Q3 2020 MannKind Corp Earnings Call

[music].

Please standby tickets.

Good day, everyone and welcome to the Mankind Corporation third quarter 2020 earnings call.

As a reminder, this call is being recorded on November 4th 2020, and will be available for playback on the mankind Corporation website. Shortly after the conclusion of this call until November 18th 2020.

This call will contain forward looking statements such forward looking statements are subject to risk and uncertainty, which could cause actual results to differ materially from they they stated expectations.

For further information on the company's risk factors. Please see their 10-Q reports filed with the Securities and Exchange Commission. This afternoon, the earnings release and the slides prepared for this presentation joining us today for mankind, our Chief Executive Officer, Michael Yes, Tanya that's Chief Financial Officer, Steven Binder, I would now like turn.

The conference over to Mr. guess Tanya. Please go ahead Sir.

Right, but given that you're looking for going into what appears to be a good luck.

Watson dagger.

As we get into the agenda. We're gonna go through Q3 highlights the financial groups, even Q4 expectations on the culinary.

Your line people about our mission, which is really to get people controlled or help the freedom to live life and you called out like what do you mean.

Our technology really hopefully quick relief, Oh, Pete patient symptoms, such as high sugar pulmonary hypertension and migrating almost at the onset of action and being able to correct that with a quick inhalation using our platform.

We're excited to continue expanding our technology into other assets as you can see the movie R&D forward.

Well he was doing <unk> recent New addition to our team Dr., Kevin probably the mid you know will be our head of medical Affairs and safety and next week, we expect also announced a new head of regulatory.

Yeah, Kevin has 25 years of pediatric endocrinology experience, which we thought was very valuable given our direction moving further into pediatrics and 2021 evolve.

Well respected as a thought leader yet Oh, Dear broke records here in California industry in the children's health globally.

What do you mean or medical affairs expanded field medical team for safety in ER Pediatrics program.

Let me talk about a few of the Q3 highlights.

<unk> for the third quarter net revenue of 7.3 million was 27% ahead of Q3 of 2019.

The new U.S., our total prescriptions grew 8% and sequentially, 3% computer to.

The market was down 3% over a year a year over year for rapid acting analog.

And 2% quarter to quarter, respectively. So we're outpacing the market shrinkage and we're continuing to grow year over year, despite the headwinds that over 19%.

Access is continuing to open up for our Brookfield reps, reaching customers in the field, obviously certain areas the country are more difficult than others, but our team has done a very decent job given the difficulties certainly difficult circumstances they face.

Are you a September year to date net revenue is 22.1 million or 31% versus 2019, and our trends are starting to pick up nicely in Q4, as we hope to see I wouldn't see scripts coming up this Friday.

Our United Therapeutics collaboration with Trinity remains on track to complete the critical and big ones here in Q4, and we recently received a 1.2 million dollar purchase order for clinical supplies as we get to Q4 and 2021 and beyond.

Our cash at the end of the quarter with 52.7 million and we used 13.5 million in operating activities.

We also reduced our debt by 2.6 million up to a lower by prepaying or just under promissory notes.

Ahead of schedule.

When we look at our far they have the green light years at our Axis and our Magenta line here is to act as you can see we are stable throughout Q3 slightly growing well.

Do the money, there's a small data issues here at the end of September but net net you can see our affairs aligns it started to turn back in the right direction at 344 as of last week and 799, we expect to continue to see that trend as we go through Q4, However, I will highlight some differences we'll see over the next few weeks and months as we end our free bridge plugs.

At the end of the call.

Our clinical programs are tracking to a fourth quarter completion I tried to outline here for you. The four key because little things we need to complete by the end of this year number one is the breeze trial, which is almost complete enrollment that got the wrap up here in Q4.

That's being led by unit there.

The second is the pivotal PK trial, which is now complete and we study reports currently being written up.

The human factor studies that mankind is wrapping up as we speak and we expect that will be done by next week. We will study report two here in Q4.

And our stability program, which Mannkinds also responsible for wrap up in the next three or four weeks. So as you can see the four critical things that lead to a truck t. filing in early 2021 will be completed here in the fourth quarter well.

