Rose Alinaya - Senior Vice President and Principal Accounting Officer Matthew Pfeffer - Chief Executive Officer and Chief Financial Officer Raymond Urbanski - Chief Medical Officer Michael Castagna - Chief Commercial Officer.

Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation 2016 Fourth Quarter and Full-Year Conference Call. My name is Eric and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded today on March 16, 2017.

Joining us today from MannKind are Chief Executive Officer, Matthew Pfeffer; Chief Commercial Officer, Michael Castagna; Chief Medical Officer, Raymond Urbanski; and Principal Accounting Officer, Rose Alinaya. I would now like to turn the call over to Ms. Rose Alinaya, Senior Vice President and Principal Accounting Officer MannKind Corporation.

Please go ahead..

Good afternoon and thank you, Eric. Thank you for joining us on today’s call. Before we proceed, please note that comments made during this call will include forward-looking statements within the meaning of federal security laws. It is possible that the actual results could differ from these stated expectations.

For factors which could cause actual results to differ from expectations, please refer to the reports filed by the company with the Securities and Exchange Commission under the Securities and Exchange Act of 1934. The conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, March 16, 2017.

We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Turning now to the financial.

Total revenue for the fourth quarter of 2016 was $12.4 million, which included $10.2 million from insulin sales to Sanofi, with net income for the fourth quarter of $54 million, including $72 million from the extinguishment of debt owed to Sanofi as part of the settlement.

For the full-year 2016, net revenue was $174.8 million, comprised primarily of $172 million of net revenue from collaboration with Sanofi. Net revenue from commercial product sales was $1.9 million related to Afrezza product dispensed to patients after giving effect to gross to net adjustments on gross revenue of $2.7 million.

Research and development expenses were up $14.9 million for 2016, a decrease of 50% compared to 2015, primarily due to lower expenses associated with the reductions in force of $6.2 million, decreased facility spending of $3.3 million, lower project costs of $3.1 million and reduced clinical trial costs of $2.1 million with the completion of Afrezza trials in 2015.

R&D expenses for the fourth quarter of 2016 decreased $2.4 million from the third quarter of 2016. Selling, general and administrative expenses were $46.9 million for 2016, an increase of 14% compared to 2015, primarily due to an increase in cost of sales and marketing of Afrezza.

Sales and marketing expenses were $19.8 million for 2016, an increase of $18.3 million over 2015, resulting for the assumption of sales and marketing of Afrezza. General and administrative expenses were $27.1 million for 2016, a decrease of 31% from 2015, primarily due to lower compensation and stock-based compensation from the reductions in force.

SG&A expenses for the fourth quarter 2016 increased $2.2 million from the third quarter of 2016. The $32 million gain from extinguishment of debt in 2016 resulted from the forgiveness of the full outstanding loan balance of the Sanofi Loan Facility as part of the settlement agreement.

On March 1, 2017, following stockholder approval of the reverse split proposal, our Board of Directors approved a reverse stock split at a ratio of 1-for-5 of the outstanding common stock and correspondingly reduced the authorized number of shares of common stock from 700 million to 140 million shares.

Giving effect for the reverse stock split, net income for 2016 was $125.7 million, or $1.37 net income per share, compared to the net loss of $369.4 million, or net lost per share of $4.54 in 2015.

Cash and cash equivalents were $22.9 million at December 31, 2016, not including $30.6 million subsequently received from Sanofi and $16.7 million subsequently received from the sale of a surplus building in the first quarter of 2017. Cash and cash equivalents were $35.5 million at the end of the third quarter of 2016.

During the fourth quarter, we received $10.2 million from the sale of insulin to Sanofi, $4.8 million from sales and shipments of Afrezza, $2.2 million from sales of surplus insulin to a third-party, and $1.1 million related to the collaboration with Receptor.

Currently, we still have $30.1 million available to borrow under the amended loan agreement with The Mann Group. With that, I’d like to turn the call over to our Chief Executive Officer, Matthew Pfeffer.

Matt?.

Thank you, Rose. What we have on the screen at the moment is sort of an outline of what we plan to discuss today. Rose has given us a financial update. I want to discuss NASDAQ compliance after which I’m going to turn the call and most of the discussion over to Dr.

Urbanski, our Chief Medical Officer to talk about some developments in the pipeline and some clinical program plans. And then a large part of the call today is going to be devoted to Michael Castagna to outline some of the things we’re doing in the commercial and marketing areas.

Probably most of the people in this call heard me give a presentation just two days ago at the ROTH Capital Conference. So I’m going to take this advantage, or this opportunity to let the others do most of the speaking today having heard from me so recently. If you didn’t hear that presentation, it’s available online, you can go find it.

