MannKind at Morgan Stanley Conference: Strategic Diversification Unveiled

On Wednesday, 10 September 2025, MannKind Corp (NASDAQ:MNKD) presented at the Morgan Stanley 23rd Annual Global Healthcare Conference, showcasing its strategic expansion beyond diabetes into new therapeutic areas. Led by CEO Michael Castagna, the company highlighted its recent acquisition of SC Pharmaceuticals, positioning itself for growth in orphan lung diseases and heart failure markets. While the outlook appears promising, challenges remain in integrating new acquisitions and navigating regulatory pathways.

Key Takeaways

• MannKind is diversifying its portfolio, moving into orphan lung diseases and heart failure.
• The acquisition of SC Pharmaceuticals is expected to enhance commercial synergies.
• Key developments include potential pediatric approval for Afrezza and ongoing clinical trials.
• MannKind holds $150 million in cash with $325 million in debt from Blackstone.
• Revenue growth is projected, with an inflection point anticipated in 2027-2028.

Financial Results

• MannKind aims for revenue growth with a focus on profitability.
• SC Pharmaceuticals is expected to contribute $110 million to $120 million in revenue by 2026.
• The company holds $150 million in cash, offset by $325 million in debt.
• Revenue is expected to significantly increase in 2027 and 2028.

Operational Updates

• MannKind’s acquisition of SC Pharmaceuticals aims to diversify its product portfolio.
• Integration of SC Pharmaceuticals is prioritized to maximize synergies.
• A label change for Afrezza is anticipated in October, with pediatric approval expected by May.
• The company is advancing clinical trials for cofazamine and nintedanib, with key data readouts expected soon.

Future Outlook

• MannKind views the next 18 months as transformative, focusing on strategic growth.
• Approval for Tyvaso DPI in idiopathic pulmonary fibrosis (IPF) is anticipated.
• The company plans to relaunch Afrezza with a pediatric indication.
• Success of SC Pharmaceuticals integration will influence future M&A activity.
• Key data readouts, including Phase 3 cofazamine analysis, could drive substantial growth.

Q&A Highlights

• The SC Pharmaceuticals acquisition was driven by cultural fit and potential synergies.
• MannKind discussed its dosing strategy and regulatory plans for inhaled nintedanib.
• Enrollment for the ICON-1 phase three trial of cofazamine is ahead of schedule.

In conclusion, MannKind’s strategic initiatives, including acquisitions and pipeline advancements, set the stage for potential growth. For a more detailed account, please refer to the full transcript below.

Full transcript - Morgan Stanley 23rd Annual Global Healthcare Conference:

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Great. Thank you all for joining us today, and welcome to the Morgan Stanley Health Care Conference. Just a quick note on disclosures. For important disclosures, please see the Morgan Stanley Research Disclosure website. If you have any questions, please reach out to your Morgan Stanley sales representative. Welcome to the group here, and thank you for attending the fireside for MannKind. My name is Ross Cohen, and I’m an Executive Director in the Morgan Stanley Health Care Investment Banking team. I’m joined here by Michael Castagna, the company’s CEO. Welcome, Mike.

Michael Castagna, CEO, MannKind: Thank you. Thanks for having us.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Of course. Maybe just for those of us in the crowd who aren’t as familiar with the MannKind story, if you could spend a few minutes just kind of walking through the history of the company. It’s been a very busy last couple of months for you all. It would be great to get the update.

Michael Castagna, CEO, MannKind: If you ever pay attention, you’ll see it’s a very different company in the next month than it was a month ago. For those of us who don’t know, MannKind, we’ve been around 34 years this year from the original technology of FTKP and what we created, mostly known for inhalation therapeutics and diabetes in particular. I think what you’ve seen over the last seven, eight years is really diversification away from diabetes and thinking about purposefully where we best apply our inhalation technology to make the biggest difference and impact we can for shareholders, patients, and employees. I think in that respect, you’ve seen our late-stage development programs go into phase three with the cofazamine. You’ve seen nintedanib is now moving into phase two. Obviously, Tyvaso DPI has done great for us in terms of the United Therapeutics partnership.

You pair that up with kind of the Afrezza that is in the background, been moving along the last couple of years and really getting that ready for a relaunch next year with pediatrics and the label change coming in the fall. All that’s been moving. You just saw last week our first major acquisition, I’ll call it. We’ve bought smaller things along the way, but nothing as big as this. That really was a transformative decision of the leadership team to kind of go out and think about how do we diversify our company? How do we grow the company faster? We also announced another partnership with United Therapeutics as well.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yep.

