Good afternoon, and welcome to the MannKind Corporation 2022 Fourth Quarter and Full Year Financial Results Earnings Call. As a reminder, this call is being recorded on February 23, 2023 and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until March 9, 2023. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those stated expectations. For further information on the Company's risk factors, please see their 10-K report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer; Michael Castagna; and Chief Financial Officer, Steven Binder. I would now like to turn the call over to Mr. Castagna. Please go ahead, sir.

Thank you, Lisa, and thank you, everyone, for joining us today. As we kick off, it was seven years ago this weekend that I decided to join MannKind and unfortunately, seven years Alan passed away. It's been an amazing journey and one that was harder than anyone could have imagined. 2023 is special because it's the beginning of our new future growth plan. We come closer to the goal that was thrown our way to play long against us. We are capitalized and prepared to enter our next phase of growth, and I want to personally thank all of our employees, our stock and debt holders demand foundation trustees and other stakeholders who support us through this journey. Our best years are in front of us. I'm very excited to kick off our Q4 earnings call today. To remind people our mission is to give people control of their health and freedom to live life, and we refer to this as life more human. This is never more true as we get right into [indiscernible] or the patient stories we hear from Tyvaso DPI's launch or the incredible feedback we get from V-Go as well as the present. Every day, we are making people's lives more human and easier to live. 2022 was a revolutionary year for MannKind. If you look back at this time last year, we had one marketed product. We're facing a delay in FDA approval for Tyvaso DPI, one compound in clinical trials, which is Afrezza for INHALE-1 that just started and a commercial revenue stream with just Afrezza. As we end the year, we have three marketed products, two we market and one that's marketed by United Therapeutics, two compounds in clinical trials with Afrezza INHALE-1 and halfway rolled out and kicking off to completing…

Thanks, Mike, and good afternoon. Pleased to review the select fourth quarter and full year 2022 financial results. Please supplement this call by reading the consolidated financial statements, MD&A contained in our 10-K, which was filed with the SEC this afternoon. We're very proud of hitting the $100 million mark in total revenues for 2022. I just showed our transition as a company with one source of commercial revenue to a company with multiple sources of commercial revenue. Let's start with the fourth quarter [indiscernible] table, and then we'll come back to the full year results. Net revenue was $12 million versus $11.3 million in 2021, a growth rate of 6%. The growth was mainly driven by higher patient demand with underlying TRx growth of 9% year-over-year. In previous quarters, I have been discussing the adverse impact of the lowering of post-sale inventory levels, which impacted our revenues for the first three quarters of 2022. We can now confirm that we saw the bottom out of this in the third quarter as expected. Year-to-date, Afrezza growth came in at 11%, which was mainly due to favorable price, higher product demand and a more favorable cartridge mix. Our gross to net held steady at 39% year-over-year. This is [indiscernible] V-Go where we had $5.4 million of net revenue for the fourth quarter and $12.9 million] for year-to-date, which represents seven months of June through December. We continue to see V-Go net revenue tracking at the high end of our forecast range of $18 million to $22 million for the 12 months post acquisition. Moving to collaboration services. Revenue in the fourth quarter was $9.5 million versus [$1.2 million] for 2021. The main driver for the fourth quarter 2022 collaboration revenue is associated with the manufacturing of United Therapeutics while this 2021…

Thank you, Steve. So as we look at MannKind's products and pipeline, you continue to see this get bolstered up year after year. Afrezza is now on track to hopefully get forward to IND filing this year, pediatric wrap-up and V-Go's launch. On the pipeline, what people don't appreciate is how much time it takes in the early stages of the pre-IND formulation and getting the dosing right and a tox data right in order to progress these into Phase 1, 2 and 3. Rest assured 201, 301 and 501 had a lot of work behind them that we will start to see the fruits of that labor over the coming couple of years. Right now, 101 has been full speed ahead, 201 is right behind it and hope to share continued updates with you on 301 and 501 as we go forward. This pipeline momentum over the next 24 months, whether it's the endocrine business or the orphan, you can see we have two major pillars of continued momentum that will drive shareholder value over the coming quarters. I won't go through each one of these, but you can really start to see how 101 and 201 in the pipeline really starts to march ahead and MannKind build out the scientific agenda. I won't spend a lot of time on V-Go, but a lot of people ask me when you bought it, what else are you planning to do. We continue to drive innovation and ideas around how do we create other opportunities for this device to biosimilars, buy and build, or just clinical improvement with slow infusion. As one of our thought leaders behind V-Go said, if you were to go lawn and put a big hole is in one spot, you get bud. When you spread that…

[Operator Instructions] First question I have is coming from Brandon Folkes of Cantor. Please go ahead.

