Q3 2019 Earnings Call

Welcome to the Mannkind Corporation third quarter Twinge 19 earnings calls.

As a reminder, dish coal is being recorded on November six two inch 19, I would be available for playback on the Mannkind Corporation website. Shortly after the conclusion of this calls until November 20, or 29 gene.

All participants will be in listen only mode for situation at this conference.

She would like to Austin's question at the end of the presentation. He signal by pressing star one.

Okay Todd.

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This call will contain forward looking statements such forward looking statements are subject to risk Cirque du, which could cause actual results could differ materially from these stated expectation.

Further information on the company's risk factors. Please see the 10-Q report.

With the Securities and exchange commissions.

Earning release on the small heats prepared for this presentation.

Joining us today for mankind, our Chief Executive Officer, Michael just Tanya.

Chief Financial Officer, Steven Binder.

Turning to conference over to Mystic Sanya. Please go ahead.

Thank you.

And thank you everyone down in this morning for our Q3 earnings call I look forward to share in our results and discuss our plans for the future.

Before I get started I'd like to wish our founder Alfred Eamonn happy birthday.

Today would be at 94th birthday views with US today fits for site was 20 years ahead of the market in terms of predicting automated insulin pumps.

The challenge we can now see what do you glucose monitoring.

Cars to the delay of insulin has on controlling sugars post meal time.

It's cold here, it's true more than ever as we just completed 35 interviews with health care providers and I don't believe one of them understood that injectable influence subcutaneously took almost two hours to start working to bring down your post meal time sugars.

The scientifically engineered particles that we create Jay will not only impact people living with diabetes, the looks down the many diseases, such as pulmonary hypertension, cystic fibrosis oncology migraine, and allergies, which impacts someone in each of our families.

Right the challenges in setbacks, we have faced our company's survived for over 20 years and our growth is just beginning.

As we talked about previously these four pillars have fundamentally transformed our growth.

As you look back the partnership's pilot in bold are important to our future as you can see this year alone you t. will generate more revenue than a frozen.

As we look forward over the next 24 months. These four pillars will be critical to our growth platform that we expect to drive shareholder returns over the coming years.

For Q3 update first I want to highlight.

The national sales to Brazil through B M.

At the zero point $7 million.

Second as we announced on Monday, United Therapeutics Tread T is progressing as planned we received our second milestone payment at 12.5 million November we completed construction of our high potency manufacturing facility in Danbury, and we dosed. The first patients were tread T back in Q3.

The feedback so far in the study is very positive that we've heard from United Therapeutics.

We've also completed a recapitalization August that gives us a solid financial foundation as we go forward, where we drew down 40 million of the $75 million credit facility.

We met our revenue covenants as of September Thirtyth imaging open dialogue with our new lending partner about our sales trends and actions were taken to improve them some of which I'll discuss in high level detail in a few slides I.

I believe we have a strong <unk> relationship with mid cap. We will successfully worked together resolve any should they may rise throughout the term of our alone.

In the third quarter, we had total revenues of four point $14.6 million or 225% year over year, and net revenue or friends of $6.4 million or 46% growth year over year.

We continue to reduce our spending and manage our employee base as we think about departures and not backfilling people continues to bring down our cost as well as reducing cost structure year over year in various functions throughout the company.

We're really proud that we know increased our coverage to five analysts with the latest being Cantor Fitzgerald that initiated coverage in October .

And we advance two molecules. The next phase of development, which are Sumit triptan into Delta, which is new today for many of you.

And their advanced into an animal PK study that will help us get some additional information as we think about.

Ah dosing and animals, and how that's going to correlate to buy a build the ability of the current available formulations.

So our pipeline side here has been updated in orange.

To talk about the two next pipeline slides that went to non from non clinical pharmacology that will help us get better understanding of the absorption through the lungs, and really help us understand the dosage form as we continue to progress season development.

We will expect this data pretty much Buddy ended the year, but pool study were outcomes in Q1.