But before I turn the call over to others, I did want to talk about NASDAQ compliance.

So as it happens literally just moments ago following the close of the market, we received a letter from NASDAQ, which I’ll paraphrase for you today, suggest to me and says, as of September 14, NASDAQ had notified us that our common stock had failed to maintain a minimum bid price of $1 over the previous 30 consecutive business days, as was required by the listing rules.

Since then, NASDAQ has determined that for the last 10 consecutive business days from March 3 to March 16, 2017, the closing bid price of the company’s common stock has been at greater than $1 per share.

Accordingly the company has regained compliance with the listing rules and the matter is now closed, so we’re back fully in compliance with NASDAQ and that issue has now been put to bed following our successful reverse stock split earlier in this year.

So with that, I want to turn it over to Ray who will talk a little bit about our pipeline and clinical development activities. And as I said, Michael will give a presentation and then I’ll make a few closing remarks and we’ll do some Q&A at the very end.

So that, Ray?.

Thank you, Matt. So before I address Afrezza’s specific topic, let me just give a brief update on our early development candidates. We are currently working on several products shown on this slide or six of them are most advanced one. I’ll just speak to the top two. Our inhaled epi program continues to progress.

We’re involved in conversations with the FDA regarding the regulatory pathway for an anaphylaxis indication. We are also assessing the possible indications for possible other indications for epi as well.

For Treprostinil, we submitted a pre-IND meeting request with the FDA on March 8, and we expect to have the meetings with the FDA sometime in May to further articulate what the Treprostinil program may look like. So now let me turn to Afrezza. We are preparing to relaunch the Afrezza pediatric program.

We are approaching this activity much like we would a new product launch to garner excitement and enthusiasm for the use of Afrezza in the pediatric population. As part of these activities, we are leveraging our relationship with the JDRF, an organization dedicated to the treatment of pediatric diabetes.

In addition, since the spending enrollment in the pediatric PK study at the time of the Sanofi transition, we have amended the protocol and resubmitted it to the FDA. We expect to reopen enrollment this coming quarter in parallel to our pediatric program re-launch efforts that I have mentioned briefly above.

Finally, we are mapping out a strategy that will significantly reduce the time to filing for a pediatric indication. This will obviously involve some discussions with the FDA and we’ll update people as we get – as we progress. Now, to our Afrezza clinical program. It is well known and documented that diabetes is now well controlled.

Over 60% of diabetics are not at the appropriate A1C goals. The data you see on this slide demonstrates that. When you look at the percent reaching target across commercial and Medicaid plans, for example, you see that two or the three patients are not at the ADA goals.

For Medicare patients, the data is so discouraging that they don’t even track patients that are below seven. The problem with this have been articulated by Dr. Riddle in an article published in diabetes care recently. And is – it is considered to be a complete lack of control of postprandial hyperglycemia as he called the prandial problem.

We believe that Afrezza is uniquely situated to address this situation. The Afrezza clinical program plans and objectives is to demonstrate that Afrezza when dosing titrated properly will resolve the postprandial hyperglycemia problem and get patients to go while additionally keeping them for improving their time and range.

As a start, we will be conducting real world effect in these studies and type I and type II diabetes. We have engaged top tier KOLs to provide important guidance on these studies. We will begin operationalizing these studies in Q2 hoping to have data sometime later this year, or early next year.

With that, I will turn the call over to my colleague Mike Castagna, who will discuss our commercial efforts..

Thank you, Ray. I briefly want to touch on 2016 and where we went and have gone to tell you some of the key things in Q4, and then just tell you where we’re going year-to-date and with respect in terms of the last few weeks of launch, as you see the prescriptions coming out.

The first is, when we received the product back from Sanofi and one of the reasons we were told is, it wasn’t commercial responses. And so before we spent a lot of money and a lot of infrastructure investments, we really wanted to get out there as fast as possible and demonstrate that this product was commercially responsive.

I think as you’ll see in a few slides, we were able to turn NRxs and TRxs up, and obviously it wasn’t to the extent that anyone would like. You have to remember this was mainly due to the fact that we were limited on resources, we were rebuilding in commercial infrastructure from scratch.

And we really want to prove that this was commercially responsive and not with 200 reps, or 300 reps, but with a very small sales force of approximately 55 people. I want to clarify that, because many people sometimes think we had more reps than we had. As a result, we were able to demonstrate this.

We also built and established internal processing controls. This was really important as we thought about transitioning from a contract sales rep model to a full-time MannKind employee model. We needed time to set ourselves up for growth, building out a commercial infrastructure from the ground up usually takes years.

