Q2 2023 MannKind Corporation Earnings Call
Okay.
Good afternoon, and work with the Mannkind Corporation 2023 second quarter financial results earnings call.
As a reminder, this call is being recorded on August seven 2023, and will be available for playback on Mannkind Corporation website. Shortly after the conclusion of this call until August 21 2023.
This call will contain forward looking statements such forward.
Looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations.
For further information on the company's risk factors. Please see their 10-Q report filed with the Securities and Exchange Commission. This afternoon, the earnings release and the slides prepared for this presentation.
Joining us today from Mannkind are Chief Executive Officer, Michael Castagna, and Chief Financial Officer, Steve Binder, I would now like to turn the call over to Mr. Cause Tanya. Please go ahead Sir.
Thank you and thank you everyone happy afternoon.
It was a year ago in Q2, when we were notified that United Therapeutics got FDA approval for <unk> based on DPI at that time, we said that would put us on the path to profitability and as we kick off a year. Later, we are proud to say that we've achieved our first operating income.
A long term sustainable company, which helps us to live our mission ultimately give people control of their health and the freedom to live life.
Today, we probably have between 15% to 20000 people, taking one of our diabetes products, nor thousands of people benefiting from debates on PPI, we're really proud of all the hard work and we're really excited to share this quarter's earnings with you.
Let me first start off by a couple of highlights here in Q2.
<unk> lung disease business is off and running.
<unk> Therapeutics is doing an amazing job strong patient demand received royalty revenue of $19 million or 63% growth just over the first quarter. We also took a step to improve manufacturing capacity through efficiencies and yield increasing that by about 250%.
Additionally, our orphan loan pipeline is starting to come into the purview, we expect that <unk>. These files going into phase, one and phase III in the next 12 months.
101, as we notified you previously there was a fire. Unfortunately, we are now moving GMP manufacturing to Danbury, Connecticut. Unfortunately, we have facilities, there where it can move the equipment into our chronic Tox study is now complete and while the full study readout on that here in Q3.
<unk> <unk> hundred one we did receive FDA feedback on our helmet and the program, but as you followed the Ips market as the generic for <unk>, which is marketed by a company named Bravo Ingelheim, we are planning to progress that to IND filing shortly and kick off a phase one study next year, we're super excited to get that into humans.
On the endocrine area, we have a president Vigo, both energizing our success.
In July we have now moved everything to one sales force one management team one focus to help people with mealtime control in type one and type two diabetes.
As you look at Q2, <unk> grew 16% versus last year, mainly driven by the Medicare access that was created under law in January of 2023, and I'll share more with you that shortly.
Additionally, <unk> is continuing to roll nicely, we had our best enrollment in the month of June ever and inhale free just kicked off and Thats already enrolled patients and Thats. The first study we're doing to show you where how and.
And the conversion factor for pump switching we'd have no data on that in our package insert and it's a question we get which is can you switch from a president to our non pump and that is the study that will drive that which is built upon the pilot study we did last year.
And now it's been over a year that we closed the vivo deal and that is achieving our first year forecasted net revenue, we gave a guidance of 18% to $22 million and we are coming in exactly on the high end of that forecast from a year ago.
Overall, what does this mean for shareholders are operating GAAP income was $2 million driven by the strong growth in DPI year over year, and our non-GAAP non-GAAP operating income was $8 million when adjusted for certain noncash items that will be described later.
I think it's a DPI saw strong demand and we were able to supply that demand with our increased manufacturing.
There was an IP update from United Therapeutics, and their recent quarterly earnings where we heard the path for ILD should be issued and give allowance through 2042.
Revenue expectations of continued strong patient demand I wanted to give clarity for our shareholders that for every 10000 paying patients we expect annual revenue to mankind.
250 million to $300 million.
Additionally, we are on track to complete our high volume capacity expansion, we do now and the end of next year, we have bulk spray drying scale up happening with two new spray dryer is being installed as we speak and we have our fill finish line coming in here in August that hopefully will be online between now and early next year.
As we look at the divestment quarterly revenue from Q2 of last year, all the way through Q2 of this year you can see the growth.
Certainly quarter over quarter and has continued to put us on the path to profitability.
Very proud of the launch we think that's doing amazingly here, great patient stories, and we see nothing really focus and keep going and I just want to say, thank you to our partner United Therapeutics for helping so many patients on our technology.
Now I want to bridge over to our diabetes business.
This is one of the things that we control every week and every year, we're trying to do a better job this year in improving patient access and keeping patients on therapy on Afrezza as we also turnaround Vigo into a growth driver for the company.
As you think about our president couple of highlights.
For those who don't know Medicare pass a law that all into will be $35 starting in January of this year.
You could see a fragile underpenetrated in this market because it was never put on it was always on a non preferred formulary, which forced patients that they have a huge cost differential we cannot do anything to close that gap. When it was covered by $35. You can see we quickly got back to what you see as a standard of care rapid acting insulin about 28% of all pre.
<unk> are for Medicare part D recipients and are present now in Q2 has now gotten that back up to where the market is for rapid acting really proud of the team work here and hopefully continue to grow and help more people living with diabetes and the part D space.
Additionally, in order to make our access message simple we lowered our we adjusted our commercial co pay to be $35 to be consistent with Medicare and you can see our Trs and our <unk> growth on the next slide here has grown consistently and we really have had an inflection. If you look from last year to this year Q1 and Q2.
Hopefully we continue to see as we go into the second half and we continue to see really good momentum year over year quarter over quarter and kind of keep watching this on a weekly basis.
Wanted to share also I think it's important I get a lot of questions why can't we grow afrezza faster I think we had a lot of things to fix over a long period of time most of that is behind us and a lot of the fruition of that work will come out next year and.
In the meantime, we continue to push forward, while we don't have any new data to share and you can see how patients feel about our product. When you look at the bright side of this picture innovative adventurous smart complex exciting bowls, we are pushing the envelope at mealtime control. This is a completely different drug it takes.
Really different approach on how you manage your sugars they mid day and when you look at patient satisfaction. We ranked the highest of all mealtime insulin secreted out there by patients. This is an independent analysis by deep Q&A as it's something we'll continue to watch as we go forward.
And I want to bridge over to Vigo.
We achieved the high end of our forecast as I. Just mentioned was nice to see here is when you look at our T. Rx trajectory. We started telling you last quarter was flattening out on <unk> and Trs It should follow and I'm really proud to show you now in Q1 going into Q2, we have slowed the decline and now we're back on a growth trajectory, which we expect.
To continue for the foreseeable future. So we had 4% growth in <unk> in Q2 over Q1 and this should continue that we feel like we've hit bottom at the White space has continued to decline while the rep targeting efforts on call on doctors continues to go up so we feel like we've hit that inflection and hopefully continue to see Vigo dwell and help more patients.
As we go forward.
This is another slide just showing you and Rx and <unk> year over year, obviously ericsson's are leading indicator, what's going to happen in the future and you could see from Q2 of last year negative 8% on <unk>.
To a plus 4% of the 12% difference year over year, and that's contributing to the positive Trs growth that we're seeing.
On the scientific front, our medical team is working really hard to start to articulate the benefits of this product with the new dosing arrangements that we have been studying.
As we look here, we want to expand the eligible population for <unk> as we go forward in particular, when you think about diabetes and the transformation of the insulin pump market or the CGM market. It always started with kids doctors and parents are very progressive is a life threatening disease hypoglycemia is a life threatening condition and we believe we will be able to demonstrate in this.
Trial hopefully.
Positive benefits when it comes to the safety of hypoglycemia as well as the efficacy. This is a non inferiority trial, but we do know from a lot of our analysis that hypoglycemia is lower with a presence.
And we'll have to see how the data pans out.
This is more than halfway enrolled at this point and we will we will have some insight here in Q.
Q4 of this year with a primary endpoint wrapping up mid next year.
Cipla phase two I got a lot of questions on when the data was coming out we did receive the data. The data analysis is being finalized we don't expect that data to become public till sometime in 2024. Once <unk> done are finalizing their plans here for India.
On inhaled three he called US are type one 8-K pop sparing study because this is the first study we're doing head to head showing you how to rotate off an insulin pump or how to rotate off injectable insulin. So really just a free afrezza to receive a desktop and that's where the three comes from we only think indeed three things the manager diabetes. It's really these three secret agree.
Hopefully give you a really tight control and give you the ability to live your life there'll be quality metrics running this trial as well improved dosing regimens from a previous trials and this is a four month primary endpoint with additional three months of follow up so everyone. In this trial will switch to a president by the end of the seven months.
Now I'm going to turn over to Steve to talk about our financials. Thank you Steve.
Thanks, Mike and good afternoon. Please review select second quarter 2023 financial results.
Please supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC. This afternoon.
Our total revenues grew 157% versus second quarter, 2022, and 189% for the six months ended June 30th versus the same period in 2022, which highlights the revenue growth associated with Televisa DPI and to a lesser extent, our endocrine business, which included the results of the <unk> product Act.
Physician from May 31, 2022.
Revenues from our collaboration with the United Therapeutics totaled $30 million in the second quarter of 2023, which is made up of royalties of $19 million and collaboration and services revenue of $11 million.
Royalties earned on net sales of <unk> of $19 million was the result of strong patient demand for innovative products and a low double digit royalty rate.
We recorded $11 million of collaboration and services revenue in the second quarter, which was almost double the prior year.