We're also excited because the increase potential that trip T has for the in interstitial lung disease indication as you T. expects a pool for today. So in in April 2021, well.

The hearing back in terms of business get filed in our label proactively or do we have to do additional work well know that very shortly.

I'd like to turn it over to Steve to talk about our financials.

Thanks, Mike and good afternoon very.

Very pleased to review our third quarter end September year to 2020 financial results, which show continued U.S. <unk> net revenue growth.

A further gross margin expansion rising above the 50% Mark for the first time.

And our continued focus on efficiently managing our cash resources.

Well be discussing select financial highlights and that's what you supplement this call, but in the condensed consolidated financial statements and then be in a contained in our 10-Q, which was filed with the FCC. This afternoon.

Let's start with looking at revenues for the third quarter and September year to date.

And with the table on the left which is our third quarter results.

The present net revenue was $70.3 million versus 5.7 million in 2019, a growth rate of 27%.

The increase was driven by volume growth from underlying to present prescription demand, which was up 8% year over year.

Price, including a more favorable gross to net percentage and.

And the continuation of the favorable mix of higher infant cartridges.

Please note that a reduction of $8.3 million in wholesale inventories occurred between June 30. It in September Thirtyth 2020, adversely impacting our volume growth.

The COVID-19 pandemic continues to impact our sales and marketing efforts in the third quarter because.

Physician access, including both face to face and digital interaction, it's constrained in varying degrees between different geographies, which impacted the effectiveness of our sales and marketing efforts. We continue to see an impact on renewal spreads. It starts some patients were reluctant to give a good position to minimize the exposure the code red.

As well as physicians, increasing the use of telehealth.

Please note that we do not have an international affiliate revenue in the third quarter of 2020, but did have revenues of $8.7 million in third quarter of 2019, which was our first sale that's likely to be on our Brazilian commercial partner wouldn't.

I didn't get the September year to do comparisons for flags in the table to the right.

Yes for the net revenue grew 31% versus 2018, driven by volume mix and price.

Gross to nets were 41% for the third quarter, which was slightly favorable to our expected range of 42% to 44% and favorable to 2019 by 2% and demonstrates the impact of our efforts to lower gross to nets you.

September year to date gross to nets came in at the lower end of the expected range at 42%.

Revenue from collaboration services was 8.1 million for the third quarter of 2020 versus 8.2 million for 2019 for September year to date revenue with 24.4 million goes to 29.5 million for 2019. So.

A reduction in the September year to date revenue year over year was expected and was mainly due to the recognition of the $10 million United Therapeutics Research agreement over the period of the fourth quarter 2018 to the second quarter 2019, when our performance obligations will substantially complete.

This shot and so this slide shows an example of one of our commercial initiatives to lower our gross to nets.

Using full line wholesalers is very expensive for small biopharmaceutical companies like mankind.

So we've been shifting prescription fulfillment from retail to specialty pharmacies.

Lets you pharmacies purchase of present directly from mankind and not through a wholesaler they have lower fees and generally they have minimal product returns, which improves our gross to nets.

You can see from the graph, we have increased specialty pharmacies shipments each quarter in 2020, we came into the year with 6% of shipments going through specialty pharmacies, increasing to 8% in the first quarter.

15% in the second quarter.

72% in the third quarter and in October we saw 20% of shipments go through specialty pharmacies.

We have shown on the next slide at almost every quarterly earnings call over the last two years, it's that important a factor on our says that net revenue growth story.

This graph shows how our product mix continued the favorable impact on the other revenue growth in the September year to date period.

Our success the messaging to physicians enhance patient understanding of a product and resulted in more appropriate starting doses for patients as well as subsequent titration to higher doses.

This is driven the 12 unit and eight unit cartridge growth rate faster than the four unit.

As a reminder, our 12 unit cartridge is probably three times the core unit cartridge and the aging of cultures. This post the two times affording the cartridge.

Faster growth of the higher unit cartridges results in higher growth, we're going to spread the revenue as compared to prescription growth.

