Good afternoon, and welcome to the MannKind Corporation 2024 first quarter financial results earnings call. As a reminder, this call is being recorded on May 8, 2024 and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until May 22, 2024. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual risks 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, their earnings release, and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; EVP and former Chief Financial Officer, Steven Binder; and Chief Financial Officer, Christ Prentiss. I would now like to turn the conference over to Mr. Castagna. Please go ahead, sir.

Good evening, everyone, and welcome to my 28th earnings call. I'm thrilled to report another exceptional quarter of growth for MannKind. Over the past eight quarters, our revenue has surged by over 250%, a testament to the dedication and innovation of our team. This puts us on a run rate of over $250 million in revenue for 2024. We have made tremendous progress in the field of inhaled insulin that we believe will continue to be a growth driver for years to come. I'm also excited to share with you our progress in addressing rare orphan lung diseases today. Thank you for joining us on this journey of growth and societal impact around the world. Just to remind everyone, our mission at MannKind is to give people control of their health and the freedom to live life. When we think about that, it translates into how our products make a meaningful impact on patients every single day. As I look at Q1, we had record Tyvaso DPI revenue of almost $48 million due to strong sales by United Therapeutics and record production in Q1 as we continue to scale up the expansion facility we've been building over the last several years. Number two, MNKD-101 made several strategic advancements with the IND being cleared Fast Track designation as well as a set up to meet with the Japanese authorities to get a clearance on how we expect to pursue Japanese registration approval down the road but also activate clinical trial sites in the second half. 201 also received the green light to proceed to Phase I. We expect that to start momentarily. In our diabetes business, things are going nicely given the [offset] that we all had with Change Healthcare. As we look at April, we're growing 7% on volume year-over-year,…

Thanks, Mike, and good afternoon. I'm pleased to review select first quarter 2024 financial results. Please supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q, which is filed with the SEC this afternoon. The first quarter extended our streak of exceptional quarterly revenue growth, with total revenues growing 63% versus the first quarter of 2023. This was our eighth consecutive period of quarter-on-quarter revenue growth. Let's start at the top of the table with Tyvaso DPI royalties, which generated $23 million in first quarter revenue, a growth of 94% over 1Q 2023. If you listened to UT's earnings call last week, strong patient demand for this innovative product is driving growth in our royalty, which is based on UT's Tyvaso DPI net revenues. Collaboration services revenue of $25 million increased 118% versus first quarter 2023, which mainly resulted from a higher level of production activity, a higher volume of semi-finished Tyvaso DPI units sold to UT with a higher average selling price per unit, and a new source of revenue, hitting certain SKUs of Tyvaso DPI instead of using a third party or sending to UT for kitting. Afrezza net revenue of $14 million grew 16% versus first quarter 2023, which was primarily driven by a lower gross net percentage of 31% versus 38% in the prior year and a price increase. The lower growth to net percentage was mainly the result of a change in estimate for Afrezza product returns. Included in our first quarter Afrezza results is an unfavorable impact to net revenues due to the interruption of our co-pay card services when Change Healthcare had a cyber intrusion in February, which completely interrupted co-pay support as well as severely impacted the ability of pharmacies to fulfill prescriptions. Our co-pay program…

Thank you, Steve. And as you can see, we are on the upswing as our revenue trajectory continues to be strong with continued shots on goal increasing to leverage our infrastructure over the coming years. Let me officially welcome Chris and say a big thank you to Steve, as we couldn't have gotten done without him. So, Steve, thank you for everything you've done. Chris, I'll give you a few seconds here -- Welcome to MannKind.

Thanks, Mike. As you and Steve just highlighted in reviewing our quarterly performance, this is an incredibly exciting time to join MannKind. Some may notice from my background, but I'm actually returning to MannKind where I began my biotech career nearly two decades ago. The company I knew 12 years ago has undergone a remarkable transformation with growing revenue streams and a robust pipeline focused on improving the lives of people living with diabetes and orphan lung diseases. My focus is working with the team to expand upon the positive momentum as we propel the company forward. I look forward to engaging with all of you at an upcoming conference.

