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Good morning, and welcome to the MannKind Corporation Second Quarter 2025 Financial Results Conference Call. As a reminder, this call is being recorded on August 6, 2025, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call and available for approximately 90 days. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty, which can cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, please see the Form 10-Q for the quarterly period ended June 30, 2025, now on file with the SEC, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Chris Prentiss. I would now like to turn the conference over to Mr. Castagna. Please go ahead.

Thank you, operator, and good morning, everybody, and thank you for joining us for our second quarter earnings call. As we look out, we're focused on creating more shareholder value, minimizing dilution and enhancing our flexibility as we enter the next phase of our growth. The next 6 to 8 quarters are going to showcase our cumulative work over the past 7 years. Let me talk about the 5 pillars of our success. First, we're on the heels of TETON 2 readout here in September, and we'll actually await those results as that provides upside to our current business plans in the future. Second, Afrezza is positioned for continued growth. [indiscernible] is now filed. I just want to put this in context, we target about 25% of all rapid-acting scripts. 1% of the rapid-acting market is roughly $300 million run rate in Afrezza. We have a strong balance sheet. With the announcement today of Blackstone, we now have access to additional capital to provide us flexibility over the coming years. Fourth, in our opinion, inhaled clofazimine is not getting enough credit in terms of meaningful opportunity that this has in our future. Fifth, our Nintedanib DPI, I'm proud to announce, will now move forward into Phase II, and I want to thank our team for all the hard work they've done. Chris will talk about further details on the Blackstone deal later in our discussion today. Our Q2 highlights are highlighted by record revenue of Tyvaso DPI sales, also record referrals for patients in Q2, which should set us up for Q3. Our inhaled Clofazimine for NTM, we expect to meet our interim target ahead of schedule, which is 100 valuable patients. Additionally, we've now advanced the dry powder formulation into preclinical studies and we anxiously await those results to move into earlier lines of treatment in the future. Nintedanib DPI for IPF, we plan to launch our trial called INFLO by year-end 2025. On the endocrine side, we're excited about the pediatric indications being submitted, and this now sets us up for launch prep as we look out over the next 4 quarters. Our endocrine business unit had strong performance in Q2 with $18.3 million in revenue or 13% growth over 2024. And for the Afrezza opportunity, the application to submit our label update is expected here in Q4 for a decision. On the financial side, we had Q2 revenues of $77 million or 6% over 2024 and year-to-date revenues of $155 million or 12% over 2024. Chris will dig into the details shortly on this one. We had a strong balance sheet with $201 million in cash, and we now have expansion capital of $500 million from Blackstone of for nondilutive capital to accelerate our growth and innovation as we look out. Let me start out on our orphan lung opportunity with MannKind 101. The NTM market is expected to exceed $1 billion by the end of the decade. Our focus will be in the U.S. and Japan, which have the highest populations and highest opportunity for growth. It's also the 2 markets that we've seen the highest enrollment rates in our trial. This is a global health concern, but a real issue in these 2 countries. As we think about the inhaled clofazimine development program, these are the 3 pillars we look at. Number one, direct lung delivery could enhance the tolerability profile minimizing side effects. We can confidently say after 90 patients enrolled, we have not seen significant patient dropout early on in the trial. We do not know what arm patients are on, but there's just not been a lot of dropout. So the tolerability does look like it is holding up early on in the trial. Our active ingredient is a guideline endorsed antibiotic with decades-long clinical track record. This drug is already used in clinical practice around the world. But due to the limitations highlighted above, we believe this is a real opportunity to transform patients' lives. And finally, the convenient dosing cycle with 1 month on and 2 months off will provide a dose-free phase that minimizes treatment burden and potentially enhances adherence. We presented the ICoN-1 global Phase III trial. I want to remind people that this is a co-primary endpoint in the U.S. of sputum culture conversion and patient-reported outcomes. For the ex-U.S. market, it is just sputum culture conversion. We have Fast Track QIDP & Orphan designation given us 12 years of exclusivity. And to date, we are now at 90 patients enrolled. We need 100 evaluable patients to hit our interim