MannKind Corporation

Good afternoon, and welcome to the Mankind Corporation third quarter 2024 financial results earnings call. As a reminder, this call is being recorded on November 7, 2024, and will be available 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 risk and uncertainties which can cause actual risk to differ materially from those stated expectations. For further information on the company's risk factors, please see the 10Q report filed with the Security 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 Costanza, and Chief Financial Officer Chris Prentice. I'd now like to turn the conference over to Mr. Kizanza. Please go ahead, sir.

Thank you, Operator, and to our entire Mankind team for all the accomplishments we've had this quarter. I've never been more excited and energized about our opportunities to grow Mankind over the coming years. Today, I'll open up with operational and pipeline highlights followed by Chris giving a financial review with closing remarks going to Q&A. As we look at our third quarter highlights, Tyveso-DPI collaboration continues to be record-setting revenue and expansion opportunities as we look at our manufacturing revenue and continued opportunities with Tyveso in IP. We're super excited by the continued strong collaboration with United Therapeutics. And now as we start to migrate from just a Tyveso, DPI, and a Fresa, The pipeline is emerging as one of our focuses this year, and we're excited by the readouts in the tetanus phase one here. We just completed the phase one that we announced this week, as well as our clofazamine inhalation study is well under its way in phase three site activations where we have ongoing opportunities here in the U.S. as well as Asia as we're starting that trial. The EBU net revenue for the quarter was $20 million, or 10%, versus last year, And we saw AFREZA overall for the year slightly impacted by headwinds throughout the first three quarters as we focused on profitable growth by realigning our sales force back in Q1. As we look in Q4, we're looking to accelerate our growth on AFREZA in 2025. And the early indicator here are some of the changes we made that I'll talk about here where we have 8% growth in NRXs year over year. Our pre-dax year study we'll be reading out very shortly here at the end of Q4. and we had a strong financial position with $268 million in cash, and we have $15 million in non-GAAP operating income for the quarter. We're leaving here in Q3 in a very strong financial position as we get ready to fund our innovation here with clofazamine 101 and 201 moving forward. Now let me bridge over to clofazamine 101. As we look at the clinical development program, there's a significant unmet need in NTM lung disease, due to current options having very severe limitations on both efficacy, safety, and tolerability. We believe oral clofazamine has been part of the guidelines since 2020, and by developing an inhalation suspension, we have a great opportunity to put more drug into the lung, really at the site of infection, while minimizing the systemic exposure, which is really important as we think about the clofazamine-related side effects of skin discoloration, QT prolongation, and drug accumulation in the organs. We also believe our convenient dosing cycle of 28 days on and 56 days off will provide us a competitive advantage. Unfortunately, as we look out in the space, Mankind is one of the last remaining companies outside of Inzomed investing in NTM at this point due to the failures of several competitors this past year. I want to remind you of the ICON1 phase three study design where now we have about 25% of sites activated. When you think about this trial, we're aiming for about 180 patients as a primary endpoint at six months. And we'll start with 28 days of treatment. We'll be off for 56 days of treatment, and then 28 days on and 56 days off. After that second treatment cycle will be our primary endpoint. We're going with a single-dose suspension of 80 milligrams inhaled and a two-to-one randomization. We'll have an interim analysis after the first 100 patients, and that'll look to make sure that the trial's on track to achieve its endpoint, or if we have to make any adjustments based on the statistical plan that's been pre-identified. I want to remind you it's a co-primary endpoint of sputum conversion and patient report outcomes for the U.S., and the rest of the world is just sputum conversion. We will conduct one trial with both endpoints for the various countries in the U.S. as well as the rest of the world. We are currently in Asia right now activating sites as well as having a kickoff meeting for investigators, and I want to thank the team for all the hard work over there. We do have FDA FastTrack, QIDP, and Orphan, which provides us with 12 years of exclusivity as we get off the ground. Now, Bridgington attended DPI. This is an exciting opportunity for the company. When we think back, I want to remind you that Technosphere technology is mostly made up of FDKP plus our Dreamboat device. And the reason I bring this up is it's a platform technology where we really know where the product flows. You can go back to some of our earlier studies on radio-labeled Technosphere insulin insulation powder, where 90% of the powder is FDKP and about 10% is insulin. And we really see wide distribution across the lungs in the upper and lower lobes. The reason that's important is a lot of people ask, how do we know this drug is going to fly where it needs to? And part