MNKD 2017 Annual Report

and other current liabilities of $2.9 million, offset by decreases in deferred revenue of $0.4 million, and purchase commitments of $4.7 million. In addition, there were increases in accounts receivable of $2.5 million, inventory of $3.3 million, and deferred costs from commercial product sales of $0.1 million, offset by a decrease in prepaid expenses of $1.4 million. The non-cash items included $5.5 million of a gain in the fair value of the warrant liability, offset by $13.6 million loss on foreign currency exchange, $4.8 million of stock-based compensation, $3.5 million of depreciation, amortization and accretion, $3.8 million of interest accrued through notes payable to principal stockholder, $3.0 million of inventory write-offs and $1.6 million of loss on extinguishment of debt. During the year ended December 31, 2016, we used $78.1 million of cash for our operating activities as a result of a net decrease in operating assets and liabilities of $139.3 million offset by our net income of $125.7 million, adjusted by non-cash charges of $64.5 million. The changes in operating assets and liabilities were due to increases in accounts receivable from Sanofi of $30.5 million, inventory of $2.3 million, and decreases in accounts payable of $12.1 million, deferred revenue of $17.5 million, deferred payments from collaboration of $134.1 million, offset by a decrease in deferred costs from collaboration of $13.5 million and increases in recognized loss on purchase commitment of $40.6 million and deferred revenue of $3.4 million. The non-cash charges included $72.0 million gain on extinguishment of debt, $4.2 million of depreciation and accretion, $5.1 million of stock-based compensation, $2.9 million of interest accrued on borrowings from our principal stockholder, and $4.5 million of interest accrued on borrowings under Sanofi Loan Facility offset by a $5.4 million non-cash gain from a change in the fair value of warrants, a $3.4 million gain on foreign currency translation exchange, and $2.3 million gain on purchase commitments. During the year ended December 31, 2015, we used $57.2 million of cash in operating activities as a result of our net loss of $368.4 million, adjusted by noncash charges of $273.1 million and a net change in operating assets and liabilities of $38.1 million. The non-cash charges included $206.6 million of impairment charges, $22.0 million of depreciation, accretion and stock-based compensation, $1.7 million interest accrued through borrowings under the Sanofi Loan Facility, $1.0 million for the loss on extinguishment of debt, with the remainder due to an adjustment for foreign currency losses. The change in net assets and liabilities was predominately due to the net decreases in receivables from collaboration from the $50.0 million received in milestone payments and $13.5 million due to the decrease in prepaids and other current assets at December 31, 2015. This was offset by net decreases in inventory. Cash provided from investing activities was $16.7 million for the year ended December 31, 2017 compared to cash used in investing activities of $1.1 million for the year ended December 31, 2016. The difference was primarily related to net proceeds received during the year ended December 31, 2017 for the sale of certain parcels of real estate owned by us in Valencia, California and certain related improvements, personal property, equipment, supplies and fixtures for $16.7 million. Cash used in investing activities decreased by $9.1 million for the year ended December 31, 2016 versus December 31, 2015, which is primarily a result of decreasing expenditures on property and equipment to conserve cash. Cash used in investing activities in 2016 and 2015 was primarily comprised of purchases of property and equipment of $1.1 million and $10.3 million, respectively. Cash provided from financing activities was $73.6 million for the year ended December 31, 2017 primarily related to $57.7 million in net proceeds from the registered direct offering of common stock and $19.4 million received from borrowings on the note payable to principal stockholder offset by a principal payment of $4.0 million on the facility financing obligation. Cash provided by financing activities of $43.0 million for the year ended December 31, 2016 was primarily related to $47.3 in net proceeds received from the sale of stock and warrants and a payment on the Deerfield notes of $5.0 million during the nine months ended December 31, 2016. Financing activities provided $5.7 million of cash for the year ended December 31, 2015, comprised of a $64.3 million payment on the outstanding 2015 notes obligation and a $4.2 million payment associated with the achievement of the second milestone to Deerfield for product launched on February 3, 2015. These outflows were offset by $34.7 million received in net proceeds from the sale of stock on the Tel Aviv Stock Exchange in November 2015, $27.8 million net of issuance costs in proceeds from at-the-market sales of stock, and $14.3 million received in proceeds from exercise of stock options and warrants. Cash inflows were offset by the payment of employment taxes related to vested restricted stock units. 61