Please standby, we are about to begin. Welcome to the MannKind Corporation First Quarter 2020 Earnings Call. As a reminder, this call is being recorded on May 6, 2020, and will be made available for playback on the MannKind Corporation website shortly after the conclusion of this call until May 20, 2020.

This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations.

For further information on the company's risk factors, please see their 10-Q report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Steven Binder.

I would now like to turn the conference over to your host Mr. Castagna. Please go ahead, sir..

Hello, and thank you, everyone. Good evening. Last we spoke 17 million people had filed for unemployment and unfortunately that number is probably going to double by tomorrow. I’m optimistic as the country lives up people can adjust to normal and we can expect a gradual recovery as things go forward.

The one plus for us with COVID the discussion around A1c control and diabetes, as we've seen a significant higher death rate of people who go into the hospital with diabetes and those without.

This discussion has been elevated as we go forward out there with our customers considering that the 5 million people are injectable insulin are not a goal and need to be doing everything they can as possible to get the goal now more than ever.

Hence our mission is to get people to control their health and the freedom to live their life, life more human. This has been focused more for us over the last six weeks than ever as we continue to talk about control and the dozen webinars that we've done with our commercial sales and marketing team and medical team over the last several weeks.

Really quickly I want to touch on the key things that we've achieved here in Q1 despite the event of COVID happening in early March. AFREZZA U.S. quarterly revenue of $8 million was 58% higher over first quarter 2019 and the highest quarter of sales we've had to-date.

There was some stocking of wholesaler and patient stock up increased net revenue by approximately $0.5 million to $700,000 as we could see scripts accelerating during the month of March. However, research analysts ranges -- ranged from $6.5 million to $7.7 million with a consensus of $7.1 million.

And you can see we can certainly have beat consensus estimates here in Q1. Our gross margin achieved a record high of 48% and it is continued to grow more positive each quarter over the last five quarters up from a negative gross margin historically.

Additionally, Brazil unfortunately launched the wrong time with COVID launching there in Brazil are shutting down their markets slowing their progress.

We anticipate a second shipment in June at a reduced cost to ensure BM can continue to supply the product that we ship not only in September, but get the prices down and get through the different currencies that have occurred, as well as get sales moving in their market.

They too under lockdown and we come out of this surely we talk to them weekly to understand what's going on and how we can help them succeed. Fortunately, United Therapeutics had the earnings call last week and they're on track – and we are on track to receive our third milestone of $12.5 million in Q2.

And COVID-19 whilst delayed the brief study slightly, we don't expect any submission impact to the FDA on our timeline or additional trials we have to do to commit – to now and the end of the year. They were not on the critical path and they don't look like to be in the critical path as we open up the markets again.

UT has done a great job and making sure when the markets open up to enroll patients again that we have additional space, the protocols are ready to go. I believe that we will finish up the BREEZE study and the other two remaining trials which are the PK study and human factor study as quickly as humanly possible over the summer.

On the cash flow front, more good news and that we've continued to reduce the cash burn quarter-over-quarter, Steve will share with you shortly, at $11.1 million this year versus $24.1 million in 2019. Overall, I am happy with our continued growth over the past few quarters and excited to see that our team moves forward.

We continue to manage our cash tightly in the new environment that we – running the company in. I'm going to switch slightly over to talk about what we're doing COVID-19 as everyone is asking, what is our response to COVID. Number one, two and three is keep our employees safe and our patients safe. We've implemented work from home.

We've had travel restrictions since pretty much early March. How amazed – how smoothly it's been to move an entire company to a virtual work environment. The team has done an incredible job and communications enhanced significantly.

I think everyone's working more hours as they wake up to a zoom call at 8 o'clock and shutdown at 6 or 7 o'clock at night before they can start to read their emails. Number two as we maintain supply of our life saving product Afrezza. The Danbury manufacturing facility is limited to essential personnel only with the remaining staff working from home.

We need to maintain our supply chain. We're in the process of producing finished goods that will carry us the remainder of 2020 to ensure no supply disruption occurs in the marketplace. Additionally, we want to reduce the strain in the medical system by minimizing in-person healthcare provider visits. We've made a donation of mask at Danbury Hospital.

We continue to find opportunities to support our local communities that we operate in. In terms of developing treatments for COVID-19, we evaluated four opportunities that I talked about recently.

At this point, we decided not pursuing two of them one because it's likely an OTC product, that we won't be able to move forward in our current capacity or FDA regulations. And the second one is, because it would require probably 10 to 15 cartridges of inhalation powder, three to four times a day, which just is not a feasible solution.

