MannKind Corporation

Good morning and welcome to the Mankind Corporation second quarter 2024 financial results earnings call. As a reminder, this call is being recorded August 7, 2024 and will be available for playback on the Mankind Corporation website shortly after the conclusion of this call and available for approximately 90 days. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty which could cause actual risks to differ materially from those stated expectations. For further information on the company's risk factors, please see the 10Q report filed with the Securities and Exchange Commission this morning, the earnings release, and the slides prepared for this presentation. Joining us today for Mankind are Chief Executive Officer Michael Castagna and Chief Financial Officer Chris Prentice. I'd like to turn the conference over to Mr. Castagna. Please go ahead, sir.

Thank you, operator. Good morning, everyone. Excited to be here, calling in from Danbury, Connecticut today, and joining me is Chris Prentice, our Chief Financial Officer. Today, we'll go over our traditional operational and pipeline highlights. Quick financial review by Chris with some closing remarks by myself, and we'll move to Q&A. Let me begin by talking about some of the second quarter 2024 highlights. First, we had record revenue on Tabeza DPI between manufacturing and royalty revenue coming in. Second, clophasmin inhalation suspension is well on its way with fast-track designation by the FDA, as well as several sites now activated and ready for patient enrollment. And thirdly, netetanib DPI is well under its way with results expected here in Q4, along with chronic tox. We're now in our third cohort of single-dose patients anxiously awaiting to move to the MAD section of the study shortly. In our endocrine business, We had second quarter revenue of $20.8 million driven by Afrezza. I'll talk about that shortly. Inhale 1 top line results for pediatrics is expected here in Q4, and we're excited for this pivotal moment in our history to unveil these results. And then the third part of the endocrine is Inhale 3. We met its primary endpoint, 17-week data. We're presenting ADA, and we're very well received. And we're coming up on our 30-week data readout here in the second half and implementing our ADA post-success plan. For financial results, record revenue for the company of $72 million of 49%, with a gap net loss of $2 million, a non-gap of $14 million that Chris will talk about shortly. We ended the quarter with a strong balance sheet, and we continue to delever the company and reducing dilutions to shareholders by paying down the manned convertible debt and cash in stock as opposed to stock only. Now let me talk about closed phasamine inhalation suspension. We look at NTM as an opportunity with two players over the coming years. Our case had great data readout in early stage and they continue to penetrate the markets in Japan and the US. As we look at the refractory population being about 10, 15, 20% of this market, we see this as a very large opportunity to bring a new entry that could be more convenient with really good lung coverage here in the US as well as Japan. Let me talk to you for a second about our phase three design. The key attributes of this product are number one, 28 days on treatment with 56 days off treatment. What that means is the patient will have one copay for the 28 days followed by two months off because the drug has a long half-life. We believe it's really important to get deep lung penetration in this disease as the macrophages are deep in the lungs and they'll take the clophasamine in. And because of the half-life, it will take about two months for it to return back to baseline. We see that same thing with month four coming on the treatment. and then month five and six off treatment. The primary endpoint of the study will be six months, and we're looking at a dose of 80 milligrams of coplasamine and a two-to-one randomization. We will have an interim analysis after the first 100 people are enrolled, and that will decide whether the trial should be larger to make sure we hit our endpoints or it's sufficiently staffed to reach the primary endpoint. The co-primary endpoint in the U.S. is sputum culture conversion and patient-reported outcomes, and the primary endpoint for Japan has been aligned, and that is sputum conversion only. We also have orphan and QID designation along with other IP giving us a minimum of 12 years exclusivity. Japan and FDA have aligned to a single trial, and we're also considering creating an expanded access program. We'll keep you posted on that. On 201, as you see, this market, while it is crowded in terms of development, there are very few options on the market for patients. We're excited at what we see from United Therapeutics and TTOM 1 and 2 reading out next year for Tyveso. But more importantly, this is on the backbone of Ofev as the market brand leader in IPF. And we believe, while it's a phenomenal drug and it's helped thousands of people live longer, we also believe it's an opportunity to enhance the quality of life that people experience when going on Ofev. And that's really our main focus here. As we look at this opportunity, how do we bring potentially improved tolerability relative to GI side effects specifically that occur with Ofev, where 50% of the people traditionally drop off treatment because of GI side effects alone. We also believe that we can dose hopefully a little bit higher directly into the lungs and get higher lung concentrations. And this is really our focus here on this product, is can we dose appropriately and tolerable? And does that show an improvement in GI tolerability? The phase one data readout and chronic tox are expected to both come in here in Q4. we will then file a meeting with the fda to move this to a phase 2 3 design in 2025. now moving on to our endocrine business unit date revenue of 39.5 million predominantly driven by a fresas i'll talk about in a second bego was de-prioritized in q1 as you may recall and we restructured the field team so that we've had a different business model coming into the year And you'll see some of that result here as I talk about our script growth. For the Q2 sales alone over the prior year grew 20% to $16.3 million. Moving into prescriptions, you can see Q1 versus Q2, 8% NRX growth leading to 5% TRX growth quarter over quarter. The NRXs are the leading indicator of what to expect three to six months later. It's nice to see that the NRX change is paying off in TRX, and we hope to continue to see that type of growth as we go into Q3 and Q4 this year. As you may or may not have read our readout on ADA with Inhale3, this was presented at an oral presentation by seven world thought leaders. The sub-analysis found several key attributes of this trial. Number one, inhaled insulin achieved a target A1C less than 7 in 30% of participants versus 17. Additionally, 24% of AFREZA was one in four patients versus 13% usual care met timing range greater than 70%, with no increased hypoglycemia. Over 50% of the subjects who got to the end of the trial said they'd like to continue on taking AFREZA. And the reason that's such an important number is 50% of the people in this trial were coming off the best technologies of AID systems, Omnipod, and were generally satisfied with their treatment. and to see that even when people switch and they maintain control, they'd like to continue to have the freedom that Afrezza brings to them. We've met our 17-week primary endpoint, and our full 30-week data is expected to read out later this year, and we'll likely give that information to shareholders here in Q4. When you look at the meal challenges here on the right, the RAI, the red line, clearly shows the postprandial glucose excursions. Relative to the initial dose in both groups, you can see a distinct difference in the first two hours. And at the end of the study, when people were titrated to Afrezza, we did a second meal challenge. You can see greater improvement in mealtime control as people learned how to use the product. And what this gives us is hope that when properly dosed, Afrezza can really impact post-prandial control significantly over the current standard of care. This data was just published in Diabetes Care a couple weeks ago. As we look out, we see inhale three is pivotal to transforming the adult population but also laying the groundwork for pediatrics where insulin pumps is the predominant competitor of choice when it comes to choosing inhaled, injected, or an alternative delivery mechanism. And we believe the SWITCH study in INHALE-3 showing consistent results of efficacy in the overall population as well as subpopulations will be important as the INHALE-1 trial was only in MDI patients, and that was by design to really show and control the one difference in the trial. The INHALE one day will read out shortly, and we'll intend to file that next year for approval, hopefully, in the future years for launch. When we look at AFREZA since I've gotten here, we've continued to grow year over year in a really good way. As we look out over the next 10, 15-plus years, we see nothing slowing down AFREZA growing year over year. Finally, we will have proper data readouts, proper label updates, and now we have the capital and talent to continue to scale this business. We will wait for the data readouts. We are conducting some independent market research so we can update you in the coming quarters on what our plans are and what to do with the data readouts as well as the additional indication of what that will mean for shareholders. But we have grown consistently, and we will continue to grow this brand for years to come.

