Good day, everyone. Welcome to the MannKind Corporation Second Quarter 2020 Earnings Call. As a reminder, this call is being recorded on August 5, 2020, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until August 19, 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 things over to Mr. Castagna. Please go ahead, sir.

Thank you and before I start, I really want to say thank you to all of our stakeholders as Q2 was a big unknown for everyone, when we look back to March. We weren’t sure how bad revenue or our [axes] [ph] would decline, or how our cash position would be impacted or TreT would be slowed down and for how long. Our team, whether it’d be HR, finance, R&D, manufacturing, medical or sales, pulled through big time, as we will discuss here on our earnings call today. And we are now finally in a very solid financial position, as we look ahead. I’m very excited about our future, whether it’d be the international expansion, TreT filing, the Phase 1 data readout from COPD, and the incredible foundation of Afrezza we can build our future growth upon. [With talent and] [ph] interest in MannKind is very high right now. And our bench of diabetes expertise continues to grow each day. Thank you again to our employees, our patients, our customers and our shareholders for hanging in there during what could have been one of the darkest periods in the history of the company. I want to remind people our mission, which is really to give people control of their health and the freedom to live life. And none of us today more than ever want the freedom to get out of our house and live our life. And hopefully, as we continue to grow our expansion within the Treprostinil franchise, and the Afrezza franchise, we can bring this to more people in the future. Let me highlight some of the key updates here during Q2. First, Afrezza’s quarterly net revenue of $7 million was 15% ahead of 2019. Our sales to Biomm were $0.2 million in that number and then…

Thanks, Mike, and good afternoon. Very pleased to review our second quarter and first half 2020 financial results, which showed meaningful Afrezza net revenue growth, even with the impact from the pandemic, gross margins holding steady at just under 50% and our cash balance, ending the second quarter at its highest levels in December 2018. I’ll be discussing select financial highlights and that’s to supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q which was filed with the SEC this afternoon. Let’s start out with looking at revenues for the second quarter in the first half of 2020. Starting with the table on the left, Afrezza net revenues of $7 million for the second quarter versus $6.1 million for the corresponding quarter of 2019, growth rate 15%. The second quarter included $0.2 million of sales to a Brazilian marketing partner, Biomm. Let’s take Afrezza net revenue grew 12% versus the prior year driven by volume growth from underlying Afrezza prescription demand, which is up 11%. Price and a favorable mix of cartridges that was partially offset by the impact in the COVID-19 pandemic. The pandemic affected our second quarter Afrezza net revenue in a number of ways. First, we disclosed in our Q1 earnings call, approximately $0.5 million of Afrezza net revenue shifted from Q2 to Q1 from increased wholesale buying patterns in March. The increased March 31 wholesale inventory levels have come back down by the end of the second quarter, which negatively impacted our second quarter Afrezza net revenue of approximately $0.5 million. Second, our sales force work from home from the second quarter and we were able to leave the physician had limited access to their offices, which impacted the effectiveness of our selling efforts. And third, the effect on…

Thank you, Steve. Now let’s talk about growing our future not just in the second half, but as we continue to look out going forward. So the first thing, I think, we were able to do during COVID was to get back in touch with many of our current shareholders, but also reach out to new shareholders. It’s something that’s been important to us and as we continue to transition the story, from an Afrezza story to a pipeline story to an expansion story, we think now’s the time more than ever to start to build up our investor base. As part of that, we’ve reached out to several new institutional investors as Steve highlighted, some of which were by offer ATM and build a position in MannKind over time and sometimes that helps us in short-term. Our investor discussions have been a 2-way street. We tell them our story and reasons to believe in our future, but we’ve also been listening and taking our feedback on key issues, for example, on [Salem padding] [ph]. We’re surprised that how new our stories to many of these people and really look at our investors in 1 of 2 buckets, those that have been with us on Afrezza with new MannKind in the history, but dropped off years ago, or those that are very interested in unit there and look at MannKind as an opportunity to capitalize on this growth story with TreT. And the additional benefit of the company becomes the further growth. We’re starting to see 2 different bases of shareholders forming in our future, which ultimately will converge into the growth story for the company whether that be, because if people believe in Afrezza and our growth in that story, or because of the upside in the company, as…

[Operator Instructions] We’ll hear first today from Thomas Smith with SVB Leerink.

Hi, this is Dylan Dupuis sitting in for Tom. A couple of quick questions, first, can you give us a little insight into what your expectations are for the new territories and the new sales reps that you brought online over this year? What are your expectations and how quickly they can get ramped up and producing at full speed? And then, kind of related to this, what are some of your target points and metrics that you’re evaluating to consider opening new territories in the future? And then, I have a couple quick follow-ups after this.

