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spk10: Good afternoon, and welcome to Mankind 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 Mankind 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 for those stated expectations. For further information on the company's risk factors, please see the 10K report filed with the Security and Exchange Commission this afternoon, the earning release, and the slides prepared for this presentation. Joining us today from Mankind are Chief Executive Officer Michael Constagna and Chief Financial Officer Steve Binder. I will now turn the conference over to Mr. Constagna. Please go ahead, sir.
spk06: 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 every 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 for Q&A. 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 mankind-produced product in 2023, the most in our history. In Q4, we had record revenue for Tyvesa on both royalty and collaboration manufacturing, along with record production on Tyvesa cartridges. We advanced our pipeline in both the orphan business as well as endocrine business, And our endocrine business had its second consecutive profitable quarter. We finished the year in the strongest position we had been in, in terms of financial ability, as well as by selling the 1% of our Tevesa 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 Tyveso DPI and what it's going to bring to patients and anticipate hopefully positive milestones for Tyveso in the future and therefore want to preserve 90% of that value for our shareholders. At the same time, we want to deep risk on the debt side of our company. We've also restructured our insulin purchase commitment and reduced our near-term cash outlays by $50 million. The EBU will be the foundation for our future launches and currently makes up about 37% of our revenue in 2023. As I presented at JP Morgan in January, our ability to grow double digits for the foreseeable future looks bright when you see in 2023 our total revenue approach $200 million, almost 100% growth year over year. I'm going to spend a few minutes on Afrezza and the EBU because we are at a pivotal inflection point with our future. Innovation takes time and disruption is even harder. When you think about the weight loss craze today, GLPs were 20 years in the making to what you see today. The pods in type 1 diabetes, 10 years in the making. And PANS took a huge time to convert from vials back in the early 2000s. I believe we can make this business a core pillar of our growth story. When you look at the endocrine business that grew 32% year over year, or $70 million in 23, and greater than 20 million in Q4, 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 NHEL 1 and NHEL 3 this year. As I look at the revenue, a Fresno net revenue grew $12 million, or 27% year over year. 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 standards. Several clinical readouts in 2024 may expand our market potentials, and I'll talk about those in a minute. One of the questions I get is what is different this year than prior 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 had two out of three, but not all three. So 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 commercial insured. So coverage we know is the number one objection. Number two, we optimized our Salesforce footprint here in January to build capabilities for the future growth. And what that means is we were able to reallocate some accounts to 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 by executing effectively, we can increase prescriber adoption. And finally, is around data and education. We want to focus on K-Well development, education at conferences, and publications to elevate the support and awareness, especially among academic centers. 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 at baseline, just unaided awareness of the present, what people's perceptions were in terms of unattractive, apathetic, attracted, or passionate. 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 we ship almost two-thirds of our key target audiences are attracted or passionate about our future. is really important because 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 when i look at the future here on our studies inhale three and inhale one i'll talk a few minutes about these we have 60 u.s sites in kol sites like the mayo clinic the jobs and clinics some of the foundations of diabetes treatment in this country Earl Hirsch is our top-tier thought leader here on INHALE-3 as a principal investigator, and he's done a great job ensuring this trial is dosing properly and enrolling quickly. 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, type 1 diabetes INHALE-3 is the largest switch study away from AID pumps. There will be about 120-some patients in this trial. Half of them will be on MDI. Half of them will be likely on AID pumps as we look at the data. The reason this data set's important is it's utilizing a new dosing conversion up front to ensure proper efficacy is maintained or improved. 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 timeframe. Another thing to remember about this trial, the first time we're enrolling, almost 25% of the patients are a level 7 A1C when they enter. So we're also showing you, hopefully, that tight control can remain by switching to Traceebo plus Afrezit, or Degledec 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 AID system. No mealtime insulin or AID system has ever beat another system head-to-head. 