Although federal revenues have been increasing so if gross margins. This table shows gross margins in the first quarter of 2019, the third quarter of 2020 or our gross margin top 50% for the first time.

We have had and continue to have excess manufacturing capacity, which results in our cost of goods remained relatively flat quarter to quarter due to production volumes remain significantly lower than our production capacity.

This results in a majority of manufacturing expenses being recognized as cost of goods in the quarter incurred.

As tread deep clinical product production has ramped up in 2020, we are now able to absorb costs over two products being manufactured at our Danbury facility, resulting in a favorable impact on the does the cost of goods sold as you can see from the reduction in the first through third quarters of 2020.

Please note that the first quarter of 2020 included an inventory write off of a half million dollars.

On a non-GAAP basis first quarter 2020 cost to goods without the inventory write off would have been $3.7 million.

Moving on to operating cash efficiency I mean, that's why we are comparing September year to date 20, 20% 2019 versus 2018.

Top of each vertical bar is affecting net revenue, which has doubled in two years to $22.3 million in the bottom is non gap net cash used in operating activities, which has decreased by 45% in two years.

The increase in the present net revenue helps drive down the cash burn, but to a larger extent, we've been laser focused on managing our operating expenses and it shows in the reduction to $40.9 million for the nine months ended September Thirtyth 2020.

Looking at this information is slightly differently at the bottom of the slide to show our average quarterly non-GAAP net cash used in operating activities.

I've been running fairly steady in 2020 on a quarter by quarter basis, where the average quarterly amount of 13.6 million, while the actual third quarter 2020 amount was $13.5 million.

Before handing the presentation back to Mike, Let me summarize the third quarter financial progress.

First we had excellent U.S. affecting net revenue growth, even when continued to experience headwinds and the COVID-19 pandemic.

Second manufacturing trip to this important nice they're big Therapeutics clinical trials has allowed our manufacturing sites to absorb fixed overhead cost, which is basically impact would be if the gross margin.

And lastly, we remain extremely diligent managing our cash well supported commercial efforts to grow forever.

Quite trip T clinical products, United Therapeutics, and move our pipeline forward.

Thank you and now I will turn it back over to Mike for some additional comments.

Thank you Steve.

Let's talk about growing our future together and where we're heading as its close out here in Q4 and start to move in 2021 first we completed our commercial and our medical team expansion by having 26 new employees in Q3 in early Q4 alone with several committed employees, we expect to start over the next few weeks.

We are expanding our integrated care model to improve the patient experience for afrezza as well as the margins on the product Afrezza assist you've heard us talk about recently, which will streamline the reimbursement support program, which was launched here in Q3 and it being fine tuned in Q4, where they're really an automated process when it comes to the prior authorizations and Utica.

Patient of free goods.

Additionally, we're putting the final touches our tele health collaborations with up script, which was leaks are launching we've had the opportunity to also talk to another telehealth provider called study health is already doing a freezer prescriptions via telehealth here in California, and Washington State and they're very excited about what they're seeing in the early results.

Third we are transitioning our bridge program, which is also known as our free goods and shows up in our weekly prescriptions.

To a physicist which will ultimately push these prescriptions into a channel that you no longer see in Symphony and then they'll show up directly to us, but it will not be county in terms of weekly prescriptions new patients ended yesterday.

To me and all patients we expect in the free goods program to end by 12 31 2020.

There will be some impact and our accident year. It's over the next 12 weeks, but we don't expect any negative impact on revenue because easily to be converted from free goods to paid prescriptions are we expect people to do the prior off and we see a good 50% to 80% somebody's far off to get approved in the free goods program.

And then second these patients I will go and stay on drug, but they're already free to that they were not impacting our revenues. We deduct. These prescriptions before we report revenue and wall to Wall Street.

We also plan to enhance our product distribution model to lower costs and improve patient access as Steve talked about 22 cents of every dollar is right now dedicated to the wholesale channel and returns.

I think that could be dramatically improved by looking at ways, such as consignment inventory model, which will minimize returns and the fees will be at or Cogs as opposed to a prescription to go through the wholesaler.

