MannKind Corporation (NASDAQ: MNKD) reported robust financial results for the third quarter of 2024, marked by a 37% increase in revenues and significant clinical advancements. The company's CEO, Michael Castagna, highlighted the strong performance of the Tyvaso DPI collaboration and a steady rise in Afrezza prescriptions. With $268 million in cash reserves and a non-GAAP operating income of $15 million for the quarter, MannKind is well-positioned to advance its clinical pipeline and focus on growth in the pediatric diabetes market.
Key Takeaways
- Q3 2024 revenues reached $70 million, a 37% increase year-over-year.
- Tyvaso DPI collaboration contributed $20 million in net revenue, a 10% increase from the previous year.
- Afrezza net revenue grew by 12% to $15 million for Q3 and by 16% to $46 million year-to-date.
- New prescriptions for Afrezza increased by 8%.
- MannKind is advancing its clinical pipeline, with Clofazamine in Phase 3 and nintedanib completing Phase 1.
- The company plans to shift from a profitability to a growth mindset in 2025.
Company Outlook
- MannKind aims to increase focus on Afrezza and streamline its salesforce.
- Management is optimistic about Afrezza's growth opportunities, especially in the pediatric diabetes sector.
- Regulatory updates for Afrezza are anticipated, with a potential pre-NDA filing meeting in the first half of 2025.
Bearish Highlights
- There has been a slight decline in overall rapid-acting insulin prescriptions.
- A strategic reduction in the salesforce from 80 to 50 has led to a decline in non-target prescriptions.
Bullish Highlights
- Strong balance sheet with $268 million in cash and investments.
- Positive trial results for Afrezza, indicating improved A1c levels over traditional insulin delivery methods.
- Tyvaso DPI royalties increased by 34% to $27 million in Q3.
- Year-to-date improvement of approximately $12 million in bottom line contribution.
Misses
- V-Go experienced a 6% decrease year-to-date to $14 million.
Q&A Highlights
- CEO Michael Castagna discussed the economic advantages of MannKind 101 and Afrezza over competitors.
- Castagna addressed the potential for clinical differentiation in the treatment of pulmonary diseases.
- Updates on the strategy for MNKD 101 and MNKD 201 are expected by 2025.
- The INHALE-3 study data is expected to be published soon, informing future educational efforts.
In summary, MannKind Corporation is demonstrating strong financial performance and clinical progress. Despite some challenges in the rapid-acting insulin market, the company's strategic focus on growth and operational efficiency is yielding positive results. Investors and stakeholders can look forward to more updates as MannKind continues to advance its pipeline and strengthen its market position.
InvestingPro Insights
MannKind Corporation's strong Q3 2024 performance is further supported by data from InvestingPro. The company's revenue growth of 51.35% over the last twelve months aligns with the reported 37% increase in Q3 revenues. This robust growth is reflected in the stock's performance, with a remarkable 102.47% price return over the past year.
InvestingPro Tips highlight that MannKind has a perfect Piotroski Score of 9, indicating strong financial health. This score supports the company's reported strong balance sheet and positive operational results. Additionally, the tip that net income is expected to grow this year corroborates management's shift towards a growth mindset for 2025.
The company's gross profit margin of 71.91% underscores the efficiency of its operations, particularly in its Tyvaso DPI collaboration and Afrezza sales. However, investors should note that MannKind is trading at a high P/E ratio of 168.02, which may suggest high growth expectations are already priced into the stock.
For those interested in a deeper analysis, InvestingPro offers 17 additional tips for MannKind Corporation, providing a comprehensive view of the company's financial health and market position.
Full transcript - MannKind Corp (NASDAQ:MNKD) Q3 2024:
Operator: Good afternoon, and welcome to the MannKind Corporation Third Quarter 2024 Financial Results Earnings Call. As a reminder, this call is being recorded on November 7th, 2024, and will be available on the MannKind Corporation website shortly after the conclusion of this call and available for approximately 90 days. This call will contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainties, which can cause actual risk to differ materially from those stated expectations. For further information on the company's risk factors, please see the 10-Q Report filed with the Security and Exchange Commission this morning, the earnings release, and the slides prepared for this presentation. Joining us today for MannKind are Chief Executive Officer, Michael Castagna and Chief Financial Officer, Chris Prentiss. I'd now like to turn the conference over to Mr. Costanza. Please go ahead, sir.
