Q1 2024 MannKind Corp Earnings Call
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Operator: Good afternoon, and welcome to the MannKind Corporation 2024 First Quarter Financial Results Earnings Call. As a reminder, this call is being recorded on May 8, 2024, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until May 22, 2024. This call will contain forward-looking statements. Such forward-looking statements are subject to risk and uncertainty, which could cause actual risks to differ materially from these stated expectations.
Good afternoon, and welcome to the Mannkind Corporation 2024 first quarter financial results earnings call.
Operator: For further information on the company's risk factors, please see their 10-Q report filed with the Securities and Exchange Commission this afternoon. The earnings released in the slide are prepared for this presentation. Join us today for MannKind, our Chief Executive Officer, Michael Castagna, EVP, and former Chief Financial Officer, Steven Binder, and Chief Financial Officer, Chris Prentz. I'd like to turn the conference over to Mr. Castagna, please go ahead,
Speaker Change: As a reminder, this call is being recorded on May eight 2024 and will be available for playback on the Mannkind Corporation website. Shortly after the conclusion of this call until May 22nd 2024.
Speaker Change: This call will contain forward looking statements such forward looking statements are subject to risks and authority, which can cause actual risks to differ materially from these stated expectations for further information on the company's risk factors. Please see our 10-Q report filed with the Securities and Exchange Commission. This afternoon.
Michael E. Castagna: The earnings release, and the slides prepared for this presentation joining us today from Mannkind are Chief Executive Officer, Michael cause Sanya, EVP, and former Chief Financial Officer, Steven Binder.
Operator: And Chief Financial Officer, Chris Prentiss I would now like to turn the conference over to Mr. Christian Arnell. Please go ahead Sir.
Michael E. Castagna: Good evening, everyone, and welcome to my 28th earnings call. I'm thrilled to report another exceptional quarter of growth for mankind. Over the past eight quarters, our revenue has surged by over 250%, a testament to the dedication and innovation of our team. This puts us on a run rate of over $250 million in revenue for 2024.
Michael E. Castagna: Good evening, everyone and welcome to my 28 earnings call I'm thrilled to report another exceptional quarter of growth for mankind.
Michael E. Castagna: Over the past eight quarters, our revenue surged by over 250% a testament.
Michael E. Castagna: Testament to this.
Michael E. Castagna: Dedication and innovation of our team.
Michael E. Castagna: This puts us on a run rate of over $250 million in revenue for 2024.
Michael E. Castagna: We have made tremendous progress in the field of inhaled insulin that we believe will continue to be a growth driver for years to come. I'm also excited to share with you our progress in addressing rare orphan lung diseases today. Thank you for joining us on this journey of growth and societal impact around the world. Just to remind everyone, our mission at MannKind is to give people control of their health and the freedom to live life.
Michael E. Castagna: We have made tremendous progress in that field of inhaled insulin that we believe will continue to be a growth driver for years to come.
Michael E. Castagna: So excited to share with you our progress in addressing rare orphan lung diseases today.
Michael E. Castagna: Thank you for joining us on this journey of growth and societal impact around the world.
Michael E. Castagna: Just to remind everyone. Our mission at Mannkind is to give people control their health and the freedom to live life, and we think about that it translates into how our products make a meaningful impact on patients every single day.
Michael E. Castagna: When we think about that, it translates into how our products make a meaningful impact on patients every single day. As I look at Q1, we had record Tabasa DPI revenue of almost $48 million due to strong sales by United Therapeutics and record production Q1 as we continue to scale up the expansion facility we've been building over the last several years. Number two, MannKind 101 made.
Michael E. Castagna: As I look at Q1.
Michael E. Castagna: We had record to base, a DPI revenue of almost $48 million due to strong sales by United Therapeutics and record production in Q1, as we continue to scale up the expansion facility. We've been building over the last several years.
Michael E. Castagna: Number two mannkind 101 made.
Michael E. Castagna: Several strategic advancements with the IND being cleared, fast-track designation, as well as a meeting with the Japanese authorities to get clearance on how we expect to pursue Japanese registration approval down the road, but also activate clinical trial sites in the second half. 201 also received the green light to proceed to phase one. We expect that to start momentarily, and for our diabetes business. Things are going nicely, given the upset that we all had with the changed health care.
Michael E. Castagna: Several strategic advancements, but the IND being cleared fast track designation as well as a setup to meet with the Japanese authorities to get clearance on how we expect to pursue Japanese registration approval down the road, but also activate clinical trial sites in the second half.
Michael E. Castagna: 201 also received the Greenlight to proceed to phase one and we expect that to start momentarily.
Michael E. Castagna: In our diabetes business things.
Michael E. Castagna: Things are going nicely, giving the upset that we all had with change healthcare as we look at April we're growing 7% on volume year over year, and we believe the challenges that happened in Q1 will be behind us as we look at Q2 going forward and I'll provide more comments as we get into the discussion today.
Michael E. Castagna: As we look at April, we're growing 7% on volume year over year, and we believe the challenges that happened in Q1 will be behind us as we look at Q2 going forward. And I'll provide more comments as we get into the discussion today.
Michael E. Castagna: And on the financials, Steve will go into great detail, but I want to say thank you for all the work that the team has done as we enter Q1 with $304 million in cash, which was $2 million above the previous quarter, and GAAP net income of $11 million, and continue to reduce leverage as we move into Q2. While MannKind 101 qualifies as an inhalation suspension, we are moving into a promising area. As we think about our nebulizer version, we are next on deck for this product to be developed and be a key part of NTM treatment worldwide.
Speaker Change: And on the financial Steve will go into great detail, but I wanted to say thank you for all the work that the team has done as we ended Q1 with $304 million in cash, which was $2 million above the previous quarter and GAAP net income of $11 million and continue to reduce leverage as we came into Q2.
Michael E. Castagna: While Mannkind 101.
Michael E. Castagna: And our license suspension, we are moving into a promising area.
Michael E. Castagna: As we think about our nebulizer version. We're at next on deck for this product to be developed and be a key part of MTM treatment worldwide.
Michael E. Castagna: When we look at NTM prevalence, this is continuing to grow, and an unmet need exists around the world. And we believe this will be over a billion-dollar opportunity with two players over the coming years.
Michael E. Castagna: When we look at the MTM prevalent this is continuing to grow and the unmet need exists around the world and.
Michael E. Castagna: And we believe this will be over $1 billion opportunity with two players over the coming years patient.
Michael E. Castagna: Patients are suffering greatly, and we're gearing up to hopefully bring them a new solution. As you can see in this chart, the unmet need really focuses on the U.S. and Japan, which is where 80% of our clinical trial sites will be. As I share with you here, our ICON1 Phase 3 study design; we'll be having our investigative launch meeting here next month to really talk about the study design and the expectations for this trial, and the interest is growing as we already have about 80% of the sites identified who are currently gearing up through the contracting process with our hopes of enrolling our first patient by the end of Q2.
Michael E. Castagna: Patients are suffering greatly and we're gearing up to hopefully bring them new solutions.
Michael E. Castagna: As you can see in this chart.
Michael E. Castagna: Unmet need really focuses on the U S and Japan, which is where 80% of our clinical trial site.
Michael E. Castagna: Roughly will be.
Michael E. Castagna: As I share with you here icon, one phase III study design will be having our investigative launch. Many here next month to really talk about the study design and the expectations for this trial and the interest is growing as we already have about 80% of the sites identified who currently gearing up for the contracting process with our hopes to enter.
Michael E. Castagna: Our first patient by the end of Q2.
Michael E. Castagna: We've aligned with the FDA on our co-primer endpoint. Our Phase 3 is progressing, and I want to remind everybody that we have 12 years of exclusivity between Orphan and QIDP designations. As we look forward, the next up in our pipeline is IPF, or called Fibrotic Diseases, because we could also be looking at PPF and other pulmonary-related conditions in 201. When you look at this, it's continued to become an unmet need with only two products approved and littered with failure. This is a very, very difficult disease to treat and harmonize the types of patients you're studying. But when you do look, OFEV has done over $3 billion in 2022 and $3.8 billion, I believe, in 2023.