Thank you, Chris, and welcome back to MannKind. As you look at 2024, we pretty much hit all the milestones we laid out so far in Q1 and are on track to hit the milestones we've laid out for Q2. We're really excited about this year in the second half, and one thing I didn't talk about is the potential approval for India. There was a clinical review there in India. We are submitting some feedback that they requested, and we do expect market authorization to happen with potential approval by the end of the year for a launch potentially in 2025. We'll continue to give you updates as we progress on that, but I do want to let you know because that is public knowledge at this point. As we look at our anticipated key value drivers, MNKD-101 is now underway. MNKD-201 has proceeded to clear. We look at Ofev revenue of $3.9 billion. That's a tremendous opportunity to help a lot of people around the world. Tyvaso DPI, we've updated for every 10,000 patients covered now looks to be roughly $300 million to $350 million in revenue as we continue to look at upside projections on our production. UT term studies reading out could provide meaningful upside from where we are today as well. On the endocrine business, we believe pediatrics is key, and we'll know that answer later this year, as well as the combination with INHALE-3 and continued growth of Afrezza internationally. As I look at the diabetes market, I continue to see roughly two-thirds of sales are outside of the U.S. for insulin, and that's a tremendous opportunity to help more people around the world and not one we pursued rapidly over time because we believe that we need to get these data sets that…

Thank you. [Operator instructions] Our first question comes from the line of Gregory Renza of RBC Capital Markets.

Hi, Mike and team. It's [Anish] for Greg. Congrats on the quarter, and thanks for taking my questions. Just wanted to ask on INHALE-3. Maybe if you could just remind us and help us set expectations for the INHALE-3 readout at ADA in June, bars of success, and potentially any key takeaways or readthroughs from the previously disclosed initial meal challenge results? Then also, just a real quick thematic question. What's next in the collaboration with UTHR, the TETON studies and opportunities in IPF and PPF? Thanks so much.

Thank you, Anish. So INAHLE-3, to make clear the expectations, most people believe AID is the best standard of care out there. And so we wanted to be able to show that if we went on Type 1 diabetes against what people perceive as the best, that Afrezza was as good in whatever measure you want to look, A1C, time and range, etc. And so 50% of the patients were on AID, and 50% were on MDI. And what we did is we switched everybody to degludec, and what that will allow us to do is have roughly 130 people in that study, half going to standard of care, and half going to Afrezza. And then at 30 weeks, anyone that was on standard of care will switch over. So, everybody will try Afrezza. So that second changer will also be an interesting analysis to see what happens for 30 weeks of continuous Afrezza versus the 12 weeks that we get in the second switch or the first 17 weeks. So we'll have lots of good data. The meal challenge test, which I think shows you when you use the dosing logarithm that we recommend that it's safe, number one; and it's effective, number two, versus the standard of care. And we show them -- when you think about when you eat, the first two hours is when your food is generally peaking and clearing, and that's what the meal challenge test was meant to show that in the first two hours, you can really get better mealtime control if you want to, right? And I think that's the key is we know how to dose two products. We can't control what a patient does in the world, what a doctor does in the real world. And so that's what's…

[Operator Instructions] Our next question comes from the line of Olivia Brayer of Cantor Fitzgerald.

Congrats on a great earnings. I just wanted to ask about your IPF program. As that moves into the clinic, how are you guys thinking about the path forward for MNKD-201? And have you considered potentially working with a partner there just considering how much interest there is in the -- that market?