There are two other products that we remain under investigation. I'll continue to watch the marketplace as this evolves and see whether or not we move these forward. As we said previously, we're not going to invest a lot of shareholder money on COVID-19.

But we will seek outside partners and opportunities to fund opportunity – fund these opportunities we're happy to dedicate our personnel and our infrastructure around these. I'm hopeful as the vaccine comes available that we could be one of the partners to make an inhalable vaccine, like we've seen with the flu.

But yes, we still need to find the vaccine before we get too optimistic on anything like that. In addition, mostly, it's really important that we sustain our business on reducing activities, which reduces our spend here in Q2 and through the year.

Many of our vendors have helped us reduce our cost structure here in Q2 by taking cuts and their own fees either in this quarter or for the remainder part of the year.

We reduced the majority of our employees pay by 20% for Q2 and we were lucky to receive the paycheck protection program which help us preserve jobs as we went forward here starting out Q2. Let me share with you some of the insights that we had going into April when we received these funds.

Number one, you can see the NRx were tracking off in February and through the first week of March here on the blue line. But these really peak the first week of March and been on a downward trend over the last seven weeks and as always usually a lag between new patient starts and TRx is going into the marketplace.

But you can see TRx start to be impacted due to the lack of products build up in demand that we saw in Q1 not happened in Q2 and it looks to me that things are hopefully going to start to stabilize as we get into May, and get our sales force back out there.

Patient retention is held up remarkably well considering that our NBRx which are true new brand treatments are down almost 35% through early April.

We just opened up seven territories this week and we are getting feedback from these reps on what's happening, how they're being received in the marketplace and using those insights to train our sales force going out again next week as we expect each week we'll continue to release waves of our employees back into the marketplace as things open up.

I can tell you anecdotally as feedback isn’t positive that our customers are welcome up to the office. We're using customary protection equipment. We're checking temperatures and making sure we follow good housekeeping guidelines to make sure we don't cause any cross contamination for our employees that are exposed to COVID-19.

We expect 20 more reps to go out next week, assuming all things go out this week, and there's no changes in the states that are opening up. These will help us start to drive new access as we go forward in the coming weeks where I think we'll start to see stabilization and hopefully growth as we get into June and close our Q2.

We continue to take feedback from the reps and the good news so far is the customers that are we're getting into our the private practice smaller doctors where we have a disproportionate amount of sales with Afrezza. We are seeing limited welcoming in academic centers and large health practices that are more academic based per se.

So that's something we'll continue to watch and while that's not where we get our bread and butter, there are some new patient starts to occur those places and we’ll continue to try to get in there as far as possible and are safe. So for those of you who may not have seen the acuity report that's out there, it's freely downloadable.

I want to talk about some of the market trends we saw. Overall COVID-19 had a disruptive market impact in the healthcare system across many, many parts of the industry. And NBRx and new starts are way down on some of the new launches have also been negatively impacted.

Patient interactions are down 30% to 70%, depending on the specialty and telehealth is up a lot, but generally not for new patient starts or changing treatment regimens, at least not in today's normal world that we're facing.

As telehealth continues to persist, I see this being a bigger opportunity to help manage people live with diabetes as they don't want to go out into the marketplace. On NRx timing, we talked about a pull forward in March. We've seen the softness in April and hopefully starts to flatten out here in May.

And we've seen the 90-day fills actually slightly increased, but not as significantly as other disease states here for Afrezza, but we've seen across the marketplace with 90 day fills and more mail order.

What have we done to mitigate these activities? Number one, we've implemented a virtual care model that we can now have effective interactions with HCP’s via zoom. We have something that we call Mchats that allow us to talk to doctors one-on-one with thought leader. And we continue engage thought leaders and host webinars every week.

We had one today, one on one day, and a couple last week. We're getting 50 to 100 customers at a time listening to different topics that we're putting out there, around COVID-19, Afrezza and telemedicine. Our customer experience center is continuing to help our patients where possible.

We're also focused on moving our free bridge claims into paid claims as we believe 60% to 70% of them can be converted to pay claims as we go forward. We're seeing some early signs but that continue to increase every four weeks as we go forward. We're also here to help ensure patients have continuity care despite the unemployment.

We have startup program that can provide free drug for up to four months and a copay system’s program that should make sure any commercial patient doesn't pay more than $15. We have launched the specialty pharmacy network in Q1 and that is now almost 10% of our sales.

