Q4 2023 MannKind Corp Earnings Call

Operator: Good afternoon, and welcome to MannKind Corporation's 2023 4th Quarter and Full Year Financial Results Earnings Call. As a reminder, this call is being recorded on February 27, 2024 and will be available for playback on the MannKind Corporation website shortly after the conclusion of the call until March 12, 2024. This call will contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainty, which could cause actual results to differ materially from those stated expectations.

Good afternoon, and welcome to Mannkind Corporation, 2023, fourth quarter and full year financial results earnings call.

As a reminder, this call is being recorded on February 27th 2024, and will be available for playback on the Mannkind Corporation website. Shortly after the conclusion of the call until March 12 2024.

This call will contain forward looking statements such forward looking statements are subject to risks and uncertainty.

Cause actual results to differ materially from those stated expectations.

Operator: For further information on the company's risk factors, please see the 10-K 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 will now turn the conference over to Mr. Castagna. Please go ahead, sir.

For further information on the Companys risk factors. Please see the 10-K report filed with the Securities and Exchange Commission. This afternoon, the earning release and the slides prepared for this presentation.

Speaker Change: Joining us today from Mannkind are Chief Executive Officer, Michael can Sanya, and Chief Financial Officer, Steve Barnhart.

Michael E. Castagna: I will now turn the conference over to Mr. Castagna. Please go ahead Sir.

Michael E. Castagna: Thank you, Valerie. We have never seen a better time for mankind than we do today. As we look at our future, it's extremely exciting, and I'm ever more motivated to ensure we deliver on all key operational opportunities in front of us. As we think about today, Steve and I will go over the operational pipeline highlights, the financial review, and I'm also here today with Lauren Sabella, our Chief Operating Officer. Q&A.

Thank you Valerie.

Michael E. Castagna: We have never seen better time for mannkind than we do today.

Michael E. Castagna: As we look at our future is extremely exciting and I never more motivated to ensure we deliver on our key operational opportunities in front of us.

Castagna: As we think about today, even though I will go over the operational pipeline highlights the financial review.

Castagna: I'm also here today with Lauren Sabella, our Chief operating officer.

Speaker Change: For Q&A.

Michael E. Castagna: We will drive shareholder value by making a difference in the lives of the patients we serve. We will make over 25 million doses and devices in 2024 and help roughly 25,000 patients take a MannKind-produced product in 2023, the most in our history. In Q4, we had record revenue for Taivesa on both royalty and collaboration manufacturing, along with record production for Taivesa cartridge production.

Lauren Sabella: We will drive shareholder value by making a difference in the lives of the patients we serve.

Lauren Sabella: We won't make over 25 million doses in devices in 2024 and helped roughly 25000 patients take a mannkind produced product in 2023, the most in our history.

Lauren Sabella: In Q4, we had record revenue per ton based on both royalty and collaboration manufacturing along with record production on Televisa cartridges.

Michael E. Castagna: We advanced our pipeline in both the orphan business as well as the endocrine business, and our endocrine business had its second consecutive profitable quarter. We finished the year in the strongest position we've been in, in terms of financial ability, as well as by selling 1% of our Tebeso royalty for $150 million upfront and $50 million in revenue milestones. Many of you asked, could we have sold more? Why didn't we sell more?

Lauren Sabella: We advanced our pipeline in both the orphan business as well as the endocrine business.

Lauren Sabella: And our endocrine business had its second consecutive profitable quarter.

Lauren Sabella: We finished the year in the strongest position we've been in in terms of.

Lauren Sabella: Financial ability as well as by selling database with 1% of our 10 base of loyalty or $150 million upfront and $50 million in revenue milestones.

Lauren Sabella: Many of you asked could we have sold more why did we sell more and the reality is we didn't need to somewhere we want to make sure we're comfortable with carrying that level of debt and cash on the balance sheet to control our future. We're very excited about <unk> and what it's going to bring to patients and anticipate hopefully positive milestones for <unk> based on the future and therefore want to preserve.

Michael E. Castagna: And the reality is, we didn't need to sell more; we wanted to make sure we were comfortable with carrying the level of debt and cash on the balance sheet to control our future. We're very excited about Tybaso DPI and what it's going to bring to patients and anticipate, hopefully, positive milestones for Tybaso in the future, and therefore want to preserve 90 percent of that value for our shareholders. At the same time, we want to de-risk the debt side of our company. We've also restructured our in-home purchase commitment and reduced our near-term cash outlays by $50 million.

Lauren Sabella: 90% of that value for our shareholders.

Lauren Sabella: At the same time, we want to Derisk on the debt side of our company.

Lauren Sabella: We've also restructure insulin purchase commitment and reduced our near term cash outlays by $50 million.

Michael E. Castagna: The EBU will be the foundation for our future launches and currently makes up about 37% of our revenue in 2023. Hazlett presented at J.P. Morgan. In January, our ability to grow double digits for the foreseeable future looks bright when you see that in 2023, our total revenue will approach $200 million, almost 100% growth year over year. I'm going to spend a few minutes on AFRESA and the EBU because we are at a pivotal inflection point with our future. Innovation takes time, and disruption is even harder. For example, when you think about the weight loss craze today.

The EU will be the foundation for our future launches and currently makes up about 37% of our revenue in 2023.

Lauren Sabella: As I presented at Jpmorgan in January our ability to grow double digits for the foreseeable future looks bright and you see in 2023, our total revenue approached $200 million almost 100% growth year over year.

Lauren Sabella: I wanted to spend a few minutes on afrezza in the EBU because we are in a pivotal inflection point.

Lauren Sabella: With our future.

Lauren Sabella: Innovation takes time and disruption is even harder when you think about the weight loss today.

Michael E. Castagna: GLPs were 20 years in the making to what you see today. The pods in type 1 diabetes were 10 years in the making, and Penn's took a huge time to convert from vials back in the early 2000s. I believe we can make this business the core pillar of our growth. When you look at the endocrine business, it grew 32% year-over-year or $70 million in 2023 and greater than $20 million in Q4 in the second quarter in a row of profit, contribution, as well as on a run rate of $80 million. We've made a lot of changes in 2023 and delivered despite those changes to set us up for a transformation once we see the new data from INHALE-1 and INHALE-3 this year. As I look at revenue, Fresno Net Revenue grew by $12 million, or 27% year over year.

Lauren Sabella: We're 20 years in the making to what you see today.

Lauren Sabella: Pods in type one diabetes 10 years in the making.

Lauren Sabella: <unk> took a huge time to convert from <unk> back into early 2000.

Lauren Sabella: I believe we can make this business a core pillar of our growth story.

Lauren Sabella: When you look at the endocrine business it grew 30%, 32% year over year or $70 million in 'twenty, three and greater than $20 million in Q4, the second quarter in a row profit profit contribution.

Lauren Sabella: As well as on a run rate of $80 million.

Lauren Sabella: We've made a lot of changes in 2023 and delivered despite those changes to set us up for a transformation once we see the new data from <unk> This year.

Lauren Sabella: As I look at the revenue Afrezza net revenue grew $12 million or 27% year over year. This is our largest jump in seven years.

Michael E. Castagna: This is our largest jump in seven years, and is the most we've seen driven by volume alone as opposed to price balanced by historical. Several clinical readouts in 2024 may expand our market potential, and I'll talk about those in a minute. One of the questions I get is, "What is different this year than previous years?" Our focus this year is incredibly different. We've been waiting for this moment when we have people, money, and data. Many times, we have had two out of three, but not all three.

Lauren Sabella: And is the most we've seen driven by volume alone as opposed to price balance by historical standards.

Lauren Sabella: Several clinical Readouts in 2024 may expand our market potential.

Lauren Sabella: And I will talk about those in a minute.

Lauren Sabella: One of the questions I get is what is different this year than prior years.

Lauren Sabella: Our focus this year is incredibly different they've.

Lauren Sabella: We've been waiting for this moment, where we had people money and data. Many times, we had two out of three but not all three.

Michael E. Castagna: So number one, we gotta maintain our persistence in Medicare and commercial to grow our base business and leverage the $35 insulin co-pay that currently exists for Medicare and commercially insured. So coverage, as we know, is the number one objective. Number two, we optimized our sales force footprint here in January to build capabilities for future growth. And what that means is we were able to reallocate some headcount, create key account managers, reimbursement specialists, as well as virtual and in-person training across the country. We also have new insights from our market research, which I'll share with you shortly, that suggest by executing effectively, we can increase prescriber adoption. And finally, it is around data and education. We want to focus on K-12 development, education at conferences, and publication to elevate support and awareness, especially among academics.

Lauren Sabella: The number one we've got to maintain our persistence in Medicare and commercial to grow it.

Lauren Sabella: Business and leverage the $35 insulin copay that currently exists for Medicare and commercial insurance coverage. We know is the number one objection.

Lauren Sabella: Number two we optimized our sales force footprint here in January to build capabilities for the future growth and what that means is we were able to reallocate some head count.

Lauren Sabella: Create key account managers reimbursement specialists as well as virtual and in person training across the country.

Lauren Sabella: We also have new insights from our market research, which I'll share with you shortly that suggest by executing effectively we can increase prescriber adoption.

Lauren Sabella: And finally is around data and education, we want to focus on cable development education at conferences and publications to elevate the support and awareness, especially among academic centers.

Lauren Sabella: Okay.

Michael E. Castagna: Here's some new market research as we go forward called the Emotional Engagement Mindset Model, which is done by a company we've leveraged for market research. This shows a significant shift in perception by the various groups we tested with our new data. And you can see a baseline, just unaided awareness of a present, what people's perceptions were in terms of unattractive, apathetic, attracted, or passionate.

Lauren Sabella: Here's some new market research as we go forward called emotional engagement mindset model, which is done by a company we've deleveraged for market research.

Lauren Sabella: This shows the significant shift in perception by the various groups, we tested with our new data in.

Lauren Sabella: And you can see a baseline just unaided awareness of our president what People's perceptions were in terms of unattractive epithetic attracted are passionate and by exposing them to our core visual aid as well as some some expectations of what <unk> data readout you can see we shipped almost two thirds of our key key target audiences are attracted a passionate.

Michael E. Castagna: And by exposing them to our core visual aid, as well as some expectations of what inhale-free data could read out, you can see that almost two-thirds of our key target audiences are attracted to or passionate about our future. It's really important because it's the first time we can see this big of a shift from where we started to where we end up with the new data coming. People don't want slow acting influence in a world that moves as fast as we do.

Lauren Sabella: Our future.

Lauren Sabella: It is really important because it's the first time, we can see this big of a shift from where we started to where we end up with the new data coming.

Lauren Sabella: People don't want slow acting in a world that moves as fast as we do.

Lauren Sabella: Okay.

Michael E. Castagna: When I look at the future of our studies, INHALE-3 and INHALE-1, I'm going to talk a few minutes about. We have 60 U.S. sites in KOL, sites like the Mayo Clinic and the Jobson Clinic, some of the foundations of diabetes treatment in this country. Earl Hirsch is our top-tier thought leader here at InHealthRe as the principal investigator, and he's done a great job ensuring this We have over 300 patients in both of these trials, and both of them are on track to read out this year. On the left side of the slide.

Lauren Sabella: When I look at the future here on our studies in <unk> and then Hell wanted to talk a few minutes about these we have 60 U S sites and Kols.

Lauren Sabella: Like the Mayo clinic, the Joslin clinic, some of the foundations of diabetes treatment in this country.

Lauren Sabella: Hershey's are top tier thought leader here in health re as a principal investigator and he has done a great job ensuring this trial is dosing properly and enrolling quickly.

Lauren Sabella: We have over 300 patients in both of these trials.

Lauren Sabella: And both of them are on track to read out this year on the left side of the slide.

Michael E. Castagna: Type 1 diabetes and the health rate is the largest switch study away from AID pumps. There will be about 120 patients in this trial, half of them will be on MDI, and half of them will likely be on AID pumps as we look at the data. The reason this data set is important is it's utilizing a new dosing conversion upfront to ensure proper efficacy is maintained or approved. We are also doing meal tolerance tests at baseline in Week 17, so we can see how people's dosing may have changed over this time period. Another thing to remember about this trial, the first time we're enrolling, almost 25% of the patients are at level 7 A1C when they enter. So we're also showing you, hopefully, that tight control can remain by switching to Traceeba plus Ephraza or Degladeca, the generic name. So a lot of people ask me, what is the goal of InHale 3? Our goal is equal efficacy to what is perceived to be the standard of care, including an AIDC. No mealtime insulin or AID system has ever beat another system head-to-head.

Lauren Sabella: Type one diabetes and <unk> the largest switch study away from AIG pumps.

Lauren Sabella: There'll be about 120 patients in this trial.

Lauren Sabella: Then we'll be on MDI half of them will be likely.

Lauren Sabella: Pumps as we look at the data.

Lauren Sabella: The reason this data set is important as it is utilizing a new dosing conversion upfront to ensure proper efficacy is maintained or improved.

Lauren Sabella: Also doing meal tolerance test at baseline and week 17, So we can see how people dosing may have changed over this timeframe.

Lauren Sabella: No nothing to remember about this trial is the first time, we're enrolling almost 25% of the patients are a level 700 <unk> when they enter so we're also showing you hopefully that tight control and remain by switching to <unk> plus our friends at <unk> is the generic name.

Lauren Sabella: So a lot of people ask me what is the goal of inhaled <unk> arcos equal efficacy towards perceived to be the standard of care, including in AIB system.

Lauren Sabella: No mealtime insulin or AIG system has ever be another system head to head and we think this is an important metric that is successful and if we see a clinical advantage on highs or lows that's upside to our expectations.

Michael E. Castagna: We think this is an important metric that is successful, and if we see a clinical advantage on highs or lows, that's upside to our expectations. We also plan to use this data to hopefully update conversion figure one in our PREZ label. We've been in discussions with the FDA since the start of the PEATS program around how we update that initial dose conversion. We hope that InhaleFree will be part of that data. On the right side of the slide, you can see, sorry, on the bottom of the slide, the different data readouts.

Lauren Sabella: We also plan to use this data to hopefully update conversion figure one in our private label, we've been in discussions with the FDA since the start of the Pizza program around how do we update that initial dose conversion.

Lauren Sabella: Hope that <unk> will be part of that dataset.

Lauren Sabella: On the right side of the slide you can see sorry on the bottom of the slide the different data Readouts first dose will be at <unk> in March the 17 week data, we expect to present at Ada in June and a 30 week data will be complete in third quarter and will be presented at a future conference.

Lauren Sabella: On the right side of the slide of inhaled. One this is a pediatric study and we think this is a watershed moment in order to transform the inflection of Afrezza will be through pediatrics, and we look at diabetes innovation today, whether it's CGM insulin pumps. This started with children and worked their way into adults because the patients are warrant social media. The parents are more progressive.

Michael E. Castagna: The first dose will be at ATTD in March. The 17-week data we expect to present at ADA in June, and the 30-week data will be complete in the third quarter and will be presented at a future conference. On the right side of this slide is INHALE-1.

Lauren Sabella: And the doctors are more progressive.

It would be the largest study done on a present over 10 years and so far we don't have the data, but I can tell you. The conversion dose has appeared to truck to cause less dropouts relative to our original trials on our president.

Michael E. Castagna: This is a pediatric study, and we think this is a watershed moment in order to transform the infection of aphreza, will be through pediatrics. When we look at diabetes innovation today, whether it's CGM, insulin pumps, this started with children and worked its way into adults because the patients are more on social media, the parents are more progressive, and the doctors are more. This will be the largest study done on a phresin in 10 years, and so far, we don't have the data, but I can tell you the conversion dose has appeared to cause fewer dropouts relative to our original trials on a phresin. There's also a meal tolerance test at baseline using CGM.

Lauren Sabella: Theres also meal tolerance test at baseline using CGM.

Lauren Sabella: This study will be used to secure pediatric approval in 2025 and beyond.

Lauren Sabella: This is how we believe we will accelerate rapid growth of our president and this will ultimately spillover into adults.

Lauren Sabella: The one hangover still the lungs, and we think it's time to move forward beyond this when we look at the data today, we've been on the market 10 years, we help tens of thousands of patients. We are building up U S Kols support.

Lauren Sabella: And we have this new data coming out.

Lauren Sabella: Would not be going to the children. If we're worried about the safety of our products.

Lauren Sabella: So when I look at the future and the growth opportunity.

Lauren Sabella: We look at four segments of our future number one were already approved for type one and type two adults in health three we'll be using a new dosing with CGM and an upfront conversion. We're super excited about this data set as it also includes a head to head data I just mentioned <unk> will continue to be the bolster the units there in type two diabetes. However, those.

