Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation 2015 Fourth Quarter and Full Year Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. As a reminder this call is being recorded today, March 14, 2016. Joining us today from MannKind are Chief Executive Officer Matthew Pfeffer, Chief Commercial Officer Michael Castagna, Principal Accounting Officer Rose Alinaya. I would now like to turn the call over to Ms. Rose Alinaya, Principal Accounting Officer of MannKind Corporation. Please go ahead.

Good afternoon, and thank you for participating in today's call. 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 the actual results could differ from these stated expectations. For factors, which could cause actual results to differ from expectations, please refer to the reports filed by the company with the Securities and Exchange Commission under the Securities and Exchange Act of 1934. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast March 14, 2016. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. I now turn the call over to our CEO Matt Pfeffer.

Thank you Rose. To open today's call I wish to first take a few minutes to express the profound grief that I and the entire MannKind community have felt since learning of the sad news of Al Mann’s passing on February 25. Al’s history of innovation for systems and philanthropy made him an incredible role model for business people the world over. The company has received hundreds of messages in the last few weeks from all walks of life. It's clear that Al and Al’s work have touched people in a very personal way. And we are grateful for the many wishes and condolences sent via phone call, email, tweets and posts. I was very lucky to spend a lot of time with Al as we traveled to investor conferences, strategized in countless meetings and together discussed the path forward for MannKind. Of the many lessons I took from those interactions highlights for me are: number one, always do the right thing putting the needs of the patients first, and number two, never give up. With these lessons in mind, I reiterate to investors listening today the themes first discussed in my presentation at JP Morgan in January. MannKind is here to stay. We fully intend to realize Al’s vision for the inhalable insulin developed here at MannKind and manufactured by us, Afrezza. MannKind senior leadership is tackling every challenge with vigor and with the goal of making sure people with diabetes have access to this compelling product and we make the best possible decisions for the long term strategic advantage. Bottom line, we are committed to fulfilling the last chapter of Al's business legacy. With that, I'm pleased to now introduce the newest member of the MannKind executive team, our just announced Chief Commercial Officer Michael Castagna. Michael’s hiring is a critical step towards making Afrezza the successful product we intend. For those of you who have not yet seen the press release, Mike joins us from Amgen where he led launch efforts for a portfolio of products in oncology and rheumatology and other diseases. Prior to that he worked at Bristol-Myers Squibb, Sandoz, subsidiary of Novartis and EMD Serono also known as Merck KGaA. He’s worked in the launch of over ten brands covering numerous disease areas. He has an MBA from the Wharton School and he’s also a licensed pharmacist with work experience at CVS and Kennedy Health Systems. We're very happy to welcome Mike to MannKind today. And I've asked him to say just a few words on today's call. Mike?

Thank you, Matt. Good afternoon everyone. Let me start by saying that I am absolutely thrilled to be here today as part of the MannKind team. As Matt said, I spent my recent years with Amgen and have been closely following MannKind trajectory. I joined MannKind because I believe there's an incredible opportunity to reposition Afrezza for a significant growth and I want to be part of the team making that opportunity a reality. As a small pharma, MannKind can approach their sales and marketing efforts of Afrezza with laser focus unencumbered by internal conflicting public demand or other challenges that often exist in large pharmas. I'm excited to take my experiences and apply them in an innovative way here at MannKind. As Chief Commercial Officer, I am chartered with all sales and marketing functions necessary, to successfully penetrate the market with MannKind products beginning with Afrezza. To do this, I will quickly build a team spearheading sales and marketing to reach doctors and patients and we will also build a team focused on insurance coverage, advocacy groups, infrastructure support. And while not preparing my first day to go into details on the strategy, I will say that plans will include the components to build awareness and knowledge of Afrezza among doctors and user community. We will do low cost DTC activities to people with type 1 and type 2 diabetes. We will also aggressively pursue improved insurance coverage to allow users easier access to the product while maintaining patient support and co-pay programs. Lastly, we know we need to better educate doctors and patients on how to use Afrezza so patients can get the blood glucose under control. There are other ways to build the business that will be discussed going forward. But of course all these activities may be executed only when the product is returned to MannKind. In closing, I'm very excited to be on board. We're working very hard to fulfil and support all transition activities and lay the groundwork for Afrezza and future Technosphere products here at MannKind. I look forward to making Afrezza the success that everyone here believes it can be. Thank you, Matt.