We don't expect that to show up to make any major impact and our weekly scripts as all these pharmacies, what we understand do report to Symphony.

Additionally, one of the great moving factor starting Afrezza making sure patients can have an ACV1 [ph] device, and we've implemented a program where we can ship these directly to patients to minimize any disruption of new patient starts.

While our overall commercial efforts have been disrupted and we expect an unfavorable impact in Q2, we can't predict the ultimate impact of pandemic events on a near-term business. That said, we are planning for success. We're investing in a new reimbursement support hub that will launch in Q3.

We fill the 12 roles that we plan for that we expand for back in Q1 and we are finalizing from our pediatric protocol with medical and FDA later this year. So while we can't predict the future, we're trying to control our destiny as best we can. I'm going to turn it over to Steve..

Thanks, Mike and good afternoon, very pleased to review our first quarter 2020 financial results, which show another quarter of accelerating Afrezza net revenue, increasing Afrezza gross margin and improving operating cash burn.

I'll be discussing select financial highlights and urge you to read the condensed consolidated financial statements and MD&A contained in our 10-Q, which is filed with the SEC this afternoon. Let's start with looking at revenues for the first quarter of 2020.

Afrezza net revenue was a record $8 million versus $5.1 million for the corresponding first quarter of 2019. The 58% increase, was generated by volume growth from underlying the Afrezza prescription demand up 27% a favorable mix of cartridges, which I'll dive into in the next slide.

Price, an approximately $0.5 to $0.7 million from increased buying patterns and patient prescription trends as patients stocked up on Afrezza as pandemic stay at home orders increased across the United States in March. There was no Afrezza international revenue in the first quarter.

Growth nets were 43% for the quarter, which fell into our expected range of 42% to 44% as communicated during our 2019 year and earnings call. The increase from 38% a year earlier, which primarily due to an increased estimate of product returns, an increase in the utilization of our patient copay assistance program.

Revenue from collaboration and services was $8.2 million for the first quarter of 2020 versus $12.4 million for the corresponding first quarter of 2019.

The reduction in revenue was mainly due to the recognition of the $10 million United Therapeutics research agreement over the period of the fourth quarter of 2018 to the second quarter of 2019 and our performance obligations were substantially completed.

Inception to-date, we have recognized $45.6 million from the United Therapeutics license agreement and $9.8 million from the United Therapeutics research agreement for a total of $55.4 million recognized inception to-date. The next slide shows how our favorable product mix impacted our first quarter revenue growth.

As explained on prior quarter earnings calls, our 12-unit cartridge is priced three times the 4-unit cartridge and the 8-unit cartridges price two times the 4-unit cartridge.

So here in the slide we're showing 4-unit equivalent cartridges to enable an easy comparison of growth rates and to show the favorable impact on Afrezza revenues from cartridge mix.

The bars on the right showed that the most expensive 12-unit cartridge had the fastest growth at 73% versus the first quarter of 2019 followed by the 8U at 60% and the 4U at 42%. Faster growth of the higher unit cartridges equates to a higher growth rate of Afrezza revenue.

Moving to Afrezza gross profit and gross margin, this slide shows gross profits steadily increasing from $1.1 million in the first quarter of 2019 to $3.8 million in the first quarter of 2020.

In the green box below the gross profit, you will see that the gross margin for the first quarter of 2020 was 48%, which has also been steadily growing since the beginning of 2019. The primary reason for rising gross profit and gross margin is increased Afrezza revenue.

As you saw more on Afrezza, the cost of goods sold relatively flat throughout the period shown the graph due to production volumes remaining lower than our production capacity. We don't yet have large variations in cost of goods sold by quarter as a majority of manufacturing expenses are being recognized as cost of goods sold in the quarter incurred.

This next slide shows how we use cash and operating activities for the first quarter of 2020, and for all four quarters of 2019. The lighter magenta bars on the top represent going to Afrezza net revenue from the first quarter 2019 to the first quarter of 2020. The bottom bars represent the non-GAAP net cash used in operating activities.

You can see a steady reduction in net cash outflows quarter-on-quarter, as we carefully managed our spending while being helped by increasing Afrezza net revenues. Non-GAAP net cash used in operating activities was $11.1 million in the first quarter of 2020. That's the last bar on the bottom right versus $24.1 million in the first quarter of 2019.

That's the first bar in the bottom left, representing a 54% decrease in net cash used, mainly driven by $9.3 million spent in the first quarter of last year on direct-to-consumer TV advertising, which was not repeated in 2020.

