Ladies and gentlemen, thank you for standing-by. Welcome to the MannKind Corporation Third Quarter 2014 Conference Call. (Operator Instructions) As a reminder call, this call is being recorded today, November 3, 2014. Joining us today for MannKind are Chairman and CEO, Alfred Mann; President and COO, Hakan Edstrom; and Chief Financial Officer, Matthew Pfeffer. I would now like to turn the call over to Matthew Pfeffer, Chief Financial Officer of MannKind Corporation. Please go ahead.

Good afternoon, and thank you for participating in this afternoon’s call. I’ll be discussing our financial results for the third quarter of 2013 as reported this morning and will then turn the call over to Hakan. Before we proceed further, please note that comments made during this call will include forward-looking statements within the meaning of federal securities laws. It is possible that 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. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast November 3, 2014. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Now turning to the financials. The net loss applicable to common stockholders for the third quarter of 2014 was $36.5 million or $0.09 per share compared with the net loss applicable to common stockholders of $50.8 million or $0.17 per share for the third quarter of 2013 and 73.4 million or $0.19 a share in the second quarter of 2014. R&D expenses were 19.2 million for the third quarter of 2014 compared to 37.3 million for the second quarter and 27.3 million for the third quarter of 2013. R&D expense, expense was decreased by 8.1 million for the third quarter of 2014 compared to the same quarter in 2013 and by 18.1 million from the second quarter of 2014 due to decreased non-cash stock compensation expense resulting from a settlement value of modified performance awards and overall decrease in stock-based compensation expense related to performance milestones substantially recorded in 2013 for which we…

Thank you Matt. Since signing the partnership agreement with Sanofi, both have been really busy coordinating efforts in preparation for a launch in the first quarter of 2015. Now I am really happy with the activity level and enthusiasm that are seen from the Sanofi staff. Representatives from the US, France, Germany are participating in the launch preparation, the clinical development programs, the regulatory preparations and the commercial manufacturing startup activity. We have established a Joint AFREZZA Committee or the JAC between the two companies represented by senior managers for critical functions, supporting the JAC several working groups have been established with working group leaders assuming the operational accountability for their areas of responsibility. They are all hard at work meeting at least weekly to enable the fourth quarter launch of AFREZZA. Both companies also have an alliance management function in place whose job it is to coordinate all the various activities and be the conduit to the JAC committee on important strategic issue. Most of the supply chain and manufacturing PV activities have successfully concluded, so I am pleased to announce that we have begun commercial production and we are confident than [rebate] of the supply of Sanofi, the launch inventory necessary for a successful launch. As a result we’re also closed to triggering payment of the first of two milestone payments associated with manufacturing and supply considerations. Not only are we in commercial production as we speak but we are also well underway in expanding cost building capacity in [inaudible]. During the first half of 2015, we will have added two additional filling lines to make sure our capacity can meet currents and anticipate the demand growth. Sanofi launch planning is well underway and our marketing team is working closely with them to convey the marketing intelligence of…

Thank you Hakan and good afternoon, ladies and gentlemen. The third quarter was certainly very eventful. We have received the FDA approval of AFREZZA, a prandial human insulin on June 27th just the Friday before the quarter starts. Then on August 11th MannKind Sanofi jointly announced formation of a global partnership for commercializing AFREZZA. Sanofi is especially significant as the partner for AFREZZA because it’s such a major force in diabetes throughout the world. Within wholesale more than 120 countries, moreover Sanofi will have basal insulin as a greatest revenue of all current insulin products. I have long considered Sanofi the best of all potential partners for AFREZZA. And my belief has been confirmed by Sanofi very strong activities in preparing for the US launch. Indeed, it is exciting to see Sanofi’s impressive commitment to resources to the partnership and I am thrilled to see our diabetes teams working very enthusiastically together towards the launch in the first quarter, Many of you early in the financial community recognized the Sanofi is likely to generate a significant mark of position for AFREZZA but some of you think MannKind 35% share of the profits to be disproportionately low reward for MannKind for its achievement and huge investment. However is important to recognize that this blip provides very attractive returns to both companies and then Sanofi will bear the brunt of remaining development and commercialization costs. The arrangement is designed to reflect the overall relative contribution of resources to the product from a commercial and development perspective, including Sanofi’s investment in building a market-leading commercial infrastructure, as well MannKind’s investment in the product to-date. Additionally, MannKind is entitled to earn $925 million of cash payments upon achievement of various milestones. With the September 23 legal closing of the agreement after FDA [start] clearance,…