Michael Castagna, CEO, MannKind: A lot of things happening in the last week, but all really exciting things and keeping us up at night.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, these are good problems. You had the recent release of the TEPTEN-2 data. Maybe just walk us through some of the key growth drivers we could expect over the next few months or the rest of the year and then going to 2026.

Michael Castagna, CEO, MannKind: I think as we get through just wrapping up ’25, we have an October label change on Afrezza, which should solve one of the biggest problems we’ve had with that product around dosing. I think getting that clear for the scale will be important. The PEDS file should be accepted in the next two, three weeks. I think that’s another one that people would wait to de-risk that a little bit. Cofazamine should hit its 100th evaluable patient enrolled in the next 60 to 90 days. Those three things will happen. We got SC Pharmaceuticals closing, hopefully, in Q4. Those are four major events for this year. They have the file subQ autoinjector, which we think is important as well. That wraps up this year.

You get into next year, and there’s a whole nother cascade of catalysts as we think about pediatric approval in May, autoinjector, if all goes well, approval with SC Pharmaceuticals will be in July, while the interim readout mid-year for cofazamine in terms of that to right-size trial because we have to go up a little bit bigger. Nintedanib, we’ll be paying attention to the enrollment in the phase two. Obviously, how Tyvaso DPI going towards the IPF and how that FDA discussion is going with United Therapeutics and that filing. That’ll be another big thing happening in the background. A lot of good catalysts over the next 18 months. As we talked about the management team, 18 months from now, the company is going to be very different than it is even yesterday.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: is a very, very exciting time for us.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: That’s super exciting. That leads to the recent deal with SC Pharmaceuticals. Can you kind of walk through some of the rationale of why you thought about doing that deal and then ultimately what the plan is for integrating?

Michael Castagna, CEO, MannKind: Yeah. I think we’ve been looking for another asset to purchase over the last couple of years. Sometimes we bid, sometimes we didn’t overbid to just walk away. Ideally, you would have found something in the orphan lung space to complement where we’re going in the future, but there’s just not a lot there that’s meaningful or worth the regulatory risk. We pivoted to something that was de-risked as we paid off our debt in December. We really freed up our balance sheet to look for a bolt-on acquisition in a more serious way. We really engaged a few ideas this year, and this one came up. One of the things is that some things we look at and we say they’re great and the company and management team is doing great, so then what value are we going to bring?

That’s kind of hard to justify those deals because then you’re just arguing over cash flows. This particular acquisition, they looked at and said their team has done a great job. They’re in the early stages of launch, and this has a lot more legs to grow a lot faster. It wasn’t obvious in the beginning that there was a nice mutual fit, but I think there’s a great fit culturally between the companies and what we stand for. I think the overlap in terms of diabetes, which we don’t think about, but in heart failure, probably 40% to 60% of those heart failure patients go fully over with extra on insulin. Probably the same in chronic kidney disease. Large percent of them have diabetes and probably are at the insulin stage.

When you start to think about how do you optimize the footprint, how do you maximize the investments in these two areas, you really do have a lot of endocrine metabolic overlap between these two. Now when you think about these two sales forces of our diabetes endocrine side and their heart failure and chronic kidney disease, there’s other things that may come on our lap in kidney disease or cardiovascular disease or even endocrine. Now that you have all these people, how do you best maximize the value and upside from where we are today? We’re going to have a really nice footprint going into next year. We’re excited about SC Pharmaceuticals. We love the work they’re doing.

I think as we close out Q3, Q4, then when they’re on books, we’ll start to see, I think shareholders will start to see like this has really good momentum, really good depth of prescribing, repeat prescribing, and how does that continue to drive future value for shareholders will be important.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, that’s great. Makes a ton of sense. How did you kind of view the ready flow in the blood or sort of the deal terms for the transaction?

Michael Castagna, CEO, MannKind: Yeah. I think in any of these deals, there’s always a gap in value, and you’re trying to figure out how to best close that gap. If management is that confident, you know, you want to share that risk with them. We built our deal forecast, and we were comfortable with that number. The upsides to the model are going to be an autoinjector, not just because it has a nice uptake. As we talked to doctors, they really think that’ll be much easier to overcome some objections from their staff around the on-body infuser versus an autoinjector. More importantly, a COG. The COGs in the on-body infuser are quite expensive, and that eats up a lot of the margin. If you can really get to an autoinjector, it frees up the margin whether you redeploy that capital to grow the brand faster or you contract away prior else.

