CHICAGO, Feb. 14, 2011 /PRNewswire/ -- Zacks.com Analyst Blog features: MannKind Corporation (Nasdaq: MNKD), Merck (NYSE: MRK), Pfizer Inc. (NYSE: PFE), TOTAL S.A. (NYSE: TOT) and Suncor Energy Inc. (NYSE: SU).
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Here are highlights from Friday's Analyst Blog:
MannKind Narrows Loss
MannKind Corporation's (Nasdaq: MNKD) fourth quarter 2010 net loss of $0.33 per share was narrower than the Zacks Consensus Estimate of a loss of $0.40. The company had suffered a loss of $0.41 (excluding the loss of $12.8 million pertaining to the disposal of fixed assets) in the year-ago quarter.
The narrower loss was attributable to lower expenses incurred in the reported quarter on the inhaled insulin candidate Afrezza. The candidate is being developed for treating type I and type II diabetes. MannKind failed to generate any revenues in the reported quarter as in the year-ago period.
Reported operating expenses slipped 42.5% to $32.1 million in the reported quarter. Research and development (R&D) spend in the quarter declined 44% to $24.2 million. The reduction was attributable to the reduced spending on developing Afrezza following the submission of a new drug application (NDA) in March 2009.
General and administrative (G&A) expenses declined approximately 38% in the reported quarter to $7.9 million. The decline in G&A expenses was primarily attributable to the lower salary-related costs resulting from headcount reduction in April 2009.
For the full year 2010, MannKind suffered a loss of $1.50 which was $0.07 narrower than the loss hinted at by the Zacks Consensus. Moreover, 2010 loss was approximately $0.44 narrower than the year-ago adjusted loss.
MannKind Trims Workforce
Following the receipt of the second complete response letter (CRL) from the FDA in January 2011, MannKind slashed its work force by approximately 41%.
While issuing a second CRL for Afrezza, the US regulatory authority asked for additional information besides asking MannKind to conduct more trials. The requirement of additional trials will push up MannKind's research and development expenses. The job cut is a measure aimed at conserving resources for pursuing activities regarding Afrezza.
Moreover, MannKind has cancelled its insulin supply deal with Merck's (NYSE: MRK) subsidiary, Organon. The headcount reduction coupled with the termination of the deal is expected to bring down operating costs at MannKind. The company is currently reviewing its projects to prioritize its outflow as it focuses on the optimal utilization of its resources.
Our Take & Recommendation
MannKind currently carries a Zacks #4 Rank (short-term Sell rating). We note that Afrezza is the company's only late-stage candidate under development. Hence, the CRL for Afrezza is a cause of major concern for MannKind, which has no marketed products in its portfolio. Besides Afrezza, the company's pipeline primarily consists of products in early stages of development.
Our skepticism on Afrezza's approval gets further deepened by failures encountered by many other companies including Pfizer Inc. (NYSE: PFE) in introducing an inhaled version of insulin into the market.
Longer term, we have a Neutral recommendation on MannKind.
TOTAL S.A. Misses on Bottom Line
Integrated oil and gas company TOTAL S.A. (NYSE: TOT) reported its fourth-quarter 2010 operating earnings of $1.54 per share (euro 1.14 per share) versus the Zacks Consensus Estimate of $1.58 per share. The operating earnings of the company reflected a growth of 12.4% from $1.37 (euro 0.93 per share) reported in the year-ago period.
TOTAL's 2010 operating earnings were $6.08 per share (euro 4.58 per share) compared with $4.85 per share (euro 3.48 per share) reported in 2009. The results of the company failed to meet the Zacks Consensus Estimate of $6.43 per share as provided by 3 covering analysts.
Total revenue at the end of fourth-quarter 2010 was $54.54 billion (euro 40.16 billion) against $53.54 billion (euro 36.23 billion) in the fourth quarter of 2009. The year-over-year growth in revenue was 2% (up 11.0% in euros).
TOTAL reported full year 2010 revenue of $211.14 billion (euro 159.27 billion) versus $183.17 billion (euro 131.32 billion) in 2009. The revenue over the prior year grew at a brisk 15% clip (up 21.0% in euros).
Cash and cash equivalents of TOTAL as of December 31, 2010, were euro 14.48 billion versus euro 11.66 billion at 2009 end.
The net debt-to-equity ratio was 22.2% at the end of 2010 versus 26.6% at the end of 2009.
TOTAL's cash flow from operation at the end of 2010 of euro 18.49 billion grew significantly over 2009 levels mainly due to the increase in net income and a favorable change in working capital.
Net investments of the company, excluding acquisitions, and including net investments in equity affiliates and non-consolidated companies, were $15.8 billion (euro 11.9 billion) versus $17.1 billion (euro 12.3 billion) in 2009.
Sale and Purchase of Assets
During 2010, TOTAL made acquisitions worth euro 3.5 billion. The investments were made to acquire assets in the Barnett Shale in the United States, UTS in Canada, a 20% interest in the GLNG projects in Australia and additional interest in Laggan Tormore blocks in the United Kingdom.
In 2010, TOTAL disposed of assets worth euro 3.5 billion, comprising the sale of Hod and Valhall fields, sale of Sanofi-Aventis shares, 5% interest in Block 31 in Angola and the Mapa Spontex unit in the Chemicals segment.
Total will continue to make strategic acquisition and divest non-core assets from its portfolio in 2011.
TOTAL has plans to invest up to $20 billion in 2011 of which 80% is earmarked for its upstream segment.
The company is committed to the cause of continuous research and development and has fixed a billion dollar budget for this purpose in 2011.
TOTAL raised its exploration budget to $2.1 billion, and is pursuing a more diversified approach to make larger discoveries.
Even though TOTAL has failed to match the consensus expectation, we appreciate the approach of the company to gradually expand its operations worldwide through acquisitions and partnerships.
During December 2010, TOTAL entered into an alliance with Suncor Energy Inc. (NYSE: SU) for oil sands assets in Alberta, Canada. This alliance raised TOTAL's interest in Suncor's Fort Hills project to 39.2%.
TOTAL S.A. currently retains a Zacks #3 Rank (short-term Hold rating).
France-based TOTAL is one of the largest publicly traded, globally integrated oil and gas companies based on production volumes, proved reserves and market capitalization. The company has exploration and production operations across five continents.
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