Michael E. Castagna: We are aligned with the FDA on our co primary endpoints are phase III is progressing and I want to remind everybody that we have 12 years of exclusivity between orphan <unk> designation.
Michael E. Castagna: Okay.
Michael E. Castagna: As we look forward to the next up in our pipeline.
Michael E. Castagna: PFS or fibrotic diseases, because we could also be looking at PBF and other pulmonary related conditions for 201.
Michael E. Castagna: When you look at this it's continue to become an unmet need with only two products approved and littered with failure. This is a very very difficult disease to treat and harmonize the types of patients are studying but when you do look O fab has done over $3 billion in 2022% and $3 8 billion I believe in 2023.
Michael E. Castagna: So this is an exciting opportunity. And the reason we're excited is that when you look at this slide, we strongly believe this product can compete in an evolving landscape. And we're excited that by moving this into an inhaled version, we could potentially reduce the side effects that we see with oral OFEV and maybe deliver higher doses into the lungs than we can currently get with the products available. We believe our Rap-Leomycin study is the first indicator that the doses we're identifying can meet the needs of these patients. We have not published this data yet, but we do have internal data, and we'll continue to look at other ways to triangulate the best chances for success with an inhaled version.
Michael E. Castagna: So this is an exciting opportunity and the reason we're excited so when you look at this slide we believe strongly this product can compete in an evolving landscape and we're excited that by moving this into an inhaled version, we can potentially reduce the side effects that we see with oral fab and maybe those higher into the lungs than we can currently get.
Michael E. Castagna: With the products available.
Michael E. Castagna: We believe our rapidly <unk> study is the first indicator that the doses. We're identifying can meet the needs of these patients as we have not published this data yet, but we do have internal data and we'll continue to look at other ways to triangulate the best chances for success with them didn't help version.
Michael E. Castagna: Twenty-eight day talks have now been completed, and chronic talks will be done at the same time we're roughly getting to phase one data. We're looking forward to moving this forward into humans here in the next. Now I'm going to focus on the endocrine business unit. Our endocrine business grew 7% year-on-year on the strength of a phresis. As we look down, you can see that the growth of Afreza was offset by the decline in VEGO.
Michael E. Castagna: 28 day Tox has now been completed and chronic tox will be done at the same time, we roughly getting the phase one data.
Michael E. Castagna: Looking forward to moving this forward into humans here in the next month.
Michael E. Castagna: Now I'm going to focus on the endocrine business unit, our endocrine business grew 7% year on year on the strength of Afrezza as.
Michael E. Castagna: As we look down you can see the growth of Afrezza was offset by the decline in Vigo. When you look at Vigo, we reduced our sales force support dedicated the Vigo in July of last year and in January this year, we transformed our sales force footprint and added more resources towards Afrezza. This was directly impacted Vigo as we double down.
Michael E. Castagna: When you look at VEGO, we reduced our Salesforce support dedicated to VEGO in July of last year, and in January of this year, we transformed our Salesforce footprint and added more resources to Afreza. This has directly impacted VEGO as we doubled down our efforts to get ready to grow Afreza faster. Some of the key things that we did this year that we should start to see the fruits of that labor here in Q2 on the field restructuring are we added field reimbursement teams, additional training support, and key account managers.
Michael E. Castagna: Our efforts to get ready to grow Afrezza faster.
Michael E. Castagna: The key things that we did this year that we should start to see the fruits of that labor here in Q2 on the field restructurings, we added field reimbursement teams additional training support and key account managers and that will be gearing up to support medical as we get ready for their lease of inhaled <unk> followed by <unk>.
Michael E. Castagna: And now we'll be gearing up to support medical as we get ready for the release of Inhale 3, followed by Inhale 1. We believe Q2 is already starting to show the benefits of this focus, as we were up 7% in the month of April year-over-year, and we'll continue to watch this trend closely as we close out Q3. We're really excited about the new data in PREZ and how this could impact our growth trajectory.
Michael E. Castagna: We believe Q2 is already starting to show the benefits of this focus as we're up 7% in the month of April year over year, and we'll continue to watch this trend closely as we close out Q2.
Michael E. Castagna: We're really excited about the new data on our present, how this could impact our growth trajectory and help me to remind you is our type one study, where we went head to head against the standards of care, whether it be MDI or AIB pumps, we are utilizing a new conversion dose upfront, which we just presented this data at <unk>.
Michael E. Castagna: InHealth Day, to remind you, is our Type 1 study where we went head-to-head against the standards of care, whether that be MDI or AID pumps. We are utilizing a new conversion to a subfrontal, and we just presented this data at ATTT.
Michael E. Castagna: And we'll also have another no-pollunge test followed by baseline, followed by week 17, which has not been presented. But our goal here is equal efficacy to the standard of care, which includes AID. And the reason that's important is doctors perceive this to be the best thing for their patients. We think it's going to be critical to really understand that data as we get ready for the. We do want to update Conversion Figure 1, and we'll make a decision whether we do this separately or together with the piece data based on the update feedback we get later this year.
Michael E. Castagna: And we'll also have another mill pilot test at baseline followed by baseline followed by week 17, which has not been presented yet.
Michael E. Castagna: But our goal here is equal efficacy.
Michael E. Castagna: To the standard of care, which includes the AIB and the reason that's important is doctors perceive this to be the best thing for their patients and we think that will be critical to really understand that data as we get ready for the kids launch.
Michael E. Castagna: We do want to update conversion figure one and we'll make a decision whether we do this separately or together with the peds data based on the FDA feedback we get later this year.
Steven B. Binder: I'll also remind you that there will be a second data readout later this year for 30-week data, which will provide some interesting insights as we look at patients who got through Week 17 and continued for an additional 13 weeks, as well as the remaining cohort of patients who didn't switch but switched for the first time. Because now doctors will have more data and more experience around titration and dosing, and hopefully, we will continue to see that progress as people switch to the second round versus the first round.
Michael E. Castagna: I'll also remind you that there'll be a second data readout later this year for 30 week data, which will provide some interesting insights as we look at patients who got the week 17 and continued for an additional 13 weeks as well as the remaining cohort of patients who didn't switch who switch for the first time because now Dr. <unk> will have more data and more experience around titrate.
Steven B. Binder: <unk> and dosing and hopefully we continue to see that progress as people switch the second round versus the first round.
Steven B. Binder: INHALE-1 is a pediatric study focused here in the U.S., and that one is in almost 40 centers, and we expect to secure pediatric approval in 2025 and beyond, and that will depend if we file on a six-month or a 12-month deadline. Let me remind you of the growth opportunities we're present that we look at over the coming decade. First, we know Type 2 will continue to be dominated by GLPs. So we are now doubling down our efforts on Type 1 diabetes with Inhal3, which we started last year.
Steven B. Binder: Didn't hear one is a pediatric study focus here in the U S and that one is almost 40 centers and we expect to secure pediatric approval in 2012 to 2025 and beyond and that will depend if we file in six months or 12 months of data.
Steven B. Binder: Let me remind you that growth opportunity, where we look at over the coming decade.
Steven B. Binder: First we know type two we will continue to be dominated by <unk>. So.
Steven B. Binder: So we are now double down our efforts on type one diabetes with inhaled <unk>, which we started last year.
Steven B. Binder: With that data coming out, we believe that will set us up for continued success in Type 1 diabetes to go head-to-head against the competition. As we look into the future, for children with INHALE-1, that will be a critical milestone and pivot point. As I've always said, most diabetes innovations have started with children, whether that be CGM or the original insulin pumps that Al Mann developed. And finally, gestational diabetes is getting a lot of attention these days for lots of good reasons, and we believe that the support around EFRESA will continue to grow as interest and guidelines get updated and as more data gets generated.
Steven B. Binder: That data coming out we believe that will set us up for continued success in type one diabetes to go head to head against the competition.
Steven B. Binder: As we look into the future children within <unk> that will be a critical milestone in pivot point as I've always said most diabetes innovations have started with children, whether that be CGM or the original income pumps that <unk> developed.