We were able to demonstrate to get a sales force up from April 1 to June 15, when we had a sales meeting to launch this product. And by July 1, within three months, our sales force was out there full-time hitting the road running. With that came some challenges and we just didn’t have enough time to get the right things done in the right way.

And that’s why we really didn’t scale up as fast as we want it, because we wanted to get our new sample packaging out there, which just took place in January. We wanted to get our new packaging out there, which also just took place this January, and we wanted – it takes time to get payors to change formulary.

These formulary decisions are sometimes made once a year, sometimes made once every three years. And so when you get a product back mid-year, you can’t just walk in and say change your formulary status, it’s not that easy, and we didn’t even have a managed care team when I first got here. So since then we’ve established the process for contracting.

We’ve hired an incredible team, and this team has had a lot of success in the first few months out there of 2016, to the point where they’re able to secure favorable payor access in 70% of commercial plans checked in January of this year.

Once we saw we were going to get to Sanofi settlement, we started several initiatives The first was transitioning out of Touchpoint, the second was the scale of the sales force, and the third – sorry, and the third was really getting ready to accelerate our growth in a way in terms of partnerships with third parties, where people with diabetes are going for information.

It didn’t make sense to stand a bunch of patients in doctors offices if doctors didn’t have samples, they didn’t know how to get the product reimbursed. They didn’t know how to prescribe the product, and those patients will come up treatment right away.

And so we see over $5 million in commercial expense that we anticipate spending in 2016, but we really thought the prudent investment would be to extend our runway in 2017 when we had a much better probability of success of securing patients and making sure they get on treatment right, but also making sure we have coverage at the appropriate time.

A couple of other things that you wouldn’t necessarily see in the public domain is how you launch through the wholesale system. So we had an inventory title model that was a little bit more expensive that we had to transition out and that was also happening in the background and that happened in the month of December.

That gives us a little bit of extra margin and it also helps us control our inventory and our relationship in stocking at the local levels. Many times it’s difficult to deal with stock outs across the country and now we have complete control over that process. The final thing I’ll say is that the MannKind ended the year with roughly 150 employees.

We hired almost 100 FTEs across many functions in a time period of four to six weeks. That that’s something that a lot of companies can do of any scale that we did. And I’m really proud of the team that we’ve hired, the people that have joined the company. They have significant diabetes experience. We’ve hired a fantastic marketing team.

We just suffered from a lack of capacity as we went through 2016. Tables now set, People are in the field. We have a few more openings left, and we’re really out there hitting the ground running. And I’ll share with you some of those early indicators towards the end of my talk.

And then finally, just before we exit the slide, there’s a couple of things you don’t see in the data, which didn’t happen in 2016. First, our big prescribers that really loved Afrezza did not come back on Board. And in fact, one of them passed away unfortunately, and that did hurt the Q4 performance.

When we expected a certain amount of prescribers to come on Board and we did our forecast, we went back to them and said, what’s going on? What happened? We know you like the drug, you had a good history of prescribing. And one of the number one things we heard consistently was, I just need to see a rep for more often and just not top of mind.

This is a very competitive category and that fit into our realization in order to grow faster, we really had to scale up. So we’ve done that. We’ve also – our existing reps that we had hired back on the Touchpoint didn’t always have existing relationships within a target that we’re calling on. So we know we were subscale.

We have some capacity in terms of challenges with funding. And as we exited 2016, you saw we settled with Sanofi. We scaled up. We hired a salesperson who’s been calling on these targets for many years and they have a tremendous amount of experience and passion to help patients. Next slide here is an important cycle, it showcases a few things.

Number one, I made a comment last year that or earlier this year, sorry, I lost track of time here, but we were making changes from a position of strength. And many people didn’t quite understand what that meant.

If we didn’t have cash in the bank, if we weren’t able to make tough choices, we wouldn’t have been able to move forward on a couple key decisions, such as the reverse stock split, such as moving out from a contract sales force to a full-time MannKind employee sales force.

This was really important that we had one way to give people confidence to join the company that we made them shareholders and we continued to progress in the way we knew we could to make it a commercial success. In November, if you look on the slide, that’s when we announced that we were actually in Touchpoint.

And anytime you tell a sales force, your first decision to exit is, they’re going to start looking for work. We also had probably about a 30% vacancy rate that we held at that point in time. We knew that was hurting ourselves.

The other thing that you don’t see is, we had a voucher program that was out there that did show up in the prescription trend that ended in January. So, there were certain amount of prescriptions each week that were free drugs going out there through the voucher program, but no longer show up in 2017.

There’s a lot of new insurance that takes place one, one for many of us with commercial insurance and therefore new prior authorization need to take place and take time.