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 FRES label. We've been in discussions with the FDA since the start of the PEDS program, around how do we update that initial dose conversion. We hope that INHALE-3 will be part of that data set. On the right side of the slide, and you can see, sorry, on the bottom of the slide, the different data readouts, first dose will be at ATDD in March, the 17-week data we expect to present at ADA in June, and the 30-week data will be complete in third quarter and will be presented at a future conference. On the right side of this slide is INHALE-1. This is a pediatric study, and we think this is a watershed moment in order to transform the infection of Afrezza will be through pediatrics. When 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 more on social media, the parents are more progressive, and the doctors are more progressive. This will be the largest study done on Afrezza in over 10 years. And so far, we don't have the data, but I can tell you the conversion dose has appeared to cause less dropouts relative to our original trials on Afrezza. 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. This is how we believe we will accelerate rapid growth of Afrezza, 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 10 years. We've helped tens of thousands of patients. We are building up USKOL 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 product. 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 1 and type 2 adults. Inhale 3 will be using a new dosing 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. GLPs will continue to be the bolster of the units there in type 2 diabetes. However, those patients will still need mealtime insulin And we'll continue to promote Afrezza and Vigo in that segment, as are millions of people who require mealtime insulin over the coming years. 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 of when it comes to a doctor, a patient, or a CDE making an educational decision for a patient. They will want to know what Afrezza looks like against insulin pumps. So we started that study with inhale 3. We're excited to hopefully wrap up inhale 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. 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 want to fulfill over time because there's only two drugs that can be used today, metformin, which crosses the placenta, and slow-acting injectable insulin. And for anyone that knows anyone who'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-tuberculomycobacterium, with our clofazamine suspension. So some of you may or may not be aware, but one of the competing products in phase three had a pause last week in enrollment. And 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-world data. The product is approved today indirectly through a market access program by the FDA and Novartis. So we see world-world data being generated from patients taking clofazine here in the U.S. as well as Japan. Third, there's KOL support for this, along with guidelines potentially. 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, Paracase. 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, 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 that 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. 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 on 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 we will be a potentially preferred option for patients, whether it's because of our favorable safety profile relative to oral clofazamine that's utilized, or the toxicities and tolerability challenges that some people face with Herakase. We also know that we'll have convenient dosing. What does that mean? 28 days of treatment, followed by two months off, followed by 28 days of treatment. 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 efficacious 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. We have an opportunity to expand a brand within a brand as we think about clofazamine in the future. The next quick pipeline highlight I want to talk about is idiopathic pulmonary fibrosis, 201. This is going to be known as the tetanus DPI 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. There's a huge unmet need in this disease state. And OFEV is the market leader, marketed by Bernd Engelheim. 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's severe GI toxicities, which limits patients' acceptance and uptake and prescriber adoption. There's roughly 15,000 active patients in treatment in this country, and we believe bringing a more tolerable product that could potentially be dosed higher would 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 detentive at substantially lower doses. As we go forward and our IND will be filed, we'll be studying this in 201 in our next slide. We'll 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. 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 lower 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. 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. With that said, I'll turn it over to Steve to go over the financials for the quarter.