Yes. I think I'd say the same thing, Gugen, is that IPF obviously is a challenging disease for lots of reasons and lots of failures. We've been working on the INHALE intended program for many years, and it's at that stage now where it's just about execution, meaning we feel pretty good about the dose. We'll confirm that in our Phase 1 around tolerability, but now it's just moving these patients in and getting the results. And we feel that means if all works out, we should have a clear winner that can help a lot of people and deal with the No. 1 Achilles' heel of the market leader out there. And so, if you think about a $3.9 billion drug that's almost $100 million a week out the door in revenue, would I much rather have that for our shareholders versus a partner? I don't think in these diseases, you need a ton of infrastructure that we haven't already built. Meaning specialty support services, pharmacy distribution, wholesalers, patient trainings, and things like that. We have all that. And so it's really about scaling that up and providing the best quality service as possible for patients and providers. And so that's directionally where we're planning ahead. We think, financially, we can afford to make these trials go forward, and I think the data is going to drive those decisions as we get there. If we come to the ex-U.S. market, I think we'll continue to reassess those in terms of the go-through distributors or as their partners. But I think from our perspective in the U.S., we continue to progress independently.

Our next question comes from the line of Steven Lichtman of Oppenheimer & Co.

Thank you. Evening, guys. Chris, congratulations. And Steve, it's been great working with you. I guess I wanted to ask on the [p] trial for Afrezza. What are the next milestones there? And, Mike, you mentioned potential filing at 6 months versus 12 months. When will we know to which direction that goes?

When I look at the competitive benchmarks, meaning other insulins, they've been approved on six months of data. In our discussions with the FDA, they would like 12 months of data in terms of safety. And then so I think it's a real question. Is there anything that we see at the six-month mark that's inconsistent with all the other thousands of patients we've studied in Afrezza? And if there's really not, then we plan to go ahead and ask to file on a submission that says we'll have pretty much the majority of the patients, if not all the patients, done by the time the FDA has to approve the product. And then we don't see a reason to wait another six months to file. They may disagree. But again, I think the data, assuming it's safe and tolerable, and we get -- if there's a positive surprise that may help our argument, if we get a negative surprise option they won't help us. So, we didn't want to get into a debate with the FDA on the timing versus let's get the clinical trial results, and then we can have that discussion with them. We found them to be collaborative on everything so far. So that's really the key there is we'd like to go for six. The data will help us get there, but there's a chance we'd have to wait for the full 12. And the reality is there's only a handful of patients that are going to be trickling along in 2025 beyond that 12 month -- beyond that six-month time point.

And then, Steve, the collaboration line, it was well ahead. You mentioned a number of variables there or pieces. Can you maybe size those different pieces that you pointed to that contributed to the quarter? And I guess, just as importantly, which of those sorts of is a sustainable item as we look to model it out in the next few quarters?

Thanks, Steve. If you think back to last year, we talked about increasing our Tyvaso DPI bulk production by about 2.5x mid last year. So, as you can look at our quarterly [CNS] revenues, third quarter, fourth quarter, first quarter this year, they've been growing. So expect higher activity in sales to United Therapeutics, which allows us to recognize the revenue. We also had a couple of things in Q1 that may not repeat. One is that we had a higher level of inventory for Tyvaso DPI at year end and a lower level at the end of Q1. So that inventory sold through in Q1, so we got to recognize that revenue. We also had some PPQ testing on our fill finish line that we could recognize revenue on. And then we also have deferred revenue. If you call back, we had deferred up over $70 million worth of deferred revenue in the first couple of years of this contract. We're starting to actually see that come through and get recognized because that needs to get recognized by 2031, which is the end of the manufacturing contract. So, it was about a $1.5 million deferred revenue that got recognized in Q1, and you'll start to see that every quarter going out to 2031.

Steve, just to add to that, the PPQ, we will see additional PPQ billing this year. Steve, that will be important because we're validating the spray dryers, and we're validating additional strengths. So that will be recurring to answer that question. And then there's kitting that we're doing that should also be recurring that was new for us this year. So those are two things that should be recurring as we go forward for the next couple of quarters.

Our next question comes from the line of Thomas Smith of Leerink Partners.

Thanks for taking the questions, and congrats on the strong quarter. A couple of questions, I guess. First, on 201, the inhaled intended program, you mentioned plans to fund a Phase 2/3 study in 2025, pending the Phase 1 results. Can you just comment on how you think about the potential regulatory path here in IPF and whether there's potential for registration on the basis of a single pivotal study or whether your base case is that you would need a second study to enable registration there?