Michael Castagna: Thank you, Operator, and to our entire MannKind team for all the accomplishments we've had this quarter. I've never been more excited and energized about our opportunities to grow MannKind over the coming years. Today, I'll open up with operational and pipeline highlights, followed by Chris giving a financial overview with closing remarks, going to Q&A. As we look at our third quarter highlights, Tyvaso DPI collaboration continues to be record-setting revenue and expansion opportunities as we look at our manufacturing revenue and continued opportunities with Tyvaso in IP. We're super excited by the continued strong collaboration with United Therapeutics (NASDAQ:UTHR). And now as we start to migrate from just the Tyvaso DPI and Afrezza, the pipeline is emerging as one of our focuses this year. And we're excited by the readouts in nintedanib Phase 1 here. We just completed the Phase 1 that we announced this week, as well as our Clofazamine Inhalation study is well under its way in Phase 3 site activations where we have ongoing opportunities here in the U.S. as well as Asia as we're starting that trial. The EBU net revenue for the quarter was $20 million or 10% versus last year. And we saw Afrezza overall for the year slightly impacted by headwinds throughout the first three quarters as we focused on profitable growth by realigning our salesforce back in Q1. As we look in Q4, we're looking to accelerate our growth on Afrezza in 2025. And the early indicator here are some of the changes we made that I'll talk about here where we have 8% growth in NRx year-over-year. Our pediatric study we'll be reading out very shortly here at the end of Q4. And we have a strong financial position with $268 million in cash, and we have $15 million in non-GAAP operating income for the quarter. We're leaving here in Q3 in a very strong financial position as we get ready to fund our innovation here with Clofazamine 101 and 201 moving forward. Now let me bridge over to Clofazamine 101. As we look at the clinical development program, there's a significant unmet need in NTM lung disease due to current options having very severe limitations on both efficacy, safety, and tolerability. We believe oral clofazamine has been part of the guideline since 2020, and by developing an inhalation suspension, we have a great opportunity to put more drug into the lung, really at the site of infection, while minimizing the systemic exposure, which is really important as we think about the clofazamine-related side effects of skin discoloration, QT prolongation, and drug accumulation in the organs. We also believe our convenient dosing cycle of 28 days on and 56 days off will provide us a competitive advantage. Unfortunately, as we look out into space, MannKind is one of the last remaining companies outside of Enzomed [ph] investing in NTM at this point, due to the failures of several competitors this past year. I want to remind you of the ICoN-1 Phase 3 study design, where now we have about 25% of sites activated. When you think about this trial, we're aiming for about 180 patients as a primary endpoint at six months, and we'll start with 28 days of treatment. We'll be off for 56 days of treatment, and then 28 days on and 56 days off. After that second treatment cycle will be our primary endpoint. We're going with a single-dose suspension of 80 milligrams inhaled and a 2-to-1 randomization. We'll have an interim analysis after the first 100 patients, and that'll look to make sure that the trial's on track to achieve its endpoint, or if we have to make any adjustments based on the statistical plan that's been pre-identified. I want to remind you it's a co-primary endpoint of sputum conversion and patient-reported outcomes for the U.S., and the rest of the world is just sputum conversion. We will conduct one trial with both endpoints for the various countries in the U.S. as well as the rest of the world. We are currently in Asia right now activating sites as well as having a kickoff meeting for investigators, and I want to thank the team for all the hard work over there. We do have FDA Fast-Track QIDP and orphan which provides us with 12 years of exclusivity as we get off the ground. Now, bridging nintedanib and DPI, this is an exciting opportunity for the company. When we think back, I want to remind you that Technosphere technology is mostly made up of FDKP plus our Dreamboat device, and the reason I bring this up is it's a platform technology where we really know where the product flows. And you can go back to some of our earlier studies on radio-labeled Technosphere insulin inhalation powder where 90% of the powder is FDKP and about 10% is insulin, and we really see wide distribution across the lungs in the upper and lower lobes. The reason that's important is a lot of people ask, how do we know this drug is going to fly where it needs to? And part of this is based on all the history we have around understanding how FDKP is made, where it flies in the lung, and how we bind the excipient through this. And we now have over 5,000 patients taking Tyvaso when you think about that, those patients have orphan lung disease pulmonary hypertension ILD and I'm sure there's some with comorbidities of IPF and COPD. So now that we have two products approved on the platform. We're very excited to continue to move forward. Our next one here, which is really MannKind 201. As we know, IPF is a growing therapeutic area with over $4.2 billion in sales in 2022, and this continues to grow each year. But the majority of those are made up of OFEV, which is a great product. It's one of two drugs only approved, but it does have severe GI side effects, which limit patients' ability to stay on the product. So as we try to think about how do we develop improved products, really this was the opportunity to lower the systemic exposure while maximizing lung exposure. And we're really happy to see in our Phase I study here, which is where we tried three doses, we call them Cohort A, B, and -- A1, A2, A3, followed