spk07: Thank you, Mike, and good afternoon. I'm pleased to review select fourth quarter and full year 2023 financial results. Please supplement this call by reading the consolidated financial statements in MD&A contained in our 10-K. 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. Let's break this down by starting with the fourth quarter total revenues at the bottom of the table. Our total revenues grew about 62% versus fourth quarter 2022, and 99% for the 2023 full-year period, primarily due to the growth in our Tyveso DPI-related revenues. Going back to the top of the table, you will see that Tyveso DPI royalty revenue for the fourth quarter was $21 million, which is a 132% increase versus 2022, and the result of continued growth in use of Tyveso DPI for patients suffering from PAH and PHILDs. Please note that $2.1 million of the fourth quarter royalty revenue was sold to a third party, and I will review the accounting for the royalty sale in a few slides. Collaboration and Services' fourth quarter revenue was $17 million, which was an 81% increase over 2022, and was primarily representative of strong Tyveso DPI production volumes in the fourth quarter. For the full year 2023, Tyveso 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 2022. 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 Tyvesa DPI semi-finished product to United Therapeutics in 2023. Moving down the table to our endocrine business, total endocrine revenues were $20 million for the fourth quarter and $74 million for the full year. For the fourth quarter, a further net revenue of $15 million compared to $12 million in 2022, a growth rate of 29%, which was mainly driven by a higher patient demand with underlying paid TRX growth of 29% year over year, 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 would likely impact our net revenues for the first quarter of 2024. For the full year 2023 period, the 27% increase in the present net revenue was mainly related to increased volume from higher patient demand with underlying paid TRX growth of 25%, price, and a more favorable growth net adjustment as a percentage of gross revenues. Net revenue for Vigo was $5 million for the fourth quarter of 2023. Revenues were 13% lower versus 2022, primarily due to lower patient demand and higher growth to nets as a percentage of gross revenues, partially offset by price. Vigo net revenue improved versus the third quarter of 2023 by $0.2 million, mainly due to improved growth to nets. For the full year period, the 48% increase is primarily related to the purchase of Vigo, on May 31st of 2022, reflecting a seven-month versus 12-month comparative. 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 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 fourth quarter of 2023, total revenues increased 14% sequentially versus the third quarter of 23 and are up 62% versus the fourth quarter of 2022. Fourth quarter 2023 total revenue of $58 million was almost 5x the total revenues recorded in the first quarter of 2022. Below the graph were 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 the third quarter earnings call, we are 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 III global clinical trial and MNKD 201 into a Phase I clinical trial. In addition, we will wait to see the results from the INHALE III and INHALE I 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 GAAP to non-GAAP reconciliation, I will 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 went adjusted for select non-cash items for stock compensation, gain or loss on foreign currency transactions, which is related to our insulin purchase commitment, loss unavailable for sale securities, a sole 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, 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 period, we ended with a net loss of $12 million. but when adjusted for the select non-cash items, becomes non-GAAP net income of $6 million, which is compared to a non-GAAP net loss of $78 million in 2022, an $84 million year-on-year positive change. Now I'd like to take some time to explain the accounting that resulted from the sale of our 1% of our Tyveso DPI royalty. To set the stage, We sold 1% of our 10% royalty for $150 million, plus up to $50 million more if certain net revenue numbers are attained within a period of time ending in September 2027. This puts a third-party valuation on the 10% royalty of approximately $1.5 to $2 billion. After we announced the royalty sale in early January, I heard back from investors that we could have done a better job explaining how we recognized those transactions in our financial statements and how we got to our accounting conclusions. So let me try again. 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 has a continuing involvement in the generation of Tyveso DPI revenue through activities to protect the intellectual property of Tyveso 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 recorded as a liability for future sales of royalties, not as revenue. The table on the slide reflects how the accounting works. We record the cash consideration received, net of issuance costs, and the related liability for the sale of future royalties on our balance sheet. To recognize interest expense related to the liabilities, we forecast the 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%. In future periods, we will continue to estimate the future royalty stream based on royalty trends, commercial success of Tyvasiv DPI, competition for the brand, and other meaningful inputs. 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 the liability. We also recognize 1% 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 2024 with 153 million in cash and 153 million of a liability for the sale of future royalties. 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 TIDESA DPI continue to grow, then the liability balance will begin to decrease. 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 offset by non-cash interest expense of $17 million. As discussed on a previous slide, we expect to isolate the non-cash aspects of this transaction in our quarterly gap to non-GAAP reconciliation of net income and loss. With over $300 million in cash and investments on our balance sheet as of December 31st, 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 expense over the next few years through operating cash flow. As these assets advance through clinical trials, we will prioritize their funding. In addition to MNKD 101 and 201, we have two clinical trials for a present nearing data readouts. We will wait to see the results of these trials before deciding whether to invest more behind this asset to grow revenues. 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 returns and release our assets from MidCap's security interest. Man-convertible debt with a balance of approximately $9 million as of December 31st, 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 dilution. Our senior convertible debt with a balance of $230 million as of December 31st, 2023, carries a low fixed interest rate of 2.5%. And we did not expect to buy back bonds prior to maturity in March 2026. 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 ATM. To summarize a very successful 2023, we doubled our total revenues to almost $200 million versus the prior year. Fourth quarter was the second successive quarter for positive contribution from our endocrine business unit. Fourth quarter was the second successive quarter of net income for the company. We saw the 1% interest in our 10% Tyvesa DPI royalty, which values the royalty stream alone at between $1.5 and $2 billion. And we ended 2023 with $302 million in cash and investments. 2024 should be another stellar year for mankind 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 Mike.
