MannKind Corporation

Good afternoon and welcome to the Mankind Corporation fourth quarter end-year and 2024 financial results earnings call. As a reminder, this call is being recorded on February 26, 2025 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 risk and uncertainty, which can cause actual risk to differ materially from these stated expectations. For further information on the company's risk factors, please see the 10-K report filed with the Securities and Exchange Commission this afternoon, the earnings release, and the slides prepared for this presentation. Joining us today for MINDKIND, our Chief Executive Officer, Michael Castagna, and Chief Financial Officer Chris Prentice. I'd now like to turn the conference over to Mr. Skartania. Please go ahead, sir.

Thank you, operator, and good afternoon, everyone. Thank you for joining our call today. It's never been a better time to be on the journey with mankind. As I look at our future, we have five key pillars. We have two FDA-approved products on our Technosphere platform. a strong balance sheet with double-digit growth enabling us to have flexibility in the future, and also the ability to fund our two novel pipeline opportunities with clofazamine inhalation suspension and the tetanus DPI, as I'll talk about later in our call. Let me highlight Q4 and some of the year-end highlights from 2024. First, our endocrine business unit had record revenues with Q4 revenue of $23 million and full year at $82 million. We started this year by appointing Dominic Marasco as president of our EBU, which I'll talk about our growth strategy in a couple slides. We also closed out quickly at the end of the year with an approval in India, which we expect to launch in the second half of this year. Additionally, we announced our AnthraStar collaboration in December, which enabled us to promote Vaximi through our US sales force, allowing us to build up a pediatric footprint earlier than we would anticipate without this opportunity. We expect our pediatric indication to be filed here in the first half with an approval in early 2026. Today's DPI calibration remains strong, and we continue to be excited about the future of this important opportunity that we'll have on patients, especially those suffering from IPF. Chris will walk through the financials in a few moments. Our colfasmian inhalation suspension programs progressing nicely With our phase three study, now with 70% of sites activated, enrollment is on track to hit our interim goal by the end of this year, to hit 100 patients for enrollment, which will allow us to have an interim readout in 2026. On the intended DPI, we had an SDA meeting at the end of the quarter. Now that we've completed phase one, we are looking to advance this to the next stage of development. Our financial results in Q4, we had $77 million in revenue and $286 million for the full year. Our year-end cash position ended at $203 million, and we were able to reduce our debt principal by $236 million in 2024. Now let me bridge over to our diabetes business. Our diabetes program progression is built on several pillars. The first was bringing in Dominic Marasco, who's not with us today because he's at our national sales meeting and will join us at our call in May. As we look at the four pillars to Afrez's growth, it starts with our team and getting the right people on the bus and adding the clinical medical liaisons. The second is the international opportunity with India, which will allow us to bring more efficiency to manufacturing and help more patients around the world. And we'll also be looking for distributors in some international markets as we go forward. The next pillar here is pediatrics. This is something we've been waiting on and working on for seven years and is really important to us to transform the growth of Afrez, as we'll talk about in a moment. We expect to be able to file this in the first half of 2025 with an approval in second quarter of 2026. There are over 300,000 kids in the U.S. suffering from type 1 diabetes, and if you're like my kids, trying to give your kid a vaccine or any type of injection is very difficult, and we look forward to hopefully bringing an option to these patients in the future. And the fourth pillar we're starting to explore is that gestational diabetes, we're able to get an investigator-initiated trial off the ground, hopefully in the first half through the JAIB Center, as there are over 300,000 women who have gestational diabetes each year. As we look at the record revenue for AFREZA, we had a 17% year-over-year increase. We continue to grow AFREZA despite GLP growth, pump innovation, and as well as our focus on profitability. We are preparing to accelerate the growth of AFREZA over the next 24 months through the initiatives I just described. As we look out at the pediatric opportunity, This would lead us to projected sales at a run rate of over $200 million a year, which is almost three times where we are today. And I'll remind you, every 10% market share in pediatrics is approximately $150 million in revenue, in addition to whatever adult spillover or adult revenue we'd have ongoing. As you look at our market research we just finished conducting in the second half of last year, we saw that about 28% of patients could switch from MDIs, and 14% of patients could switch from AIDs, which would include Omnipod and Tandem. We generally would discount this type of projection by about 50%, but as you read the quotes here from the pediatric endocrinologist and the type 1 caregivers, there is a big opportunity here in kids to really help a lot of patients, whether that's reducing the complexities of counting carbs and insulin sensitivity ratios, or just making it easier for parents to administer something for their children. So we're very, very excited about pediatrics. You'll continue to see us prepare and scale up our investments around this, but don't expect much change in the first half as we're really preparing for the second half once we know that this file will be on track with the FDA. Now I'm going to bridge to our pipeline. As we look at Tyveso first, DPI-related revenues were over $200 million in 2024, and this made the first billion-dollar product for United Therapeutics, which we're very proud to be their partner. We're super excited to see that Technosphere platform has achieved the billion-dollar status. We're actually very excited about the opportunity this provides us to fund our pipeline with non-dilutive financing. As we look out, we know there's a major milestone in front of us here with Teton II in the second half. And if that reads out, we would expect that to be reflective of a positive opportunity here for Tavesa DPI potentially going to IPF in the future. Chris will talk about the revenues of Tavesa shortly. Last year at this time, we had two other competitors ahead of us moving forward in NTM. And unfortunately for patients, they didn't make it to the end of 2024. We now see a clear opportunity to be the next leader in NTM. This product that we're working on has had nearly a decade of development opportunity put into it as of today. When we think about the NTM therapies have severe limitations, whether it's efficacy, safety, or tolerability, we fundamentally believe activity at the site of the lung will be critical to transforming these patients' lives. We believe the good adoption rate will happen with clofazamine when we think about the guideline support and the experience that patients and doctors have with clofazamine around the world. However, making this more convenient, better lung delivery, and the support of the guidelines, we believe will create a great opportunity for patients and mankind in the future. One of the key questions we get is around dosing and proof of concept of how we know how we know that clofazamine actually works. So I wanted to bring back some data that we used to use given the renewed focus from investors in our current stage of development. The preclinical data around clofazamine demonstrates superiority over oral clofazamine. This was in our preclinical data when we purchased the product that we saw the significant reductions versus control and versus oral clofazamine. We were seeing 99% reductions in colony-forming units. We think this efficacy is reflective of what we think is encouraging for patients. And the next thing followed by dosing. So when we looked at dosing, we had several choices to make as clofazamine had a long half-life and we were worried about drug accumulation. And so the way we thought about the drug was, you know, between the payer system in the U.S. and duration of effect and the burdensome that could come with a nebulizer, we looked at really making this 28 days on and 56 days off. And this was supported by the PK analysis we did originally in animals, followed by our phase one study extrapolating these curves out. So our analysis, insights, and recommendations have now been reviewed and approved by Japan, FDA, as well as several other countries. This is important, and it's going to be critical to our current development program and opportunity to launch successfully in this market. This all led to the design of our pivotal trial, ICON1, which is our global phase three trial. We are on track and expect to meet our interim enrollment target of 100 patients by the end of this year. Let me translate that. Once we get to 100 patients, it'll take another six to eight months in order to get the interim analysis, which will then determine do we have this trial sized appropriately or do we have to go up in size? We do not expect to cut off enrollment while we wait for this result and this insight so that if we are at 100 patients and we're seeing, let's just call it 20 patients a month enroll, If it would take six months, this would give us 220 to 240 patients. So that insight will give us the opportunity that if the trial does need to be scaled up, we'll hopefully have already met that opportunity by not closing down enrollment. As of today, we're projecting 25 to 30% of our required patients for this interim analysis to be enrolled by the end of Q1. Now I want to talk about IPF. IPF is a progressive and fatal disease that has significant unmet need for patients. Only one in five patients are currently on an FDA-approved drug, despite being diagnosed and despite knowing they have options. The current drugs have high discontinuation rates, and they're very, very difficult to take. Despite these drawbacks, the two products on the market today have worth over $4 billion in combined sales. As we look at Natadnib relative to Ofev, we believe we can provide comparable pulmonary exposure and efficacy, and we also believe, as we think about the other products coming in development, That Nutetanib will be used as part of the backbone of treatment. So whether there's oral Nutetanib or inhaled Nutetanib, we do not see this foundation being replaced. We see most of the new competition being added on to treatment as opposed to replacing one for one. We successfully completed a phase one study here in 2024, and this was the foundation of our FDA briefing book here that we're meeting with FDA in early Q2. If all goes well, we continue to progress this in the second half to hopefully a phase two trial. We're super excited by and with this committee for patience, but we're still early on in our discussions and look forward to bringing you more updates as the year progresses.