Thank you. We will now begin the question and answer session. (Operator Instructions) And Jay Olson is on the line with the question. Please go ahead. Jay Olson – Goldman Sachs: Thank you for taking the question, I have a couple of them. First, in light of the Management changes at Sanofi, could you please describe how that may or may not impact the AFREZZA partnership? And then second, with regards to the first manufacturing related milestone payment, should we expect MannKind to receive that payment during the fourth quarter? And also will that payment be capitalized? And then finally, have you had any conversations with payers and are you expecting AFREZZA to be included on any formularies at launch? And has that impacted your perspective on pricing at all? Thank you.

Well let me start with the question about the three buckets. While certainly the three buckets [inaudible] AFREZZA partnership. I have to day that the entire Sanofi organization has embraced this opportunity with much enthusiasm as we’ve seen the US, in France and in Germany. So we are still looking forward to a long and successful partnership and yes we have not seen any other impact than that. Matt do you want to?

What was your next question Jay, just to make sure I get in the right sequence? Jay Olson – Goldman Sachs: I think Hakan had mentioned that there was this first manufacturing milestone payment should be expected near term, and I was wondering if that would be in fourth quarter and if it will be capitalized? Thank you.

I can half answer your question. We don’t project timing or things like that. We think it’s imminent but whether we’re in November so it could easily fall into the fourth or the first will get what we get it but much like and of the same rationale that we’ve deferred the recognition, revenue recognition of the upfront payment you would expect the milestone payments to be deferred on to the same basis, so happily we’ll have the cash that’s what most important for us at this point but recognizing them through the P&L, we’ll have to wait for the same criteria which means some track record of sales and ability to project earnings as the upfront payment would. Jay Olson – Goldman Sachs: Okay, thank you.

And is regard to your question – I mean certainly the research has been done and pay conversations are underway however this specific irresponsibility for our Sanofi partners so this is really as much as I am prepared to state that this point because of competitive reasons but I can assure you, again, it’s a very active area for us right now. Jay Olson – Goldman Sachs: Thank you.

And the next question comes from Cory Kasimov. Please go ahead.

Hi, this is actually [Brittany] on for Cory. Thanks for taking the questions, I have two questions. How many reps is Sanofi going to launch with? And also second, what are your thoughts on the recent commentary made by Sanofi about insulin pricing and how this may affect AFREZZA? Thanks.

Once again, unfortunately I have to tell you that certainly we know that Sanofi has a big and a large diabetes organization in the US including sales reps and MSLs. And that is being worked out together with Sanofi right now. And in a short period of time the JAC committees in between the two companies are getting together say to finalize the planning. But again, for competitive reasons I cannot give you the exact number or reps that are – and MSLs that are being part of the plan but it’s a well-resourced focused plans

And there will be one group of that those sales people whose first priority will be AFREZZA. .

Absolutely. What was the second question?

And then the second on is about Sanofi’s commentary about insulin pricing and how that may affect AFREZZA.

Well, remember most of their pricing was really in relation to the Lantus, so they’re speaking about a different market. We think this is clearly a differentiated product, but we’re. Not really prepared to discuss pricing at this point.

Thank you.

The next question comes from Adnan Butt. Please go ahead. Adnan Butt – RBC Capital Markets: Thanks for taking my question. Good to hear launch is on track for first quarter. If I can ask, would you able to tell us the specific steps that have been taken so far? Is a sales force assigned and did I hear correctly that it’s a sales force that’s going to have AFREZZA as the first detail? And are these new reps or are these being assigned from the current Sanofi structure? That’s first question, please.

While there are certain experienced representatives that are within the Sanofi organization and yes they will certainly have first – the number one position in the sales target during launch and into the first and second quarter. Adnan Butt – RBC Capital Markets: So, Hakan, what more needs to be done to nail down when in the first quarter the launch can take place?