Steven B. Binder: And finally, just a single diabetes is getting a lot of attention. These days for lots of good reasons and we believe that the support around our presence will continue to grow as interest in guidelines.
Steven B. Binder: Updated and as more data gets generated these will be long term strategic initiatives for our president some of which we will control some of it's outside of our control.
Steven B. Binder: These will be long-term strategic initiatives for EFRESA, some of which we will control and some of which will be outside of us. With that said, I'm now going to turn it over to Steve Binder to walk us through the financials.
Steven B. Binder: But that said I am now going to turn it over to Steve Binder to walk us through the financials.
Steven B. Binder: Thanks, Mike, and good afternoon. I am pleased to review select first quarter 2024 financial results. Please supplement this call by reading the condensed consolidated financial statements and NV&A contained in our 10-Q, filed with the FCC this afternoon. The first quarter extended our streak of exceptional quarterly revenue growth, with total revenues growing 63% versus the first quarter of 2023. This was our eighth consecutive period of quarter-on-quarter revenue. Let's start at the top of the table with Taiviso DPI Royalties, which generated $23 million in first quarter revenue, with a growth of 94% over OneCube 2023.
Steven B. Binder: Thanks, Mike and good afternoon.
Steven B. Binder: Pleased to review select first quarter 2024 financial results. Please supplement this call by reading the condensed consolidated financial statements and MD&A contains our 10-Q, which was filed with the SEC. This afternoon.
Steven B. Binder: If you listened to UT's earnings call last week, strong patient demand for this innovative product is driving growth in our royalty, which is based on UT's Taibeso DPI net revenue. Collaboration services revenue of $25 million increased 118% versus first quarter 2023, which mainly resulted from a higher level of production activity. A higher volume of semi-finished Pardeso DPI units sold to UT with a higher average selling price per unit, and a new sorcerer by the name of... Kitting certain SKUs of Tybasa DPI instead of using a third party or sending them to UT for kitting.
Steven B. Binder: The first quarter, extending our streak of exceptional quarterly revenue growth with total revenues growing 63% versus the first quarter of 2023. This was our eighth consecutive period of quarter on quarter revenue growth.
Steven B. Binder: Let's start at the top of the table with Televisa, GPI royalties, which generated $23 million in first quarter revenue.
Steven B. Binder: A growth of 94% over <unk> 2023.
Steven B. Binder: If you listen to <unk> earnings call last week strong patient demand for this innovative product is driving growth in our royalty, which is based on <unk> net revenues.
Steven B. Binder: Collaboration services revenue of $25 million increased 118% versus first quarter, 2023, which mainly resulted from a higher level of production activity.
Steven B. Binder: Higher volume of semi finished <unk> units sold Ut with a higher average selling price per unit.
Steven B. Binder: A new source of revenue hitting certain skus of Televisa DPI instead of using a third party or sending to Ut for kidding.
Steven B. Binder: The present net revenue of $14 million grew 16% versus first quarter 2023, which was primarily driven by a lower growth-to-net percentage of 31% versus 38% in the prior year and a price increase. The lower growth-to-net percentage was mainly the result of a change in estimate for a Fezzer product. Included in our first quarter of FREZA results is an unfavorable impact to net revenues due to the interruption of our copay card services when change healthcare had a cyber intrusion in February, which completely interrupted copay support, as well as severely impacted the ability of pharmacies to fulfill prescriptions.
Steven B. Binder: Afrezza net revenue of $14 million grew 16% versus first quarter, 2023, which was primarily driven by a lower growth to net percentage of 31% versus 38% in the prior year and a price increase.
Steven B. Binder: The lower growth to net percentage was mainly the result of a change in estimate for Afrezza product returns.
Steven B. Binder: Included in our first quarter of <unk> results is an unfavorable impact to net revenues due to the interruption of our co pay card services when change healthcare, a cyber and extrusion in February was completely interrupted co pay support as well as severely impacted the ability of pharmacy.
Steven B. Binder: Descriptions.
Steven B. Binder: Our co-pay program was down for approximately... Vigo dropped 16% to $4 million in the first quarter of 2024, which is mainly driven by lower demand resulting from transitioning our focus on volume growth to a focus on profitability. The next slide shows our revenue growth by source and basic earnings per share on a quarter-by-quarter basis over a rolling eight-quarter period from the second quarter of 2022 to the first quarter of 2024, with the far Total revenues of $66 million increased 13% sequentially versus the fourth quarter of 2020 and are up 251% versus the second quarter of 2022, which is the first quarter of Tybaso DPI commercial sales.
Steven B. Binder: Our co pay program was down for approximately two weeks.
Steven B. Binder: Veeco dropped 16% to $4 million in the first quarter of 2024, which is mainly driven by lower demand, resulting from transitioning our focus on volume growth. So a focus on profitability for veeco.
Steven B. Binder: The next slide shows our revenue growth by source and basic earnings per share on a quarter by quarter basis over a rolling eight quarter period in the second quarter of 2020 to the first quarter of 2024.
Steven B. Binder: For the first quarter 2024.
Steven B. Binder: <unk> right hand bar.
Steven B. Binder: Total revenues of $66 million increased 13% sequentially versus the fourth quarter of 2023 and are up 251% versus the second quarter of 2022, which is the first quarter of <unk> DPI commercial sales by Ut.
Steven B. Binder: Our exceptional revenue growth is dropping to the bottom line, as you can see below the graph, where we show our quarterly basic earnings and loss per share. The first quarter of 2024 was the third straight quarter with net income, positive earnings per share, $11 million in net income, and four cents a share, which was a significant increase over the third and fourth quarters of 2020. Moving on, we discuss our gap to non-gap reconciliation.
Steven B. Binder: Our exceptional revenue growth is dropping to the bottom line as you can see below the graph, we show our quarterly basic earnings and loss per share.
Steven B. Binder: The first quarter of 2024 was the third straight quarter with net income and positive earnings per share of $11 million of net income and <unk> <unk>, a share which was a significant increase over the third and fourth quarters of 2023.
Steven B. Binder: Moving on to our GAAP to non-GAAP reconciliation, we had GAAP net income of $11 million, which when adjusted for select noncash items for the soul portion of royalty revenue.
Steven B. Binder: We had a gap in income of $11 million, which when adjusted for select non-cash items for the sold portion of royalty revenue and interest expense on liability for sale of future roads. Stock Compensation, and Gain or Loss in Foreign Currency Transactions, which is related to our Insulin Purchase, produced a non-GAAP net income of $15 million versus a 2023 first quarter non-GAAP net loss of $5 million. This is a $20 million quarterly, year-on-year improvement.
Steven B. Binder: Interest expense on liability for sale of future royalties.
Steven B. Binder: Compensation and gain or loss on foreign currency transactions, which is related to our insulin purchase commitment.
Steven B. Binder: Reducing non-GAAP net income of $15 million versus the 2023 first quarter non-GAAP net loss of $5 million. This is a $20 million quarterly year on year improvement.
Steven B. Binder: On the fourth quarter earnings call, I laid out our plans for deploying the $300 million in cash and investments on our balance sheet at the end of 2023 against our highest priority. This slide is an update of what we discussed at year end, as the priorities have not changed since that call, but we have begun to execute the plan, as you can see from the comments highlighted in green. Now that we have fast-track designation and FDA clearance to move forward with the Phase 3 clinical trial for MNKD-101 and FDA clearance to move forward with the Phase 1 clinical trial for MNKD-201, we will invest in these trials to see them executed as quickly and efficiently as possible.
Steven B. Binder: In the fourth quarter earnings call I laid out our plans for deploying the $300 million in cash and investments on our balance sheet at the end of 2023 against our highest priorities. This slide is an update of what we discussed at year end at the priorities have not changed since that call, but we have begun to execute the plan as you can see from the comments highlighted.
Steven B. Binder: And Green Dot.
Steven B. Binder: We have fast track designation and FDA clearance to move forward with the phase III clinical trial for <unk> 101.
Steven B. Binder: FDA clearance to move forward with the phase one clinical trial for MNK EV 201.
Steven B. Binder: We will invest behind these trials to see them executed as quickly and efficiently as possible.