We’ll discuss with the management team what the next best opportunity to grow faster is. That’s what’s so important, I think, around the autoinjector and the CVR there. The last one is the revenue stream. When you think about management, it’s always, always much more about the baby. Things are going to be great. Then you got disruption, you got integration. How do you just have a reasonable forecast that’s acceptable? MannKind doesn’t give guidance. Hopefully they can see, you know, roughly what we see next year is $110 million, $120 million win rate plus Afrezza, plus Tyvaso, plus manufacturing the pipeline. You got a lot of nice things for MannKind happening in 2026.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah. Yeah. That makes a ton of sense. You briefly touched on it earlier, but as you think about the commercial rollout for the SC Pharmaceuticals product, where do you feel like you can add value based on what prior management did? They have some capital constraints, for example, as an organization. How do you think you can expedite and potentially create more value with their product?

Michael Castagna, CEO, MannKind: As we double-clicked down, we did some of our own spot calls, obviously, for diligence. We clearly see the management team’s done a really nice job on the perception of the product, where the product fits, and the unmet need that they’re solving. That, to me, is clear black and white. You get into some who just don’t even know about the product, which is a lot of people because they have 40 FTE equivalents on cardiovascular and 40 FTE equivalents on chronic kidney disease. In chronic kidney disease or cardiovascular, that is a dripping bucket of number share of voice that you need. I think the first thing is how do you increase share of voice and marketing support within each of those respective call points?

I don’t want to get into what they do, but I think there’s a lot more leech and frequency, a lot more top of mind that can happen. You get into the conferences and how do you raise awareness at the conferences. You get into the health systems. They have five key account managers, which are doing a great job. You’ve really seen that growth. The reality is you might need more, right? We see the discharge protocol, the heart failure, the readmission rates. That hospital protocol administration is critical in my mind. Once you’re in that protocol and you can help reduce those readmissions, that’s huge for the health systems. You see next year, what came out in the middle of the deal flow was this Medicare CMS guidance on taking cuts in 2027 on personal physician payments, right?

If you have 20 heart failure patients, you may take a 9% pay decrease or a 9% increase depending on how your outcomes are. Now it’s still draft guidance, but I think having an 18% swing on someone’s pay really drives good behaviors usually. Yeah. I think as we look at this, I think the product next year has an opportunity to fit into the paradigm shift of heart failure and what’s going to happen even faster.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, and then maybe shifting focus to Tyvaso DPI and IPF. With positive TEPTEN-2 top line results with United Therapeutics, and the planning of bridging study, the royalty stream is obviously expected to grow there materially. Can you share with these developments along with the anticipated TEPTEN-1 data in the first half of 2026 convene for the broader outlook?

Michael Castagna, CEO, MannKind: Yeah. I mean, I think TEPTEN-1 and TEPTEN-2 are phenomenal investments that United Therapeutics is making to place a huge bet in idiopathic pulmonary fibrosis. It’s not just that bet. It’s the manufacturing plant that they’re building in North Carolina. It’s the expansion that they put in Danbury, Connecticut with our plant. They’ve placed a billion-dollar bet here on idiopathic pulmonary fibrosis. When you think about some of the questions I get out, are they really going to go after Tyvaso DPI? Of course they are. Otherwise, why would they spend all this money on manufacturing? We feel very confident United Therapeutics will work as quickly as they physically can to get to the FDA, to get to the bridging study, to get that to patients as fast as humanly possible.

Personally, I think the TEPTEN-2 results, we as a company, because of the financial upside to those data points, we didn’t want to depend on those for our survival or our business development decisions or our clinical investments. Because if it didn’t pan out, then you got to pull back everything. We kind of always ran our company without that in the plan. Now that you have that, this can be a meaningful contribution to MannKind and our shareholders and the patients that they’re going to serve is going to be huge. I think the results with TEPTEN-2 surprised many on Wall Street in a good way.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: No one expected. There’s a lot of discussion. It’s funny we’re having a debate at dinner last night. A lot of discussion of is Tyvaso DPI an antifibrotic or not? You got a pulmonologist who works for us who says, of course it is. Why is that a discussion point? I can tell you how many other doctors don’t understand it and say it is a discussion point. UT, I don’t think ever wavered. I think my pulmonologist never wavered. It’s just kind of funny how you get those results and everyone seems surprised. I think those that really believe in Tyvaso DPI and how it works weren’t surprised.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: It’s nice to see a big win for United Therapeutics and we’re their biggest cheerleaders.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah. No, it’s nice to see a big win for you and United Therapeutics and also the IPF patient community, to be quite honest, given what’s been going on their list.

