MannKind Corporation

Good morning and welcome to the Mankind Corporation Second Quarter 2025 Financial Results Conference Call. As a reminder, this call is being recorded on August 6, 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 the forward-looking statements. Such forward-looking statements are subject to risk and uncertainty, which can cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, please see the Form 10Q for the quarterly period ended June 30, 2025, now on file with the SEC, 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 would now like to turn the conference over to Mr. Castagna. Please go ahead.

Thank you, Operator, and good morning everybody. And thank you for joining

us for our Second Quarter

Earnings

Call. As we look out, we're focused on creating more shareholder value, minimizing dilution, and enhancing our flexibility as we enter the next phase of our growth. The next six day quarters are going to showcase our cumulative work over the past seven years. Let me talk about the five pillars of our success. First, we're on the heels of Teton2 readout here in September, and we'll actually wait to those results as that provides upside to our current business plans in the future. Second, a Fresno's position for continued growth. PESA is now filed. I just want to put this in context. We target about 25% of all rapid acting scripts. 1% of the rapid acting market is roughly $300 million run rate in a Fresno. We have a strong balance sheet with the announcement today of Blackstone. We now have access to additional capital to provide us flexibility over the coming years. Fourth, in our opinion, inhaled clofazamine is not getting enough credit in terms of meaningful opportunity that this has on our future. Fifth, our Nintendo DPI, I'm proud to announce, will now move forward into phase two, and I want to thank our team for all the hard work they've done. Chris will talk about further details on the Blackstone deal later in our discussion today.

Our

Q2

highlights are

highlighted by record revenue of Tivesa DPI sales. Also, record referrals for patients in Q2, which should set us up for Q3. Our inhaled clofazamine for NTM, we expect to meet our interim target ahead of schedule, which is 100 valuable patients. Additionally, we've now advanced the dry powder formulation into preclinical studies and will actually await those results to move into earlier lines of treatment in the future. Nintendo DPI for IPF, we plan to launch our trial called InFlow by year end 2025. On the endocrine side, we're excited about the pediatric indications being submitted, and this now sets us up for launch prep as we look out over the next four quarters. Our endocrine business unit has strong performance in Q2 with $18.3 million in revenue or 13% growth over 2024. And for the presidental opportunity, the application to submit our label update is expected here in Q4 for a decision. On the financial side, we have Q2 revenues of $77 million or 6% over 2024, and -to-day revenues of $155 million or 12% over 2024. Chris will dig into the details shortly on this one. We have a strong balance sheet with $201 million in cash, and we now have expansion capital of $500 million from Blackstone, offer non-dilutive capital to accelerate our growth and innovation as we look out. Let me start out on our open long opportunity with ManxHind 101. The NTM market is expected to exceed $1 billion by the end of the decade. Our focus will be on the U.S. and Japan, which have the highest populations and highest opportunity for growth. It's also the two markets that we've seen the highest enrollment rates in our trial. This is a global health concern, but a real issue in these two countries. As we think about the inhaled plofasamine development program, these are the three pillars we look at. Number one, direct lung delivery could enhance the tolerability profile, minimizing side effects. We can confidently say after 90 patients enrolled, we have not seen significant patient dropout early on in the trial. We do not know what arm patients are on, but there's just not been a lot of dropout. So the tolerability does look like it is holding up early on in the trial. Our active ingredient is a guideline-endorsed antibiotic with decades-long clinical track record. This drug is already used in clinical practice around the world, but due to limitations highlighted above, we believe this is a rare opportunity to transform patients' lives. And finally, the convenient dosing cycle with one month on and two months off will provide a dose-free phase that minimizes treatment burden and potentially enhances adherence. We presented the ICON1 Global Phase III trial. I just want to remind people that this is a co-primary endpoint in the U.S. of sputum culture conversion and patient-reported outcomes. For the -U.S. market, it is just sputum culture conversion.