by a multiple sending dose over seven days where we tested A1 and A2 dosing. We really didn't need to go to A3, but we wanted to make sure it was safe and tolerable for that data to have in the future. Overall, this trial was a success. We saw no dose-limiting toxicities or dose implications on FEV1. And we also saw in our chronic tox study no significant signals or adverse event findings that would prevent us from moving forward in a chronic administration of this product. So we're really happy to wrap these two things up. We will meet with the FDA on our proposal for further development to move this into a Phase 2, 3, hopefully here in 2025. This is a very exciting time for MannKind as this will be two assets we have going into full-scale clinical trials, which will pave the way for future exponential growth for MannKind. I now want to bridge over to our diabetes business, where we had the first large trial readout this year that we've been investing in over the last couple of years. This trial was designed to really look at usual care, which is inclusive of automated insulin delivery pumps, mainly Tandem and Omnipotent in this trial, as well as patients on MDI, comparing that to a single shot of Degludec or Tresiba plus Afrezza. And then at the end of 17 weeks, these patients were given a second meal challenge and we could see in the first and second meal challenge significant improvement in post-prandial control in the first two hours. And then at 17 weeks, everybody went into a single arm trial at this point. And either you rolled over from the Afrezza Degludec or you switched to usual care. And what you see here on the next slide is we just released the 30-week data. I'm really proud to see that the longer you're on Afrezza here on the top left, you can see your A1c continue to improve over time. We also continue to see more people getting the goal of almost 42% got the goal, which is unbelievable here. And it's very tough disease in Type 1, where the large majority of patients do not set a goal today. The second part of this study was the readout of those who switched from 17 weeks usual care. And what did that happen to them at 30 weeks? And you can see as clinicians got more experience with Afrezza, we saw an improvement in A1c in those 13 weeks of taking the product. Plus, we're able to see twice as many people get the goal here on the right side in 13 weeks, which is important as we think about the trial and what Afrezza can do. And I'll remind you, this is people who are already on the optimized treatments they were taking. They've been with diabetes a long time. And by switching into Afrezza, we were able to drive more people to goal, which is ultimately a huge benefit to society. Now let's shift over to our revenues year-to-date. When we look at the EVU profitability has been our focus this year. And when you think about the growth and the transformation we've had, Afrezza grew 16% year over year while V-Go was slightly down, as we shifted to managing V-Go for profitability this year away from volume. And we've been really happy with those outcomes. And now in year-to-date overall for the business you can see this year versus last year is about a $12 million improvement in bottom line contribution between managing our expenses, improving our efficiency on COG, and continuing to drive more to the bottom line. When we look at Q3, we're able to grow Afrezza despite multiple headwinds throughout this year. When we think about what happened earlier this year, we had payers put in double step edits, we had salesforce restructuring, compounded by a shift in inventory in Q3 as we exited our Walgreens consignment. And one of our specialty pharmacies was told to shift patients back out to retail by Optum for all of their patients, not just Afrezza. And a lot of those caused a lot of hiccups here as we went through each quarter through this year. And this is all behind us as we close out Q4. And this was also followed by a mix of faster growth in four and eight units versus 12, which is a direct reflection of our focus to grow more in the type 1 space versus type 2. So when you look at all that noise, I'll say going into Q4, we're excited by what we see because so far in the month of October, new prescriptions are up 8% year-over-year. This is our earliest leading indicator of our success as we look at this quarter and next quarter on how we're going to do. In Q4, we also made a change by removing V-Go from the salesforce to double down the focus on Afrezza’s growth. And we increased our target incentives around hub referrals and new prescription growth as we exit this year. Given the outcomes of the INHALE-3 and the outcome in INHALE-1 pediatric results, we expect to continue to shift Afrezza from a profitability mindset to a growth mindset in 2025 and beyond. As we look here, I want to remind you of the pediatric opportunity. There were 300,000 kids living with type 1 diabetes. This was a 52-week primary study in INHALE-1, ages four to 17. Very little were type 2, majority were type 1. And the primary endpoint is at six months. And the data will be coming in here before the end of the year, so we'll be able to update shareholders. And we would expect a pre-NDA filing meeting in the first half. The real issue here is, do we want to try to argue that there should be a six-month filing versus a 12-month filing? As the 12-month data will come out roughly late Q2 next year, and the filing would happen after. If it's a six-month filing, we'll be able to file that earlier in the year. But the FDA has indicated that they expect to want to see the 12-month data before we file. So as we look out, we got INHALE-3 coming with the label change, hopefully on figure one, as well as INHALE-1 readout. And we're also going to be seeing an IIT we're funding in gestational diabetes very shortly. So we continue to look at Afrezza multitude of growth opportunities in the coming years. Now let me stop there and turn it over to Chris to give us an update on our financials.