of this is based on all the history we have around understanding how FDKP is made, where it flies in the lung, and how we bind the excipients through this. And we now have over 5,000 patients taking Taveso. When you think about that, those patients have orphan lung disease of pulmonary hypertension, ILD, and I'm sure there's some with co-operatives of IPF and COPD. So now that we have two products approved on the platform, we're very excited to continue to move forward our next one here, which is really Mankind 201. As we know, IPF is a growing therapeutic area with over $4.2 billion in sales in 2022, and this continues to grow each year, with the majority of those made up of OFEV, which is a great product that's one of two drugs only approved, but it does have severe GI side effects, which limit patient's ability to stay on the product. So as we try to think about how do we develop improved products, really this was the opportunity to lower the systemic exposure while maximizing lung exposure. And we're really happy to see in our phase one study here, which is where we tried three doses, we'll call them cohort A, B, A1, A2, A3, followed by multiple sending dose over seven days where we tested A1 and A2 dosing. We really didn't need to go to A3. but we wanted to make sure it was safe and tolerable for that data to have in the future. Overall, this trial was a success. We saw no dose-limiting toxicities or dose implications on FEV1, and we also saw in our chronic tox study no significant signals or adverse event findings that would prevent us from moving forward in a chronic administration of this product. So we're really happy to wrap these two things up. We will meet with the FDA on our proposal for further development to move this into a Phase 2-3, hopefully here in 2025. This is a very exciting time for mankind as this will be two assets we have going into full-scale clinical trials, which will pave the way for future exponential growth for mankind. I now want to bridge over to our diabetes business, where we had the first large trial readout this year that we've been investing in over the last couple of years. This trial was designed to really look at usual care, which is inclusive of automated insulin delivery pumps, mainly Tandem and Omnipod in this trial, as well as patients on MDI, comparing that to a single shot of Degladec or Traceeba plus Afrezza. And then at the end of 17 weeks, these patients were given a second meal challenge, and we could see in the first and second meal challenge significant improvement in post-prandial control in the first two hours. And then at 17 weeks, everybody went into a single arm trial at this point, and either you rolled over from the Afrezza-Degladec or you switched to usual care. And what you see here on the next slide is we just released the 30-week data, and I'm really proud to see that the longer you want to phrase it here on the top left, you can see your A1C continue to improve over time. We also continue to see more people getting to goal of almost 42% got to goal, which is unbelievable here, and it's a very tough disease in type 1, where the large majority of patients do not sit at goal today. The second part of this study was the readout of those who switched from 17 weeks usual care And what did that happen to them at 30 weeks? And you can see as clinicians got more experience with Afrezza, we saw an improvement in A1C in those 13 weeks of taking the product. Plus, we were able to see twice as many people get the goal here on the right side in 13 weeks, which was important as we think about the trial and what Afrezza can do. And I'll remind you, this is people who are already on the optimized treatments they were taking. They've lived with diabetes a long time. And by switching into Afrezza, we were able to drive more people to goal which is ultimately a huge benefit to society. Now let's shift over to our revenues year to date. When we look at the EVU profitability has been our focus this year. And when you think about the growth and the transformation we've had, Fresno grew 16% year over year while Vigo was slightly down as we shifted to managing Vigo for profitability this year away from volume. And we've been really happy with those outcomes. And on year-to-date overall for the business, you can see this year versus last year is about a $12 million improvement in bottom-line contribution between managing our expenses, improving our efficiency on COGS, and continuing to drive more to the bottom line. When we look at Q3, we're able to grow Afreza despite multiple headwinds throughout this year. When we think about what happened earlier this year, we had payers put in double-step edits, we had Salesforce restructuring, compounded by a shift in inventory in Q3 as we exited our Walgreens consignment. And one of our specialty pharmacies was told to shift patients back out to retail by Optum for all of their patients, not just to Fresa. And a lot of this caused a lot of hiccups here as we went through each quarter through this year. And this is all behind us as we close out Q4. And this was also followed by a mix of faster growth in four and eight units versus 12, which is a direct reflection of our focus to grow more in the type one space versus type two. So when you look at all that noise, I'll say going into Q4, we're excited by what we see because so far in the month of October, new prescriptions are up 8% year over year. This is our earliest leading indicator of our success as we look at this quarter