There were also reductions and other promotional and marketing activities, as well as personnel and employee related costs, which contributes to lower cash burn in the first quarter of 2020. I'm proud of the awareness that our employees have regarding the importance of spending cash wisely, and it shows in our results.

Wrapping things up, we have a solid quarter to start 2020. We're facing headwinds from the COVID-19 pandemic.

As Mike just described, the mitigate the impact of the pandemic on the company, we have pulled back on spending, have asked for and received fee reductions from vendors, have implemented a pay reduction for a majority of our employees and received the PPP loan.

We will continue to be proactive in navigating the company through the pandemic uncertainty and we will continue to take actions we feel appropriate to keep MannKind moving in the right direction for all of our stakeholders. Thank you and I'll turn it back over to Mike for some additional comments..

Thank you, Steve. On the next slide here you can see that our TRx has continued to grow in some support our sales force infrastructure out there in Q1 of ’17, all the way through now Q1 of 2020. We typically see a small dip here in Q1 versus Q4. And that was no different this year albeit a lot less than the previous year.

But that will recover or should recover as we progress throughout the year as we see Q1 drops, typically Q2 to Q3, Q4 pickup. This year, we may see a flattening in Q2 and a pickup as we go to Q3 and Q4.

We've done everything we can to ensure success coming out of COVID and as you see here, we have the three 3x growth and as Steve talked about on the revenue side, for think about as a one to two leverage almost where you got 3x growth and prescriptions, you get almost double that revenue.

Here we saw quarterly net revenue go from $1.2 million in 2017, almost to over $8 million here in 2020 and 7x growth in revenue. We don't see anything dramatically shifting this trajectory we continue to look forward over the quarters beyond 2020 just have to get through this COVID hiccup that we're all facing.

A lot is happening here, we're continuing to progress forward, we're making sure we align our resources appropriately and reduce our costs where we can continue to deliver demand and get this company going in the right direction. We also move into a virtual shareholder meeting here on May 21st.

I'm going to remind people to make sure they vote their shares. Please sign in 10 to 15 minutes before the start and have your control number when you log in, in order to ask questions. This will be really important for people ask questions. There are five proposals here on the agenda.

Collection of our new directors as you guys know, we've added two new directors in the last few months, and one of our older directors have stepped down for reelection. We're asking an increase an authorized common shares were down to about 20 million shares currently in our authorized capital, which was less than three years ago.

We said those shares would last approximately three years. We are looking to amend the 2018 equity incentive plan that lies for a compensation or non-executive officers and ratified to wait.

So again, want to thank all of our shareholders for your patience during trying time, I believe the company is going in the right direction we've taken appropriate action.

And I believe Q1 is a good reflection of what's to come as we continue to make this company great and get Afrezza to more patients while we continue to move TrepT and international expansion forward. So I want to thank our employees, especially the commercial, the finance, HR, moving fast to get secure the PPP loan, which definitely preserve jobs.

Our employees are working under extremely difficult conditions maintained Afrezza production to keep TrepT on the right track and making clinical supplies there, as well as getting ready for the FDA filing later this year. The R&D team continues to work on TrepT. They continue to work on the COVID-19 as well as pipeline opportunities.

And our sales and medical team had never seen such a big jump in communication and collaboration. More than ever, I'm excited about the teamwork that I'm seeing in the effort as we go forward. And just here is a nice thumbs up from our two employees were out in the field yesterday, Scott and AJ.

I just want to thank you for all your work out, and all our employees are starting to go out and get back out to normal. Thank you for everyone and I think we’ll move the questions..

Thank you. [Operator Instructions] We'll take our first question from Brandon Folkes with Cantor Fitzgerald. Please go ahead..

Hi. Thanks for taking my questions and congratulations on all the progress during the quarter.

Firstly, can you just talk about the impact of COVID-19 on your ability to onboard and potentially train new patients? You've talked about the sales force is going back to work, but maybe in April how we should think about that and as the sales force ramps back up.

And then secondly, can you just elaborate further on what drives growth in the high unit cartridges? Thank you..

Great. Great question, Brandon. [Inaudible] so I think we definitely saw a drop about 35% in new to brand starts. And so that is due to the fact that they're just less patient being seen by doctors and are even less fewer patients being seen in office. So a lot of people have moved to telemedicine. And I think that's just really to maintain care.

I won't say people are looking to actively change care. However, we have started those conversations with providers and implemented – I'll call the ability to ship ACV1 directly to a patient where they can access the instruction video.