Chris Prentiss: Thanks, Mike, and good afternoon, everyone. I'm pleased to discuss our third quarter 2024 financial results. For a summary of our financials, please refer to our press release issued prior to this call and our 10-Q, which is on file with the SEC. As Mike mentioned, our business demonstrated robust double-digit revenue growth compared to last year, led by revenues related to Tyvaso DPI. Third quarter revenues were $70 million, which represent a 37% increase compared to last year's quarter. For the year to date, we recorded revenues of $209 million, a 49% increase over the prior year period. Looking at the details, Tyvaso DPI royalties contributed $27 million in third quarter revenue, an increase of 34% over the same quarter last year, and $75 million, or a 48% increase for the nine-month period. On United Therapeutics Q3 earnings call, they noted the revenue growth was due to additional patients and an increase in price. They also commented that referrals and start patterns remain very robust, reinforcing their confidence in the durability of the growth profile. Collaboration and Services revenue was $23 million, a 78% increase from the third quarter of 2023. For the nine-month period, we recorded $74 million, a 108% increase compared to the same period in 2023. The increase over the prior year period was primarily attributable to increased manufacturing activities for Tyvaso DPI. Collaboration and services revenue consists primarily of manufacturing revenue based on production activities sold through to UT and a recognition of deferred revenue. In the first half of 2024 and in prior years, we also earned approximately $3 million of revenue related to certain scale-up activities in the first half of 2024, resulting in the expected slight decline in the back half of the year. Afrezza net revenue for the third quarter was $15 million, a 12% increase due to higher demand and improved growth to net. During the nine-month period, Afrezza revenue was $46 million, a 16% increase over the same period last year. This increase was due to higher demand, a price increase and improved gross-to-net. V-Go net revenue was approximately $5 million for the third quarter, an increase of 5%. And the nine-month period was approximately $14 million, a decrease of 6%. This is due to lower product demand partially offset by improved gross-to-net adjustment and increased price. Our annual revenue trends from 2020 through the latest 12-month period also show a consistent increase with double-digit revenue growth year over year. These revenues and our management of the commercial business have led the results on the bottom line. In the third quarter, we recorded GAAP net income of $12 million, which when adjusted for non-GAAP items results in non-GAAP net income of $15 million. This compares the GAAP net income of $2 million in the prior year quarter and non-GAAP net income of $4 million. For the nine-month period of 2024, we reported net income of $20 million and non-GAAP net income of $45 million. Whereas for the same period in 2023, we reported a net loss of $13 million and a non-GAAP net loss of $1 million. As we highlighted earlier on the call, last year we transitioned to running the Endocrine Business Unit for profitability, which has contributed approximately $11 million year-to-date in operating income. This combined with our net royalty income and the margin earned from collaboration and services has allowed us to fund our two promising development programs to date and also achieve net income of $20 million for the year-to-date period and $45 million non-GAAP. The operational execution of our business combined with our cash and investments of $268 million as of the end of September, leaves us with a strong balance sheet and the ability to invest in the business for growth. With that, I'll turn the call back over to Mike.