Additionally, UTI is not made a decision on the undisclosed compound as they were right to opt in for a certain period of time and their completing a market assessment before making any decisions.

Finally, our long waited for the pediatric study protocols nail down 50, if we review and we expect that feedback by the end of the year.

[noise] snapped bridging to afrezza.

In terms of T. acts as a net sales growth on the left side here you can see you every year, 17% growth and Trx is increasing almost 3000, a month or 9094 quarter.

And that sales grisby growth basis of 46% year over year 6.4 million is our highest sales ever Afrezza. When you include the Brazil number.

The next part of the equation as we've been thinking about the company and the history here with David Kendall joining has been around the scientific communication really helping adopt what does the clinical profile a phrase it looked like and how do we get a lot of our data published so that the guidelines that are out there can start to create a new old tracking category as well as communicated.

Scientific value of a president why it's different from subcutaneous insulin here you can see we had seven.

Seven papers that we expect to be accepted in presented I'm sorry.

Except it and were presented at upcoming conferences between publications and article journals as well he TD and the diabetes technology meeting in Baltimore and later this month.

These journals help highlight everything around hypoglycemia ultra rapid profile better early glucose control and really are meant to articulate the attributes of afrezza that people are not all aware of as we look in the marketplace. The last two you see here around Blue Hill, and as we get ready to launch. This device were really excited about the data coming out of the trial we ran.

Get some feedback on on user experience and how this will help better trainer and president patients out there and give our customers more confidence.

[noise] the scientific platform is really going to help us continue to propel growth were friends as we go forward and as I talk about our new strategy going into 2020.

The laser focus as we get into type one versus type two patients.

When you look at this year, we have had continued growth quarter over quarter. The exception to that we always see in Q1 is small dip year over year in Q2 to Q3, we saw sequential growth in prescriptions of 5% and if you look at the marketplace of the competition, what's been happening people actually been having a decline sequentially quarter to quarter Nielsen market is flat to declining depending on how you look at it.

In the end as we look at cartridges, which is another way to look at our business, we weren't happy as we looked at a into the summer we made several changes in our marketing department.

Identify gaps that were highly no market research and we rolled out several plans in Q4 around coverage and training and launch new reimbursement support materials as well as our first pharmacy network in several key markets were piloting new piloting new C.D. trainers.

<unk> enhanced focus to move our free bridge program to paid claims as we expect to exit to free goods program and transition to a more cost effective program during Q1 2020.

But you can see here or cartridges since we commercially relaunch the product ourselves in Q1 of 17 have almost tripled from almost 200000 hours a month on a rolling basis over 600000 hours a month in October when we look at the latest data. We have this trend continues to demonstrate growth for afrezza and while we weren't happy where we saw where we works we thought we should be ahead.

We do believe making the appropriate adjustments will continue to propel us into Q4 and as we continue to find to tune. This going into 2020, we'll continue to see more growth ahead.

So what does that insight that we got as we look to 2020.

We did research with over 200 providers between quantitative and qualitative research in Q3 up into including last week, we identified three areas for faster if president growth number one a one stop hub that will provide reimbursement support pharmacy fulfillment coordinate patient training and help address any drop off that occurred in the first 30 days.

As we look at our data on drop off I know, it's a big question. We get we did here, 30% to 40% of patients may drop off president for one reason or another.

Part of that is making sure we do the on boarding properly around call and inhalation proper technique in the first 30 days, we believe will address a lot of the issues. The second thing we heard was around type one.

When you think about our business, 45% of the patients are living with type one diabetes.

Some of those patients may use of friends on top of their insulin pumps. This is not something that we market. When you think about how they're using it they're taken one dose when they get high on the sugars post meal, which could be once a week it could be twice a week, but those patients are not refilling every 30 days as one would expect so that they may fill once a quarter. They may for once a year, but those are prescriptions.

We see one time was under what happened on refills I wanted to provide the insight to our customers as we go forward and our shareholders.