Michael Castagna, CEO, MannKind: The dose of studies is horrible.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Great to see. Maybe shifting focus to your internal IPF program and inhaled nintedanib. Can you just walk us through the inflow phase two trial design, including some of the key endpoints and the expected timeline for enrollment and top line data?

Michael Castagna, CEO, MannKind: Yeah. We’re giving guidance right now. We expect the first half of 2027 for top line data. That depends, obviously, on the enrollment. The trial kicks off this year. We’ve already got the CRO. We’re doing sites. We’re hoping to have the first patient, and I’ll call it late this year, early next year, just depending on how quickly we get through IRBs. This will be about a 228-person study, four arms. Two arms will be active, two arms will be placebo. These are testing a BID and a TID regimen. You have to have twice as much placebo because they’re blinded. Those patients, after 12 weeks of dosing, they’ll be able to switch to open enrollment. We’ll have people going on hopefully six to nine months of data that we can look at for longer-term effects. In the short term, we’ll have about 150 on active nintedanib.

We think that is enough number in the shortest amount of time you could do ethically to do a placebo-controlled trial. That was one of the big challenges, as the FDA really wants a placebo trial. They want it on top of background therapy, which we don’t think is feasible. Outside the U.S., you can actually probably get IRBs to approve a 12-week treatment while they’re waiting for the standard of care to come in.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, no, it makes sense.

Michael Castagna, CEO, MannKind: Yeah. We tested two, we’re testing two doses. Basically, a 6 milligram a day exposure and an 8 milligram a day exposure. Some people say, why are you doing TID? We just don’t know whether nintedanib, it’s a receptor binding issue, it’s a frequency of hitting, it’s an ADC CMAC. We want to kind of, we feel like the dose is in the right range. The low and the high should work.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: Do those hitting the receptor somehow differently have a different effect size? That’s what we’ll be looking at. We expect a combined analysis to show some early read of data at 12 weeks.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yes. I guess those specific doses, I guess what gives you the confidence that those are the right ones to push forward with?

Michael Castagna, CEO, MannKind: Yeah. If you back up a second on OFEV, you know, it’s got severe GI side effects, right? 50% of people drop out. Even those who take it, they’re on tons of doses of Imodium and they just can’t get through the day in most cases. They’d rather not take anything than take what’s approved. That drug does $4 billion a year despite those setbacks. It has about 5% bioavailability. If you were to look at, say, what’s available, that’s actually carrying any type of therapeutic effect size, and then you calculate what you think you need to get into the lung, I think those are the bets that we’re taking, that we’re treating a lung disease, that we’re getting to a specific dose within the lung, and that we ran animal models to kind of calculate that and triangulate our dose calculation.

The good news is, whether it’s us or a competitor, we both got to the same ballpark independently. I do think there’s a minimum dose you need to hit for nintedanib to work, and then above that, you might get more efficacy. I would say we’re both probably in the ballpark at a minimum. The question is, can you get higher exposure or higher impact on these higher doses? We don’t know yet. That’ll be part of it. The last thing I’ll say is, whether it’s Avalon with a pirfenidone inhalation beta or even TEPTEN-2 results, you’re showing that treating the lung directly is creating a nice effect size. I would say a lot of people wonder whether you give an OFEV inhalation versus OFEV orally, will you still have that effect size? I would say now we have a proof of concept of two that have very nice outcomes.

I feel even more excited today. If you ask me where the risk was six months ago, it was if we get the right dose and cut the lung target, have an effect size. I would say TEPTEN-2 just demonstrated success in a good way for Tyvaso DPI, but I believe this product will. Avalon, we didn’t represent our data yet publicly, but in Avalon, the data gave us more confidence that we got the right dose.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah. Maybe just pulling a little bit more on that point around nintedanib. Naturally, it’s had a lot of the GI tox issues historically. What gives you the confidence in the inhaled approach of nintedanib effectively to be better positioned in the adherence challenge at the date?