We significantly increased the sampling and the product with the new sales force that also will cannibalize some TRxs in the marketplace as people may have problems in the insurance and they’re are not filling the drug, or they have high out of pocket cost in the beginning of the year.

And then finally, our consolidation of titration boxes that we launched recently, a lot of patients, not a lot, but I guess quite a few getting an 8, 12 combo box for us, now they’re able to get one titration box and solve that into one co-pay. And so we’ll see consolidation of TRxs part of that reason. So we’re not concerned.

When we look at the last few weeks of prescription trends and say, oh, my god, the world’s falling. That’s not the case. We know we had to make some tough choices. We know we had to make the transition with the sales force, and we know we had to scale in order to make sure MannKind is successful.

I think this slide demonstrates at the high level on the purple that Afrezza was commercially responsible when we launched the Touchpoint sales force. Number two, the green line shows you the NRxs were going up, and the blue line shows you that refills are falling.

You have to remember when you see 100 or 150 NRxs every week, that does not necessarily mean, we had exactly 150 new patients. There’s another number here that does not always public, which is a new member Rx, and that’s a new to drug person. And that number is always much smaller than the NRxs numbers.

NRxs account when you switch pharmacy sometimes, when you switch doctors, when your prescription expires and you get a new prescription. So you have to keep in mind that that is in the base. And so when you see the NRxs realize there’s a sub number of new patients that’s within that.

With the sales force just even support the commercial responsiveness of the drug, you see, as we exited, you saw NRxs decline now that the people are back out there obviously expect NRxs’s to start to go back up. Next slide.

The other thing that’s really important and this comes to me a lot of times from our shareholders on the phone is, Mike, why are we not seeing refills billed? Well, I think you saw in late Q4, the refill started building.

The other thing you can see that that’s not always transparent to the marketplace is, we look at something called medical possession ratio, and to make that very simple in your head, that means if a patient went to a pharmacy to fill a 30-day supply did they actually get enough drug to cover the 30-day supply.

And the bottom line is, if you look historically over the Afrezza’s launch, an average patient was only getting 70% of the drug filled that they actually needed, which meant by week three, they were out of stock, out of supply, and we have to go back to the pharmacy and we discover those refill too soon. So now we see that number well over 95%.

And so we see the average patient who gets a prescription filled has enough coverage to get through the month. We’ve eliminated the refill too soon issue and titration boxes are helping increase compliance from retention, and they’re also giving people the ability to succeed in their titration and getting their goal in the first month.

Under the previous launch, we saw a lot of people drop out in the first 30 days. We expect as we continue to go forward that dropout will be significantly reduced, which will only help us compound TRxs as we go forward. And so in that is the blue line, where you can see from July, we had a little under 170 all the way through December.

The average Rx had over 195 cartridges. That’s also important when you think about the price point of a new start for patients. It’s not necessarily a $200 price point, it’s somewhere upwards of double that price. That allows us to make a significant investment upfront to make sure people are doing well in the beginning.

The other part of the weekly average TRxs and you see that continue to grow as we progressed from July through December. When you look at weekly data that I know comes out there online, that’s an early view, it’s not a full dataset. You have to wait for the monthly data, which one average is going to be higher than the weekly data.

And so this is a true representation of that, it’s not adjusted for days of the month, so if December had 31 days and November had 30, you’ll often see it will increase. But in general, you can see we were having nice trends as we were making progress in 2016. And I want to move forward to 2017 and close out 2016.

First, we’re focused on three 3 P’s, the payor, the providers, and the patient. So with the payor, we’ve had significant meetings with all the top payors and that’s been ongoing since July 2016.

This is resulted in significant formulary coverage of Afrezza coming into this year, and it’s also resulted in several formulary and clinical presentations at the top payors that all of us will be familiar with. Some of them are waiting to see a few other issues – a few other topics and clinical presentations.

Some of them, we can only catch them every 48 weeks. And so we were just at a conference last week and we’ll at a conference with many of them in the next two weeks. So but in general, I can tell you the discussions are very positive.

It just takes time for them to get through their internal controls, modify contracts and review formularies and clinical presentation. We do have a new value proposition story that we are orchestrating that will also be launching that will really highlight what Ray talked about around postprandial control.

The payors today have really, they typically choose one or two of the mealtime injectable insulins. There is not always a lot of choice. And we see that that has not worked in two out of three patients in order to help people get below seven. And the data is finally starting to build that they really get the large percent of people below seven.

We always got to balance hypoglycemia and pushing the dose of the prandial insulin. So this is something that we do believe we will win. It will take time, but again, talking to payors early days are very positive. We’re also expanding the capacity of our payor team.