Michael E. Castagna: And hopefully, this study will be used to secure pediatric approval in 2025 and beyond. This is how we believe we will accelerate rapid growth for FREZA, and this will ultimately spill over into adults. The one hangover is still the lungs, and we think it's time to move forward beyond this. When we look at the data today, we've been on the market for 10 years, and we've helped tens of thousands of patients. We are building up U.S. KOL support, and we have this new data coming out. We would not be going to the children if we were worried about the safety of our products.

Lauren Sabella: Patients will still need mealtime insulin and we will continue to promote our president and Vega in that segment as our millions of people who required mealtime insulin over the coming years.

Lauren Sabella: However in order to be a leader in type one we need the data from <unk> III to set us up for an <unk>, which is the pediatric segment.

Lauren Sabella: When we do finally get that data, we know insulin pumps will be the indirect competition. When it comes to a doctor patient CD, making their educational decision for a patient they want to know what it finds it looks like against insulin pumps.

Michael E. Castagna: So when I look at the future and the growth opportunity, we look at four segments of our future. Number one, we're already approved for type one and type two adults. In health number three, we'll be using a new dose with CGM and an upfront conversion. We're super excited about this data set as it will also include the head-to-head data I just mentioned.

Lauren Sabella: So we started that study within health rate, we're excited to hopefully wrap up and one in a few months here and once we see that data we will have a one two punch this year as we wrap up 2024.

Lauren Sabella: And now lets people are starting to see the first those data we're getting questions on gestation diabetes. We think there is an unmet need there that we want to fulfill over time, because there's only two drugs that can be used today.

Michael E. Castagna: GLPs will continue to be the bolster of the units there in type 2 diabetes, but those patients will still need mealtime insulin, and we'll continue to promote Afreza and Vigo in that segment as there are millions of people who will require mealtime insulin over the coming year. However, in order to be a leader in Type 1, we need the data from Inhale 3 to set us up for Inhale 1, which is the pediatric segment. Because when we do finally get that data, we know insulin pumps will be the indirect competition when it comes to a doctor, a patient, or a CDE making an educational decision for a patient. They will want to know what a phrasal looks like against insulin pumps.

Lauren Sabella: Foreman, which crosses the placenta and slow acting injectable insulin and for anyone that knows suffered from gestation of diabetes keeping your time in range really tight is critically important.

Lauren Sabella: I'm going to bridge over to the pipeline very quickly MTM non tuberculosis mycobacteria with our Clofazimine suspension.

Lauren Sabella: So some of you may or may not be aware, but one of the competing products in phase III had a pause lists we can enrolment and people ask me why am I excited about our program and why am I confident.

Lauren Sabella: Well. The reason we're excited is one when we purchased the product there was preclinical data showing an improvement.

Lauren Sabella: In bacterial recovery in the lung model that they used.

Lauren Sabella: Number two theres wearable data the product is approved today indirectly through in.

Michael E. Castagna: So we started that study with NHL3. We're excited to hopefully wrap up Inhale 1 in a few months here, and once we see that data, we will have a 1-2 punch this year as we wrap up 2024. And now as people are starting to see the first dose data, we're getting questions on gestational diabetes. We think there's an unmet need there that we wanna fulfill over time because there are only two drugs that can be used today. Metformin, which crosses the placenta, and slow-acting injectable insulin.

Lauren Sabella: Market access program by the FDA and Novartis. So we see <unk> data being generated from patients taking <unk> here in the U S as well as Japan.

Lauren Sabella: Third there's kols support for this along with guidelines essentially.

Lauren Sabella: And finally, there is no near term competition for trials now for patients. So as we look forward. We have 100 sites, we're going to target across the world and we see no other option really for these patients to enroll besides the current drug that's on the market Hurricanes.

Lauren Sabella: So here is the design of our phase III study called the icon One study, which was designed post our FDA feedback along with the quality like group there at the FDA.

Michael E. Castagna: And for anyone that knows anyone that's suffered from gestational diabetes, keeping your time and range really tight is critically important. I'm going to bridge over to the pipeline very quickly. NTM Non-tubercular mycobacterium with our clofazamine suspension.

Lauren Sabella: Taken their feedback we've been corporate ended its design and its 120 patients on <unk>.

Lauren Sabella: <unk> 60 on the placebo arm will do an interim analysis at 50% and we'll continue to watch enrollment as we saw the competing program enroll relatively quickly over the last six months of the year last year into this year and that gave us even more excitement for the speed of enrollment that could happen with this trial.

Michael E. Castagna: So some of you may or may not be aware, but one of the competing products in Phase 3 had a pause in enrollment last week. People ask me, why am I excited about our program, and why am I confident? Well, the reason we are excited is, one, when we purchased the product, there was preclinical data showing an improvement in bacterial recovery in the lung model that they used. Number two, there's world data.

Lauren Sabella: We're excited to get this trial going and we expect to file the R&D here in March and kick off the trial in June as we've had a lot of dialogue with FDA on the trial design and we expect quite quick approval on a central IRB.

Lauren Sabella: What's exciting to us as this will be over $1 billion market with only two players in the next five years to 10 years, we have the potential to be the second approved MTM product and the market research indicate we will be a potentially preferred option for patients.

Michael E. Castagna: The product is approved today indirectly through a market access program by the FDA for Novartis. So we see world data being generated from patients taking clofazamine here in the US as well as Japan. Third, there's KOL support for this, along with guidelines.

Lauren Sabella: It's because of our favorable safety profile relative to orla oral clofazimine, that's utilized or the toxicity and tolerability challenges that some people face with our case.

Michael E. Castagna: And finally, there's no near-term competition for trials now for patients. So as we look forward, we have 100 sites we're going to target across the world, and we see no other option really for these patients to enroll besides the current drug that's on the market, Paracetamol. So here is the design of our phase three study called the ICON1 study, which was designed post our FDA feedback along with the Quality Light group there at the FDA. We've taken their feedback, and we've incorporated that into this design, and it's 120 patients on the active arm and 60 on the placebo arm. We'll do an interim analysis at 50%, and we'll continue to watch enrollment. As we saw, the competing program enrolled relatively quickly over the last six months of the year, last year into this year, and that gave us even more excitement for the speed of enrollment that could happen with this trial.

Lauren Sabella: We also know that how convenient dosing what does that mean 28 days of treatment followed by two months all followed by 28 days of treatment. So if youre doing well, you'll potentially be treated with four cycles of the year that gives patients a large burden back from from what they did every single day to where they are.

Lauren Sabella: We also know the current treatments are not highly efficacious and that patients need more options in order to keep this disease and control. It may be disease that goes away and comes back over time, but it's one that they are probably live with chronically for a long time.

Lauren Sabella: We have an opportunity to expand our brand within the brand as we think about capacity in the future.

Lauren Sabella: The next quick pipeline highlight I want to talk about is idiopathic pulmonary fibrosis 201.

Lauren Sabella: This is going to be known as the <unk> TPI as we go forward.

Lauren Sabella: The reason I'm excited about this program as our 28 day Tox data was very clean.

Michael E. Castagna: We're excited to get this trial going, and we expect to file the IND here in March and kick off the trial in June, as we've had a lot of dialogue with the FDA on the trial design, and we expect quite quick approval from the central IRB. What's exciting to us is this will be over a billion-dollar market with only two players in the next five to ten years. We have the potential to be the second approved NTM product, and the market research indicates that we will be a potentially preferred option for patients, whether it's because of our favorable safety profile relative to oral clofazamine that's used, or the toxicities and tolerability challenges that some people face with our product. We also know that we'll have convenient dosing. What does that mean?

Lauren Sabella: 80% of these patients die at five years Theres, a huge unmet need in this disease state and <unk> is the market leader marketed by Brian going behind.

Lauren Sabella: And we have decreased risk relative to the landscape that has failed in IPF development, because we already know this molecule works and Ips.

Lauren Sabella: But we do also know that there is severe gi toxicities, which limits patients acceptance and uptake and prescriber adoption.

Lauren Sabella: There's roughly 15000 active patients on treatment in this country and we believe bringing a more tolerable product that could potentially be dosed higher.

Lauren Sabella: Maximizing value for this population relative to what's out there today.

Lauren Sabella: Additionally, our bleomycin study on 201 appeared to mitigate the inflammation and fibrosis comparable to oral attended at substantially lower doses.

Lauren Sabella: As we go forward in our IND will be filed will be studying this and 201.

Michael E. Castagna: 28 days of treatment followed by two months off, followed by 28 days of treatment again. So if you're doing well, you'll potentially be treated for four cycles a year. That gives patients a large burden back from what they did every single day to where they are. We also know that current treatments are not highly effective and that patients need more options in order to keep this disease in control. It may be a disease that goes away and comes back over time, but it's one that they'll probably live with chronically for a long time.

Lauren Sabella: Next slide we will be studying this in our part one a single ascending dose as well as our multiple ascending dose to show can we tolerate higher doses over seven days.

Lauren Sabella: It will be an important study that gets done here in Q2 with data expected to read out in Q3, our goal is to show lowest Gi side effects and safety in healthy volunteers.

Lauren Sabella: I want to acknowledge as we go forward the hard work that Steve has done.

Lauren Sabella: In lending our royalty financing deal as we worked on this for over six months.

Lauren Sabella: We're in a great position because of these vision and leadership over the last seven years and before I turn it over I just want to acknowledge all the hard work, Steve has done for us and our shareholders and our employees.

Michael E. Castagna: We have an opportunity to expand a brand within a brand as we think about cliffhousing. The next quick pipeline highlight I want to talk about is Idiopathic Pulmonary Fibrosis 201. This is going to be known as the TETNIB GPI as we go forward. The reason I'm excited about this program is our 28-day tox data was very clean. We know 80% of these patients die in five years.

Lauren Sabella: That said I will turn it over to Steve to go over the financials for the quarter.

Lauren Sabella: Yes.

Steven Binder: Thank you, Mike and good afternoon.

Steven Binder: I'm pleased to review select fourth quarter and full year 2023 financial results.

Steven Binder: These supplement this call by reading the consolidated financial statements and MD&A contained in our 10-K.

Steven Binder: 2023, it was a year of substantial revenue growth for the company in terms of both percentage and dollar growth.

Michael E. Castagna: There's a huge unmet need in this disease state, and OFEB is the market leader, marketed by Brungle, and we have decreased risk relative to the landscape that has failed in IPS development because we already know this molecule works in IPS. What we do also know is that there are severe GI toxicities, which limits patients' acceptance and uptake and prescriber adoption. There are roughly 15,000 active patients in treatment in this country, and we believe bringing a more tolerable product that could potentially be dosed higher will be maximized in value for this population relative to what's out there today. Additionally, our RAT gliomycin study on 201 appeared to mitigate the inflammation of fibrosis comparable to oral butentinib at substantially lower doses.

Total revenues doubled versus 2022 and reached nearly $200 million.

Steven Binder: Let's break this down by starting with the fourth quarter total revenues at the bottom of the table. Our total revenues grew a robust six 2% versus fourth quarter 2022, and 99% for the 2023 full year period, primarily due to the growth in our <unk> DPI related revenues.

Steven Binder: Going back to the top of the table you will see that Televisa DPI royalty revenue for the fourth quarter was $21 million, which is 132% increase versus 2022.

Steven Binder: <unk> continued growth in use of <unk> DPI for patients suffering from PVH in ph ILD.

Steven Binder: Please note that $2 1 million in the fourth quarter royalty revenue was sold to a third party and our re review the accounting for the royalty sale in a few slides.

Michael E. Castagna: As we go forward in our IND-OB file, we'll be studying this in 201, in our, in our next slide, we'll be studying this in our Part 1A single-dose study, as well as our multiple ascending dose to show whether we can tolerate higher doses over seven days. This will be an important study that gets done here in Q2, with data expected to read out in Q3. Our goal is to show the lowest GI side effects in safety and healthy volunteers. I want to acknowledge, as we go forward, the hard work that Steve has done in landing our royalty financing deal, as we worked on this for over six months. We're in a great position because of Steve's vision and leadership over the last seven years.

Steven Binder: Collaboration services fourth quarter revenue was $17 million, which was an 81% increase over 2022 and was primarily representative of strong pervasive DPI production volumes in the fourth quarter.

Steven Binder: For the full year 2023, <unk> DPI royalty revenue was $72 million, an increase of 361% versus 2022, which was primarily due to the increase in patient demand for their product.

Steven Binder: <unk> commercial sales by United Therapeutics late in the second quarter of 2022.

Steven Binder: Royalty revenue has now become our largest single source of revenue, which allows us to fund and progress our clinical development and product pipeline.

Steven Binder: Collaboration and services revenue for the 2023 full year period was $53 million, an increase of 90% versus 2022, which was primarily due to the startup of commercial manufacturing in the second quarter of 2022, and the increase in production and sales of <unk> DPI semi finished product.

Steven Binder: Before I turn it over to Steve, I just want to acknowledge all the hard work Steve has done for us and our shareholders and our employees. With that said, I'll turn it over to Steve to go over the financials for the quarter. Thank you, Mike, and good afternoon.

Steven Binder: And please review select fourth quarter and full year 2023 financial results. Please supplement this call by reading the consolidated financial statements and MD&A contained in our 10-case. 2023 was a year of substantial revenue growth for the company in terms of both percentage and dollar growth. Total revenues doubled versus 2022 and reached nearly $200 million.

Steven Binder: <unk> therapeutics in 2023.

Steven Binder: Okay.

Steven Binder: Moving down the table to our endocrine business.

Steven Binder: Total endocrine revenues were $20 million for the fourth quarter.

Steven Binder: And $74 million for the full year.

Steven Binder: For the fourth quarter, Afrezza net revenue of $15 million compared to $12 million in 2020 to a growth rate of 29%, which was mainly driven by a higher patient demand with underlying paid to your ex growth of 29% year over year.

Steven Binder: The lower gross to net deduction as a percentage of gross revenue and price.

Steven Binder: Compared to the third quarter of 2023, there was a $2 million increase which represents half patient demand and have increased channel inventory due to wholesaler purchasing an extra week of product in late December.

Steven Binder: Let's break this down by starting with the fourth quarter total revenues at the bottom of the table. Our total revenues grew a robust 62% versus the fourth quarter of 2022 and 99% for the 2023 full year period, primarily due to the growth in our Tybaso DPI related revenue. Going back to the top of the table, you will see that Tybaso DPI royalty revenue for the fourth quarter was $21 million, which is a 132% increase versus 2022 and the result of the continued growth and use of Tybaso DPI for patients suffering from PAH and PHILD. Please note that $2.1 million of the fourth quarter royalty revenue was sold to a third party.

Steven Binder: This additional wholesaler purchase in late December would likely impact our net revenues for the first quarter of 2024.

Steven Binder: For the full year 2023 period, and 27% increase in Afrezza net revenue was mainly related to increased volume from higher patient demand with underlying paid trs growth of 25% price in a more favorable gross to net adjustment as a percentage of gross revenues.

Net revenue for <unk> was $5 million for the fourth quarter of 2023.

Steven Binder: Revenues were 13% lower versus 2022, primarily due to lower patient demand and higher gross to net as a percentage of gross revenues, partially offset by price.

Steven Binder: <unk> net revenue improved versus the third quarter of 2023 by <unk> $2 million, mainly due to improved gross to net.

Steven Binder: And I will review the accounting for the royalty sale in a few minutes. Collaboration and Services' fourth quarter revenue was $17 million, which was an 81% increase over 2022 and was primarily representative of strong Pavesa DPI production volume. For more information, visit www.fema.gov. For the full year 2023, Paivaso DPI royalty revenue was $72 million, an increase of 361% versus 2022, which is primarily due to the increase in patient demand for the product and the start of commercial sales by United Therapeutics late in the second quarter of 2020.

Steven Binder: For the full year period to 48% increase is primarily related to the purchase of <unk> on May 31, 2022, reflecting a seven month versus 12 month comparative.

Steven Binder: The next slide shows our revenue growth by source and basic earnings per share on a quarter by quarter basis in the first quarter of 2022 through the fourth quarter of 2023 I'd like to show this graph because it highlights how dramatically our business has changed in two years and how we're executing against expectations for the <unk>.

Steven Binder: Fourth quarter 2023, total revenues increased 14% sequentially versus the third quarter of 2003 and are up 62% versus the fourth quarter of 2022.

Steven Binder: Fourth quarter 2023, total revenue of $58 million with almost five X. The total revenues recorded in the first quarter of 2022.

Steven Binder: Royalty revenue has now become our largest single source of revenue, which allows us to fund and progress our clinical development and product pipeline. Collaboration and services revenue for the 2023 full-year period was $53 million, an increase of 90% versus 2022, which is primarily due to the start of commercial manufacturing in the second quarter of 2022 and the increase in production and sales of Tybasa DPI semi-finished product to United Therapeutics in 2021. Moving down the table to our endocrine business, total endocrine revenues were $20 million for the fourth quarter. $74 million for the full year.