I now would like to turn it over to Chris. Thanks, Mike, and good morning, everyone. I am pleased to review select second quarter 2024 financial results. Please refer to our press release issued earlier today for a summary of our financial results for the second quarter of 2024, as well as our 10Q, which was filed with the SEC this morning. The second quarter, with total revenues of $72 million, marked our ninth consecutive period of quarter-on-quarter revenue growth and a 49% increase compared to the second quarter of 2023. For the six-month period, we recorded total revenues of $139 million, a 55% increase over the prior year period. Let's now discuss the details. Tyveso DPI royalties contributed $26 million in second quarter revenue, an increase of 34% over the second quarter of 2023, and $48 million, or 57%, for the six-month period. As we heard on UT's earnings call last week, they continue to experience strong patient demand and are encouraged by the record referrals and new patient starts during the quarter for both PAH and PHILD patients. Collaboration and services revenue was $26 million, an increase of 132% versus second quarter 2023. The six-month period was $51 million, or 125% compared to the same period of 2023. The increase over the prior year periods resulted from a substantially higher level of production activity, which was sold through to UT. AFRESA net revenue of $16 million grew 20% versus second quarter 2023, which was primarily driven by volume growth, a lower gross to net percentage of 37% versus 39% in the prior year, and a price increase. Similarly, in the six-month period, AFRESA net revenue grew 18% to $31 million, primarily driven by a reduction in gross to net percentage and price. The lower gross to net percentage was mainly the result of a change in estimate for AFREZA product returns. Vigo declined 7% to $4 million in the second quarter of 2024 and 11% to $9 million for the six-month comparable period. The decline reflects lower demand as we have focused our attention on AFREZA. The next slide shows our revenue growth by source and basic EPS on a quarter-by-quarter basis over a rolling eight-quarter period from the third quarter of 2022 through the second quarter of 2024. For the second quarter of 2024, total revenues of $72 million increased 9% sequentially versus the first quarter of 2024. After three quarters of positive earnings per share from Q3 2023 through the first quarter of 2024, we had a net loss in the current quarter of $2 million, or one cent per share. This was the result of our early repayment of the man group convertible note and mid-cap senior secured notes, which we completed in April, and resulted in an accounting charge of $7 million recorded as a loss on extinguishment of debt. Now to our gap to non-gap reconciliation. We had a gap net loss for the quarter of $2 million, which when adjusted for non-gap items results in non-gap net income of $14 million. This compares to a non-GAAP loss of approximately $400,000 in the prior year quarter. For the six month period, we reported net income of $9 million and non-GAAP net income of $29 million. For the six month period in 2023, we reported a net loss of $15 million and a non-GAAP net loss of $6 million. The second quarter represents our fourth consecutive quarter of positive non-GAAP earnings. which we expect to continue as we execute on our current business plan. As we reflect on our progress on the first half of the year, total revenues grew by 55% for the six-month period compared to the prior year, driven by growth in both our Tyveso DPI-related revenue and AFRESA growth. At $139 million, this gives us an annual run rate of over $275 million in revenues. Net income for the first half of the year was $9 million, and non-GAAP income was $29 million. This demonstrates the significant progress we have made as our revenues are supporting our pipeline development efforts. Cash and investments were $262 million at the end of the quarter. This is after the repayment of both demand group and mid-GAAP notes in April, leaving only the $230 million senior convertible notes due in March 2026. This cash position, combined with our de-levered balance sheet, puts us in a strong position to continue to invest in our commercial products and our exciting pipeline. With that, I will turn it back over to Mike.