Michael Castagna, CEO, MannKind: We did a phase one study, and I can’t remember exactly the patient in there, but we went to, you know, small, medium, high dose, we’ll call it. We did repeat dosing. We saw no diarrhea in the trial. We saw no dropouts for cough or tolerability. People do get cough with a dry powder, but that’s about the cough you get. Honestly, most IPF patients do that 20 times a minute, and 21 is not going to hurt them. I think they’d rather have a tolerable drug, no diarrhea, or no Imodium four times a day than have an extra four coughs. I don’t think we’ll have major cough issues, but the data will show that hopefully.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Would you position it as a replacement therapy, add-on therapy, or combination?

Michael Castagna, CEO, MannKind: Our core belief is this will be a combination in evolution. As you think about the future state, we’re excited as we come back to 2027 to do a larger phase three. You’ll see Tyvaso DPI to be approved. You’ll see hopefully cofazamine (101) drug approved. You’ll have nintedanib (201), you’ll have pirfenidone. You’ll have four drugs out there, and three of them we’ll be able to use on top of. I think a combination treatment study that we’ll have to do along with 90 patients will be a good study design. We should be able to roll that pretty quickly by then.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: As you think about the broader competitive landscape, when you compare 201 to other inhaled IPF candidates, for example, to even to about 50 PI and those currently in clinical development, how do you think about that?

Michael Castagna, CEO, MannKind: We’ll be at ERS looking at the Tyvaso DPI nebulizer data, and you think we’ll see, you know, what does this sub-analysis look like? I don’t know any more than the public knows. You know, trying to see the good news about United Therapeutics is they got two large trials, roughly 600 patients each arm in each trial. You’re going to see the combined analysis is going to have a lot of power, right? What does it look like on nintedanib? What does it look like on pirfenidone? What does it look like in 90 patients or treatment, or you know, that maybe not on treatment? I think that will give us some good information that will hopefully give us some confidence. My bet is hopefully Tyvaso DPI and nintedanib combination look good.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yep. How are you approaching the regulatory strategy around it, particularly in light of the XUS piece too?

Michael Castagna, CEO, MannKind: I think we met with the FDA in April, which was right after all the changes they were having. If you think about MannKind as a company, Tyvaso DPI went to the cardio division, Afrezza’s been in the metabolic division, and our pipeline is squaring the orphan lung division. The lung division has only had to consult on our development programs in terms of Afrezza. They never had to actually evaluate our technology in wholesale. I think some of the questions they didn’t quite understand were how the technology binds the APIs, what it does when it goes into the lung, where it goes. We spent a lot of time just explaining that to them.

I did that because whether it’s Tyvaso DPI coming, if nintedanib coming, it’s cofazamine oral coming, inhaled coming, we’re going to have three drugs on the platform coming at the end of the next 18 months. That feedback that they wanted was, you know, I may not agree with, you know, people with IPF are dying, and they die at a higher rate than HIV patients today. I feel like we have to have a higher sense of urgency around getting innovation to these patients.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: Because they don’t want to wait for the next innovation. When you got a 12-month trial and it takes two years to roll and do it, that means 40,000 people died.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: I think we can do a better job as society helping patients have access to treatment earlier.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: Rather than arguing with the FDA for a year, which we could have done and got to a better spot, we just pivoted the trial design to XUS and know what they want. We’re incorporating that. We’ll just come back in phase three. I feel fully confident we’ll achieve what they want: placebo, first dose, tolerability, those things. That’ll be done. That’ll answer their questions. We should be wide open to go to phase three with them.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: No, it makes a ton of sense. Maybe shifting gears to 101 and NTM, enrollment for the ICON-1 phase three trial is progressing ahead of schedule. Can you walk us through some of the expectations for the 2026 interim analysis?

Michael Castagna, CEO, MannKind: Yeah, I mean, cofazamine is NTM. Unfortunately or fortunately, there’s nothing in front of us and there’s nothing behind us. In our case, Insmed has done a nice job paving the way. It’s a great, great product that’s doing very well. They got a naive or early treatment trial they’re enrolling and finishing up. For us, we’ll have the refractory population with the co-primary endpoint interim analysis next year for the U.S. The ex-U.S. market only needs sputum, and we’ll have those answers next year. If all goes well, we should hopefully be staffing up 101 at the end of next year, early 2027 for filing.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yes.