Well, I would say that the launch team, the joint launch team in the companies are going to present their final plans to the JAC within a few weeks. At that point in time I would say then you will have a decision in between the company when they’re ready to launch. But as I mentioned from a supply point of view we are in commercial production at this point in time so we are confident that we will have a product available for a launch. Adnan Butt – RBC Capital Markets: Okay and one more question then I’ll get back in line. Do you expect to provide details of the post approval studies when you’re prepared to? And do they have to be finalized pre-launch or can they be finalized after the launch? Just because of the size and timing of those studies would be of some interest for us.

They can be finalized after launch. Those are in discussions with the FDA and if I remember correctly during the first half of 2015, all those will be agreed upon with the FDA and then initiated following those studies. So there will probably be discussed at a later earnings call then we have more details. Adnan Butt – RBC Capital Markets: And lastly, Sanofi is holding an analyst event, do you know what you expect them to discuss regarding AFREZZA there?

Since I have been talking to them I can talk about that, I mean it is an Analyst Day there I think I believe they’re calling it New Medicines Day, I can tell you I am very relieved and gratified that AFREZZA will be very prominently featured in that event. Couple other products are coming down the pipe but I think it will demonstrate that commitment to the product and their excitement about it, so I am looking forward to it as well. Adnan Butt – RBC Capital Markets: Okay, I’ll get back in line for now, thanks.

Thank you.

And Steve Byrne is online with a question. Please go ahead. Steve Byrne – BofA Merrill Lynch: You covered a lot of categories were the two Companies are working together, these joint steering committees, the European filing activity, the protocol development for the post approval studies, the Eastern countries that are interested in this. Are all of these activities included in this 35%, 65% joint sharing agreement? And does that – did that begin effectively the date of the agreement or does this all start to accrue post launch?

Well it starts as the effective date of the agreement but not all those things are included in the 65, 35 profit split so there are specified things that related specifically to the sales and promotional efforts of AFREZZA that are included and some things specifically or not for example I mean Hakan talked to lengths about the joint advisory committee, our cost and their cost for example that committee are specifically excluded from that arrangement so we don’t pick up their cost, they don’t pick-up ours, we bear our own cost for these things. Steve Byrne – BofA Merrill Lynch: And is it also the case on your – the activities regarding the expansion at Danbury and bringing the three fill lines on stream, is that essentially your cost until your post launch when you would capitalize it?

Yeah it would be our cost it would be capitalized as we incur those types of expenses and then the depreciation of those cost would be absorbed into the product and we’d be reimbursed as we sell the product Sanofi. Steve Byrne – BofA Merrill Lynch: Okay, that’s helpful. And the $19 million R&D expense in the quarter, can you break that down into how much of that was actually pre-launch activities at Danbury? And where do you think that expense line item trends down to post launch?

This is moving kind of quickly. It’s trending down but I can’t get you to an exact number yet, remember I said expectations, you’re not going to see a dramatic impact in the fourth quarter because that only starts getting absorbed in the product as we go in the commercial manufacture which is only just begun, so you’re not going to see a full quarters impact of that. And even then it’s only the things that are in the materials produced. So that’ll start late this quarter and you’ll see the first big impact of it for a full quarter basis in the first quarter of next year. Steve Byrne – BofA Merrill Lynch: Okay, thank you for the help.

Alright.

The next question comes from Keith Markey. Please go ahead. Keith Markey – Griffin Securities, Inc.: A couple of questions. I was wondering if we might see a launch outside of – in China or the Middle East prior to Europe. And also wondering, how are you going to recognize the $150 million upfront payment and the milestones that you’re capitalizing, is that going to be on a straight-line basis or is there some other mechanism?

Let me start with launches outside the US and Europe and say China, other places. Again, those discussions are just in the beginning, we do know that in China, the regulatory process is rather lengthy and Europe it’s more similar to what you see in the US. So the only thing I can say right now there certainly an agenda items for us but we have not really delve into the detail at this point in time that I can give you a more specific answer because again the focus certainly on the launch in the US. Keith Markey – Griffin Securities, Inc.: Okay, thank you.