This amount is primarily related to revenue associated with manufacturing type Asa PPI, which we started to manufacture commercially for Ut in the second quarter of 2022.
Total revenues from our collaboration with beauty were $53 million for the first half of 2023 again, representing strong patient demand for <unk> as compared to $8 million for the first six months of 2022.
The 2022 six months period includes the start up commercial manufacturing of <unk> DPI by mankind midway through the second quarter and the commercial launch of the product by duty towards the end of the second quarter.
Moving down the table to our endocrine business total endocrine revenues were $18 million, which was made up of Afrezza net revenue of $14 million in vivo with net revenue of $5 million.
<unk> net revenue of $14 million compares to $11 million in 2020 to a growth rate of 27%, which is very consistent with our first quarter growth rate.
The growth was mainly driven by higher patient demand with underlying <unk> growth of 16% year over year increased channel inventory to support higher demand and price.
For the June year to date period total endocrine revenues were $36 million.
Net revenue from Vega was $5 million for the second quarter of 2023, we purchased Vigo and May 31, 2022. So the increase over 2022 is mainly from a one month versus three month comparative.
For the 12 month period post acquisition Vigo had net revenue of $22 million, which was at the top end of our forecasted range.
The next slide shows our revenue growth by source on a quarter by quarter basis from the first quarter of 2022 through the second quarter of 2023, we'd like to show this graph because it really highlights how dramatically our business has changed in the last two years.
We started 2022, recognizing revenues primarily from Afrezza and now we have two revenue streams from <unk> PPI, plus two endocrine products products delivering commercial revenue.
The second quarter of 2023, we grew total revenue by 20% from the first quarter fueled by the growth of Taipei, So DPI royalties.
Below the graph I plotted the loss per share for each quarter and you can see the impact from the increasing revenues in particular from Televisa DPI royalties, which don't have any associated expenses.
We recorded a loss per share of only two cents in the second quarter, representing an 82% decrease from the second quarter of 2022.
The second quarter of 2023, we had a first quarter of GAAP income from operations since I joined the company six years ago, and the amount of $2 million there for a long time coming but the growth in revenues associated with UT collaboration I've had a significant impact on turning this positive.
Starting with this quarter, we will communicate a GAAP to non-GAAP reconciliation, so that investors can clearly see the impact of certain noncash items on our P&L.
Looking at the table, we had positive GAAP income from operations of $2 million in the second quarter of 'twenty, three as compared to a GAAP loss from operations of $21 million in the prior year.
When adjusting for the noncash items of stock compensation of $6 million and a loss of foreign currency of less than $1 million. We had positive non-GAAP income from operations of $8 million for the second quarter of 2023.
When looking at EPS, we recorded a GAAP net loss of <unk> <unk> per share, which when adjusted for noncash items stock compensation were also foreign currency and a gain on available for sale Securities. We had non-GAAP EPS of zero for each share. The primary difference with two of our income from operations and net.
Income included in EPS.
Interest income and interest expense.
Plan to continue to show a reconcile you like affiliation like this each quarter to enable more transparency.
The impact of our operations on cash.
We continue to tightly manage our cash outflows, while benefiting from the increasing revenues associated with diabetes for DPI and our integrated business as we move the company towards profitability and being cash flow positive. We continue to believe that our current level of cash cash equivalents and investments plus anticipated operating cash inflows into our.
Flows will allow us to adequately invest in and grow our business without a need for any follow on stock offerings.
Thank you and now I'll turn it back over to Mike.
Thank you Steve first of all when I talk about a new addition to our leadership team we hired Dr. Burkhardt blank, who is our executive Vice President and head of R&D and Chief Medical Officer, I've had the pleasure of working together over the last two months as you've done a deep dive on all of our assets. He's visited our facility, where we had the fire and it really helps build the team.
<unk> helped us think about the future structure of how we move these assets forward.
And I get the question of what's going to be the next leg up for Mannkind over the next few years. It really is the R&D covenant to fruition, which we call. It is now time to bring in someone like Dr. Burkhardt to help us put the governance structure in place and manage these assets as we have four or five great assets coming down the road.
He has more than 25 years of global development experience at several companies starting his career out of Barnwell Ingelheim go into a quarter.
The company recently in France.
He has experienced multiple disease areas eight early preclinical and successful NDA submissions and you've got small molecules drug device combo as well as on health therapeutics, it's very difficult to find somebody with such breadth and depth of experience.
We're very fortunate to have someone that Dr. Black join us and help us lead our efforts here over the next several years.
As you can see the next slide.
That will be working on we have all the work with Afrezza pediatrics in the filing that will come with that but the international work coming to get us back into Brazil, and India. We have V goes we continue to evaluate that for other opportunities and grow here in the U S.
And then the pipeline itself with Am 101 vehicle size I mean, two of one to 10 that are both go into <unk> phase one in phase III.
And then you have dna's alpha, which we're continuing to work to get that into patients as quickly as possible.
And another asset TGF beta which continues to work through its animal models until we can get it into a preclinical formulation ready for testing.
So you've got a lot of work in front of them, they're moving things along and Thats. The question I always get is why isn't our friends at growing faster and I don't think people. Appreciate is it takes a lot of money and time and people to run four development programs and that's the choices. We've made fun Pete Pediatrics and funded 101, two or one 301, a 501 in order to ensure that.
We have one launch per year, starting in roughly 2025, either new indication or a new product launch and continue to be focused on that effort and we believe this is going to be really critical to our future success.
The next slide shows you some of the milestones associated with these pipeline investments that we're making.
Should ultimately give us new product revenue or expanded product revenue with existing products.
As you look at the endocrine business inhaled three kicked off here, we expect to have that data in the first half of next year.
India trial readout that that'll be finalized here in the second half and discuss next steps at that point.
And the inhale one pediatric trial Readouts should happened late in the first half next year as a primary endpoint of six months, we've added a new milestone here in the second half of 'twenty three for inhaled, one where well have an interim analysis, telling us either trial is properly sized.
It needs more patients will take a little longer or it's a futile exercise that keep going obviously, we believe the primary endpoint is sufficiently statistically it will be sufficient.
But until we get to that interim analysis in October .
It would be late October so how that information by the next quarterly earnings call.
That'll be important to share with shareholders that we think that would be on track I'm going to try to have read out there in the first half of 'twenty four.
On the orphan lung things that we're in control of it's the 201 PID, it's done a filing with that and it's.
It's the <unk> submission for <unk>, one of the things we're evaluating based on the FDA thoughts post to fire, which is and we use are some of the data that was generated in Germany in order to bridge for the U S to keep the ideal tracking ultimately get this trial off the ground.
24.
And then finally, you also have a United Therapeutics working on the T stop studies and we know that's critical for continued expansion there for Televisa.
We look at the key value drivers these are real and they are significant.
Pipeline as we think about 101 going forward every thousand patients that we capture in that disease will probably bring in $100 million in revenue at the time of launch.
For 201 does the multibillion dollar opportunity littered with failure, we've taken the market leader made it into an inhaled version hopefully minimizing the systemic toxicities and being able to enable patients to have well controlled therapeutic dose in IPF for 201.
As it comes to the DPI you can see the strong start there.
At the end of the day there are multiple ways that you can see this growing to over 10000 patients and we wanted to give you clarity on is how we think about that from a shareholder of mankind. Obviously, we're not in control of the launch, but we feel very good about United Therapeutics investments and opportunities to continue to help as many patients as possible suffering from P. H I L T as well as like forget hopefully in the future.
<unk>.
The pediatrics is the thing we highly anticipate next year and every 10% in kids fundamentally changed the long term trajectory for a president that compounds for the next 20 years, but right now I want you to understand for every 10% share of kids is roughly $150 million in revenue we're investing in the handheld three study because we believe if we get great data on.
And he'll want that's versus rapid acting insulin. The next question. We get is what happens if you switch off and its own pump how does the data look and we hope to show you that we're as good.
Or better depending on the data, but hopefully not worse.
Pilot study, we showed that we were as good as using until pump versus not.
And the reason that's important is we expect a once weekly basal to be able to market in the not too distant future. So we literally could give people live with diabetes down the 52 injections, a year plus and Helen their mealtime insulin plus a CGM that's game changing for patients and providers.
Vega, we are focus on stabilization as you can see growth is now in front of US. We wanted to continue to make that a more profitable product as we go forward into 2004 and beyond.
Now I'll turn it over.
Thank you.
Thank you, ladies and gentlemen would like to ask a question. Please press star one on one of your telephone again to ask a question. Please press star one one.
One moment for your first question.
Our first question comes from the line of Steven Lichtman of Oppenheimer <unk> Company. Please begin.
Thank you evening everyone.
Mike you mentioned the <unk>.
The real <unk>.
Benefit that you've seen and so in reimbursement this year and Medicare.
How are you guys balancing you wanted to drive profitability in the business versus investing in getting the word out now because it does.
Seem like this is a.
A big change for the branded business as you showed into the second quarter here, So talk a little bit about how youre getting that word out versus I know you want to start driving some leverage in the business as well.
Thank you for the question I think first as you know we've tried different reimbursement support programs over the years and they haven't always resulted in a trend break.
I think this year, we saw that you know the Medicare patients Anda approval ratings are very high they are in the 90% plus range.
And so that makes us feel confident that we can continue to help more patients and now that we can see the market share in two quarters get.
Get up to where injectable insulin is as a percent of their business.
It gives us some confidence to push even harder in this segment.
In terms of profitability, we have submitted rebates for Medicare part D over the years.