You see we have a job opening today and we will continue to expand and enhance this team as we go forward. On the provider side, our sales force today, we won’t give exact numbers for competitive reasons. But it’s approximate 3X of where we were last year in terms of where we expect to make impact.

And we still have few more openings, I think, six or seven. We’re interviewing the candidates today and tomorrow and we should have those pretty much closed out over the next week or two. We transition to a per day nurse educator model.

And so now we have almost 80 nurse educators across the country who will help to a per day in training and/or education in office. This significantly reduces the cost of a fixed cost into a variable cost and makes it that much more impactful. So as we grow, this cost will grow, but not fixed cost as we had in 2016.

We’ve enhanced our focus on MannKind Cares, which I’ll share with you briefly, as already talked about samples and packaging. The next one that I get more questions than I could ever imagine is, when you’re going to kick off commercials and what are you doing for the patient? And so I want to try to answer that today.

The first one is, we have integrated a new patient teach program that really helps enhance that process at the local level and will turn the patient into starting patient very quickly within days and weeks of the doctor making the choice.

The next is, we’ve partnered with third-party, such as Charles Mattocks who’s putting a reality show on for diabetes on this Discovery Life in the summer. That will be one of the first time you will see our TV commercial aired. It’s part of our sponsorship. We are going to get exclusive commercials during that show.

So the more successful that show is, the more viewers will see our ad. And it’s a very targeted population, and that’s in the process of being filmed and we’ll continue to be excited about seeing that starting in July. The next, as many of you may have seen at Damon Dash, he’s a gentlemen who is bigger than life himself. He really has a ton of passion.

He’s been a Type 1 diabetic for over 30 years, and he happens to be a person taking Afrezza. He has genuinely taken an interest in the product and with diabetes and educating others around their diabetes health.

He’ll be launching something called Dash diabetes network over the coming weeks and there will be targeted content launching out of that process. And then finally, Outcome Health, which was formerly known as Context Media, I’ll talk about in a second, which is really the in-office iPads, wireless, et cetera, that you see.

He is launching affective yesterday with commercials for Afrezza showing there in the office. We also will be expanding our social media capabilities, which I’ll touch on in a second. Just a highlight, when I get the e-mails from you all on DTC and when you’re going to launch your commercial.

The first is that, our market share today, you really don’t want to launch TV in a broad spectrum. You would literally be flushing your money down the toilet relative to return. First, you’re going to need over $40 million just to launch a real TV campaign. And second, the impact from TV to prescribing is typically three to six months.

And you have to have enough reach in frequency of those commercials to impact the patient at the time they’re going to see their doctor. So they see the ad and make an appointment, and you have to make sure, they’re continuing to see your ad although we have until the day they make that appointment.

So it’s not typical that patients sees an ad and they go and say, I want that drug tomorrow. That typically takes two to four months. And so there’s always a lag from the time you do a consumer effort for the time you have an impact.

And you can see here within the diabetes class alone, it’s $40 million to $130 million in spend just in the last year for some of these leading brands. So when it comes to TV, it’s something we’ll continue to evaluate. We will be launching targeted TV ads. We are building a TV commercial, that process takes four to six months.

We started that process in December, once we knew we had the Sanofi funding to extend our runway throughout 2017. Those ads will need FDA feedback and review. And once they’re finalized, we will finalize those and launch those. Another thing I’d like to announce is, we did hire a gentleman by the name of Jason Appel.

And Jason joins us from Amgen and Sanofi. He has had significant diabetes experience as well as digital experience throughout the industry.

He’s really helped us harness all the social platforms, whether it’s Twitter, Instagram, Tumblr or Pinterest, and he really is partnering with these companies and third-party vehicles that reach out to people with diabetes. And so you’ll see a lot more. You’ve already seen our new Twitter handle Afrezza HCP Afrezza patient.

There’s a lot more coming as it comes to our social media presence and engaging our patients online. We see the positive stories all over the Internet.

It’s probably one of the few times, where as a company you may want to take the risk on adverse event reporting an FDA requirement, because the overwhelming majority of feedback on the Internet are patients voting for their health. They’re talking positively about our drug. They’re very excited about this product, and what it’s meant for them.

And so we want to harness that context and really get people together and start spreading the word. We’ll be partnering with a leading third-party portal who works with patients and doctors.

They have 6 million people with diabetes in their network, 2.2 million unique visitors a month to the properties, and all 30,000 of our targets for doctors who will be also being engaged.

So I want to move our dialogue from are we going to be doing broad TV commercials? I would say is, the leadership team here will make decisions on the amount of funds we need to raise and what we do with those funds? And you really want to accelerate growth and the TV ad, we think will drive that, or do we double down on other efforts that we’re doing.