Now I'd like to turn it over to Chris. Thank you. Thanks, Mike, and good afternoon, everyone. I will now discuss our fourth quarter and full year 2024 financial results. For a summary of our financials, please refer to our press release issued before this call and our Form 10-K on file with the SEC. Fourth quarter revenues were $77 million, a 31% increase over last year's fourth quarter. For the full year 2024, we recorded revenues of $286 million, a 43% increase over the prior year. TIDESO DPI royalties contributed $27 million in the fourth quarter. This was an increase of 28% over the same quarter last year. Royalties for the year were $102 million or a 42% increase due to UT's increase in net revenue from sales of Tyveso DPI. Collaboration and services revenue consists primarily of manufacturing revenue based on production volumes sold through to UT and the recognition of deferred revenue. We recorded revenue of $27 million, a 55% increase from the prior year quarter, and 101 million for the full year 2024, a 90% increase compared to the prior year. AFRESA net revenue for the fourth quarter was 18 million, an 18% increase due to higher demand and improved gross to net adjustments. For the full year 2024, AFRESA revenue was 64 million, a 17% increase over 2023. This increase was due to higher demand, pricing, and improved gross to net adjustments. VGO net revenue was approximately $5 million for the fourth quarter, an increase of 1% over the same quarter in the prior year. And the full year 2024 revenues were $18 million, a decrease of 4% over the prior year. This is due to lower product demand, partially offset by improved gross to net adjustments, and increased price. As a reminder, As of the fourth quarter of 2024, the sales force is no longer actively promoting Vigo. While we continue to make the product available to patients, we believe Vigo has reached its peak annual sales given the lack of promotion behind it. As we previously mentioned on this call, our business demonstrated robust double-digit revenue growth compared to last year, led by revenues related to Dybaso DPI, which exceeded $200 million for the year. Our annual revenue trends from 2020 through 2024 also show a consistent increase with double-digit revenue growth year over year. We had a strong finish to the year, delivering significant growth across the three revenue streams, resulting in an annualized run rate of $300 million. Our 2024 revenues grew by 43%, driven by Tyveso DPI-related revenues, which provides non-dilutive funding for our pipeline. For 2024, we reported net income of $28 million or $0.10 per share compared to a net loss of $12 million or $0.04 per share for 2023. On a non-GAAP basis, we reported $68 million of net income or $0.25 in earnings per share for 2024 compared to $6 million of non-GAAP net income or $0.02 per share for the prior year. In 2024, we transformed our balance sheet. paying down debt of $236 million across three instruments, resulting in a remaining debt balance of just $36 million related to our senior convertible notes. We used a combination of cash and stock to avoid potential dilution of 12 million shares of common stock while also saving $9 million in interest expense through maturity. With this minimal debt balance and our robust cash position of $203 million,