Michael Castagna, CEO, MannKind: If the data could tell you you need 230 or 300 patients, and if that’s the case, we’ll hopefully keep enrolling, but maybe you need another three to five months. We’ll see.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: I don’t think it’s like years. I think we’re talking a quarter or two. I think that’s in the purview of society to say this is real and it’s coming. So far, we’re on track for early Q4 to hit the 100th evaluable patient enrolled. We are just finishing up the animal studies for the dry powder we developed for that product as well, and the tolerability seems to be there. I think when you look at our case, there’s a lot of dropouts, a lot of tolerability issues. We are not seeing that so far in the first, you know, 100 or so people that have come in at a trial, so that’s great. People are staying on. They’re rolling over to the extension phase, they’re rolling over to second dosing. We’re just not seeing major dropouts, which is great.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, no, good to hear. As you, on the IR case point, right, how do you, as you compare the phase 3 ICON-1 studies onto the Convert and Arise studies on their part, are there differences in the endpoints, patient selection, dosing?

Michael Castagna, CEO, MannKind: I think when you study drugs at different times, you always have different, you know, patient characteristics. We’ve been very conscious of that, meaning how sick were the Arise patients? You know, how sick were their patients on their original trials versus the latest trial? Even in our trial, we started looking at Japan took off on enrollment. You start looking at how many people had exposure to IR case, how much of a risk is that creating? Do we cap that? Do we not? We wind up capping the number of cavities in the holes that people have in their lungs because we think someone that has 4 centimeters is not going to respond to anything. I think it’s just not rigging the trial. It’s just nothing’s going to work for that population probably. How do you make sure the effect size is there that you’re looking for?

How do you make sure you’re helping the population that can benefit the most? I think that the baseline characteristics are probably better than AM2, but slightly, you know, these patients are a little bit sicker than you probably saw in the original IR case trial.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, maybe around the commercial profile, I guess, how do you envision positioning cofazamine (101) against IR case?

Michael Castagna, CEO, MannKind: I think the research would indicate that it’s the only treatment option doctors have today. They use it. Patients would rather try IR case than go to a placebo-controlled trial. I think our enrollment would have been, we argued for years about not having a placebo in this population. The FDA mandated it. We finally did it. I would tell you the number one objection we have is someone doesn’t want to enroll in a placebo trial and not get active drug when they think their life is limited. That’s slowed down enrollment a little bit. Despite that, we’re still ahead. In terms of us versus IR case, I think we got to make sure we hit the sputum. We’ve benchmarked the IR case efficacy at 20% delta from placebo. Placebo dose 10, which is roughly our estimate, we do 30. We feel like that’s an approvable product.

We will have the PRO that IR case used in the early treatment phase trial. That data has never been generated in the late phase treatment refractory population. That’ll be a difference. We’ll have that data. We’ll see what it looks like. That’ll be there. Then you get into dosing. Today, a patient has to take IR case every day for six months. If it works, congratulations, you have one more year of treatment. In our case, you have 28 days where we load up the lung with cofazamine. It’s got a 70-day half-life. Then you stop taking it for 56 days. You have two treatment cycles in six months. If you’re successful, then you’ll add four more. It’s really about minimizing the patient burden, hopefully maximizing the efficacy and tolerability. I think those things alone are going to differentiate the product pretty well.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, yeah, no, it makes sense. How do treatment paradigms differ between, I guess, the U.S. and Japan for NTM specifically? How does that affect the strategy?

Michael Castagna, CEO, MannKind: I don’t think they differ, excuse me, dramatically. IR case has had a very strong start in Japan. It was just later than the U.S. When you look at people coming into our trial, there’s probably an equal number roughly that got exposed to IR case in Japan as early as the U.S. When you look at, you know, roughly X% had IR case. IR case has done a nice uptake in Japan where IR case in the U.S. with COVID launched a little bit slower, but it’s done better over time. I don’t think we’ll see a big difference there. I think the backbone of treatment that’s used in the refractory population is very similar. We see the patient populations being pretty comparable. Maybe some of the patients in Japan came a little bit sicker because they didn’t have as many options as long.

I think that’ll even out as the trial progresses.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yep. And then maybe just changing gears to back to Afrezza. So Afrezza achieved another quarter of really strong script growth in the second quarter. With the decision on the upcoming label update, how transformative could this be for adoption in both the adult and pediatric populations?

