MannKind Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 7, 2023

There are 7 speakers on the call.

Operator

Good afternoon, and welcome to the MannKind Corporation 2023 Third Quarter Financial Results Earnings Call. As a reminder, this call is being recorded on November 7, 2023, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until November 21, 2023. This call will contain forward looking statements. Such forward looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, Please see their 10 Q report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation.

Operator

Joining us today from MannKind are Chief Executive Officer, Michael Castagna and Chief Financial Officer, Steven Binder. I would now like to turn the conference over to Mr. Castagna. Please go ahead, sir.

Speaker 1

Thank you, Didi. Thank you all for joining us today. It's been 6 years since Steve and I became CEO and CFO. We've turned this company from losing well over $100,000,000 a year to our 1st profitable quarter in our history. We've helped over 20,000 people on a MannKind manufactured product last quarter and our pipeline is moving faster than ever to help more as we continue to live our mission to help patients live a better life.

Speaker 1

As you think about our highlights this quarter, we've made great progress on the clinical and financial aspects of our company. In New York and Lung Space, we've seen Tyvaso royalty revenue of over $20,000,000 and manufacturing of $13,000,000 On the pipeline, MANKRYM-one hundred and one cannot be in a better position. We came from our last earnings call when we just had learned of a fire in our Our partnership in Germany to successfully moving CMC here in Danbury and we have manufactured our first clinical batch in record time. MANKIND-two zero one, our inhaled nocetinib program has continued to progress towards filing an R and D and starting our Phase 1 trial in the first half of twenty twenty four. Feedback from our thought leaders has been very positive on this program, and we're excited to get this into humans as quickly as possible.

Speaker 1

On the endocrine business, we've achieved our 1st quarterly positive contribution. This is 1 quarter ahead of our expected Q4 goal. We made $500,000 in Q3 of this year. That was driven by our Afrezza 24% growth year over year. As we think about INHALE 1 and INHALE 3, we are super excited on the clinical progress these two trials have made as they are pivotal for our future in the diabetes business.

Speaker 1

On inhale-one, we achieved our pre specified interim analysis, which was run when we hit 50 percent enrollment to determine the size of the trial was appropriate or not. We now expect to finish up enrollment Exciting trial. I'll talk a little bit more about it, but we are 2 months ahead of plan enrollment. And on the financial income, net income of $2,000,000 We've also began paying down our mid cap debt. We are continuing to deleverage our company so we can drive greater shareholder value.

Speaker 1

This way, we continue to free up cash flow to drive future growth by reducing our interest expense. As we look at Tyvaso, many of you may recall from the last quarter when there were some questions around what happened at the end of Q2 in the inventory and the $30,000,000 number we heard from Unither. And so we plotted here was a continued quarter over quarter, including that $30,000,000 now that it's transparent of what our royalty rate is. We can show you the breakdown Between what $30,000,000 would mean to MannKind in terms of our royalty rate on those $30,000,000 in sales. And when you look, Patient demand continues to be very strong quarter over quarter since launch of last year.

Speaker 1

The The next question I often get is around manufacturing and I would like to hopefully put this to bed as we go forward for shareholders. As we exit 2023, we expect our new fill finish to come online for Improving our ability to build inventory and supply the market growth for many years to come. As you look out, we expect new bulk capacity to come on in the second half of next year, continue to bring more efficiency and more upside production as UT gets ready to wrap up their IPF trial, hopefully showing the positive impact for patients. As we look out, you'll see MannKind can make 25,000 to 35,000 patients a year. We can serve with our manufacturing capacity, and We can build that up to 35,000 to 50,000 through additional efficiencies without any additional manufacturing plans.