But today, I want to focus you on what we are going to do. Number one is, point-of-care. The point-of-care outreach potential is significant. We’ve done radio. We’ve – I mean, sorry, we’ve done newspaper, we’ve done magazines, and we’ve done online.

So you’ve seen we’ve done USA TODAY direct mail directly to patients, we’ve done health craze, and we’ve done sporting events throughout the World Series. We’ve – that help us gain some awareness. But more importantly, point-of-care at the doctor’s office is something where we know we can make immediate impact in the next 30, 60, 90 days.

So I wanted to announce today the Outcome Health platform, this is what you see. You’ve got the TV in the doctor’s office. You have the billboard if you look on the left wall, there’s like electronic billboards that will rotate, and you have patient iPads in the office.

So when you’re waiting for the doctor to come in, you have an iPad and in all those scenarios you will see a Afrezza branding and ads being placed. They have averaged over 155,000 doctors, obviously, we won’t be in all those offices. But we will be in a large percentage of our targets that have this capacity and capability in the office.

Now, I want to bridge to the early indicators of success. I’m sure many of you saw NRxs on the Internet and wondering what’s happened in first few weeks out there? And we – they’re flat week-to-week and for those who didn’t see, I think, it’s important to know. The first few weeks our NRxs were flat and TRxs was slowly climbing.

One of the first things we see and we look at it on a daily basis is the number of samples ship, the number of co-pay cards redeemed and downloaded, as well as referrals in a MannKind Care. So we know daily what’s happening and how quickly and is there are any concerns that we need to correct.

And so we meet weekly on these things and we have dashboard that we continue to watch. I want to share with you just a couple of key highlights I think are important for you to know. Number one, are samples. We shipped over 2,000 sample boxes just in the first four weeks of launch.

I can confidently tell you that these are – the last two weeks have been all-time highs and samples ever shipped on the product and which tells you our sales force is out there. Doctors are requesting the samples, and that’s just an early indicator of what’s to come. Number two, MannKind Cares.

This is our reimbursement portal This is the way we help people get access to our products, whether it’s insurance barriers. This is really meant to help patients navigate through the process, so that they don’t get lost. In the last four week, we’ve had over 200 referrals come in into the portal.

These people don’t turn right in the prescriptions they want. And so when you look at NRxs and the lag effect from the time they get prescribed to the time they get reimbursement for the time they actually ship drug at the pharmacy, there is some lag effect. And so what I can tell you out of 200 referrals, obviously, they build week-over-week.

10% of completed through insurance verification and privatization, those will show up in the weekly NRx and TRx numbers. 15% have been shipped to three products.

So one of the things we offer patients that are commercially insured is, if you don’t get coverage in the first five days that we’re processing reimbursement, we will ship you free goods from MannKind Cares on a titration box to get you started.

One of my goals in life is to make sure that patients don’t suffer the stress and tension that exists between a doctor’s office, prior authorizations, insurance carriers, and pharmaceutical pricing. It’s not fair to the patients that they get stuck in the middle.

And so where possible, we do try to help those people start on drug as quickly as possible. We had about 2% that canceled, I would tell you that number is low. Typically, you’d expect 5% to 10% to cancel.

As these people progress their reimbursement process and they find out their co-pays or their out of pocket cost, we would expect this number to increase slightly. But the overwhelming majority of coming in the last few weeks and you see 70% of all these referrals are still in process.

And so as they work through the system, they will get started on three product and they will turn into NRx and TRx. And in small sub cases, they unfortunately may not gain insurance coverage and then we have to work through the appeals with the doctor’s office.

But I think these are the two earliest indicators you can look at in terms of samples and trial and getting peoples earlier. The final one is around co-pay new enrollment and new presenters. So on this slide, you see a purple line on top and a blue line underneath.

The purple line is really how many enrollment, meaning, somebody goes in enroll and says, they download a co-pay card, which gives you an indicator that they’re going to get a prescription. Please remember that probably less than 20%, 30% of all of our perceptions you can have a co-pay card. So well over 60% to 70% do not even use co-pay.

What you do see is two big blips here; one in July/August of 2016 and one in December/January of 2017. Those blips are related to Sanofi programs that were ending and then a little bit of people downloading new co-pay cards. So I won’t count those as true and new enrollments, they’re just switching from a Sanofi program to ours.

What we do see on the purple line is, as we progressed 2016, we were seeing a slowdown in our activity and it was really related to vacancy management and getting out there in relaunching a sales force.

So we knew we had vacancies and new enrollments were slowing down, where you can see in February to March, new enrollments to back up and again there’s a little bit of a lag effect by two to four weeks from the time they roll co-pay card to the time they use the co-pay card. For the first two weeks out there, we’ve seen this increase.