analysis in 2026. Let me remind you that some of the baseline patients will not have a positive sputum culture when they enrolled, and they will not be included in the interim analysis. Next, I'm excited to talk about MannKind 201. As we highlighted last quarter, we've completed our Phase I study looking at 3 doses in single ascending and 2 doses in multiple ascending. We had to redesign of the trial post our FDA meeting feedback as we went into Phase II, and I'm going to share with you today that trial design. This trial will be named INFLO as we look forward to launching this ex U.S. here in 2025. This study will be looking at approximately 228 patients in a randomized placebo-controlled trial with 12 weeks of active drug, followed by 6 months of open-label extension where everyone can get exposure to our product. We'll be exploring 2 doses, which is 2 milligrams TID or 6 milligrams a day of exposure or 4 milligrams BID 8 milligrams a day of exposure. The primary objective of the study will be looking at safety and tolerability, really specifically to make sure inhaled powders will be tolerable in this patient population. The second one will be around the FVC and efficacy signals at the early stage of 12 weeks as the primary endpoint. When we look at these doses, these are consistent and may provide equal or greater exposure than what we saw presented at [indiscernible] at ATS here in May. Regardless of the doses, this range that we both achieved independently gives us confidence that we're in a really good spot to move this forward in the patients and hopefully see a signal here in the not-too-distant future. Now I'll close the orphan lung discussion here on Tyvaso DPI. Our Tyvaso DPI revenue continues to grow as we achieved $31 million in royalty here in Q2, which put us at about $1.2 billion DPI over the last 4 quarters. As you see, our manufacturing revenue shifted downwards from Q1 to Q2 of $22 million. And this is just due to timing of manufacturing that Chris will talk about. But as I talked about 101, 201, dry powders, these are all the things that are going on in manufacturing that we have to shift around our teams as we look forward in the future. We'll anxiously be awaiting the TETON 2 results as well as TETON 1 in 2026. Now I'm going to talk about our endocrine business unit. Afrezza first half year-over-year grew 22% on new prescriptions and 17% on TRxs. We really look at this performance as we start to see how can we grow writers and how can we grow the depth of prescribing. And devil is in the details here as we think about enhancing prescribing amongst our top prescribers, but how do we more broadly adopt our prescribing base. Some of the things we're doing is really enhancing our coverage at clinical conferences. If you look at the building momentum we've had this year, starting at ATTD in March, all the way through ENDO, ADA, ATDC as well as children's for diabetes as well as ad boards and focus groups. We've engaged with over 3,000 health care providers and our booths have been packed with guests wanting to learn more information about Afrezza, not just in the U.S. but around the world. We remain excited about the future opportunity of this product and the potential to help children as we go forward. As we look at our vision for this product, we want to enhance our messaging and field force expansion ahead of the [indiscernible] launch. We need to produce a halo effect, not just for kids, but what this is going to mean for the adult Afrezza community. The new campaign you'll start to see roll out later this year will be called Insulin The Moment. And this really establishes the foundation of the product around speed and control at every moment of a patient's day. This is one of the challenges you hear when you talk to patients and providers is the stacking effect of insulin, the slow effect size of insulin and the challenges patients face whether they're using insulin through a pump or a pet. We believe launching this new campaign targeting not just health care professionals, but consumers will resonate in the challenges they face in everyday control of people using insulin. We also will increase our share of voice. As we've talked about the expansion, we expect the full sales force to be up and running by the end of this year and the first full quarter of their impact will start in Q1 and Q2 of next year. We are deploying medical science liaisons, key account managers, field reimbursement specialists as well as an additional 20 to 30 sales reps throughout our Afrezza footprint in adults. This new targeting will enhance our coverage of the market to approximately 50% in 2026. Additionally, there is future data coming that will unlock our potential in areas like gestational diabetes, inhale first being a completely naive patient newly diagnosed, getting Afrezza in the first 10 days of diagnosis as well as INHALE AIDEx, which is around an exercise study looking at Afrezza in a highly active patient population. These are the next set of generation data that we expect in 2026 and beyond. Now I'll turn it over to Chris.

