MNKD 2017 Annual Report

information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the Act. In accordance with SAB 118, we have determined that the provisional amounts recorded are a reasonable estimate at December 31, 2017. Any subsequent adjustment to these amounts will be recorded when the analysis is complete in 2018. Results of Operations Years ended December 31, 2017 and 2016 Revenues The following table provides a comparison of the revenue categories for the years ended December 31, 2017 and 2016 (dollars in thousands): Year Ended December 31, 2017 2016 $ Change % Change Revenues: Net revenue - commercial product sales: Gross revenue from product sales . . . . . . . . . . . . . . . . . . $12,572 $ 2,714 $ 9,858 363% Gross-to-Net Adjustments: Wholesaler distribution fees and prompt pay discounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (1,653) (489) (1,164) (238%) Patient discount and co-pay assistance programs . . (667) (196) (471) (240%) Rebates and chargebacks . . . . . . . . . . . . . . . . . . . . . (1,060) (134) (926) (691%) Net revenue - commercial product sales . . . . . . . . . . . . . . . . . 9,192 1,895 7,297 385% Net revenue - collaboration . . . . . . . . . . . . . . . . . . . . . . . . . . . 250 171,965 (171,715) (100%) Revenue - other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,303 898 1,405 156% Total revenues . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $11,745 $174,758 $(163,013) (93%) Gross revenue from product sales results from sales of Afrezza. The increase in gross revenue from product sales of $9.9 million for the year ended December 31, 2017 compared to the prior year is primarily due to an increase in cartridges sold. Total estimated gross-to-net adjustments of $3.4 million were approximately 27% of gross revenue from product sales for the year ended December 31, 2017, a decrease of approximately 3% of gross revenue from the prior year. This decrease is due primarily to distribution fees paid to Integrated Commercialization Solutions Direct (“ICS”) in 2016 as part of an interim agreement that enabled us to distribute product in all necessary jurisdictions while we obtained the necessary licenses. This agreement was terminated on December 15, 2016 and therefore these fees did not recur in 2017. Net revenue from collaboration for the year ended December 31, 2017 decreased by $171.7 million from the prior year, primarily because the Sanofi License Agreement was terminated in 2016, which resulted in us recognizing previously deferred revenue from Sanofi, including upfront and milestone payments. The $0.3 million of collaboration revenue recognized in 2017 is as a result of the collaboration with Receptor, which is more fully described in Note 8 – Collaboration Arrangements of the Notes to the Consolidated Financial Statements included in Part II – Item 8 – Financial Statements and Supplementary Data. Revenue – other for the year ended December 31, 2017 represents $1.7 million from sales of bulk insulin to a third party and $0.6 million from a sale of intellectual property. Revenue – other for the year ended December 31, 2016 represents $0.9 million from sales of bulk insulin to a third party. 52