Michael Castagna: Thank you, Chris. As we look back on 2024, we've executed all the milestones we've laid out so far, with the very last one coming up on INHALE-1, which we fully expect to share with the street here by the end of the year. We're looking forward to closing out the year. As we look at the first half, we have several key regulatory updates coming around 201 with another Phase 1 meeting, Tyvaso DPI and Afrezza expansion hopefully coming online, 101 continues site activations around the world and patient enrollment and screenings continuing. We'll also be having discussions with the agency on our INHALE-1 readout and our INHALE-3 data label change as we go forward. The next adventure of the company is extremely exciting as we look at our key value drivers going forward. We have 101 with every 1,000 patients being $100 million in revenue. As we look out in the NTM space, ARIKAYCE is approaching $400 million in annual sales as we look to 2025. We feel very good that this market, helping NTM patients, will be a very robust opportunity in the coming years. 201, as we move that one forward, we think this has a real opportunity to help impact the patient's lives and impact with IPF who suffer every day from severe diarrhea and GI side effects. As we think about Tyvaso DPI, it's hard for us to control that revenue stream, but we try to give you clarity that we continue to see very strong demand growth and manufacturing opportunities, and that for every 10,000 patients here is roughly $300 million to $350 million in revenue to MannKind. With the upcoming readouts next year of TETOM 1 and 2, we're going to be extremely excited about this IPF opportunity as well as TETOM PPF. Looking forward to continue to leverage the manufacturing scale that we've built up as well as the opportunity to help a whole other area of patients suffering from IPF. Within the endocrine space, I want to remind you of the pediatrics. Every 10% share is roughly $150 million in net revenue. We feel very comfortable if we can get this indication, we'll be able to achieve a substantial opportunity in children to make their lives hopefully better than what they go through today. The INHALE-3 study we'll be reading out. We're just starting to educate our salesforce and customers around this data, and we also will have international expansion updates as we progress throughout 2025. We're looking forward to bringing all this forward and landing us in a continued growth opportunity in the years to come. We'll have several opportunities to share scientific and investor updates here in Q4 as well as Q1 next year. Starting off with the UBS Global Healthcare Conference next week. We'll be there on Tuesday, followed by an opportunity to be invited with Oppenheimer here on December 12th in New York for the Rare Disease Summit. And we'll also be attending the ATTD conference where we already have several abstracts and presentations accepted around our INHALE-3 data and possible INHALE-1 as we find out more notifications being accepted. So we have several opportunities to continue to update you as well as our key stakeholders in the scientific community around our key data sets in 2025. We'll include just a few as we start out the year. I'm looking forward to hopefully many more opportunities in 2025 to communicate with you and our other key stakeholders. Thank you very much. We look forward to closing out the year strong and appreciate your continued support. We'll now open up for Q&A.
Operator: Thank you. [Operator Instructions] And our first question will be coming from Andreas Argyrides of Oppenheimer. Your line is open.
Andreas Argyrides: Thanks, Operator. Thanks, guys, and congrats on all the progress this quarter. Two questions from us. Regarding 101, can you just give us a sense in thinking about ARIKAYCE and the number that you provided or what percentage penetration that is in the market and then where does 101 fit in that and how much bigger in that sense can it be? And then for 201, can you just give us a little bit more detail on the Phase 1 and how that helps inform the Phase 2 through design that you may have seen from an efficacy standpoint and then maybe a little bit more detail on the timeline that you said. I appreciate that. Thank you.
Michael Castagna: Sure. Thank you, Andreas. I think it came in a little blurry, but I think I heard your first question was on 101 around ARIKAYCE penetration and where does 101 fit in. And as we look at the landscape, I think the first thing is hopefully displacing ARIKAYCE in the refractory population as the administration and hopefully tolerability of 101 if it works efficacy-wise should sustain the ability to do that very well. The second area is we are down to final formulation selection very shortly on 101 and mid- to long-term we also expect to bring a dry powder formulation out that would help penetrate earlier lines of treatment. And so our ultimate goal is to be used first line and second line or refractory between a dry powder and a nebulizer. Just the nebulizer was the faster way to market and so they're right on top of each other in the grand scheme of things, but that's generally where we expect to be able to compete in early and late lines of treatment in NTM. We'll get further updates in terms of that strategy in bridging study or new study, naive study, et cetera, sometime in ‘25. The 201 details on how that informs us. I think the first thing was making sure the chronic tox data was okay because that to me was the first step in this area. And then the Phase 1 study was really looking to see what, if any, GI side effects could have occurred or is there anything related to OFEV-type side effects that would give us concern or at least confirm our thesis that they should be minimal, which is what we expected and they were. And then the second part of that is while they were healthy volunteers, it was the first time we're really putting nintedanib in a healthy volunteer lung and we're pretty confident in FDKP, as I stated earlier in the call, but demonstrating that there was no adverse reaction to nintedanib. We could clearly see in the Phase 1, whether it's the control arm or the placebo or the active, there was no indicators or any concerns for that. So that really shapes us up for the Phase 2. We know the FDA and their preliminary comments wanted a dose range finding study, so that's what we'll go to them with next year. So we're trying to get to either a Phase 2, 3 bridge or even just go into our single dose that we want to target and see whether we can down dose if somebody had tolerability issues. But until we meet with the FDA, I think it's all, we can't really predict where their heads are going to be and we have a good rationale, but whether they agree or disagree is the question. So that's where we are. We expect to get there hopefully in Q1 and we'll provide updates, as we meet with them.
