
    
    (293,190
    )BALANCE, DECEMBER 31, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    101,381
    
    
    
    1,014
    
    
    
    1,444,125
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,081,039
    )
    
    
    364,100Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    349
    
    
    
    4
    
    
    
    896
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    900Issuance of stock awards to consultants
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    30
    
    
    
    
    
    
    
    (18
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (18
    )Issuance of common shares from the release of
restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    248
    
    
    
    2
    
    
    
    (317
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (315
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,811
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,811Comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (303,039
    )
    
    
    (303,039
    )Unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    295
    
    
    
    
    
    
    
    295Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (302,744
    )BALANCE, DECEMBER 31, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    102,008
    
    
    
    1,020
    
    
    
    1,469,497
    
    
    
    
    
    
    
    
    
    
    
    295
    
    
    
    (1,384,078
    )
    
    
    86,734Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    323
    
    
    
    3
    
    
    
    1,397
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,400Issuance of stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,360
    
    
    
    84
    
    
    
    59,640
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    59,724Issuance of common shares from the release of
restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,240
    
    
    
    22
    
    
    
    (7,023
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,001
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    94
    
    
    
    1
    
    
    
    382
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    383Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,219
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20,219Comprehensive loss:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (220,104
    )
    
    
    (220,104
    )Unrealized loss on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (581
    )
    
    
    
    
    
    
    (581
    )Unrealized gain on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    5
    
    
    
    
    
    
    
    5Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (220,680
    )BALANCE, DECEMBER 31, 2009
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    113,025
    
    
    $
    1,130
    
    
    $
    1,544,112
    
    
    $
    
    
    
    $
    
    
    
    $
    (281
    )
    
    $
    (1,604,182
    )
    
    $
    (59,221
    )Issuance of common shares under Employee Stock
Purchase Plan
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    288
    
    
    
    3
    
    
    
    1,602
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,605Issuance of stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,100
    
    
    
    21
    
    
    
    14,314
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,335Issuance of stock in exchange for cancelling an
equal amount of note payable to related party
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,100
    
    
    
    21
    
    
    
    16,660
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,681Issuance of stock under share lending agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,000
    
    
    
    90
    
    
    
    71
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    161Issuance of common shares from the release of
restricted stock units
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    962
    
    
    
    10
    
    
    
    (3,402
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,392
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    318
    
    
    
    3
    
    
    
    921
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    924Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,580
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,580Comprehensive loss:
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170,560
    )
    
    
    (170,560
    )Unrealized gain on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    361
    
    
    
    
    
    
    
    361Unrealized loss on foreign currency translation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6
    )
    
    
    
    
    
    
    (6
    )Comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (170,205
    )BALANCE, DECEMBER 31, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    
    
    
    
    
    127,793
    
    
    $
    1,278
    
    
    $
    1,587,858
    
    
    $
    
    
    
    $
    
    
    
    $
    74
    
    
    $
    (1,774,742
    )
    
    $
    (185,532
    )
  70




---



##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
 CumulativePeriod fromFebruary 14,1991 (Date ofInception) toYears Ended December 31,
    
    
    December 31,2008
    
    
    2009
    
    
    2010
    
    
    2010(In thousands)CASH FLOWS FROM OPERATING ACTIVITIES:Net loss
    
    $
    (303,039
    )
    
    $
    (220,104
    )
    
    $
    (170,560
    )
    
    $
    (1,774,742
    )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization
    
    
    12,287
    
    
    
    18,725
    
    
    
    17,324
    
    
    
    96,463Stock-based compensation expense
    
    
    24,793
    
    
    
    20,219
    
    
    
    13,580
    
    
    
    113,422Stock expense for shares issued pursuant to research agreement
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,018Loss on sale, abandonment/disposal or impairment of property and equipment
    
    
    213
    
    
    
    12,869
    
    
    
    
    
    
    
    23,575Accrued interest on investments, net of amortization of premiums (discounts)
    
    
    (237
    )
    
    
    (12
    )
    
    
    
    
    
    
    (191
    )In-process research and development
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    19,726Goodwill impairment
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    151,428Loss on available-for-sale securities
    
    
    
    
    
    
    
    
    
    
    644
    
    
    
    873Other, net
    
    
    
    
    
    
    5
    
    
    
    (6
    )
    
    
    1,104Changes in assets and liabilities:State research and development credit exchange receivable
    
    
    (669
    )
    
    
    582
    
    
    
    1,115
    
    
    