And they've mostly been rejected because of the rebate game up.
Attention on the PBS and so there wasn't a lot we could do maybe going into next year that could change.
Most of our patients just have doctors need to do a prior off and we're seeing very high approval rates. So maybe as we go into 2024, we'll start to see either ph be removed completely of Medicare part D. R.
Or continue the success that we're seeing this year and we can help even more patients next year beyond what we're doing but it's nice to see in six months, we can get back to that.
Market share of injectable insulin.
<unk> always felt that patients were not getting the product properly because of.
The difference is in Medicare part D reimbursement co pay to a patient.
And we work pretty closely with CMS to explain this and they understood. It. Unfortunately helps patients and so I think that's really what you can see is that.
<unk> didn't help that's hurting people at the end of the day.
We could but there's only so much you can do on part D.
Got it great and then and then I.
I guess as we think about the back half.
<unk>.
And based on your visibility how should we think about DPI royalties.
Sequentially here in the third and fourth quarter, you know to keep coming in certainly a lot better higher than we expected it to.
Is this a good level or based on your visibility can you give us directions directionally into three.
Third and fourth quarter and then also on gross margin first half strong on.
Our friends at Vigo, I think around 70% is that pretty good level for the back half.
So Steve as you know we don't provide forward looking.
Guidance or forecasts.
So the.
You listened to <unk> call, they're very bullish on pace.
Patient demand for <unk>, you can see through our royalties.
And the manufacturing of the product so without providing any guidance for the second half of the year. We just believe there will continue to be strong patient demand.
And we'll report those revenues in the third and fourth quarters they come in.
As for the margin a 72%.
Is right for a combined Afrezza and Vigo Fred.
Fred's has got a better margin than V. Go. It goes we don't provide those separately anymore. Just combined yeah that is.
A pretty good margin for error, there, there's variability quarter to quarter with the amount of manufacturing we do on Afrezza.
That impacts the afrezza margin from quarter to quarter, but.
We feel that it's in the right ballpark for.
The margins for our commercial products at this point.
Okay great.
Thanks, Steve Thanks, Mike.
Welcome.
Thank you Steve.
Thank you one moment please.
Our next question comes from the line of Olivia Brayer of Cantor. Your line is open.
Hey, good afternoon, and thank you for the question can you guys talk about the decision to take an interim look at <unk>, one and whether that was built into the trial design initially.
Then just what's the clinical bar for success in order for that study to continue as planned and then I've got a follow up question on DPI.
Sure.
In terms of look was always planned in the original statistical plan and analysis. So that has not changed it's the only thing we didn't know is when we would hit 50% enrolment.
And the trial that was the driver of that and so now that we know that we hit that milestone it doesn't matter what they could crunch the data at meet together as a as a D. S M B a.
Mannkind will not know the data Fortunately Fortunately instance, its confidential to the I guess the big.
But at least we'll know at that point you know in the trough.
While a futile well keep go in Baltimore patients.
Obviously power and it's hopefully at the end points, we need to hit and wrap up on six months after that as the primary endpoint at the.
The secondary in probably the second cohort.
And the control arm switching over to a friend's apartment initial six months. So we expect the primary endpoint of that trial will be wrapped up hopefully six months after that.
<unk>.
So we'll go from there.
Okay got it and then second question is it looks like you guys increased epi revenue assumptions for every 10-K patients to $2 $50 million to $300 million can you give any color on what's driving that increase.
Yeah, I think as we continue to fine tune to basically each quarter, we get a little bit more clarity on what does it look like.
And in terms of pricing packaging.
All of those things go into it I don't know I'd really.
Don't break out the details of our forecast, but we wanted to give people some guidance because you know I think the one thing.
As you hear about different indications and are different.
Factories factories to be built between our expansion at <unk>.
Plant, we want you to at least have a range of number there.
And some of that changes over time because of discounts or manufacturing revenue assumption. So that's why we gave a range as opposed to more than anything else with the number of patients.
Okay got it that's helpful. Thanks, Michael I appreciate it.
Thank you one moment please.
Our next question comes from the line of Gregory Zhao of.
RBC capital markets. Your line is open.
Hi, Mike and team, it's a niche on for Greg Congrats on the quarter and thanks for taking my questions. Just a couple for me on 201, maybe just for some color on differentiation other than drug delivery of Nintendo how would you describe to one's ability to differentiate against the drug like pirfenidone in patients with IPF and how would you care.
Richter is the received FDA feedback and how are you incorporating it into the development path going forward I appreciate the time and thanks again.
Yeah, great questions I think the good news is there's been some data out there on the inhaled pirfenidone and that tells you delivering an inhaled route.
Via these products could could work I think our particular product and our focus has been on the tendon. We originally had both a development we actually picked just wanted to go forward.
Versus trying to develop both and the reason is we believe the limiting side effects of old fab is around the Gi side effects and the dosing.
And by putting in the inhaled route it's got very.
Low bioavailability.
Oral route and that allows us flexibility here in our design of our thinking around and health.
We believe we should be able to minimize some of the side effects that patients see obviously, we have to get this into human trials, but that's gone into our thesis.
And the FDA feedback gave.
Give us some flexibility to think about a healthy fall.
Tiers versus IPF patients and how we think about phase one to phase III design.
So that work will be finalized those paying for burkhart to start before I.
Really.
My fingerprint down on which way, we should go and that'll be aligned in telecom.
Billings here very shortly.
We feel pretty good about the product profile and deliver dose and the ability to differentiate hopefully on the tolerability side as you may or may not realize we believe 30% to 40% of people drop out.
Oh fab because they just cannot tolerate the product.
And that's a pretty significant population that's not getting help.
So again product may or may not go generic by the time, we get to market.
Fact that people cannot tolerate it gets the efficacy when they go to 80% probability of dying in five years significant unmet need.
And so we feel pretty good about the FDA feedback, there's always things to work through it but nothing that was a showstopper for us.
Great. Thanks, so much I appreciate it.
Thank you one moment please.
Yeah.
Our next question comes from the line of Thomas Smith of Leerink Partners. Your line is open.
Hey, guys. Good afternoon, thanks for taking the questions and let me add my congrats on the solid results.
On the endocrine business unit performance I think youre now guiding to profitability in 2024, I think previously you talked about your expectation has been to get to breakeven by the end of this year just wanted to check in and get your updated thoughts has anything changed in terms of timing or outlook for the rest of the year and then maybe as a follow up if you could just.
Give us an update on how you're thinking about investment here in the pipeline and platform broadly how should we think about the R&D spend over the next couple of years.
Are you guys thinking about bringing back I mean, and then have the tenant in some of these other pipeline programs forward.
Balancing that versus desire to maintain profitability. Thanks.
Thank you Greg Great question I think on the breakeven in Q4, that's still our intent.
To get there you know well, we'd be exactly there plus or minus a couple hundred grand.
We'll wrap up but I think we're still tracking on Thanksgiving.
And I don't know.
We're on track, but could be off by a little bit, but yes. It shouldn't be any major thing in the Grand scheme, so that should be profitable as we look into 'twenty four wall.
R&D spend I'd answer that two ways. One we don't intend to launch these products ourselves outside the U S. So we will be seeking partnerships for rest of world and when you think about products like MTF with qualifiers. I mean, you know the Asia Pacific area is is a large market that we would hopefully find one partner.
And launch and take over some of the costs associated with the development there.
Within the U S. You you know Theres a couple of things ramping up next year. So the first will be inhaled wanted the second being held three so those two trials do cost US you know quite a bit of money each year and we would expect some of those costs as they wind down to shift towards called Fives. I mean, so we haven't given quite exact guidance yet because some of this is the timing and the upsell.
The patients.
All of the qualifiers, I mean trial, which you know as you look at the timeline a large majority of those expenses late 'twenty five as opposed to 'twenty four there will be some expenses.
For example, some of the manufacturing expense, but that'll hit cash flow versus you can comment on amortization quarterly.
And it could be a mix of things that are put on the balance sheet and amortized over that.
Trial period, and others that are expensed as incurred.
Yes.
And then I think the phase one studies aren't that expensive in the Grand scheme of things. So I don't even if we got capacity in a phase III and then they've gone into phase one I don't think Thats an unbearable.
And at that we should be should be okay. As we look at 2024 to 25 time frame.
Keep in mind, our friend this should continue to grow because it looks like it's starting to grow and Toby associates continues to do well so I think on the company.
Let's make sure we're not in a position that we started in six years ago and that's our number one focus.
We think when we look at this as a big growth area for the company and future revenue that won't make sure we're able to capitalize off for our shareholders and patients.
Got it that makes sense, thanks for taking the questions guys.
Thank you. Thank you.
Thank you.
One moment please.
Our next question comes from the line of Orin Loopnet.
Wainwright Your line is open.
Alright, Thanks, a couple questions first on <unk>.
So DPI.
No youre not giving guidance.
A few serious product to talk about but you.
You did point to their call, where they certainly are quite bullish but they did.
Call out $30 million in stocking this quarter.
And sort of linked it to your advancements and improvements in capacity and yield for the product and so I guess can you just help us understand where are you at now.
And going forward in terms of supplying that.
Whether it's hand to mouth.
Or if you've actually now well ahead of demand and do you expect.
I guess two.
You keep having to fulfill.
So we should keep seeing that grow if demand is growing going forward versus.
It really filled the channel up a lot now and we could take a breather.
Yeah.
I think Lauren if you.