Thanks, Mike, and good morning, everyone. Before we get into the details of the quarterly results, I want to highlight our revenue growth over the last 3 years as we compare the trailing 4 quarters on an annual basis. This annual double-digit growth has resulted in total revenues over $300 million for the trailing 4 quarters, and we expect this growth to continue through both our commercial products as well as our revenues earned through our collaboration with United Therapeutics. Our overall revenues in the second quarter grew 6%, led by royalties earned on Tyvaso DPI. Tyvaso DPI royalties contributed $31 million in the second quarter, an increase of 22% over the same quarter last year. Collaboration and services revenue consists primarily of manufacturing revenue based on production volumes sold through to UT and the recognition of deferred revenue. We recorded revenue of $23 million in the second quarter, a 12% decrease from the prior year as a result of the net impact of onetime items in both periods. Afrezza net revenues for the second quarter were $18 million, a 13% increase over the prior year. As Mike discussed earlier, we are encouraged by the recent performance of Afrezza in new and recurring prescriptions over the prior year and expect this trend to continue. V-Go net revenue was approximately $4 million for the second quarter, an 8% decrease from the prior year, driven by lower product demand. As V-Go is not actively promoted, we are pleased with the results of the product thus far this year. As we look ahead to the second half of the year, we anticipate continued growth in our royalty revenue driven by net sales of Tyvaso DPI. We expect collaboration and services revenue for the second half of 2025 to be in line with the $51 million recorded in the first half of this year. The quarterly results of CNS revenue have fluctuated this year. This is primarily driven by the timing of manufacturing as we balance the production for the period in terms of Tyvaso DPI, Afrezza and our development programs. Lastly, we anticipate Afrezza will continue its growth trajectory based on the recent underlying performance and our expanded promotional efforts. On the expense side, R&D has increased over the prior year period as enrollment in the ICoN-1 trial of inhaled clofazimine is progressing well and preparations are underway to initiate the Phase II IPF study for our MannKind 201 program later this year. Additionally, our team is developing a DPI formulation for our clofazimine program as well as additional potential pipeline assets. Selling, general and administrative expense has increased compared to the prior period, primarily driven by investments in expanding our commercial infrastructure. As you may recall, we had paused investment in Afrezza at the beginning of 2024, while awaiting pediatric trial data and reduced the sales force. With the potential approval of Afrezza in the pediatric indication, we're now enhancing our commercial organization, having deployed a medical science liaison team and will expand the sales force later in the year. Today, we also shared that MannKind has entered into a strategic financing arrangement with Blackstone, providing access up to $500 million in nondilutive funding. This capital, secured on favorable terms and combined with our quarter end cash and investments balance, of $201 million reinforces our strong liquidity position and is available to be strategically deployed across our key growth initiatives, including supporting our commercial build-out for the potential pediatric launch of Afrezza, advancing our development pipeline and allowing us the ability to move quickly on business development opportunities. Mike and I and other members of the management team will represent the company at the Wells Fargo, Cancer, H.C. Wainwright and Morgan Stanley conferences in September. We look forward to seeing folks there and in other forums this quarter. With that, I will turn the call back over to Mike.

Thank you, Chris, and thank you for the team's hard work on the Blackstone deal, which is really going to provide us the capital we need to produce these anticipated catalysts over the coming quarters. As you've seen, we've executed the first half successfully, and we have several planned opportunities here in the second half for continued execution of our plan. As we look to our stairway of building value, Tyvaso deep dive will continue to be the foundation in the near term. As you look out into the longer term, the endocrine build with international expansion as well as pediatric expansion will continue to not only make MannKind more efficient, but allow us to help more patients around the world as we go forward. Inhaled clofazimine is a meaningful opportunity, and let me remind you that every 1,000 patients is approximately $100 million in revenue. We've also advanced this dry powder inhalation because we believe in order to penetrate the earlier lines of treatment, you're going to need something that's much easier for patients versus the refractory population we're currently studying. Nintedanib DPI is well underway. We've now selected the CRO, and we plan to initiate the INFLO trial here in the near future. As you continue to see Ofev as a meaningful contributor to growth in the IPF space, we're hopefully excited to provide another option for patients as we go forward. We'll be sharing some of the new data at upcoming scientific conferences with ADCES in August here in Phoenix as well as ISPAD, which is a pediatric conference here in the fall. I want to thank everyone for all their hard work this quarter as we really can start to see the fruition of all of our work over the last 7 years coming together this year and next year, and we look forward to continue to execute our plan and share those updates in the future quarters. Thank you for your time today, and we'll now open up for questions.