We have

fast

-track

QIDP and orphan designation given us 12 years of exclusivity, and to date, we are now at 90 patients enrolled. We need 100 invaluable patients to hit our interim analysis in 2026. Let me remind you that some of the baseline patients will not have a positive sputum culture when they enrolled, and they will not be included in the interim analysis. Next, I'm excited to talk about Mankind 201. As we highlight in our last quarter, we've completed our Phase I study looking at three doses in single ascending and two doses in multiple ascending. We had to redesign the trial post our FDA meeting feedback as we went into Phase II, and I'm going to share with you today that trial design. This trial will be named INFLOW as we look forward to launching this -U.S. here in 2025. This study will be looking at approximately 228 patients in a randomized placebo-controlled trial with 12 weeks of active drug, followed by six months of open-label extension where everyone can get exposure to our product. We'll be exploring two doses, which is 2 milligrams TID, or 6 milligrams a day of exposure, or 4 milligrams BID, 8 milligrams a day of exposure. The primary objective of this study will be looking at safety and tolerability, really specifically make sure inhaled powders will be tolerable in these patient populations. The second one will be around the FVC and efficacy signals at the early stage of 12 weeks as the primary endpoint. When we look at these doses, these are consistent and may provide equal or greater exposure than what we saw presented at Avalon at APS here in Maine. Regardless of the doses, this range that we both achieved independently gives us confidence that we're in a really good spot to move this forward in the patients and hopefully see a signal here in the not too distant future. Now we'll close the orphan lung discussion here on Tivesa DPI. Our Tivesa DPI revenue continues to grow as we achieve $31 million in royalty here in Q2, which put us at about a $1.2 billion DPI over the last four quarters. As you see, our manufacturing revenue shifted downwards from Q1 to Q2 of $22 million. This is just due to the timing of manufacturing that Chris will talk about, but as I talked about 101, 201, dry powders, these are all the things that are going on in manufacturing that we have to shift around our teams as we look forward in the future. We'll anxiously be waiting for Teton2 results as well as Teton1 in 2026. Now I'm going to talk

about

our endocrine business unit. The first half year over year grew 22% on new prescriptions and 17% on TRXs. We really look at this performance as we start to see how can we grow writers and how can we grow depth of prescribing. And that was in the details here as we think about enhancing prescribing amongst our top prescribers, but how do we do more broadly adopt our prescribing base? Some of the things we're doing is really enhancing our coverage at clinical conferences. When you look at the building momentum we've had this year, starting at ATTD in March, all the way through ENDO, ADA, ATDC, as well as Children's for Diabetes, as well as Ad Boards and focus groups. We've engaged with over 3,000 healthcare providers and our booths have been packed with guests wanting to learn more information about Afresa, not just in the US, but around the world. We remain excited about the future opportunity of this product and the potential to help children as we go forward. As you look at our vision for this product, we want to enhance our messaging and field force expansion ahead of the PEACE launch. We need to produce a halo effect, not just for kids, but what this is going to mean for the adult Afresa community. The new campaign you'll start to see roll out later this year will be called Insulin in the Moment. And this really establishes the foundation of the product around speed and control at every moment of a patient's day. This is one of the challenges you hear when you talk to patients and providers is the stacking effect of insulin, the slow effect size of insulin, and the challenges patients face whether using insulin through a pump or a pen. We believe launching this new campaign targeting not just healthcare professionals, but consumers will resonate in the challenges they face in everyday control of people using insulin. We also will increase our share voice. As we've talked about the expansion, we expect the full sales force to be up and running by the end of this year. And the first full quarter of their impact will start in Q1 and Q2 of next year. We are deploying medical science liaison, key account managers, field reimbursement specialists, as well as an additional 20 to 30 sales reps throughout our Afresa footprint and adults. This new targeting will enhance our coverage of the market to approximately 50% in 2026. Additionally, there is future data coming that will unlock our potential in areas like gestational diabetes, inhale first being a completely naive patient, newly diagnosed, getting Afresa within the first 10 days of diagnosis, as well as inhale AX, which is around an exercise study, looking at Afresa and a highly active patient population. These are the next steps in generation data that we expect in 2026 and beyond. Now I'll turn

it over to Chris.