Speaker 1

And as you all know, the IPF market is well over 100,000 And UT will be able to supply to the upside scenarios in addition to what we can manufacture. We're extremely grateful that United is investing over $500,000,000 in CapEx to duplicate our facility there in North Carolina. We look forward to supporting them on that transition. As we look turn back to MannKind, MannKind-one hundred and one, We've made our 1st batch since the fire. This is amazing work by our team in Danbury who did this in record time on top of the build out of Tabeso, On top of the progress of the pipeline getting ready for IND, we expect chronic tox data here this quarter as well as FDA feedback on our final protocol design.

Speaker 1

And all of this will put us on track to start our Phase twothree trial in the Q2 of next year. And here's a nice beautiful picture of our first 1,000 vials coming off our production line. Thank you to the team in Danbury for incredible work. Now if I bridge to Afrezza, we hear a lot of noise about GLPs and the impact they may or may not having on various aspects of the healthcare system and or consumer. It's a lot of noise, but you can see not much impact on Afrezza.

Speaker 1

And The main change here in Q2 to Q3 was self driven, but the overall insulin market in the gray line, you can see the insulin market year over year is relatively flat to a small single digit decline. On Afrezza, year over year, we had growth, but in Q2 to Q3, we made significant changes to our infrastructure to drive our focus to profitability. Number 1, we decreased our T and A. We changed our sales force bonus structure. We actually are in the process of moving our marketing team from California to Danbury and we merged 2 sales forces into one that impacted over 30% of all territories.

Speaker 1

The new team is now in place. We put some incentives here in Q4 to close the year strong, but this impact has nothing to do with GLPs and has everything to do with internal change to set us up for 2024. The next slide you can see here is our 1st 9 months year over year comparing the 1st 9 months Each year since we launched the product as MannKind in 2017. I'm really excited to see that we've doubled our growth over last year When you look at 2021 to 2022 versus 2022 into 2023, significant growth driven by our Medicare Part D $35 insulin program that was part of the IRA with the government. As we refocused back on INHIL-one, this is our pediatric trial We met the sample size we usually projected.

Speaker 1

One outcome could have been we needed more patients and that would have dragged on the length of this trial. We now expect completion to happen and this is very positive as we can wrap up this trial next year and start to prepare for launch. As you may or may not realize, most Type 1 diabetes innovation has happened in kids, whether it's been Omnipod with the Potters, Dexcom with CGM for insulin pumps that our founder, Alfred E. Mann, built. As I bridge over to inhale-three, here we are, who would thought 20 years later, Running one of the largest switch trials in Type 1 diabetes away from the standard of care, which is including the AID automated insulin pumps, Where half the patients in this trial are on an AID system and switching in record time, we're using the latest CGM technology with G7 We're also including 20% of people whose A1C is less than 7%.

Speaker 1

So this is going to show you whether you are at goal or above goal, how can you best use Afrezza and a daily Tresiba to show how you can maintain control or improve control hopefully with less hypoglycemia. These are top tier sites and we are well ahead of schedule and looking forward to releasing this data in Q1 and Q2 of next year. Flipping the card over here to V Go. The decline in V Go has been abated after a 2 year decline. We are focused on improving the margin for 2024.

Speaker 1

As you will hear from Steve, our gross to nets went from 49% to 58%, mainly because of rebates. We've now started the process of Some of the DB suppliers are now working on the PBMs. So we'll continue to watch this closely. With V Go, we believe we can continue to drive demand and improve margins as we go forward. I'd like to turn it over to Steve.

Speaker 1

Thank you.

Speaker 2

Thanks, Mike, and good afternoon. I'm pleased to review Select's Q3 2023 financial results. Please supplement this call to read the condensed consolidated financial statements and MD and A contained in our 10 Q, which was filed with the SEC this afternoon. Let's start by looking at the total revenues at the bottom of the table. Our total revenues grew 56% versus Q3 2022 121% for the 9 months ended versus the same period in 2022, which highlights the Q2 2022 launch and the subsequent revenue growth associated with Tyvaso DPI and to a lesser extent, our endocrine business, which included the results of the V Go product acquisition from May 31, 2022.