    (1,303
    )Prepaid expenses and other current assets
    
    
    3,613
    
    
    
    2,311
    
    
    
    823
    
    
    
    (1,249
    )Other assets
    
    
    
    
    
    
    (36
    )
    
    
    267
    
    
    
    (317
    )Accounts payable
    
    
    (14,620
    )
    
    
    (6,371
    )
    
    
    (4,287
    )
    
    
    1,702Accrued expenses and other current liabilities
    
    
    6,395
    
    
    
    (12,271
    )
    
    
    (7,554
    )
    
    
    13,929Other liabilities
    
    
    (24
    )
    
    
    
    
    
    
    
    
    
    
    (2
    )Net cash used in operating activities
    
    
    (271,288
    )
    
    
    (184,083
    )
    
    
    (148,654
    )
    
    
    (1,352,564
    )CASH FLOWS FROM INVESTING ACTIVITIES:Purchase of marketable securities
    
    
    (63,651
    )
    
    
    (2,000
    )
    
    
    (4,178
    )
    
    
    (796,779
    )Sales and maturities of marketable securities
    
    
    46,100
    
    
    
    17,800
    
    
    
    2,000
    
    
    
    792,565Purchase of property and equipment
    
    
    (82,453
    )
    
    
    (18,852
    )
    
    
    (9,542
    )
    
    
    (320,251
    )Proceeds from sale of property and equipment
    
    
    70
    
    
    
    
    
    
    
    
    
    
    
    284Net cash used in investing activities
    
    
    (99,934
    )
    
    
    (3,052
    )
    
    
    (11,720
    )
    
    
    (324,181
    )CASH FLOWS FROM FINANCING ACTIVITIES:Issuance of common stock and warrants
    
    
    902
    
    
    
    61,507
    
    
    
    17,025
    
    
    
    1,219,080Collection of Series C convertible preferred stock subscriptions receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Issuance of Series B convertible preferred stock for cash
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,000Cash received for common stock to be issued
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,900Repurchase of common stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,028
    )Put shares sold to majority stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    623Borrowings under lines of credit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,220Proceeds from notes receivables
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,742Borrowings on notes payable from related party
    
    
    30,000
    
    
    
    135,000
    
    
    
    87,000
    
    
    
    322,000Principal payments on notes payable to principal stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (70,000
    )Borrowings on notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,460Principal payments on notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,667
    )Proceeds from senior convertible notes
    
    
    
    
    
    
    
    
    
    
    95,783
    
    
    
    207,050Payment of employment taxes related to vested restricted stock units
    
    
    (317
    )
    
    
    (7,001
    )
    
    
    (3,392
    )
    
    
    (11,574
    )Net cash provided by financing activities
    
    
    30,585
    
    
    
    189,506
    
    
    
    196,416
    
    
    
    1,742,806NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    $
    (340,637
    )
    
    $
    2,371
    
    
    $
    36,042
    
    
    $
    66,061CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD
    
    
    368,285
    
    
    
    27,648
    
    
    
    30,019
    
    
    
    CASH AND CASH EQUIVALENTS, END OF
PERIOD
    
    $
    27,648
    
    
    $
    30,019
    
    
    $
    66,061
    
    
    $
    66,061SUPPLEMENTAL CASH FLOWS DISCLOSURES:Cash paid for income taxes
    
    $
    2
    
    
    $
    
    
    
    $
    
    
    
    $
    26Interest paid in cash
    
    
    4,313
    
    
    
    8,131
    
    
    
    13,662
    
    
    
    32,149Accretion on redeemable convertible preferred
stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (952
    )Issuance of common stock upon conversion of notes payable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,331Increase in additional paid-in capital resulting from merger
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    171,154Issuance of common stock for notes receivable
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,758Issuance of put option by stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,949
    )Put option redemption by stockholder
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,921Issuance of Series C convertible preferred stock subscriptions
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000Issuance of Series A redeemable convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,296Conversion of Series A redeemable convertible preferred stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,248
    )Non-cash construction in progress and property and equipment
    
    
    6,597
    
    
    
    620
    
    
    
    1,742
    
    
    
    1,742Cancellation of principal on note payable to related party
    
    
    
    
    
    
    
    
    
    
    16,681
    
    
    
    16,681
   71




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 1. Description of business and basis of presentation
 Business
  Basis of Presentation
   Segment Information Segment Reporting Disclosures about Segments of an Enterprise and Related Information
 72