Andreas Argyrides: Appreciate the caller and congrats on all the progress and I'll hop back in the queue. Thanks.
Michael Castagna: Thank you.
Operator: Thank you. One moment for the next question. And our next question will be coming from Olivia Brayer of Canter Fitzgerald. Your line is open.
Olivia Brayer: Hey, good afternoon. Thank you for the question. What more can you tell us about MNKD 201's profile just in terms of any differentiation you've seen so far? You guys are obviously not the only ones developing an inhaled version of the drug. And did you guys look at PK as it relates to the oral formulation? If so, any comparisons there?
Michael Castagna: Sure. I think the -- I think first of all, we're probably in a speed to move this into patients in a bigger way. And I believe we have the ability to do that in the dry powder formulation in terms of CMC is pretty much ready as well as our trial design. So it's really just getting this to the FDA. I think in terms of, one can ask is there a difference in a nebulizer versus a dry powder? We probably have a little bit of a bias towards dry powder given our company history and background and the success of Tyvaso DPI and what we saw there over their nebulizer. So that's really our key points of differentiation as we go forward. I think there's always enough room in the market for two players. So it's really about making a difference in the patient's lives and letting competition compete. But we think that this disease requires hopefully some innovation that we can bring to the marketplace. In terms of the clinical differentiation, as you may or may not realize, these patients take immense amounts of Imodium just to try to stay on OFEV. And that'll be some of the stuff we look at is, do we reduce the number of Imodium, do we reduce diarrhea? Our proposal for the FDA is a combination of naive and experienced patients. So hopefully we'll be able to see a GI side effect from OFEV versus us in that profile. Again, the FDA could change our trial design and we would focus only on experienced patients potentially. But otherwise, we think the administration is not going to be the biggest burden in terms of a pill versus inhaled. But the side effect profile of OFEV is really what we're going after. And hopefully we can get higher lung concentration. We did measure plasma PK in this trial, not to compare it to OFEV, but just to kind of triangulate to our animal models to see where we were. And that data is still coming in as we speak. So we'll have that full analysis before we go to the FDA.
Olivia Brayer: Okay, understood. Thanks, Mike. And then just in terms of kind of data disclosure for measuring plasma NPK, should we expect to see that sometime next year? Or is that something that you'll just go to the FDA with and not necessarily present at a medical meeting or publish?
Michael Castagna: I don't want to speculate yet because I don't know what the data says relative to our animals and how would we triangulate that or put some information out there. I do think people have been asking around the bleomycin study and this. And so we'll think about how we can bring some more articulation of our confidence as we go forward and what that trial design looks like and the data behind the support around that. And that's probably the one area I think we're still having some internal discussion on, which is, do you do a smaller phase two just to get the efficacy data so people could see that sooner. And then that'll take a little bit longer of a Phase 2 than a Phase 3, but it would give people more certainty. And so those are some of the discussions between the FDA and our internal clinical development team.
Olivia Brayer: Okay, great. Thank you. I appreciate the color.
Michael Castagna: Okay.
Operator: Thank you. One moment for the next question. And our next question will be coming from the line of Faisal Khurshid of Leerink Partners. Your line is open.
Faisal Khurshid: Hey, guys. Thanks for taking the question. I just wanted to ask if you could say a little bit more around the adverse event profile that you saw in the Phase 1 for the inhaled and tentative. Like, with the FEV drop and cough events, could you tell us a little bit more, like, what's your hypothesis around what caused that? Like, is that excipient related? And just anything around, like, kind of time course of those events. And, yeah, just any more insight you can give around that. Thank you.