Speaker 2

Focusing on revenues from our collaboration with UT, revenues totaled $33,000,000 in the Q3 of 2023, which consists of royalties of 20,000,000 and Collaboration Services revenues of $13,000,000 Royalties earned in the net sales of Tyvasa DPI of $20,000,000 was a result Continued strong patient demand for an innovative product. We recorded $13,000,000 of collaboration and services revenue, which is primarily related to revenue associated with manufacturing Tyvaso DPI. This revenue grew 27% over the prior year as we sold more product at a higher price to United Therapeutics. For the September 2023 year to date period, Total revenues from our collaboration with UT were $87,000,000 as compared to $25,000,000 for the 1st 9 months of 2022, representing strong patient demand for Tyvaso DPI. Additionally, the 2022 9 month period included the start of commercial manufacturing of Tyvaso by MannKind midway through the Q2 and the commercial launch of the product by UT towards the end of the second quarter.

Speaker 2

Moving down the table to our endocrine business. Total endocrine revenues were $18,000,000 Afrezza net revenue of $13,000,000 The growth was mainly driven by higher patient demand with underlying paid TRx growth of 12% year over year, A lower growth to net deduction and price. For the 9 month period ending September 30, 2023, The 26% increase was mainly related to increased volume from higher patient demand with underlying paid TRx growth of 18%, price and a more favorable gross to net adjustment. Net revenue from V Go was $4,000,000 for the Q3 of 2023. Revenues were 18% lower versus 2022, primarily due to a lower level of patient demand.

Speaker 2

However, We have stopped the downward trend as TRx has been about the same amount for each of the 1st three quarters of 2023. For the 9 month period ending September 30, the 92% increase is primarily related to the purchase of V Go on May 31, 2022. So the increase over 2022 is mainly from a 4 month versus 9 month comparative. The next slide shows our revenue growth by source on a quarter by quarter basis from the Q1 of 2022 to the Q3 of 2023. We'd like to show this graph because it highlights how dramatically our business has changed in the last 2 years and how we are executing against expectations.

Speaker 2

As Mike pointed out earlier, the royalties from Tyvaso DPI have been growing steadily since launch and the fastest growing revenue source in our portfolio. United Therapeutics Management stated during their 2nd quarter earnings call that approximately $30,000,000 of Tyvaso DPI sales in the Q2 related to specialty pharmacies purchasing product to enable them to get through the contractual inventory levels. And then the 3rd quarter call held last week, UT stated that the Tyvaso DPI revenues for the Q3 generally reflected patient demand. We have denoted the royalty associated with the specialty pharmacy inventory stocking on the chart in the Q2 2023 bar, which allows for a clear demonstration of the royalty related demand growth by quarter. Based on our 3rd quarter revenues, We have a current run rate of over $200,000,000 of which approximately 40% represents royalties, which do not have any offsetting expenses, therefore falling straight to the bottom line with the associated cash flow used to fund our pipeline and reduce debt.

Speaker 2

Below the graph, I have plotted the earnings or loss per share for each quarter, and you can see the impact from the increasing revenues. In the Q3, we recognized earnings per share of $0.01 This is not a typo. We have hit a significant financial milestone. We have now entered a period where we expect to bounce back and forth between earnings and loss per share, I'll call it a breakeven period, And then we expect to grow earnings per share assuming Tyvaso DPI continues its upward trajectory and the Endocrine business unit increases its positive contribution. The following GAAP to net GAAP presentation was started in the Q2 of this year to better highlight the non cash impact of certain items to our P and L.