[Operator Instructions] Our first question comes from the line of Olivia Brayer of Cantor Fitzgerald.

Congrats on a great deal with Blackstone. Can you maybe walk us through what a best case might look like just in terms of time lines for a potential bridging study in IPF? I think the BREE

Sorry, the first one was around what the bridge could look like for Tyvaso DPI and IPF.

Yes, exactly. And just how you're thinking about time line for it, Mike, just given -- I know it will be a much faster time line than what we saw with PAH, hopefully, no CRL is involved. But just how that could realistically play out, right, if TETON 2 ends up being positive and then TETON 1, when could this ultimately come to market, I guess, is what I'm thinking for DPI.

Yes. I mean it's hard for me to comment on UT's regulatory strategy and clinical strategy here. I think what you could just -- as you lay out the data readout that UT has communicated, that's to say it comes out in September and TETON 1 is next year, you got now some time to meet with the FDA and kind of work through what that could look like and potentially get as much work done as you can before your TETON 1 readout because TETON 1 is really for the U.S. market per se. So that's our optimism is around -- let's get the TETON 2 results and then hopefully, UT will accelerate and meet with FDA on what that could look like. And I think some of the effect size that you'll see in the trial will drive some of the, I'll say, ideal opportunity here with FDA. But I think it's too soon for us to speculate the clinical strategy there. I don't want to speak for UT.

Okay. Understood. And then on your nintedanib DPI program, can you maybe just talk about how you're thinking about this drug in context of some of the new updates in that space. Is this basically a replacement to current oral background therapies and then hopefully gets used in combination with newer treatments as they come to market? And then also just a question around whether you guys were able to come to an agreement with FDA around which patients to enroll in that Phase II around naive patients versus patients that are already on background therapy?

Yes. I think that was one of the challenges you kind of heard me say we had to recreate the trial. When we were looking at the original design, it was really about taking nintedanib patients or patients that failed nintedanib and then enrolling them in this and showing more of a non-inferiority design. I think the FDA was adamant on a placebo-controlled on top of general background therapy design as they've given the feedback to other parties. It just doesn't work when you think about the treatment paradigm in the U.S., the IRB approvals you need. You really just can't do a placebo-blinded trial for 6 months. And so that's what made us pivot the work over the last 3 months and really look at an ex U.S. market where it does take, call it, 3 months to get access to the standards of care. You could run a placebo-controlled trial and get them through the safety and clinical IRBs and protect patients at the end of the day. So we've kind of put all the things the FDA requested into the trial. It's just going to be done more ex U.S. than U.S. per se. And I think that will give us the data we need to have the conviction we need to move to Phase III. And we even upsized the trial a little bit from where we were thinking just to make sure the results that we do get are a little bit more robust. The next phase will be the Phase III -- and I think if you look out in the IPF market, we would expect, hopefully, BI's product to get approved. We'd expect Tyvaso DBI to be out there. And so as we look out over the 2-year window, there could be now 4 drugs for IPF, maybe 5 if Bristol-Myers gets there. And then you can see this really being on top of background therapy and designed the way that the FDA expects. As you see those other agents, about 70% of the time, those trials have background therapy on top of, right? And so that's one big area. The second big area is going to be the fact that majority of people cannot tolerate the 2 options that are out there today. And we think there's a lot of patients who either choose to not take current treatment and die because the side effects are so severe. And there's a large population there that we believe an inhaled nintedanib could really help and hopefully by them the time they need for life. And so that's really where we look at the 2 populations, those that are intolerable for the current agents, -- and as the market expands with combination treatment, we think there's a huge opportunity there. And as we go to Phase III, that we think those other drugs being on the market will help us execute a better Phase III trial.

Our next question comes from the line of Faisal Khurshid of Leerink Partners.

I wanted to ask also on 201. Can you discuss your sort of level of confidence in using nintedanib DPI on top of background pirfenidone, both from a safety perspective and also the ability to clear a difference versus a placebo arm that includes background therapy on an efficacy basis as well?

I have Wasim here. Wasim why don't you comment on pirfenidone?