They were very extensive prescriptions I go through the free goods program, we hope to minimize our costs and the fees associated with those prescriptions in the coming quarters.

Next we are we have changed our sample program on our sample volume will be reduced by half, which we expect will result in better patient initiation as they get a new 27 count penetration sample pack launched which should a streamline prescribing and be put less samples into the marketplace. We really expect the sample packs to get the patient started for the first seven days and then from.

There are no afrezza since program will ship product directly to the patient while the prior off is being completed in that seven day time period.

We also are ready to launch a big Alpro, obviously because of the slow that down but weve already started work on 2.0, which will be ddos detection and integration hopefully with the Dexcom apiay for continuous CGM monitoring along with overlay of dosing data with Afrezza.

We have six new publications that we believe will be accepted and published here in Q4. In addition to the 14, new scientific releases. We've had in 2020 as we talked about on previous calls one of the biggest factors we need to do with the phrases education market and all the safety and efficacy aspects of the product and just the last two weeks I've had many calls.

The V.A. system and deal and Kaiser and many other key thought leaders around the country were really trying to do a much better job of getting our information in front of the way people.

We expect our pediatric phase three study protocol, we solidify that to the FDA here in Q4 and in the late stages of picking a name for this study as well with euro and once we get the feedback we will decide when to start that trial pending the coated issues that exist in two clinical trials. These days.

What to expect in terms of Propofol all here in Q4, one we expect the fourth milestone to come in at 12.5 million man.

We anticipate shipping an additional 800000 hours and clinical inventory in Q4 and wants to pay additional purchases in 2021 as you to explores I'll be and continuation of the existing patients and the breeze extension as well as prepared preparation for the approval and building launch inventory.

We expect to complete all clinical CMC work here to support the mandates mission as I said stated here in Q4.

As you May have heard this week unit or expects to file thrifty by April 2021, with NFC approval in late 21 or early 22.

With Tyvaso, so net net.

Label expansion for Aiotv is expected in April 2021 reason, that's important Darden no currently approved treatments for this whr grew three which is 30000 patients today tyvaso bills. Their sales on 3000 patient. This is 10 times larger than where they are today and this is really an important opportunity for Trinity we have a pay.

Planned study a UTI has a planned study for Greece to if it's needed pending FDA feedback on our filing strategy here very shortly.

United Therapeutics expects additional read outs for P.H.C. or PD.

Well see F. L D, which are all upside on our current truck key assumptions.

I want to bridge over to the pipeline on Technosphere. We just completed formulation work on two new opportunities, which we'll talk about in early Q1, and we're progressing single chip can forward. It just completed large animal testing and preliminary results look very positive to keep going forward, we will give it.

Further update here in early 2021 on the pipeline as we go through a prioritization exercise to bring more clarity to the market place around which compounds are moving where and when bill. Some of these new assets were starting to develop.

The next question, we always get is around capital expectations. As he showed you would continue to be very prudent and reducing our cash burn managing it very tightly and we have not had any major fundraisers and almost two years.

We ended Q3 with $52.7 million, we expect the Q4 milestone of 12.5.

Midcap has a third troughs available to us at $25 million between now and the first half of 2021 subject to milestones conditions.

We are exploring a sale leaseback of the Denbury facility, we will retain the facility, but sell it to two investor and then Lisa back. The early stages. This is an early stages. The feedback has been very positive.

We continue to look for operating efficiency opportunities to drive both top and bottom line growth a decrease in our gross to nets to manage our cash spend tightly and finding ways to accelerate revenue growth as evidenced by our recent hires in the field, who knows they take time to get up to speed, but that expansion to 11, New states should start to pay off here in Q4, and Q1 and beyond.

So at least probably showed our transformation our revenue growth drivers are now finally, starting to deliver shareholder value as we look at our performance this year and all the way to us that we have coming in terms of the Technosphere platform continues to move other assets forward, our U.S. afrezza for adults with growing year over year. Despite the cobot challenges the industry faces our.

Our pipeline is moving nicely forward here were trapped tea, we are looking at additional collaborations with other companies.