Speaker 2

In the Q3 of 2023, we reached the milestone of positive GAAP net income of $2,000,000 while a year ago, looking at the right column, with a GAAP net loss of $14,000,000 When we adjust the 2023 Q3 GAAP net income for non cash items of stock compensation As highlighted earlier, we expect to be plus or minus GAAP breakeven for a number of quarters before we expect to see net income growing on a continuous basis. I will conclude with some additional comments. In the Q3, we started to pay down our senior secured debt based on our contractual obligation to pay the loan over 24 months beginning in September, and we expect to be able to pay off this debt over the next 2 years out of operating cash flow. We continue to tightly manage our cash flows and had a reduction in cash and investments of only $2,000,000 in the 3rd quarter as we expect to progress towards achieving positive operating cash flow in the near future. Thank you.

Speaker 2

And I'll turn it back over to Mike.

Speaker 1

Thank you, Steve. It's never been a better time for MannKind employees, shareholders and partners. We're in the strongest position we've been And we're well diversified as we look out whether it's our in line brand opportunities, our pipeline opportunities or Tyvaso DPI growth in addition to any other business development things that come our way. We're super excited at the Orphan Lung business as we look at IPF and specifically natinib and the TGF beta programs. These are programs that have moved up in the priority list in terms of treatments coming down the pipeline in IPF as we've had so many failures, which is not good for patients, but unfortunately good for MannKind as we are now closer than ever to help more people in IPF.

Speaker 1

We feel very strongly that MANKIN-two zero one can provide a differentiated product for those people in the drug that's already approved on the market, The lowering the dose delivered directly into the lung, we think will provide a huge benefit around the GI side effects and hopefully efficacy as people can dose higher. There's been over $400,000,000 in the last year just in funding an ALK5 inhibitor as well as other inhaled therapeutics around oteniv or profanil. As we look at the next three quarters, I wanted to share with you The endocrine updates here as well as orphan lung. Our 2024 milestones will be shared on the next call. But for now today as we look out this year, We've completed everything we said we are and we're on track to wrap up the year strong.

Speaker 1

India is on track to file our regulatory submission there for India, which will be an approval If all goes well in 2024, inhale 1 will be fully randomized and hopefully reading out sometime next year And inhale 3 will be read out hopefully by March April timeframe. On the orphan lung, 101 is on track for submission. We expect to initiate that trial in Q2 and 201 IND submission is on track and we'll be doing that study in Phase 1 healthy volunteers early next year. We've never we've been near death and we take seriously our fiduciary responsibility to shareholders. As we think about our future expense management, capital allocation is the number one most critical thing we have to do, which is really about deleveraging the company, investing in our growth drivers and improving shareholder value.

Speaker 1

Here are many shots on goal to think about as we close-up today's call and get ready for Q and A. Number 1, pipeline is 101, natinib is a real unmet need. And just to put some context here, for every 1,000 patients we get, it's approximately $100,000,000 in revenue. MANKIND-two zero one has huge upside until we get this through Phase 1. I don't want to guess how big this could be, but it could be a nice Huge inflection for our company and our patients.

Speaker 1

Aveso DPI, we can't always guess where that will be. But as you know, UT has a goal for 25,000 patients in 25, and shareholders can guess is that 10,000, 20,000 what that means for Tyvaso. What does mean is $250,000,000 to $300,000,000 revenue for every 10,000 covered patients. We're super excited and anxiously await the UT Teton study readouts for IPF and we get really excited now about our pediatric INHAL-one, continued V Go stabilization and hopefully growth and our pump sparing trial on INHAL3 as well as an opportunity to bring Afrezza to patients around the world. Thank you again for your patience.

Speaker 1

It's been a long quarter And apologize about our stock price, not anything we can see or we'll call the decline the last day or so, but we'll continue to progress on everything we can to make this a great company and a great investment for shareholders. Thank you. We'll now take Q and A.

Operator

Thank you. Please standby while we compile the Q and A roster. Our first question comes from Gregory Renza of RBC Capital Markets.

Speaker 3

Great. Good evening, Michael. Congrats on the progress Thanks for taking my question. As you certainly have that commitment to the manufacturing on DPI and kind of get that in I just wanted to ask a little bit on Afrezza. And while you're guiding to sort of the inhaled series of trials, Just curious if you can articulate just a little bit about how you see that actually shaping the trajectory of Afrezza?