Where to take away the $30 million in revenue you know.
You can see.
With the world's East range, you can see it's grown quarter over quarter I don't think have asos is anywhere near.
Capped out in terms of if you look at the United around New starts.
Continued conversion.
ILD and not fully penetrated obviously, so you know.
As each quarter goes on that will chew up more inventory more days on hand.
Ultimately, we've got to keep stocking and keep building that inventory. So we're not giving exact guidance on how much we have on hand, but I would say, we don't think it's flat.
And therefore, we expect continued growth as we look out.
Yeah.
Yes, and I don't know don't Misunderstand me I think it's pretty clear demand has grown as well I guess I'm just trying to understand where you're just basically catching up to where inventory sort of needed to be in general.
Keep supply in the market as expected.
Or have you.
Such that you expect or do you think will be positive that they now work through that inventory on the wholesaler side.
Yes, I mean, we're not privy to their contractual obligations with the pharmacies and days on hand, I know they went up more than we could give the pharmacy at the time as we close Q1. So I think we've made some changes here in Q2 to enhance that and I think as we closed out the quarter you can see we do.
Good job with the increased demand.
And so again I don't want to comment for U T. On in terms of what inventory will projected to be in Q3 or not.
I think our job is to make as much as we can remember we're doing that.
Okay and.
I'll move on to the pipeline of 201.
I just wanted to clarify your earlier comments you mentioned some of the Fda's feedback.
<unk> two.
Clinical work either in healthier or IPF patients.
I'm just trying to understand are we talking about theoretically is this just a discussion for phase one whether that needs to be unhealthy versus patients or in theory are we actually talking about deeper into the development timeframe. Given we already know about these molecules is a possible I'm just speculating in the Pos.
Well that you could do I guess, a streamlined or abbreviated full registration quality development program potentially that would just be.
PK or bioavailability based and not necessarily even have to do a full clinical trial in patients.
I would say I wish and the second part of the question I think if you look at the FDA typically as you're changing route of administration that will always require a clinical trial.
So that that would be our expectation in and Shimon.
Disease experience.
Ah patients.
How we designed that trial and the endpoints of that trial I think there are still things we won't go public with but the fact that the phase one we were going back and forth in terms of do we do help ease or do you do some in IPF. It does appear we have flexibility to make that call on our side and I guess, what burkhart here now we will talk about the pros and cons of.
Obviously, if you do healthy as it can go a lot faster than if you do people with Ah Ips.
Yes, they're harder to find and get them to trial and it just takes a little bit longer and they don't want to spend days in AR and a clinical.
Clinical research sites. So that's always something we're trying to manage around what insights that we're trying to get what are we trying to prove it.
I think to do so.
But no we would fully expect the phase III trial to at least be.
Patients who have Ips.
Okay, and just lastly, I.
I guess building on Steve's question upfront and when you talk about sort of the trade offs between contracting with profitability.
In general what are you guys at in terms of contracting.
Clearly you have a high margin higher margin product a higher priced product.
With small market share and I'm, just wondering given the high positive feedback you get.
Relative to all these other therapies.
What opportunities have you explored in terms of being able to I mean, a question if I can match injectables on price, but is there a possibility that you could get substantially better coverage and get a real step function in access next year or maybe.
2025, depending on the.
Bidding cycle, such that Youre willing to give up.
Economics right.
For a chunk of volume.
Oh I'm.
So I think I'll stick with a question for Steve Steve liquids question.
So I think youre spot on in terms of <unk>.
He's way, giving discounts for faster growth versus being profitable.
And I think based on all the programs we've done historically, we've not seen that.
Relieving some of the administrative burden has actually caused any faster growth for Afrezza I think it's really about conviction that efficacy and safety wise, you're as good as an insulin pump or you could safely switch from MDI and get equal or better outcomes. So that data sets will come out with next year.
It does.
Rebates are going away as I suspect they are with all the price of scrutiny around the injectable insulin and.
The contract, which really did prevent us from getting open access to afrezza in our preferred way.
If what I suspect happens in 'twenty four there could be an opportunity to move up our discount range a little bit.
That would hopefully result in greater volume.
The way the way contracts are structured in general in the payer space is they can choose to put the product on formulary and collect a little bit higher rebates. They just have not made that choice over the years and so not every pbms has a contract but a couple do and.
So were not made aware right now that that's going to change for next year, but I do plan to go out and meet with some of the big players to talk about this.
Because we see the Medicare part D success, and we'd like to continue to help patients gain access to our product.
We're not looking too.
Part of the value proposition with Afrezza is you don't need to pay hundreds of dollars a month of insulin pump supplies.
I'll need to pay for the pump do you don't need to pay for.
The maintenance and everything else.
But you still need to pay for them when you get a pumps or the whole economic value prop, whether its an omni powder medtronic or tandem pump plus the cost of insulin plus better efficacy is really what we focus on payers and that's some of the work and data sets that will read out next year. So so to your point.
When we get some plants next year, but hopefully real push for 25% as we didn't really have a differentiated product and our results bear that out in the clinical trials.
But I wouldn't expect alright.
Yes.
So if I'm hearing that data is going to give some really new to talk to payers about next year for the 2025 a cycle.
I think thats going to be important.
Do some payers to stay with the price changes they move us up they might but I would expect better discussions as we get new data readouts.
Alright, thank you.
Thanks, Eric.
Yeah.
Thank you one moment please.
Our next question comes from the line of Anthony Petrone of Mizuho. Your line is open.
Thanks, and congrats on a good quarter here a couple on <unk> and then I'll follow up with a couple on diabetes.
On the renewed outlook there for 10000 patients 250 to 300 million Mike <unk>.
Assuming again that doesn't include idiopathic pulmonary fibrosis.
The new the IPF label expansion and are there any early kind of views as to what IPF could add to that 250 to 300 million and then for Steve on that question as well just from a manufacturing capacity standpoint, Ken can the Danbury facility at the current capacity handle that label expansion or will.
You need to.
I have a little bit of an acceleration in growth Capex. If that that label is secured and then I'll have a couple of follow ups.
Okay.
I think the way you got to look at that statistic is regardless of where the 10000 patients come from being IPF ILD ph, obviously, they don't have the approval for IPF right now.
But if that was the drive incremental volume and a new market for them.
Roughly the revenue we would expect for every 10000 patients. So it's not just there.
Theres really not a when you think about the price of the product is more of an annual cost as opposed to Ah indication costs.
And the same thing is true as we built out the manufacturing the original facility that we launched with was meant to handle.
Really ph ILD and then as it expanded Ut invested in additional capital improvements.
In new spray drying capacity as well as fill finish that is really setting us up for IPF and continued upside forecast if I basically keeps stilwell in ILD.
N P. H then they wont make sure we have enough safety manufacturing capacity beyond whenever we can expect so we don't ever stock out that's a life saving drug.
And then you T has announced they're building a duplicate facility.
North Carolina and that'll be.
Important when you got a drug that's doing this great you don't want to have a single source our failures. So we were helping them with.
With that as well so hopefully that answers your question on <unk>.
The IPF as well as manufacturing.
No helpful and then on diabetes.
Is this the is this a full quarter of V go I know.
You guys I think it was straddling the <unk> full launch or was this sort of the quarterly run rate a full quarter for V. Go and then on just any update on the Blue hail.
S launch.
Integrated with <unk> Com, just just maybe a little bit there or is that going to be.
Launched with with <unk>, six <unk> seven or is it.
One version of <unk> com.
And I guess, maybe even more important to that is when you think about the inhaler and the overlap with Dex Com I mean is there any statistics that you have on.
On the current inhaler.
Ah patients that are active decks com users that at this point in time. Thanks.
Anthony Let me answer the first question on Pico required the product on May 31, 2022.
So our revenues for 2022 in the second quarter or about $2 million.
And they were about $5 million in Q2 of 2023, so it's not a great comparison, because you only have one month last year, but going forward you should have.
Comparability.
That's helpful.
And I think on on Vega is as you may or may not realize it was a turnaround that was one of the client for a long period of time. So we had to stabilize before we get the growth. We started seeing a stabilization on <unk> is back in Q4 Q1, you could finally see that translate to <unk>. This last quarter. So hopefully as we go forward quarter over quarter, we can start to see year over year.
Your comparisons but.
We're proud that we hit the first milestone, which was our high end of our $18 million to $22 million guidance.
The.
Blue Hills is so we are planning to use that and inhale three.
So in health, we just kicked off this month, we're almost got all the sites activated and that'll be the beta test.
And that phase phase four trial, and then assuming that goes well then we'll evaluate continued improvements to get that into the general population is currently with <unk> six <unk> seven for my knowledge I know it was quite tested them on June seven.
So it does imported it does work well on both and but we're not limited to just <unk> com, we're happy to partner with Libre or since you Alex or other parties.
But that is the.
The current integration is with the API.
<unk>.
Thanks again.
Okay.
Thank you.
Showing no further questions at this time I'd like to turn the call back over to Michael Costanza for any closing remarks.
Thank you and thank you everyone for your patience as we continue to turn around the company. We do feel like we're on the right growth track, we have great growth drivers between our in line assets in our pipeline assets.
It's been a long journey to get here, but we're really proud of the team to work in the energy going into it and all the patients who are helping us benefit from from your investments. So I just wanted to say, thank you to analysts covering us and our shareholders and our employees all of our stakeholders.
