Good afternoon and welcome to the MannKind Corporation Third Quarter 2021 Earnings Call. As a reminder, this call is being recorded on November 9, 2021 and will be available for playback on MannKind Corporation website shortly after the conclusion of this call until November 23, 2021.

This call will contain forward-looking statements, such forward-looking statements are subject to risk and uncertainty, which could cause actual results to differ materially from the 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 our Chief Executive Officer, Michael Castagna, and Chief Financial Officer, Steven Binder.

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

Good afternoon, everyone. And I apologize for that delay. We were having a problem with the audio and couldn't quite figure out who's end it was. So I do apologize, and we'll jump right in and I'll try not to speak faster than [Indiscernible]. Equivalent, let's talk about our operational highlights, where we've been, and where we're going.

First, I want to thank our shareholders for the support and feedback over the last few months. Obviously, the news received a few weeks ago was not something we expected, but we do think it's something manageable that we'll get through, that we'll talk about.

I also want to thank our employees who worked so hard during Q3 to ensure we are executing on our 3 key priorities; Tyvaso DPI production and scale, progress of our pipeline, and driving Afrezza growth in the U.S.

As you look at our revenue, we're really, really happy to see that in Q3 2021, we had $22 million in revenue, which was 45% over last year. And we looked at Afrezza as we grew 34% to $9.8 million over last year. An overall, year-to-date, 35% total revenue growth and 25% on Afrezza.

We're really proud of those results, and look forward to continue to drive future growth as we go forward. In the often known area, I want to talk about a couple of things. Number 1, our units of collaboration.

I'll talk about the [Indiscernible] on the next slide, but I want to let you know that we've began commercial manufacturing and we continue to hire and expand our facility on Danbury to handle the expected future demand coming of [Indiscernible] On the pipeline I'm going to share some new data with you today as we had some really positive data come out in our pre -IND talk studies for [Indiscernible] and plan to start Phase 1 here in Q4.

Additionally, we're just wrapping up formulation work with our TGF data for IPF and we're also almost near done of ASMI DPI dosing in terms of innovation. On the Endocrine area, Afrezza experienced 16% growth year-over-year on paid prescriptions. As you may recall, we ended our free goods programs in January of this year.

We've launched our pediatric trial in Q3. We currently, are enrolling patients [Indiscernible] 5 sites up and running, as of today. In Q3, as we ended the quarter, we weren't happy with the direction we were going, and we decided to refocus our resources here in the U.S., as we came into Q4, by removing out any distractions related to that venue. 1.

We exited MSO in Australia and we cease co-promote liquidity in effective in Q4. We believe our resources are best focused on these top 3 priorities, which is driving U.S. Afrezza for the pipeline and UT collaboration. We will continue to look for potential global partners for helping our ex-U.S. strategy going forward.

For our best short-term impact is to drive faster growth here in the U.S., which will ensure success worldwide. On the liquidity front, we are really happy today to close the sale leaseback for $102 million of proceeds, on top of $181 million we had at the end of September.

I think, as you see towards the end of my discussion today, we are well-positioned for future growth and that capital will be used for great purposes. On Tyvaso DPI, we do expect to be approved, hopefully with the United Therapeutics by the summer of 2022 or earlier.

A complete response was received noting a single deficiency on an [Indiscernible] issue at third-party facility that forms analytical testament for possible drug substance. This deficiency had absolutely nothing to do with [Indiscernible] or our Tyvaso DPI products.

The great news is we think it's [Indiscernible] and we could see that we have the same indications with Tyvaso Inhalation Solution for PH-ILD, and we didn't have any contraindications or box warnings into labeling that we've seen. The citizens petition is not completed, but it's not cited us as efficiency in DTRF.

Users focused on resolving this issue, and getting approvals of Tyvaso asap, which no later than the summer of '22 or earlier. MannKind, we're focused on manufacturing prelaunch product and scaling up our factories for future indications. As we look at Afrezza in the U.S., we had a very strong Q2.

We've had some headwinds early in Q3 as we focused on Delta's -- COVID has shutdown offices again. We also added distraction trying to get liquidity off the ground, which wasn't going the direction everyone wanted. That calls us to refocus our energy in Q4 as we got ready to end the quarter.

Number 1, the present pediatric studies scaling for enrollment as we having more onboard. Number 2, we've hired a primary care pilot in the Southeast, that will be about 30 FTEs between the sales force and the commercial team running it, and that's on track for January launch. The third focus is launching a consignment model of top 3 pharmacy chain.