Speaker 3

And Depending on the outcomes of 1 and 3, how will that kind of shape your commitment to the endocrine business and to Afrezza itself?

Speaker 1

Greg, great questions. I think the data is going to drive some of these decisions, right? The good news of MannKind, we have the capital to place bets If we see opportunities to grow faster, we are our goal is to run the business to profitability. But if we can see a way to cause a major inflection into that growth curve after all this time, I think we'd be more than excited to place that bet to show shareholders what can really happen with Afrezza. The INHALE 3 trial is a groundbreaking trial in our mind.

Speaker 1

It's one of the largest switch trials done and it's got the new dosing regimen and I didn't talk about that, but One of the things we got at the FDA to agree to is we could basically double the dose upfront and we're testing the first dose in the office to ensure patient safety and comfort. And we're hopefully able to see and we've already run those presentations that we are crushing the first two hours of postprandial control. Now if that carries out through a trial over 12 to 14 weeks or 6 months, that should provide opportunity for improved time and range, Lower hypoglycemia as well as hopefully better overall efficacy and tolerability and sustainability on the product. So the trial results are going to drive a big part of that outcome, but we've done everything we can after all these years. These are the pivotal trials I would have loved to do years ago, But it's a stepwise way to work with the FDA to get the dosing right, to get the adult leaders right.

Speaker 1

And these are U. S. Trials. When you think about it, we have 60 trials, Top centers in the U. S, many academic centers, these people have never had real exposure with inhaled insulin.

Speaker 1

So it's a real opportunity to change our future and I think we need the good data to Support that, I think we've done everything we can to make sure the data is the best outcome we can possibly hope for. And we'll be ready to cause that inflection if we get good supporting data behind it.

Speaker 3

Got it. That makes sense. And maybe just one more, maybe even Steve perhaps, but just remind us on the economics on DPI just for our own modeling purposes so we kind of get that right. And to what extent are the royalties fixed dynamic and just how that flows through. Thanks again guys and congrats on the progress.

Speaker 1

Thank you, Greg. I'll turn it over to Steve.

Speaker 2

Thanks, Greg. We have two pieces to our contract with United Therapeutics that show up in our P and L. The first under Collaboration and Services revenue is the revenue associated with the manufacturing of the Tyvaso DPI product. That is on a cost plus basis. If you look in the P and L, you'll see revenues and the costs associated and you'll see a margin a little over 20 And for collaboration services this quarter, that fluctuates up and down depending upon our revenue recognition with United Therapeutics in Some other areas outside of the actual manufacturing of the product.

Speaker 2

And the other is royalties. Our royalty rate is 10% on net sales and that's the net sales for United Therapeutics of Tyvaso DPI to their customers.

Speaker 1

It does not vary by sales threshold.

Speaker 3

That's great. Thanks again, guys.

Speaker 4

Thanks, Greg. Thank you, Greg.

Operator

Thank you. One moment for our next question. Question comes from Ron Feiner of Oppenheimer.

Speaker 5

Hi, guys. This is Ron on for Steve. Congrats on the quarter. I just wanted to ask about gross margin. It was really strong again this quarter.

Speaker 5

Maybe you guys can give us a little bit about your outlook for margins sequentially and in 2/24 percent? Thanks.

Speaker 2

Thanks, Ron. The margin this quarter for our commercial products was 78 percent. It was up sequentially from previous quarters, mainly around 2 things happening. One is we're getting a better handle on our margin for the V Go product. And the second is we're getting increased efficiencies in Afrezza as the factory is producing both Afrezza and Tyvaso DPI.

Speaker 2

So we don't give forward looking statements, but I think that the 78% Feels in the right territory for right now. So I think it's a good number, if you're thinking about modeling going forward.