Thanks, Mike, and good morning, everyone. Before we get into the details of the quarterly results, I want to highlight our revenue growth over the last three years as we compare the trailing four quarters on an annual basis. This annual double digit growth has resulted in total revenues over 300 million for the trailing four quarters. And we expect this growth to continue through both our commercial products, as well as our revenues earned through our collaboration with United Therapeutics. Our overall revenues in the second quarter grew 6% led by royalties earned on Tivesa DPI. Tivesa DPI royalties contributed 31 million in the second quarter, an increase of 22% over the same quarter last year. Collaboration and services revenue consists primarily of manufacturing revenue based on production volume sold through to UT and the recognition of deferred revenue. We recorded revenue of 23 million in the second quarter, a 12% decrease from the prior year as a result of the net impact of one time items in both periods. Afresa net revenues for the second quarter were 18 million, a 13% increase over the prior year. As Mike discussed earlier, we are encouraged by the recent performance of Afresa in new and recurring prescriptions over the prior year and expect this trend to continue. Vigo net revenue was approximately 4 million for the second quarter, an 8% decrease from the prior year, driven by lower product demand. As Vigo is not actively promoted, we are pleased with the results of the product thus far this year. As we look ahead to the second half of the year, we anticipate continued growth in our royalty revenue driven by net sales of Tivesa DPI. We expect collaboration and services revenue for the second half of 2025 to be in line with the 51 million recorded in the first half of this year. The quarterly results of CNS revenue have fluctuated this year. This is primarily driven by the timing of manufacturing as we balance the production for the period in terms of Tivesa DPI, Afresa, and our development programs. Lastly, we anticipate Afresa will continue its growth trajectory based on the recent underlying performance and our expanded promotional efforts. On the expense side, R&D has increased over the prior year period as enrollment in the ICON1 trial of inhaled clofazamine is progressing well and preparations are underway to initiate the Phase II IPF study for our Mankind 201 program later this year. Additionally, our team is developing a DPI formulation for our clofazamine program as well as additional potential pipeline assets. Selling general and administrative expense has increased compared to the prior period, primarily driven by investments in expanding our commercial infrastructure. As you may recall, we had paused investment in Afresa at the beginning of 2024 while awaiting pediatric trial data and reduced the sales force. With the potential approval of Afresa in the pediatric indication, we're now enhancing our commercial organization, having deployed a medical science liaison team, and will expand the sales force later in the year. Today, we also share that Mankind has entered into a strategic financing arrangement with Blackstone, providing access up to $500 million in non-dilutive funding. This capital, secured on favorable terms and combined with our quarter end cash and investments balance of $201 million, reinforces our strong liquidity position and is available to be strategically deployed across our key growth initiatives, including supporting our commercial build out for the potential pediatric launch of Afresa, advancing our development pipeline, and allowing us the ability to move quickly on business development opportunities. Mike and I and other members of the management team will represent the company at the Wells Fargo, Cantor, HC Wainwright, and Morgan Stanley conferences in September. We look forward to seeing folks there and in other forums this quarter. With that, I will turn the call back over to Mike.

Thank you, Chris, and thank you for the team's hard work on the Blackstone deal, which is really going to provide us the capital we need to produce these anticipated catalysts over the coming quarters. As you've seen, we've executed the first half successfully, and we have several planned opportunities here in the second half for continued execution of our plan. If you look to our stairway of building value, Tivesa DeepDive will continue to be the foundation in the near term. As you look out into the longer term, the endocrine build with international expansion, as well as pediatric expansion, will continue to not only make Mankind more efficient, but allow us to help more patients around the world as we go forward. Inhale copazamine is a meaningful opportunity, and let me remind you that every 1,000 patients is approximately $100 million in revenue. We've also advanced this dry powder inhalation because we believe in order to penetrate the earlier lines of treatment, you're going to need something that's much easier for patients versus the refractory population we're currently studying. The tentative DPI is well underway. We've now selected the CRO, and we plan to initiate the Inflow trial here in the near future. As you continue to see, OFEV is a meaningful contributor to growth in the IPF space. We're hopefully excited to provide another option for patients as we go forward. We'll be sharing some of the new data at upcoming scientific conferences with ADCS in August here in Phoenix, as well as ISPAT, which is a pediatric conference here in the fall. I want to thank everyone for all their hard work this quarter, as you really can start to see the fruition of all of our work over the last seven years coming together this year and next year. And we look forward to continue to execute our plan and share those updates in the future quarters.