The second part of the pillar will be an increased focus resources on type one diabetes. When you think about Afrezza, we have roughly 6000 patients on the product today 3000 type one and 3000 type two.

And yet type ones only make up 5% of all people living with diabetes. However, we do see that the unique attributes of the product are disproportionately benefiting a type one focus when you think about the challenges people with type one live with around hypoglycemia weight.

Dosing speed of action CGM. These are all attributes that we've demonstrated a friendly to be equal or better than a standard of care. So as we go to next year, you'll see sales and marketing efforts targeting advocacy and future debtor generation will be more focused on type one versus type two we feel we're adequately prepared to continue to address the type two market and as it.

As it grows we will continue to go back into a larger penetration when you think about what we've done this year, we came into the new year with a big focus on type two with a big retail presence with our bridge program co pay card along with the DTC campaign, we weren't happy with the results. We saw as it was all those efforts through August of this year.

And that's why we did pivot a little bit here in Q3 and continued is expect to see positive impact to those pivots in Q4.

The third part of this was continued health care provider education and patient education.

We did not believe that large majority of our endocrinologist do not understand time action profile of injectable insulin versus inhaled insulin they directionally understood that a phrases faster than any other insulin out. There. However, they did not understand that subcutaneous insulin takes about two hours to start working in fact love them thought because a subcutaneous it starts.

Working immediately or within 20 to 30 minutes, that's a really big difference we have lots of data on this particular topic to go out and educate to market.

The second parts of phrase I mentioned is around weight and leading hypoglycemia, David Kindles, an incredible job getting some of those data out there in the various publications and conferences throughout this year.

And then we think about the last part of presents unique ability to deliver insulin through the lung really creates unique attributes when it comes to understand and monomeric an ex Americans ones.

I want to we will continue to provide you more clarity on this strategy as it goes for but wanted to give you a preliminary glimpse of where we're going into 2020, because the next time, we'll have an earnings call will be roughly in early February March of next year.

[noise].

And finally, the last part of this that I think is important is something I mentioned earlier about Blue Hill. This slide on the left side you can see very confident the confidence was about 27% sorry, 37% of providers. When it came to training on on Unhealthier. When you look at post using Blue Hill in five people to get scale.

Comfortable you saw that number went from 37% to 96% or an improvement of 3.4 to 4.7 on a scale one to five.

80% of customers thought blue held reduced or teach time and 91% of customers believe this would be more successful journey Hilton. So going forward, we expect to launch a blue help pro version will be called for HCP is in Q1 of 2020 . We're very excited as this will really help demonstrate instead of the market as we get to Bluetooth connected care hopefully in late.

2021.

Now I'm going to turn over to Steve Binder.

Thanks, Mike and good morning.

Discussing preliminary financial results for a third quarter would show total revenue growth of 225% for the third quarter over 2018.

Net or friends or revenue growth of 6% for the third quarter, including our first international sale of Afrezza to our partner be own in Brazil, and continued improving gross margin as the years progress.

We also announced Monday that we achieved this second milestone or a license agreement with United Therapeutics and received $12.5 million subsequent to the quarter end.

Let's start out with looking at the revenues for the third quarter.

Total revenues for the quarter, which is the bottom blue line.

Were 14.6 million versus 4.5 million for the corresponding third quarter 2018.

The 225% increase is primarily generated from the recognition of revenue related to the United Therapeutics license agreement and the amount of $7.9 million as well as growth of 46% in a present net revenue to $6.4 million.

Your friends in net revenue increases favorably impacted by volume putting ourselves in Brazilian partner beyond.

Cartridge mix, partially offset by an increasing gross net deduction of $4.7 million.

Your friends or gross and that deductions were 43% for the third quarter of 2019, a decrease from 47% in the prior year.

The third quarter 2019 gross to net percentage was favorably impacted by the sale of point $7 million to be which does not have any gross to nets deductions and accounted for approximately a 2% rate favorability, but was more than offset by unexpected increases in our product returns and.