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 2. Summary of significant accounting policies
 Financial Statement Estimates
 Cash and Cash Equivalents
 Concentration of Credit Risk
 Marketable Securities Investments- Debt and Equity Securities, Accounting for Certain Debt and Equity Securities. Investment- Debt and Equity Securities The Meaning of Other-Than-Temporary Impairment and Its Application to
Certain Investments The Meaning of Other-Than-Temporary
Impairment and Its Application to Certain Investments.
 State Research and Development Credit Exchange Receivable
 Fair Value of Financial Instruments
    Goodwill and Identifiable Intangibles Goodwill and Other Intangible Assets Intangibles-
 73




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Goodwill and Other,
 Property and Equipment
 Impairment of Long-Lived Assets Property Plant and Equipment Accounting for the Impairment or Disposal of Long Lived-Assets.
 
    
    significant changes in the Companys strategic business objectives and utilization of
the assets;
    
    a determination that the carrying value of such assets can not be recovered through
undiscounted cash flows;
    
    loss of legal ownership or title to the assets;
    
    a significant adverse change in legal factors or in the business climate that could
affect the value of a long-lived asset (asset group), including an adverse action or
assessment by a regulator; or
    
    the impact of significant negative industry or economic trends.
  Accounts Payable and Accrued Expenses .
 Income Taxes
 74




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Income
Taxes, Accounting for Uncertainty in Income Taxes  an
interpretation of FASB Statement No. 109
  Contingencies Contingencies Accounting for Contingencies.
 Stock-Based Compensation Compensation- Stock Compensation , Share-based Payment.
 Warrants Derivatives and
Hedging, Contracts in an Entitys Own Stock Accounting for
Derivative Financial Instruments Indexed to, and Potentially Settled in, a Companys Own Stock.
 Comprehensive Income (Loss) Comprehensive Income, Reporting
Comprehensive Income,
 Research and Development Expenses Research and Development Accounting for Research and Development Costs.
 75




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Clinical Trial Expenses
 Interest Expense
 Net Loss Per Share of Common Stock
  December 31,2008
    
    2009
    
    2010Exercise of common stock options
    
    
    5,591,101
    
    
    
    6,403,498
    
    
    
    7,760,833Conversion of senior convertible notes into common stock
    
    
    5,117,523
    
    
    
    5,117,523
    
    
    
    19,826,113Exercise of common stock warrants
    
    
    2,882,873
    
    
    
    2,882,873
    
    
    
    Vesting of restricted stock units
    
    
    5,947,408
    
    
    
    3,419,533
    
    
    
    3,271,644
 Exit or Disposal Activities Exit or Disposal
Cost Obligations, Accounting for Costs
Associated with Exit or Disposal Activities Liability Recognition for
Certain Employee Termination Benefits and Costs to Exit and Disposal Activity (Including Certain
Costs Incurred in a Restructuring).
 Recently Issued Accounting Standards Improving Disclosures About Fair Value Measurements
 76




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Milestone Method of Revenue Recognition,
 3. Investment in securities
  December 31,
    
    December 31,2009
    
    2010Gross
    
    
    
    
    
    
    
    
    
    GrossCost
    
    Unrealized
    
    Fair
    
    Cost
    
    Unrealized
    
    FairBasis
    
    Loss
    
    Value
    
    Basis
    
    Gain
    
    ValueAvailable-for-sale securities
    
    $
    2,761
    
    
    $
    (286
    )
    
    $
    2,475
    
    
    $
    4,295
    
    
    $
    75
    
    
    $
    4,370
  4. State research and development credit exchange receivable
  77




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 5. Property and equipment
  EstimatedUsefulLife
    
    
    December 31,(Years)
    
    
    2009
    
    
    2010Land
    
    
    
    
    
    $
    5,273
    
    
    $
    5,273Buildings
    
    
    39-40
    
    
    
    54,966
    
    
    
    54,948Building improvements
    
    
    5-40
    
    
    
    113,188
    
    
    
    113,489Machinery and equipment
    
    
    3-15
    
    
    
    72,958
    
    
    
    73,812Furniture, fixtures and office equipment
    
    
    5-10
    
    
    
    5,312
    
    
    
    5,369Computer equipment and software
    
    
    3
    
    
    
    15,840
    
    
    
    16,306Leasehold improvements
    
    
    
    
    
    
    172
    
    
    
    53Construction in progress
    
    
    
    
    
    
    6,261
    
    
    
    14,496273,970
    
    
    
    283,746Less accumulated depreciation and amortization
    
    
    
    
    
    
    (65,741
    )
    