Michael E. Castagna: As we look for opportunities to grow FRESA faster from our new commercial model and upcoming data readouts, we intend to wait to see the results from INHALE-3 and INHALE-1 before making a decision on whether to increase investment behind FRESA. Moving on to changes in our debt structure that were executed in early April, first, we paid off the mid-cap senior secured debt, which freed us of the encumbrances on our assets and discharged the associated debt covenants while eliminating our higher-cost debt, which had an interest rate of 8.25%.
Steven B. Binder: As we look for opportunities to grow at a faster from our new commercial model and upcoming data Readouts, we intend to wait to see the results from <unk> three an inhaled one before making a decision on whether to increase investment behind our presence.
Michael E. Castagna: Moving on to changes in our debt structure that were executed in early April 1st we paid off the mid cap senior secured debt, which freed us the encumbrances on our assets and discharge the associated debt covenants, while eliminating our higher cost debt, which had an interest rate of 8.25%.
Michael E. Castagna: We then extinguished the convertible debt without Mann's trust by converting part of the debt into 1.5 million shares at the contractual conversion rate and paid cash for the remaining outstanding debt. By paying cash, we reduced expected dilution by over 2 million shares, or we're back in the convertible debt. We also believe that the per share price, paid in cash, of $4.31 lets you bargain for the company, and as we see, a price on our stock in this range is severely undervalued.
Michael E. Castagna: We then extinguish the convertible debt without <unk> trust by converting part of the debt into one 5 million shares to contractual conversion rate and paid cash for the remaining outstanding debt.
Michael E. Castagna: By paying cash we reduce expected dilution by over 2 million shares were backing the convertible debt. We also believe that the per share price paid in cash or $4 31.
Michael E. Castagna: What's the bargain for the company as we see a price on our stock and this range is severely undervalued.
Michael E. Castagna: We continue to evaluate the senior convertible debt as we get closer to the March 2026 maturity and intend to do what is in the best interest of shareholders. To summarize... We grew total revenue to 63% year-over-year, another exceptional quarter for revenue growth, and we achieved our eighth consecutive quarter of revenue growth, which has us on a run rate of over $250 million in annual revenue. We recorded $11 million in net income, our third consecutive quarter of net income.
Michael E. Castagna: We continue to evaluate the senior convertible debt as we get closer to the March 2026 maturity and intend to do what is in the best interest of shareholders.
Michael E. Castagna: To summarize.
Michael E. Castagna: We grew total revenue, 63% year over year, another exceptional quarter for revenue growth and we achieved our eighth consecutive quarter of revenue growth, which has us on a run rate of over $250 million in annual revenues.
Michael E. Castagna: We recorded $11 million and net income our third consecutive quarter of net income.
Michael E. Castagna: Our growing revenue is being used to fund our capital allocation priorities and has favorably impacted our ability to grow net income and earnings per share. We ended the quarter with $2 million more in cash and investments on our balance sheet than when we started the quarter, without needing to sell stock, raise debt, or enter into a BD deal, a first in my seven-year tenure at MannKind. As this is my last earnings call, I would like to thank Mike, the extended MannKind team, the MannKind board, and those shareholders who supported us through the dark days when our continued existence was in question.
Michael E. Castagna: Our growing revenue is being used to fund our capital allocation priorities and has favorably impacted our ability to grow net income and earnings per share.
Michael E. Castagna: We ended the quarter with $2 million more in cash and investments on our balance sheet than when we started the quarter without needing to sell stock raise debt or enter into a BD deal a first in my seven year tenure and mankind.
Speaker Change: And this is my last earnings call I would like to thank Mike extended Mannkind team, the Mannkind board and those shareholders, who supported us through the dark days when our continued existence was in question at this supportive of the executive team to execute our strategy and build mannkind into a company that has a bright future and one that we can.
Michael E. Castagna: That this support allowed the executive team to execute our strategy and build MannKind into a company that has a bright future and one that we can all be proud of. Thank you, and now we'll turn it back over to Mike.
Mike: I'll be proud of.
Michael E. Castagna: Thank you and now I'll turn it back over to Mike.
Michael E. Castagna: Thank you, Steve. And as you can see, we are on the upswing as our revenue trajectory continues to be strong, with continued shots on goal increasing to leverage our infrastructure over the coming years.
Mike: Thank you, Steve and as you can see we are on the upswing as our revenue trajectory continues to be strong with.
Mike: With continued shots on goal increasing to leverage our infrastructure over the coming years.
Michael E. Castagna: Let me officially welcome Chris and say a big thank you to Steve, as this couldn't have got done without him. So Steve, thank you for everything you've done. Chris, I'll give you a few seconds here. Welcome to MannKind.
Mike: Let me officially welcome Chris I'd say, a executive Steve as you Couldnt have gotten done without him. So Steve. Thank you for everything you've done.
Michael E. Castagna: Chris if few seconds here.
Chris: Welcome to Manhattan.
Chris Prentz: Thanks Mike. As you and Steve just highlighted in reviewing our quarterly performance, this is an incredibly exciting time to join MannKind. Some may notice from my background that I'm actually returning to Mankind, where I began my biotech career nearly two decades ago. The company I knew 12 years ago has undergone a remarkable transformation, with growing revenue streams and a robust pipeline focused on improving the lives of people living with diabetes and orphan lung disease. My focus is working with the team to expand upon the positive momentum as we propel the company forward. I look forward to engaging with all of you at an upcoming conference.
Chris: Thanks, Mike.
Chris: You and Steve just highlighted in reviewing our quarterly performance is an incredibly exciting time to join mankind.
Chris Prentz: Some may notice from my background, but I am actually returning to mankind, where I began my biotech career nearly two decades ago.
Chris Prentz: The company I knew 12 years ago has undergone a remarkable transformation with growing revenue streams and a robust pipeline to focus on improving the lives of people living with diabetes and orphan lung diseases.
Chris Prentz: Our focus is working with the team to expand upon the positive momentum as we propel the company forward.
Chris Prentz: I look forward to engaging with all of you at an upcoming conference.
Michael E. Castagna: Thank you, Chris, and welcome back to MannKind. As you look at 2024, we've pretty much hit all the milestones we laid out so far in Q1 and are on track to hit the milestones we've laid out for Q2. We're really excited about this year and the second half.
Speaker Change: Thank you, Chris and welcome back to Mannkind.
Michael E. Castagna: As we look at 2024 pretty much hit all the milestones we laid out so far in Q1 and are on track to hit the milestones we've laid out for Q2.
Michael E. Castagna: We're really excited about this year in the second half and one thing I didn't talk about is the potential approval for India. There was a clinical overview there in India. We are submitting some feedback that they requested and we do expect market authorization to happen with potential approval by the end of the year.
Michael E. Castagna: And one thing I didn't talk about is the potential approval for India. There was a clinical trial there in India. We are submitting some feedback that they requested. We do expect market authorization to happen, with potential approval by the end of the year, for a loss potentially in 2025. We'll continue to give you updates as we progress on that, but I do want to let you know because that is public knowledge. As we look at our anticipated key value drivers. MannKind 101 is now underway, and MannKind 201 has proceeded to clear.
Michael E. Castagna: For a launch potentially in 2025.
Michael E. Castagna: We'll continue to give you updates as we progress on that but I do want to let you know because it's public knowledge at this point.
Michael E. Castagna: As we look at our anticipated key value drivers Mannkind want to one is now underway.
Michael E. Castagna: <unk> <unk> hundred one has perceived a clear.
Michael E. Castagna: We look at OFEB revenue of $3.9 billion. That's a tremendous opportunity to help a lot of people around the world. Tyvanso DPI, we've updated for every 10,000 patients covered, now looks to be roughly $300-350 million in revenue as we continue to look at upside projections on our production. UT T-Drone Studies Reading Out could provide meaningful upside from where we are today as well. On the endocrine business, we believe pediatrics is key, and we'll know that answer later this year, as well as the combination with inhale-free and continued growth of Afreza International.
Michael E. Castagna: At <unk> revenue of $3 9 billion.
Michael E. Castagna: That's a tremendous opportunity to help a lot of people around the world.