Rebate accruals of point $7 million, having a negative impact on the gross to net percentage of approximately 6%.

We continue to refine our gross net estimates each quarter, which can result in unexpected adjustments like these.

Also please note that wholesaler inventory levels did not significantly change from the second quarter, Therefore, having no significant impact on the third quarter of present revenue.

Inception to date, we've recognized $29.7 million from the United Therapeutics, a license agreement and $9.6 million.

Therapeutics Research agreement, where performance obligations are substantially complete.

This slide shows us versus international revenue mix for the third quarter.

Our U.S. President net revenue of $5.7 million grew by 31% versus the third quarter of 2018 and was impacted by the gross to net accruals just discussed.

Our year to date gross debt rate for the U.S. are friends or revenue was 42% and was favorably impacted by lower rates in the first and second quarters as compared to third quarter.

Below the U.S. are present revenue line you can see that in September we had international net of friends revenue up <unk> point 7 million for the sale to our Brazilian partner be and preparation for the launch as mentioned before sales to be I'm did not have any gross to net deductions.

On the left hand side of this slide shows our cartridge mix and mix favorability versus the third quarter of 2018.

We grew our 12 you cartridges at the fastest rate of 33% followed by the way you cartridges at 15%.

Faster rates of growth had a positive impact on revenue growth due to our 12 unit being priced three times before unit and our eight unit being priced at two times before unit.

The right hand side of this slide shows the same data button for unit cartridge equivalent which is our lowest price cartridge.

The growth rates are still the same but it shows visually had the sale of 12 unit and eight unit cartridges are more impactful to our friends or revenue growth.

For example on the left the 12 unit cartridges had approximately 400000 unit sales in the third quarter of 2019 and it when Equivalized before unit cartridges on the right. It becomes approximately 1.2 million units.

The top table on this slide shows a frezza gross profit or loss and gross margin for the third quarter.

We had a frozen net revenue of $6.4 million and cost of goods sold a $7.1 million.

Included in the cost of goods sold is a 2.75 million dollar onetime charge related to an amendment fee for instance supply agreement with Amphastar or you may recall that we amended our insulin supply agreement in August which allowed us to move $46 million of insulin purchases out of the 2019 to 2020.

Three period to better align our insulin supply with their friends of demand.

Because of this onetime charge the GAAP reported gross loss was point $7 million on a non-GAAP basis without including the onetime charge and cost of goods sold gross profit would have been 2.1 million and would have produced a non-GAAP gross margin of 32.1%.

The third quarter of 2018, we had a gross loss of point 9 million, which reflects the lower level of sales included inventory write offs <unk> point $7 million.

At the bottom. This slide is our gross margin trend for 2019, which has been increasing each quarter from 20.8% in the first quarter, 32.1% in the third quarter as we continue to increase or friends or revenue, while holding manufacturing costs, a fairly steady level quarter to quarter.

We expect sales increases to outpace cost of goods increases in the near term as excess capacity costs are absorbed into inventory, which is expected to produce increasing gross profit.

As revenues rise.

One last item to note we ended the third quarter with $50.4 million of cash cash equivalents restricted cash and short term investments.

This balance is prior to the United Therapeutics milestone payment, we received a $12.5 million in early November .

Thank you now I'll turn it back over to Mike for some additional comments.

Thank you Steve.

Your next slide here, you see that our tier axis have continued to grow just like I. Just previously showed your cartridges and this is on symphony fast data. So this is not adjusted for gross to nets, and what are you continuously as quarter over quarter growth and prescriptions and revenue and we expect to see this in Q4 as we go forward. Despite some of the challenges in sequential growth.

Q3 Q2.

Well I talk about some of the next near term milestones that we look out for the company.

Number one is a Brazil launch they just recently at a conference they're down in Brazil, with all the thought leaders, where they showcase the frezza and introduction of friends into the marketplace.