Thanks, Michael. We will now transition to the reporting of financial results. I'll have additional comments on the business as a whole afterwards before we take questions. With that, I will now turn the call back over to Rose Alinaya, our Principal Accounting Officer.

Turning now to the financials. The net loss for 2015 was $368.4 million, including $206.6 impairment related charges, or $0.91 per share compared to a net loss of $198.4 million or $0.51 per share for 2014. Research and development expenses were $29.7 million for 2015, a decline of 70% compared to 2014 largely due to effects of our restructuring measures in 2015, reduced development expenses resulting from our shift to commercial production of Afrezza and decreased clinical trial related expenses. R&D expenses for the fourth quarter of 2015 decreased slightly from the third quarter of 2015. General and administrative expenses were $41 million dollars for 2015, a decline of 48% compared to 2014 primarily due to a decrease in non-cash stock based compensation and non occurrence of professional fees in 2014 associated with the closing of a collaboration and license agreement with Sanofi and the amendment of the financing facility with Deerfield. G&A expenses for the fourth quarter of 2015 decreased $3.2 million from the third quarter of 2015. Product manufacturing expenses were $51.8 million for the fourth quarter of 2015 related to under-absorbed labor and overhead and inventory write offs. Correspondingly given the continued lower than expected sales of Afrezza we assessed the impact of the value and recoverability of our long-lived assets in accordance with accounting guidance. As a result, impairment charges of $206.6 million were recorded in the fourth quarter of 2015 of which $140.4 million related to impairment of fixed assets and $66.2 million related to loss on future purchase commitments primarily insulin. Cash and cash equivalents were $59.1 million at December 31, 2015 compared to $32.9 million in the third quarter of 2015. During the fourth quarter of 2015 we received $34.7 million in net proceeds from the sale of stock on the Tel Aviv Stock Exchange, $2.6 million in payments from Sanofi for product shipments and $13.6 million in net proceeds from our aftermarket sales facility. We still have $30.1 million available to borrow under the amended loan arrangement with The Mann Group. We expect G&A to remain relatively flat in 2016 as compared to last year as a result of our restructuring measures in 2015 offset by an expected increase in professional fees related to the Sanofi termination. We anticipate our overall R&D. expenses will decrease in 2016 compared to last year due to our focused efforts on the transition of the Afrezza rights this year and minimal incremental costs associated with our development pipeline. We will incur sales and marketing expenses in 2016 as the sales and marketing efforts transition from Sanofi this year. Product manufacturing expenses are expected to remain relatively flat as compared to last year due to the Sanofi termination and the associated transition period as this year's production level should be consistent with last year's volume. And now I turn the call back over to Matt for final comments.

Thank you, Rose. The most noteworthy financial event in the fourth quarter was clearly the impairment charges recognized as a result of the continued slow sales of Afrezza by Sanofi through the end of the year which culminated in their decision to return the product to MannKind. As a consequence we wrote down our Danbury manufacturing facility and wrote off especially all of our raw material and finished goods inventory, including some components not even yet received for which we have purchased commitments. These non-cash write-downs will have a positive effect ironically on our P&L going forward as they will reduce overhead and material costs associated with future product manufacture. While the results of 2015 were well short of our expectation, as we talked about in our earnings release, we're looking forward to the next twelve months with optimism and great excitement. With Afrezza expected to be back under our control next month we're all enthusiastic about the opportunity to launch a lean focused commercial effort that highlights the differentiating qualities of our product. With Michael now on board as our Chief Commercial Officer we've taken a critical step in building our commercial infrastructure, activities towards what will essentially be a relaunch of Afrezza are well underway. That's not to say that Afrezza will not continue to be available in the interim. Quite the contrary we’ve committed to our patients and doctors that there will be no interruption in supply of Afrezza and we intend to keep that commitment. As everyone knows, we get rights to Afrezza back on April 5 or shortly thereafter. There will follow a flurry of activity in the weeks that follow and the ADA meeting in June in particular will be an important meeting for MannKind and Afrezza. We've submitted four abstracts and all four…

[Operator Instructions] And we have a question from Cory Kasimov from JP Morgan.