And Keith as far as straight-line I believe that it will likely be straight-line. What I can’t tell you for sure is when that will begin and with certainty how long it will last. So some of those things are still to come, you certainly should not expect to see any revenues being flowing into the P&L in the next year as again we need to get to a point where we have some track record of sales and we see the projections and trajectory before we can recognize anything at all and then it will likely be spread over a modest period after that. Keith Markey – Griffin Securities, Inc.: Okay, thanks. And if I could ask one other question, I thought you might have a few additional people on the call for the – probably for the first time. So I was wondering if you might be able to compare AFREZZA to Exubera, explain a little bit why you believe that AFREZZA is going to be a success where Exubera was not?

Keith it’s hard to really try to compare AFREZZA to Exubera because they are totally different products. They are truly powders, so both companies Pfizer and MannKind decided to deliver by inhalation, but the difference is that the Exubera was a very huge clumsy inconvenient and very expensive device, they delivered a powder that was clinically less efficient and ineffective than injected rapid acting analogs. And even rapid acting analogs are not even close to pancreatic insulin. A rapid acting analog doesn’t [inaudible] for close to an hour unless for five to seven hours and Exubera was even worse than that but pancreatic insulin peaks in 10 to 14 minutes and a couple of hours and if you look at the clinically at the kinetics of AFREZZA, they’re very, very close to those, it’s hard to see much material difference and so you can’t compare AFREZZA to Exubera, the fact that both inhaled is not really the important feature. Keith Markey – Griffin Securities, Inc.: Alright, thank you.

And the next question comes from Josh Schimmer. Please go ahead. Josh Schimmer – Piper Jaffray: Thanks for taking the questions. First one for Hakan, if you could clarify the supply and manufacturing milestones that you expect, the timing and then the amount. And then for Matt, just because it’s so important for modeling the Company want to push a little deeper on the percent of R&D in the quarter that was for manufacturing and what kind of decline we should expect? I’m sure that is information that you have fairly handy. And earliest in the ballpark, are we talking 50% of the expenses for the quarter, more or less? Thanks very much.

In regards to the supply milestones, having started commercial production, we feel at this point in time but that certainly will have to be reduced by the JAC that we have met the performance targets and parameters that was important for the first of the two milestones. So my expectation is that as soon as the JAC is coming together for the first or the second joint meeting that will be an item for review and that’s happening in a few weeks. Josh Schimmer – Piper Jaffray: And the dollar amount for those milestones?

The first is $25 million. Josh Schimmer – Piper Jaffray: Great.

I told you we announced that there are three milestones that we’re potentially CMC related and they’re 25 each. And with that so I guess my answer, we’re not sure it would be helpful, I can certainly breakdown between manufacturing and clinical – because I think that might even be misleading because the clinical sort of expenses and R&D are coming down rapidly but it’s not bottomed out yet by any means. Certainly manufacturing is about two-third of that total. I think that percentage will increase but it’s not going to completely go away. We do expect to have some cost associated with future application, the product that it will still be ours and other things that will be done to faster development and for the products even then to the Sanofi agreement, that will still remain our cost, they’ll be chargeable to the collaboration but not currently reimbursable. So it’s going to drop a lot, it’s – remember it’s just the things that are going into the product that it will come out of the P&L but that will be the bulk of it.

One of the new projects, of course is a new process for manufacturing AFREZZA which has significant advantages and we pay for to get to the IND and then, and that’s almost ready now and Sanofi pays for all of the other development expenses until it goes into manufacturing and that’s their expense. Josh Schimmer – Piper Jaffray: Okay, thank you.

The next question comes from Arlinda Lee. Please go ahead. Arlinda Lee – MLV & Co.: Hi guys. Thanks for taking my question. Can you maybe walk us through some of the mechanics of the Sanofi, the draw down that you can take on them? And how we should look at the convertible note due in 2015?