Number two is initiated initiate our phase three clinical trial in India, which was recently approved a few weeks ago by the FCC, which is the equivalent of the FDA here in the U.S. I want to remind you of this is actually a robust study, where we're going to generate data and another two to 300 patients in the type two setting against oral placebo products Oh placebo.

Oral product standard of care, we look forward to using our new dosing protocol that we saw unfilled Levine results back in Q2, and we think are going to demonstrate a much larger study really Clinton currently strong results for market were 81 million people are living with diabetes with a large majority of an agency attend and out of control when you think back to the Philippines studies.

Average rate once he was a nine we saw 1.6% he won't see reduction in 12 weeks. So we look forward using a protocol and our next phase three trial here.

We also expect the data read out any day now on a type two study where we use dexcom in switching people on insulin that were out of control onto Afrezza. This is referred to as the kept Ms trial and that data, we expect to be presented or early two late mid next year.

I previously just talked about the Blue help pro launch we're in the process of make manufacturing those and getting those into the market in Q1.

We've had several conversations with our partner AMA sell in Australia, we expect to file a physical regulatory approval, there and start to work on ways to build a pharmacoeconomic registry. So we can launch successfully in Australia as appropriate time.

International market expansion is also one of the things as we've demonstrated the partners, we have and get to you knew part as we look to add fred's into other markets around the world.

Every time, we make a decision to go international we know it's a 12 to 24 month timeline lead time by time, you file all the way to getting approval and so it's really important new good tiet identify partners as we think about our growth plans over 2022 to 2024.

Another part that's been important is around short dated product and inventory management. Our side is that we expect approval on exploration dating which will allow us probably another four to five months updating on our inventory by time. It gets the wholesale channel Fortunately with our volumes, where they are today and our manufacturing improvements. We've made we don't expect.

To have any inventory write downs, we continue to go forward.

Ft a feedback.

Pediatric phase three trial the important we wrapped up co were too and we submitted several comments that F.D.A. to confirm that we're comfortable closing out part one of the study before we begin part two and part two is the phase III protocol, which weve given an FDA our draft for comments and we expect those comments back by the end of Q4.

I'm really looking forward to moving the company forward as we think about 2020 beyond refocusing our efforts in 2020 that drive more growth faster and the team is currently working on closing up Q4 strong and making sure. We have a very successful 2020 beyond I want to thank everyone, who worked hard for this quarter and we'll open up for questions.

Thank you if you would like to ask a question. Please signal by pressing star one on your telephone keypad, if you're using speakerphone. Please make sure. Your mute function is turned off your signal to reach our equipment.

Again press Star one to ask a question.

We'll take our first question from Brandon Folkes of Cantor Fitzgerald. Please go ahead. Your line is open.

All right. Thanks for taking my questions and congratulations progressed during the quarter.

Firstly can you just talk about today to you have generated.

Got you are using to help prescribed this was a bit understanding of how to convert patients onto a fraser from the current insulin and any feedback you've received.

From the prescribers since you began this effort. Thank you.

Yeah right of first thank you for initiating coverage I speak I really appreciate it and thank you will also visiting our site up and Denbury.

That's a great question in one of the things I'll tell you know the research I think we're really happy with as we always feel like sometimes we're moving our script set of snail's pace.

Which is which is true because this is a large mark and we should be growing a lot faster, but I'm really proud that some of the insights. We've gained is around the clinical profile Frezza, we don't need additional data to convince doctors that are friends is a great product that's the good news.

A lot of doctors understood. The profiled actually believe it's better a lot of their objections to adoption were related to managed care reimbursement patient onboarding patient dosing patient training, that's very different than talking about clinical data and clinical considerations. The second part of the I mentioned is what you just asked about was the conversion from Kurt.

Insulin to inhaled insulin.

And as as somebody who had fallen to company. After those doctors that we target I was really happy to hear doctors actually understand that conversion feature a lot more because when you look at the latest they don't Afrezza, it's somewhere between a 1.5 and a two and you really got to use each individual patients results to make that judgment call and that's one of the things you'll see into Kipp. This trial, where we took.