The blue line below, you can see there was a spike in July of 2016 on new enrollments and over the next three months you saw people present and redeem this co-pay card.

Again, you see the same thing in January 2017, and you see the continued new enrolments increase, and we would expect new presenters, i.e., new arcs to start to increase over the coming weeks, as these people come in and get their prescriptions filled with their doctor. I’ll just close by saying, it’s been a lot of excitement out there.

The tone from the doctor is when you first got out there in 2016 was one of – are you going to survive? Are you going to make it? Can I use your drug? What’s the titration box? How do I prescribe it? So this year we’ve had a lot more openness in discussion with doctors, a lot of positive feedback on the new programs we’re launching, and most importantly, we’ve really simplified the on-boarding with patient.

I think if you were sitting in a physician shoes, give a paradigm shift like a President in terms of how it’s dosed? How it’s used? And how it’s prescribed and reimbursement on top of that? So that takes time for people to understand. It takes time to make those calls to get in the physician’s office.

And you also have to remember, we had a 100% disruption across our sales force and territory alignment, as we scale up our infrastructure. So we did keep probably about two-thirds of the Touchpoint people that were there. Now, we transitioned them over to full-time MannKind employees. And so it’s not that Touchpoint didn’t work out, we were unhappy.

It’s just in order to scale up and launch a new commercial business model that’s differentiating and putting patients on drug quickly, required a different mindset. And so those people are now here, they’re trained and they’re out the door, and I’m really excited to see what we’ll see over the coming weeks with all the programs we’re launching.

I’m going to stop there and turn it back to Matt..

All right. Thanks very much, Mike. So recapping somewhat, as Rose told us, we finished the year in a very strong cash position with a very strong record, in fact, earnings, greatly reduced debt than previous, and a very strong cash position as well.

If you take the year-end cash and add back some things that we hadn’t yet received, but we’re in receivables and we’ll receive shortly after the end of the year. You’re talking over $70 million in actual cash. Take that, add that $30 million that’s still available for The Mann Group should it be needed. Clearly, we’re in a pretty strong cash position.

We’ve also made, as Ray told us, continued progress with the pipeline. Obviously, we have to prioritize our spend and Afrezza is first and foremost our number one priority. So we start those programs from time-to-time. But we continue to make solid progress there in spite of that. He also talked a lot about our clinical programs.

So we’re taking a fresh look and updating and reinvigorating the pediatric program, which will get started again in new in more rapid fashion very soon.

But we’re also looking at some interesting programs that are really more marketing oriented that should improve access, simplify dosing, and show some clear benefit than we did with our original approval studies. Finally, Mike posted a lot of exciting things about what’s going on with the commercial team.

So clearly, we’ve made a lot of progress in marketing and commercial activities. We’ve got a stronger, larger sales team out there. As is typical for any sales force, usually takes some weeks or months to start seeing the full effect. But the leading indicators are all very strong and promising.

There’s also new sample packaging out starting this month, or excuse me, first of this year, which is very helpful, because it make sure that people get off to a better start. We have new product configurations to encourage better titration and again maximize the chances of success for the patients. And we’ve done just a phenomenal job.

I modestly do say so myself, so it wasn’t me, but our reimbursement folks, where we’re now on formulary for 70% of the covered lives implies in the US with minimal to very light restrictions or none. Finally, we have a lot of exciting marketing initiatives that are just kicking off and Mike talked a lot about those.

So many of them are digitally oriented in office, very focused activities. But also some direct-to-consumers and some broader things that we’re playing with, both in sponsorships and targeted TV commercials ultimately. So I think, we’ve got the year off to a great start. We have all the pieces in place and we’re looking forward to a very exciting year.

With that, we – I did promise some Q&A. Typically, we have not gotten a lot of analysts questions. But I’m going to turn it over very briefly back to the operator just to give instructions for how any covering analysts who might be on the call, or 5% or greater stockholders who might be on the call have the opportunity to ask a question if they wish.

But as you recall, we did solicit questions from stockholders generally, they need to do it in advance. So I have a whole lift of them here, I’m going to try to, frankly, we tried to make sure that those questions were largely answered in the presentation.

So there wouldn’t be too many of the Q&A, but I have a few that just didn’t quite fit that will get to after that.

So operator?.

Thank you. We will now begin the question-and-answer session. [Operator Instructions].

Okay So while we receive anything comes through there and I think we’re not necessarily expecting any. I want to try to get to some of the questions that were submitted in advance from general stockholder base. I’m going to group the questions together into a broad themes and try to pick those that I didn’t think were directly necessarily answered.