Steven Binder: Below the graph, where our quarterly basic earnings and loss per share. The fourth quarter was the second straight quarter with net income and positive earnings per share as I stated during our third quarter earnings call. We are in a period, we expect to bounce back and forth between earnings and loss per share as our revenues increase but we will also be increasing our spending on.

Steven Binder: Our pipeline as we move <unk> 101 into a phase III global clinical trial, and then man cave 201 into a phase one clinical trial.

Steven Binder: In addition, we will wait to see the results from the <unk> and then have one clinical trials for further before deciding whether to increase promotional spend behind that product.

Steven Binder: For now we will continue to focus on growing the profitability of the endocrine business unit, which has had a positive contribution for two straight quarters.

Steven Binder: Moving onto our GAAP to non-GAAP reconciliation.

Speaker Change: I'll first focus on the fourth quarter, which is on the left hand side of the table.

Steven Binder: For the fourth quarter, present net revenue of $15 million compared to $12 million in 2022. The growth rate of 29%, which was mainly driven by higher patient demand, with underlying paid TRX growth of 29% year-over-year, and a lower gross-to-net deduction as a percentage of gross revenue and price. Compared to the third quarter of 2023, there was a $2 million increase, which represents half patient demand and half increased channel inventory due to wholesalers purchasing an extra week of product in late December. This additional wholesaler purchase in late December will likely impact our net revenues for the first quarter of 2020. For the full year 2023 period, the 27% increase in present net revenue was mainly related to increased volume from higher patients, with underlying paid TRX growth of 25%, price, and a more favorable growth to net adjustment, percentage of gross revenues. Net revenue for Vigo was $5 million for the fourth quarter of 2020. However, revenues were 13% lower versus 2022, primarily due to lower patient demand and higher growth to net as a percentage of gross revenues Vigo net revenue improved versus the third quarter of 2023 by $0.2 million, mainly due to improved growth.

Speaker Change: We had GAAP net income of $1 million, which when adjusted for select noncash items for stock compensation gain or loss on foreign currency transactions, which is related to our insulin purchase commitment.

Speaker Change: Loss on available for sale Securities a solid portion of the royalty revenue and the interest expense on the liability for sale of future revenues, which I'll discuss in more details in a minute.

Speaker Change: <unk> non-GAAP net income of $7 million versus the 2022 fourth quarter non-GAAP net loss of $11 million.

Speaker Change: For the full year 2023 period, we ended with a net loss of $12 million when adjusted for the select noncash items becomes non-GAAP net income of $6 million, which is compared to a non-GAAP net loss of $78 million in 2022 and $84 million.

Speaker Change: Year on year, a positive change.

Speaker Change: Now I'd like to take some time to explain the accounting that resulted from the sale of our 1% of our Thai VSO DPI royalty.

Speaker Change: To set the stage, we saw 1% of our 10% royalty for $150 million plus up to $50 million more a certain net revenue numbers are obtained within a period of time ending September 2027. This puts a third party valuation on the 10% royalty of approximately one 5% to $2 billion.

After we announced the royalty sale in early January I heard back from investors that we could've done a better job of explaining how we recognize these transactions our financial statements and how we got to our accounting conclusions. So let me try again.

Speaker Change: First we looked at all of the GAAP guidance reviewed all similar relevant transactions, we could find in the last five years and then consulted with our auditors. The conclusion, we arrived at amongst other things is that mankind is it continuing involvement in the generation of <unk> DPI revenue productivity to protect the intellectual property of <unk>.

Steven Binder: For the full year period, the 48% increase is primarily related to the purchase of Vigo on May 31st, 2022, reflecting a 7-month versus 12-month comparison. The next slide shows our revenue growth by source and basic earnings per share on a quarter by quarter basis from the first quarter of 2022 through the fourth quarter of 2023. I'd like to show this graph because it highlights how dramatically our business has changed and how we're executing against expectations. For the fourth quarter of 2023, total revenues increased 14% sequentially versus the third quarter and were up 62% versus the fourth quarter of 2022. Fourth quarter 2023 total revenue of $58 million, with almost 5x the total revenues recorded in the first quarter of 2020.

Speaker Change: Such as extending the patent estate protecting the product and the continuing involvement in the manufacturing the product for United Therapeutics. Thus the upfront proceeds recorded as a liability for future sales of royalties not as revenue.

Speaker Change: The table on the slide reflect how the accounting works we record the cash consideration received net of issuance costs and a related liability for the sale of future royalties on our balance sheet.

Speaker Change: To recognize interest expense related to liabilities with forecast of future royalties to be received through 2042 and calculate the return that would be needed when receiving a $150 million upfront payment for 1% of the royalty over this time period.

Steven Binder: Below the graph are our quarterly basic earnings and loss per share, the fourth quarter with the second straight quarter with net income and positive earnings per share. As I stated during the third quarter earnings call, we're in a period where we expect to bounce back and forth between earnings and loss per share as our revenues increase. But we will also be increasing our spending on our pipeline as we move MNKD-101 into a phase three global clinical trial and MNKD-201 into a phase one clinical trial. In addition, we will wait to see the results from the INHALE-3 and INHALE-1 clinical trials for FRESA before deciding whether to increase promotional spend behind that product. For now, we will continue to focus on growing the profitability of the Endocrine Business Unit, which has had a positive contribution for two straight quarters. Moving on to our Gap to Non-Gap Reconciliation I'll first focus on the fourth quarter, which is on the left-hand side of the table. We had GAAP net income of $1 million, which was adjusted for select non-cash items for stock compensation.

Speaker Change: This rate came to just over 11%.

Speaker Change: In future periods, we will continue to estimate the future royalty stream based on royalty trends commercial success of <unk> TPI <unk>.

Speaker Change: Competition for the brand and other meaningful inputs.

Speaker Change: The outcome of these future estimates may adjust the prospective interest rate used in determining interest expense and amortization of the liability.

Speaker Change: Each quarter, we will charge, our P&L for noncash interest expense based on the interest rate and credit the liability.

Speaker Change: We also recognized a 1% royalty as noncash revenue and reduced the liability by this amount.

Speaker Change: In addition to the noncash attributes of this transaction. We also earn cash interest income of approximately $7 $5 million annually.

Speaker Change: The slide shows how the accounting should work for 2024, if nothing changes in our forecast of expected royalties.

Speaker Change: The balance sheet would end 2024 with $153 million in cash and $153 million of our liability for the sale of future royalties.

Speaker Change: The liability balance will increase as long as the noncash interest expense is greater than the noncash royalty revenue, which is likely to occur over the next few years.

Steven Binder: Gain or Loss on Foreign Currency Transactions, which is related to our in-fund purchases. LawFront, available for sale security, a sole portion of the Royalty Revenue, and the interest expense and the liability for sale of future revenues, which I'll discuss in more detail in a minute, provide for a non-GAAP net income of $7 million versus a 2022 fourth quarter non-GAAP net loss of $11 million. For the full year 2023, we ended with a net loss of $12 million.

Speaker Change: Once the noncash royalty revenue becomes greater than the noncash interest expense assuming that sales of <unk> continue to grow then the liability balance will begin to decrease.

Speaker Change: Focusing on the 2020 for income statement on the right side of the table, we will record noncash revenue of $10 million in cash interest income of $7 million offset by noncash interest expense of $17 million.

Speaker Change: As discussed on a previous slide we expect to isolate the noncash aspect of this transaction in our quarterly GAAP to non-GAAP reconciliation of net income and loss.

Steven Binder: An adjustment for the select non-cash items becomes a non-GAAP net income of $6 million, which is compared to a non-GAAP net loss of $78 million in 2022. $84 million dollar year-on-year positive. Now I'd like to take some time to explain the accounting that resulted from the sale of our 1% of our Taiveso DPI royalties. We set the stage; we sold 1% of our 10% royalty for $150 million plus up to $50 million more if certain net revenue numbers were attained within a period of time ending in September 2027. This puts a third-party valuation on the 10% royalty at approximately $1.5 to $2 billion. After we announced the Royal Peace sale in early January, I heard back from investors that we could have done a better job explaining how we recognized these transactions in our financial statements and how we got to our accounting conclusions. So, let me try again.

Speaker Change: With over $300 million of cash and investments on our balance sheet as of December 31, 2023, I want to share our near term priorities for using the cash to increase shareholder value.

Speaker Change: First focusing on our development pipeline, we expect to fund much of MNK 101, and <unk> hundred one clinical trial expense over the next few years through operating cash flow.

Speaker Change: As these assets advance through clinical trials, we will prioritize their funding.

Speaker Change: In addition to <unk> 101 in 201, we have two clinical trials for our present nearing data readouts.

Speaker Change: We will wait to see the results of these trials before deciding whether to invest more behind this asset to grow revenues.

Speaker Change: In addition, we plan to do the following with our debt.

Speaker Change: Our mid cap senior secured debt has a balance of approximately $33 million as of December 31, 2023, and currently carries an interest rate of eight 5%, we expect to pay off this debt in the first half of 2024 to take advantage of the interest rate arbitrage between debt interest expense and cash investment returns and we.

Steven Binder: First, we looked at all of the GAP guidance, reviewed all similar relevant transactions we could find in the last five years, and then consulted with our auditors. The conclusion we arrived at, amongst other things, is that mankind has a continuing involvement in the generation of PIVASA DPI revenue through activities that protect the intellectual property of PIVASA DPI, such as defending the patent estate, protecting the product, and a continuing involvement in the manufacturing of the product for United Therapeutics. Thus, the upfront proceeds are recorded as a liability for future sales of royalties, not as revenue.

Speaker Change: Lease our assets from mid caps security interest.

Speaker Change: Man convertible debt with a balance of approximately $9 million as of December 31, 2023 is expected to be paid off early in cash or in a mix of cash and stock by doing this we will be we would be reducing future shareholder dilution.

Speaker Change: Our senior convertible debt with a balance of $230 million as of December 31, 2023 carried at low fixed interest rate of two 5%.

Speaker Change: We do not expect to buyback bonds prior to maturity in March 2026.

Speaker Change: Maturity arrives, we expect to reduce future dilution by paying off the debt with cash or our stock prices below the conversion price of $5 21.

Steven Binder: The table on the slide reflects how the account... We record the cash consideration received, net of issuance costs, and a related liability for the sale of future royalties on our balance to recognize interest expense related to the liability. We forecast that future royalties to be received through 2042 and calculate the return that would be needed when receiving a $150 million upfront payment for 1% of the royalty over this time period. This rate came to just over 11. For future periods, we'll continue to estimate the future royalty stream based on royalty trends, the commercial success of PIVASA DPI, competition for the brand, and other meaningful. The outcome of these future estimates may adjust the prospective interest rate using determining interest expense and amortization of the liability. Each quarter, we will charge our P&L for non-cash interest expense based on the interest rate and credit to the liability.

Speaker Change: Additionally, we do not expect to access the ATM.

Speaker Change: To summarize a very successful 2023 with doubled our total revenues to almost $200 million versus the prior year fourth quarter was the second successive quarter of positive contribution from our endocrine business unit.

Speaker Change: Fourth quarter was the second successive quarter of net income for the company. We saw the <unk> interest in our 10% <unk> royalty, which values the royalty stream alone between one five and $2 billion.

Speaker Change: And we ended 2023 with $302 million in cash and investments.

Speaker Change: 2024 should be another stellar year for mankind, as we're financially trying to drive our commercial and clinical priorities and deliver increased shareholder value.

Speaker Change: Thank you and now I'll turn it back over to Mike.

Mike: Thank you, Steve and I appreciate the explanation of all the accounting and I never want to note neither do I.

Mike: I appreciate you.

Mike: So.

Mike: Next slide.

Mike: Mankind has been around 33 years I don't want to give a special thank you to our founder who passed away eight years ago.

Steven Binder: We also recognize 1% of the royalty as non-cash revenue and reduce the liability by this amount, in addition to the non-cash attributes of this transaction. We also earn cash interest income of approximately $7.5 million annually. The slide shows how the accounting should work for 2024 if nothing changes in our forecast of expected royalties. The balance sheet would end in 2024 with $153 million in cash and $153 million in liability for the sale of future roads. The liability balance will increase as long as the non-cash interest expense is greater than the non-cash royalty revenue, which is likely to occur over the next few years. Once the non-cash royalty revenue becomes greater than the non-cash interest expense, assuming that sales of PYDASA or DPI continue to grow, then the liability balance will begin. Focusing on the 2024 income statement on the right side of the table, we would record non-cash revenue of $10 million and cash interest income of $7 million, all set by a non-cash interest expense of $17 million.

Mike: 25th.

Mike: The reason that's important today I decided that joined Mannkind and I will forever be grateful for Al Mann.

Mike: He was a special <unk>, who can share about society, our patients and making a difference.

Mike: We have the foundation he left us within 2016, and we built this into a major self sustaining growth company against all odds.

Mike: When you look at the history from 16 forward.

Mike: We announced our United Therapeutics collaboration.

Mike: We acquired <unk>, which is our phase III asset with Clofazimine Mannkind 101.

Mike: We purchased Vigo, which made our endocrine division more sustainable and brought US a couple of thousand new prescribers.

Mike: And have ACO DPI has been ahead of all expectations since its approval.

Mike: As I look forward, we are just getting started.

Mike: Expected 2024 milestones alone between our president in the study Readouts.

Mike: <unk> 101, Mannkind 201, not to mention obviously, the DPI, which has two major trials going on in <unk>, and <unk>, which I heard this past week, where 70% enrolled.

Mike: Once they finish up enrollment, we'll have 12 months that we should expect to see data from United Therapeutics.

Steven Binder: As discussed on a previous slide, we expect to isolate the non-cash aspects of this transaction and our quarterly gap, the non-gap reconciliation of net income. With over $300 million in cash and investments on our balance sheet as of December 31, 2023, we want to share our near-term priorities for using the cash to increase shareholder value. First, focusing on our development pipeline, we expect to fund much of MNKD 101 and MNKD 201 clinical trial expenses over the next few years through operating cash flow. As these assets advance through clinical trials, we will prioritize their funding. In addition to MN-KD-101 and 201, we have two clinical trials for the present nearing data readout. We will wait to see the results of these trials before deciding whether to invest more in this asset to grow revenue.

Mike: Additionally, our team just the shape.

Mike: <unk> completed the high speed fill finish line in terms of qualification and will now be going into pp Q hopefully producing much higher volumes of Zalviso outlet line as we execute one going into Q2.

Mike: As I look at our future we have several key value drivers.

Mike: As you can see our insiders picked up some stock in the last few weeks, we will start board meeting because we believe we're undervalued and we're very confident in our future.

Mike: Analysts have expenses in for a pipeline, but no revenue in the next five years.

Mike: We think this is an unfair valuation of our company given that we do expect to launch <unk> in the next five years and move and TM Im sorry can move to the.

Mike: <unk> asset in terms of Mannkind 201 into patients and then hoping to phase III, but then when we go back and look at another successful company in time Intermune.

Mike: Assembly valued at $800 million at one point in 18 months later was $8 billion once they got a positive data readouts are.

Mike: Our job is to not react or overreact day to day to swings in the stock market, but to lay out a firm foundation for future growth and as we look out there whether it's the pipeline with Mannkind 101 every thousand patients is approximately $100 million in revenue.

Steven Binder: In addition, we plan to do the following with our debt. Our Mid-Cap Senior Secured Debt has a balance of approximately $33 million as of December 31, 2023 and currently carries an interest rate of 8.25%. We expect to pay off this debt in the first half of 2024 to take advantage of the interest rate arbitrage between debt, interest expense, and cash investment and release our assets from MidCap's security. Mann Convertible Debt with a balance of approximately $9 million as of December 31, 2023, is expected to be paid off early in cash or in a mix of cash and stock. By doing this, we would be reducing future shareholder delusions. Our senior convertible debt, with a balance of $230 million as of December 31, 2023, carries a low fixed interest rate of 2.5%. We do not expect to buy back bonds prior to maturity in March 2021. However, when maturity arrives, we expect to reduce future dilution by paying off the debt with cash if our stock price is below the conversion price of $5.21. Additionally, we do not expect to access the

Mike: One we're going to start patients those narrow as you think about Ips every thousand patients was roughly $150 million in annual revenue.

Mike: Let me get into Televisa, DPI, which as you can see this past year.

Mike: When you add up the collaboration services revenue. In addition to that of royalties. We knew those roughly 5000 patients on <unk>, So DPI and thats about half of the $250 million revenue that we experienced this past year.

Mike: And the <unk> side, we have several major upcoming opportunities within <unk>, and then health rate.

Mike: As well as the President International.

Mike: <unk> is being managed for improved profitability as we continue to focus on improving our margins by reducing cogs as well as improving gross to nets.

Mike: So as we take a step back we have multiple shots on goal to create significant shareholder value across three commercial products. When you think about the president of <unk>.

Mike: <unk> in vivo Theyre already FDA approved.