People and injectable insulin we converted them at a 1.5 in two inhaled and we'll get those results. Shortly we think there will be very compelling to reinforce this exact nature, but a lot of the doctors, we talk with actually understood how to do to conversion in our messages are resonating with customers in regards to the clinical efficacy and the dosing of the product appropriate dosing, which was a.

Major issue historically, so so we feel good about that I think the proper training around inhalation cough, probably lot more noise on that them than we've seen in the trial and I think thats really important to address but but I think it's a great question I'm really happy that the customer feedback actually did called that out and confirmed that they are starting to understand that more and more.

Great. Thanks, and one follow up you actually just actually kind of my next question is you meant you called out to coughing in your prepared remarks can you just give us some kinda in terms of how you are going to manage that feedback and and how you manage those patients to make sure that they go into trouble for Fraser.

Thank you.

Yes.

Yeah, I think the first thing is we're mining doctors of our clinical trial data, which you know we have thousands of patients who use the frozen trials and then that you saw a 3% call discontinuation rate. So anyone any doctor says Oh I lost a patient for call.

It probably means if there was one patient out of three that they've written there is a problem, meaning they probably either didn't train them properly or they they patient cost they thought they weren't getting the drug we got to give clarity that it's okay to call because one out of four patients will get a cost in the first 30 days, but really getting patients that 30 day adjustment period, we're very few people have.

Coffee after 30 days as they do get a call interment [laughter], it's not a hacking call for mucus producing cost. So I think it's really just clarifying because a lot of doctors are reading the first scrip right now and they don't they all understand that sometimes and so the experienced doctors not as big of an issue. The less experienced doctors is building a confidence I think that's why I highlight does because it just came out there.

Research a little bit more than we expected, but we know from all of our clinical data that it can be addressed and controlled.

The second part it use I'll answer your question is we've actually put things in our and our kept US studies wells are Indian trial on how to address calls if it does occur for example, take a glass awarded before and after and evaluate split dosing. If it's a 20 units of insulin and a meal time take two eats into four to break down the inhalation and blue.

Well I think we'll give proper emulation technique, where someone is trying to nail too strongly they might try to give more forced and is required. So all those things are going to our retraining as we think about our business model next year. It will be really important embedded trainer that goes out educates that patient face to face on those particular issues and I think thats currently really reduce that dropout rate.

Great. Thank you very much.

Thank you again rent.

We will take care.

Okay, all right let's.

Wainwright. Please go ahead your line is okay.

Oh, Thanks Kerry.

I hear you find that you weren't pathway.

So your question.

Just you didn't speak to the gross to net this quarter and some other questions and pull and I'm, just wondering going forward, especially as we head into Q1 2020 and beyond what's in it sounds like some changes to the freight Krug, maybe Copel program can you just talked about how we should model.

Scripts translating to revenue with your best guess at this point going for.

Yeah, I I wouldn't until we identify the new line New program that we're going to be Lucky I, what didn't adjust your model yet Oh, yes.

Hi, we're going to feedback loop give me one second.

Okay that is now I wouldn't just your model yet because Q4, we wouldn't expect any major shifts from Q3 I think by the time, we'd get to the Q4 earnings call. We'll have clarity for you on how to interpret that I can tell you. One thing we're considering we used to have approached we started program. We just don't promoted as much as a free goods program and that was.

Managed through our reimbursement hub and that's at our Cogs as opposed to a retail prescription cost. So the cost dramatically dropped by two thirds just by moving it from one platform to another.

But before we do something like that we want to make sure all the kings, who worked out and that is going to be able to launch successfully I'm. So I wouldn't change anything yet, but know that will bring you clarity either in term before but once as it gets implemented or as we get to the earnings call.

We will now take our next question from Pasha, So rough.

The B. They rink. Please go ahead your line is open.

Hi, this is doing a pretty sitting in for Pasha.