Michael Castagna, CEO, MannKind: I wouldn’t expect any major inflections the rest of this year because we’re not investing enough to kind of call that and be realistic here. I think the label change allows us to, we have a new marketing campaign ready to go. We’ll have new sales materials ready to go, new messages out to the sales force. All that will be implemented in Q4 with the label change, and you only got about six weeks of time before the year closes by the time that happens. You know, between Thanksgiving, Christmas, and holidays, you’re just only going to make so much impact the rest of this year. I think it’s really about gearing up for next year and setting us up for a January relaunch of a product in terms of that. You got PEGS coming in in roughly May, June.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yep.

Michael Castagna, CEO, MannKind: I think as you look at next year, it’s really the relaunch of Afrezza. I think the label change for us is the first step because we know the 500 or 600 prescribers who write the drug consistently know how to dose it properly. The thousands who’ve written one script or two scripts have never done it properly because they read the label and they only dose patients. Having that label change is more important for the academic centers, honestly, who just don’t know how to prescribe it.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: Teaching them how to prescribe it, if they only want to read the label, not see us as a company, at least they can get it right for their patients.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: That’s going to be important. PEGS to us is the, you know, when you look at diabetes innovation and breakthrough, it all starts with kids and goes to adults. Whether that’s Dexcom, management, insulin pumps, Omnipod, all these innovations started with children and then became successful in adults and didn’t do the other way around. Unfortunately, we started the other way around, which is much harder. Changing 65-year-old endocrinologists who’ve been doing the same thing for 40 years is probably one of the toughest jobs we have. There’s no incentives for them to spend more than seven minutes with a patient. That’s the real problem. You’re trying to change habits. That’s really difficult.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah. On the PEGS point, I guess you’ve mentioned May, June is the planned launch. What can you share today around your intentions around the launch and the strategy?

Michael Castagna, CEO, MannKind: Yeah. For kids, you know, we’ve studied the trial from four to 17. We feel like we got a pretty bold age range. That’ll be the first, you know, the FDA gave us all the way down to four. They limit that in some way. They already did each of the kids 10 to 12. As long as we’re in that ballpark, we feel good. There wasn’t a ton of patients below 10. We had 39 sites in the trial. There are roughly 50 sites in the country that treat most of the kids. When you think about the almost 80% overlap of patients who are in the trial or sites in the trial relative to the market, we’re going to hire about 20 key account managers. They’ll be responsible for clonal children’s hospitals or those places that treat children connected to academic centers.

There’s about 20% of the community physicians that treat pediatrics. That’s where you’ll see our sales force also target that with Afrezza. Adults will fold those targets into that creep as well. You’ll see 500 to 1,000 targets be added to our call plan next year just for pediatric launch. That’s between the account managers and the adult Afrezza reps. The reason all that’s important is when you take a step back, we target 27% of the market to save all new implants. Post these transformations January 1, we should be down 45 to 50%. It’s a big leap up next year. If I say like we’re not, we’re preparing this year, but the reality is, you know, we’re going to have a much higher call percentage against the new implant market than we have this year.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah. That’s significant. Also, when you layer in some gestational diabetes, for example, to Afrezza, how does that also play into the long term?

Michael Castagna, CEO, MannKind: Yeah, I think that’s a good question. One of the, if you talk to doctors today, they’ll give you three excuses why they haven’t tried Afrezza. They’ll talk about the dose is not specific enough. We’ll fix that with a label change. They’ll talk about the lung safety. We have a large lung safety publication coming out. They’ll talk about managed care. We charge $3 a day for a great experience. You’ll find most doctors, when they give you the managed care objection, don’t even know you have a $3 a day insulin. We’ve decided $99 is a fair price for our product. We don’t make any money on it, but we don’t want people not to get access because the payers block them. I’d say that’s number one.

When you really think about those objections you have, and then how do you reframe that with the customers to make an impact, that’s going to be important. I’m sorry, I don’t understand your question. Oh, pregnancy. Sorry. Payer. The payers have indicated for the first time ever that the rebates related to insulin are no longer there and that the prices of insulin have come down. Therefore, blocking Afrezza is not always in the best interest anymore. Before, they used that to block us because they collect $2 billion, $3 billion in rebates from the competition, and there’s nothing we could do. If they added Afrezza, they lost $2 billion in rebates. You can’t blame them.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: We were restricted to the sickest patient. Now when you go forward, you know, you think payers want to be on the front page of, you know, New York Times for blocking pregnant women and gestational and kids? No, they don’t. We feel like there’s a real opportunity on the payer side, which will be one of the big objections to say maybe we can contract it away and make kids approved easier. Maybe, you know, gestational data still has to come out and see what that looks like. These babies have large complications and fetal maternal disease. Can we really showcase Afrezza, what’s going on in that population? We just published a case series of five patients this month. They’re doing a study right now with double crossover from injectable inflammatory to us.