And what this means is instead of having middleman involved in our inventory chain of command, we will now have inventory stockpiled with a third-party chain, which will improve patient access ultimately decreased costs along the value chain. 4.

We'll be launching a pilot to improve patient retention during the first 12 weeks of treatment, we expect this to kick off in December. And we just launched something called, the new Afrezza challenges CGM called, seeing is believing. And this has first focus is about, 160 doctors who never witnessed Afrezza.

And we can see in the first 10 days depends up 30% of these doctors, right after their first prescription for Afrezza. And we continue to further assist our reimbursement of our new prescriptions coming in are up 45% in the latest 4 weeks versus the Q3 average. We see early signs of Q4 to change the term momentum from what we saw as we exited Q3.

One thing I want to share with you is new dataset that just got presented this past week and the oral presentation on Thursday with Kevin Kaiserman. We're really focused on driving the data realtime control Company and to discuss with the FDA how to best update our label to better reflect the dosing upfront with the Afrezza.

We were recently informed by the FDA that we've been accepted into their MIDD Pilot program, which is the Model Informed Drug Development Program and we hope that does potentially help us to understand how we could actually change the label so as to convert in-charter label better reflects an upfront those that will get better glycemic control As the data, you can see in this trial here, this is the dosing we're using in kids, which is basically a 2x your injectable dose rounds down to the nearest and present cartridge.

Returned to really streamline and simplify the effective dose conversion for new patient, starts on Afrezza. And what you can see in this chart on the left is, Dose 1, is within our label. And we know from history, we hear a lot of people say that, it had adequate control when they switch from injectable influence.

And what you can see is, when you use our new formula of 2x round down from nearest dose of Afrezza. For example, if you want 5, you multiply by 2, that would be 10, rounded down to the nearest [Indiscernible]. And that's what you see here, is a 2x round down dose is almost a 50 milligram per deciliter by the end of 2 hours.

That would translate to about a 1% to 2% A1C reduction if you are to maintain that for over 24 hours. And this is consistent with the newest data we generated on Afrezza, where we show switching from subcu towards Afrezza does improve A1C, and just changing nothing else at all besides your endpoints.

Now, I'll turn it over to Steve, and I will close off talking about the pipeline..

Thanks, Mike. And good afternoon. Very pleased to review select third quarter and year-to-date 2021 financial results. Please supplement this call by reading the condensed consolidated financial statements, MD&A contained in our 10-Q, which was filed with the SEC this afternoon. Let's start up by looking at revenues for the third quarter of 2021.

Afrezza net revenue was $9.8 million versus $7.3 million in 2020, a growth rate of 34%. The components of growth, include the demand increase, consisting of symphony reported paid TRx growth of 16% and price, including a more favorable gross to net percentage of 40% versus 41% 2020.

TRx for the third quarter of 2021 and 2020, were both adversely impacted by the COVID pandemic. Year-to-date growth to 25% was driven by simply reported paid TRx growth of 11%, a more favorable mix of Afrezza cartridges and price, including a 2% more favorable gross to net percentage.

Moving to collaboration services, revenue for the second quarter was $12.5 million versus $8.1 million for 2020, representing a 54% increase. The increase was mainly due to additional contracted activities associated with our UT collaboration, and a decrease in the recognition period used for the R&D services and licensed performance obligation.

The year-to-date revenue from collaboration's and services was 44% or $35.1 million and consists mainly of revenue from our collaboration with United Therapeutics in the amount of $33.5 million.

The graph on our next slide, shows the quarterly and September year-to-date Afrezza gross margin on a GAAP basis and on a Non-GAAP basis for September year-to-date, which is adjusted to exclude the expense recorded in the second quarter for the insulin supply agreement amendment fee of $2 million.

Our gross margin, has been increasing each quarter during 2021 and stands at 55% year-to-date on a GAAP basis, and 62% on a Non-GAAP basis, which excluded the amendment fee.

We continue to have excess manufacturing capacity for Afrezza, which impacts the cost of goods recognized in our gross margin, can fluctuate significantly quarter-to-quarter, depending on the timing and the manufacturing of bulk and finished products.

I believe, looking at the year-to-date numbers, providing better perspective on tracking where our margin is running for current Afrezza performance.

Looking to the future, we expect to have favorable impact to our gross margin as we start to manufacture commercial scale Tyvaso DPI which head towards overhead costs and makes our plant more efficient, as well as to anticipate margin expansion from growing Afrezza revenues.

This slide is an update to the information presented during the second quarter earnings call and outlines the different performance obligations with United Therapeutics and how we're recognizing revenue associated with each performance obligation as of September 2021.