Look forward to talking to you again, albeit a conference tomorrow in New York meeting New investors as well as September will be in New York for several conferences. So hopefully as updates happen, we'll provide that at those opportunities. Thank you.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.
[music].
[music].
Good afternoon, and work with the Mannkind Corporation 2023 second quarter financial results earnings call.
As a reminder, this call is being recorded on August seven 2023, and will be available for playback on Mannkind Corporation website. Shortly after the conclusion of this call until August 21 2023.
This call will contain forward looking statements such forward looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations.
For further information on the company's risk factors. Please see their 10-Q report filed with the Securities and Exchange Commission. This afternoon, the earnings release and the slides prepared for this presentation.
Joining us today from Mannkind are Chief Executive Officer, Michael Castagna, and Chief Financial Officer, Steve Binder, I would now like to turn the call over to Mr. Chris Danya. Please go ahead Sir.
Thank you and thank you everyone happy afternoon.
It was a year ago in Q2, when we were notified that United Therapeutics got FDA approval for <unk> based on PPI at that time, we said that will put us on the path to profitability and as we kick off a year. Later, we are proud to say that we've achieved our first operating income.
US a long term sustainable company, which helps US live our mission to ultimately give people control of their health and the freedom to live life.
Today, we probably have between 15 to 20000 people taken one of our diabetes products, nor thousands of people benefiting from debate on PPI, We're really proud of all the hard work and we're really excited to share this quarter's earnings with you.
Let me first of all are off by a couple of highlights here in Q2.
Two ind's file going into phase, one and phase III in the next 12 months.
101, as we notified you previously there was a fire. Unfortunately, we are now moving GMP manufacturing to Danbury, Connecticut. Unfortunately, we have facilities, there, where we can move the equipment into our chronic Tox studies now complete and while the full study readout on that here in Q3.
Mannkind 201, we did receive FDA feedback on our held the Technip program for those of you following the IPF market out of the generic four O fab, which is marketed by a company named Bravo Ingelheim, we're planning to progress that to IND filing shortly and kick off a phase one study next year, we're super excited to get that in the humans.
On the endocrine area, we have now a president Vigo, both synergize our success.
Starting in July we have now moved everything to one sales force one management team one focus to help people with mealtime control in type one and type two diabetes.
As you look at Q2, our friends at Crx's grew 16% versus last year, mainly driven by the Medicare access that was created under law in January of 2023, and I'll share more with you that shortly.
Additionally, in Hell, one is continuing to roll nicely, we had our best enrollment in the month of June ever and inhale three just kicked off and that's already enrolled patients and that's the first study we're doing to show you, where how and and the conversion factor for pump switching we'd have no data on that in our package insert and it's a question we get which is can you switch from our friends at too.
Non pump and that is the study that will drive that which is built upon the pilot study we did last year.
And now it's been over a year then we closed the vivo deal and that is achieving our first year forecasted net revenue, we gave a guidance of $18 million to $22 million and we are coming in exactly on the high end of that forecast from a year ago.
Overall, what does this mean for shareholders are operating GAAP income was $2 million driven by the strong growth in DPI year over year, and our non-GAAP non-GAAP operating income was $8 million when adjusted for certain noncash items that will be described later.
Yeah.
I think it's a DPI saw strong demand and we were able to supply that demand with our increased manufacturing.
There was an IP update from United Therapeutics, and their recent quarterly earnings where we heard the patents for ILD should be issued and give allowance through 2042.
We have revenue expectations and continued strong patient demand I wanted to give you clarity for our shareholders that for every 10000 paying patients we expect annual revenue to mankind between $250 million to $300 million.
Additionally, we are on track to complete our high volume capacity expansion would you now and the end of next year, we have bulk spray drying scale up happening with two new spray dryer is being installed as we speak and we have fill finish line coming in here in August I hope it will be online between now and early next year.
As we look at the base of quarterly revenue from Q2 of last year, all the way through Q2 of this year you can see the growth consistently quarter over quarter and this has continued to put us on the path of profitability.
Very proud of the launch we think that's doing amazingly here, great patient stories, and we see nothing really focus now as we keep going I just want to say, thank you to our partner United Therapeutics for helping so many patients on our technology.
Now on a bridge over to our diabetes business.
This is one of the things that we control every week and every year.
Trying to do a better job this year in improving patient access and keeping patients on therapy on Afrezza has we also turnaround vigo into a growth driver for the company.
As you think about our friends a couple of highlights.
For those who don't know Medicare pass a law that always will be $35. Starting in January of this year and you can see our friends was underpenetrated in this market because it was never put on it was always on a non preferred formulary, which forced patients that they have a huge cost differential we cannot do anything to close that gap. When it was covered by $35 you can see we.
Quickly got back to what you see as the standard of care rapid acting insulin about 28% of all prescriptions are for Medicare part D recipients and our friends at now in Q2 has now gotten that back up to where the market is for rapid acting really proud of the team work here and hopefully continue to grow and help more people living with diabetes.
And the part D space.
Additionally, in order to make our access message simple, we lowered our we adjusted our commercial copay to be $35 to be consistent with Medicare and you can see our Trs and our Rx growth on the next slide here has grown consistently and we really haven't had an inflection. If you look from last year to this year Q1 and Q2.
Hopefully we continue to assess as we go into the second half and we continue to see really good momentum year over year and quarter over quarter and kind of keep watching this on a weekly basis.
Well, it's a share also I think it's important I get a lot of questions why can't we grow afrezza faster I think we had a lot of things to fix over a long period of time most of that is behind us and a lot of the fruition of that work will come out next year and.
In the meantime, we continue to push forward, while we don't have any new data to share and you can see how patients feel about our product. When you look at the bright side of this picture innovative adventurous smart complex exciting bowls, we are pushing the envelope at mealtime control. This is a completely different drug it takes.
Really different approach on how you manage your sugars they've a day when you look at patient satisfaction, we ranked the highest of all mealtime insulins afraid it out there by patients. This is an independent analysis by deep Q&A and so it's something we'll continue to watch as we go forward.
And I want to bridge over to Vigo.
[noise] achieved the high end of our forecast as I just mentioned well it's nice to see here is when you look at our T. Rx trajectory. We started telling you last quarter. It was flattening out on <unk> and Trs It should follow and I'm really proud to show you now in Q1 going into Q2, we have slowed the decline and now we're back on a growth trajectory, which we expect to.
Continue for the foreseeable future. So we had 4% growth in <unk> in Q2 over Q1 and this should continue that we feel like we've hit bottom at the White space has continued to decline while the rep targeting efforts on call on doctors continues to go up so we feel like we've hit that inflection and hopefully continue to see Vigo dwell and help more patients.
As we go forward.
This is another slide just showing you and <unk> and <unk> year over year, obviously analytics is our leading indicator what's going to happen in the future and you could see from Q2 of last year negative 8% on <unk> up to a plus 4% of the 12% difference year over year and that's contributing to the positive <unk> growth that we're seeing.
On the scientific front, our medical team is working really hard to start to articulate the benefits of this product with the new dosing arrangements that we've been studying as we look here, we want to expand the eligible population for friends as we go forward in particular, when you think about diabetes and the transformation of the insulin pump market or the C. G.
Market. It always started with kids doctors and parents are very progressive is a life threatening disease hypoglycemia is a life threatening condition and we believe we'll be able to demonstrate in this trial hopefully.
Positive benefits when it comes to the safety of our Bible.
Glycemia as well as the efficacy. This is a non inferiority trial, but we do know from a lot of our analysis that hypoglycemia is lower with a presence that.
That will have to see how the data pans out.
This is more than halfway enrolled at this point and we will we will have some insight here in Q.
Q4 of this year with a primary endpoint wrapping up mid next year.
Simplifies too I got a lot of questions on when the data was coming out we did receive the data. The data analysis is being finalized we don't expect that they would become public till sometime in 2024. Once <unk> done are finalizing their plans here for India.
On inhaled three we call. This our type one AK pumps bearing study because this is the first study we're doing head to head showing you how to rotate off an insulin pump or how to rotate off injectable insulin. So really just a free afrezza to receive a desk com and that's where the three comes from we only think you need three things the manager diabetes. It's really these three secret agree.
Hopefully give you a really tight control and give you the ability to live your life there'll be quality metrics running this trial as well improved dosing regimens from a previous trials and this is a four month primary endpoint with additional three months of follow up so everyone. In this trial will switch to afrezza by the end of the seven months.
Now I'll go to overseas to talk about our financials. Thank you Steve.
Thanks, Mike and good afternoon, I'm pleased to review select second quarter 2023 financial results.
Please supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC. This afternoon.
Our total revenues grew 157% versus second quarter of 2022 and 189% for the six months ended June 30 versus the same period in 2022, which highlights the revenue growth associated with Televisa DPI and to a lesser extent, our endocrine business, which include the results of the Vigo product Act.
Physician from May 31, 2022.
Revenues from our collaboration with the United Therapeutics totaled $30 million in the second quarter of 2023, which is made up of royalties of $19 million and collaboration and services revenue of $11 million.
Royalties earned from the net sales of <unk> of $19 million was the result of strong patient demand for innovative products and a low double digit royalty rate.
We recorded $11 million of collaboration and services revenue in the second quarter, which was almost double the prior year.
This amount is primarily related to revenue associated with manufacturing tie basically PPI, which we started to manufacture commercially for U T and the second quarter of 2022.
Total revenues from our collaboration with you'd see were $53 million for the first half of 2023 again, representing strong patient demand for <unk> 50, P. I, that's compared to $8 million for the first six months of 2022.