Mike: As well as two assets coming up quickly in the pipeline between Mannkind 101 in 201.

Mike: We have multiple shots on goal within these assets, we are completely focused on delivering shareholder value sustainably for years to come.

Steven Binder: To summarize, a very successful 2023. We've doubled our total revenues to almost $200 million versus the prior year. The fourth quarter was the second successive quarter for positive contribution from an endocrine disease. It was the second successive quarter of net income for the company.

Mike: We have several upcoming presentations on engagements at conferences I'll be doing non deal roadshows with Steve over the coming months to get the word out as we feel like mankind is at the best inflection point with the best team in the industry.

Steven Binder: So the 1% interest in our 10% TI-VASA DPI will... Values of the royalty stream alone are between $1.5 and $2 billion, and we ended 2023 with $302 million in cash and investments. 2024 should be another stellar year for MannKind as we are financially primed to drive our commercial and clinical priorities and deliver increased shareholder value. Thank you, and now I'll turn it back over to you. Thank you, Steve. And I appreciate the explanation all day coming. I never want to know.

Mike: Cash on the balance sheet and multiple shots on goal in terms of data readouts to drive future growth for <unk>.

Mike: Super excited about future and I will stop there about what used to take questions. Thank you again.

Speaker Change: Thank you.

Speaker Change: Ladies and gentlemen, I would like to ask a question. Please press star one on your Touchtone telephone again to ask a question. Please press star one one.

Speaker Change: One moment for our first question.

Speaker Change: Our first question comes from the line of Andreas <unk> of Wedbush. Your line is open.

Andreas: Great. Thanks for taking our question congrats on all the progress.

Andreas: Maybe two for us here quickly.

Michael E. Castagna: I appreciate it. So, next slide. MannKind has been around 33 years, and I want to give a special thank you to our founder who passed away eight years ago on February 25th. The reason that's important is the day I decided to join MannKind, and I'll forever be grateful for all MannKind. He was a special human being who cared about society, our patients, and making a difference.

Andreas: Despite an evolving competitive landscape and our ph ILD.

Andreas: The guard royalty puts a $15 billion valuation on an <unk> base or GPI, a key component to <unk> do you think your views of the lowers the sleep device compared with other high resistance devices.

Andreas: The question here is could you elaborate on the differences with the DPI device compared with the competitors and how that plays into <unk> safety and efficacy profile and also how do you see the DPI device played a key role in the delivery of the Technip in IPF.

Michael E. Castagna: We have the foundation he left us with in 2016, and we built this into a major self-sustaining growth company against all odds. When you look at the history from 16 forward, we announced our United Therapeutics collaboration. We acquired Quorum, which is now our Phase 3 asset with Quifazamine and MannKind 101. We purchased Vigo, which made our endocrine division more sustainable and brought us a couple thousand new prescribers. And Tavesa DPI has been ahead of all expectations since its approval. As I look forward, we are just getting started. The expected 2024 milestones alone between AFRESA and the study readout. MannKind 101, MannKind 201, not to mention the Thalassos DPI, which has two major trials going on in Teton 1 and Teton 2, which I heard this last week, were 70% enrolled. Once they finish up enrollment, they'll have 12 months later, and we should expect to see data from United Therapeutics. Additionally, our team just this day completed the high-speed fuel finish line in terms of qualification.

Speaker Change: Okay. So let me sure I get that second question.

Speaker Change: Can you repeat that one yeah, yeah sure so back to the the advantages of our DPI device, how do you see it playing a key role in the delivery of new tentative in IPF.

Speaker Change: Mostly from a delivery and a safety perspective.

Speaker Change: No I think Thats, what gets US excited right I'll start with that question first is when you think about our platform. It's the same device being used in the same audience.

Speaker Change: That.

Andreas: We're currently moving forward in orphan lung disease that United Therapeutics is also using right. So the familiarity of the training all that comfort of.

Andreas: Bringing inhalation into this patient population with our current technology.

Andreas: US that much more confident because most of the powder.

Andreas: <unk> SDK P. So if they can tolerate that and the ph market and we know some of those patients overlap with ILD as well as IPF.

Andreas: And then being able to show that our powder at 1990, 9% SDK piece should be able to.

Andreas: Tolerate it and need to tighten up as we go forward and so far the animals.

Michael E. Castagna: And we'll now be going into PPQ, hopefully producing much higher volumes of Tyveso out of that line as we exit Q1, and into Q2. As I look at our future, we have several key value drivers. As you can see, our insiders picked up some stock in the last few weeks after our board meeting because we believe we're undervalued and we're very confident in our future. Analysts have expenses in for our pipeline, but no revenue in the next five years.

Andreas: The solution and all of that looks positive we are doing a chronic tox and we'll have that done by the end of this year.

Andreas: At the same time, we get phase one so I think this year, but technically should feel like its even more diverse than it already has given its a known asset and a known technology.

Andreas: That'll be a positive contribution for there.

Andreas: On the other side of the equation, you're asking me how do we differentiate our platform.

Andreas: I think our powders are built to fly with our devices, they're going hand in hand, we're not taking a novel powder and thrown into an off the shelf device I think that it is.

Michael E. Castagna: We think this is an unfair evaluation of our company, given that we do expect to launch clofazamine in the next five years and move NTM, I'm sorry, and move the IPF asset in terms of MannKind 201 into patients and then, hopefully, into phase three by then. We go back and look at another successful company in time. Intermune was similarly valued at $800 million at one point and 18 months later was $8 billion once they got a positive data readout. Our job is to not react or overreact day-to-day to swings in the stock market but to lay out a firm foundation for future growth.

Andreas: That deep lung penetration, it's about the velocity of those patterns are coming out and how consistent and deep lung penetration youre getting across the line.

Andreas: And so I think that's number one number two we know that the powder, we need is very low because we probably go backwards filling the smallest volume put a 60 microgram.

Andreas: We're up to 64 microgram or higher so as people want more they don't need to inhale that much more powder to get additional effect size.

Andreas: It should help on cost, which should help on absorption as well as just safety when you think about.

Andreas: A lot of FDA questions on hormones and devices in asthma, how to use steroid use these are questions that come up with the FDA. It's really important right that there is not excess powder come around especially when you get to these narrow therapeutic drugs.

Michael E. Castagna: And as we look out there, whether it's the pipeline with MannKind 101, every thousand patients is approximately 100 million in revenue. 201, we're going to start patient dosing there, and you think about IPS, every thousand patients is roughly 150 million in annual revenue. And then we get into Tybasa DPI, which, as you can see, this past year was, when you add up the collaboration and services revenue, in addition to the royalties, we knew there were roughly 5,000 patients on Tybasa DPI, and that's about half of the $250 million in revenue that we experienced this past year. On the endocrine side, we have several major upcoming opportunities, with InhaleOne and InhaleThr VEGO is being managed for improved profitability as we continue to focus on improving our margins by reducing COGS as well as improving gross to net.

Andreas: You want the proper dose delivered with minimal powder containment happening.

Andreas: Peter.

Andreas: Construction happening outside of the cartridge itself. These are all important things that come up and I also think patient satisfaction is very high and the trials that Ut Ren.

Andreas: And pivotal and as we also know from thousands of patients. We've studied the president the device is relatively easy to use from quarters old to roughly 80 years old.

Andreas: So those are just the well known comfort the dosing and the consistency of dose will be important factors as we go forward.

Speaker Change: Alright, I appreciate that I'll jump back into queue and congrats also on the on all the progress.

Speaker Change: Thank you one moment please.

Speaker Change: Our next question comes from the line of Olivia Brayer of Cantor Fitzgerald. Your line is open.

Olivia Brayer: Hey, good afternoon, guys. Thank you for the question can you talk about how MTM fits into your strategic priorities just as you grow into a more mature company.

Operator: As we take a step back, we have multiple shots on goal to create significant shareholder value across three commercial products when you think about Afreza, Avesa DPI, and Vigo, which are already FDA approved, as well as two assets coming up quickly in the pipeline between MannKind 101 and 201. We have multiple shops on goal within these assets. We are completely focused on delivering shareholder value sustainably for years to come. We have several upcoming presentations and engagements at conferences. I'll be doing a number of roadshows with Steve over the coming months to get the word out as we feel like Mankind is at the best inflection point with the best team in the industry, cash on the balance sheet, and multiple shopfront goals in terms of data readout to drive future growth. We're super excited about the future, and I will stop there Valerie to take, Thank you again. Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 1-1 on your touch-tone telephone.

Olivia Brayer: And there is some competition in this space, although maybe lesser these days as you pointed out so how should we be thinking about where MN KD 101 could fit into the treatment paradigm and last question is just can you remind us on what the timelines are for expected enrollment and data readouts there. Thank you.

Olivia Brayer: Sure.

Olivia Brayer: But I think there's a couple of things the health fits in the company.

Speaker Change: First will be a decision on licensing outside the U S. So we'll run the trial.

Speaker Change: Key countries, where MTM exist.

Speaker Change: But we may choose to partner out Japan for example, where we saw in the Med went independent and we haven't made those decisions. We don't have to make those decisions. We are looking for partners talking to partners, but it's up to us and we're a little bit in control of that process there.

Speaker Change: In terms of how it fits in the Mannkind I think theres core capabilities that we have today around reimbursement support patient training and how do you treat specialty products and distribution things like that that we have that will be applicable to the MTM space.

Operator: Again, to ask a question, please press star 1-1. One moment for our first question. Our first question comes from the line of Andreas Argyrods on Webb Bush. Your line is open.

Speaker Change: And then when you think about where it fits into the treatment regimen.

Speaker Change: There's two points there number one we're going after the refractory patients first in that population right. The only drug approved is our case.

Andreas Argyrods: Great, thanks for taking our question. Congratulations on all the progress. Just maybe two for us here quickly.

Speaker Change: We think there we have a significant clinical advantage as well as the convenience advantage that we should be able to displace or grow that market opportunity very quickly as.

Andreas Argyrods: Despite an evolving competitive landscape in PAH and ILD, Cigar Royalty puts a $15 billion valuation on Tybaso DPI, a key component to DPI's advantages and convenience of the low resistance device compared with other high resistance devices. So the question here is, could you elaborate on the differences between the DPI device compared with the competitors and how that plays into DPI's safety and efficacy profile? And also, how do you see the DPI device playing a key role in the delivery of Nutetinib and IPF? Thanks. Andre, I want to make sure I understand that second question. Can you repeat that one?

Speaker Change: As we enter it.

Speaker Change: The other part is we are actively working on a dry powder version of Clofazimine and we expect that that will be used for naive population. So that it can be used earlier lines of treatment. So we do intend to cover early and late stage and that's one of the benefits of being where we are as a company.

Speaker Change: When that opportunity presents itself and we choose to want to fund maybe a second trial at that point.

Speaker Change: We can decide and part of that will be how fast is the phase III enrolling.

Speaker Change: On the.

Speaker Change: The refractory population.

Speaker Change: We look at and to Delete example, right. They got about 180 patients in 15 months and so that's about what we need. So if you really think about where we are today.

Michael E. Castagna: Yeah, yeah, sure. So back to the advantages of the DPI device, how do you see it playing a key role in the delivery of NetEdNib and IPF? Sure. Mostly from a safety point of view.

Speaker Change: 15 months from now we could be fully enrolled but we only need half of that population to do our interim analysis. So we hope to have that interim analysis sometime in the second half of next year and then we would just be waiting for the full patient population to get there in order to to hopefully file on six month data.

Michael E. Castagna: Yeah, no, I think that's what gets us excited, right? I'll start with that question first. When we think about our platform, it's the same device being used in the same audience that we're currently moving forward in orphan lung diseases that United Therapeutics is also using, right? So the familiarity of the training, all that, and the comfort of bringing inhalation into this patient population with our current technology gives us that much more confidence because most of the powder is our novel excipient, FDKP. So if they can tolerate that in the pH market, we know some of those patients overlap with ILD as well as IPF, but then being able to show that our powder at 90, 99% FDKP should be And so far, the animals, the dissolution, and all that looks positive.

Speaker Change: That's our goal with the primary point of six months and.

Speaker Change: When you think about the Grand scheme of life, we're not that far away from hopefully kicking us trial here in the second quarter and more importantly, we're sitting here next year at this time, we should be.

Speaker Change: Quickly enrolling halfway if everything goes as planned.

Speaker Change: Thank you one moment please.

Speaker Change: Our next question comes from the line of Steve <unk> of Oppenheimer <unk> Company. Your line is open.

Steven Binder: Thank you guys.

Steven Binder: Guys and congrats on the progress.

Steven Binder: Just level setting into ATT D.

Steven Binder: What is the date exactly that we're going to see there I know we will see the 17 week at this as an inhaled <unk> excuse me, but I know, we'll see the 17 week at Ada, but what what's the anticipation at ATT.

Michael E. Castagna: We're doing a chronic tox, and we'll have that done by the end of this year, at the same time we get phase one. So I think this year the technics should feel like it's even more diverse than it already is given it's a known asset and a known technology. That'll be a positive contribution. On the other side of the equation, you were asking me, you know, how do we differentiate our platform? I think, you know, our powders are built to fly with our devices.

Speaker Change: Yes, so we have a presentation, thereby URL hirsch, which will be the first dose on the meal tolerance data.

Speaker Change: Steve, but I think that will allow us the opportunity to obviously have a phrase on the podium there in front of everybody.

Speaker Change: But I'm sure <unk> will be presenting some of the data and the rationale why afrezza deserves a more fair chance in treatment and he'll show that first dose data and.

Michael E. Castagna: They go hand-in-hand. We're not taking a novel powder and throwing it into an off-the-shelf device. I think that it's about deep lung penetration.

Speaker Change: That'll be the primary focus there is it's a technology conference with lots of innovation and that's really a type one community.

Steven Binder: That comes from there I think the other part of this is starting to talk about do you go to Europe. For example is there another opportune months, we see the full dataset to expand to other markets in a meaningful way.

Michael E. Castagna: It's about the velocity of those powders coming out and how consistent and deep lung penetration you're getting across the lung bed. And so I think that that's number one. Number two, we know that the powder we need is very low because we probably wrote records of filling the smallest volume for the 60 micrograms all the way up to 64 micrograms or higher. So, you know, as people want more, they don't need to inhale that much more powder to get additional effect size, which should help with cough, which should help with absorption, as well as just safety. When you think about a lot of FDA questions on hormones and devices and asthma, how to use steroids, you know, these are questions that come up with the FDA. It's really important, right, that there's not excess powder coming around, especially when you get to these narrow therapeutic drugs. You want the proper dose delivered with minimal powder containment happening or powder extraction happening outside of the cartridge itself.

Steven Binder: So.

Steven Binder: We're there for that reason as much as anything in terms of showing the data in meeting global falters.

Speaker Change: Got it Okay and then.

Steven Binder: Just on the endocrine business in general I know, you've been balancing growth and profitability and you noted in your prepared remarks, you're optimizing the sales force footprint. So.

Steven Binder: Are you are you have been reducing the footprint be more strategic there can you talk a little bit about what you've been doing and then.

Steven Binder: What are the range of commercial investments you would consider assuming positive outcomes in inhaled <unk> would you add more of the sales force would be something else. Thanks.

Speaker Change: Yeah, I think on the Salesforce footprint you have to if we're buying back 18 months. When we bought Vigo in may of 'twenty, two we dedicated roughly 2025 ftes to that brand alone and.

Steven Binder: One it was on a two year decline not being promoted and we want to stabilize it and to we didn't want to disrupt the afrezza field team. So we help we held overlapping expenses for quite a while and both of those businesses.

Andreas Argyrods: So these are all important things that come up, and I also think patient satisfaction was very high in the trial that UT ran in Pivotal. And as we also know from thousands of patients we've studied at FRESA, the device is relatively easy to use from four years old to roughly 80 years old. So those are just, you know, the well-known comfort, the dosing, and the consistency of dose will be important factors as we go forward. All right, I appreciate that. I'll jump back into the queue.

Steven Binder: And really our focus going into July in January of this year was a two step process around integrating <unk> into our commercial footprint on Afrezza and then the second step was in a great salesforce into one voice one team and that took place in January of this year.

Steven Binder: There were some head count that were freed up as a result of that process and we reinvested some of those head counts into the field reimbursement support the training.

Steven Binder: And the.

Operator: Congratulations also on all the progress. Thank you. One moment, please. Our next question comes from the line of Olivia Brayer of Cantor Fitzgerald. Your line is open.

Steven Binder: The key account managers and we think the key account managers are critical as we go into pediatrics and academic centers, that's not where fred's as has been widely adopted so the first step is getting the key account managers to make sure. We stabilize those big accounts and then the second step will be hopefully filtering and some reps underneath them, where they can maintain accounts or grow accounts day to day, while those key account managers.