Okay, I apologize. I missed your first…

New territories in sales, what are the expectations for the new territories – and new sales team…

Okay. Yeah. So I think that the first thing as you think about, we opened up 11 states and those reps are just getting out there, really the last month, meeting their customers for the first time. And when you think about those 11 states, we don’t expect a rapid uptake in the first month, as it’s basically the launching from scratch. And I can tell you, I was on a call recently with one of the [city] [ph] organization. And it’s amazing to me that their knowledge base is backward about 4 years ago, and they just missed all the new information we’ve published. So I think the first step is making sure those new territories are supported with good medical support. And we’re giving those employees the runway to be successful and I think they’ll have that. We’re seeing some early success in a lot of these new territories, so they are growing. But they’re starting from a base of zero pretty much and that’s – so that’s exciting as we continue to see that base grow. I think the first thing we look at in terms of metrics of success is really new prescriptions. That’s going to be the earliest indicator of success. And like I said, we’re looking at those and early results are encouraging. And we’ll look at that as we get to the end of Q3 and Q4 to decide, do we expand even more territories as we go into 2021 and see what our growth has been on the second half. And a lot of this is COVID dependent guys. We are being prudent with the cash. We’ve been fortunate to bring in here in Q2. But we also know that we’ve got to train people, given the time. And that’s just going to take a little bit of energy. So we’re excited, we’re looking at this hopefully and the new employees have been excellent. The talent base we’re recruiting is incredible. So we got 4 out of 9 new managers in the field and probably we’ll have 19 new reps this year, so 35% improvement. So, we feel very good about that and excited about those metrics. In the medical support team, we’re looking to hire 3 to 5 MSLs as we speak. We’ll have some support there at the new districts.

Yeah. Great, thank you. And then, real quick, if you can give us an update on the progress being made with AMSL in Australia, as well as the pediatric program. That’d be appreciated.

I heard AMSL in Australia and…

Peds program.

Peds? Okay. So on ASML, I was just on the phone with them a week ago. They, obviously, were hit by COVID. And things were shut down there and they’re just coming out of it. We are working on filing and we’re just finishing up the gaps in the filing and seeing what we need to do with anything modified, to get ready for filing. So that’s now moving forward, it took a little longer than we would like, for lots of reasons. But that’s on track now to start moving forward. And it’s probably going to be an 18-month process from the time when it’s filed. So that’s moving forward. Next one on the peds study is we’re doing a couple things right now. The first thing is we’re doing some market research to hear from patients and providers on the unmet needs in the pediatric space and the endpoints we’re looking at in our trial, and really trying to get a better forecast for how big we think the pediatric segment can be for inhaled insulin. We’re generally feeling very optimistic, and we really want to hear from the providers on hearing the optimism. The second part is we’ll be doing some pediatric advisory boards here to get feedback on the protocol design, the endpoints, and really making sure that we design this trial for speed of enrollment, balanced by risk and assessment of how quickly we can move this forward. So I think that’s important. And then, the third part is really building up the pediatric thought leaders. And so, we just hired a commercial person who joins us with a deep diabetes background from Novo and Lexicon. And he’ll be moving out here and really starting to build up our thought leadership within the ped segment. And I’m sure Alejandro you got a ton of connections in the pediatrics with your background. So we’re excited about peds. We know it’s going to take a little while to get there. But we’re putting the right plan in place to launch it successfully, and build that market up as we get ready for launch. But right now we’re just getting all the right ducks in a row to get the trial off the ground.

Yeah, great. Thank you very much.

Thank you.

We’ll hear next from Brandon Folkes with Cantor Fitzgerald.

Hi, thanks for taking my questions and congratulations on all the progress in the quarter. So you mentioned how quite – as a growth driver or sort of a new dynamic we’re moving towards. So can you just provide some feedback you’ve heard from physicians? In terms of switching patients in the current environment and in an extremely [heath] [ph] environment, do physicians want to see patients in person at some stage? If so, how often? And maybe segueing from that, can you talk about some of the positive shifts in the way we do business you’ve seen in COVID, that you think will be tailwind coming out of COVID? Thank you.