The 2022 six months period includes the start up commercial manufacturing of high base of DPI by mankind midway through the second quarter and the commercial launch of the product by duty towards the end of the second quarter.
Moving down the table to our endocrine business total endocrine revenues were $18 million, which is made up of Afrezza net revenue of $14 million in V go with net revenue of $5 million.
Net revenue of $14 million compares to $11 million in 2020 to a growth rate of 27%, which is very consistent with our first quarter growth rate.
The growth was mainly driven by higher patient demand with underlying paid T. Rx growth of 16% year over year increase channel inventory to support higher demand and price.
For the June year to date period total endocrine revenues was $36 million.
Net revenue from Vega was $5 million for the second quarter of 2023, we purchased Vigo and May 31, 2022. So the increase over 2022 is mainly from a one month versus three month comparative.
For the 12 month period post acquisition Vigo had net revenue of $22 million, which was at the top end of our forecasted range.
The next slide shows our revenue growth by source on a quarter by quarter basis from the first quarter of 2022 through the second quarter of 2023, we'd like to show this graph because it really highlights how dramatically our business has changed in the last two years.
We started 2022, recognizing revenues primarily from Afrezza and now we have two revenue streams from Thai basically PPI plus two endocrine products products delivering commercial revenue.
The second quarter of 2023, we grew total revenue by 20% from the first quarter fueled by the growth of Taipei, So DPI royalties.
Below the graph I plotted the loss per share for each quarter and you can see the impact from the increasing revenues in particular from Thai basic DPI royalties, which don't have any associated expenses.
We recorded a loss per share of only two cents in the second quarter, representing an 82% decrease from the second quarter of 2022.
The second quarter of 2023, we had our first quarter of GAAP income from operations since I joined the company six years ago, and the amount of $2 million Theres been a long time coming but the growth in revenues associated with the U T collaborations they've had a significant impact on turning this positive.
Starting with this quarter, we will communicate a GAAP to non-GAAP reconciliation, so that investors can clearly see the impact of certain noncash items on our P&L.
Looking at the table, we had positive GAAP income from operations of $2 million in the second quarter of 'twenty three.
Compared to a GAAP loss from operations of $21 million in the prior year.
When adjusting for the noncash items of stock compensation of $6 million and a loss of foreign currency of less than $1 million. We had positive non-GAAP income from operations of $8 million for the second quarter of 2023.
When looking at EPS, we recorded a GAAP net loss of <unk> <unk> per share, which when adjusted for noncash items stock compensation were also foreign currency and a gain on available for sale Securities. We had non-GAAP EPS of zero for each share the primary difference between our income from operations and.
Net income included in EPS, it's interest income and interest expense.
The plan to continue to show a reconcile your affiliation like this each quarter to enable more transparency into the impact of our operations on cash.
We continue to tightly manage our cash outflows are benefiting from the increasing revenues associated with Televisa DPI and our endocrine business as we move the company towards profitability and being cash flow positive. We continue to believe that our current level of cash cash equivalents and investments plus anticipated operating cash inflows into <unk>.
Outflows will allow us to adequately invest in and grow our business without a need for any follow on stock offerings.
Thank you and now I'll turn it back over to Mike.
Thank you Steve first of all when I talk about a new addition to our leadership team we hired Dr. Burkhardt blank, who is our executive Vice President and head of R&D and Chief Medical Officer, I've had the pleasure of working together over the last two months as you've done a deep dive on all of our assets. He's visited our facility, where we had the fire and it really helped build that.
<unk> helped us think about the future structure of how we move these assets forward.
And I get the question of what's going to be the next leg up for Mannkind over the next few years. It really is the R&D coming into fruition, which we call. It is now time to bring in someone like Dr. Burkhardt to help us put the governance structure in place and manage these assets is we have four or five great assets coming down the road.
It's more than 25 years of global development experience at several companies starting his career out of Barnwell ingelheim going to record it.
The company recently in France.
He has experienced multiple disease areas.
Early preclinical and successful NDA submission.
You've got small molecules drug device combo as well as on health Therapeutics, it's very difficult to find somebody with such breadth and depth of experience. We're very fortunate to have someone like Dr. Black join us and help us lead our efforts here over the next several years.
As you can see the next slide the pipeline I'll be working on and we have all the work with Afrezza pediatrics in the filing that will come with that we have the international work coming to get us back into Brazil, and India. We have V goes we continue to evaluate that for other opportunities and grow here in the U S.
And then the pipeline itself with a M 101, being <unk> to a one to 10 that are both go into <unk> phase one in phase III.
And then he had dna's alpha, which we're continuing to work to get that into patients as quickly as possible.
And another as a TGF beta which continues to work through its animal models until we get into a preclinical formulation ready for testing.
So you've got a lot of work in front of them moving these along and that's the question I always get is why isn't a friend's growing faster I don't think people. Appreciate is it takes a lot of money and time and people to run four development programs and that's the choices. We've made fun Pete Pediatrics and funded 101 201, three or one of 501 in order to ensure.
We have one launch per year, starting in roughly 2025, either new indication or a new product launch and continue to be focused on that effort and we believe this is going to be really critical to our future success.
The next slide shows you some of the milestones associated with these pipeline investments that we're making.
Should ultimately give us new product revenue or expanded product revenue with existing products.
As you look at the endocrine business inhaled three kicked off here, we expect to have that data in the first half of next year.
The India trial readout that that'll be finalized here in the second half and discuss next steps at that point.
And the inhale one pediatric trial Readouts should happened late in the first half of next year as a primary endpoint of six months.
We've added a new milestone here in the second half of 'twenty three for inhaled, one where robin interim analysis, telling us either a trial is properly sized.
It needs more patients will take a little longer or it's a futile exercise to keep going.
Obviously, we believe the primary endpoint is sufficiently statistically will be sufficient.
But until we get to that interim analysis in October which would be late October . So we'll have that information by the next quarterly earnings call.
That'll be important shared with shareholders that we think that will be on track I'm gonna trials have read out there in the first half of 'twenty four.
On the orphan lung things that we're in control of it's the 201 PID, it's done a filing of the IND. It's.
Its IND submission for <unk> pads, I mean, one of the things we're evaluating based on the F D.
Post the fire, which is and we use are some of the data that was generated in Germany in order to bridge for the U S to keep your eye and deal tracking ultimate get this trial off the ground in early 'twenty four.
And then finally, you also have a United Therapeutics working on the T cell study and we know that's critical for continued expansion there for Televisa.
As we look at the key value drivers. These are real and they are significant the pipeline as we think about 101 going forward every thousand patients that we capture in that disease.
We bring in $100 million in revenue at the time of launch.
For 201. This is a multibillion dollar opportunity littered with failure, we've taken the market leader made it into an inhaled version hopefully minimizing the systemic toxicities and being able to enable patients to have them well well controlled therapeutic dose in IPF for 201.
As it comes the DPI you can see the strong start there.
At the end of the day there are multiple ways that you can see this growing to over 10000 patients and we want to give you clarity on is how we think about that from a shareholder of mankind.
Obviously, we're not in control of the launch, but we feel very good about United Therapeutics investments and opportunities to continue to help as many patients as possible suffering from P. H I L T as well as like forget hopefully in the future.
The pediatrics is the thing we highly anticipate next year and every 10% in kids fundamentally changed the long term trajectory for president, but that compounds for the next 20 years, but right now I want you to understand for every 10% share in kids is roughly $150 million in revenue.
Investing in the inhaled three study because we believe if we get great data on handheld won that's versus rapid acting insulin. The next question. We get is what happens if you switch off an insulin pump how does the data look and we hope to show you that we're as good.
Or better depending on the data, but hopefully not worse.
Pilot study, we showed that we were as good as using insulin pump versus not.
And the reason that's important is we expect to once weekly basal to be able to market in the not too distant future. So we literally could give people live with diabetes down the 52 injections, a year plus and handling their mealtime insulin plus a CGM that's game changing for patients and providers.
Vigo, we are focus on stabilization as you can see growth is now in front of US we wanted to make that a more profitable product as we go forward into 'twenty four and beyond.
Now I'll turn it over.
That's your questions. Thank you.
Thank you, ladies and gentlemen, I'd like to ask a question. Please press star one on one of your telephone again to ask a question. Please press Star 111 moment for your first question.
Our first question comes from the line of Steven Lichtman of Oppenheimer <unk> Company. Please begin.
Thank you evening everyone.
Mike you mentioned the <unk>.
The real.
Benefit that you've seen and.
So in reimbursement this year Medicare.
How are you guys balancing you wanted to drive profitability in the business versus investing in getting the word out now because it does seem.
It seem like this is a.
A big change for the branded business as you showed.
Into the second quarter here, so talk a little bit about how you're getting that word out versus I know you want to start driving some leverage in our business as well.
Yes.
First the question.
I think first as you know we've tried different reimbursement support programs over the years and they haven't always resulted in a trend break.
I think this year, we saw that you know the Medicare patients are a the approval ratings are very high they are in the 90% plus range.
And so that makes us feel confident that we can continue to help more patients and now that we can see the market share in two quarters.
Get up to where injectable insulin is as a percent of their business.
It gives us some confidence to push even harder in this segment.
In terms of profitability you know, we have submitted rebates for Medicare part D over the years.
And they've mostly been rejected because of the rebate game of copper.
Competition in the PBS.
So there wasn't a lot we could do maybe going into next year that could change.