Probably the most common question has to do with our financial position and our financial runway, burn rate, and our planning of stock offering? Well, we talked a little bit about our financial position. I think, we’re in a strong position. So we don’t have any immediate need for speed for funding.

And I know some of you heard me say this before, we would never pre-announce a funding, because the one way to make sure it’s going to be difficult and not happened at all is to pre-announce it, so we’re not going to do that. At any given point in time, we have a lot of things underway.

Sometimes and we always try to focus on things that are non-dilutive where we can. Sometimes those things come through and we’re able to announce them once they happen, such as the Sanofi announcement in December.

Sometimes they don’t happen in the speed with which we’d like to, and we’re ultimately forced to go out to the market like we did last May and raised the money. We always have that option, but it’s not something is our first plan, or first thing we think of.

Clearly, our burn rate is integral for this, I’ve been saying for as long as I can remember that it typically tends to hang around about $10 million a month. A couple of things I point out on that.

It’s interesting that it hasn’t gone up really appreciably, because we’ve made a lot of efforts and had a lot of success reducing cost in a lot of different areas. And then we’ve taken that money and channel that into the important things like the more commercial efforts and so forth. So it tend to stay sort of flat at that level.

When I say that number, however, you should know that that assumes really potentially nothing in the way of sales. To the extent, the sales start increasing, that will offset our burn rate, because the marginal cost, or the variable cost of producing and producing the product is pretty immaterial at this point. So sales are all upside to us.

Hopefully, we expect that to happen. We do, in fact, expect that to happened and that will increase that, or improve that number. That said, if we need to raise a little bit of money, we always can as an – it’s an opportunity out there.

If we wanted to get somewhere between 2015 to get us through the end of the year, or make sure, we can do that easily and still support our efforts, we would do that. But we will wait and see how it goes.

If you see us at some point raising more money, that would be a positive sign, because it’s an indicator that we have something that’s working really well and we want to accelerate those efforts. The next question I have has to do is, if I can find and read it.

Has the FDA label review date been set? It’s not yet appearing on the FDA’s public calendar. This will be their revised label submission, I assume. Ray, actually this is probably a better question for you..

So, Matt, typically, the FDA does not put on their website PDUFA dates for label revision. But I will tell you that, we have received an official letter from the FDA testifying or stating that our PDUFA date actually is September 30th of this year..

Okay. And always we can hope that it might happen as soon as….

We always do..

But you never know. The next question why some of those – I’m wondering, it has to do with our recent hire extra cost and why we took that step and so forth. I often call it out as an example of my continued optimism that we’re able to hire somebody like of Stewart’s caliber and retract him into the company. I shouldn’t disclose salaries.

But we typically aren’t paying them with or before. Yes, they see the vision, they see the hope, and the potential in the company, and we’re able to bring him on Board. In Stewart’s case, he was very opportunistic, and I thought very helpful for us, because clearly you saw, as Mike mentioned, we’ve hired 100 people over the last couple of months.

That’s a huge effort with just a couple of HR people that we had before would have been probably impossible, but sure has been hugely helpful there.

At the same time, we have an in-house sales force now, which raises a whole bunch of complications, how we design properly incentivized programs and how you compensate [ph] these people and the reward success are all things we’ve not had to deal with before and having someone who with that experience has been usually helpful to make that happen and ensure maximum success.

And the final question I have it’s kind of a group of questions. I’m going to wrap them up together.

They get asked how are our relationships with The Mann Foundation? Are they selling a bunch of stock, because I think there were some reporting that led people to believe there was a lot of selling going on? I’ll say, our relationship at current, they remain that way. We’re in fairly regular communication. I think they are strong.

The – what might have looked like sales, I can tell you, I don’t believe are as you’d expect for trust and remainder trust and so forth, there are occasional distributions out of the trust into the hands of certain beneficiaries and so forth. It doesn’t mean, they’re being sold.

It just means being transferred to somebody and unfortunately because of the way the reporting works, we didn’t lose sight of the shares at that point. So they don’t get reported as part of that Mann shares. They’re out there somewhere. We have no reason to suspect.

But frankly, we don’t know whether they’re being sold or what’s happening to them from that point. But don’t read in, there’s some mutual side distribution or selling of MannKind stock fund. So that were current, we would know that and it’s not. And with that, I think we can wrap it up.

I think most all other questions I have on my list here were in one way or another included in the presentations mostly by Mike, or they just think that for obvious reasons, we can’t answer, we do get it, because a few of those kind of oddball questions.

But I appreciate everybody’s attention, your loyalty and continuing to follow the company, and look forward to speaking to you again very soon. Thank you..

Thank you, ladies and gentlemen. This concludes today’s conference. Thank you for participating. You may now disconnect..

Q -:.