Starting with the [Indiscernible] services, we have been recognizing revenue on a ratable basis over the expected clinical development time period for Tyvaso DPI, which started in 2018 through the PDUFA date in October 2021 on our performance obligation was substantially completed.

We recognized $9.9 million in the third quarter and $28.4 million year-to-date. There is about $1.5 million of deferred revenue, associated with this performance obligation on our balance sheet at September 30th that, we anticipate being recognized in the fourth quarter.

The technology license relates to royalty revenue, which we expect to recognize on net sales of Tyvaso BPI once approved by the FDA and sold by United Therapeutics. As previously disclosed, the royalty rate is in a low double-digit, and we plan to be more specific once Tyvaso DPI is approved by the FDA.

The next performance obligation is manufacturing services, which is associated with the commercial supply agreement signed in August, and then amended in October, which extended the agreement for 5 to 10 years.

Revenue will be recognized as we sell commercial products to United Therapeutics, As of September 30th, we have begun manufacturing commercial products, but had not begun to sell products to UT. We expect to begin selling products to UT in the fourth quarter.

The next performance obligation is pre -commercialization services, which were recognized between the second and third quarter of 2021, in the amount of $0.8 million year-to-date. The revenue does not have a profit margin and represents costs incurred by MannKind with delivering the agreed upon services.

And lastly, the performance obligation for Tyvaso DPI next-generation R&D, which is being recognized on a percentage completes the method during the second quarter of 2021 and the first quarter of 2022. This revenue also does not have a profit margin and represents costs incurred by MannKind when delivering the agreed upon activity.

We recognized $2.4 million and $4.3 million in the third quarter and September year-to-date periods, respectively. The timing associated with our United Therapeutics collaboration has certainly confusing and I hope I was able to shed some light and help you understand this area a little better.

If you strip away the technical accounting mumbo -jumbo, our collaboration with UT yielded over $100 million in upfront and milestone revenues, which we've recognized over a 3-year period.

We have agreed to perform additional work associated with Tyvaso DPI, for which we are being compensated by UT, and our commercial manufacturing effort has started producing product for which we expect to begin selling to UT in the fourth quarter. Let me conclude with some final comments on our financial resources from liquidity.

Today, we are financially stronger Company than we have been over the past 5+ years. We ended third quarter with approximately $180 million in cash and investments and added approximately $100 million to our cash and investments balance with the closing of the non - dilutive sale leaseback of our Danbury manufacturing facility yesterday.

We are now in good shape to fund our growing pipeline, which might blow updates momentarily, make targeted investments behind Afrezza and look for business development deals that are complimentary to our business, which can provide higher rates of return for our shareholders. With this, I'll turn it back over to Mike for some additional comments..

Thank you, Steve. And thank you, everyone else. With the sales impact now closed, you can see the proceeds really are focused on how we can take opportunistic opportunities on Afrezza, which we've not been able to do in the past. Additionally, our pipeline today is robust and growing rapidly.

It's growing so fast that we physically cannot do any more than we're doing without hiring a lot more people.

For next year, the reason we'll talk about the pipeline is we're not going to talk on another shareholder call probably till March, February when Q4 closes, but there's a lot of positive things happening in the pipeline between now and then, that I really wanted to take a step back for shareholders to have a glimpse of what's coming.

On this slide in particular, you could see the cannabidiol, I think they are on Phase 1, they've started and they are looking at acute panic disorder as well as anxiety. They focus on that in their Phase 1. But that's slide is really accordingly. We are pleasantly shocked with this data. We are excited to be sharing this with you for the first time.

We know Clofazamine works. So we're already excited about the how we bought it in through our acquisition of Qrum mid-December. But it's really good to see that this effect last 56 days post data, absolutely mainly.

So as the new top data just recently got in and we just looked at its high, medium and low dose relative to the minimum and inventory concentration, which is the green line.

And from the left side, we dose for 28 days, and then we follow these animals for another 56 days, host dosing, to look at how fast the drug clears, how much will vesting impact it has in the long versus the plasma.

And here I'm showing you the LAN levels of dose at [Indiscernible] before, and you could see that, it's really less in the lungs for long time before it come down. It's a liquid fuel drug, and that's exactly what you want to see in this disease.

And we can tell you in the plasma, there's not very high concentration to, specifically from the plasma much faster. Because this is a lung disease, you want the drug to stay in the lungs and this is at least 8 times at MIC, which we did a wide therapeutic dose window.