spk06: Thank you, Steve, and I appreciate the explanation of all the accounting that I never wanted to know. I appreciate you. Next slide. So Mankind 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 Mankind, and I'll forever be grateful for Al Mann. He was a special human being who cared about society, our patients, and making a difference. 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 Therapies collaboration. We acquired Quorum, which is now our phase three asset with clofazamine or Mankind 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. Expected 2024 milestones alone between AFREZA and the study readouts, Mankind 101, Mankind 201, not to mention the TIDESA DPI, which has two major trials going on in TITAN 1 and TITAN 2, which I heard this last week, were 70% enrolled. Once they finish up enrollment, they'll have 12 months there we should expect to see data from United Therapeutics. Additionally, Our team just this day completed the high-speed fill finish line in terms of qualification and will now be going into PPQ, hopefully producing much higher volumes of Tyveso out of that line as we exit Q1 going 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 post 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. 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 the IPF asset in terms of Mankind 201 into patients and then hopefully into Phase III 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. And as we look out there, whether it's the pipeline with Mankind 101, every 1,000 patients is approximately $100 million in revenue. 201, we're going to start patients dosing there. And if you think about IPS, every 1,000 patients is roughly $150 million in annual revenue. And then we get into Tyvesa DPI, which, as you can see, this past year, When you add up the collaboration services revenue in addition to the royalties, we know there's roughly 5,000 patients on Tybaso 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 INHALE-1 and INHALE-3, as well as the Fresno International. Vigo 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. As we take a step back, we have multiple shops on goal to create significant shareholder value across three commercial products when you think about Afrezza, Avesa DPI, and Vigo that are already FDA approved, as well as two assets coming up quickly in the pipeline between Mankind 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 non-video 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 shops on goal in terms of data readouts to drive future growth. We're super excited about our future, and I will stop there, Valerie, to take questions. Thank you again.
spk10: Thank you. Ladies and gentlemen, if you'd like to ask a question, please press star 11 on your touchtone telephone. Again, to ask a question, please press star 11. One moment for our first question. Our first question comes from the line of Andreas Argyrats of Webbush. Your line is open.
spk03: Great. Thanks for taking our question. Congrats on all the progress. Just maybe two for us here quickly. Despite an evolving competitive landscape in PAH and ILD, the Cigar Royalty puts a $15 billion valuation on Tyveso DPI, a key component to DPI's advantage is the ease and convenience of the low-resistance device compared with other high-resistance devices. So the question here is, could you elaborate on the differences with the DPI device compared with the competitors and how that plays into DPI safety and efficacy profile? And also, how do you see the DPI device playing a key role in the delivery of Nutetnib and IPF? Thanks.
spk06: All right. I want to make sure I get that second question. Can you repeat that one?
spk03: Yeah, yeah, sure. So I back to the the the advantages of the DPI device. How do you see it playing a key role in the delivery of Nutetnib and IPF? Mostly from a delivery to safety perspective.
spk06: Yeah, no, I think that's what gets us excited, right? I'll start with that question first is, you know, we think about our platform, it's the same device being used in the same audience that, you know, we're, we're currently moving forward in orphan lung disease that United Therapeutics is also using, right? So the familiarity of the training, all that and the comfort of um you know bringing inhalation into this patient population with our current technology gives us that much more confident 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 um you know then being able to show that our powder at 90 99 fdkp should be able to um tolerate it in the detective as we go forward And so far, the animals, you know, the dissolution and all that looks positive. 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 tetanib 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 for there. 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. They're going hand in hand. We're not taking a, a novel pattern thrown into an off-the-shelf device. I think that it's about that deep lung penetration, it's about the velocity of those patterns coming out, and how consistent and deep lung penetration you're getting across the bed. And so I think that's number one. Number two, we know that the pattern we need is very low, because we probably have gold records of filling the smallest volume for the 60 microgram, all the way up to 64 microgram or higher. you know, as people want more, they don't need to inhale that much more powder to get additional effect size, which should help on cough, which should help on absorption, as well as just safety. When you think about a lot of FDA questions on hormones and devices and asthma, how to use steroid use, 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. So these are all important things that come up. And I also think patient satisfaction is very high in the trials that UT ran in Pivotal. And we also know from thousands of patients we've studied Afreza in, 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.