Olivia Brayer: Hey, good afternoon, guys. Thank you for the question. Can you talk about how NTM fits into your strategic priorities as you grow into a more mature company? And there is some competition in the space, although maybe less so these days, as you pointed out. So how should we be thinking about where MNKD 101 could fit into the treatment paradigm? And lastly, can you remind us of what the timelines are for expected enrollment and data readouts there? Thank you.

Steven Binder: On the next group of accounts and get us ready for peds.

Steven Binder: So we have a multi step process here, it's not going to happen overnight, but the first step was getting into one field field footprint, one voice with one team and one new marketing campaign, which we're actually rolling out. This week. So I think the team will see that we've invested a lot in training and we have a couple field trainers now.

Steven Binder: And thats going to be the number one focus this year is can we grow.

Michael E. Castagna: Sure, I think there are a couple of things about how it fits in the company. You know, the first will be a decision on licensing outside the U.S. So we'll run the trial in the key countries where NTM exists, but we may choose to partner out Japan, for example, where we saw Indumed went independent. We haven't made those decisions. We don't have to make those decisions.

Steven Binder: After that we have been with the current footprint and the current infrastructure you put around that footprint and that model is working I think will have conviction to go ahead and expand that model further they could easily add 50 to 100 more people I wouldnt really do that until we saw groundbreaking data and that some of our current model is working with Kols support.

Steven Binder: I think the number one thing, but the data will be the kols support around that data because we have to be able to penetrate the academic centers, which are very pumped based and I think that the pump data within an L. Three is going to have to hold up in every objective way in terms of producing high is it reducing lows are improving he wants to your time in range.

Michael E. Castagna: We are looking for partners and talking to partners, but you know, it's up to us, and we're a little bit in control of that process there. In terms of how it fits into MannKind, I think there are core capabilities that we have today around reimbursement support, patient training, and how do you treat specialty products from distribution, things like that that we have that will be applicable to the NTM space. And then when you think about where it fits into the treatment regimen, there are two points there.

Steven Binder: The other day and it looks like it's got to be very compelling for us to be willing to spend money in that compelling.

Steven Binder: Investment will be commensurate with the data.

Steven Binder: We're not going to we've been through if there is a long time, we're very excited about the data we loved the product.

Steven Binder: But we have to be objective around our investments and our ability to drive success and I think the data is going to help support that.

Speaker Change: Understood. Thanks, Mike.

Speaker Change: Thank you one moment please.

Michael E. Castagna: Number one, we're going after the refractory patients first, and in that population, right, the only drug approved is Arakase. And we think there we have a significant clinical advantage as well as a convenience advantage that we should be able to replace or grow that market opportunity very quickly as we enter it. The other part is that we are actively working on a dry powder version of clofazamine, and we expect that that will be used in naive populations so that it can be used earlier in lines of treatment.

Speaker Change: Our next question comes from the line of Gregory Windsor of RBC capital markets. Your line is open.

Gregory Windsor: Hi, Mike and team, it's a niche on for Greg Congrats on the quarter and thanks for taking my questions I just wanted to parlay some questions on inhale three there how should we be thinking about clinical bars for HBA one fee over the 17 week period in June and then just considering real world translate ability of the trial design, maybe if you can just remind us on.

Gregory Windsor: Foreseeing pushes and pulls for getting patients to switch between injectable insulin or pumps to afrezza. Thanks again.

Michael E. Castagna: So we do intend to cover early and late stage, and that's one of the benefits of being where we are as a company, is when that opportunity presents itself and we choose to want to fund maybe a second trial at that point, we can decide, and part of that will be how fast the phase three enrollment in the refractory population goes. If we look at AN2 as the lead example, right, they got about 180 patients in 15 months. So that's about what we need. So if you really think about where we are today,

Gregory Windsor: I think the first question I was kind of the non inferiority margin maybe in health right between the two arms.

Steven Binder: That's a <unk>, 4%, which was consistent with our pivotal trials in type one.

Steven Binder: And so that was those trials were done with a different conversion and so we're hoping one of the things you saw on those trials because we got to the right dose. So just took 12 weeks, we're hoping by starting at a bedroom upfront. We have 12 more weeks of benefit and we saw.

Michael E. Castagna: 15 months from now, we could be fully enrolled, but we only need half of that population to do our interim analysis. So we hope to have that interim analysis sometime in the second half of next year, and then we would just be waiting for the full patient population to get there in order to hopefully file on six-month data. So that's our goal. It's a primary endpoint at six months, and when you think about the grand scheme of life, we're not that far away from hopefully kicking this trial off here in the second quarter, and more importantly, we're sitting here next year at this time. We should be quickly enrolling halfway, if everything goes as planned. Thank you. One moment, please. Our next question comes from the line of Steve Lichman of Oppenheimer and Company. Your line is open.

Steven Binder: The other part this year, if you may or may not recall. This we did a small study called ABC, which was the pilot trial in 25 patients to show could you switch off an insulin pump how do you adjust the basal.

Steven Binder: What happens over the 12 weeks, so that study and that study gave us a lot of insights on things we had to correct for this larger trial before we spent the money.

Steven Binder: For example, <unk>.

Steven Binder: On site titrated basal very well the other site, we learned that they could do could be a little more aggressive with their basal titration.

Steven Binder: And so those are the types of things we tried to give more guardrails around in this trial to ensure proper titration proper conversion and obviously doctors now use insulin pumps and so that was the only thing we saw on the original trial was they know how to manipulate the pump very well because these doctors use pumps all day long.

Steven Binder: I'm afraid it was new to them they didn't know how to use it to its advantaged in terms of dosing.

Steven Binder: Follow up dosing if necessary so we feel pretty good about the trial design the controls within the trial.

Steve Lichman: Thank you. Evening, guys, and congrats on the progress. Just setting up into ATTD, what is the data exactly that we're going to see there? I know we'll see the 17 week at ADA, excuse me, I know we'll see the 17 week at ADA, but what's the anticipation at ATTD? Yeah, so we have a presentation there by Earl Hirsch, which will be the first dose on the meal tolerance data. Steve, what I think that will give us is the opportunity to obviously have EFRES on the podium there in front of everybody. But I'm sure Earl will be presenting some of the data and rationale why EFRES deserves a more fair chance in treatment. And he'll show that first dose data, and that'll be the primary focus there. As you know, it's a technology conference with lots of innovation, and that's really the type of community that comes from there. I think the other part of this is starting to talk about, you know, do you go to Europe, for example?

Steven Binder: So now we just wait for the data so that gives you some perspective there.

Steven Binder: So we didnt design it for superiority there will be secondary endpoints that we'll watch out for.

Steven Binder: And then your second question around.

Steven Binder: How do you think about this memorial World.

Steven Binder: The existing with pods and pumps.

Steven Binder: Physicians and I think it comes down to patient motivation.

Steven Binder: At the end of the day I think we will have cable support I think we will continue to see guidelines support we saw some updates this year on the standards of care for Afrezza.

Steven Binder: People are starting to understand the lower rates of hypoglycemia, the better time and range and Youre seeing they want a real time acting insulin as they've kind of adjusted every AIB system and pumped together.

Steven Binder: What's next and what's next is really tightening control, even further and we're the best tool to help that.

Steven Binder: So that's a lot of what we're talking about is how do we look at data on Afrezza on top of the pumps potential even though that's an FDA challenge. We're also thinking about <unk> and if you're still at mealtime.

Steven Binder: <unk> on <unk>.

Michael E. Castagna: Is there another opportunity once we see the full data set to expand to other markets in a meaningful way? So, you know, we're there for that reason as much as anything in terms of showing the data and being global. Okay, and then just on the endocrine business in general, I know you've been balancing growth and profitability, and you noted in your prepared remarks that you are optimizing the sales force footprint. So I guess, have you been reducing the footprint, being more strategic there? Can you talk a little bit about what you've been doing?

Steven Binder: Are you at a friend to those populations. So we're starting to look and say if we were to get positive data on <unk> III is an early readout and we anticipate and he'll want to look good then what's the next leg up that we should really start exploring for more continued opportunities for afrezza.

Steven Binder: About the.

Steven Binder: The pump market is the pediatric market the institutional diabetes market GOP market. There's a lot of niche areas that are quite large and we think this brand can grow pretty rapidly over the coming years relative to where its been the last five years.

Speaker Change: Great. Thank you so much.

Speaker Change: Thank you one moment please.

Steven Binder: Our next question comes from the line of Oren Loopnet of H C. Wainwright. Your line is open.

Steven Binder: Thanks.

Oren Livnat: Couple of one on one questions can you just help us better understand.

Michael E. Castagna: And then, what are the range of commercial investments you would consider assuming positive outcomes for Inhale 3 in 1? Would you add more to the sales force? Would it be something else? Yeah, I think on the Salesforce footprint, you have to rewind 18 months.

Oren Livnat: How you arrived at the.

Oren Livnat: Yes.

Oren Livnat: Pivotal study sample size and powering what's that based on and.

Oren Livnat: With regards to the PRA endpoints I guess since that's a new subjective end points in this space.

Michael E. Castagna: When we bought Vigo in May 22, 22, we dedicated roughly 20-25 FTEs to that brand alone. One, Vigo was on a two-year decline, not being promoted, and we wanted to stabilize it. And two, we didn't want to disrupt the Afreza field team.

Steven Binder: What is the bar there what does that need to look like.

Steven Binder: <unk>.

Steven Binder: The competitive point of view.

Speaker Change: And I've got a follow up thanks.

Steven Binder: Yeah.

Speaker Change: These are two great questions, but I think it's the biggest challenge to developing products for MTM and Thats why I think youre going to see continued lack of investment because you have to have enough capital to go through with it in the case of intermodal spent many years building out this space and working with the FDA.

Michael E. Castagna: So we held overlapping expenses for quite a while in both of those businesses. And really, our focus going into July and January of this year was a two-step process around integrating Vigo into our commercial footprint on Affrezza, and then the second step was integrating Salesforce into one voice, one team. And that took place in January of this year.

Steven Binder: As long as the patient communities and we know that the physician <unk> population really want to go faster and we know the patient population really wants to go fast.

Steven Binder: And even the FDA will say, it's been nothing but collaborative along this whole journey for five years and come back with corium.

Steven Binder: I think the market forces are aligned to help support us with the when the wind in our backs to push us forward.

Michael E. Castagna: There were some headcounts that were freed up as a result of that process, and we reinvested some of those headcounts into the field reimbursement support, the training, and the key account managers. We think the key account manager is critical as we go into pediatrics and academic centers, because that's not where Fred has been widely adopted.

Steven Binder: And then you get into risks of running these trials and I think the reality is there are risks in this population.

Steven Binder: But given the efficacy.

Steven Binder: <unk> mean, we estimated about a <unk>.

Steven Binder: 20%, 30% effect size delta between us and placebo.

Michael E. Castagna: So the first step is getting the key account managers to make sure we stabilize those big accounts. And then the second step will be hopefully filtering in some reps underneath them where they can maintain accounts or grow accounts day to day while those key account managers take on the next group of accounts and get us ready for PEDS. So we have a multi-step process here. It's not gonna happen overnight, but the first step was getting the one field footprint, one voice with one team, and one new marketing, which we're actually rolling out this week. So I think the team will see that.

Steven Binder: And that's going to be the interim analysis to see are we on track for that.

Steven Binder: We might have to increase the sample a little bit.

Steven Binder: That's number one.

Steven Binder: The second part of the PRA, we went back and forth with the FDA for years, not just months on the <unk> endpoint, the PR division and the feedback from the pure division.

Steven Binder: Two reasons, one we werent comfortable running a placebo controlled trial.

Steven Binder: Given that you can pretty much know what the active arm is and we think that makes the bureau.

Steven Binder: Difficult tool and therefore, we tried to make it a secondary endpoint.

Steve Lichman: We've invested a lot in training. We have a couple of field trainers now. And that's gonna be the number one focus this year, is can we grow? After them, we have the, https://otter.ai because we have to be able to penetrate the academic centers, which are very pump-based. And I think that the pump data within INHALE-3 is gonna have to hold up in every objective way in terms of reducing highs or reducing lows or improving A1C or timing. So if we ask them what the data need to look like, it's got to be very compelling for us to be willing to spend money, and that compelling investment will be commensurate with the data. We're not gonna; we've been through FEDS for a long time.

Steven Binder: The FDA was insistent it should be a primary a co primary endpoint and so around it around amongst story short we landed where we did which was a co primary endpoint with the understanding that this is a little bit of a risky.

Steven Binder: Endpoint, but they agree we've done the best we can to create the baseline measurements and the improvements in those key measurements that we've aligned to with the FDA.

Steven Binder: And that the efficacy is going to have to matter in terms of sputum conversion as much as the CRO tool by itself and so just like I know listening to this call I mean, what they're going through with the FDA. We've had a lot of those questions we've worked with them.

Steven Binder: Got a lot of their feedback already incorporated into our trial design. So now it's about the data and then what happens with this data and how you analyze that data once it comes in will be really important but again, we'll work very closely with the FDA as they think.

Michael E. Castagna: We were very excited about the data. We love the product, but we have to be objective about our investments and our ability to drive growth. I think the data is going to help. Thanks, Mike. Thank you. One moment, please. Our next question comes from the line of Gregory Renza of RBC Capital Markets. Your line is, Hi, Mike and team. It's Anishan for Greg.

Steven Binder: They understand where we are they understand the pros and cons.

Steven Binder: Rather than keep debating it we thought it was more important to get the data and help get this drug across the finish line.

Speaker Change: Okay, and just so unclear.

Steven Binder: Youre going based on some clofazimine experience efficacy wise and are you assuming.

Operator: Congratulations on the quarter and thanks for taking my questions. I just wanted to ask some questions on Inhale 3 there. How should we be thinking about clinical bars for HbA1c over the 17 weeks in June? And then just considering real world translatability of the trial design? Maybe if you can just remind us of the foreseen pushes and pulls for getting patients to switch from injectable insulin or pumps to a FRESA. Thanks again.

Steven Binder: An improvement on that meets your powering.

Steven Binder: Assumptions or are you being conservative on that now.

Steven Binder: I think when you when you look if we're going into a naive patients we think we'd see a much higher efficacy rates because we're focused on refractory we think it'll be a.

Steven Binder: Little less obviously, a naive patients and I think you saw that in the intimate RK stayed out there.

Steven Binder: There's only one study to really judge.

Gregory Renza: I think the first question I had was kind of the non-inferiority margin, maybe an in-health rate between the two arms, and I think that's 0.4%, which was consistent with our pivotal trials on type one. And so that was, you know, those trials were done with a different conversion. And so we're hoping, one of the things we saw in those trials was that we got to the right dose; it just took 12 weeks. We're hoping by starting at a better risk up front, we have 12 more weeks of benefit. And we saw the other part, this year, if you may or may not recall this, we did a small study called ABC, which was a pilot trial on 25 patients to show whether you could switch off an insulin pump. How do you adjust the basal?

Steven Binder: NTN endpoints on and that's our case and so I think when you go back in the redevelopment program. They had a 23% delta between the control and theirs.

Speaker Change: Im not sure they had a placebo I would go back and double check the data.

Steven Binder: And so that's some of the work that we were going back and forth on is incorporating the placebo could have a placebo effect and how much more yet to be highly powered trial with that potential risk.

Steven Binder: And that's a lot of back and forth with 50 or so.

Steven Binder: We've done the best we can and will have a determined emphasis we think thats. The most important aspect that we will get to in this trial.

Steven Binder: But.

Steven Binder: Assuming that's on track and we feel very good about the wrapping up this trial to bring this to patients very quickly.

Steven Binder: Alright.

Steven Binder: And then.

Steven Binder: Just with regards to.

Steven Binder: The tomato DPI situation, we're seeing a lot of headline with regards to potential competition in lawsuits.

Steven Binder: I am sure you couldn't or wouldn't comment directly on anyone else's litigation.

Michael E. Castagna: What happened over the 12 weeks of that study? And that study gave us a lot of insights on things we had to correct for this larger trial before we spent the money. For example, one site titrated basal very well; the other site, we learned that you could be a little more aggressive in their basal titration.

Steven Binder: But if you are willing I am curious if youre able to comment on whether your.

Steven Binder: Our orders coming into this year and your efforts at inventory our manufacturing capacity expansion.

Michael E. Castagna: And so those are the types of things we tried to get more guardrails around this trial to ensure proper titration, proper conversion. And, you know, obviously, doctors know how to use insulin pumps. And so that was the other thing we saw in the original trial was that they knew how to manipulate a pump very well because these doctors use pumps all day long, whereas if Fresno was new to them, they didn't know how to use it to its advantage in terms of dosage, you know, follow-up dosing if necessary. So we kind of feel pretty good about the trial design, the controls within the trial, so now we just wait for the data. So that gives you some perspective there. We didn't design it for superiority.

Steven Binder: Reflect.

Steven Binder: Any possible assumptions or risks around.