Congratulations on all the progress this year and the last seven years. Maybe just two for me. Just any update on the Tyvaso manufacturing inventory scale? Just given comments from UT about sort of how they view that product longer term. How should we think about manufacturing scale up there? And then secondly, on the ABC trial, can you just talk us through how we should think about the revenue pull-through from the readout obviously recently and then later this year? And then I have three anyway. Any very early feedback you got from the last two days since that press release?

Brandon, last question is any feedback?

Since you put out the press release on the...

Okay, sure. So I'll take each one of those. I think on the manufacturing inventory listed by United Therapeutics yesterday, I think one of the things I heard was the order patterns had some impact, but also the pharmacy days on hand inventory. And the demand has been very strong on Tyvaso, which is great, but it also puts a lot of stress and strain on our manufacturing. We've been able to stay well ahead of the demand, but that has not allowed people to build as much inventory as they want as we continue to -- production goes right in. We can modify each week on which cartage strength that we fill, which pack-size that we sent to the packager. But we haven't reached full capacity manufacturing yet as we continue to look over the last six months. There are definitely lots of things to work through in the equipment and scale up that have been worked through, and we consistently expect Q1 to show a much more consistent, I'll say, productivity impact in Q1 versus Q3 and Q4. We don't anticipate any inventory issues. We continue to stay well ahead of demand. And I think you'll continue to see that productivity out of our plant and the efficiencies this year, so we're doing things to add additional production capacity just in case demand continues to go faster than we would anticipate. Remember when we built a factory and that we made Tyvaso DPI, we made it for PAH and ILD at a time when the new team was doing [$400 million, $450 million] revenue with ILD expected. Obviously, that product is now well and away from [$1 billion] plus this year. And we want to make sure we continue to stay well ahead of that ability to convert…

Our next question will be coming from Steven Lichtman of Oppenheimer. Please go ahead.

This is Ron on for Steve. I was hoping you guys can -- I saw you're going to launch BluHale next month. Last time, you talked a little bit about the chip shortage, and I wonder if you could give us an update on how that was resolved and how you're looking forward. How are you looking at that looking forward? And how are you preparing for the launch, considering that? And also, I can have a short follow up, that would be great.

Sure. On BluHale, the chip shortage, I don't believe is an issue. I think there's other parts that became obsolete that we're updating and we work in the device a little bit. So all that's working through. But I think we have devices right now to kick off the pilot, and that pilot is really going to drive the human factors, and the insight feedback will drive the launch investment and/or plan in the second half. I think what's really like this is the first time where we're going to have dosing and Dexcom CGM integrated as we talk about going into type 1, we do think providing those insights to a patient and to a provider are really important, and that's something has pipe from type 2 to type 1 on Afrezza that this is going to be a critical device in the second half, assuming we get positive patient feedback. So that's -- we don't anticipate any type of shortage in the next 1,000 devices to launch. We think that will be fine at this point what we can see.

Okay. And then you said you're -- this is going to be integrated with the Dexcom. Are there any plans to integrate with any other glucose monitors? Or are you going to stick with Dexcom on the whole?

No. I think Dexcom is the easiest because they have open APIs, and we are able to work with them and get that agreement done. I think Libre is obviously the next big one, especially Libre 3. And also Senseonics now that they're getting to the one-year sensor and starting to launch that, that will be a nice opportunity to look at some Calix as well. So we want to be platform agnostic at the end of the day from CGM, but we do believe CGM is something that's really important.

Next question is coming from Anthony Petrone of [Mizuho]. Please go ahead. Please go ahead.

Congratulations to the team on the execution. Maybe one on BluHale, just when you think of sensor opportunity, you certainly have some synergies with Afrezza. Just want to confirm, is that going to be also used with Tyvaso? And when you think of the ability to monitor inhalation and usage, how do you think that plays out over time? If you're capturing that data, do you get better drug adherence and ultimately, does that drive better consumption down the road? And then I'll have a few follow ups.