Speaker 5

Thanks. And then maybe one more. Do you guys are you guys modeling in any impact from GLP-1s on your diabetes business? And now and for the future, are you seeing any impact? And maybe on any of the products in the pipeline, are you thinking about something like that?

Speaker 5

Thanks.

Speaker 1

So when you look at Afrezza, about 55% of our business is Type 2 and 45% is Type 1. That fluctuates from time to time. But in general, our focus since last year has been growing the Type 1 market and our clinical trials around Type 1. The reason that's important is GLPs are not going to change a Type 1 patient need for insulin in a meaningful way. And so as you think about the Type 2 market, Eventually, most patients are still going to need mealtime control.

Speaker 1

So even if they go on GLPs, we already knew there was a 7 to 10 year delay from the time somebody needs mealtime control when they get it. And my guess is GLPs are just going to push it off a year or 2. But as you can see, the insulin market and the diabetes market is continuing to grow. It's a pandemic in this country and I don't see a need for insulin going away. Will the growth slow because of GLPs?

Speaker 1

Absolutely. Well, the impact of Afrezza, absolutely not. I don't see that as a major impact given that we have less than 1% of the share where we target doctors and 0.2% in the whole country. So we've been able to increase our market share significantly where we put reps versus when we don't, But the GLPs are used much earlier and our population is much sicker. So we just have a very different segmentation of where Afrezza plays and we don't expect much impact there.

Speaker 5

Great. That's very helpful. Thank you, guys.

Speaker 4

Thank you.

Operator

Thank you. One moment for our next question. Question comes from Oren Livnat of H. C. Wainwright.

Speaker 6

Thanks guys. I have a few questions. It's an exciting time indeed for someone to just cover the name through the tough times. First, just to clarify quickly on the discussion around the transitional period, this breakeven period you talked about sort of fluctuating back and forth. Is that for non GAAP as well or is that just the GAAP number?

Speaker 6

And is that just a function of R and D investment timing or Is potentially even just gross profit going to be lumpy around here?

Speaker 2

Yes. So Warren, without getting really specific, It's probably going to be for GAAP and non GAAP. As you can see, there's not a tremendous amount of amounts that go between the 2. And we've got this foreign exchange gain or loss depending upon the U. S.

Speaker 2

Dollar euro exchange rate because our Purchase commitment for insulin is done in euros, so that can swing in one direction or another over a quarter by $2,000,000 or $3,000,000 or $4,000,000 So I think just over the next few quarters, we're going to jump back and forth. We're going to

Speaker 1

be spending a little bit

Speaker 2

more in R and D as you would expect based on What Mike presented on the pipeline, but we're going to have revenues that are growing at the same time in particular or expect revenues to grow at the same time for Tyvaso DPI Royalties in particular as well as our endocrine business.

Speaker 1

And I think some of the timing of the FDA feedback and when those R and D expenses kick in, some of that will be a GAAP issue, some will be a cash flow issue. But In general, we got enough cash to fund those things. But until we get some of the FDA clarity and the INDs filed and approved, That's just going to give us a little bit of fluctuation.

Speaker 6

Got you. Got you. Talking about inhale, I guess the pump switch study in particular, I think we talked about this last quarter, but can you remind me what do you think is the biggest Assuming the data is compelling and what you hope to see, what do you think the biggest immediate impact from that is? Is it The education and awareness hopefully dramatically increasing amongst physicians and Type 1 patients as a result, Or is perhaps the bigger lever here the pharmacoeconomic argument you may be able to make with payers Hopefully, we'd be able to make repairs with regards to relative costs of expensive pumps and whether that might get you a significantly better access over time. I do have one more follow-up.

Speaker 6

Thanks.

Speaker 1

Yes. I think there's a couple of things, Oren. You hit on a couple of them. The first is lung safety. So getting into kids and showing Expected lung outcomes that we would expect in inhale free, some of our latest data on FEV1 changes has shown that the control arm is worse than the Afrezzaarb.