spk03: All right, appreciate that. I'll jump back in the queue. Congrats also on all the progress.
spk10: Thank you. One moment, please. Our next question comes from the line of Olivia Breyer of Cantor Fitzgerald. Your line is open.
spk00: Hey, good afternoon, guys. Thank you for the question. Can you talk about how NTM fits into your strategic priorities just 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 last question is just can you remind us on what the timelines are for expected enrollment and data readouts there? Thank you.
spk02: Sure.
spk06: I think there's a couple of things to how it fits in the company. You know, the first will be a decision on licensing outside the U.S. 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 Inzomed went independent. We haven't made those decisions. We don't have to make those decisions. 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 Mankind, I think there's core capabilities that we have today around reimbursement support, patient training, and how do you treat specialty product 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's two points there. Number one, we're going after the refractory patients first, and in that population, right, the only drug approved is our case. And we think there we have a significant clinical advantage as well as a convenience advantage that, you know, we should be able to displace or grow that market opportunity very quickly as we enter it. The other part is we are actively working on a dry powder version of clofazamine, and we expect that that will be used for a naive population so that it can be used earlier in 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 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 is the phase three enrolling on the refractory population. If we look at AN2 as the lead 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, you know, 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 of six months. you know, when you think about the grand scheme of life, we're not that far away from hopefully kicking this trial off here in second quarter. And more importantly, you know, we're sitting here next year at this time. We should be, you know, quickly enrolling halfway if everything goes as planned.
spk10: Thank you. One moment, please. Our next question comes from the line of Steve Lichman of Oppenheimer & Company. Your line is open.
spk04: Thank you, evening, guys, and congrats on the progress. Just level setting into ATTD, what is the data exactly that we're going to see there? I know we'll see the 17-week at – this is on inhale three, excuse me. I know we'll see the 17-week at ADA, but what's the anticipation at ATTD?
spk06: Yeah, so we have a presentation there by Earl Hirsch, which will be the first dose on the meal tolerance data. And Steve, what I think that will allow us is the opportunity to obviously have Afrez on the podium there in front of everybody. But I'm sure Earl will be presenting some of the data and rationale why Afrez 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 a type 1 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? 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 beating global failures.
spk04: Got it. 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, you know, optimizing the Salesforce footprint. So I guess are you – Are you reducing the footprint, being more strategic there? Talk a little bit about what you've been doing. And then what are the range of commercial investments you would consider assuming positive outcomes in Inhale 3M1? Would you add more to Salesforce? Would it be something else? Thanks. Yeah.
spk06: I think on the Salesforce footprint, you have to rewind back 18 months. When we bought Vigo in May of 22, we dedicated roughly 20, 25 FTEs to that brand alone. And one, it was on a two-year decline not being promoted. We wanted to stabilize it. And two, we didn't want to disrupt the Afrezza field team. So we held overlapping expenses for quite a while in both of those businesses. And really, our focus going into July and January this year was a two-step process around integrating Vigo into our commercial footprint on Afrezza. And then the second step was integrating the Salesforce into one voice, one team. And that took place in January of this year. 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, that's not where FRESA has been widely adopted. So, you know, 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, you know, 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 PEATS. So we have a multi-step process here. It's not going to happen overnight, but the first step was getting the one 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. We have a couple of field trainers now, and that's going to be the number one focus this year is can we grow faster than we have been with the current footprint and the current infrastructure you put around that footprint. And if that model is working, I think we'll have conviction to go ahead and expand that model further. We can easily add 50 to 100 more people. I wouldn't really do that until we saw groundbreaking data and that some of our current model was working with KWEL support. I think the number one thing with the data will be the KWEL support around that data, because we have to be able to penetrate the academic centers, which are very pump-based. And I think that the pump data within NHL3 is going to have to hold up in every objective way in terms of reducing highs or reducing lows or improving A1C or time and range. So if we ask what does 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 going to – we've been through it for a long time. We're very excited about the data. We love the product. 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.