and next quarter on how we're going to do. In Q4, we also made a change by removing Vigo from the sales force to double down the focus on Afrez's growth, and we increased our target incentives around hub referrals and new prescription growth as we exit this year. Given the outcomes of the INHALE-3 and the outcome in INHALE-1 pediatric results, we expect to continue to shift AFREZA from a profitability mindset to a growth mindset in 2025 and beyond. As we look here, I want to remind you of the pediatric opportunity. There were over 300,000 kids living with type 1 diabetes. This was a 52-week primary study in INHALE-1, ages 4 to 17. Very little were type 2, majority were type 1, and the primary endpoint is at six months. And the data will be coming in here before the end of the year, so we'll be able to update shareholders. And we would expect a pre-NDA filing meeting in the first half. The real issue here is, do we want to try to argue that there should be a six-month filing versus a 12-month filing, as the 12-month data will come out roughly late Q2 next year, and the filing would happen after. If it's a six-month filing, we'll be able to file that earlier in the year. But the FDA has indicated that they expect to want to see the 12-month data before we file. So as we look out, we got inhale three, coming with the label change, hoping on Figure 1, as well as Inhale 1 readout. And we're also going to be seeing an IIT we're funding and gestational diabetes very shortly. So we continue to look at AFREZA's multitude of growth opportunities in the coming years. Now let me stop there and turn it over to Chris to give us an update on our financials.

Thanks, Mike, and good afternoon, everyone. I'm pleased to discuss our third quarter 2024 financial results. For a summary of our financials, please refer to our press release issued prior to this call and our 10Q, which is on file with the SEC. As Mike mentioned, our business demonstrated robust double-digit revenue growth compared to last year, led by revenues related to Tyveso DPI. Third quarter revenues were $70 million, which represent a 37% increase compared to last year's quarter. For the year to date, we recorded revenues of $209 million, a 49% increase over the prior year period. Looking at the details, Tyveso DPI royalties contributed $27 million in third quarter revenue, an increase of 34% over the same quarter last year, and $75 million, or a 48% increase for the nine-month period. On United Therapeutics' Q3 earnings call, they noted the revenue growth was due to additional patients and an increase in price. They also commented that referrals and start patterns remain very robust, reinforcing their confidence in the durability of the growth profile. Collaboration and services revenue was $23 million, a 78% increase from the third quarter of 2023. For the nine-month period, we recorded $74 million, a 108% increase compared to the same period in 2023. The increase over the prior year period was primarily attributable to increased manufacturing activities for Tyveso DPI. Collaboration and services revenue consists primarily of manufacturing revenue based on production activities sold through to UT and a recognition of deferred revenue. In the first half of 2024 and in prior years, we also earned approximately $3 million of revenue related to certain scale-up activities in the first half of 2024. resulting in the expected slight decline in the back half of the year. AFRESA net revenue for the third quarter was $15 million, a 12% increase, due to higher demand and improved growth to nets. During the nine-month period, AFRESA revenue was $46 million, a 16% increase over the same period last year. This increase was due to higher demand, a price increase, and improved growth to nets. Vigo net revenue was approximately $5 million for the third quarter, an increase of 5%, and the nine-month period was approximately $14 million, a decrease of 6%. This is due to lower product demand partially offset by improved growth to net adjustments and increased price. Our annual revenue trends from 2020 through the latest 12-month period also show a consistent increase with double-digit revenue growth year over year. These revenues and our management of the commercial business have led the results on the bottom line. In the third quarter, we recorded GAAP net income of $12 million, which, when adjusted for non-GAAP items, results in non-GAAP net income of $15 million. This compares the GAAP net income of $2 million in the prior year quarter and non-GAAP net income of $4 million. For the nine-month period of 2024, we reported net income of $20 million and non-GAAP net income of $45 million, whereas for the same period in 2023, we reported a net loss of $13 million and a non-GAAP net loss of $1 million. As we highlighted earlier on the call, last year we transitioned to running the Indocrine Business Unit for profitability, which has contributed approximately $11 million year-to-date in operating income. This, combined with our net royalty income and the margin earned from collaboration and services has allowed us to fund our two promising development programs to date and also achieve net income of $20 million for the year-to-date period and $45 million non-GAAP. The operational execution of our business combined with our cash and investments of $268 million as of the end of September leaves us with a strong balance sheet and the ability to invest in the business for growth. With that, I'll turn the call back over to Mike.