One of sort of gets a little more clarity around Brazil, what the early market looks like what the potential ramp looks up might look like and then walk us a little bit how you guys are recognizing revenue.

Part of the partnership.

Oh on Brazil, They just got the products of customs a couple weeks ago. So I don't want to come and yet on the launch plans I know there, finishing up pricing negotiations with the government I think until that happens you know we're just we know there's a lot of excitement down there.

But I think we need another month or so just to get the feedback on how that flows out but otherwise products down there it's gone through customs it's in their warehouse.

And I'll take the second piece of that deal and so we recognize revenue when we ship the product.

I had it off to our partner be own.

They take.

Possession of it as a ships out of the United States.

There's no right of return on the products. So that's why we recognize it right away. We also don't have any gross to nets, theres, no rebates or anything associated with it.

Right. Thank you very much.

We will now take our next question from Bert Hazlett of P.T.O.G. Please go ahead. Your line is open.

Thanks, Thanks for taking the question.

Just with regard to <unk>.

I will be on <unk> and <unk> and.

The the revenue there I mean, I've a couple of different questions.

Should we be considering the gross to net being exactly the same as it was this quarter or how should we think about gross to net with that particular component of revenue going forward.

To answer that.

So a bird we tried to identify the U.S. afrezza only gross to nets on.

Slide which was at 45% for the quarter, so it's a little bit higher.

It actually created a 2% favorability for us.

Also we talked about this quarter, having some unexpected.

Accruals that we took into the gross to net so we don't.

Project out and we don't try to.

To do that as a general rules so.

So you can look at the prior quarters.

I wish you a day basis, we had a 42% gross to net.

They're going to jump around a little bit so.

I hope that helps.

Okay. Thank you say we only.

Seem to be as high as it wasn't country, but until we get the Q4, we can't can't really gets it.

Okay. Then then with regard to United Therapeutics, what are the particular, what the pacing that weekend.

You're expecting from from the two possible Technosphere program, how long will be the clinical effort take and and ER and anything where you can provide along the trajectory of the timeline that would be helpful.

Yeah, I I can say a couple of things everything's on track a to date. So there's nothing that from what we laid out a year ago to today. We've been actually ahead of schedule on certain manufacturing attributes products are up on stability. The plants built we were ready for at the inspection whenever that occurs that's all very strong the clinical trial is ongoing.

And with Trinity is a a number of their seven sites or 12 sites, but they have enough sites up enrolling patients are enrolling I know that preliminary feedback that we're hearing anecdotally is extremely positive some of the quotes I I won't get into here, but the quotes from the patients are heartbreaking at the end of the Dave How this is impacting their life. So we remain very very excited about getting.

Mr. patients because we believe being able to those higher levels Ultrapar no will be important in this trial lets you allow people. After I think a couple weeks dosing to go to higher doses in the trial and follow up port for a while that's the pivotal trial on the switch study. The next part will be running here in a few weeks will be the human factor study mankind's running that based on our.

History of our dreamboat device.

Our team is fully capable of doing that study I don't expect lot of risk it should be relatively easy to do.

That will be happening here in L.A. and a few weeks with people living with pulmonary hypertension and then after all this is done early next year will want to PK study and that will be the pivotal PK as it was all of the dosing we're doing now and the preliminary data we have previously and once that's done will pretty much start to wrap up a final any final atrophy.

So the product and get ready to file so I'm not a lot left its really just time consuming more than anything but theres nothing here, that's freight limiting beyond what we had to do first was getting manufacturing batches up on stability.

So just to follow on that there's a discussions on the arts therapeutics call about material label expansion for takeaway so.

Are you expecting to be able to participate in that label expansion and if so how and if not if you have to do additional work.

Could you just described.

<unk> plans for for that additional work as well.

I think there was saying you may need a bigger boat so depending on label expansion, what they're going after you know we build our plant to serve the current capacity of what we expect the triplet tyvaso market if that label expansion dramatically improve their population penetration such as the CBD and.