Michael Castagna: Yeah. There was no – I think in the seven-day part, we looked to see did it get worse over the seven days? Did people have it on day one, have it on day seven? The bottom line is there was no real concerns around the drop or the significance of the drop, or it didn't continue to get worse. In fact, no one just continued because of it. So people that may have got it on day one may not have had it on day seven. Some people didn't have it on day one, got it on day seven. So there was no consistency about when or how it appeared. There is one thing I'll highlight for you that I think is important is these patients had to do an FEV1, I think, like, every 15 minutes, roughly. So there was, like, four to five FEV1s in the hour to two hours post-dosing. And so that itself would have a lot of irritation of the lung. And that's something that the FDA wanted, so we did it. But I'm not sure it's going to tell us much. We'll look at the summary of all that data. But there was a lot of, I'll say, administration of FEV1 throughout the time period of measurement. And so we're looking at total FEV1 drops from the initial dose all the way through two hours. And that's after repeated FEV1s per patient. So there's a lot of data drawn, a lot to still be summarized, but there was nothing at the highest level when we looked at the data that was of concern or consistency, I'll say. And it seemed to happen in both the control as well as the active arm, so there wasn't anything specifically around the tentative that we would say. There's also, I think it's much more around putting dry powder in the lungs than anything and the frequency of FEV1 testing that was required.
Faisal Khurshid: Yeah, yeah, that sounds like a workout. Just to clarify, the placebo arm was, like, just a straight excipient without the tentative. It's the same kind of dry powder inhalation, just no active drug?
Michael Castagna: Yeah, just DKP is the excipient.
Faisal Khurshid: Got it. Great. Thanks for taking the question.
Michael Castagna: Okay. Thank you.
Operator: Thank you. One moment for the next question. Our next question will be coming from the line of Gregory Renza of RBC Capital Markets. Your line is open.
Anish Nikhanj: Hi, Mike and team. It's Anish on for Greg. Congrats on the progress this quarter, and thanks for taking our questions. Just firstly on 101. What's the broader value proposition from an economical standpoint for patients and physicians to use MannKind 101 over ARIKAYCE or even oral clofazamine and NTM? Maybe if you have some early thoughts on where you'd like to land on out-of-pocket cost. And then just in keying in on Tyvaso or Tyvaso DPI and the TETON IPF and PPF studies, might 201 also be clinically usable in PPF? I know there's some research out there. Just wanted to get your thoughts. Thanks so much.
Michael Castagna: Yeah. No, thank you. I do think that's, as we saw, another company switched from IPF to PPF. I think we'll see some results on IPF next year with the TETON 1 and 2. So I think there is an opportunity there, to your point. Some of that will be – we would expect to get, in my mind, extrapolation of indication. So if we look at what nintedanib’s indicated for, I think it's really picking the right population with the right trial to get the right endpoint. And I think it's part of our request with the FDA. Just like we got ILB with Tyvaso DPI, we would hope to get extrapolation with that focus. So that would be our first focus on that. But to your point, maybe we could go after PPF instead of IPF if we really wanted to. And I think that's still an ongoing discussion. But I think a lot of this is the bigger population of IPF and the predictability of enrollment in that trial. I'll bridge over to your one-on-one question on the brand value proposition. So I think when you look at clofazamine, it's in all the guidelines. Doctors really love it. Our team is over in Asia right now, in Australia, activating sites and kicking off the investigator meetings over there. And clofazamine has much more wider use, I'll say, in those markets. And so the receptivity of our nebulizer form is very high. And the belief in clofazamine as a treatment for NTM is very high. And when you think about the couple side effects of clofazamine, in particular, oral formulation, you're getting skin discoloration, QT prolongation, and potentially organ accumulation. So those are three things you don't want that with the reduced dose and the systemic circulation, but better concentration in the lungs, we would see a better value prop. And then combine that, I think, with ARIKAYCE. ARIKAYCE is an aminoglycoside, so it's got ototoxicity by nature. And I do believe those will be clinically differentiated, especially as you get to infectious disease docs and hospitals who are used to dealing with these things. I think there will be a clinical differentiation, potentially of safety. Again, we've got to get trial results before we get too excited. But I think conceptually that's where our heads are. And then you get to the dosing administration. Every day cleaning a device for six months, 18 months of your life is a burden. And that's one of the reasons we chose the dosing we did with clofazamine, which is 28 days on and 56 days off. One is the use of a nebulizer and the PKPD, the product allows us to probably get that long. And then the second is the co-pay burden on the patient. And so there is no real incentive to the doctors to use I'll call [ph] nebulizer or an oral form of a product, unlike diabetes where there's an incentive to use an insulin pump. That doesn't happen in this disease. But being able to really get that nebulizer down to once a month, which should remain one co-pay to the patient. And so while the overall WAC costs for a month's supply will probably be comparable to a three-month supply, I would say that that duration of effect will last you to three months and the co-pay will be a one-month thing. And that's important, especially for Medicare, which is generally caps per month as we go into ‘25. So that's kind of the value prop on the cost economic side and the dosing and safety that we're thinking about.