Michael E. Castagna: I've answered DPI, we've updated for every 10000 patients covered now it looks to be roughly $300 million to $350 million of revenue as we continue to look at upside projections on our production.
Michael E. Castagna: U T type studies reading out could provide meaningful upside from where we are today as well.
Michael E. Castagna: On the endocrine business be pediatrics is key and we will know that answer later this year as well as the combination within health rate and continued growth of our present internationally as it is.
Michael E. Castagna: As I look at the diabetes market, I continue to see... Roughly two-thirds of sales are outside of the U.S. for insulin, and that's a tremendous opportunity to help more people around the world and not one we have pursued rapidly over time because we believe we need to get these data sets that we have coming out this year, which will set us up for 2025. As we look at opportunities to communicate with shareholders, we have three things coming.
Michael E. Castagna: Look at the diabetes market I continue to see.
Michael E. Castagna: Roughly two thirds of sales are outside of the U S, where insulin and that is a tremendous opportunity to help more people around the world and we're not one we pursued rapidly over time, because we believe that we need to get these datasets that we have coming out this year, which will set us up for 2025 and beyond.
Michael E. Castagna: As I look at opportunities to communicate with shareholders, we have three things coming.
Michael E. Castagna: We have the annual shareholders meeting next week; it will be via the internet. Please submit your questions there, and please vote for your shares as well; I just did mine last night. The scientific conferences will be in the endocrine field, there are two endocrine meetings coming up, the ADA meeting here at the end of June and the CD meeting in the mid-August. And then Lung Disease, which will be one of our first times attending as an NTM patient conference, followed by the American Thoracic Society, both in San Diego and the next...
Michael E. Castagna: Annual shareholders meeting next week will be via the Internet. Please submit your questions. There. Please vote your shares as well I just had my last night.
Michael E. Castagna: Antefix conferences, we'll be at the endocrine to.
Michael E. Castagna: Two endocrine meeting is coming up to 88 meeting here at the end of June and the CD meeting at the end of August.
Michael E. Castagna: Lung disease, which would be one of our first time attending as an MTM patient conference followed by the American Thoracic Society, both in San Diego in the next two weeks. So we'll have a scientific presence, where we can and continue to engage with key thought leaders at these places and we will be at the RBC Conference next week, followed by Leerink in Boston in July I believe.
Michael E. Castagna: So we'll have a scientific presence where we can and continued engagement with key thought leaders at these places. We'll be at the RBC conference next week, followed by Lee-Rink in Boston in July, and I believe we just got another invite for all. Thanks again for everything. Look forward to talking with you all next week, and please bring your questions and we'll try to answer them as best we can.
Michael E. Castagna: Just got another in late for August for another conference call take that shortly thanks.
Michael E. Castagna: Thanks again for everything look forward to talking with you all next week and please bring on your questions and we'll try to answer them as best we can.
Speaker Change: Thank you.
Michael E. Castagna: Okay.
Operator: Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by while we compile the Q&A list. Our first question comes from the line of Gregory Renza of RBC Capital Markets. Your line is now open.
Speaker Change: Thank you at this time, we will conduct a question answer session. As a reminder to ask a question you will need to press star one on your telephone wait for your name to be announced to withdraw. Your question. Please press star one again, please stand by while we compile the Q&A roster.
Gregory James Renza: Yeah.
Gregory James Renza: Our first question comes from the line of <unk> <unk> of RBC capital markets. Your line is now open.
Michael E. Castagna: Yeah, hi Mike and team, it's Anishan for Greg. Congratulations on the quarter and thanks for taking my questions. I just wanted to ask about InHale3, maybe if you could just remind us and help us set expectations for the InHale3 readout at ADA in June, bars of success, and potentially any key takeaways or read-throughs from the previously disclosed initial meal challenge results. Then also, just a real quick thematic question, you know, what's next in the collaboration with USAR, the Teton studies, and opportunities in Thanks so much.
Gregory James Renza: Yes, Hi, Mike and team, it's a niche on for Greg Congrats on the quarter and thanks for taking my question.
Michael E. Castagna: Just wanted to ask on inhaled <unk> III, maybe if you could just remind us and help us set expectations for the inhaled <unk> readout at Ada in June.
Michael E. Castagna: <unk> is a success and potentially any key takeaways or read throughs from the previously disclosed initial meal challenge results and then also just a real quick thematic question. What's next in the collaboration with with youth are the Teton studies and opportunities in IPF. The PPS. Thanks, so much.
Michael E. Castagna: Thank you, Noosh. So on InhaleFree, to make clear the expectations, you know, most people believe AID is the best standard of care out there. And so we wanted to be able to show that if we went to type 1 diabetes against what people perceive as the best, that AFREZA was as good in whatever measure you want to look at, A1C, time and range, et cetera. And so 50% of the patients were on AID, and 50% were on MDI. And what we did is we switched everybody to Degladec.
Michael E. Castagna: Thank goodness.
Michael E. Castagna: So and then Neill free to make clear the expectation.
Michael E. Castagna: People believe AIG is the best standard of care out there.
Michael E. Castagna: And so we wanted to be able to show that if we went on type one diabetes against what people perceive as the best.
Michael E. Castagna: Fraser was as good and whatever measure you want to look <unk> time, and range et cetera, and so 50% of the patients and.
Michael E. Castagna: And 50% were on MDI.
Michael E. Castagna: And what we did is we switched everybody to deadwood deck and what that will allow us to do is have roughly 130 people.
Michael E. Castagna: And what that will allow us to do is have, you know, roughly 130 people in that study, half going to standard of care and half going to FRESA, and then a 30-week... Anyone that was on standard of care will switch over, so everybody will try it further. So that second changer will also be an interesting analysis to see what happens, you know, for 30 weeks of continuous DeFresno versus. That's the 12 weeks that we'll get in the second switch, or the first 17 weeks.
Michael E. Castagna: In that study have going to standard of care and half going to Afrezza net 30 weeks.
Michael E. Castagna: That was on standard of care will switch over so everybody will try afrezza. So that second changes will also be an interesting analysis to see what happens.
Michael E. Castagna: For 30 weeks of continuous afrezza versus.
Michael E. Castagna: The 12 weeks that we'll get in the second switch or the first 17 weeks. So we'll have lots of good data.
Michael E. Castagna: So we'll have lots of good data. The meal challenge test, which I think shows you, when you use the dosing logarithm that we recommend, that it's safe, number one, and it's effective, number two, compared to the standard of care. And we show them, you know, when you think about when you eat, the first two hours is when your food is generally peaking and clearing, and that's what the Meal Challenge Test was meant to show, that in the first two hours, you can really get better mealtime control if you want to, right?
Michael E. Castagna: The meal challenge test, which I think shows you when you use the dosing of logarithm that we recommend that its safe number one in its effective number two.
Michael E. Castagna: Versus the standard of care and we showed then when you think about when you eat the first two hours is when your food is generally peaking.
Michael E. Castagna: And clearing and Thats, what the meal challenge test was meant to show is that in the first two hours you can really get better mealtime control.
Michael E. Castagna: And I think that's the key, you know, we know how to dose the product. But we can't control what a patient does in the world, or what a doctor does in the real world. And so that's what it's going to be interesting as we see the trial results come out, what it really looks like when we see all the data in totality. But I think to make it clear, a WIN is as good as standard of care in terms of really looking at what we put on AID as well as MDI. So it'll be a total analysis, not individual. Anything else in the health group?
Speaker Change: You want to Brian I think that's the key is we know how to dose the products, we cant control, where the patient doesn't the world of Dr doesn't the real world.
Michael E. Castagna: And so that's what's going to be interesting as we see the trial results come out.
Michael E. Castagna: What really looks like when we see all the data in totality, but.
Michael E. Castagna: But I think to make it clear a win is as good as standard of care.
Michael E. Castagna: In terms of really looking at we put an AI D as well as MDI. So it'll be a total total analysis on individual components.
Michael E. Castagna: Anything else on and healthy.