So the combination currently between oral nintedanib and oral pirfenidone, as you know, it's not happening, the combination of the side effects there. So from our perspective, we're going, as you well know, with inhaled nintedanib, the systemic exposure would be very low. So from a safety perspective, tolerability perspective, I mean, obviously, we need to do the trial. But the drug-drug interaction there, we expect it to be minimal. As far as efficacy, I mean, we do have enough reason to believe that the efficacy of both pirfenidone and nintedanib combined, if they are tolerated, that it will be there. This is our hypothesis. And I would argue the same for the upcoming potential approval of [indiscernible]. I mean the combination there, same thing. And the future of IPF treatment in our opinion, is really a combination therapy, which as of now with the 2 currently available therapies, it's not there.

And we will be allowing both of those agents in the background treatment in this upcoming Phase II trial.

Yes. Got it. And then what do you need to show to bring that development program into the U.S.? And would that be something that could occur during the course of the Phase II? Or would that be just for the Phase III downstream?

I think definitely, the Phase III, we feel confident if we get the results here that we need that this is a U.S. global trial at that point. I think it's a matter of timing. So the trial enrollment could go very quickly ex U.S. from currently what we have lined up. And it'll just be a timing issue by the time we get X amount of patients in and go back to the FDA and show them what they want to see, will they allow it. But I think even in the U.S., [indiscernible] is not when you think about, we can't go on top of Nintedanib and you're not switching them, they got to have a washout period. It's just a very difficult trial to execute in the U.S. But I don't think it's an FDA issue as much as it's an IRB placebo study. will investigators even enroll 12 weeks on placebo. And we just think it's going to be a very hard trial to enroll by the time you get it through IRBs and approval, you're going to talk minimal patients relative to the expense and time. [indiscernible] if you have anything else to add Okay. So that's -- so we won't roll out the U.S., but I think our focus is on getting this done as quickly as possible to move the program into Phase III. And by the time you get there, you actually might be done the enrollment period.

Our next question comes from the line of Andreas Argyrides Oppenheimer.

On the progress in the quarter. Also on 201, can you talk about what you expect or what you're looking for in terms of a treatment effect from the Phase II, given also that it's kind of a small -- on the [indiscernible] side? And then also maybe rationale for -- Mike, you already kind of alluded to some of the rationale for going ex U.S., but anything also about the patient profiles abroad that makes sense as well. Trying to get a little readthrough into the TETON 2 study here. And then, Chris, for you, maybe just again, thinking around the Blackstone deal, the rationale to do a kind of a revolving credit deal versus other traditional financing.

I'll start off and I'll ask question to add. I think on the effect size, the main thing we'll be looking at is tolerability and safety because that's really the Achilles heel of nintedanib. I think when you look at the pivotal trials of that product, you can start to see a response in 12 weeks. And so that's why we made the primary endpoint. We thought what's a long enough period with placebo that you can safely go and not compromise somebody's journey and ethically enroll the trial. And we felt 12 weeks is appropriate. After 12 weeks, it's an open-label extension. So we will have hopefully a good group of patients going on for 6 to 9 months, but it will be at their option. So I think we'll start to see that effect size, hopefully, over time, not just at the 12-week mark, but over the patients who continue. And then remember, anyone that's on placebo, we'll have the option of active drug at week 12. And so I think that's really going to give us a nice data set to power a Phase III trial appropriately. And I think when you look at those effect sizes, obviously, they have to be meaningful enough in FVC. So I think when the secondary endpoint will be efficacy, it will not be powered for efficacy per se. The other key aspect of the trial is really the BID and TID. So as the market does not really know and experts don't know how nintedanib actually has the effect that it does, we don't know if it's a signaling issue, a switch issue, a duration of effect of a binding receptor. And so we're actually experimenting with that in this trial design in terms of TID versus BID Obviously, when you look at the [indiscernible] data, it could even be QD, but we want to wind up with a wonky result and try to stretch PK/PD it may not be that parameter in terms of what you're looking at from a QD versus BID. So these are insights we'll look, and you might see a difference between those 2 dosing regimens, and that will be important for a Phase III design. But otherwise, we think this will give us enough information to properly design and power a Phase III trial globally. [indiscernible] , I don't know if you have anything.