spk04: Understood. Thanks, Mike.
spk10: Thank you. One moment, please. Our next question comes from the line of Gregory Renza of RBC Capital Markets. Your line is open.
spk01: Hi, Mike and team. It's Anish 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 HbA1c over the 17-week period in June? And then just considering real-world translatability of the trial design, maybe if you can just remind us on the foreseen pushes and pulls for getting patients to switch between injectable insulin or pumps to Afrezza. Thanks again.
spk06: I think the first question I have was kind of the non-inferiority margin, maybe an in-health rate between the two arms. And I think that's a 0.4%, which was consistent with our pivotal trials on type 1. 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 we got to the right dose. It just took 12 weeks. We're hoping by starting at a better dose 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, could you switch off an insulin pump? How do you adjust the basal? What happens 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. And so those are the types of things we tried to get more guardrails around in this trial to ensure proper titration, proper conversion, And, you know, obviously doctors know how to use the insulin pumps. And so that was the other thing we saw in the original trial was they know how to manipulate a pump very well because these doctors use pumps all day long. Where Fresno was new to that, they didn't know how to use it to its advantage in terms of dosing and, 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. So we didn't design it for superiority. Those 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 rural world, you know, existing with pods and pumps and physicians? 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 AFREZA. People are starting to understand the lower rates of hypoglycemia, the better timing range, and they're seeing they want a real-time acting insulin as they've kind of adjusted every AID system and pumped together. What's next? And what's next is really tightening control even further, and we're the best tool to help that. So that's a lot of what we're talking about is how do we look at data on a Fresnel on top of 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 Afrezza to those populations? So we're starting to look and say, if we were to get positive data on inhale three as an early readout, then we anticipate inhale one will look good. Then what's the next leg up that we should really start exploring for more continued opportunities for Afrezza? If you think about it, it's the pump market, it's the pediatric market, it's the gestational diabetes market, GLP market. There's 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 five years.
spk01: Great, thank you so much.
spk10: Thank you. One moment, please. Our next question comes from the line of Oren Livnett of HC Wainwright. Your line is open.
spk09: Thanks. I got a couple one-on-one questions. 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? With regards to the PRO endpoint, I guess since that's a new subjective endpoint in this space, you know, what is the bar there? What does that need to look like to be an effective competitor to review? And I've got a follow-up. Thanks.
spk06: Yeah. Lauren, 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 Inzamed, which spent many years building out this space and working with the FDA, as well as the patient communities. And we know that the physician KOL population really wants colfazamine. We know the patient population really wants colfazamine. And even the FDA, I will say, has been nothing but collaborative along this whole journey for five years and going back with Quorum. So 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 risks of running these trials. And I think the reality is there are risks in this population. But given the efficacy on clofazamine, we estimated about, I think, a 20%, 30% effect size delta between us and placebo. And that's going to be the interim analysis to see are we on track for that. If not, we might have to increase the sample a little bit. That's number one. 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. The FDA was insistent it should be a primary or co-primary endpoint. And so around and around, 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 endpoint, but that 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, and that the efficacy is going to have to matter in terms of sputum conversion as much as the PRO tool by itself. Just like I know, I listened to Inzomet'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. 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 in. All be really important. 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 drug across the finish line.
spk09: Okay, just so I'm clear, 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?
spk06: No. I think when you look, if we were going after naive patients, we'd think we'd see a much higher efficacy rate, but because we're focused on refractory, we think it'll be a little less obvious in naive patients, and I think you saw that in the in the med, our case data out there. There's only one study to really judge NTM endpoints on, and that's our case. And so I think when you go back in their development program, they had a 20%, 30% delta between the control and there is, 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 is, 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 risk. And that's a lot of 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 to bring this to patients very quickly.