    
    (81,390
    )Property and equipment  net
    
    
    
    
    
    $
    208,229
    
    
    $
    202,356
    6. Accrued expenses and other current liabilities
  December 31,2009
    
    
    2010Salary and related expenses
    
    $
    13,362
    
    
    $
    5,624Research and clinical trial costs
    
    
    3,169
    
    
    
    668Accrued interest
    
    
    2,065
    
    
    
    4,993Construction in progress
    
    
    203
    
    
    
    149Other
    
    
    3,535
    
    
    
    3,406Accrued expenses and other current liabilities
    
    $
    22,334
    
    
    $
    14,840
 7. Related-party loan arrangement
 Wall Street Journal
 78




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     8. Senior convertible notes
  December 31,2009
    
    
    2010Notes due 2013Principal amount
    
    $
    115,000
    
    
    $
    115,000Unamortized debt issuance expense
    
    
    (2,235
    )
    
    
    (1,699
    )Net carrying amount
    
    
    112,765
    
    
    
    113,301Notes due 2015Principal amount
    
    $
    
    
    
    $
    100,000Unamortized debt issuance expense
    
    
    
    
    
    
    (3,966
    )Net carrying amount
    
    
    
    
    
    
    96,034Senior convertible notes
    
    $
    112,765
    
    
    $
    209,335
 79




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    80




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
    9. Fair Value of Financial Instruments
       81




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 10. Common and preferred stock
 Private Placements
 Public Equity Offering
 Common Stock
 th
    82




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 December 31,
    
    
    
    December 31,2009
    
    
    
    2010Exercise of common stock options
    
    
    6,403,498
    
    
    
    7,760,833Conversion of senior convertible notes into common stock
    
    
    5,117,523
    
    
    
    19,826,113Exercise of common stock warrants
    
    
    2,882,873
    
    
    
    Vesting of restricted stock units
    
    
    3,419,533
    
    
    
    3,271,64417,823,427
    
    
    
    30,858,590
 Preferred Stock
 11. Net loss per common share
  12. Stock award plans
  Outstanding
    
    Shares AvailableOutstanding
    
    Restricted
    
    forOptions
    
    Stock Units
    
    Future Issuance2004 Equity Incentive Plan
    
    
    6,922,362
    
    
    
    3,271,644
    
    
    
    3,613,1462004 Non-Employee Directors Stock Option Plan
    
    
    597,500
    
    
    
    
    
    
    
    194,500Options outside of any plan granted to principal stockholder
    
    
    240,971Total
    
    
    7,760,833
    
    
    
    3,271,644
    
    
    
    3,807,646
  83




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
        84




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Year Ended December 31,2008
    
    
    2009
    
    
    2010Employee-related
    
    $
    24,716
    
    
    $
    19,653
    
    
    $
    13,478Consultant-related
    
    
    77
    
    
    
    566
    
    
    
    102Total
    
    $
    24,793
    
    
    $
    20,219
    
    
    $
    13,580
  Year Ended December 31,2008
    
    
    2009
    
    
    2010Research and development
    
    $
    14,350
    
    
    $
    12,115
    
    
    $
    7,926General and administrative
    
    
    10,443
    
    
    
    8,104
    
    
    
    5,654Total
    
    $
    24,793
    
    
    $
    20,219
    
    
    $
    13,580
  Year Ended December 31,2009
    
    2010Risk-free interest rate
    
    
    2.16%  3.07
    %
    
    
    0.74%  3.14
    %Expected lives
    
    5.8  6.1 years
    
    2.6  6.1 yearsVolatility
    
    
    78%  80
    %
    
    
    78%  102
    %Dividends
    
    
    
    
    
    
    
  WeightedWeighted
    
    AverageAverage
    
    GrantNumber
    
    Exercise
    
    Date
    
    Aggregateof
    
    Price
    
    Fair Value
    
    IntrinsicShares
    
    per Share
    
    per Share
    
    Value ($000)Outstanding at January 1, 2010
    
    
    6,403,498
    
    
    
    7.20
    
    
    
    
    
    
    $
    20,422Granted
    
    
    2,051,300
    
    
    
    6.03
    
    
    $
    4.06Exercised
    
    
    (317,787
    )
    
    
    2.91Forfeit
    
    
    (167,337
    )
    
    
    4.67Expired
    
    
    (208,841
    )
    
    
    10.97Outstanding at December 31, 2010
    
    
    7,760,833
    
    
    
    6.91
    
    
    