Yes. To add to that. So that study, as Mike mentioned, I mean, 12-week is a double-blind period. However, it's really it's a 9-month study in the sense that when you include the open-label extension. So we will have -- and we have 2 active doses versus placebo. So we'll have data on both safety and tolerability and efficacy for 9 months for most of the patients for those who are randomized to active and even the placebo will have about 6 months data after the transition. As far as treatment effect assumptions, I mean, obviously, we have our thoughts about the treatment effect. But again, this is first in patient study. So this will be the basis for our assumptions moving forward. You know we did the healthy volunteers first in humans last year. So we have those data. And the molecule is not new, right, nintedanib. So we understand its pharmacokinetics. The Inhaler is not new. It's already into approved products, as you know. And the powder that we're using is also not new. It's already approved products. So we are very comfortable with the delivery, how we're giving it and the pharmacokinetics and pharmacodynamics are already well understood this [indiscernible].

And then Andreas, on the financing front, as we look out the next 18 to 24 months, we just see a number of key catalysts for us. We have our 2 late-stage development programs. We have starting to focus on commercial prep for one of those programs in clofazimine. And obviously, we have the pediatric launch that we hope to have in 2026, if approved. So as we look at all of those, having access to flexible capital at this point in time, just makes a lot of sense to have this instrument in place. And then, of course, one of the key tenets here is have the ability to be reactive if business development opportunities present themselves. And so speed in those situations, I think, is really important. And so for us to be able to be in a position of strength on that side, again, just made this instrument the right choice for us and really happy to be working with a partner like Blackstone.

Our next question comes from the line of Brandon Folkes of H.C. Wainwright.

Congrats on the update. Maybe just changing gears a little bit to Afrezza. Can you perhaps just talk about the typical Afrezza patient today, sort of where you're gaining the most traction as we continue to see this double-digit growth? And if you've seen any evolution yet maybe over the last 12 months since the sort of inhaled -- the 2 data sets were published. Just unaided awareness of these data sets currently? Are they seeping into the prescribing community? As yet, just given the outreach you've done, obviously, not promoting to it, but just -- and then sort of when we think about depth and breadth of prescribing, where are you seeing the traction today on Afrezza?

Yes. I think the first comment I'll make and Nick is with us is the -- we just got a database breakdown, and I think you can kind of indirectly see it in the earnings is that the breakdown of patients is roughly 45% type 1 and 55% type 2. Over the last year or so, we've been pivoting a little bit more to type 1, and we can see 4- and 8-unit strength is growing a little bit faster than the 12 unit over the last year. So I think that would signal our execution against type 1 is growing and the uptake there is getting a little bit higher. I'll let Nick talk about -- a little bit more about the depth and breadth and some of the work you're doing.

Yes. Thanks, Mike, and I would agree with that. I think what we're seeing overall is increased awareness -- we've changed our strategy a bit by adding targets across the field sales force where we're going after unique prescribers. We've had much more activity at congresses where we've had less of a presence in the past. We're engaging more in scientific and clinical education to create awareness around the science and the benefits of Afrezza within its competitive landscape. So overall, I would say focusing on the adult community, looking to increase unique prescribers, increasing awareness around science and clinical data, I think, is where we're starting to see ourselves making good progress, and we'll continue to do so, focus in that area for at least the next 2 to 3 quarters.

Sorry, I was struggling with the mute but I apologize. Yes, maybe -- sorry, as we just think about the sales footprint and the growth, as we get the pediatric label and sort of in light of the additional capital you now have access to, are you going to think about sort of going with a full footprint for pediatrics on day 1 on the launch? Are you thinking about sort of incremental investment, assessing the traction and sort of then perhaps layering in additional expansion, additional reps to target the pediatric indication over time? Just how should we think about sort of Afrezza investment beyond 2025?