spk09: All right. And then just with regards to the Tevesa DPI situation, we're seeing a lot of headlines with regards 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 are 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 uh, competition? Are you like potentially waiting to do anything or is it pedal to metal, pedal to the metal, so to speak on that front?
spk06: Yeah. On the Tamesa DPI, I mean, we are making as much as we can around the clock. Nothing's slowed down there. Um, we know, you know, we want to build up inventory as well. So between the demand and the current, um, you know, amount we can manufacture, there's no slowing down, uh, where we are with Tamesa DPI. In terms of, um, 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 got ild 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 we got ild we said we manufactured we've manufactured we said it would have a nice conversion it's had a better conversion than anyone expected so From my perspective, TAVESA DPI is delivered on all parameters, above and beyond expectations, despite an under-forecasted launch, which put a lot of pressure on mankind. And we did not miss one beat to make sure every patient had everyday supply. And that, you know, we did a lot. Our team worked incredibly hard last year to make that happen. And we had record production in Q4, and we'll have hopefully equal record production in Q1 and even more production in Q2. So, you know, 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 going to tolerate theirs, which has three or four times more powder, if I recall. So, you know, it's really about the patient tolerability. 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 is, you know, Tabasco DPI is strong. It's doing great in ILD as much as pH from what I heard from their call. And our conversations with UT continue to be very positive. I did want to mention another thing, Oren, is Japan so far is okay with the sputum conversion. So we'll do one trial on Mankind 101 for clofazamine. In terms of U.S. and Japan, it'll 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. or co-primary. So that'll be an important aspect that, you know, we did struggle with the FDA saying, why are you the only country in the world that wants this sputum plus PRO where we don't have the same demand yet 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. 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 in terms of student conversion.
spk09: Okay. And I look forward to talking to Steve some more about this accounting.
spk10: I'll stay out of that conversation. Thank you. One moment, please. Thank you. Our next question comes from the line of Thomas Smith of Lead Rank Partners. Your line is open.
spk08: Hey, guys. Good afternoon. Thanks for taking the questions and letting me add my congrats on all the progress. Just a couple on our end. I guess first on MNKD 201, the inhaled and tetanin program. Can you just walk us through your expectations for the Phase I data in Q3 and how quickly you think you could turn this around and advance it into a Phase II trial in IPF patients? And then just remind us how you're planning for clinical supply and scale on 201.
spk06: Sure. 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, you know, IPF patients to healthies, which saved us a lot of time and money. So that's number one. So that turnaround time should be pretty quick in terms of wrapping up phase one and filing and 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. Wasim, who will be pivotal in leading our development program beyond phase one for 201. 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? Is it a 2 study going into a phase three? 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 push 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. So in the case of 201, we actually wanted those higher. And that's where we need the chronic tox data in Q4 to help support that higher dosing. And assuming a patient can tolerate that higher dose, and we think that's going to be one of our clinical differentiators for 201. So that would be the things we look for in the trials. Can we dose higher? Is it tolerable? And do you have any of the GI side effects that we see with the oral formulation?
spk08: Got it. That's helpful. And then just on the pipeline strategy and the priorities here, obviously you had a lot on your plate across the inhale studies for Afreza and the clopazamine 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 the internally derived candidates out of your platform?
spk06: Yeah, no, that's a 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's working extremely hard to make sure we get these INDs in, to get the INHALE 1 and 3 study wrapped up. And so, you know, from a financial flexibility, people don't realize we probably spent Don't quote me on exact numbers, but over $30 million between NHL-1 and NHL-3 between people and trial costs. So those trials are wrapping up this year, 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 phase in. People also missed that we have been funding tox trials and other data sets in R&D over the last couple of years on 101 and 201, as well as 501. 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 if we can't fund it out of cash flow generation that we are today, that we have the cash on the balance sheet if we needed 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.
spk07: I know, Mike, I think the other original question was also around BD versus internal. I think you're exactly right. We're going to focus in on the internal priorities that we have, and if opportunities come along, we'll certainly assess them, but the focus will be internally first.