Meaning most of our patients just doctors need to do a prior off and we're seeing very high approval rates. So maybe as we go into 2024, we'll start to see either ph be removed completely of Medicare part D.
Or you know continue to success that we're seeing this year and we can help even more patients next year beyond what we're doing but it's nice to see them six months, we can get back to a market share of injectable insulin.
Always felt that patients were not getting the product properly because of the.
The difference is in Medicare part D reimbursement co pay to a patient and we work pretty closely with CMS to explain this and they understood. It. Unfortunately, it helps patients and so I think that's really what you can see is that cost didn't help that's hurting people at the end of the day that we did everything we could but there's only so much you can do on part D.
Got it great and then and then.
I guess as we think about the back half.
Hmm.
Based on your visibility how should we think about DPI royalties.
Sequentially here in the third and fourth quarter, you know to keep coming in certainly a lot better higher than we expected it to.
Is this a good level or based on your visibility can you give us directions directionally into the 300.
Third and fourth quarter and then also on gross margin first half strong on on Afrezza Vigo I think around 70% is that pretty good level for the back half.
So Steve as you know we don't provide forward looking.
Guidance or forecasts.
So the.
If you listened to you tease call, they're very bullish on <unk>.
Patient demand for <unk> as you can see through our royalties.
And the manufacturing of the product so without providing any <unk>.
<unk> for the second half of the year.
Just believe they will continue to be strong patient demand.
And we'll report those revenues in the third and fourth quarters they come in.
As for the margin a 72%.
Is ripe for a combined afrezza and Vigo Fred.
<unk> got a better margin than V. Go. It goes we don't provide those separately anymore just combined yeah that is.
A pretty good margin for their there's variability quarter to quarter with the amount of manufacturing we do on Afrezza.
That impacts your friends up margin from quarter to quarter, but we.
We feel that it's in the right ballpark for.
The margins for our commercial products at this point.
Okay great.
Thanks, Steve Thanks, Mike.
Welcome.
Yes.
Thank you one moment please.
Our next question comes from the line of Olivia Brayer of Cantor. Your line is open.
Hey, good afternoon, and thank you for the question.
You guys talk about the decision to take an interim look at an inhaled one and whether that was built into the trial design. Initially and then just what's the clinical bar for success in order for that study to continue as planned and then I've got a follow up question on DPI.
Sure.
In terms of it was always planned in the original statistical plan and analysis. So that has not changed it's the only thing we didn't know is when we would hit 50% enrolment.
And the trial that was the driver of that and so now that we know that we hit that milestone it doesn't matter when they crushed it data at meet together as a as a D. S M B a.
I will not know the data pushout. Unfortunately instance, its confidential to the I guess, the big but at least we'll know at that point you know in the trial feudal well keep go in Baltimore patients.
And we obviously power in it so hopefully the endpoint that we need to hit and wrap up six months after that as the primary endpoint at the.
Secondary end point will be the second cohort.
And the control arm switching over to a friend's apartment initial six months. So we would expect the primary endpoint of that trial will be wrapped up hopefully six months after that early November date.
No.
Yeah.
Okay got it and then second question is it looks like you guys increased BPI revenue assumptions for every 10-K patients to $2 $50 million to $300 million can you give any color on what's driving that increase.
Yeah, I think as we continue to fine tune to basically each quarter, we get a little bit more clarity on what does it look like.
And in terms of pricing packaging a dose all of those things go into the account I really don't.
Not break out the details of our forecast, but we wanted to give people some guidance because you know I think the one thing.
As you hear about different indications and are different.
Factories.
That would be built between our expansion at <unk>.
Plant, we want you to at least have a range of number.
There and some of that changes over time because of discounts or manufacturing revenue assumption. So that's why we gave a range.
Opposed to point anything else with the number of patients.
Okay got it that's helpful. Thanks, Michael I appreciate it.
Thank you one moment please.
Our next question comes from the line of Gregory <unk> of RBC capital market your honest something.
Hi, Mike and team, it's a niche on for Greg Congrats on the quarter and thanks for taking my questions. Just a couple for me on 201.
Maybe just for some color on differentiation other than drug delivery of Nintendo how would you describe to one's ability to differentiate against the drug like pirfenidone in patients with IPF and how would you characterize the received FDA feedback and how are you incorporating it into the development path going forward I appreciate the time and thanks.
Again.
Yeah, great questions I think the good news is there there's been some data out there on the inhaled Pirfenidone and that tells you you're delivering an inhaled route.
To be in these products could could work I think our particular product and our focus has been on the tenant. We originally had both a development we actually I just wanted to go forward.
Versus trying to develop both and the reason is we believe the limiting side effects Oh fab is around the Gi side effects and the dosing.
And by putting in the inhaled route it's got very.
Low bioavailability via the oral route and that allows us flexibility here and our design and our thinking around and health.
We believe we should be able to minimize some of the side effects that patients see obviously got to get this in human trials, but that's gone into our thesis.
And the FDA feedback.
You gave us some flexibility to think about healthy volunteer is versus IPF patients. How do we think about phase one to phase III design.
That work will be finalized those weighing for burkhart to start before I really put my.
Figure for Dow on which way, we should go and that'll be aligned in telecom.
Filing here very shortly.
So we feel pretty good about the product profile and deliver dose and the ability to differentiate hopefully on the tolerability side as you may or may not have realized.
30% to 40% of people drop out.
Oh fab because they just cannot tolerate the product.
And that's a pretty significant population that's not getting help.
So again product may or may not go generic by the time, we get to market, but the fact that people cannot tolerate and get the efficacy when they go to 80% probability of dying in five years, a significant unmet need.
And so we feel pretty good about the FDA feedback, there's always things to work through it but nothing that was a showstopper for us.
Great. Thanks, so much appreciate it.
Thank you one moment please.
Yes.
Yeah.
Our next question comes from the line of Thomas Smith of Leerink Partners. Your line is open.
Hey, guys. Good afternoon, thanks for taking the questions and let me add my congrats on the solid results.
On the endocrine business unit performance I think you're now guiding to profitability in 2024, I think previously you talked about your expectations being to get to breakeven by the end of this year.
Wanted to check in and get your updated thoughts has anything changed in terms of timing or outlook for.
For the rest of the year and then maybe as a follow up if you could just give us an update on how you're thinking about investment here in the pipeline and platform broadly how should we think about the R&D spend over the next couple of years.
You guys think about bringing back I mean, and then having the tenant name in some of these other pipeline programs forward.
One thing that versus desire to maintain profitability. Thanks.
Thank you Greg Great question I think on the breakeven in Q4, that's still our intent.
To get there you know well, we'd be exactly there plus or minus a couple of hundred Grand you know that the year will wrap up but I think we're still tracking on Thanksgiving.
Yeah.
We're on track, but could be off by a little bit, but yes. It shouldn't be any major thing in the Grand scheme, so that should be profitable as we look into 'twenty four wall.
The R&D spend I I'd answer that two ways one.
We don't intend to launch these products ourselves outside the U S. So we will be seeking partnerships for rest of world and when you think about products like N T. F with qualifiers I mean, you know the Asia Pacific area is is a large market that we would hopefully find one partner to launch.
And take over some of the costs associated with the development there, but then the U S. You you know there's a couple of things ramping up next year. So the first will be in help wanted the second being held three so those two trials do cost US you know quite a bit of money each year and we would expect some of those costs as they wind down to shift towards called files. So we haven't given quite.
Exact guidance yet because some of this is the timing and the upside of the patients.
Oh, the Clofazimine trial, which you know as you look at the timeline a large majority of those expenses late 'twenty five as opposed to 24.
It would be some expenses for example, some of the manufacturing expense, but that'll hit cash flow versus you can comment on that amortization on a quarterly basis and it could be a mix of things that are put on the balance sheet and amortized over that kind of a trial period and other center expense as incurred so.
And then I think the phase one studies aren't that expensive in the Grand scheme of things. So I don't even if we got capacity in a phase III and then they've gone into phase one I don't think that's an unbearable.
Expense and that we should be should be okay. As we look at 2024 to 2025 time frame and keep in mind, our friends and should continue to grow because it looks like it's starting to grow and turbine associates, who continue to do well. So I think on the company I'll.
I want to make sure we're not in a position that we started in six years ago and that's our number one focus but we think when we look at our philosophy. This is a big growth area for the company in future revenue.
Make sure we're able to capitalize off for our shareholders and patients.
Got it that makes sense, thanks for taking the questions guys.
Thank you. Thank you.
Thank you.
One mom and plans.
Our next question comes from the line of Orin Loopnet of H C. Wainwright. Your line is open.
Alright, Thanks, a couple questions first on <unk>.
So DPI I know youre, not giving guidance and a few serious product to talk about but you.
You did point to their call, but they certainly are quite bullish but they did.
Call out a $30 million in stocking.
Uh huh.
And sort of linked it to your advancements and improvements in capacity and yield for the product and so I guess can you just help us understand where are you at now.
And going forward in terms of supplying that.
Whether it's hand to mouth a warranty.
Or if you've actually now well ahead of demand and do you expect I guess to keep having to fulfill.
Orders, so we should keep seeing that grow if demand is growing going forward versus you know.
It really filled the channel a lot now and we could take a breather.
Yeah.
I think if you.
Where to take away the $30 million in revenue you can see with.
But the royalty range you can you can see it's grown quarter over quarter I don't think Tau asos anywhere near capped out in terms of you know if you listened United around new starts.