Video where the doctor show them the ACV1 result and ensure that compliantly start new patients that program just launched last week and we're already shipping devices days later. So I think we are able to continue to get new patients on board and doctors to start new patients.

The second question is around training new patients to make sure they start off appropriately. That's even more important and we've kind of created a virtual training program, where patients and doctors can get support from the company where we can engage in appropriate training with patients in ways that we never had before.

And so we're experimenting with new technologies, new opportunities, and new capabilities and we'll continue to assess these as we open up back into normal markets. But right now all of our team has been equipped to get new patients started, as that is the lifeblood to our future and our growth.

We expect it to be slower than it was in Q1, but I think you're still seeing – we're seeing around 100, 150 new patients a week be started on the brand and so we think that's important as we turn the corner here throughout May and June.

What drives growth at a higher unit cartridge is actually a great thing because one of the reasons the drug struggled in the first couple years of launch was mainly around under dosing. And doctors just could not get their head around. A four unit cartridge is not equivalent to a four unit injectable.

And so, I think when you see all the work that the medical and commercial teams put out there around appropriate dosing – the right conversion is we expect more patients to be on 8s and 12 than we do on 4s and 8s.

And so that's really a good reflection of the commercial strategy and the medical team doing their job around getting the information out there to providers and getting this one to one ratio, that was really launched out there with Sanofi that it really is not a one-to-one and so I think you seen that reflect as it continues to grow year-over-year and higher strengths there.

So I think it's a good aspect of the execution we're doing..

Great. Thank you very much..

Thank you..

Thank you. We'll now take our next question from Steven Lichtman with Oppenheimer and Company. Please go ahead..

Hey. Thanks. Hi guys. Mike in your seven territory that you would be opening this week, I was wondering if you could explain that just a little further. Are these areas that are opening up to in-person patient visits or is it now that your sales reps to go in or perhaps scope.

And secondly was this the first group of territories to open up?.

Steve you coming in very cloudy maybe it's the mask I think. I think your question was, is it the first week we’re opening up and as the seven reps with the feedback you’re seeing..

With the plan?.

With the plan, is that what the question was Steve?.

Yeah. It was more headphones than mask, but let me I just I'll ask it again real quick too. So just want to understand a little bit more what the seven-territory opening up means.

Is that opening up in-person patient visits in those areas or is it now that your sales reps can go in or is it both just wants to understand what that needs to be say opening up?.

Yes. Yes. So I think our definition of open up is first that the states were compliant in following the stay-at-home order in the various states and that those states that are starting to open up opportunities for people to get back to normal, that we're allowing those people this was our first pilot week.

And I think it was four states and we had seven reps impacted some of the states, we don't actually have reps in so it’s irrelevant but for two of the states, we did have seven reps. And I think that they're just getting out there prospect and seeing if they can set up lunches is that going to be appropriate or not.

Are doctors opening to seeing in reps are they are even opening their offices, I think what we're hearing, for example, even though Atlanta is opening up, the doctors are no plan to open till late May or early June. So even though our reps could be out there, there's not a lot of places for them to go with doctors offices are still staying closed.

Where I think the market is South Carolina and in that market, we did find opportunities to get out there and meet some customers. They were grateful to see our sales force again, excited to know we're still here and hopefully their support will be stronger than ever.

And so, that was positive feedback and then some of those markets, we got general feedback that the academic centers in large, area health systems like integrated delivery networks, they're a little more closed still and we expect to be closed for the next four to six weeks. So the majority of our business happens to be private practice doctors.

And so that's a good thing as those are the ones opening up first, because they do have to keep their lights on as well. So, we'll see it's only 72 hours out. So I can't give you a whole lot of color. But I can just tell you, the feedback was positive yesterday and our reps are following appropriate protection.

Make sure we're not exposing them with other patients with doctor’s offices. The other thing I felt is interesting – that as I saw Steve was a doctor said we weren't checking temperatures on every patient coming in, but it was kind of pointless because no one has a temperature.

So they stopped doing that because to do it 100 times, 100 negatives kind of, you got to cut work out of the system and try to figure out what's going to actually make a difference. So I think we're all learning as we open up and we'll continue to transfer those learnings from market-to-market.

I hope Steve and do you have anything to add?.

[Inaudible].

And then Steve its opening next week, we expect, I don’t know exactly….

[Inaudible].

Seven more states next week, which impact another 20 reps. So we have about 70 reps today. So about 27 of them will be up and running by next week and we just hired a new training class, which will start on Monday as well. So that will help us as we get out there in June but then we expect more when the markets reopen..