Early treatment of ph, then that will dramatically increase the potential to try to royalties that we would expect at some point I can walk you through just how that happens so they'll get their label update for Tyvaso.

And tried TV and then our label will be a five if I'd be to that label. So when if you look back and growth hormone I did this where we got approved with two indications. Our competition has five other indications because we were five a fight B. We filed an amended application got off all seven indications it will be very similar process. Here is the question is does it happened before or.

After trustee approval and that's going to drive the strategy, meaning if the if they're expanded label happens before our approval by default, we should get that label I'm not aware of anything that's different that wouldn't apply to us if if our approval happens and then their label prove what happens after we'd have to file an amendment to our application and get the label expansion, but.

It would apply to try to the short answer.

Okay. Thank you that's helpful. Just one more for me.

Just could you give them a little more granularity on on the changes in in marketing effort that you were referring to from from Q3 to Q4, just a little bit more granularity as a it on what you were discussing in the prepared remarks.

Yeah.

I think part when we did research in.

Late July August we got the result, and I think I presented one slide back in September , which I'm happy to share with you offline.

But it really showed that on 11 out of 13 attributes doctors understood. A phrase it was it was as good or better than the standard of care. The two areas that came in a little weaker were around dosing and the second one was around managed care coverage in managed care coverage is way more important dosing because the dosing one is solved with experience we haven't updated the support that one the managed care.

And what's frustrating for us because we had launched several programs. This year that we felt addressed this injection and and so when we went out and talk to some of the customers. We realized while we may have the right tools, how they were being communicated in how they were being marketed through the sales force was off a little bit and so that's where the marketing can quickly came together with the.

A change in marketing that we made that we have several new members in the marketing team in Q3. They came together and re launched a set of new materials, probably focused around reimbursement support prior authorization checklist simple things like that every messaging around our co pay card and the bridge program and we saw an immediate impact of that the following three four weeks post sales meeting so incept.

Remember, we actually retrained all of our Salesforce in two to three day meetings.

And separate weeks across the month of September and so they have all that new materials that they can now world to their customers and some of that was ever. Additionally around messaging around patient Paypal type, one and a patient type on tied to and getting more specific of who is the appropriate patient for afrezza. So all that information literally rolled out.

Second and third week of September it was being implemented we saw some some nice nice trends as we exit September came into October . So I hope that gives you some clarity, but was really focused on managed care and how to make sure that patients are covered and that's one of our frustrations as doctors give you this excuse and I understand why and then you know we don't.

Always have no no prior authorization.

That we look at our piece for CBS or you are United Health care Optum, they're pretty much a prior off the label and given the 80% of that people on insulin aren't a goal it pretty much get approved and we've been talking to payers about removing those ph completely as we go into 2020, and we'll continue to enhance the managed care situation.

As we go forward and like I said I've talked to Prime Therapeutics Optum CBS side on the last three weeks. So we're continuing to look at and how we enhance Medicare coverage and how we get these these prior auths perceptions removed the reduced so including last week I was at a payer aboard with 15 payers getting really direct feedback on our budget impact model and how we can move this.

Forward as it's been three years, and it's really ridiculous that somebody's criteria still out there, but we've got to remove barriers that exists for the providers, either creating a better mouse trap to get them through and help them or just getting a completely removed from the marketplace. So that theres no prior hospital.

So we think that's possible we seem to happen in a few plans and and we know 70% of script should go through within a couple of days upon p. submission. So so we feel good about the ability there's much more around the communication.

Okay. Thank you for the coal.

Thank you.

There are no further questions or and I do apologize if you're still listening we Oh, we lost you on the Q. So we could talk offline if there's any other questions. Thank you.

I would now like it's hard to call back over to our speakers for any final closing remarks.

Thank you no other questions.

Think were good.

Thank you everyone have a great afternoon anything.

This concludes today's call. Thank you for your participation you may now disconnect.