Thank you for your time today, and we'll now open up for questions.

Thank you. As a reminder, to ask a question, you will need to press star 1-1 on your telephone. To remove yourself from the queue, you may press star 1-1 again. Please stand by while we compile the Q&A roster. Our first question comes from the line of Olivia Breyer of Kander Fitzgerald. Please go ahead, Olivia.

Hey, good morning, guys. Thank you for the question, and congrats on a great deal with Blackstone. Can you maybe walk us through what a best case might look like just in terms of timelines for a potential bridging study in IPF? I think the BREE study took two to three months, and I think with DPI already on the market, maybe there's a much faster timeline to approval than what we saw for PAH, and then have a follow-up on an intended program.

Sorry, the first one was around what the bridge could look like

for Taveisa DPI and IPF?

Yeah, exactly, and just how you're thinking about the timeline for it, Mike, just given I know it'll be a much faster timeline than what we saw with PAH. Hopefully no CRLs involved, but just how that could realistically play out, right? If Teton2 ends up being positive and then Teton1, when could this ultimately come to market, I guess, is what I'm thinking for DPI.

Yeah, I mean, it's hard for me to comment on UT's regulatory strategy and clinical strategy here. I think what you could just, as you lay out the data readout that UT's communicated, that's to say it comes out September and Teton1 is next year. You got now some time to meet with the FDA and kind of work through what that could look like and potentially get as much work done as you can before your Teton1 readout, because Teton1 is really for the US market, per se. So that's our optimism is around, let's get the Teton2 results and then hopefully UT will accelerate it, meet with FDA on what that could look like. And I think some of the effect size that you'll see in the trial will drive some of the, I'll say, ideal opportunity here with FDA. But I think it's too soon for us to speculate the clinical strategy there. I don't want to speak for UT.

Okay, understood. And then on your Intentative DPI program, can you maybe just talk about how you're thinking about this drug in context of some of the new updates in that space? Is this basically a replacement to current oral background therapies and then hopefully gets used in combination with newer treatments as they come to market? And then also just a question around whether you guys were able to come to an agreement with FDA around which patients to enroll in that phase two around naive patients versus patients that are already on background therapy.

Yeah, I think that was one of the challenges kind of, we say we had to recreate the trial when we were looking at the original design. It was really about taking the tentative patients or patients that failed in the tentative and then enrolling them in this and showing more of a non-inferiority design. I think the FDA was adamant on a placebo controlled on top of general background therapy design as they given the feedback to other parties. It just doesn't work when you think about the treatment paradigm in the US, the IRB approvals you need. You really just can't do a placebo blinded trial for six months. And so that's what made us pivot the work over the last three months and really look at an ex-US market where it does take called three months to get access to the standards of care. You could run a placebo controlled trial and get them through the safety and clinical IRBs and protect patients at the end of the day. So we've kind of put all the things the FDA requested into the trial. It's just going to be done more ex-US than US per se. And I think that will give us the data we need to have the conviction we need to move to phase three. And we even upsized the trial a little bit from where we were thinking just to make sure the results that we do get are a little bit more robust. The next phase will be the phase three one. And I think if you look out in the IPF market, we would expect hopefully BI's product to get approved. We'd expect Tavase or DBI to be out there. And so as we look out over the two year window, there could be now four drugs for IPF, maybe five if Bristol Myers gets there. And then you can see this really being on top of background therapy and designed the way that the FDA expects. As you see those other agents, about 70 percent of the time those trials have background therapy on top of. And so that's one big area. The second big area is going to be the fact that majority people cannot tolerate the two options that are out there today. And we think there's a lot of patients who either choose to not take current treatment and die because the side effects are so severe. And there's a large population there that we believe an inhaled and that could could really help and hopefully buy them the time they need for life. And so that's really where we look at the two populations, those that are intolerable to the current agents. And as the market expands with combination treatment, we think there's a huge opportunity there. And as we go to phase three, that we think those other drugs being on the market will help us execute a better phase three trial.