Steven Binder: Competition.

Steven Binder: Like potentially waiting to do anything or is that pedal to metal pedal to the metal so to speak on that front.

Speaker Change: Yes on the tomato DPI I mean, we are making as much as we can around the clock nothing slowed down there.

Speaker Change: We know.

Speaker Change: Wanted to build up inventory as well so between the demand and the current.

Speaker Change: We can manufacture there's no slowing down where we are with Thomas the DTI.

Speaker Change: In terms of.

Speaker Change: A competitor coming I mean, we've been hearing about this for years.

Speaker Change: And whether it was the higher dose that was the indication everyone's been doubting us about is this going to be.

Speaker Change: Get approved when we did get approved then you're going to have ILD, we got ILD, we've been very honest with the market ever since this drug is under review.

Michael E. Castagna: There will be secondary endpoints that we'll watch out for. And then your second question around, you know, how do you think about this in the real world, you know, existing with pods and pumps? physicians.

Speaker Change: And everything we've said has come true right. We said we would expect ILD. We got ILD. We said we manufacture we manufactured we said that we have a nice conversion it's had a better conversion than anyone expected. So from my perspective, <unk> has delivered on all parameters above and beyond expectations.

Michael E. Castagna: And I think this comes down to patient motivation. At the end of the day, I think we will have KOL support. I think we will continue to see guideline support. We saw some updates this year in the standards of care for AFRESA. People are starting to understand the lower rates of hypoglycemia, the better time and range, and they're seeing that they want a real-time acting insulin as they've kind of adjusted every AID system and pumped together. What's next?

Steven Binder: Despite an under forecasted launch, which put a lot of pressure on Mannkind and we did not Miss one beat to make sure every patient every day supply.

Steven Binder: We did a lot of our team worked incredibly hard last year to make that happen and we had record production in Q4 and will hopefully equals record production in Q1 and given more production in Q2 so.

Steven Binder: If you looked at their story. They went after ILD is there through differentiator for some reason and I'll be honest, if a patient can't tolerate dry powder for ILD I don't see how they can tolerate theres, which has three or four times more powder if I recall.

Michael E. Castagna: And what's next is really tightening control even further, and we're the best tool to help that. And so that's a lot of what we're talking about, is how do we look at data on a FRESA on top of the pumps, potentially? We know that's an FDA challenge. We're also thinking about GLPs, and if you still have mealtime popping on GLPs, do you add a FRESA to those populations?

Steven Binder: So it's really about the patient tolerability, it's about the titration, it's about the powder load.

Steven Binder: And it's about how your culture patient training patient all of these are really equal the important things.

Steven Binder: And anytime you launch a new drug you find things out as you go along and you're modifying your go forward and that's pretty much I think I hear you <unk>.

Michael E. Castagna: So we're starting to look and say, if we were to get positive data on INHALE-3 as an early readout, and we anticipate INHALE-1 will look good, then what's the next leg up that we should really start exploring for more continued opportunities for FRESA? If you think about it, it's the pump market, it's the pediatric market, it's the gestational diabetes market, and the GLP market. There are a lot of niche areas that are quite large that we think this brand can grow pretty rapidly over the coming years relative to where it's been the last few years. Great, thank you so much.

Steven Binder: Obviously, you've got strong it's doing great.

Steven Binder: <unk> and ILD as much as ph from what I heard on their call.

Steven Binder: Our conversations with you to continue to be very positive.

Speaker Change: I did want to mention.

Speaker Change: Other thing.

Speaker Change: Japan.

Speaker Change: So far is okay with the sputum conversion, so we'll do one trial.

Speaker Change: On Mannkind 101 for <unk> in terms of U S and Japan will be one global study, but will cut the data two different ways one for Japan for speed of two primary for the U S or co primary so that'll be an important aspect we did struggle with the FDA, saying why are you the only country in the world that once this sputum plus CRO, where we don't have the same.

Michael E. Castagna: Thank you. One moment, please. Our next question comes from the line of Oren Livnat of H.C. Wainwright. Your line is open. Thanks. I have got a couple of questions about 101.

Oren Livnat: Can you just help us better understand how you arrived at the pivotal study, sample size, and powering, you know, what's that based on? And, With regard to the PRO endpoint, I guess, since that's a new subjective endpoint in the space, what is the bar there? What does that need to look like to be an effective competitor?

Speaker Change: Demand yet.

Speaker Change: In other countries around the world. So that's why I think sputum, you still got to kill the bug at the end of the day and I think that becomes king in this disease and can we do that really well is the question.

Speaker Change: <unk> is a workout, but when you look at the labels of <unk> are not really strong claims at the end of the day. So I still think efficacy is going to matter in terms of sputum conversion.

Speaker Change: Okay and.

Speaker Change: And I look forward to talking to Steve some more about this accounting.

Michael E. Castagna: and I've got a follow-up. Yeah, Oren, these are two great questions, and I think it's the biggest challenge to developing products for NTM, and it's why I think you're going to see continued lack of investment, because you have to either have enough capital to go through with it, in the case of Intimate, which spent many years building out this space and working with the FDA, as well as patient communities. And we know that the physician K-well population really wants colphasmia. And we know the patient population really wants colphasmia.

Speaker Change: I'll stay out of that conversation.

Speaker Change: Thank you one moment please.

Speaker Change: Our next question comes from the line of Thomas Smith of Leerink Partners. Your line is open.

Thomas Smith: Hey, guys. Good afternoon, thanks for taking the questions and let me add my congrats on all the progress.

Thomas Smith: Just a couple on Rins I guess first on.

Thomas Smith: Mmk.

Thomas Smith: One being held in tighter than program can you just walk us through your expectations for the phase one data in Q3, and how quickly you think you could turn this around it and advance it into a phase II trial in IPF patients in then.

Michael E. Castagna: So even the FBI, I will say, has been nothing but collaborative along this whole journey for five years and coming back with Quorum. I think the market forces are aligned to help support us with the winds in our backs to push us forward. And then you get into the risks of running these trials. And I think the reality is there are risks in this population, but given the efficacy of clofazamine, we estimated about a 20%, 30% effect size delta between us and placebo. And that's gonna be the interim analysis to see if we are on track for that. If not, we might have to increase the sample a little bit. That's number one.

Thomas Smith: Just to remind us how you're planning for clinical supply and scale on 201.

Thomas Smith: Sure.

Thomas Smith: The phase one study because it's a pretty quick study were actually were doing going to do.

Thomas Smith: IPF patient the FDA, who pushed us to consider healthy volunteers. So we actually switched from IPF patients to help these which saves us a lot of time and money. So that's number one.

Thomas Smith: So that turnaround time should be pretty quick in terms of wrapping up phase one and filing an end of phase one meeting with FDA hopefully by the end of the year and then we're having good discussions internally, we just hired a new gentleman talked to our team who will be pivot.

Thomas Smith: Pivotal.

Michael E. Castagna: The second part is the PRO. We went back and forth with the FDA for years, not just months, on the PRO endpoint, the PRO division, and the feedback from the PRO division for two reasons. One, we weren't comfortable running a placebo-controlled trial, given that you can pretty much know what the active arm is, and we think that makes the PRO a difficult tool, and therefore, we tried to make it a secondary endpoint. However, the FDA was insistent that it should be a primary or co-primary endpoint.

Thomas Smith: Our development program beyond phase one for 201, and we're having good discussions internally for example, do we do a <unk> study to get data sooner in parallel while we continue to wait.

Thomas Smith: To kick off the trial.

Thomas Smith: For the next phase.

Thomas Smith: Two study going into a phase III. So that work is happening as we speak and I don't want to prematurely guests, where we land, but just like <unk>, where we've pushed to not do a phase II trial, one could argue that that's a little risky at the same time. We know these drugs work we know the approximate dose we're trying to go after and we know that that dose has produced a signaling effect that we expect.

Michael E. Castagna: And so we went round and around, and long story short, we landed where we did, which is a co-primary endpoint, with the understanding that this is a little bit of a risky end point, but that they agree we've done the best we can, create the baseline measurements, and the improvements in those key measurements that we've aligned to with the FDA. And that efficacy is going to have to matter in terms of sputum conversion as much as the PRO tool by itself. And so, just like I know, I listened to Ed's call. I mean, what they're going through with the FDA, we've had a lot of those questions, we've worked with them, and we've gotten a lot of their feedback already incorporated into our trial design. So, you know, now it's about the data and then what happens with the data and how you analyze that data once it comes out. All really important.

Thomas Smith: So.

Thomas Smith: In the case of 201, we actually one of those higher and Thats, where you need the chronic tox data in Q4 to help support that higher dosing and <unk>.

Thomas Smith: When a patient can tolerate the higher dose, we think thats going to be one of our clinical differentiators for.

Thomas Smith: 201, so that'll be the things we look forward in the trials can be dose higher is tolerable and do you have any of the Gi side effects that we see what the world formulations.

Speaker Change: Got it that's helpful and then just on the.

Speaker Change: Pipeline strategy and the priorities here, obviously, you have a lot on your plate across the enhance study for Afrezza and the close hasn't been in the tier one programs, but now that you have the financial flexibility I'm. Just wondering if you could talk about how you're thinking about balancing external business development opportunities first and then Boston sort of an internally derived candidates out of your car.

Speaker Change: One.

Speaker Change: Yeah, Great question I think the team is bursting at the seams on everything we're doing today and the good news is we have a great team who is working extremely hard to make sure. We get these R&D then to get the inhaled <unk> three study wrapped up.

Michael E. Castagna: But again, we'll work very closely with the FDA. I think they understand where we are, they understand the pros and cons, and rather than keep debating it, we thought it was more important to get the data and help get this drunk. Okay, and just so I'm clear, um... You're going based on some clofazamine experience efficacy wise, and are you assuming an improvement on that with your powering assumptions, or are you being conservative on that?

Thomas Smith: And so from a financial flexibility people don't realize we probably spent.

Thomas Smith: <unk> exact numbers, but over $30 million between inhaled wanted handheld three between people and trial cost. So those trials are wrapping up this year going into next year as you think about clofazimine there'll be a little bit of overlap with the 101, but there's other trials wrap up and so you kind of see that phased in.

Thomas Smith: People also miss that we had been funding Tox trials and other datasets in R&D over the last couple of years on one on one or 201.

Michael E. Castagna: I think when you look, if we're going after naive patients, we think we'd see a much higher efficacy rate, but because we're focused on refractory patients, we think it'll be a little less obvious in naive patients. And I think you saw that in the In the Med error case data out there. There's only one study to really judge NTM endpoints on, and that's the error case.

Thomas Smith: As well as.

Thomas Smith: A final one so there's been other investments in R&D to arent as transparent because and I'll talk about them as much but again some of those are wrapping up and those those extra funds will be used to fund the phase III trial. So I think we have the financial flexibility to ensure we can't funded out of cash flow generation that we are today that we have the cash on the balance sheet, if we needed to.

Michael E. Castagna: And so I think when you go back in their development program, they had a 20, 30% delta between the control and there was, I'm not sure they had a placebo. I have to go back and double check the data. And so that's some of the work that we were going back and forth on, you know, incorporating the placebo could have a placebo effect, and how much more do you have to be, and how do you power a trial with that potential? And that's a lot of going back and forth with the FDA. So we've done the best we can. We'll have an interim analysis. We think that's the most important aspect that we will get to in this trial, but assuming that's on track, then we feel very good about wrapping up this trial and bringing this to patients very quickly.

Thomas Smith: But our goal is to continue to run the company like we have been and not get too far ahead of our skis until we continue to show consistent delivery as we go forward, Steve I don't know if there's anything you want to add on there.

Thomas Smith: No.

Steven Binder: I think the other original question was also around BD versus internal I think youre exactly yes, we're going to focus in on the internal priorities that we have and if opportunities come along we will certainly assess them, but the focus will be internally first.

Speaker Change: Yeah and on the BD side, Yeah, we get lots of inbounds. These days.

Speaker Change: We're just busy and so if we see something compelling we'll look at it but we're not actively trying.

Speaker Change: Trying to pursue anything we want to work with what we have and maximize the value of what we have on our plate right now.

Speaker Change: Got it that makes sense alright, guys. Thanks for taking the questions.

Speaker Change: Thank you. Thank you one moment please.

Speaker Change: Our next question comes from the line of Anthony Petrone Zillow Group. Your line is open.

Anthony Charles Petrone: Alright, Thanks for squeezing me in here and congrats on strong results also.

Speaker Change: No.

Anthony Charles Petrone: Alfred Mann, passing to the team maybe Steve a couple on <unk>. So just the royalty agreement.

Michael E. Castagna: All right, and then... Just with regard to the Teveso DPI situation, you know, we're seeing a lot of headlines with regard to potential competition and lawsuits, and I'm sure you couldn't or wouldn't comment directly on anyone else's litigation. But, if you're willing, I'm curious if you're able to comment on whether your orders coming into this year and your efforts at inventory or manufacturing capacity expansion reflect, I guess, any possible assumptions or risks around competition. Are you potentially waiting to do anything, or is it pedal to the metal, so to speak, on that front?

Anthony Charles Petrone: High level, why why was 1%.

Anthony Charles Petrone: Sort of the right number.

Anthony Charles Petrone: Lauren's point this potential competition. So so what was the calculus and settling on 1% and can you is there an option to further monetize <unk> royalty.

Steven Binder: Your scenario may be where you want to fast track one to one 201 or even add to the portfolio for future growth investments would you consider monetizing.

Anthony Charles Petrone: The Royalton further as a source of funds and then I'll have a couple of follow ups on on diabetes for Mike.

Anthony Charles Petrone: So Anthony it's Steve so.

Steven Binder: What we did is we looked at what the value.

Steven Binder: Was for the <unk> ACO royalty in a very competitive environment, we had originally over 25 different.

Michael E. Castagna: Yeah, on the Tevesa DPI, I mean, we are making as much as we can around the clock; nothing has slowed down there. We know, you know, we want to build up inventory as well. So between the demand and the current, you know, amount we can manufacture, there's no slowing down where we are with Tevesa DPI. In terms of a competitor coming, I mean, we've been hearing about this for years, and whether it was the higher dose, it was the indication, everyone's been doubting us about, you know, is this going to get approved? When we did get approved, then you're going to have ILD. We have ILD.

Steven Binder: Purchasers come to the table.

Anthony Charles Petrone: And we wanted to keep a vast majority of the royalty to mankind. So we thought 1% was right to get to about $300 million on our balance sheet, which would fund not only our pipeline would put us in a good position to fund the convertible debt when it matures in 2026, so yes, we are.

Anthony Charles Petrone: Can further monetize the royalty if there was a need for it but we don't expect there to be a need for it at this point in time.

Speaker Change: Steve I'll, just add two things.

Anthony Charles Petrone: And then to your question the thing that drives royalty valuation as interest rates and the calculation you're using for expected interest rates and so.

Michael E. Castagna: We've been very honest with the market ever since this drug was under review, and everything we've said has come true, right? We said we would expect ILD. And we got ILD.

Steven Binder: Over time at Fisher, if rates come back down the overall value of this royalty may go up even further even if the sales came off a little bit of a trend for some reason, but we think that when we started this process. The royalty rate was not transparent to the public.

Michael E. Castagna: We said we'd manufacture them. We've manufactured them. We said it would have a nice conversion. It's had a better conversion than anyone expected. So from my perspective, Tavesa DPI delivered on all parameters above and beyond expectation, despite an under-forecasted launch, which put a lot of pressure on MannKind, and we did not miss one beat to make sure every patient had every day supply. We did a lot. Our team worked incredibly hard last year to make that happen.

Steven Binder: When you look back in June July of 2023, and we want to bring value to our company around what is 10% of the royalty works because we thought the values and that 10% felt the right way to to demonstrate that clearly to investors in the meantime, we're midway through that process.

Steven Binder: <unk> disclosed the royalty so we didn't have to kind of work around that issue number one and then number two of the interest rates are high and that does create a bigger discount factor into that future cash flow. So those are things going in our favor hopefully over the coming years.

Michael E. Castagna: We had record production in Q4, and we'll hopefully have equal record production in Q1 and even more production in Q2. So if you look at their story, they were after ILD as their differentiator for some reason. And I'll be honest, if a patient can't tolerate a dry powder for ILD, I don't see how they're gonna tolerate theirs, which has three or four times more powder. So, you know, it's really about patient tolerance, it's about the titration, it's about the powder load, and it's about how you coach a patient, train a patient. All these are really equally important things. And anytime you launch a new drug, you find things out as you go along, and you modify, and you go forward. And that's pretty much what I think I hear UT doing.

Anthony Charles Petrone: And.

Anthony Charles Petrone: The thing about a competitor coming.

Anthony Charles Petrone: No there is about.