Yes. I think we're building up the peds plan. I think our initial thoughts are number one, we decreased our sales force footprint coming into 2024. And we're running Afrezza for profitability in 2025 and really late '24 all the way into early '25. As we came out and got the pediatric data, right, our confidence level in the peds launch went up, right, in terms of lung safety and believability and the opportunity that exists there. And so as you see this year, we are -- with the hiring of Nick and the expansion of the team. Number one is we -- when we decrease the footprint, we're only targeting about 25% of all rapid-acting scripts, which is mainly our target to maintain our business. In order to grow, we need to target a larger percentage of the market. The #1 thing we hear is doctors do not remember, Afrezza, it's not top of mind, and it's true. Our reps are not there every week, hitting them like they're getting hit with insulin pumps from one company or another every week. So that's important as we close out this year, and we have a label change coming up in October that we want to get the sales force expansion so that, that label change can be communicated more widely. The second thing with peds is it's a different selling target than our traditional Afrezza use. Most of our Afrezza use comes from private practice doctors who know our data, who have open access and they listen to the scientific exchange. A lot of the future is in academic centers and children's hospitals where our reps have not traditionally been as strong nor our selling model. And so we think it's really important to build a dedicated key account manager team with experience selling in institutions. It's a different skill set, and that's where the majority of peds being almost 80% are treated. When you look at our [indiscernible] trial, we had 39 of the 50 academic target centers in the U.S. in the trial. So we had a large percentage of them do the trial, and we think there's a really important opportunity to continue that education and expansion in kids. The other thing we're going through to your question on the uptake will be why do we believe and we'll start to communicate this information, why do we believe the uptake in kids will be more accelerated than we've seen in adults. And anecdotally, our feedback from advisers and conferences and engagements has been very, very positive. Parents have been very excited. People are shocked. They didn't know and [indiscernible] has been on the market this long. And so we just think there's a whole new opportunity to relaunch the brand and pivot the entire franchise. And so we need to keep expanding in adults as we can grow there. But more importantly, going into the pediatric community early and often will be important. And I'll remind you guys, we do co-promote BAQSIMI with Amphastar. So that does allow us to go into the pediatric community and promote that product today, and that is something we're weighing as we go forward.

Our next question comes from Anthony Petrone of Mizuho Americas.

Great and the Blackstone agreement. Maybe a couple on clofazimine and a follow-up on Afrezza. When we think about clofazimine ICoN ahead on the interim getting to 100 patients, if you get the desired sputum conversion outcome at interim, how does that change just the time line? Can it actually be fast tracked for clearance if you get that sputum conversion? And then when you think about building a sales force, a pulmonology-facing sales force, like what is the size of that team if you look ahead to a positive outcome? And then I'll have a follow-up on Afrezza.

I think on the sputum, obviously, that's where we're weighing the trial statistically. And if we get that interim result next year, we're going to let the trial enrollment keep happening even if we were to hit the 180 mark. So I think if it says it's good at 180, some of the debate we'll have at that time will be, do we lock the database at 180 or do you wait for the remaining 20, 30 people to hit the 6-month endpoint. And that will drive the time line there with FDA. It does have QIDP designation as well as fast track. So there is an opportunity for a faster review and a rolling submission, I believe, with FDA. And I think the FDA has been nothing but collaborative with this NTM asset and clofazimine. There is nothing else in development that's meaningful. We're the last option for patients at this point. And I do think the FDA wants to see this product succeed and get there if we have the data to support it. that's on that. On the pulmonary sales side, I wouldn't speculate yet the size or investment there. That's one of the reasons we put the capital up as we get closer, we'll make the right assessment opportunity. But it's not a huge footprint, right? This is a very specialized disease. I think the biggest thing is weighing as we continue to watch ARIKAYCE in Japan, what do you do in the Japanese market? And how do you either partner that or build it yourself. And I think those will be the key strategic questions we face over the next 12 months. As we look in those markets, there is opportunity -- significant opportunity in Japan as we look at trial enrollment, KOL support, has been in Asia for the last few weeks. There's a large opportunity there and a lot of support for clofazimine. So we're really excited about it. I think it's going to be a meaningful opportunity for trajectory inflection on MannKind. And it's coming before we blink, I mean, really next year, close to this time, we'll be hopefully seeing what the interim says and going where we are.

No, that's great. And then on Afrezza, maybe just that patient profile in pediatric from a utilization intensity standpoint. Do you imagine this is going to be kind of more meal time? Or will it be even some aspect of basal plus bolus? So just trying to get an understanding of the intensity of a pediatric patient on Afrezza versus an adult patient.

I mean, Nick just came from the conference here in July. I'll give you my thoughts and then Nick, you can add any anecdotal feedback you have from the sessions. But I think parents stress a lot around hypoglycemia and insulin pumps and chasing their child down with injections. And I do believe parents will want to use Afrezza full time versus sometimes we hear sporadic use on top of an insulin pump, [indiscernible] highs, holidays, things like that. So Nick, I don't know where you came back, if you want to add anything from the conference and the parent engagement you had.