Thank you, Brandon. So I think initially when COVID hit, everybody was just trying to figure out how to survive. And the one small benefit that we have with MannKind is a lot of our business is in private practice owners. And so, they were the first to open up a little bit. And we can have at least more interaction probably than some of our industry colleagues were. So that’s slightly different than maybe some of the academic centers, which are maybe different types of starts. And so, I think a lot of us, whether it’s MannKind or other companies or just physician offices, we’re just trying to figure out how to survive during lockdown. And so, there wasn’t a lot of new starts or interest in starting patients. It’s really a matter of keeping patients on therapy, keeping them engaged, making small tweaks. And I think telehealth was great for that. And then as we realized that COVID is going to go on longer than 4 weeks, we started shifting a little bit and getting some feedback on can you start new patients virtually with Afrezza. And how do you think about that with the [SE,] [ph] we want spirometry, how do you think about that with dose titration? And how willing will doctors be? And what’s nice is as we created this program, we had over 100 requests for FEV1 devices come in from providers who were shut down but still getting virtual new patient starts. So that was a good inclination of a pilot for us to see could you make telehealth work as part of your business expansion? And that’s what gave us the confidence to start to build up the telehealth, because there’s definitely little bit of coordination there with the spirometry, but we think it’s possible. And one of the things we’ve heard from doctors is, hey, if patients come in and ask for it, we’re going to start them doing COVID. But they weren’t interested in a lot of switching right now. But I think that was 2 months ago, a month and a half ago. But now where we are, I think new starts are coming back. We’re seeing in our weekly scripts, we’re seeing in our – listening with our reps. So I think, yes, California and Florida probably slower than Texas, but New York’s pretty much back up and running, New Jersey back up and running. So, Boston, we have new people there. So we feel that things are going in the right direction. And as California and Texas and Florida open back up, I think you’ll see some faster growth ahead of us. But we’re very happy with where things landed and where we’re going. So once we’re short, during COVID, we learned – we can start virtual coming out of COVID. We have a better footprint, we’ll have telehealth. And we think there’s a future year to get patients coming from both angles, that’s really important.

Right. Thank you very much.

Thank you, Brandon.

We’ll have next from Bert Hazlett with BTIG.

Yeah. Thanks. My congratulations on your meaningful progress in challenging environments, things are clearly moving in the right direction in a number of ways. With regard to TreT in the collaboration with the United Therapeutics, could be a little bit more granular about kind of the state of manufacturing. Again, you comment on how that’s helping gross margins overall. But any other kind of timelines for additional efforts with regard to manufacturing in TreT, it would be helpful? Thank you.

Hey, Bret. Not a lot to say meaning, we built up a manufacturing facility last year, it was a big investment in the millions of dollars that UT Health support. It’s up and running where – because have the same process fee, we’re switching over to process fee. And the team is working hard to kind of get that up and running, because as you can imagine, getting ready for the filing, making sure the equipment, the packaging, everything is working in sync. The team is working night and day to make sure that that’s working positively. And you’re doing that during pretty stressful working conditions. So I think, just being ganged up and being hot, and then protected from COVID is not easy. And I just want to say thank you to the team, because they haven’t missed a beat. And we will be the contract manufacturer, so even now, TreT in clinical supplies, sometimes even if you’re filling in sometimes, we’re helping out. That’s going forward in the clinical – both clinical supplies, this will be delivered by MannKind and our manufacturing facility there. So all the equipment installed, all the stability vaccines are up and running, the tests are running fine. And everything looks really positive. So we don’t see knock on wood. We don’t see any major hiccups going forward are those going to work throughout as you get ready for filing. But otherwise, we feel very good about the tightness of the process, the consistency, and what we’ve learned throughout the last 2 years here. So I think UT is an incredible partner. And really just a great collaboration as we think about the R&D side, not the manufacturing side. I think I’ve had a great relationship in working team.

Terrific. Thank you.

And at this time, I’d like to turn things back to management for any closing remarks.

No, I just want to say thank you again to everybody. I think it was a spectacular quarter, despite some major headwinds and if you let me in March, April, how things will turn out and none of us could predict the situation we’re in and how darker would be, and we all expect a lot worse. And I’m just really thankful that the team pulled through and we left the company in really good standing excellent Q2. And I feel like we’ve got the financial resources to invest in growth. We’ve got the team to take us forward, and the talented new people looking at us. So I just want to say thank you and excited to have you on board. And now onto your newest employee this week, but our next week, we’ll have 2 more. So every week we’ve had some new employees, it’s been great, and looking forward to moving this company forward in the right direction. And getting Afrezza where should be is really one of the standards of care for instance via diabetes. So just thank you again, everybody. I think you could see we’re moving on all cylinders, and just really proud of the work everybody pulled through and we’re going to be. So look forward to talking to you soon. We’ll have a couple of investor conferences in September, and maybe 1 or 2 in between them. So I think you’ll hear from us a couple of times. And we’ll try to work on some enhanced investor communications, which we know has been a big request and that’s been one of the feedback as well. So we’ll come together newsletter, we’ll be sharing that with you and hopefully sign up on our website. Make sure you register there to receive that. And I’m trying to say thank you again for everybody. And let’s see how things continue to move here in Q3, but we’re very excited about all the activities, all the teams coming together and the execution to make Q3 a success. Thank you.

And that will conclude today’s conference. Again, thank you all for joining us.