OK, great. Thank you guys. Appreciate it.

Thank you. Thank you. Our next question comes from the line of Faisal Khashib of Lurink Partners. Please go ahead, Faisal.

Hey, guys. Thanks for the question. I wanted to ask also on 201, can you discuss your sort of level of confidence in using the Intendant MDPI on top of background profanidone, both from a safety perspective and also the ability to clear a difference for a placebo on that includes back on therapy on an efficacy basis as well?

I have Waseem here. See, why don't you comment on the profanidone?

Good morning. This is Waseem. Hello. Good to hear from you. So the combination currently between oral and telent and oral profanidone, as you know, it's not happening. The combination of the side effects there. So from our perspective, we're going, as you well know, with inhaled and telent, the systemic exposure would be very low. So from a safety perspective, for a relative perspective, I mean, obviously we need to do the trial. But the drug-drug interaction there, we expect it to be minimal as far as efficacy. I mean, we do have enough reason to believe that their efficacy of both profanidone and telent combined, if they are tolerated, that it will be there. This is our hypothesis. And I would argue the same for the upcoming potential approval of Neurondomilaz. I mean, the combination there, same thing. And the future of IPF treatment, in our opinion, is really combination therapy, which as of now with the two currently available services, it's not there.

And we will be allowing both of those agents in the background treatment in this upcoming Phase II trial.

Yep, got it. And then what do you need to show to bring that development program into the US? Would that be something that could occur during the course of the Phase II, or would that be just for the Phase III downstream?

I think definitely the Phase III, we feel confident if we get the results here that we need that this is a US global trial at that point. I think it's a matter of timing. So the trial enrollment could go very quickly, XUS from apparently what we have lined up. And it would just be a timing issue by the time we get X amount of patients in and go back to the FDA and show them what they want to see, will they allow it? But I think even in the US, profanidone is not, you know, when you think about it, we can't go on top of the tetanib and you're not switching them. They got to have a washout period. It's just a very difficult trial to execute in the US. But I don't think it's an FDA issue as much as it's an IRB placebo study. You know, we'll investigate it. There's even a role 12 weeks on placebo. And we just think it's going to be a very hard trial to enroll by the time you get it through IRBs and approval. You're going to talk minimal patients relative to the expense and time. I'll see if you have anything else to add. So that's so we won't go out the US, but I think our focus is on getting this done as quickly as possible to move the program into phase three. And by the time you get there, you actually might be done the enrollment period.

Got it. Thank you for taking the questions.

Thank you. Our next question comes from the line of Andreas Argaritis of Oppenheimer. Yeah,

good morning and thanks for taking our questions. Congrats on the progress in the quarter. Also on 201, can you talk about what you what you expect or what you're looking for in terms of the treatment effects from the phase two, given also that it's kind of a small on the score side and then also maybe rationale for you might get you already kind of alluded to some of the rationale for going X US. But anything also about the patient profiles abroad that makes sense as well. Trying to get a little reader into the T time to study here and then Chris for you, maybe just again thinking around the Blackstone deal, you know, the rationale to do a kind of a revolving credit deal versus, you know, other traditional finances. Right.