Got it. Thanks, Mike, for the color. Turning to the expense side on gross margin, your product gross margin expansion continues to be impressive. Steve, at about what revenue level should we expect absolute cost to start moving higher? And then secondly, I know you're obviously not giving guidance, but on that cost of revenue for collaborations.

I guess that's a little more in your control any directional guidance you can provide on that as we look out over the next few quarters?.

Yeah. So the first question was on our cost of goods sold in our gross margin expansion. So we don't give forward looking guidance. But I will say that we'll continue to have gross margin expand until such time as we actually have to add additional costs in our manufacturing site, such as additional shifts or additional lines to manufacture Afrezza.

In relation to the revenue on the collaboration that is being amortized somewhat on a straight line basis through the end of 2021. So you'll see mostly consistent amortization of that revenue to our revenue line between now and the end of 2021. So if you're modeling it, that's what you should see..

And Steve just add a little more color – I mean, I think, Steve, we don't know in the foreseeable future in the next call three to four quarters, you shouldn't expect any type of shift in the manufacturing line in terms of adding a second shift. So I think we look out over the next four quarters.

You can see that's been pretty consistent in the range Steve provided.

But, the factory is built for scale, you've seen it and I think we still have some good expansion opportunities and productivity improvements we can make before we have to add more shifts? Okay, this may all shifts as we get to TrepT production? And what does that look like when spending how much capacity reason for that and how much staff we need that that could shift a lot of things going into 2021..

Okay. Got it. And then very lastly you mentioned, obviously some of the initiatives you put in place on the cost for SG&A, it already did take a pretty big step down in the first quarter.

Based upon the new steps you've taken should we expect directionally, but there's still some room to go down on an absolute basis sequentially here?.

Yes.

I mean our goal is to continue to improve this year we are -- I mean, we're trying to run the company very tight, there are sometimes one-off things that happen like in Q2, annual bonuses to get paid, so that year-over-year that's more relevant than quarter-to-quarter, insurance renewals happen for directors and officers insurance in August every year.

So if certain onetime events each year, so it's going to be hard to look sequentially, but I think you can see we're continue to manage cash very tightly. The seniors done an amazing job of running lean, as people leave the company, we don't always replace them. It's kind of replace with new people. So we can encourage will keep your talent.

And so I think we're trying to put every dollar we can into revenue generating opportunities, and as the further breaks trend, I think that's really our focus has continued to be able to get this product moving in the right direction the hands of patients..

Thank you, guys. Appreciate it..

Thank you..

Thank you. And we will take our next question from Thomas Smith with SVB Leerink. Please go ahead..

Hi, guys. Good afternoon. Thanks for taking the questions. I just had a couple. First, it's obviously difficult operating environment out there.

Can you just give us a little more color on some of the things that you're doing to stay engaged with the existing Afrezza prescribers during this time? And then can you talk about some of the actions you're taking for patients, who are now facing unemployment have maybe lost their insurance coverage during this time, some of the actions you're taking to retain them as patients and keep them on Afrezza?.

Sure. I actually have David Kendall in here, David, I don't know if you want to give a few words on what we're doing interact with our support leaders to stay engaged..

Yeah. Thanks for the question, Thomas. It's actually been a really unique opportunity for us to catch people when they've got a little free time, some breathing room in their day. For most it's not exactly what they were looking for with lower patient volumes.

But I personally and our medical team had the opportunity to engage providers both who are active prescribers to review with them both how they can continue Afrezza safely.

Many have asked questions, for example about how a Afrezza therapy can be utilized in the presence of usual upper respiratory infections, as well as supporting them on the virtual instruction on the inhaler as, and as Mike talked about getting devices to measure pulmonary function into the hands of patients. So that can be done remotely.

So just making sure that providers have those key clinical interventions. Similarly, we're coming up on meeting season even though they're all virtual, getting additional information on a Afrezza dosing, Afrezza utility, and Afrezza effectiveness out to those providers.

So all of those are things fortunately would have the opportunity to do over the last six eight weeks. As regards patient support, obviously, the virtual patient teaches that our commercial team can execute, as well as supporting the clinic systems with pulmonary function tests and these virtual patient start. So I think I've talked about them.

We've been able to maintain that medical connection and coordinate with our commercial team, even though obviously all of them are out in the field..

And I can tell you, I have an email list of about 700 providers I email probably once every six to 10 days and thanks to hear feedback on the topics we're sending, for example, I did a telehealth webinar about two weeks ago on Friday and a lot of people today I'd love to hear it I just can't do it at that time.