Speaker 1

And so I think really showing new lung data and the reversibility of that is going to be really important. And we feel like we've now measured this in a certain way to make it And timing that reversibility. So that's going to be an important endpoint combined with having a good pediatric outcome for FDA review and approval. Those couple of things will give us a huge halo effect after next year will be 10 years since FDA approval of Afrezza And that will give us hopefully the length of time on the market, the lack of any safety and surveillance plus these new trial readouts, I think are all going to be really critical. Then there's 2 other things I would add or 3 other things.

Speaker 1

Number 1 is education. We have now really world renowned thought leaders and academic centers Running these trials who can now be on podiums, who can now be on publications, who can now do CME that we just didn't have before. And I think that's going to be critical In conjunction with marketing and sales training, we're really putting a lot of investment in our sales force right now on training, skill sets, clinical knowledge and Really teaching them how a patient lives with Type 1, understanding the insulin pumps and what that's going to mean to a patient and how they position Afrezza in that market. And as we think about Europe, I do think the INHAL3 trial will be really important to think about the pharmacoeconomic because in Europe they do care about The total cost of care being hypoglycemia, medical as well as pharmacy, and I do think if we can show pretty good outcomes with a pump or without a pump, It doesn't have to be better. It just has to be as good as.

Speaker 1

There's a significant cost to consumers as well as society for these insulin pumps and pods. And that's going to be something important as we look at Germany, Italy, UK, they're paying more and more for diabetes technology. And we think now is the time to bring new innovation to Europe as well. But having this data set and the pediatric data set will be important for the global market, not just the U. S.

Speaker 1

Market, but it will help us in the U. S. I can tell you, I just talked to some of the payers this past week and we expect continued Medicare coverage. In fact, we got Medicare to update their website last week around inhalants being covered for 2024 because of the IRA impact. We know that the price of insulin is coming down.

Speaker 1

We don't expect any negative formulary And I think as we go into 2025, we'll look at how to use V Go and Afrezza to open up access together. 'twenty four is going to be For everybody given the IRA impact on society and drug companies and discounts and PBMs, a lot of confusion happening For 2024, getting ready for 2025. So that dust will settle, but we expect Afrezza to continue to have a good formulary coverage As well as we go as we go forward.

Speaker 6

Okay. You anticipated my next question. Just regarding IRA, it sounds like For the endocrine business, it's a little bit uncertain pushes and pulls there. But for Tyvaso DPI, I know that's Euthers launched, but Is your understanding that that is only a tailwind as far as to what extent it has any impact in 2024?

Speaker 1

Yes. I don't I mean, I think I'll let UT comment obviously for their future Tyvaso. But what I would say is the Medicare Part D, which is Tyvaso was a Part D for nebulized and the Part D is what the inhaled version is covered for DPI. And so those patients right now have a huge out of pocket cost, which does prevent some of them from switching over. And so as you think about Tyvasa going in the next year and the following year, that out of pocket cost should Roughly around 3,000 next year and 2,000 the following year, if I recall.

Speaker 1

And hopefully, that will help continue to provide incremental demand beyond our current trends for Tyvaso DPI. And so that's something we anticipate as we go forward. That should be a net benefit to patients as you cap those costs as well.

Speaker 6

All right. Thanks. Appreciate it. Thank you.

Operator

Thank you. One moment for our next question. And our next question comes from Andreas Arguerides of Wedbush Securities.

Speaker 4

Thanks for taking that. Yes, good afternoon and thanks for taking my questions here. Congrats on all the progress. Just two questions from us. The company's transformation to an orphan lung story is certainly exciting.

Speaker 4

Can you provide us with the next steps for submitting INDs for 101 in NTM and 201 in IPF? And then also, How you guys are thinking about the Phase twothree trial design, endpoints, treatment duration, etcetera? Thank you.