I'll

start off and ask question that I think on the effect size, the main thing we'll be looking at is tolerability and safety because that's really the Achilles heels and the 10 nib. I think when you look at the pivotal trials of that product, you can start to see a response in 12 weeks. And so that's why we made the primary endpoint. We thought what's a long enough period with placebo that you can safely go and not compromise somebody's journey and ethically enroll a trial. And we felt 12 weeks is appropriate after 12 weeks. It's an open label extension. So we will have hopefully a good group of patients going on for six to nine months, but it'll be at their options. So I think we'll start to see that effect size hopefully over time, not just at the 12 week mark, but over the patients who continue. And then remember anyone that's on placebo will have the option of active drug. It's week 12. And so I think it's really going to give us a nice data set to power a phase three trial appropriately. And I think when you look at those effect sizes, obviously they have to be meaningful enough enough to see. So I think on the secondary endpoint will be efficacy will not be powered for efficacy per se. The other key aspect of the trial is really the BID and TID. So as the market does not really know and experts don't know how the 10 nib actually has the effect that it does. We don't know if it's a signaling issue, a switch issue, a duration of effect of a binding receptor. And so we're actually experimenting with that in this trial design of terms of TID versus BID. Obviously, when you look at the Avalon data could even be QD, but we want to wind up with a wonky result and try to stretch PKPD when it may not be that parameter in terms of what you're looking at from a QD versus BID. So these are insights we'll look and you might see a difference between those two dosing regimens and that will be important for a phase three design. Otherwise, we think this will give us enough information to properly design and power a phase three trial globally. What's the amount of you? Yeah,

to add to that. So that study, as Mike mentioned, I mean, 12 week is the double blind period. However, it's really it's a nine month study in the sense that when you include the open label extension, so we will have and we have two active doses versus placebo. We will have data both safety, tolerability and efficacy for nine months for most of the patients and for those who are randomized to active and even the placebo will have six months data after a transition. As far as treatment effect assumptions, I mean, obviously we have our thoughts about that treatment effect, but again, this is first in patients study. So this will be the basis for our assumption moving forward. You know, we did the healthy volunteers first in humans last year. So we have those data and the molecule is not new. Right. And so we understand it's pharmacokinetics. The inhaler is not new. It's already into approved products, as you know, and the powder that you're using is also not new. It's already in the product. So we are very comfortable with the delivery and how we're giving it and the pharmacokinetics and pharmacodynamics already well understood of this one.

And then Andreas on the financing front, as we look out the next 18 to 24 months, we just see a number of key catalysts for us. We have our two late stage development programs. We have starting to focus on commercial prep for one of those programs and clofazamine. And obviously we have the pediatric launch that we hope to have in 2026 if approved. So as we look at all of those having access to flexible capital at this point in time just makes a lot of sense to have this instrument in place. And then, of course, you know, one of the key tenants here have the ability to be reactive if business development opportunities present themselves. And so speed in those situations, I think, is really important. And so for us to be able to be in a position of strength on that side, again, just made this instrument the right choice for us and really happy to be working with a partner like Blackstone.

Great,

thanks. Thank you.

Our next question comes from the line of Brandon Foulkes of HC-Rainwright. Please go ahead, Brandon.

Hi, thanks for taking my questions and congrats on the update. Maybe just changing gears a little bit to Ephraiza. Can you perhaps just talk about the typical Ephraiza patient today, you know, sort of where you're gaining the most traction as we continue to see this double digit growth? And if you've seen any evolution yet, maybe over the last 12 months since they sort of inhaled data, the two data sets were published, you know, just an added awareness of these data sets currently, you know, are they seeping into the prescribing community as yet? Just given the outreach you've done, obviously not promoting to it, but you know, just and then sort of when we think about depth and breadth of prescribing, you know, where are you seeing the traction today on Ephraiza?

Yeah, I think the first time I'll make it up, Nick, is with us is the we just got a database breakdown and I think you can kind of indirectly see it in the earnings is the breakdown of patients is roughly 45% type one and 55% type two. Over the last year or so, we've been pivoting a little bit more to type one and we can see four and eight unit strength is growing a little bit faster than the 12 unit over the last year. So I think that would signal our execution against type ones is growing and the uptake there is getting a little bit higher. I'll let Nick talk about a little bit more about the depth and breadth and some of what you're doing.