Can you do it again? We actually did it this past Monday have another hundred people join, which I found great questions, great thought leaders joining us and great interaction. We just had another one this morning with Steve Edelman and Dr. Nick Argento down in Maryland. So great, great, again engage with about 60, 70 providers.

So I think we'll do everything we can to keep customers top of mind, and keep Afrezza top of mind, and also just bring value to them during this downtime as they start to think about how they re-engineer their business model and how do they start to think about reduced patient volumes or getting people more efficiently into a telemedicine and in person clinics.

So, we're trying to bring value where we can in terms of information and I think so far that engagements in very, very high with our top prescribers and our top thought leaders, and I've actually been impressed just listening to some of them haven't talked to in a year to hearing your thoughts on the Afrezza and how much their attitude has changed towards adopting a Afrezza in the right patient population.

So I've been more excited than ever, around how people are thinking about it and our growth as we go forward as we come out of this people are seriously considering Afrezza is a real mealtime alternative to pumps and injectable influence. So and it's coming from every header needs out there. So I'm excited to continue to see that tide turn.

So the answers to your question, what we're doing to stay engaged and just give you some context. These are zoom meetings. These are webinars. These are one on one everything you can imagine, but all virtual for the most part and informative. In terms of unemployment, our team is working on a couple options, which we're going to see next week.

We have not had believe it or not, I can't answer any, but I don't believe that any inquiries on. I lost my job and I can't access the press. I imagine there are people in that situation. And so we have multiple programs available today if somebody needed Afrezza, we have a startup program we can modify to make sure they get covered immediately.

We have a cash program we can modify and lower the price. People need a new one time lower payment and we have anyone that's [inaudible] qualify for commercial coverage. And I looked at this as of last week, we have not seen any dramatic shifts through this Wednesday, at least I got the weekly data on Medicaid versus Medicare versus commercial.

Commercials continue to grow this year. I would expect Medicaid to pick up a little bit. But I haven't seen that happen yet in the data book, but it's just natural and you have 30 million people unemployed. It's going to happen. So we're going to make sure patients don't go without. Those are all things we're watching here in Q2 guys.

So it's hard to give clear guidance when we don't know we may stabilize scripts put a 10% shift in Medicaid that changes the revenue line. So, right now, we haven't seen that, but we'll continue to watch that over the next six weeks..

Right. Okay. No. Thanks. That's, that's helpful color. And then can you just talk a little bit about the Paycheck Protection Program funds. I know, we've seen some companies in the space, who've received loans under this program actually return the capital based on their interpretation of the Treasury Department guidelines.

Can you -- I guess just talk about how you're thinking about these funds and whether there is any chance that you have to repay the funds based on the updated Treasury Department guidance?.

Yeah. We've been following the news covers about the Paycheck Protection Program unless I looked around 340 public companies got funds, and about 42 of them returned the fund, but 99% of the money went to non-public companies, partially because public companies would naturally not qualify either because they're not based in the U.S.

so they may not meet the criteria laid out by the FDA. In our case, [Technical Difficulty] that we're the sort of small business that was meant to protect, we have 233 employees were well within the 500 employee limit that they defined as a small business back then they increase the number of what the definition of was a small business.

And the PPP loan was necessary to support our ongoing operations of the business given the economic conditions, especially when we think about 50% of our cost here, MannKind our people, and by the time we were making the decision on what to do, we were seeing our new NBRx's drop we were seeing our NRx's drop.

So we knew what things weren't going to look that bright for Q2, and we had to make some choices. As a stay at home order started to be implemented, outside of those trends, we were facing those decisions, and we honestly were getting concerned because you're supposed to try to get a clarification in the week before we did.

But the system just wasn't opened up in a way for public companies. So instead of for a loan people we are able to preserve our cash offset the declining revenue, right off the downturn, which we thought would simply be detrimental to our business if we had to lay off people.

So we're excited that we're able to protect jobs, keep people employed, and the PPP won't address this gap, which is important. I mean, that was a key part of this. As we think about the guidance in that, you know, whether you're the appropriate to take the funds or not, and you need the funds.

I would say in late March and early April, when we made these decisions, there were no sources of liquidity. We were leveraged company with mid-cap. they weren't looking to loan more money in an economic crisis, and when you think about the equity markets, they were effectively shut down following offerings between mid-March and mid-April.

And so we made all the right decisions at the time we made this decision and you know, fact our opera shares are low and we're in a quarterly earnings high period. So there wasn't much we could do to raise money. In the time period, we had to do what we had to do to preserve jobs.