Okay. So let’s think about how this works and how money moves around into this agreement. Each quarter we will submit our expenses to Sanofi and we will create a combined P&L for the collaboration, we will technically be responsible for 35% of any losses or to the recipient of 35% of in profits to that quarterly statement produces obviously in the first several quarters we expect there will be losses and then ultimately those will turn to profits. But to the extent of their losses in the early periods, at the such time that number is figured out, we have the option of either writing a check to Sanofi for our share or we can apply that to that line of credit that they have provided to us so that we don’t have to be cash out of pocket. And that’s a 10 year instrument except to the extent when we become profitable, the first thing we should do use those profits for us to repay that obligation. Is that kind of answer that part of the question? Arlinda Lee – MLV & Co.: Yes.

The other things that are happening is in the meantime there is cash flow coming into the company because there are funding the production of products so we do get paid for that on a current basis so let’s not cash out of pocket twice and there is an element of cash positivity there to because to the extent we’ve already paid for things like a manufacturing facility, those depreciation is contained in that product those costs are passed along but then our cash cost likewise to the extent that there are raw materials we’ve previously paid for those costs are pass along to Sanofi but they’re not cash cost to us either. So there will be some net cash inflow from the manufacturing arrangement during the term of the agreement for most of it anyway in the early years. Arlinda Lee – MLV & Co.: Okay, great. And would you be able to use the line of credit against – what are your plans for the convertible note? And could you use the line of credit against that?

No. The convertible note, we’ve not I think it’s premature to say what we will do with that, I think it’s unlikely we will expect to be paying that off or providing shares is more likely that it would be restructuring in some fashion but anything can happen between now and then we will see what happens when we get a little closer to it. I do talk about that instrument really often and they have pretty firm views on what they would like us to do with it but we’ll see so. I need to pull that and reserve and I can’t commit one way or the other but we cannot use the Sanofi loan to pay that off nor would we expect to or want to. Arlinda Lee – MLV & Co.: Okay. Great, thanks.

The next question comes from Christopher James. Please go ahead. Christopher James – Brinson Patrick Securities Corporation: Let me add my congrats on your progress. Most of my questions have been asked at this point, but it’s great to hear that you’ve begun commercial scale up. But could you give us an update on the work, your work for getting additional lines of insulin approved and what additional work needs to be done there? And then I have a quick follow up.

Chris are you speaking of the different cartridge strength when you say different lines of insulin, what you’re asking about. Christopher James – Brinson Patrick Securities Corporation: Yes, the different cartridges. The 12 unit, I believe you were going to submit the NDA for the 12-unti cartridge and –

That is correct. We have on our side we have finalized what we believe the application to the FDA to submit that momentarily. It was sent over to Sanofi, but a week to 10 days ago and so I don’t know the specifics whether it has been submitted at the point in time but I know it is just about to be submitted since they also took the responsibility for the NDA and going forward, we did transmit to the FDA through them. So it’s certainly in process it may have been submitted already. Christopher James – Brinson Patrick Securities Corporation: Great, thanks. And given that you describe the other technology as a platform, have you identified any specific opportunities for Technosphere or the inhaler in pain or any of these other areas where it seems like it might be useful?

Yes of course we have but we can’t talk about them yet.

I once was quoted and certainly regret those words, embarrassment – but I think it’s to some extent true, we have a lot of opportunities we’ve identified and we’re calling through them, we can’t afford to do everything. So we want to make sure we pick the optimal lines and make sure we have a good plan in place before we start talking about them publicly so that we can start being judged as progress against what we’re planning and I hope we’ll be in a position to do that in subsequent quarters but definitely not today. Christopher James – Brinson Patrick Securities Corporation: Great, thank you.

Hakan mentioned that’s a very active area, we have a lot of people internally and people externally helping us with that project. Christopher James – Brinson Patrick Securities Corporation: Great, thanks, guys.

And Jay Olson is on the line with the question. Please go ahead. Jay Olson – Goldman Sachs: Alright. Thanks for taking the additional questions, I have a couple of them. With regards to a European filing, since the AFREZZA pivotal studies included European study sites, should we expect to see a European regulatory submission in the near term? And if not, can you comment on what additional work might be needed? And then secondly, you had in your prepared remarks and in the press release described some additional borrowing capacity that was available to you. Do you expect to use that over the next year or so? Thank you.