Sure. I think BluHale has been a long time coming and had lots of headaches as you're driving innovation. These types of things take time. But I do think your one question/comment is critical, which is especially on Tyvaso and Afrezza, when you're using something for the first time as we continue to improve the number of new doctors prescribing, new educators utilizing and training, people sometimes, especially on like the lower dose cartridge, you don't feel any powder going into the lung. You're like did I get my dose. And so showing proper inhalation technique and registering that dose that was taken, I think, improves people's confidence, and that's one of the things we saw early on in our user trial with health care providers was it improves their confidence in training and ultimately their success with the patient dramatically. And so I do think that's not just for the patient, also for the provider for them to start to see that data, the compliance of that, looking at that overlaying with CGM in the case of diabetes, we think will be important. And long term, I just think -- I look at what One Drop has done with data, collecting data sets and predicting outcomes over time. I think this is where we want to go. We think data in health care is going to be critical and starting to collect this data and build out the skill set capability. We're in volume 1.0. We have a long ways to go, but this is the beginning of this year to really start to think about -- no better modeling in sugars and data collecting on sugars and predicting what's going to happen with the dose you took. And so we think there's a lot there that will continue to evolve as we start thinking about data scientists and other types of people that we don't have here yet. On the UT side, I don't want to comment for them other than they are using the pro version, which is the health care provider edition to show proper inhalations technique, and that is launched. And I believe they will also continue to want biz for their -- what they're doing in their PH. So I don't want to speak to that, but I'll let them communicate that.

That's helpful. And then follow ups would be on endocrine studies, you think of pediatric, but also the India trial at JPMorgan, you put some math around this. So for every 10% market share impedes, it's $150 million revenue opportunity or TAM opportunity, let's call it. When you think about that in type 2, obviously, much larger patient pool. So is there an equivalent number of 10% in type 2s, which could be facilitated by India? How should we think about that number? And is the right way to look at it is share gains from GLPs? And I have one last one.

Sure. So on the PGS, I would say that's roughly a good estimate number, but every 10% share rapid act in kids alone in the U.S. will be about $150 million net revenue to MannKind. So that's why when people say, why don't you invest in a trial now because we want to set [indiscernible] for success. This year your transformation for terms of tightening up really put some profitability and moving the branding or strong positioning between the two assets. But next year, when all the stuff starts to read out, we start to prepare for launch, we think these are the right questions and the right answers have data around to ensure we could achieve 10%, 20%, 30% market share in kids. There's going to be a huge spillover effect as you're successful in kids into adults. And so that number is just for kids. You can also think about these kids turning 18, 20, 25 they're going to start to go over the old market, and that's going to have a compound effect back into the second half of the decade. So we have a long-term view on this asset. We've taken a long time to get to where we, but we do believe we're finally at that point, we're assuming all the data read out as we expect, I think, to be very, very exciting on inhaled insulin going forward. On India, the way I think about India is it's going to be a very low-margin business, but there's [81 million] people living with diabetes and the long controlled way at the beginning and expanding over time to free up the cost. But the real benefit for us is on FDKP, which we've already, utilizing our factory capacity that's not is right now for the U.S.,…

That's a pretty last quick one. Just Apple made some news this week about potentially hopping in here. You're collaborating with CGM providers. I don't know if you have any sense you can add on some of the news that came out of Apple.

Yes. Thank you. Look, I think Apple, Amazon guys continue to get bumped in health care technology and health care data at the end of the day. And I think where we're going BluHale, back to your question, having that data, being able to have that data to predict where people are going to have to go and start to think about outcome contracts. I mean everyone is looking at ways to drive better outcomes at a lower cost, you stated to help that. I think it's premature for us to think about where would Apple be in five years because I go back to my stage at Novartis, where we were going to have a contact lens that was measuring who goes with Google, if I recall, and that never came out, right? So there's a lot of excitement, but it takes time for this innovation to happen. And health care is not easy feat to kind of enter into, but we'll keep watching it.

The next question will be coming from Gregory Renza of RBC. Please go ahead.

Great. Mike and Steve, congrats on the year on the progress. Mike, just maybe a quick one. As you build on the success of Tyvaso DPI of course, what we all know about the potential option to license the platform for a second PAH product with UniTher. And I know the pro levers of you and Steve are describing really while the pipeline launches over the next several years, I'm just curious how you think about some of the parameters or potential with a second license with UniTher and how that potentially factors into some of your goals about one indication or product per year over the next several years in your pipeline?