So FDA said they're going to provide additional guidance about how we'll review certifications. And we'll wait that guidance as it comes out and go accordingly. But at this point, we believe we were right and taking the funds and we're going to FDA and the government because they were there to preserve jobs, and it preserved well over 100 jobs.

In fact, allow us to keep our business plans on track for the year and hire additional people, which we could have easily not hired. Have we not received these funds? Hopefully, a little bit of color. We're watching it closely. And, we'll manage to it either way as we boys manage everything that comes on us..

Right. Okay. Great. Thanks, Mike. Appreciate the color..

Thank you. We'll take our next question from Bert Hazlett with BTIG..

Thanks. I doubt it later. Maybe I missed this, but my apologies, but it seems as if United Therapeutics is increasingly bullish on the prospects for [inaudible] and expansion beyond the current market that they're focused on in a number of different ways.

Could you just remind us about how TrepT specifically can participate in that and the plans to do so in the expanded market?.

Hey, Bert. I mean, look, when we entered a deal with United we knew that trial was coming obviously with early window the readout was and having a positive read on this I think a WHO three criteria literally expands the market dramatically for Tyvaso. And we would expect our TrepT program to be able to participate in that market expansion.

In fact, it will probably help penetrate that market because of the easier delivery platform that we have in an administration time and backup supplies you need et cetera. So, we're very excited we went into this expecting Treprostinil and PH, we felt that alone was a good enough partnership to make this worthwhile endeavor for both companies.

And now this is all upside we got to think through that forecast. We are thinking through that as a manufacturing capacity. Think about that in our packaging.

So it definitely changes and we're working closely with an eye every week to make sure we continue to supply patients in BREEZE, but also think about the interstitial lung disease indication and how we prepare for that with Tretti. So we're very excited about Tyvaso.

We think that will provide the future capital of the company to ensure continued acceleration of growth as we get out there. And just to remind investors, we will receive double digit royalties upon approval. So this data today does a little over $400 million.

These are significant when you look out and see where further revenues will be and place on top of it some, we are excited. Are there other questions Bert, you missed our record revenue..

Oh! Sorry. I muted are you are you contemplating additional? Are you additional expansion even, beyond the type 3 patients in your manufacturing plants? Again, they're talking fairly substantial even about beyond the most recent data.

So I'm just kind of curious as to what extent that's being contemplated in MannKind?.

Yeah. I mean, we are the CMO hope for just have for Treprostinil DPI, so obviously we're in discussions with then. We'll work accordingly we have time on our side to scale up where we need to. So we think about a filing within the next couple of 12 months or sooner.

Plus the FDA review time that gives you 20 time to continue to figure out what you need to scale manufacturing, sales supply the market, but if I recall Martin maybe JPMorgan does mean in the fall. But she probably it’s a $1 billion product that gets us very excited as we think about our future.

So as we always felt this is a great program, a great opportunity to help patients. And I think the patients in the BREEZE study are demonstrating the success of this product. As we know there's a rollover phase and we're seeing what people are doing in the rollover phase and they're staying on the product and they're happy.

So I'm excited to help more patients with our technology and I think it just continues to help demonstrate the platform what else it could do for other diseases beyond page, ILD [ph], diabetes, migraine, et cetera so anything, it just reinforces we got to continue move this pipeline in the company forward and find additional partners to move the company down the road and expand the technology..

Thanks..

Thank you and that does conclude today's question and answer session. I like to turn the conference back over to management for any additional closing remarks..

Yeah. I just wanted to thank everybody again. We have ADA coming up, which has now moved to a virtual meeting as well as Endo 2020. I know David Kendall is setting up lots of one on ones with all videos.

We have some datasets that will be released at these conferences as well as ongoing publications, working on the launch to move BluHale patient edition, as well as in office professional editions. So as people get back out there but some new tools to train patients. And so we remain excited about our future.

We know PPP is important aspect of Q2 for us COVID is something we want to manage like every other drug company. And I think just watch the weekly scripts and hopefully see them stabilize over the next three, four weeks as the markets open up and patients come back into treatment.

But otherwise, I think we've caught up remarkably well considering where the world was four to six weeks ago. So I am generally optimistic about where things are headed and just want to thank our shareholders, our employees and everyone that's been here to support us.

It’s looks like we're going to come through this and hopefully be stronger team and company come out of it. So thank you again..

Thank you..

Thank you that does conclude today's conference. Thank you all for your participation. You may now disconnect..