Hi, this is actually Brittany on for Cory, thanks for taking the questions. Can you just give a little insight into your strategy for addressing your liquidity position, and then also any detail on expected spend to detailed Afrezza? Thank you.

Well the short answer is no. I mean we never pre-announce financing strategies. We have talked a little bit about our overall goals to increase the presence of Afrezza in the worldwide market which could result in some cash coming in and there are multiple discussions like that going on. But obviously it's premature to commit to things like that. And we need to have a better feel for what things like that might look like and how the Sanofi situation winds up before we make any firm commitments on financing activities. Clearly we're not super impressed with the stock price at the moment. So we're not anxious to do anything dilutive and we’re exploring other kinds of opportunities. Beyond that, burn for building a sales and marketing organization I think it's premature. I'm not going to put, Michael, on the spot, it’s literally his first day today. But we’re in discussions on how best to do that. We’ve talked about this a lot before in a philosophical manner and those statements remain just as true now as they were then.

And our next question is from Jay Olson with Goldman Sachs.

I'm just looking at the current run rate for Afrezza scripts, which have declined steadily since the beginning of the year. Can you talk about when we should expect that to reverse, and how fast that trajectory could turn around?

But I think the first thing has to happen, is we have to have control of sales of Afrezza. It's really essentially not being marketed anymore. Once we can start that effort then we expect it to turn around and hopefully relatively quickly. I mean we have a lot of things underway to address that and have a very able person to my right who's going to be focusing all of his attentions, he’s done this before and we expect he can do it again to make that happen. As far as specific timelines it’s a little bit harder to address that. A lot of it will depend upon the speed and the final. strategy with which we deploy the sales force and how fast we can turn around some of the issues we have with the insurers which we know is a continuing problem. But we have a lot of things in mind to fix that. It's less clear how quickly we can do that but -- so it's still a little uncertain at this point. I wish I could give you some real specific guidance, I can’t. I hope we will be able to in the near future.

Sanofi had put some pretty substantial resources behind Afrezza with sales force, DTC spending. There’s also a commitment to conduct some clinical trials. Can you just give us an idea for the sake of -- purpose of modeling 2016, any guidance on the level of resources you intend to invest, and what the mix might be behind that?

Well, it sounds a little bit – first, I have to dispute your premise. I'm not sure that Sanofi did put those significant resources you're implying. Certainly not in the DTC area which was -- I shouldn't get too much into detail there. I will object to the premise generally and then the rest of the question sounds like a rephrasing of the prior question. I think we've said we want to do this in a lot more focused way. Try to concentrate on the areas where we think will have the greatest success. And we've seen evidence of where those areas are. It's premature to go into too much detail. But again I think you'll hear about that very soon certainly in the weeks to come.

Can you remind us how much the clinical trial will cost, that was agreed to with the FDA, and when that will start?

No, I assume you mean the long term safety study.

Yes.

That's still -- the final design of that study was never reached with the FDA. It's still under discussion and until that happens it's impossible to project what the cost will be, because there's too many moving pieces and things that are still under discussion.

Is there any timeframe on that?

Yes there is. We've not publicly said but I think you should expect to hear more details let's just say in the next couple of months.

And then also, you have spoken in the past about making some adjustments to the price on Afrezza. Is there any color you can give on that?

Yeah I think we felt that there were some problems with how Sanofi priced it and took it out into the market and we would reevaluate that. I don't want to commit to anything specific we haven't up to this point. Clearly we can't do that until the product is in our control and we have actually product to sell. There is a fair amount of products out still in the channels that will be sold first, that will be Sanofi branded product and then you'll see MannKind branded product. And that would be the point where you could start seeing those kind of pricing changes.

What’s your goal in adjusting the price? Is it going to improve your formulary status? Do you have commitment from PBMs to improve the formulary status based on the lower price?