Anish Nikhanj: Great. Thanks so much.
Michael Castagna: Thank you.
Operator: I'm sorry.
Michael Castagna: No, go ahead. The next question.
Operator: All right. Thank you. One moment for the next question. And our next question will be coming from Brandon Folkes of Rodman & Renshaw. Your line is open.
Brandon Folkes: Hi. Thanks for taking my question. And congratulations on the progress during the quarter. I actually want to switch gears and talk a little bit about Afrezza. Can you just talk about the growth in Afrezza and especially the growth in terms of the breadth and depth of subscribers? And what is the unaided awareness out there in the market just in the investment that MannKind has put into Afrezza data over the last year? Is there some level of anticipation of that data among your current prescribing community? And then how do we see the Afrezza commercial footprint evolving over time, just given that backdrop, especially as we sort of move into the pediatric label and then sort of really make a move on the inhale or both sets of inhaled data? Thank you.
Michael Castagna: Thank you, Brandon. I see from you there's a few questions wrapped up in there. And so I would say the unaided awareness of Afrezza amongst doctors is what we'd expect given the investment in our narrow target, meaning we target probably about 4,000 to 5,000 docs any given quarter. And the number that actually write on a consistent basis is obviously much less. And so that gets you to our focus, which is not broadening prescribers right now. It's actually going deeper with the current prescribers who have used the product. Because we got to a point this year where we really reduced our salesforce from roughly 80 people down to 50. And so with that 40% cut, we had to go narrow and deep. And that strategy seems to be working. We're seeing growth within our targets that we're really on top of. And we've seen that we've lost a little bit of scripts in the non-targets, I'll say, or in some of those docs that we had to leave with the reduction in the salesforce. But the hope was we would make up that drop on those that we are targeting. So that does appear to be kind of making that transition as we got from Q2 to Q3 to early Q4. The other part that we are seeing in the endocrine space, and you can kind of see in the insulin scripts, I think the overall TRX has dropped roughly 3% to 5% in Q3 in the overall rapid-acting mealtime market. And Afrezza obviously dropped from Q2 to Q3 a little bit. And some of that is we're seeing the endoswitch from treating diabetes to actually treating weight loss. And they're just literally wholesale shifting their focus and their patient volumes. And so we'll see how that continues to play out. I don't expect it to impact Afrezza in a dramatic way because we have more than enough prescribers that we still need to help and work on. But that was some of our top prescribers. We start to see that shift. And that's why it is important to broaden our commercial focus beyond the ones that we do have. And overall as we go forward, we want to kind of see the reaction to the INHALE-3 data. So that came out. The 30-week data just came out a few weeks ago here. And that data will be published in a reputable journal probably in the next four to eight weeks. And so that's been accepted. And then we have a bunch of presentations at ATTD. And we're just starting to educate the marketplace. So we'll be looking to bring MSLs out in 2025 to really start to get into the academic centers and fellowship trainings and really focus a little bit more on getting out from underneath the burden, I'll say, of the safety perceptions of inhaled insulin and how we start to put that on the table and move forward on the efficacy opportunities to help more patients. So it's a lot in your question, but I do think we've got a good grasp of what's going on and we feel pretty good about the direction we're going and our ability or desire to shift investment to grow it faster, at least put some resources behind key areas to make a difference.
Brandon Folkes: Great. Thank you very much. And congratulations again.
Michael Castagna: Thank you.
Operator: Thank you. And this does conclude the Q&A session for today. I would like to turn the call back over to management for closing remarks. Please go ahead.
Michael Castagna: Thank you, Lisa, for moderating today. And thank you to all the MannKind team and our shareholders. We've had a great year so far. We're going to close the year strong, looking really forward to 2025. And we'll continue to give you guys updates as things come in. But there's obviously a lot going on, all in a great way. And we look forward to continuing to open up that communication line and feel free to reach out with any questions. Thank you.
Operator: Thank you all for joining the conference call today. You may now disconnect. This does conclude today's meeting.
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