Yes. I think there's -- what we hear largely from the caregivers, which tends to be the parents or the patients themselves is post diagnosis, the patients go through a series of steps, which is initiation of therapy, which tends to be MDI, perhaps looking to switch therapies or eventually going on an AID. And so I think that it's an opportunity for Afrezza to be plugged in at many different steps along the diagnosis pathway and the treatment pathway. I also think, as Michael had mentioned, -- there's the opportunity for meal time and multiple controls throughout the day. These are younger kids that tend to be active playing sports, grabbing meals as they go. And so I think the opportunity for pediatrics and adolescents will be slightly different from what we've seen in the adult community. And I think we're making adjustments as to how we fit into that community now.

Thank you, Anthony. Yes, we just see kids being so much more active, and that's where inhaled insulin plays much better role for patients.

Our next question comes from the line of Yun

The first question on 201 study. I just wanted to confirm that I heard it correct that you said the placebo-controlled 12-week treatment period is not powered for efficacy. And is the goal to select one dosing regimen between the TID and BID and move it forward to Phase III? Or is it possible that both dosing regimens can move into Phase III? And also, what's the possibility of including active control arm in the Phase III or any requirement regarding inclusion of an active control arm, please?

I think it's a little too soon to speculate the exact Phase III design. But I think from the interactions we have with the FDA you can see adding -- we have to assume more drugs get approved. And I mean, one of the challenges is nintedanib is the majority of scripts in the U.S. So it's hard to add on top of nintedanib and inhaled nintedanib. So you really look at -- you're limited to pirfenidone. So we really do hope that there's more drugs approved over the next 1.5 years so that when you run this trial, you have background therapy that you can add on top of in a placebo arm as the FDA seems insistent on the placebo control here. So it's not an active comparator as much as this placebo compared on top of background therapy. That's our running assumption today. In terms of effect size and powering the trial, should it be 1 or 2 dosing regimens, I think we're just -- we have some flexibility here in terms of -- is it 2 milligrams or 4 milligrams twice a day or 3 times a day. I think that's our focus is getting one dose regimen into Phase III. We don't expect to see a significant difference between these 2 arms. But let's say there is a -- as you look at the subpopulations and patient characteristics, maybe we start to see signals in one or the other, and that would drive a potential dose regimen selection. But we don't expect to go at this point with 2 different doses in Phase III. We expect to pick one, and we'll look for group analysis and sub analysis on patient characteristics is that does the BID versus TID show anything different. But our overall assumption is it's probably a BID exposure, and that's our working assumption, but we didn't want to get there and find out maybe TID had a better effect size or a better receptor binding that we can't see. So part of this is you're going into a nature that no one else has ventured into in terms of inhaled nintedanib and receptor binding and directly impacting the lung. So we feel very good about that exposure, but now we just have to understand the signaling that happens in that tissue.

I see. And then a question on the $500 million loan agreement with Blackstone. Are you able to share under what conditions will you be able -- we need to draw additional capital? And would that be based on commercial or clinical milestones, please?

No. So it's up to $500 million. We draw $75 million now. We have $125 million that is committed. We, for the most part, have the ability to draw that at our discretion. So there are no specific sales milestones or development-related milestones that would be contingent upon. I think Blackstone just wants to make sure that this is growth capital, and we're putting this forward in a way that makes sense.

Thank you. I would now like to turn the conference back to management for closing remarks.

I just want to say thank you to everyone today for listening. We are very excited about where we're going in terms of the late-stage development pipeline is really starting to mature. We've spent a lot of energy and a lot of money over the years to get to this point. We now have the flexible funding that we need to make sure we can grow these assets, invest in these assets as funding a late-stage Phase III and a late-stage Phase II is important to us and being able to kind of get to the data readouts will only create more value inflection for shareholders and patients. And so we're very excited about those late-stage assets and the opportunity coming at us with peds. That's now on file. That clock is ticking, and we'll continue to update you guys on those opportunities. And thank you again for your time and look forward to follow- up questions and investor meetings in September.