The president National expansion, obviously has been impacted but the trial in India is ethical underway here in November if all goes well our fit for the pediatric program is moving forward as planned here in a flat file this with the FDA at the end of Q4 and start a phase three trial in the near future.

Overall, we feel very good about where we are on it. Thank all of our employees, our shareholders and our patients for enabling us to continue to be successful and grow despite the challenges we're all facing.

I think we'll open up the chemo.

Sounds good. Thank you if you'd like to ask a question. Please.

Our one on your telephone keypad.

Isn't a speaker phone please.

Please make sure your mute function is turned off to life.

Yes, once again Thats star one.

Well take our first question from Brandon <unk> from Cantor Fitzgerald.

Hi, Thanks for taking my question and congratulations on that will be quarter.

Maybe for.

Can you just talk a little bit about how you think about that.

For now in terms of the Adlakha bid and yeah.

Okay, and maybe just any color on capex.

If you were to address it is adding new territory.

Yeah.

Additional risks and really probably territory here, you're just increasing their core points there and following on from that yet.

Actually the guidance 2021 Penny stocks you just talk about some of the areas you may begin.

Next year. Thank you.

Right now so I missed the 2021 part.

I just area of the business you got to look to invest behind in 20 or what was your thought okay fine and 2021.

Great. Thank you I'm sure somebody give some color on the Salesforce expansion. So we made a decision in Q2 to expand our sales force we hired a quite a few people in Q2, we trained them in Q3 and they're out there now now running we've also expanded our medical team. So we have more medical liaison.

Doom medical education to providers here, we still have one or two of them, we will be starting very shortly and so that's another big expansion as we think one of the key parts of Afrezza is we're finding physicians just aren't aware of our data, but they want to learn more they want to understand how to prescribe that and inviting us out. So I think thats exciting I talked to a position today was given for Grand rounds and then.

Three weeks and front there is a big part of it. That's just one example, where having more people on the bus allows us to get in front of these docs, who are getting round. Another talks to ensure afrezza is now being highlighted as one of the new ultra wrapping it turns out there so that's exciting.

The other part is the expansion has been that the commercial team. So we you know we get a lot of feedback what are we doing online. So when you think about 2021 I think we can scale up online presence, even more because we know the salesforce as much as we try on the coated the impacts you know we're going to be bumped a little bit as we sit down there's lockdowns them and opening closing and academic centers. So one of the areas we're really focused.

One is increasing education amongst the diabetes educators as.

As well as Simi education, as well as online engagement with patients and so that's really what you're seeing the telehealth launch how do you find people online we're struggling make sure they're they're clicking on our ads and pulling through in the Tele health. How we just raise awareness amongst patient advocates that are out there and all the third party websites that we just haven't had a strong presence in.

But we now have more more patients coming in the product everyday we say, we got to get the thousand patients who got a share that news and so we're training and enable those people to do that more effectively.

So I think thats little bit we'll see in 2021 on the medical side I will probably look at some new analysis of our data to get some new research publications and presentations next year and we're also looking to may be running some small studies.

To answer a couple of questions. We have a non answer yet in some of our pipeline opportunities with with the president as well as the pipeline.

In terms of capital allocation, there's not a lot of expense to move some of the pipeline assets forward. We think that can be offset just managing our cash balance and I think as you see tracked p. launch and our pipeline move forward there'll be coinciding each other as as the pipeline news and from phase one to phase two dose phase two studies should come into play roughly after that.

He is launching generating cash and their companies. So we're trying to manage everything to make them think as we continue to build that out and create shareholder value.

Great. Thank you very much.

Oh.

Well move next to attack Thomas.

<unk>.

Hey, guys. Good afternoon. Thanks for taking the questions just a couple on my end personally Betsy.

Can you talk about some of the work you're doing on the manufacturing side to prepare for the potential approval and commercialization sounds like it could come in 2021 or early 2002.

And then you mentioned United's planning the breeze through trial, obviously, they're running the clinical development program, but can you talk about how you think about their strategy to expand the Trinity label beyond the initial ph indication.

Sure.