Yeah, thanks Mike and I would agree with that. I think what we're seeing overall is increased awareness. We've changed our strategy a bit by adding targets across the field sales force where we're going after unique prescribers. We've had much more activity at congresses where we've had less of a presence in the past. We're engaging more in scientific and clinical education to create awareness around the science and the benefits of a fresa within its competitive landscape. So overall, I would say focusing on the adult community, looking to increase unique prescribers, increasing awareness around science and clinical data, I think is where we're starting to see ourselves making good progress and we'll continue to do so. Focus in that area for at least the next

two to three quarters.

Great. Thanks very much. Sorry, I was struggling with the mute button. I apologize. Yeah, maybe, sorry, as we just think about the sales footprint and the growth, as we get the pediatric label, you know, and sort of in light of the additional capital you now have access to, are you going to think about sort of going with a full footprint for pediatric research? For pediatric research on day one on the launch? Are you thinking about sort of incremental investment? You know, look, assessing the traction and sort of then perhaps layering an additional expansion, additional reps to target the pediatric indication over time. How should we think about sort of a fresa investment beyond 2025?

Yeah, I think we're building up the PEDS plan. I think our initial thoughts are number one, we decreased our sales force footprint coming into 2024. And, you know, we were running a fresa for profitability in 2025 and really late 24 all the way into the early 25. As we came out and got the pediatric data, right, our confidence level in the PEDS launch went up, right, in terms of lung safety and believability and the opportunity that exists there. And so as you see this year, we are with the hiring of Nick and the expansion of the team. Number one is when we decrease the footprint, we're only targeting about 25% of all rapid acting scripts, which is mainly our targets to maintain our business. In order to grow, we need to target a larger percentage of markets. The number one thing we hear is doctors do not remember a fresa. It's not top of mind. And it's true. Our reps are not there every week. Hitting them like they're getting hit with insulin pumps from one company or another every week. So that's important as we close out this year and we have a label change coming up in October that we want to get the sales force expansion so that that label change can be communicated more widely. The second thing with PEDS is it's a different selling target than our traditional fresa use. Most of our fresa use comes from private practice doctors who know our data, who have open access, and they listen to the scientific exchange. A lot of the future is in academic centers and children's hospitals where our reps have not traditionally been as strong nor our selling model. And so we think it's really important to build a dedicated key account manager team with experience selling in institutions. It's a different skill set. And that's where the majority of PEDS being almost 80% are treated. When you look at our PEDS trial, we had 39 of the 50 academic target centers in the US in the trial. So we had a large percentage of them do the trial and we think there's a really important opportunity to continue that education and expansion in kids. The other thing we're going through to your question on the uptake will be why do we believe, and we'll start to communicate this information, why do we believe the uptake in kids will be more celebrated than we've seen in adults? And anecdotally, our feedback from advisors and conferences and engagements has been very, very positive. Parents have been very excited. People are shocked. They didn't know and Helen's been on the market this long. And so we just think there's a whole new opportunity to relaunch the brand and pivot the entire franchise. And so we need to keep expanding in adults as we can grow there. But more importantly, going into the pediatric community early and often will be important. And I'll remind you guys, we do co-promote Baximi with Amphistar. So that does allow us to go into the pediatric community and promote that product today. And that is something we're weighing as we go forward.

Great. Thank you very much and congrats on all the updates.

Thank you. Thank you. Our next question comes from Anthony Patrone of Mizzouho Americas. Please go ahead, Anthony.

Great. Thanks on all the updates and the Blackstone agreement. Maybe a couple on clofazamine and a follow up on a phrase. When we think about clofazamine icon ahead on the interim, getting to 100 patients, if you get the desired sputum conversion outcome at interim, how does that change just the timeline? Can it actually be fast tracked for clearance if you get that sputum conversion? And then when you think about building a sales force, a pulmonology facing sales force, what is the size of that team if you look ahead to a positive outcome? And then I'll have a follow up on a phrase.