Michael E. Castagna: And on the collaboration with UT, I think there's an agreement that we signed years ago that said, if there are additional collaboration opportunities, there's work to be done, and licensing, et cetera, that could happen. We have been so focused on Taivisa over the years that we've had different ideas. For example, we brought Publix, Sialis, and Matinib. Both of those would have had to be in-licensed by UT at the stage we got them to.
Speaker Change: Okay. Good then.
Michael E. Castagna: And on the collaboration with UT I think they're there.
Michael E. Castagna: Is an agreement that we signed years ago.
Michael E. Castagna: If theres additional collaboration opportunities that there's there's work to be done in licenses et cetera that could happen.
Michael E. Castagna: We have been so focused on service over the years.
Michael E. Castagna: We've had different ideas for example, we brought public cialis and not nib.
Michael E. Castagna: Both of those would have had it been in licensed by UT at this stage, we got them too.
Michael E. Castagna: Because they have exclusivity for our platform for pH, and so we couldn't move forward with them without them, they chose not to, and I defer to them, but I think the biggest... 0 1 0 0 0 0 0 0 0, And that's turned out to be true when you look back in time. So I think it's really trying to find what's next that's gonna be meaningful clinically. But at the end of the day, we are moving forward with other warfarin diseases outside of TAH by ourselves, and I think that's. Now we have the ability to fund and grow it, generating revenue for our own shareholders and the patients we help.
Michael E. Castagna: Because they have exclusivity for a platform for ph and so we couldn't move forward with them what's out there.
Michael E. Castagna: Bring them in.
Michael E. Castagna: They chose not to.
Michael E. Castagna: And I would defer to them, but I think the biggest.
Michael E. Castagna: Staying at the time, we had that discussion was really around today. So we're gonna be so big.
Michael E. Castagna: Everything is going to move the needle.
Michael E. Castagna: And that's turned out to be true when you look back in time. So I think it's really trying to find what's next what's going to be meaningful clinically.
Michael E. Castagna: But at the end of the day, we are moving forward in other orphan diseases outside of ph by ourselves and I think thats how.
Michael E. Castagna: Now we have the ability to fund and grow and get the revenue for our own shareholders and the patients to help them.
Michael E. Castagna: Great, thanks so much, and I look forward to seeing you next week.
Speaker Change: Great. Thanks, so much and look forward seeing next week.
Speaker Change: Okay. Thank you.
Operator: Thank you. One moment for our next question. Our next question comes from the line of Olivia Brayer of Canter Physio. Your line is now open.
Speaker Change: Thank you one moment for our next question.
Olivia Simone Brayer: Our next question comes from the line of Embraer of Cantor Fitzgerald. Your line is now open.
Google: Hey, this is Google on for Olivia.
Olivia Simone Brayer: That's on a great earnings I just wanted to ask about your IPF program as that moves into the clinic. How are you guys thinking about the path forward for mankind.
Olivia Simone Brayer: One and have you considered potentially working with our partner there does considering how much interest there is in the market in that market.
Olivia Simone Brayer: Yeah, I think I'd say the same thing, Guggen. IPF obviously is a challenging disease for lots of reasons and lots of failures. We've been working on the inhaled tinnitus program for many years.
Olivia Simone Brayer: Yes, I think I would say the same thing again is that.
Olivia Simone Brayer: IPF, obviously is a challenging disease for lots of reasons and lots of failures.
Olivia Simone Brayer: We've been working on the inhaled <unk> program for many years.
Michael E. Castagna: And we're at that stage now where it's just about execution, meaning we feel pretty good about the dose. We'll confirm that in our Phase 1 studies around tolerability, but now it's just moving these patients in and getting the results. We feel that means, if all works out, we should have a clear winner that can help a lot of people and deal with the number one Achilles heel of the market leader out there. And so, you know, if you think about a $3.9 billion drug, that's almost $100 million a week out the door in revenue.
Olivia Simone Brayer: And it's at that stage now, where it's just about execution, meaning we feel pretty good about the dose.
Michael E. Castagna: We will confirm that in our phase one around tolerability, but now it's just moving these patients in and getting the results and we.
Michael E. Castagna: We feel that means if all works out we should have a clear winner that.
Michael E. Castagna: Can help a lot of people and deal with the number one Achilles heel of the market leader out there.
Michael E. Castagna: So if you think about a $3 $9 billion drug that that's almost 100 million a week out the door in revenue.
Michael E. Castagna: You know, would I much rather have that for our shareholders versus a partner? I don't think in these diseases you need a ton of infrastructure that we haven't already built, meaning specialty support services, pharmacy distribution, wholesalers, patient training, things like that. We have all that. And so it's really about scaling that up and providing the best quality services possible for patients and providers. And so that's.
Michael E. Castagna: What I'd much rather have that for our shareholders versus a partner I don't think in these diseases, you need a ton of infrastructure.
Michael E. Castagna: That we haven't already built meeting specialty support services pharmacy distribution wholesalers.
Michael E. Castagna: Patient training things like that we have all of that and so it's really about scaling that up.
Michael E. Castagna: In providing the best quality service as possible.
Michael E. Castagna: Patients and providers and so that's.
Michael E. Castagna: That's the direction we're planning to head. We think financially we can afford to make these trials go forward. And I think the data is going to drive those decisions as well. If you come to the Ex-U.S. market, I think we will. We'll continue to reassess those in terms of the go-through distributors or their partners. I think from our perspective in the U.S., we continue to progress. Awesome.
Michael E. Castagna: That's directionally, where we're planning to head.
Michael E. Castagna: We think financially we can afford to make these trials go forward.
Michael E. Castagna: And I think the data is going to drive those decisions as we get there.
Michael E. Castagna: If you come to the ex U S market I think we will.
Michael E. Castagna: We will continue to reassess those in terms of you go through distributors or as their partner, but I think from our perspective in the U S. We continue to progress independently.
Speaker Change: Sounds great. Thank you.
Operator: Thank you one moment for our next question. Our next question comes from the line of Steve Lichtman of Oppenheimer & Co.
Speaker Change: Thank you for our next question.
Operator: Our next question comes from the line of Steve Fleishman of Oppenheimer <unk> Co. Your line is now open.
Steven Michael Lichtman: Your line is now open. Thank you, evening guys. Chris, congratulations, and Steve, it's been great working with you. I guess I wanted to ask about the PEED trial for AFREZA, what are the next milestones there? And Mike, you mentioned potential filing at 6 versus 12 months. When will we know in which direction that goes?
Speaker Change: Thank you evening guys Chris.
Speaker Change: Chris Congratulations Steve and Doug.
Steven Michael Lichtman: Great working with you.
Steven Michael Lichtman: I guess I wanted to ask on peace trial for <unk>, what are the next milestones there.
Steven Michael Lichtman: And Mike you mentioned.
Steven Michael Lichtman: Our potential filing at six versus 12 months, what or when will we know which direction that goes.
Michael E. Castagna: When I look at the competitive benchmarks, meaning other insulins, they've been approved on six months of data. And in our discussions with the FDA, they would like 12 months of data in terms of safety. And then, I think it's a real question, is there anything that we see at the six-month mark that's inconsistent with all the other thousands of patients we've studied in IFRESA? And if there's really not, then we plan to go ahead and ask for approval on a submission that says we'll have pretty much a majority of the patients.
Steven Michael Lichtman: Yes.
Michael E. Castagna: When I look at the competitive benchmarks being.
Michael E. Castagna: Other influence they have been approved on six months of data.
Michael E. Castagna: And our discussions with the FDA they would like 12 months of data.
Michael E. Castagna: In terms of safety and then so I think it's a real question is there anything that we see at the six month Mark.
Michael E. Castagna: Thats inconsistent with all the other thousands of patients we studied in our president and if Theres really not then and we plan to go ahead and ask to file an IDE submission that says we'll have pretty much majority of the patients.
Michael E. Castagna: If not all the patients are done by the time the FDA has to approve the product, and then we don't see a reason to wait, you know, another six months to file. They may disagree, but again, I think the data, assuming it's safe and tolerable, and we get, you know, if there's a positive surprise, that may help our argument. If we get a negative surprise, obviously, that won't help us. So we didn't want to get into a debate with the FDA on the timing versus letting's get the clinical trial results. And then we can have a discussion with them. We have found them to be collaborative on everything so far.