On the manufacturing side, we completed the build out of the factory news late last year or so.

That was a multimillion dollar investment and thus its one project. That's completed so weve made commercial supplies within that batch are we waiting for one piece of equipment coming to finalize a then the package. So that's all here and we're just wrapping all that up here between now and then to be here. So the factory work should be in a place to start to make.

You know scalable commercial supplies here in the roughly January timeframe. So.

So we'll be ready to go on that one.

On the Breeze, and new T., leading the filing what I would say is we're more aligned on their perspective of how they think about the label how we're approaching the FDA with getting I'll be in the label and remember we're filing tread t. as in India, not a final five b. So that gives us a little more flexibility around reference in terms of beauty is the owner of the aisle D.

Data as well as the ph indication and there's there's a small chance that we have to do the breeze plenty to get diabetes and there's a chance the FDA will allow us to file with the I'll be in the label we are waiting for half the feedback on that and logically. It makes sense you should be able to move forward.

And I think that will be in lockstep with the FDA in UTI to make a decision on but we'll have that pretty much in early Q1, who don't get more clarity to there, but it does imply perspective, it's today. So it looks good and I'll be direct t. looks good relative to today, so there shouldn't be additional or much additional work required and we'll do that I'll be indication.

Got it got it and just okay. Great. Thank you. Some you know you give a little more color on that we're including different types of ph subgroups in our human factor study. So we will have human factors data, which is probably one of the bigger things with the FDA for I'll do it right and that sort of rigid additional indications beyond just people until they sell.

So that's just other ways, we are preparing to make sure we are ready to go.

Got it got it thanks, Mike I appreciate the color thanks for taking the questions.

Thank you.

Well no Nextel Peru.

Yeah.

Yeah. Thanks appreciate all the color here just to follow up on that one of discard.

Discussion what would the briefs to the design.

Going look like [laughter] do you have any sense of a plan for that at this point.

I think I don't have a a black and white answer on December I think it'll be a small study like you saw with our Breeze one study.

The question is is probably more naive patients than a switch my guess.

But I think that's going to be dependent up the feedback, but but I think you know the real question right now do we need to do Breeze to we're ready to go in the event, we need to as we don't want to lose any time in getting this in new truck T. label and so I think that's the first question is do we need to do breeze to and if we do we're ready to go and if we don't we plan to file with high on the label for.

Hopefully 2021 launch.

Okay, great. Thanks for that and then you know the.

Screaming contemplate.

Other research programs and efforts that you haven't disclosed any chance on any visibility on those other efforts in the not too distant future.

You know what I would say is you know we're all focused maybe should tread t. hits, its timelines and gets to patients as soon as possible. We met with your T. Many times on other ideas and other assets I won't talk much about that I think let's get through Trinity I think you know hopefully this is a you know the plan here is not to be a one and done in partnership with UTI.

Specked. This places our platform exclusively for ph and we would expect to find more opportunities to help patients engage with with other products. So.

I think let's get to tee off the ground and I think the rest will have further discussions and and guidance on.

All right terrific. Thanks, that's it for me.

Thank you Brett.

And well move next to Steven Lichtman with Oppenheimer and company.

Thank you hi, guys.

Are you talking eight you started you talked about the star excuse me of a phrase as history here keep after getting through the mechanics of that.

In terms of the the P. now.

And also the just the benefits that you see in terms of you really opening up access.

Yeah, and Steve I apologize.

I haven't seen an issue its own so to our shareholders and analysts on the phone I apologize if I broke up a little bit we'll look into this for next time.

I think when I heard you ask as the mechanics of a friend to assist and the benefits that I see of the program in terms of the process.

So the mechanics are if you've heard of something like cover my meds, its very similar but streamline so dr. Lee prescribed to a central pharmacy.

Pharmacy and that pharmacy, then it automatically giving if any is it goes through with no P.H. ASCO showing gets filled it does appear to be required. If he gets immediately email to the doctor and then from there. They filled now it goes electronically into the payer and we most of the time. These are proved within a day or two so we think snacks 72 hours.