    
    
    
    $
    19,229Vested or expected to vest at December 31, 2010
    
    
    7,123,858
    
    
    
    7.04
    
    
    
    
    
    
    $
    17,515Exercisable at December 31, 2010
    
    
    3,622,421
    
    
    
    8.57
    
    
    
    
    
    
    $
    8,289
  85




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   WeightedAverageNumber
    
    
    Grant Dateof
    
    
    Fair ValueShares
    
    
    per ShareOutstanding at January 1, 2010
    
    
    3,419,533
    
    
    $
    7.50Granted
    
    
    1,412,852
    
    
    $
    5.98Vested
    
    
    (1,418,938
    )
    
    $
    5.48Forfeited
    
    
    (141,803
    )
    
    $
    6.46Outstanding at December 31, 2010
    
    
    3,271,644
    
    
    $
    6.28
    13. Warrants
  14. Commitments and contingencies
 Operating Leases
 Year Ending December 31,2011
    
    $
    6262012
    
    
    2692013
    
    
    16After 2013
    
    
    0Total minimum lease payments
    
    $
    911
  86




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 Capital Leases
 Supply Agreement
 Guarantees and Indemnifications
 Litigation Contingencies Accounting for
Contingencies
    87




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
  Licensing Arrangement
 15. Employee benefit plans
  16. Income taxes
  December 31,2009
    
    
    2010Deferred tax assets:Net operating loss carryforwards
    
    $
    462,913
    
    
    $
    508,272Research and development credits
    
    
    44,597
    
    
    
    54,949Capitalized research
    
    
    40,754
    
    
    
    33,597Accrued expenses
    
    
    1,389
    
    
    
    1,600Non-qualified stock option expense
    
    
    20,024
    
    
    
    24,435Depreciation
    
    
    6,047
    
    
    
    9,333Total net deferred tax assets
    
    
    575,724
    
    
    
    632,186Valuation allowance
    
    
    (575,724
    )
    
    
    (632,186
    )Net deferred tax assets
    
    $
    
    
    
    $
    
 88




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   December 31,2008
    
    
    2009
    
    
    2010Federal tax benefit rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State tax benefit, net of federal benefit
    
    
    
    
    
    
    
    
    
    
    Permanent items
    
    
    
    
    
    
    
    
    
    
    Intercompany transfer of intellectual property
    
    
    
    
    
    
    (18.0
    )
    
    
    (5.0
    )Valuation allowance
    
    
    (35.0
    )
    
    
    (17.0
    )
    
    
    (30.0
    )Effective income tax rate
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %
 Income Taxes Accounting
for Income Taxes,
  Accounting for Uncertainty
in Income Taxes
 89




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
 17. Related party transactions
      90




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##### Table of Contents



MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
   18. Selected quarterly financial data (unaudited)
  March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)2009Net loss
    
    $
    (59,412
    )
    
    $
    (55,604
    )
    
    $
    (45,555
    )
    
    $
    (59,533
    )Net loss applicable to common stockholders
    
    $
    (59,412
    )
    
    $
    (55,604
    )
    
    $
    (45,555
    )
    
    $
    (59,533
    )Net loss per share applicable to common
stockholders  basic and diluted
    
    $
    (0.58
    )
    
    $
    (0.54
    )
    
    $
    (0.42
    )
    
    $
    (0.53
    )Weighted average common shares used to
compute basic and diluted net loss per
share applicable to common stockholders
    
    
    102,030
    
    
    
    102,322
    
    
    
    108,779
    
    
    
    112,860
 March 31
    
    
    June 30
    
    
    September 30
    
    
    December 31(In thousands, except per share data)2010Net loss
    
    $
    (44,700
    )
    
    $
    (42,251
    )
    
    $
    (45,303
    )
    
    $
    (38,306
    )Net loss applicable to common stockholders
    
    $
    (44,700
    )
    
    $
    (42,251
    )
    
    $
    (45,303
    )
    
    $
    (38,306
    )Net loss per share applicable to common
stockholders  basic and diluted
    
    $
    (0.40
    )
    
    $
    (0.37
    )
    
    $
    (0.40
    )
    
    $
    (0.33
    )Weighted average common shares used to
compute basic and diluted net loss per
share applicable to common stockholders
    
    
    113,095
    
    
    
    113,116
    
    
    
    113,528
    
    
    
    114,932
 19. Subsequent events
  91




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MANNKIND CORPORATION AND SUBSIDIARIES
(A Development Stage Company)
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
     92