In regards to European studies remember what we did as I thought of doing the regulatory studies for the US. We kept kind of European requirements in line so that hopefully there was a way to leverage what we have done in US. Whether we need any further studies or whether we are looking at enhancing the label of AFREZZA before we submit in the European arena still needs to be discussed with the Sanofi. We have not have the chance to do that yet because all our people and really our capacity is right now fully exploited towards the opportunity in the US. So I don’t have any further insights on that at this point in time but the fact that we certainly kept the European mine as we conducted the regulatory trials for the US approval.

Again, you know me well to know that I don’t like to forecast things especially about borrowings or offerings and those kinds of things. I like having the ability to get money just in case but I don’t have any current plans to drop on those facilities but it’s nice to have on there. Jay Olson – Goldman Sachs: Okay, thank you.

The next question comes from Shaunak Deepak. Please go ahead. Shaunak Deepak – Jefferies & Co.: Thank for taking my question guys. Just wanted to see if you could provide a little bit more detail on how Sanofi would be targeting AFREZZA to like these patients in this thing that I think they termed the lost decade on their call last week? See if there’s any clarity you can provide on the sales and marketing efforts?

Let me take a crack at that one minute. It’s interesting I couldn’t help it noticed that term they used to because I’ve not heard to use previously but it’s an interesting way to characterize a problem that certainly exists in the diabetes community where it’s well recognized that it just really hard to get patients to move on particularly the insulin, there is so much resistance to starting on insulin that doctors characterize up to a decade of time where you’re struggling with alternatives and different kinds of worlds and other things or diet or whatever happens to be trying to get some insulin and unfortunately during that time a lot of damage is cost to the patient and one of the reasons we see the problems as such is still with all the advances we made in this field, the prevalence of a long term complications in diabetes, the common ones you hear about, the scary ones like blindness and amputations and things. It still happen with some regularity and I think that’s partly what’s to blame speaking of the non-doctor, but I think that’s what their alluding to and I think they see in addition to the may be some of them, more obvious places where AFREZZA might be used if you want to pick where you might have the biggest impact on patients and on humanity generally it might be to the extent we can get AFREZZA into the patients sooner. And I think that’s what they were alluding to. Clearly we’ve always thought this ought to be used earlier, we were very pleased to do our last Phase 3 pivotal in an early stage setting with potentially Metformin failures. If we can get the use by people earlier we hope we can impact the ultimate…

It’s going to be tricky and you will see a lot of breakdown in the Qs but generally speaking as you know we had unusually large amount of expenses flowing through in the non-cash stock compensation area for lot pent up things in past quarters that really did not occur again in the third quarter and in fact since we had accrued some things in the prior quarters and when you actually book it, it is depending on the stock price and obviously stock price – upwards but in fact down a little bit be ultimately settlement of those with a smaller number so we actually came out with a slightly negative number in the third quarter of 14. So without going into nitty-gritty details it was a fairly amount and it was negative amount as opposed to prior quarters where it was quite large. Shaunak Deepak – Jefferies & Co.: And just for modeling purposes, I was getting around 20.2 and 9.2 respectively for the two expense lines, is that about right?

20.2, 9.2, I am not sure which expense lines you’re talking about, so I am hesitant to give you a specific answer. I mean it depends on what you take out, so the G&A expenses has been trending in the nines range sure without these unusual costs but this quarter was higher remember because we made a large payment in recognition of the Sanofi transactions. So both as the commission on the people will help us but also professional fees and so forth. So yeah it’s been trending in the mid nines from a G&A expense standpoint and yeah it’s been running 19 to 20 or so R&D if you exclude stock-based compensation but it’s been increasing in manufacturing and decreasing in clinical and other areas just as a kind of a general trend. Shaunak Deepak – Jefferies & Co.: Yes, thank you.

Remember, a lot of those costs are going to be absorbed by Sanofi in the future.

We have no further questions at this time. I will now turn the call over to Mr. Mann.

Thank you and thanks to all of you for joining with us today and we look forward to our next quarters’ conference call in which we expect to update you regarding the commercial launch of AFREZZA. Thank you again.