If you're not approved within 72 hours. After submission we will provide a free code for free drug to get the patient started quickly while we will await the answer but the answer is negative.

More people are the Doctor lumps offs, obviously, we'll peel it we do see maybe 20% of patients have to go through an appeal.

About 80% of the people generally either get it right away with no P.I., Florida peers approved within a couple of days. So we believe eight out of 10 patients will go through automatically through this new process and will be streamlined directly to a pharmacy benefit that on the other side of this is a pharmacy is used to seeing a present prescription is written wrong, we'll get it correctly with the doctor immediately.

We don't have it in inventory within a day. So there's no long term wait for the patient and then we think as we launched a tele health model, they're going on not a one they're not going to want to go to a walgreens or CBS right, they're going to want to go and have a directly meal through a third party. So that's also streamlining that aspect for the patient with the telehealth model as well as the direct streamline prescribing.

So we're trying to make it easy for patients to get a friendly easy to get the refills along with one of these will get here is the ability and the consent.

To follow up with patients to make sure. They stay on the drug we train them in person and if there's any other challenges we face that we have the ability to reach out to them and that's another big part of our model in the future and leveraging our new home that we built to help is difficult cases on to make sure patients you know one anguish give access to the drug.

And you know it's interesting some of the payers are contacting us I'm trying to think about ways to.

Who referred to up in the category maybe to preferred from non preferred that'll be exciting if that happens and we recently got notification that CMS is going to remove the injectable restrictions for afrezza. When it comes to getting CGM right. Now CGM was in Medicare was only dedicated if you run injectable insulin that will be changed in coming years.

With the period, where our inhaled insulin loss will be added to the to the criteria or bill just remove the word injectables reality, how that will flow through.

So we're having good discussions there and we're also looking to try to ensure their Medicare patients have access under the new Medicare claims come from savings in 2021 or 2022, so a lot on the access side and ultimately that's really we're trying to do is to streamline this perception because that's one of the reasons doctors tell us to hold them back and we think we can fix this and they tell you.

The or take the barrier question access barrier question away than the rest of its really not for US you know.

900 prescribed the drug in touch with the drug and that's that's getting easier by the day with the new sample pack. So.

So long winded answer to an important question, but I, we hired some great people here from other competing companies in terms of the diabetes space and I feel very good about the team we have in place to run. This program. So I'm looking forward to get no scrip.

Great. Thanks, Mike.

Thank you.

Well move on to the next Oh, Okay. It looks like your back so that's one.

[laughter] well take a hot summer.

Hi, Thanks, Thanks for that sorry, I meant to ask a question about gross margin and congratulation on the progress with that first and foremost so pretty impressive over the past couple of quarters.

Is there more room weren't more leverage there, especially as you think about additional capabilities coming on board with a with trachea and.

And the other programs.

I believe its Steve Yes, there certainly is and you know when I looked at our costs and you look at the order trending for Afrezza. According to 4 million a quarter range and.

[music] millions for collaboration services that gets adjusted a little bit if we have to add some additional resources for commercial manufacturing, but generally that's not going to change.

In the short term so.

Well take a model and the model out what our revenues are going even gonna see where our costs are going to be.

Got it thanks.

[laughter], sorry, somebody I think we'll put the tables or wait to get this EBITDA.

No 70, 80% range as we keep going forward. There's no reason it doesn't can drop into the bottom line and yes.

So that's as far as getting efficiencies in the factories second the trustee and as Steve said, we will continue to move this more direction.

Thank you.

That I don't see any more questions here. So I want to thank I know what allows the warm with something else I appreciate the message here.

So we will wrap up the call are available for any questions for ounce will follow up and then the shareholders feel free to email us we'll try to get back to you in a three rows and when answering questions. You have but we are looking forward to wrapping up here Q4, and 2020, putting this behind us and getting ready for an exciting 2021 is we anticipate using a a trip T program forward.

A further and international market opportunity that exists so well watch list. So they get everybody be safe out there and I look forward to talking to you hopefully.

The new year.

Everyone that concludes our conference call for today. Thank you all for your participation.

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Oh.

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