spk06: Yeah. And on the BD side, you know, 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 plates right now.
spk08: Got it. That makes sense. All right, guys. Thanks for taking the questions. Thank you.
spk10: Thank you. One moment, please. Our next question comes from the line of Anthony Patron of Mizuho Group. Your line is open.
spk05: Thanks for squeezing me in here and congrats on strong results. Also, condolences on... Alfred Mann passing to the team. Maybe, Steve, a couple on Tyveso, just the royalty agreement, just high level. Why was 1%, you know, sort of the right number? At Oren's point, there's potential competition. So what was the calculus on settling on 1%? And can you, is there an option to further monetize Tyveso 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, you know, the royalty further as a source of funds? And then I'll have a couple of follow-ups on diabetes for Mike.
spk07: Anthony, it's Steve. So what we did is we looked at what the value was for the Tyveso royalty in a very competitive environment. We had originally over 25 different types purchasers come to the table. 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, but put us in a good position to fund the convertible debt when it matures in 2026. So yes, we 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.
spk06: Steve, I'll just add two things, Anthony, to your question. The thing that drives royalty valuation is interest rates and the calculation you're using for expected interest rates. 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 came off a little bit of 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, July of 2023. And we wanted to bring value to our company around what is 10% of the royalty worth because we thought it was undervalued. And that 10% felt 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, 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. And the thing about a competitor coming, you know, we know there's about, you know, X percent 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. we're pretty bullish on DPI and whether there's one or two priors out there, you know, it only helps more patients that 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're, you know, we think mankind indirectly benefits as more competition does come.
spk05: Appreciate that. And just on inhale three and inhale one, just from a combined outlet there for a phrase that when you think about using phrase it with with uh automated insulin pumps and then the pediatric indication just just to kind of level set again from from the mankind standpoint you know how it's looking at those two opportunities you know from a market expansion standpoint for the product and and actually which of the two indications are you most excited about do you think you get you know faster traction pediatrics or would it be in the combination use thanks again and congratulations
spk06: Yeah, no, thank you. I think the challenge with adding your Fresa 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 use it on special occasions? 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've seen when people used to criticize our refill rates. We knew roughly 20%, 30% of our type 1s use a Fresa intermittently. which kind of hurts your refill rates, right? And then we know type twos are not as compliant as we want to be. So that's why it's so important to make sure that, you know, 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 timing range? That's what we're hoping to see with these new trials versus 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 PEDS approval, but to cause an inflection, We want to show that hopefully we're improving something on the product. If you ask me which is going to be more critical, I think inhale one will be the study that causes Afrezza 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 kids is there's 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. And when you think about the study, it's only 40 centers in the U.S. So we are covering the majority of the key academic centers in this trial, so they will have firsthand experience once the results are unveiled or finalized at least. And so we kind of really made sure, could we have gone faster by making it a global trial? Absolutely. We thought in order to have a major inflection, you better have the right experience with clinicians in the U.S., and that's really what we're doing. Unfortunately, we could not go against pumps in that trial. We wanted to, at the time, switch off insulin pumps and include them. The FDA would not allow us, and that's one of the reasons we kicked off INHALE-3 is we felt once we did the ABC trial, it was safe to switch people off insulin pumps. And even the FDA agreed at that point that we could add that to the trial, but we thought by the time we change INHALE-1 and get all that through the IRBs, it wasn't worth the distractions. So we feel very good about where we are in a one-two punch with inhale one and inhale three. Appreciate that.
spk10: Thank you. I'm showing no further questions at this time. I'd like to turn the call back over to Michael Constagna, CEO, for any closing remarks.
spk06: Thank you, Valerie. Thank you all for the analysts coming in. Look forward to seeing hopefully a couple of you at ATTD. Also, we'll be on the non-deal roadshow, hopefully in some key cities, meeting with our investors. I just want to say thank you to everyone. It's been a great year so far. 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. Steve and Dave and everything else, thank you for all the work everyone's doing. Have a great day.
spk10: Thank you. Ladies and gentlemen, this does conclude today's conference. Thank you all for participating. You may now disconnect. Have a great day.
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