Anthony Charles Petrone: X percent converted from <unk> to DPI. However, if there was another competing product out there that may help drive more adoption and earlier adoption of BPI, which indirectly may help US right. As you think about the future. So we're pretty bullish on DPI and whether theres, one or two players out there.

Anthony Charles Petrone: It only helps more patients that can hopefully use the product more in earlier lines of treatment as well so.

Speaker Change: That's kind of how we looked at it.

Michael E. Castagna: You know, obviously DPI is strong, it's doing great, and ILD as much as PH from what I heard from their call. Our conversation with UT continues to be very interesting. I do want to mention another thing, Oren. Japan so far is okay with a sputum conversion.

Anthony Charles Petrone: We think mannkind indirectly benefits as more competition does come.

Speaker Change: I appreciate that and just on <unk>.

Anthony Charles Petrone: And Hell three an inhaled one just from a combined.

Anthony Charles Petrone: Outlook there for a phrase, though when you think about using Fraser with with automated insulin pumps and in the pediatric indication just kind of level set again.

Michael E. Castagna: So we'll do one trial, on MannKind 101 for clofazamine, in terms of the U.S. and Japan, it will be one global study, but we'll cut the data two different ways, one for Japan for sputum and dual primary for the U.S. So that'll be an important aspect of, you know, we did struggle with the FDA saying, "Why are you the only country in the world that wants this Sputum Plus PRO when we don't have the same demand yet?" Other countries around the world.

Anthony Charles Petrone: From from the Mannkind standpoint.

Anthony Charles Petrone: How it's looking at those two opportunities.

Anthony Charles Petrone: From a market expansion standpoint for the product and actually which of the two indications that you're most excited about do you think you get.

Anthony Charles Petrone: Faster traction in pediatrics or would it be in the combination use thanks again and congratulations.

Anthony Charles Petrone: Yes.

Anthony Charles Petrone: I think the the challenge with adding your presence on top of pumps. Besides the FDA I'll just put that out there.

Michael E. Castagna: So that's why I think sputum, you still have to kill the bug at the end of the day, and I think that becomes king in this disease, and can we do that really well? The PROs will work out, but when you look at the labels of PROs, they're not really strong claims at the end of the day, so I still think efficacy is going to matter. Okay, and I look forward to talking to Steve some more about this accounting. But I'll stay out of that conversation.

Anthony Charles Petrone: Is really the need that a patient C and are they are always going to carry all this extra supplies with them and they use it on special occasions that you use them when they get home, it's not a full time patient when you think about that value.

Anthony Charles Petrone: And that's one of the things I think I've seen when people used to criticize our refill rates, but we knew roughly 20, 30% of our type one user friendly intermittently, which kind of hurts your refill rates right and we know type twos or complaints we want to be.

Operator: Thank you. One moment, please. Our next question comes from the line of Thomas Smith of Lerank Partners. Your line is open.

Anthony Charles Petrone: So that's why it's so important to make sure that we are front and center choice for patients who have mealtime control for one improve the agency as we look out there can we improve a one so you can improve time and range. So that's what we're hoping to see what these new trials.

Thomas Smith: Hey, guys, good afternoon. Thanks for taking the questions. And let me add my congratulations on all the progress. Just a couple on our end.

Michael E. Castagna: I guess first on MNKD 201, the inhaled intended program, you just walk us through your expectations for the phase one data in Q3 and how quickly you think you could turn this around and advance it into a phase two trial in IPF patients. And then just remind us how you're planning for clinical supply and scale on 201. Sure.

Anthony Charles Petrone: Versus when we got approval was just to show that the drug is as good as the standard of care and we think that's good enough for peds approval, but to cause an inflection right. We want to show that hopefully, we're improving something on the product.

Anthony Charles Petrone: If you ask me, which is going to be more critical I think inhale.

Anthony Charles Petrone: One will be the study that causes a president to become the next standard of care and what I mean by that is can we grow faster by putting more people out there more marketing more advertising absolutely I think we can is it going to be an inflection point that looks like a rocket I think it's going to take another launch into a new market and the good news about Kid, there's only about.

Michael E. Castagna: On the phase one study, because it's a pretty quick study, we were actually going to do IPF patients. It was the FDA who pushed us to consider healthy volunteers. So we actually switched from, I'll say, IPF patients to healthies, which saved us a lot of time and money. So that's number one.

Michael E. Castagna: So that turnaround time should be pretty quick in terms of wrapping up phase one and filing an end of phase one meeting with FDA, hopefully by the end of the year. And then we're having good discussions internally. We just hired a new gentleman, Dr. Waseem, who will be pivotal in leading our development program beyond phase one for 2019. And we're having good discussions internally. For example, did we do a 1B study to get data sooner in parallel while we continue to wait to kick off the trial for the next phase? Or is it a phase 2 study going into phase three?

Anthony Charles Petrone: 500 doctors in the country that are meaningful <unk> and mostly academic centers are mostly about 40 50 centers in the country.

Anthony Charles Petrone: When you think about the study it's only 40 centers in the U S. We are covering the majority of the key academic centers in this trial. So they will have firsthand experience once the results are unbilled.

Anthony Charles Petrone: Our finalized at least and so we kind of really mature could have gone faster by making it a global trial, absolutely, but we thought in order to have a major inflection you better have the right experience with conditions in the U S and Thats really what were doing Unfortunately, we cannot go against pumps in that trial, we wanted to at the time.

Michael E. Castagna: So that work is happening as we speak, and I don't want to prematurely guess where we land. But just like clofazamine, where we pushed to not do a phase two trial, one could argue that that's a little risky. At the same time, we know these drugs work. We know the approximate dose we're trying to go after, and we know that that dose has produced a signaling effect that we expect.

Anthony Charles Petrone: Switch off insulin pumps and include them the FDA would not allow us and that's one of the reasons, we kicked off and healthy as we felt that once we did the ABC trial. It was safe to switch people off insulin pumps, neither FDA accretive at that point that we could add that.

Anthony Charles Petrone: To the trial, but it would be felt by the time, we change and Hell wanted to get all that through the RMB is it wasn't worth the distraction.

Michael E. Castagna: So in the case of 201, we actually wanted higher doses, and that's where we need the chronic toxin data in Q4 to help support that higher dose. Assuming a patient can tolerate that higher dose, and we think that's gonna be one of our clinical differentiators for 201. So that'll be the things we look for in the trials. Can we dose higher? Is it tolerable?

Anthony Charles Petrone: So we feel very good about where we are in a one two punch with and one of them.

Speaker Change: I appreciate that.

Speaker Change: Thank you I'm showing no further questions at this time I'd like to turn the call back over to Michael <unk> CEO for any closing remarks.

Michael E. Castagna: Thank you Valerie. Thank you all for the animals coming and look forward to seeing hopefully a couple of years <unk>.

Speaker Change: Also we'll be on the non deal roadshow, hoping some key cities meeting with our investors.

Michael E. Castagna: and Do you have any of the side effects that we see with, Okay. Got it. That's helpful. And then just on the pipeline strategy and the priorities here, you obviously had a lot on your plate across the in-house studies for FRESA and the Quotas Amina and the 201 programs, but now you have the financial flexibility. I'm just wondering if you could talk about how you're thinking about balancing external business development opportunities versus advancing sort of internally derived candidates out of your platform. Yeah, no, that's a great question.

Speaker Change: And just wanted to say thank you to everyone. It's been a great year, so far we're super excited.

Michael E. Castagna: Everything is off to a great start and we're looking forward to making 2020 for another record setting year. So thank you again for everything and.

Michael E. Castagna: Steve and David everything else. Thank you for all the work everyone's doing.

Speaker Change: Have a great day.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's conference. Thank you all participating you may now disconnect have a great day.

Michael E. Castagna: Yeah.

Michael E. Castagna: [music].

Michael E. Castagna: I think the team is bursting at the seams with everything we're doing today, and the good news is we have a great team who's working extremely hard to make sure we get these INDs in to get the INHALE-1 and INHALE-3 studies wrapped up. And so, you know, from a financial flexibility point of view, people don't realize we probably spent, don't quote me on exact numbers, but over $30 million between INHALE-1 and INHALE-3 between people and trial costs. So those trials are wrapping up this year and going into next year. As you think about clofazamine, there'll be a little bit of overlap with the 101, but these other trials wrap up, and so you kind of see that phased in.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Yes.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: [music].

Michael E. Castagna: People also missed that we have been funding Cox trials and other data sets in R&D over the last couple of years on 101 and 201 as well as 501. So there's been other investments in R&D that aren't as transparent because we don't talk about them as much. But again, some of those are wrapping up, and those extra funds will be used to fund the phase three trial. So I think we have the financial flexibility to ensure, you know, if we can't fund it out of cash flow generation as we are today, that we have the cash on the balance sheet if we need to. But our goal is to continue to run the company lean like we have been and not get too far ahead of our skis until we continue to show consistent delivery as we go forward. Steve, I don't know if there's anything you want to add. I know, Mike, I think the other question was also around...

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: [music].

Michael E. Castagna: Yes.

Michael E. Castagna: Thanks.

Michael E. Castagna: Yes.

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Michael E. Castagna: Yeah.

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Michael E. Castagna: Okay.

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Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: I think you're exactly right about the internal priorities that we have and if opportunities come along, I'll register them and address them. But, And on the BD side, we get lots of inbounds these days. We're just busy. And so if we see something compelling, we'll look at it, but we're not actively trying to pursue anything; we want to work with what we have and maximize the value of what we have on our plate. I got it.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yeah.

Michael E. Castagna: Okay.

Michael E. Castagna: That makes sense. All right, guys. Thanks for taking the questions. Thank you. One moment, please. Our next question comes from the line of Anthony Petrone of Mizzou Health Group. Your line is open.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Anthony Charles Petrone: Thanks for squeezing me in here and congrats on the strong results. Also, condolences on Alfred Mann passing to the team. Maybe, Steve, a couple on Taivaso, just the royalty agreement, just high level.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Steven Binder: Why was one percent, you know, sort of the right number? At Oren's point, there is potential competition, so what was the calculus on settling on one percent? And can you, is there an option to further monetize Taivaso royalty, you know, under a scenario maybe where you want to fast-track 101 and 201 or even add to the portfolio for future growth investments? Would you consider monetizing the royalty further as a source of funds? And then I'll have a couple of follow-ups on diabetes for my Anthony and Steve, so What we did is we looked at what the value was for the type A's for royalty in a very competitive environment. We had originally over 25 different...

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Sure.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Thank you.

Michael E. Castagna: Sure.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Steven Binder: Purchasers come to the table, and we wanted them, and the vast majority of the Royal Family. So we thought 1% was right to get to about $300 million on our balance sheet, which would fund not only our pipeline but put us in a good position to fund the Convertible Debt, one that matures in... So, yes, we can further monetize the royalty if there is a need for it, but we don't expect there to be a need for it at all. Steve, I'll just add two things to your question. The thing that drives royalty valuation is interest rates and the calculation you're using for expected interest rates.

Michael E. Castagna: Yes.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Right.

Michael E. Castagna: Sure.

Michael E. Castagna: [music].

Michael E. Castagna: Sure.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: [music].

Steven Binder: And so over time, if interest rates come back down, the overall value of this royalty may go up even further, even if the sales come off a little bit of a trend for some reason. But we think that when we started this process, the royalty rate was not transparent to the public when you look back in June and July of 2023. And we wanted to bring value to our company around 10% of the royalty value because we thought we had value. And that 10% felt like the right way to demonstrate that clearly to investors. In the meantime, and we're midway through that process, UT disclosed the royalty, so we didn't have to kind of work around that issue, number one. And then, number two, interest rates are high, and that does create a bigger discount factor into that future cash flow.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Sure.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: So those are things going in our favor, hopefully, over the coming years, and uh, the thing about a competitor coming, you know, we know there's about X% converted from Nebulizer to DPI. However, if there was another competing product out there, that may help drive more adoption and earlier adoption of DPI, which indirectly may help us, right, as you think about the future. So we're pretty bullish on DPI and whether there are one or two priors out there. You know, it only helps more patients who can hopefully use the product more in earlier lines of treatment as well. So that's kind of how we looked at it. And we think MannKind indirectly benefits. Appreciate that. And just on inhale three and inhale one, just from a combined.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Sure.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Outlook there for a phrasal when you think about using phrasal width with automated insulin pumps and then the pediatric indication, just to kind of level set again, from the MannKind standpoint, you know, how it's looking at those two opportunities from a market expansion standpoint for the product, and actually which of the two indications are you most excited about? Do you think you get, you know, faster traction, in pediatrics, or would it be in the combined use? Thanks again, and congratulations. Yeah, no, thank you. I think the challenge with adding your FREZ on top of pumps, besides the FDA, I'll just put that out there, is really the need that a patient sees, and are they always going to carry all this extra supplies with them? And do they only use it on special occasions?

Michael E. Castagna: Okay.

Michael E. Castagna: Thanks.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Jesus.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Yes.

Michael E. Castagna: [music] space.

Michael E. Castagna: Do they use it when they get home? It's not a full-time patient when you think about that value. And that's one of the things I think I saw when people used to criticize our refill rates. We knew roughly 20, 30% of our type 1s use a FREZ intermittently, which kind of hurts their refill rates, right?

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Okay.

Thank you.

Michael E. Castagna: [music].

Michael E. Castagna: And then we know type 2s are not as compliant as we want to be. So that's why it's so important to make sure that we are a front and center choice for patients who have mealtime control or want to improve their A1C as we look out there. Can we improve A1C? Can we improve time and range?

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: That's what we're hoping to see with these new trials. When we got approval, it was just to show that the drug was as good as the standard of care. And we think that's good enough for approval.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: But to cause an inflection, we want to show that, hopefully, we're improving the product. If you ask me which is going to be more critical, I think INHALE-1 will be the study that causes aphresin to become the next standard of care. And what I mean by that is, look, can we grow faster by putting more people out there, more marketing, more advertising? Absolutely. I think we can. Is it going to be an inflection point that looks like a rocket?

Michael E. Castagna: [music].

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Thanks.

Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: I think it's going to take another launch into a new market. And the good news about kids is there are only about 500 doctors in the country that are meaningful pedendos. And they're mostly academic centers, and they're mostly about 40, 50 centers in the country.

Okay.

Michael E. Castagna: Sure.

Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Sure.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Thanks.

Michael E. Castagna: Thank you.

Michael E. Castagna: And when you think about the study, it's only 40 centers in the U.S. We are covering a majority of the key academic centers in this trial, so they will have firsthand experience once the results are in, or are finalized at least. And so we kind of really made sure, could we have gone faster by making it a global trial? Absolutely. But we thought in order to have a major inflection, you better have the right experience with clinicians, and that's really what we do. Unfortunately, we could not go against pumps in that trial. We wanted to, at the time, switch off the information on pumps and include them, but the FDA would not allow us.

Michael E. Castagna: Yes.

Michael E. Castagna: Thanks.

Michael E. Castagna: Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Sure.

Michael E. Castagna: Sure.

Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Yes.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Got it.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: And that's one of the reasons we kicked off Inhale-3 is that we felt once we did the ABC trial, it was safe to switch people off. And even the FDA agreed at that point that we could add that to the trial, but we thought by the time we changed it in L1 and got all that through the IRBs, it wasn't worth the distraction. So we feel very good about where we are in a one-two punch with Inhale-1. I appreciate that. Thank you. I'm showing no further questions at this time.

Michael E. Castagna: Thanks.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Thanks.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Thank you.

Michael E. Castagna: Okay.

Okay.

Michael E. Castagna: Thank you.

Michael E. Castagna: Yes.

Michael E. Castagna: Sure.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Thank you.

Michael E. Castagna: [music].

Operator: I'd like to turn the call back over to Michael Castagna, CAO, for any closing remarks. Thank you, Valerie. Thank you all for the animals coming in. Look forward to seeing, hopefully, a couple of you ATTD.

Operator: Also, we'll be on the non-deal roadshow, hopefully in some key cities, meeting with our investors. And I just want to say thank you to everyone. It's been a great year so far.

Michael E. Castagna: Thanks.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Operator: We're super excited. Everything's off to a great start, and we're looking forward to making 2024 another record-setting year. So thank you again for everything, and Steve and Dave and everything else. Thank you for all the work, everyone. Have a great day.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Okay.

Michael E. Castagna: Thanks, Paul.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Okay.

Operator: Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect.

Michael E. Castagna: Okay.

Michael E. Castagna: Thanks.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Operator: Have a great day, www.mannkindcorporation.com ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? Good afternoon and welcome to MannKind Corporation 2023 Fourth Quarter and Full Year Financial Results Earnings Call. As a reminder, this call is being recorded on February 27, 2024 and will be available for playback on the MannKind Corporation website shortly after the conclusion of the call until March 12, 2024. This call will contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainty, which could cause actual results to differ materially from those stated expectations.

Michael E. Castagna: Okay.

Michael E. Castagna: [music].