Michael E. Castagna: If not all of the patient is done by the time the FDA has to approve the product and we don't see a reason to wait.
Michael E. Castagna: Another six months to file.
Michael E. Castagna: And then may disagree, but again I think the data assuming that it's safe and tolerable and.
Michael E. Castagna: If there's a positive surprise that may help our argument if we get a negative surprise, obviously that won't help us so we didn't want to.
Michael E. Castagna: Get into a debate with the FDA on the timing versus let's get the clinical trial results.
Michael E. Castagna: And then we can have that discussion with them, we found them to be collaborative on everything so far.
Michael E. Castagna: So that's really the key there, is we'd like to go for six. The data will help us get there, but there's a chance we'd have to wait for the full 12. And the reality is there are only a handful of patients that are going to be trickling along beyond the 12-month period.
Michael E. Castagna: So that's really the key there is we'd like to go for six data will help us get there, but theres a chance we'd have to wait for the full 12.
Michael E. Castagna: And the reality is there's only a handful of patients that are going to be trickling along in 2025.
Michael E. Castagna: Beyond 12 months beyond that six month time point.
Speaker Change: Okay. That's helpful.
Steven B. Binder: Okay, that's helpful. And then, and Steve, the collaboration line was well ahead. You mentioned a number of variables there or pieces. Can you maybe size those different pieces that you pointed to that contributed to the quarter, and, I guess, just as importantly, which of those sort of is a sustainable item as we look to model it out in the next few quarters?
Michael E. Castagna: And then Steve <unk>.
Speaker Change: Collaboration line.
Steven B. Binder: It was well ahead, you mentioned the number of variables there or pieces can you.
Steven B. Binder: Maybe size those different pieces that you pointed to that contributed to the quarter end.
Steven B. Binder: And I guess, just as importantly, which of those services sustainable item as we look to model it out in the next few quarters.
Steven B. Binder: Thanks, Steve. If you think back to last year, we talked about increasing our Tybaso DPI bulk production by about 2.5x mid last year. So as you can see, look at our quarterly CNS revenues, third quarter, fourth quarter, first quarter this year. They've been growing. So expect... higher activity in sales to United Therapeutics, which allows us to recognize the revenue. We also had a couple of things in Q1 that, um..., may not repeat.
Steven B. Binder: Thanks, Steve if you think back to last year, we talked about increasing our <unk>.
Steven B. Binder: Basically DPI.
Steven B. Binder: Bulk production by about two five X mid last year.
Steven B. Binder: As you can see look at our quarterly CNS revenues third quarter fourth quarter first quarter. This year they've been growing.
Steven B. Binder: So you expect.
Steven B. Binder: Higher activity in sales to the United Therapeutics, which allows us to recognize the revenue.
Steven B. Binder: We also had a couple of things in Q1 that.
Steven B. Binder: One is that we had a higher level of inventory for TiBasic DPI at year end and a lower level at the end of Q1. So that inventory sold through in Q1, so we got to recognize that revenue. We also had some PPQ testing on our fill finish line that we could recognize revenue on. And then we also have deferred revenue. If you recall back, we had deferred over $70 million worth of deferred revenue in the first couple of years of this contract.
Steven B. Binder: May not repeat one is that we had a higher level of inventory for Televisa VPI at year end and a lower level at the end of Q1, so that inventories are sold through in Q1.
Steven B. Binder: So we got to recognize that revenue.
Steven B. Binder: Also had some <unk>.
Steven B. Binder: <unk> testing on our fill finish line that we could recognize revenue on.
Steven B. Binder: We also have deferred revenue if you call back we had deferred up over $70 million worth of deferred revenue in the first couple of years of this contract.
Steven B. Binder: We're starting to actually see that come through and get recognized because that needs to get recognized by 2031, which is the end of the manufacturing contract. So it was about a million and a half dollars of deferred revenue that got recognized in Q1, and you'll start to see that every quarter going out to 2031.
Steven B. Binder: We're starting to actually see that come through and get recognized because that needs to get recognized by 2031, which at the end of the manufacturing contract. So there was about 1 million and a half dollars of deferred revenue that got recognized in Q1, and you'll start to see that every quarter going out to 2031.
Steven B. Binder: Steve, just to add to that, the PPQ, we will see additional PPQ billing this year, Steve, so that will be important because we're validating spray dryers, and we're validating additional strengths. So that will be recurring to answer that question. And then there's kitting that we're doing that should also be recurring, that was new for us this year. So those are two things that should be recurring as we go forward for the next couple. Okay.
Speaker Change: Okay. That's helpful.
Steven B. Binder: The <unk>, we will see additional P. P Q.
Speaker Change: Billing this year, Steve so that'll be important because we are validating this.
Steven B. Binder: Spray dryers and were validating additional strength, so that will be recurring to answer that question.
Steven B. Binder: And then there's kidding that we're doing that we should also be recurring that was new for us this year.
Speaker Change: So those are two things that should be recurring as we go forward.
Steven B. Binder: Next couple of quarters.
Steven B. Binder: Okay, got it. Thank you guys. Thank you. One moment for our next question. Our next question comes from the line of Thomas Smith of LeRink Partners. Your line is now open.
Speaker Change: Okay got it thank you guys.
Steven B. Binder: Okay.
Thomas Jonathan Smith: One moment for our next question.
Steven B. Binder: Our next question comes from the line of Thomas Smith of Leerink Partners. Your line is now open.
Thomas Jonathan Smith: Hey guys, good afternoon. Thanks for taking the questions, and congrats on the strong quarter. I have a couple of questions. I guess first on 201, the Inhaled Impediment Program, you mentioned plans to fund a Phase II-III study in 2025, pending the results of Phase I. Can you just comment on how you think about the potential regulatory path here in IPF and whether there's potential for registration on the basis of a single pivotal study, or whether your base case is that you would need a second study to enable registration?
Thomas Jonathan Smith: Hey, guys. Good afternoon, thanks for taking the questions and congrats on the strong quarter.
Thomas Jonathan Smith: Couple of questions I guess first on 201.
Thomas Jonathan Smith: <unk> had on that program.
Thomas Jonathan Smith: <unk> plans to fund our phase three study in 2025 pending the phase one results can you just comment on how you think about the potential regulatory path here and ICF and.
Thomas Jonathan Smith: Whether there is potential for registration on the basis of a single pivotal study or whether your base case that you would need a second study to enable registration.
Michael E. Castagna: I would say it's too early to comment publicly on those things. For example, you can see an example where a single trial could be required with a sense of endpoint like IPF specifically. And then the question is, can we get extrapolation to PPF, for example, or will the FDA say do one indication and that could be enough for approval, and if you want the other ones, you've got to do another small study. I think the precedent is there when you look at biosimilars as well as Tyvaso.
Speaker Change: I would say, it's too early to comment publicly on those things.
Michael E. Castagna: You can see an example.
Michael E. Castagna: Whereas the single trial could be required with a sense of endpoint like Ips and specifically.
Michael E. Castagna: And then the question is can we get extrapolation to PBF for example.
Michael E. Castagna: Or would the FDA say do one indication and that could be enough for approval and you want the other ones you Gotta do another small study.
Michael E. Castagna: I think the precedent personally there when you look at Biosimilars as well as the heavy so.
Michael E. Castagna: DPI, where we got ILD and PAH. They're biosimilars; you get the full label, not just the specific indication, even though you study in one. So I think a lot of that's TBD. We're gonna have an end of phase one meeting with FDA, that's ultimately gonna drive that next phase of discussion. And I think that's going to be
Michael E. Castagna: TPI, where we got ILD and ph Biosimilars youre getting the full level not just the specific indication, even though your study and one.
Michael E. Castagna: So I think a lot of that's TBD.
Michael E. Castagna: We're going to have an end of phase one meeting with FDA, that's ultimately going to drive that next phase of discussions.
Michael E. Castagna: And I think that that's going to be important.