The new conversion in <unk> and.
ILD and not fully penetrated obviously, so you know as each quarter goes on you know that will chew up more inventory more days on hand, and you know ultimately we gotta keep stocking and keep building that inventory. So we're not giving exact guidance on how much we have on hand, but I would say, we don't think it's flat.
And therefore, we expect continued growth as we look out.
Yeah.
Yeah, and I don't don't Misunderstand me I think it's pretty clear demand has grown as well I guess I'm just trying to understand where you're just basically catching up to where inventories sort of needed to be in general Uh huh.
Keep supply in the market as expected.
Or have you made it such that you expect that or do you think it would be positive. They now work through that inventory on the wholesaler side.
Yeah, I mean, we're not privy to their contractual obligations with the pharmacies and days on hand, I know they went up more than we could give the pharmacy at the time as we close Q1. So I think we've made some changes here in Q2 to enhance that and I think as we close out the quarter you can see we did a good job with the increased demand.
And so again I don't want to comment for U T. On in terms of what inventory will project to be in Q3 or not.
Our job is to make as much I mean, I suppose we cant remember we're doing that.
Okay, and I'll move on to the pipeline of 201.
I just Wanna.
Clarify your earlier comments you mentioned some of the Fda's feedback.
Relates to.
Clinical work either in healthier or IPF patients and I'm just trying to understand are we talking about theoretically is this just a discussion for phase one whether that needs to be unhealthy versus patients or in theory are we actually talking about deeper into the.
Development timeframe, given we already know about these molecules is a possible I'm just speculating is it possible that you could do I guess, a streamlined or abbreviated full registration quality development program potentially that would just be I guess PK or bioavailability base did not necessarily even have to do a full clinical trial.
Patients.
I would say I wish and the second part of the question I think if you look at the F. D. A typically as you're changing route of administration that will always require a clinical trial and then so that that would be our expectation in and human disease experience disease patients. How we designed that trial and the endpoints of that.
Trial, I think are still things, we won't we won't go public with.
But the fact that the phase one we would go back and forth in terms of do we do help ease or do you do something in IPF. It does appear we have flexibility to make that call on our side and I guess, what burkhart here now what we'll talk about the pros and cons of.
Obviously, if you do healthy that could go a lot faster than if you do people with IBM.
Yes, it's harder to find and get them into the trial and it just takes a little bit longer and they don't want to spend days in AR and our clinical research sites. So that's always something we're trying to manage around what insights that we're trying to get what are we trying to prove it was the right thing to do so.
But no we would fully expect the phase III trial to at least.
Yes.
Patients who have Ips.
Okay, and just lastly.
I guess building on Steve's question upfront, where you talk about sort of the trade offs between contracting with profitability.
In General where are you guys at in terms of contract I mean, clearly you have a high margin higher margin products higher priced product.
You know with small market share and I'm just wondering given the high positive feedback you get you know relative to all these other therapies.
What opportunities have you explored in terms of being able to I mean, a question here if I'm gonna match Injectables on price, but is there a possibility that you could get substantially better coverage and get a real step function in access next year or maybe you know.
2025, depending on the bidding.
Bidding cycle, such that you're willing to give up.
Economics right.
For a chunk of volume.
Oh, I'm, sorry, you're going to see without a question for Steve Steve liquids question.
So I think you're spot on in terms of we.
We always way, giving discounts for a faster growth versus being profitable.
And I think based on all the programs we've done historically, we've not seen that.
Relieving some of the administrative burden has actually caused any faster growth for Afrezza I think it's really about conviction that efficacy and safety wise, you're as good as an insulin pump or you could safely switch from MDI and get equal or better outcomes. So that data sets will come out with next year if if.
The rebates are going away as I suspect they are with all the price of scrutiny around the injectable insulin.
The contract in which really didn't prevent us from getting open access to afrezza in our preferred way.
If when I suspect happens in 'twenty four.
Could be an opportunity to move up our our discount range, a little bit and that would hopefully result in greater volume.
So we are the way contracts are structured in general in the payer space is they can choose to put the product on formulary and collect a little bit higher rebates that they just have not made that choice over the years and so not every pbms has a contract but a couple of do.
And so were not made aware right now that that's going to change for next year, but I do plan to go out and meet with some of the big players to talk about this because we see the Medicare part D success, and we'd like to continue to help patients gain access to our product.
But we're not looking to no part of the value.
New proposition with Afrezza is you don't need to pay hundreds of dollars a month of insulin pump supplies, you don't need to pay for the pump do you don't need to pay for.
And everything else, but.
But you still need to pay for them when you get a pump so the whole economic value prop, whether its an omni powder medtronic or tandem pump plus the cost of insulin plus better efficacy is really what we focus on payers and that's some of the work that data set so the readout next year so to your point David.
Get some plants next year, but hopefully real push for 25.
They can really have a differentiated product and the results hopefully bear that out in the clinical trials.
But I wouldn't expect alright.
She departments.
So if I'm hearing you and that data is going to give some really new to talk to payers about next year for the 2025 a cycle.
I think that's gonna be important.
Do some payers to stay with the price changes they move us up they might be.
But I would expect better discussions as we get new data readouts.
Alright, thank you.
Thanks Mark.
Yeah.
Thank you one moment please.
Our next question comes from the line of Anthony Petrone of Mizuho. Your line is open.
Thanks, and congrats on a good quarter here a couple on <unk> and then I'll follow up with a couple one on diabetes.
On the renewed outlook there for 10000 patients 250 to 300 million, Mike I'm, assuming again that doesn't include idiopathic pulmonary fibrosis, the new the IPF label expansion and are there any early kind of views as to what I P. F could add to that $250 million to $300 million.
And then for Steve on that question as well just from a manufacturing capacity standpoint, Ken can the Danbury facility at the current capacity handle that that label expansion or will you need to.
I have a little bit of an acceleration in growth Capex. If that that label is secured and then I'll have a couple of follow ups.
I think the way you go to look at that statistic is regardless of where the 10000 patients come from being IPF ILD ph. Obviously, they don't have the approval probably PFS right now, but if that was to drive incremental volume and a new market for them.
That's roughly the revenue we would expect for every 10000 patients. So it's not just.
There's really not a when you think about the price of the product is more of an annual cost as opposed to it indication costs.
<unk>.
And the same thing is true as we built out the manufacturing.
You know the original facility.
We launched with was meant to handle.
No really ph ILD and then as it expanded U T invested in additional capital improvements.
In new spray drying capacity as well as fill finish that is really setting us up for IPF and continued upside forecast if I basically keeps stilwell in ILD.
N P. H then they wont make sure we have enough safety manufacturing capacity beyond whenever we could expect so we don't ever stuck out. This is a life saving drug and and then U T has announced they're building a duplicate facility.
Down North Carolina and that'll be.
Important when you got a drug that's doing this great you don't want to have a single source our failures. So we were helping them.
With that as well so hopefully that answers your question on.
The Ips as well as manufacturing.
No helpful and then on diabetes.
Is this the is this a full quarter of a V go I know.
You guys I think it was straddling the one Q2 Q full launch or was this sort of the quarterly run rate a full quarter for V. Go and then on just any update on the Blue Hail a V. I S launch integrated with Dex Com, just just maybe a little bit there or is that going to be.
Launched with with <unk>, six <unk> seven or is it.
One version of <unk> com.
And I guess, maybe even more important to that is when you think about the inhaler and the overlap with Dex Com I mean is there any statistics that you have on.
On the current inhaler.
Ah patients that are active decks com users that at this point in time. Thanks.
Let me answer the first question on V go required the product on May 31, 2022.
So our revenues for 2022 in the second quarter of about $2 million and they were about $5 million in Q2 of 2023. So it's not a great comparison, because you only have one month last year, but going forward you should have.
Comparability.
That's helpful.
And I think on on V. Go is as you may or may not realize it was a turnaround that was one of the clients for a long period of time. So we had to stabilize before we get the growth that we started to seen a stabilization on <unk> is back in Q4 Q1, you could probably see that translate to <unk>. This last quarter. So hopefully as we go forward quarter over quarter, we can start to see year over year.
Our comparisons but.
We're proud that we hit the first milestone, which was our high end of our $18 million to $22 million guidance.
The blue.
Blue Hills is so we are planning to use that and inhale three so.
In health, we just kicked off this month, we're almost got all the sites activated and that'll be the beta test.
And that phase phase four trial, and then assuming that goes well then we'll evaluate continued improvements to get that into the general population is currently with <unk> six <unk> seven from my knowledge I know it was kind of tested them on June 7th.
So it does imported it does work well on both and but we're not planning a limited to just decks com, we're happy to partner with Libre or since you Alex or other parties.
But that is the.
<unk> integration is with the API.
<unk> 67.
Thanks again.
Okay.
Thank you I'm showing no further questions at this time I want to turn the call back over to Michael Costanza for any closing remarks.
Thank you and thank you everyone for your patience as we continue to turn around the company. We do feel like we're on the right growth track, we have great growth drivers between our in line assets in our pipeline assets.
Been a long journey to get here, but we're really proud of the team the work and the energy going into it and all the patients who are helping us benefit from from your investments. So I just want to say, thank you to analysts for covering us and our shareholders and our and our employees all of our stakeholders.
Forward to talking to you again I'll be a conference Tomorrow in New York meeting New investors as well as September in New York for several conferences, so hopefully as updates happen won't provide them at those opportunities. Thank you.
Yeah.
Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.