We saw no dose-limiting side effects and drug levels are significantly higher than 84, which really starts to make us think about how we could dose this differently high designing innovative trial. You're going to get this in Phase 1. By year-end we expect that patients to readout Q1.

But as we go, really we're already thinking about the Phase 2 design and how we work with the FDA to do something interesting here. But that super excited about this product [Indiscernible] in last year. And [Indiscernible] and the team, they are continuing to do an incredible job as moving it forward.

The next task that we have in pre -clinical development that we brought in this year that we're really excited about is TGF beta for IPF. It was announced in June. We've already just finished up the dry powder inhalation formulation. We're about to put this into PK and PD.

And that will tell us what the levels are in the lungs, what levels are in the plasma and how long half-life is. And then just as we evolve, our technology continues to show rapid lung levels with minimal systemic circulation.

That's exactly what we want to see in this particular target, because it's -- as a known side effect profile in the systemic circulation accretes headaches for patients and really the mature dosing window. This agreement that we have with Thirona allows MannKind to exercise certain rights to seek a full license to treat fibrotic pulmonary diseases.

Just to remind you, Thirona is developing this for a dermatological application in keloid scarring. And they also retained breaks for everything except for fibrotic lump-sum that we're focused on. So as we look out over the next 5 quarters, but I'm really just talking about 2022 for right now, you could see a couple of things.

Number one, in Q1 we'll get the Thirona program into [Indiscernible]. We will have a, Phase 1 readout on MNKD 101, which is Clofazamine. We will know by then the, Cannabinoid Technosphere Phase 1 readout, so that'll come out here in Q1. We'll be moving MNKD 201 in the tox studies, roughly in Q2.

And all this data will then generate meetings with the FDA in alignment that should get us into Phase 2 initiation on 101, by the end of the year. And Phase 1 initiation by MNKD 201, by the end of the year. This is our estimated best guess today on what we know will be have coming.

There's a lot of work to get done, but when you ask why we're raising the money? It's because we looked at over 12 months and 24 months, we could see the pipeline really starting to advance. And we can see the ability to scale a [Indiscernible] now that all the safety data [Indiscernible] is published.

We see opportunities to continue to grow this Company, will rapidly over the next couple of years, we have the previous 5 years. This data is excluding any new opportunities that may arise because of external collaboration. We've started working on a few formulations, those are ramping up, and they may turn into additional collaboration deals of 2022.

Lots of excitement on the pipeline I want to share with you. As we look at 2021 milestones, just to wrap up the year, I can't believe it's already November, it's absolutely crazy how fast the year has gone by. But you could see we had a very, very successful year.

Obviously, we want to get a win on, Tyvaso DPI for an approval, unfortunately we got a CRL in our control, but I would say, the team did a good job in the manufacturing process for the scalability ready. The United Therapeutics team did an amazing job on the clinical data and getting in the span of record time. So doesn't to anyone lack of effort.

And a lot of [Indiscernible] inhalation products do struggle the first round. In this particular case, we had a clean approval in front of us, that hang up on the technicality that, Q2 would within the clinical trial. But we are happy to overall, the progress we've made the Company MannKind stronger today than it's ever been in the last 5 years.

And our future is brighter than it's ever been. Double-digit growth for [Indiscernible] as far as we can see [Indiscernible]. So thank you to everyone will stop there and we'll take questions..

At this time. [Operator instructions] Our first question comes from the line of Gregory Ranexa from RBC Capital Markets. Please ask your question..

Hi, this is [Indiscernible] for Greg. Thank you for taking our questions, and congrats on the progress..

[Indiscernible] go..

Can you hear me? Operator, can you hear me?.

Yes, ma'am. I can hear you. [Indiscernible].

I do apologize to our analysts and our shareholders as we experiencing technical difficulties from the start of the meeting. We'll give it one more minute. You guys can hear your questions but we cannot..

Excuse me, presenters, could you hear me..

Okay. To our analysts who are on hold, I apologize, we cannot hear you, but we will take your calls and obviously gets you ready for updates after this earnings call today. I apologize for the technical difficulties. It's probably started late and there's obviously a challenge here.

I must have jinx ourselves saying how smoothly these eventual fire alarms to where we are. But thank you to everyone. Apologize for that. I know we have a retail shareholder meeting tomorrow. Look forward to that. Obviously, any retail shareholder listening today, email Rose or IR if you want to join that meeting.

And any questions, please get those in advances. We're going to try to go through the topics and organized that in a [Indiscernible] type of way. And hopefully we don't have any issues here..

Hold on. Okay. Thank you for your time..

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