Michael E. Castagna: Thanks.

Okay.

Michael E. Castagna: Okay.

Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Thanks.

Michael E. Castagna: Perfect.

Michael E. Castagna: Sure.

Michael E. Castagna: [music].

Michael E. Castagna: Sure.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Thank you.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Okay.

Michael E. Castagna: Okay.

Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Okay.

Michael E. Castagna: Thanks.

Michael E. Castagna: Great.

Okay.

Michael E. Castagna: Yes.

Michael E. Castagna: Sure.

Speaker Change: Good afternoon, and welcome to Mannkind Corporation, 2023, fourth quarter and full year financial results earnings call.

Operator: For further information on the company's risk factors, please see the 10-K report filed with the Security 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 will now turn the conference over to Mr. Castagna. Please go ahead, sir.

Speaker Change: As a reminder, this call is being recorded on February 27, 2024, and will be available for playback on the Mannkind Corporation website. Shortly after the conclusion of the call until March 12 2024.

Speaker Change: 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 those stated expectations.

Michael E. Castagna: Thank you, Valerie. We have never seen a better time for mankind than we do today. As we look at our future, it's extremely exciting, and I'm ever more motivated to ensure we deliver on all key operational opportunities in front of us. As we think about today, Steve and I will go over the operational pipeline highlights, the financial review, and I'm also here today with Lauren Sabella, our Chief Operating Officer. Q&A.

Speaker Change: Further information on the company's risk factors. Please see the 10-K report filed with the security and Exchange Commission. This afternoon, the earning release and the slides prepared for this presentation.

Speaker Change: Joining us today from Mannkind are Chief Executive Officer, Michael <unk>, and Chief Financial Officer, Steve Binder.

Michael E. Castagna: We will drive shareholder value by making a difference in the lives of the patients we serve. We will make over 25 million doses and devices in 2024 and help roughly 25,000 patients take a MannKind-produced product in 2023, the most in our history. In Q4, we had record revenue for Taivesa on both royalty and collaboration manufacturing, along with record production for Taivesa cartridge production.

Michael E. Castagna: Ill now turn the conference over to Mr. <unk>. Please go ahead Sir.

Michael E. Castagna: Thank you Valerie.

Michael E. Castagna: We have never seen a better time for mannkind than we do today.

Michael E. Castagna: As we look at our future is extremely exciting and I never more motivated to ensure we deliver on all key operational opportunities in front of us.

Speaker Change: As we think about today, Steven I will go over the operational pipeline highlights the financial review and I'm also here today with Lauren Sabella, our Chief operating officer.

Speaker Change: For Q&A.

Speaker Change: We will drive shareholder value by making a difference in the lives of the patients we serve.

Michael E. Castagna: We advanced our pipeline in both the orphan business as well as the endocrine business, and our endocrine business had its second consecutive profitable quarter. We finished the year in the strongest position we've been in, in terms of financial ability, as well as by selling 1% of our Tibetan royalty for $150 million upfront and $50 million in revenue milestones. Many of you asked, could we have sold more? Why didn't we sell more? And the reality is, we didn't need to sell more. We wanted to make sure we were comfortable with carrying the level of debt and cash on the balance sheet to control our future. We're very excited about Tyvaso DPI and what it's going to bring to patients and anticipate, hopefully, positive milestones for Tyvaso in the future and, therefore, want to preserve 90 percent of that value for our shareholders. At the same time, we want to de-risk the debt side of our company. We've also restructured our in-home purchase commitment and reduced our near-term cash outlays by $50 million.

Speaker Change: We won't make over 25 million doses in devices in 2024.

Lauren Sabella: And helped roughly 25000 patients take a mannkind produce product in 2023, the most in our history.

In Q4, we had record revenue per <unk> on both royalty and collaboration manufacturing along with record production on Televisa cartridges.

Lauren Sabella: We advanced our pipeline in both the orphan business as well as the endocrine business.

Lauren Sabella: Our endocrine business had its second consecutive profitable quarter.

Lauren Sabella: We finished the year in the strongest position we've been in in terms of.

Lauren Sabella: Financial ability as well as by selling the <unk>, 1% of our <unk> royalty were $150 million upfront and $50 million in revenue milestones.

Lauren Sabella: <unk> asked could we have sold more why did we sell more and the reality is we didn't need to somewhere we want to make sure we're comfortable with carrying the level of debt and cash on the balance sheet to control our future.

Lauren Sabella: We're very excited about <unk>, DPI and what it's going to bring to patients and anticipate hopefully positive milestones for <unk> based on the future and therefore want to preserve 90% of that value for our shareholders at.

Michael E. Castagna: The EVU will be the foundation for our future launches and currently makes up about 37% of our revenue in 2023. Hazlett presented at J.P. Morgan. In January, our ability to grow double digits for the foreseeable future looks bright when you see that in 2023, our total revenue will approach $200 million, almost 100% growth year over year. I'm going to spend a few minutes on AFRESA and the EBU because we are at a pivotal inflection point. That's our future. Innovation takes time, and disruption is even harder. When you think about the weight loss craze today,

Lauren Sabella: At the same time, we want to Derisk on the debt side of our company.

Lauren Sabella: We've also restructure insulin purchase commitment and reduced our near term cash outlays by $50 million.

Lauren Sabella: The EU will be the foundation for our future launches and currently makes up about 37% of our revenue in 2023.

Lauren Sabella: As I presented at Jpmorgan in January our ability to grow double digits for the foreseeable future looks bright and you see in 2023, our total revenue approached $200 million, almost a 100% growth year over year.

Lauren Sabella: I'm going to spend a few minutes on afrezza in the EBU because we are in a pivotal inflection point.

Lauren Sabella: With our future.

Michael E. Castagna: The GLPs were 20 years in the making to what you see today. The pods for type 1 diabetes were 10 years in the making, and Penn took a huge time to convert from BIOS back in the early 2000s. I believe we can make this business a core pillar of our growth. When you look at the endocrine business, it grew 32% year-over-year or $70 million in 2023 and greater than $20 million in Q4, the second quarter in a row, a profit contribution, as well as on a run rate of $80 million. We've made a lot of changes in 2023 and delivered despite those changes to set us up for a transformation once we see the new data from INHALE-1 and INHALE-3 this year. As I look at revenue, Fresno Net Revenue grew by $12 million, or 27% year over year.

Lauren Sabella: Innovation takes time and disruption is even harder when you think about the weight loss Grace today.

Lauren Sabella: We're 20 years in the making to what you see today.

Lauren Sabella: Pods in type one diabetes 10 years in the making.

Lauren Sabella: <unk> took a huge time to convert from vials back into early 2000.

Lauren Sabella: I believe we can make this business a core pillar of our growth story.

Lauren Sabella: When you look at the endocrine business it grew 30%, 32% year over year or $70 million in 'twenty, three and greater than $20 million in Q4, the second quarter in a row of profit profit contribution.

Lauren Sabella: As well as on a run rate of $80 million.

Lauren Sabella: We've made a lot of changes in 2023 and delivered despite those changes to set us up for a transformation once we see the new data from <unk> This year.

Lauren Sabella: As I look at the revenue Afrezza net revenue grew $12 million or 27% year over year. This was our largest jump in seven years.

Michael E. Castagna: This is our largest jump in seven years, and is the most we've seen driven by volume alone as opposed to price balanced by historical. Several clinical readouts in 2024 may expand our market potential, and I'll talk about those in a minute. One of the questions I get is, "What is different this year than previous years?" Our focus this year is incredibly different. We've been waiting for this moment where we have people, money, and data. Many times, we have had two out of three, but not all three.

Lauren Sabella: And is the most we've seen driven by volume alone as opposed to price balanced by historical standards.

Lauren Sabella: Several clinical Readouts in 2024 may expand our market potential.

Lauren Sabella: And I'll talk about those in a minute.

Lauren Sabella: Well one of the questions I get is what is different this year than prior years.

Lauren Sabella: Our focus this year is incredibly different we've.

We've been waiting for this moment, where we had people money and data. Many times, we had two out of three but not all three.

Michael E. Castagna: But number one, we've got to maintain our persistence in Medicare and commercial to grow our base business and leverage the $35 insulin copay that currently exists for Medicare and commercially insured patients. So coverage, we know, is the number one objective. Number two, we optimized our sales force footprint here in January to build capabilities for future growth.

The number one we've got to maintain our persistence in Medicare and commercial to grow our base business and leverage the $35 insulin copay that currently just for Medicare and commercial insurers. So coverage. We know is the number one objection.

Lauren Sabella: Number two we optimized our sales force footprint here in January to build capabilities for the future growth and what that means is we were able to reallocate some head count.

Michael E. Castagna: And what that means is we were able to reallocate some headcount, create key account managers, reimbursement specialists, as well as virtual and in-person training across the country. We also have new insights from market research, which I'll share with you shortly, that suggest that by executing effectively, we can increase prescriber adoption. And finally, is around data and education. We want to focus on K-12 development, education at conferences, and publication to elevate support and awareness, especially among academics.

Lauren Sabella: Create key account managers reimbursement specialists as well as virtual and in person training across the country.

Lauren Sabella: We also have new insights from our market research, which I'll share with you shortly that suggest by executing effectively we can increase prescriber adoption.

And finally is around data and education, we want to focus on cable development education conferences and publications to elevate the support and awareness, especially among academic centers.

Michael E. Castagna: Here's some new market research as we go forward called the Emotional Engagement Mindset Model, which is done by a company we've leveraged for market research. This shows a significant shift in perception by the various groups we tested with our new data. And you can see a baseline, just unaided awareness of a present, what people's perceptions were in terms of unattractive, apathetic, attracted, or passionate.

Lauren Sabella: Okay.

Lauren Sabella: Here's some new market research as we go forward called emotional engagement mindset model, which is done by a company we've deleveraged from market research.

This shows a significant shift in perception by the various groups, we tested with our new data and.

Lauren Sabella: And you can see a baseline just unaided awareness of our present, what People's perceptions were in terms of unattractive apathetic attracted are passionate and by exposing them to our core visual aid as well as some some expectations of what in Hell III data could read out you can see we shipped almost two thirds of our key key target audiences are attracted are passionate about.

Michael E. Castagna: And by exposing them to our core visual aid, as well as some expectations of what inhale-free data could read out, you can see that almost two-thirds of our key target audiences are attracted to or passionate about our future. It's really important because it's the first time we can see this big of a shift from where we started to where we end up with the new data coming. People don't want slow acting influence in a world that moves as fast as we do.

Lauren Sabella: Our future.

Lauren Sabella: It is really important because it's the first time, we can see this big of a shift from where we started to where we ended up with the new data coming.

Lauren Sabella: People don't want slow acting in a world that moves as fast as we do.

Michael E. Castagna: When I look at the future of our studies, INHALE-3 and INHALE-1, I'm going to talk a few minutes about... We have 60 U.S. sites in KOL, sites like the Mayo Clinic and the Jobson Clinic, some of the foundations of diabetes treatment in this country. Earl Hirsch is our top-tier thought leader here at InHealthRe as a principal investigator, and he's done a great job ensuring We have over 300 patients in both of these trials, and both of them are on track to read out this year. On the left side of the slide.

Lauren Sabella: Okay.

Lauren Sabella: When I look at the future here on our studies inhaled <unk> wanted to talk a few minutes about these we have 60 U S sites and Kols.

Lauren Sabella: Like the Mayo clinic to Jonathan clinics, some of the foundations of diabetes treatment in this country.

Lauren Sabella: Hershey's are top tier thought leader here in <unk> is the principal investigator and he has done a great job, ensuring this trial dosing properly and enrolling quickly.

Lauren Sabella: We have over 300 patients in both of these trials.

Lauren Sabella: And both of them are on track to read out this year on the left side of the slide.

Michael E. Castagna: Type 1 Diabetes Inhale 3 is the largest switch study away from AID pumps. So there will be about 120 patients in this trial. Half of them will be on MDI, and half of them will likely be on AID pumps as we look at the data.

Lauren Sabella: Type one diabetes and <unk> the largest switch study away from AIG pumps will.

Lauren Sabella: It'll be about 120, some patients in this trial.

Lauren Sabella: Then we'll be on MDI half of them will be likely.

Michael E. Castagna: The reason this data set is important is it's utilizing a new dosing conversion up front to ensure proper efficacy is maintained or approved. We are also doing meal tolerance tests at baseline in week 17, so we can see how people's dosing may have changed over this time. And another thing to remember about this trial, the first time we're enrolling, almost 25% of the patients are at level 7 A1C when they enter. So we're also showing you, hopefully, that tight control can remain by switching to Triceva plus Fresa, or Degladec is the generic name. So a lot of people ask me, what is the goal of InHale 3? Our goal is equal efficacy to what is perceived to be the standard of care, including an AIDC. No Mealtime Insulin or AID system has ever beat another system head-to-head.

Lauren Sabella: Pumps as we look at the data.

Lauren Sabella: The reason this data set is important as it is utilizing a new dosing conversion upfront to ensure proper efficacy is maintained or improved.

Lauren Sabella: Also doing meal tolerance test at baseline and week 17, So we can see how people dosing may have changed over this timeframe.

Lauren Sabella: No nothing to remember about this trial. The first time, we're enrolling almost 25% of the patients are a level <unk> when they enter.

So we're and also shown you hopefully that tight control and remained by switching to <unk> plus <unk> is the generic name.

Lauren Sabella: So a lot of people ask me what is the goal of inhaled <unk> III arcos equal efficacy was perceived to be the standard of care, including in AIB system.

No mealtime insulin or AI system has ever be another system head to head and we think this is an important metric that is successful and if we see a clinical advantage on highs or lows that's upside to our expectations.

Michael E. Castagna: We think this is an important metric that is successful, and if we see a clinical advantage on highs or lows, that's upside to our expectations. We also plan to use this data to hopefully update Conversion Figure 1 in our PREZ label. We've been in discussions with the FDA since the start of the PEATS program around how we update that initial dose conversion. We hope that Inhaletree will be part of that data. On the right side of the slide, you can see, sorry, on the bottom of the slide, the different data readouts.

Lauren Sabella: We also plan to use this data to hopefully update conversion figure one in our private label, we've been in discussions with the FDA since the start of the Pizza program around how do we update that initial dose conversion.

Lauren Sabella: And we hope that <unk> will be part of that dataset.

Lauren Sabella: On the right side of the slide you can see sorry on the bottom of the slide the different data Readouts first dose will be at <unk> in March of <unk>.

Michael E. Castagna: The first dose will be at ATTD in March. The 17-week data we expect to present at ADA in June, and the 30-week data will be complete in the third quarter and will be presented at a future conference. On the right side of the slide is INHALE-1.

Lauren Sabella: 17 week data, we expect to present at Ada in June and a 30 week data will be complete in third quarter and will be presented at a future conference.

Lauren Sabella: On the right side of this slide is inhaled. One this is a pediatric study. We think this is a watershed moment in order to transform the inflection of Afrezza will be through pediatrics, and we look at diabetes innovation today, whether it's CGM insulin pumps.

Michael E. Castagna: This is a pediatric study, and we think this is a watershed moment in order to transform the use of aphrazole for pediatrics. When we look at diabetes innovation today, whether it's CGM, insulin pumps, this started with children and worked its way into adults because the patients are more on social media. The parents are more progressive, and the doctors are more so. This will be the largest study done on a phresin in 10 years, and so far, we don't have the data, but I can tell you the conversion dose has appeared to cause fewer dropouts relative to our original trials on a phresin. There's also a meal tolerance test at baseline using CGM, and hopefully, this study will be used to secure pediatric approval in 2025 and beyond.

Lauren Sabella: Starting with children and work their way into adults because the patients are warrants social media. The parents are more progressive and the doctors are more progressive this.

This will be the largest study done on our president over 10 years and so far we don't have the data, but I can tell you. The conversion dose has appeared to truck to cause less dropouts relative to our original trials on our president.

Lauren Sabella: Theres also meal tolerance test at baseline using CGM and hopefully this study will be used to secure pediatric approval in 2025 and beyond.

Michael E. Castagna: This is how we believe we will accelerate the rapid growth of aphrodisiacs, and this will ultimately spill over into adults. The one hangover is still the lungs, and we think it's time to move forward beyond this. When we look at the data today, we've been on the market for 10 years, and we've helped tens of thousands of patients. We are building up U.S. KOL support, and we have this new data coming out.

Lauren Sabella: This is how we believe we will accelerate rapid growth of Afrezza and this will ultimately spillover into adults.

Lauren Sabella: But one hangover is still the lungs, and we think it's time to move forward beyond this when we look at the data today, we've been on the market 10 years, we've helped tens of thousands of patients. We are building up U S Kols support.

Michael E. Castagna: We would not be going to the children if we were worried about the safety of our product.

Lauren Sabella: This new data coming out we would not be going to the children. If we're worried about the safety of our products.