I would say it's too early to comment publicly on those things. You can see an example where a single trial could be required with a sense of endpoint, like IPF specifically. And then the question is can we get extrapolation to PPF, for example, or would the FDA say, do one indication, and that could be enough for approval? And if you want the other ones, you have to do another small study. I think the precedent, personally, is there. When you look at biosimilars, as well as Tyvaso DPI, where we got ILD and PAH their biosimilars, you're getting the full label, not just a specific indication, even though you study in one. So I think a lot of that's TBD. We're going to have an end of Phase 1 meeting with the FDA that's ultimately going to drive that next phase of discussions, and I think that's going to be important.

And then on the Afrezza development plans, you have the ongoing INHALE-1 and INHALE-3 studies, but then you also highlighted the potential in gestational diabetes. I was wondering if you could elaborate on that opportunity and whether you think you'd need a specific study to better access that population?

Yes. What's happened is the people doing the INHALE-3 study, some of them, I don't recall specifically, they were in the study or they are part of the centers that are in the study, so I apologize for that. But they saw the post-meal challenge results at ATTD, and that's really what sparked this discussion, which is wow, we are trying to really control postprandial sugars in the first 120 minutes and keep sugars under 120. And because injectable insulin is so slow, and it just takes about 90 minutes to start working, there's no way a gestational person can really bring sugars down in two hours when it takes 90 minutes to start working. And so they felt when they saw the meal challenge results that this could really help change that goal and the guidelines that they're trying to implement as we go forward. So, then it got into the discussion, which is there's another -- there's two things we've been requested. One is to contribute a drug for a PK study to show that, obviously, a gestational woman could inhale at the same rate as an adult. We don't have any concerns. But obviously, we'd want to get that data to help support that population. And then the next thing is there's a large trial going on out there that they would like us to be part of, and that's not something we would fund. If that's something a third party would be funding. We would just be providing a drug and support. So, part of this is, what can we help support? And part of this is what is the market going to do? But if you ask me, are we going to consider doing a large pregnancy trial? The answer is not at this time, but I won't rule it out forever. I think we got to get the PK data and see what's good enough and what happened out there because there's really only two drugs to treat these patients. It's metformin and rapid-acting insulin. And so, they would love to have something that's for 12 weeks of treatment, roughly, a short time period that works with CGM. So, that's been the feedback and discussion. And if all goes well, we'll hopefully get there. But we're doing some internal work as well to make sure we feel comfortable with the overall situation and requests.

I'm showing no further questions at this time. I would now like to turn it back to Michael Castagna, CEO, for closing remarks.

I just want to clarify one thing that some of you have commented on via email, which was our share count outstanding. Our shares have not gone up when we are for profit in a quarter yet to show the fully diluted share count. So, the average share count is really $270 million versus $263 million last year, $270 million. So, it's not really going up as much as some of you may have thought on the retail side. Overall, I want to say thank you to Steve again. It was a great quarter. We're firing on all cylinders. The teams are working really hard on your behalf. We're really out there to help patients. We have a lot of meetings coming up with ATS. We're going to be doing some patient advisory boards -- physician advisory boards, investigator meetings. So, I think MannKind's reputation moving into the inhaled orphan lung space is going to dramatically improve this year. And pretty much every quarter from here on out, we'll start to hopefully have updates on clofazimine's progress. Now that we've gotten through all the hard work, I'll say the hard work is now the trial, but getting to this point is a miracle. It's hard to get drugs through development, and the fact that we're now able to proceed to Phase 3 and see the light that we can get this to patients in the near future as fast as drug development could possibly go, we will work as hard as we can to get there. We're in the best financial position we've been in, and you saw us deleverage the company. And we'll continue to do what's best for shareholders and make sure we're allocating capital and being prudent with our expenses. So, thank you again. I look forward to seeing some of you at the upcoming investor conferences. And please go ahead and make sure you ask your questions next week. We always want to make sure we have an open dialogue with our shareholders as we have a lot to share and an exciting future and looking forward to continuing to hopefully have great performance over the coming years. Thank you.

Thank you for your participation in today's conference. This does conclude the program.