I think we’ll see hopefully in that study a really good readout on control in pregnant women. Those are the things coming next year that you start to get away from. Is Afrezza just a new kind of inflow that’s inhaled? Does Afrezza, what our data shows, get more people to go? You don’t need an insulin pump. You can get great control without an insulin pump when you switch off it to gestational diabetes to pediatrics. These are all four things that are happening right now as we speak next year that we can start to talk about guidelines getting updated, payer restrictions getting uplifted, and really clearing some of those traditional hurdles for Afrezza that have been out there.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, look, there’s a ton going on clearly. There are multiple launches coming up. You have data coming up over the next 12 to 18 months. How do you think about capital allocation and priorities?

Michael Castagna, CEO, MannKind: The mixed back there because we’ve got a lot of capital to press the gas on. I think the good news is, you know, next year will be our toughest year financially, meaning, you know, we have the cash to do what we need to do. If you really think about what we’re doing, we’re funding an insulin naive trial first time ever. You’re going to get newly diagnosed here. You’re going to get Afrezza for the first time. You want to change the next 40 years of diabetes, teach kids how to start with inhaled insulin and never get injected again. That’s going to be game-changing. You got the 201 trial with IPF. If that’s positive, the stock’s a unicorn stock, right? If 101 reads out, that’s going to be another huge bolus for us. These are the big bets.

We have the capital to place all of them, and that’s our plan. If it goes forward to the end of the year, we close SC Pharmaceuticals. You know, we’ll have $325 million in debt roughly from Blackstone, and you’ll have about $150 million cash on the balance sheet. We’re profitable today, so, you know, we’ll try to maintain that goal. We’re not worried about if a quarter gets negative or two, that’s not the end of the world because we have enough cash to fund all the equilibrium. Next year, you got them all hit at the same time. You should start to see that revenue inflection happen, and then 2027, 2028 gets easier.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah.

Michael Castagna, CEO, MannKind: We’re OK. We’re ready to make those investments.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah. Maybe a follow-on question to the capital piece is you took a deal with SC Pharmaceuticals. How do you see M&A being as part of your toolkit going forward?

Michael Castagna, CEO, MannKind: That seems to be the big question we got in the last 60 minutes. We had it in seven days. I don’t want to guess on that one right now. I think, look, when you make a big acquisition like this, nothing’s more important than making sure the employees are happy in the integration. You hit the numbers you set out for, that your deal terms were solid and foundational, and that you deliver them with deal terms. The board has more confidence in management as well as your ability to do more. You got to first deliver on the first bite. That’s where we’re at right now. You know, we think we’re a nice mid-sized company that can look for more. I think we just have to do an excellent job on this integration and really prove ourselves first before we start running to the next thing.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, no, it makes a ton of sense. It’s a super exciting time internally as it goes already, so the integration will be key. That’s really all I had in terms of questions. If there’s anything else we want to maybe even cover.

Michael Castagna, CEO, MannKind: No, just because shareholders are listening and there’s some people in the audience here, I think the last thing I’ll just close is, you know, our stock has run up the last seven to ten days with all the announcements. Some of the questions I get, did we miss the run up? I just want to, you know, give some perspective, which is we did a royalty deal January of last year, and that was a value to the company and the royalty of about $1.5 billion. There was a milestone for, you know, really was the IPF indirectly if you looked at the revenue stream. When you think about where the company is today, you know, you still have that royalty stream still strong. Now you got TEPTEN-2, DVIST, and now you have 101, 201, PEGS.

Like there’s so much more that’s happened in 18 months that, you know, that valuation to us is still quite undervalued from where we are. If people are looking for a good stock, so a good revenue growth and, you know, cash on the balance sheet to fund innovation, that I think we’re very unique in that situation compared to a lot of our peers.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Yeah, no, and we’ll look forward to seeing it.

Michael Castagna, CEO, MannKind: Thanks.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Thank you for joining us, Michael. I really appreciate all the time.

Michael Castagna, CEO, MannKind: Appreciate your time. Thanks, Ross.

Ross Cohen, Executive Director, Morgan Stanley Health Care Investment Banking team: Thank you.

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