We have a lot of research we've done. We don't have commitments from anybody because we can't really talk to them until the NDA is back in our control. So we’ve done a lot of research on the issues that prevented the product from selling more and where the mistakes were made. And so we have a preliminary plan. But we don't have commitments per se. I mean anything -- all the discussions are pretty formal. It’s not the same as a commitment.

And then I guess, finally, do you expect to tap into the $30 million credit facility from The Mann Group?

I don't currently anticipate doing that but it's nice to know it’s there. We need it.

And our next question is from Adnan Butt from RBC Capital Markets.

Matt, do you foresee the company being able to announce a strategy about commercialization before, or by the time the product comes back, so kind of early April? Is that feasible?

I think we will be formulating the strategy during that time but really until we have products that we can sell ourselves that it’s somewhat academic. In the meantime it's still available through Sanofi channels and once we have it fully under our control and there's a lot of -- there's a lot of steps to this, that can be somewhat underestimated. But so many of these steps can't really be entered into until we actually have the NDA back which will happen until after April 5. So for example if we want to change the packaging and have it say MannKind instead of Sanofi we can do that but we can't do it -- can't submit it to the FDA until we have the product back. So that’s going to be the kicking off of a lot of process. It's not the end of the process. I hope soon after that either in connection with our next quarterly call or sooner, we be in a position to be a lot more forthcoming and specific for how we're going to go about this. But today is not the time.

Sure. And then one more, in terms of cash how long will current cash last, assuming things stay the same?

Well things won't stay the same but if they did -- I mean if we use that as a simplifying assumption, yeah takes us into early into the second half of the year. That’s not drawing upon any of the sources that are available resources we have now. But clearly we have things underway. It's premature to announce them. I am not terribly worried about it but it's not going to get us to profitability that's for sure. So we need to do some additional things and get us to the point where we can demonstrate these strategies that we have in mind where we really have the impact on the sales and the inflection of the sales curve that we expect it will.

And we have a question from Keith Markey of Griffin Securities

I was just wondering, could you give us an update on the clinics that you are working with to help to get the drug accepted better by the patients?

Well you’re talking about the diabetes care centers?

Yes.

Well remember those aren't affiliated with MannKind but we do hear from them from time to time. I think the ones we talked about last, I believe their first center is opening within the week or so. They have two more that they are assembling. I am not sure how far behind those are, I think they're going to closely follow. So you should start to see those popping up. It's interesting since that was first talked about we’ve got an awful lot of inquiries from similar kinds of organizations, awful lot may be an overstatement. We've gotten several inquiries from similar kind of organizations interested in doing something similar. So it's an exciting time. I think the advantage of something like that is they can do some very specialized work. They clearly in my discussions with them have seen the advantages of combining Afrezza with, for example, continuous glucose monitoring and getting what they're terming real time diabetes control. Because if you look at the patients that have had the most notorious successes with the product, that seems to be a trait that many of them share. They can quickly see what's happening with their blood sugar levels and use a very rapid acting insulin such as Afrezza which is really the only one out there with those kind of kinetics to make corrections and keep good control. So it’s nice that they can expand those successes and make a bigger name for themselves. We wish them the best of luck. But of course we have to kind of keep a comfortable separation between ourselves for regulatory reasons.

And then I was just wondering, you mentioned the April 5 transition date again, and I was wondering if that’s a hard and fast date, or if there is something that could actually delay it beyond the 5th at this point?

Well we consider it the target date. I think it's the likely date but it's not a hard and fast date. Nothing is ever – you never get everything done that particular day. That would be the date we target for the key things such as for example the transfer of the NDA and getting things like supporting websites and all those things should go live right then. But they will be necessarily things that will trail past that too. End of Q&A

We have no further questions at this time. I will now turn the call over to Matthew Pfeffer for closing remarks.

Okay, well, I just want to say thank you all very much for your attention and for your belief in MannKind and we look forward to giving future updates and answering some of these unanswerable questions of this point as we move forward and continue to show some progress towards commercialization of our product. So thanks once again. We'll talk to you again soon.