Michael E. Castagna: Got it. That's helpful. And then on the IFRESA development plans, you have the ongoing INHALE-1 and 3 studies, but then you also highlighted the potential for gestational diabetes. I was wondering if you could elaborate on that opportunity and whether you think you'd need a specific study to better access that population.
Speaker Change: Got it that's helpful and then.
Michael E. Castagna: On the Afrezza development plans you have the ongoing inhaled one in three studies, but then you also highlighted the potential and just stay as final diabetes.
Michael E. Castagna: I was wondering if you could elaborate on that opportunity and whether you think you would need a specific study to better access to that population.
Michael E. Castagna: What happened is that some of the people doing the INHALE-3 study, some of them, and I don't recall specifically whether they were in the study or whether they are part of the centers that are in the study, so I apologize for that. But they saw the post-meal challenge results at ATTD, and that's really what sparked this discussion, which is, wow, we are trying to really control postprandial sugars in the first 120 minutes and keep sugars under 120.
Speaker Change: Yes, what's happened is the people doing the inhale three study some of them.
Michael E. Castagna: I don't recall specific they were in the study or they are part of the centers that are in the study so I apologize for that but they saw the postmill challenged results at <unk> and that's really what sparked.
Michael E. Castagna: This discussion, which is why we are trying to do.
Michael E. Castagna: Really control postprandial sugars in the first hundred 20 minutes and keep sugars under 120, and because injectable insulin is so slow and it just takes about 90 minutes to start working there is no way gestation a person can really bring sugars down in two hours when it takes 90 minutes to start working.
Michael E. Castagna: And because injectable insulin is so slow, and it just takes about 90 minutes to start working, there's no way a gestational person can really bring sugars down in two hours when it takes 90 minutes to start working.
Michael E. Castagna: And so they felt, when they saw the mail challenge results, that this could really help change that goal and the guidelines that they're trying to implement as we go forward. So then it got into the discussion, which is, you know, there's another, there's two things we've been requested to do. One is to contribute the drug for a PK study to show that obviously a gestational woman could inhale the same way as an adult. We don't have any concerns, but obviously we'd want to get that data to help support that population.
Michael E. Castagna: And so they felt when they saw the mill challenge results.
Michael E. Castagna: Could really help change that goal in the guidelines that they are trying to implement as we go forward.
Michael E. Castagna: So then it got into the discussion, which is you know there's another there's two things we've been requested wanted to contribute drug for a PK study to show that obviously gestation all women could inhale the same rates of adult we don't have any concerns, but obviously, we'd want to get that data to help support that population and then the next thing is theres, a large trial going on out there that.
Michael E. Castagna: And then the next thing is, there's a large trial going on out there that they would like us to be part of, and that's not something we would fund if that's something a third party would be doing. [inaudible] So part of this is what we can help support, and part of this is what the market is gonna do. But if you ask me if we're gonna consider doing a large pregnancy trial, the answer is not at this time, but I won't rule it out forever. I think we gotta get the PK data, see what's good enough, what happened out there, because there are really only two drugs to treat these patients. [inaudible] And so they would love to have something.
Michael E. Castagna:
Michael E. Castagna: They would like us to be part of and Thats not something we would fund that that's something a third party who would be funding, we would just be providing drug and support.
Michael E. Castagna: So part of this is what can we help support part of this is what is the market going to do.
Michael E. Castagna: But if you ask me like are we going to consider.
Michael E. Castagna: <unk> a large pregnancy trial the answer is not at this time.
Michael E. Castagna: But I won't rule it out forever I think we've got to get the PK data and see what's good enough.
Michael E. Castagna: What happens out there because there's really only two drugs to treat these patients it's that format and rapid acting insulin.
Michael E. Castagna: And so they would love to have something that's for 12 weeks of treatment roughly short time period that works with CGM.
Michael E. Castagna: 12 Weeks of Treatment, a short time period that worked. So that's been the feedback and discussion. And if all goes well, we'll hopefully get there, but we're doing some internal work as well to make sure we feel comfortable with the overall situation.
Thomas Jonathan Smith: Got it. That makes sense.
Thomas Jonathan Smith: So that's been the feedback and discussion.
Thomas Jonathan Smith: And if all goes well, we'll hopefully get there, but we're doing some internal work as well to make sure we feel comfortable with the overall situation in the request.
Michael E. Castagna: All right, guys. Thanks for taking the questions. I appreciate it.
Speaker Change: Got it that makes sense. Thanks, guys. Thanks for taking the questions I appreciate it.
Operator: Thank you. I'm showing no further questions at this time. I would now like to turn it back to Michael Castagna, CEO, for closing remarks.
Speaker Change: Thank you I'm showing no further questions at this time I would now like to turn it back to Michael question Your CEO for closing remarks.
Michael E. Castagna: I just want to clarify one thing that some of you have commented on via email, which was our share count outstanding. Our shares have not gone up when we are in profit for a quarter. You have to show the fully diluted share count. So the average share count is really 270 versus 263 last year, 270 million. So it's not really going up as much as some of you may have thought on the retail side.
Operator: Okay.
Michael E. Castagna: I just wanted to clarify one thing that some of you have commented on via email, which was our share count outstanding.
Michael E. Castagna: Our shares have not gone up when we are for profit in a quarter you have to show the fully diluted share count. So the average share count is really $2 70 versus $2 63 last year $270 million. So it's not really gone up as much as some of you may have thought on the retail side.
Michael E. Castagna: Overall, I want to say thank you to Steve again. It was a great quarter. We're firing on all cylinders. The teams are working really hard on your behalf. We're really out there to help patients. We have a lot of meetings coming up with ATS. We're doing some patient advisory boards, physician advisory boards, and investigator meetings. So I think MannKind's reputation Moving into the inhaled lymph and lung space is going to dramatically improve this year, and pretty much every quarter from here on out, we'll start to hopefully have updates on clofazamine's progress now that we've gotten through all the hard work. I'll say the hard work and now the trial, but getting to this point is a miracle.
Michael E. Castagna: Overall I want to say, thank you to Steve again.
Michael E. Castagna: It was a great quarter, we're firing on all cylinders. The teams are working really hard on your behalf.
Michael E. Castagna: We're really out there to help patients we have a lot of meetings coming up with Etfs are going to be doing some patient advisory board fruition advisory boards.
Michael E. Castagna: Investigator meeting, so I think mankind's reputation.
Michael E. Castagna: Moving into the inhaled insulin inhaled.
Michael E. Castagna: Lung space Youre going to see dramatically improved this year and pretty much every quarter from here on out we will start to hopefully have updates on clofazimine progress now that we've gotten through all the hard work I'll say, the hard work and how the trial, but getting to this point is a miracle, it's hard to get drugs through development and the fact that we're able to proceed to phase III.
Michael E. Castagna: It's hard to get drugs through development, and the fact that we're now able to proceed to phase three and see light at the end of the tunnel that, you know, we can get this to patients in the near future as fast as drug development can possibly go, we will work as hard as we can to get there. We're in the best financial position we've been in, and you saw the leverage that comes with it. And we'll continue to do what's best for shareholders and make sure we're allocating capital and being prudent with our expenses.
Michael E. Castagna: Light that we can get this to patients in the near future.
Michael E. Castagna: Fastest drug development could possibly go we will work as hard as we can to get there. We're in the best financial position, we've been in and he saw deleverage the company.
Michael E. Castagna: We'll continue to do what's best for shareholders, and making sure we're allocating capital and being prudent with our expenses. So thank you again I look forward to seeing some of you at the upcoming Investor conferences and please go ahead and make sure you ask your questions next week, we always want to make sure. We have an open dialogue with our shareholders as we have a lot to share an exciting future and I'm looking forward to continue.
Michael E. Castagna: So thank you again. I look forward to seeing some of you at the upcoming investor conferences. And please go ahead and make sure you ask your questions next week. We always want to make sure we have an open dialogue with our shareholders as we have a lot to share and an exciting future, and we are looking forward to continuing to, hopefully, have great performance over the coming years.
Michael E. Castagna: Into hopefully a great performance over the coming years. Thank you.
Operator: Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.
Speaker Change: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
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