Yes, great question. And I think over time, we've -- Tyvaso is going to be so large as we talk about ideas with UniTher, yes, we want to make sure that, that gets off right book because whether that's assets $1 billion, $2 billion plus, I think that's really UT's purview, we want to make sure we can make supply and be ready for it and not distract our collective teams on that one. I do believe that over time, we will find other ways to help our patients. I know Martin is dedicated to that focus, and we continue to assess opportunities that come to us through them or PAH any other areas that they're focused on. I would say, in general, MannKind, we've gone through a pretty deep assessment with our Board in the second half of last year around how much energy do we want to continue to put in platform in terms of going out and seeking partnerships through large pharma, midsize pharma versus continue to innovate our own assets. And we decided that our real focus is bringing our assets forward as fast as possible a decade to double down on new ideas within our platform or other platforms that we see out there and less so on trying to drive more portions. So of course, everything is the next door deal, but I think we've picked a lot of the key opportunities already to develop inhaled therapeutics that we think can make a difference. And now our focus is really on even earlier stage innovation as we get out there and think about 2030 and beyond, it's probably not a repurposed asset. It's probably an NCE in some more time condition. And that's kind of -- people look and say, where are you in '23? These decisions we made three years ago, in '24 made three years ago. So we're working on focus for 2030, 2028. We feel like the pipeline is enough to drive a lot of innovation forward in the next couple of years. But that does not mean every -- like every day, the last couple of weeks, I've had an inbound business development whether it's can we work with you? Can we work? Do you want to sell something? But there's a lot of activity out there happening. There's a lot of companies out of money or refocusing their strategy and divesting noncore assets. And so we'll keep looking, but we feel pretty good about where we stand and driving that future for value.

And the next question will be coming from Tom Smith of SVB. Please go ahead.

This is Mike on for Tom. Are there any gating factors remaining for the adaptive Phase 2/3 study of clofasimine expected in the second half of this year? Can you briefly describe kind of the planned study design? And how quickly do you imagine we could start to see data from that study?

How quickly? I'm sorry?

Could we see data from that study?

Okay. I don't want to comment too early on some of the study details yet either for competitive reasons that we're still finalizing that. But what I would say is the gating factors are really twofold, one, open up the IMT; and two, just working with the international regulatory bodies to make sure we can import drug and hope the trial sites activated. Those are the two biggest gating factors. We are pretty close with the FDA in terms of some of the last-minute trial details we focused on. And in particular, there's a quality life metric that people want to know about NTM and then there's the assumption on sputum conversion. And so, you can expect the trial design will incorporate some of those features. And I can tell you it will not be established patients. We're looking at earlier treatment patients who were on general background therapy, so we're not going after naive. We felt that would be too hard to enroll and too expensive relatively to the time it would take. And so we're looking for earlier stage people not responding on GPT in a global way, so will be U.S., some places in Europe, Japan, South Korea, Australia are the key areas. So we're focused on quality of the patient consistency, the patient type and ones that aren't necessarily the ARIKACE treatment that are the sickest that may not respond to anything, but really trying to get a little bit earlier in treatment. No other gating factor is just getting the IND filed which requires us to get the manufacturing GMP batches [indiscernible] and break that document up to get that fitted, which the teams will feed ahead on should happen in late Q2, early Q3, hopefully. And once that's filed, that will be the last thing before we can investigate and keep this off.

Understood. And then just one kind of follow up. From a modeling standpoint, how should we be thinking about the trajectory of SG&A moving forward both throughout 2023 and over the next couple of years just based on the commitment to V-Go relative to the Afrezza sales force restructuring?

I'll let Steve take that.

Sure. I think SG&A, we don't talk too much about forward-looking financial information. We don't currently have large gap plans or plans scale up. However, if we see opportunities, such as the trial readout that come around, we may put money behind our endocrine business. And so what I would say is TBD, but we'll see how it goes.

The thing I would add to that, Mike, is pediatric spec gets closer, we don't need to add a bunch of expenses. There's about 500 [indiscernible] in the country that make up the majority of the pediatric market. So when you think about the investment for the future indications, it's not a huge infrastructure. We won't have the people, maybe we add another over 10. But I think if Afrezza keeps going the direction it's going, there's a upside, but got low market share there that we can hire another 200 reps. We don't do that because we're trying to make it profitable. We see a real growth opportunity to expand our growth faster. We can do that. And we've added three or four new territories this year alone in markets where we've never had a sales rep in. So these are the opportunities we'll look forward, but we're not -- we're looking to keep things relatively stable and a drop revenue to the bottom line as we go forward.

We'll now turn the call back over to Mike Castagna for closing remarks. Please go ahead, sir.

Thank you, again, everyone. Thank you for the questions. Thank you, Anthony, for joining us for the first time. It's good to hear some new analysts come in. I think that's important as we think about the next phase of the Company, a lot of the questions we're getting is new investors is really around the pipeline, the future and what's next. And so we're excited as we anticipated that we think is there and attendance right behind it for us to start off the year strong. V-Go, we'll watch over the next six weeks as we just launched that in the sales force. But otherwise, super exciting before to hopefully wrapping up Q1 in six weeks and sharing that with you in the next quarter here. But otherwise, just thank you, everyone, for everything, and we're always here to answer your questions and hopefully keep creating value with helping patients.

This concludes today's conference call. Thank you all for joining. Everyone may disconnect, and have a great evening.