Speaker 1

I want to make sure I heard your questions a little fuzzy on my side. So INDs and Phase IIIII design. So on the INDs, we are the number one Long pole in the 10th is the manufacturing stability. So everything else is pretty much on track to be ready in terms of study reports or filing for the IND. And remember, we were trying to get that filed for Q4.

Speaker 1

So we were pretty well on our way for that. And so at this point, it's really can we bridge some of the clinical supplies from Germany To the U. S. For the dating and for the inventory for the clinical trial. So that's for 101 and that's on track for an early Q1, mid Q1, I'll say, filing.

Speaker 1

But we can find a way to get there faster based on our FDA meeting we have coming up, that's we will do that. On the 201, it's just making the clinical supplies, which are in Process right now on getting those up on stability, in terms of getting the 3 month data we need to file that IND. So but both of those are on track. It's mainly around just Making sure the manufacturing is up and running. Unfortunately, the team that's making 201 had to make 101 on top of everything else.

Speaker 1

And They're stacked on top of each other, but they're working hard to get them both ready for IND filings. So those are the main things that are the last steps here. All the talks and everything else pretty much is ready to go. The Phase twothree design, we actually have an upcoming FDA meeting where I'll provide More clarity after that because we're going to the FDA to try to change a few things we have previously, were focused on Looking at the new ARIKAYCE data just came out with their quality of life as well as some of the dosing, we think there's a way to continue to streamline Trials, as you may or may not know, we hired a new Head of R and D, Doctor. Burkart, and he joined us back in May.

Speaker 1

So we've taken a fresh look at all the programs, the trials, the FDA feedback, And there's a few things we thought could be a little bit clear and ensure the trials go as smoothly as possible, as fast as possible. So We'll get that feedback in the next month and we'll share those updates hopefully at JPMorgan on the official trial design that we're comfortable

Speaker 4

Okay, great. Appreciate the color and congrats on all the progress. Thanks.

Speaker 1

Thank you.

Operator

Thank you. I'm showing no further questions at this time, I would like to turn it back to Michael Castagna, CEO, for closing remarks.

Speaker 1

Just thank you, everyone. I think you can see we've made a lot of progress. We continue to grow our revenue. We continue to help more patients and we continue to move the pipeline forward. And really our goal to improve our mission to give people control of their health and to free them to live their life.

Speaker 1

As you look at each of our targets, these people are really suffering. In some cases, they have 3 to 5 years to live. And so every day counts to get these patients our treatments as soon as possible, safely and effectively in the clinical trials Totally gets into the market. Thank you everyone for everything. We look forward to closing out the year strong and we'll provide continued updates as news comes in.

Speaker 1

Thank you again.

Operator

This concludes today's conference call. Thank you for participating and you may now disconnect.

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Key Takeaways

  • MannKind reported its first‐ever profitable quarter with GAAP net income of $2 million and earnings per share of $0.01, marking a shift toward a breakeven and earnings growth trajectory while beginning to pay down senior secured debt.
  • Q3 collaboration with United Therapeutics generated $20 million in Tyvaso DPI royalties and $13 million in manufacturing revenue, driving a $200 million run rate that flows largely straight to the bottom line.
  • Afrezza inhaled insulin achieved its first positive quarterly contribution of $0.5 million, supported by 24% year-over-year growth and a 12% increase in paid TRx, as the company restructures its sales model to boost profitability.
  • Pivotal INHALE trials are ahead of schedule, with INHALE 1 reaching its interim analysis two months early at 50% enrollment and INHALE 3 testing dose‐switch outcomes in pump users, setting up key data readouts in early 2024 to potentially reshape the diabetes franchise.
  • Manufacturing upgrades in Danbury will bring new fill/finish online by late 2023 and bulk capacity in H2 2024 to support up to 50,000 patients, while pipeline programs MANKRYM-101 and inhaled nocetinib (MANKIND-201) are on track for IND submissions and Phase I starts next year.
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Earnings Conference Call
MannKind Q3 2023
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