I think on the sputum, obviously that's where we're weighing the trial statistically. And if we get that interim result next year, we're going to let the trial enrollment keep happening, even if we were to hit the 180 mark. So I think if it says it's good at 180, some of the debate we'll have at that time will be, do we lock the database at 180 or do you wait for the remaining 20, 30 people to hit the six month endpoint? And that'll drive the timeline there with the FDA. It does have QIDP designation as well as fast track. So there is an opportunity for a faster review and a rolling submission, I believe, with the FDA. And I think the FDA has been nothing but collaborative with this NTMS set and Clopasmi. There is nothing else in development that's meaningful. We're the last option for patients at this point. And I do think the FDA wants to see this product succeed and get there if we have the data to support it. That's all now. On the pulmonary sales side, I wouldn't speculate yet the size or investment there. That's one of the reasons we put the capital up as we get closer. We'll make the right assessment opportunity. But it's not a huge footprint. This is a very specialized disease. I think the biggest thing is weighing, as we continue to watch our case in Japan, what are you doing in the Japanese market and how do you either partner that or build it yourself? And I think those will be the key strategic questions we face over the next 12 months. As we look in those markets, there is opportunity. So we have an opportunity in Japan. As we look at trial enrollment, KOL support, Osemen has been in Asia for the last few weeks. There's a large opportunity there and a lot of support for Clopasmi. So we're really excited about it. I think it's going to be a meaningful opportunity for trajectory inflection on mankind. And it's coming before we blink. I mean, literally next year, close to this time, we'll be hopefully seeing what the interim says and then knowing where we are.

No, it's great. And then on a phrasal, maybe just that patient profile and pediatric from a utilization intensity standpoint, do you imagine this is going to be kind of more meal time or will it be even some aspect of basal plus bolus? So just trying to get an understanding of the intensity of a pediatric patient on a phrasal versus an adult patient. Thanks.

I mean, Nick just came from the conference here in July. I'll give you my thoughts and then Nick, you can add a little feedback after the sessions. But I think parents stress a lot around hypoglycemia and insulin pumps and chasing their child down with injections. And I do believe parents will want to use a phrasal full time versus sometimes we hear sporadic use on top of an insulin pump, summer highs, holidays, things like that. So Nick, I don't know what you came back to add anything from the conference in the parent engagements.

Yeah, I think there's what we hear largely from the caregivers, which is tends to be the parents or the patients themselves is, you know, post diagnosis, the patients go through a series of steps, which is initiation of therapy, which tends to be MDI, perhaps looking to switch therapies or eventually going on an AID. And so I think that it's an opportunity for a FRESA to be plugged in at many different steps along the diagnosis pathway and the treatment pathway. I also think, as Michael had mentioned, there's the opportunity for mealtime and multiple controls throughout the day. These are younger kids that tend to be active, playing sports, you know, grabbing meals as they go. And so I think the opportunity for pediatrics and adolescence will be slightly different from what we've seen in the adult community. And I think we're we're making adjustments as

to how we fit into that community now. Thank you.

Thank you, Anthony. We just see kids being so much more active, and that's where inhaled insulin plays a much better role for patients.

Thank you. Our next question comes from the line of the ends on a web push. Please go ahead.

Hi, good morning. Thank you very much for taking the questions and the first question on to one study. I just wanted to confirm that I heard it correct that you said the placebo control probably treatment period is not powered for efficacy. And is the goal to select one dose in regimen between the TID and BID and move it forward to phase three? Or is it possible that both those regimens can move into phase three? And also, what's the possibility of including active control arm in the phase three or any requirement regarding inclusion of active control arm, please?

But I think it's a little too soon to speculate the exact phase three design, but I think from the interactions we have with the FDA, you can see adding, you know, we have to assume more drugs get approved. And I mean, one of the challenges, the tentative is the majority of scripts in the US, so it's hard to add on top of the tentative and inhale the tentative. So you really look at your limit at the profounded on. So really do hope that there's more drugs approved over the next year and a half. So that when you run this trial, you have background therapy that you can add on top of and a placebo arm as the FDA is seems insistent on the placebo control here. So it's not an active comparator as much as a placebo comparator on top of background therapy. That's our running assumption today in terms of effect size and power in the trial. And should it be one or two dosing regimens? I think we're just we have some flexibility here in terms of is it two milligrams or four milligrams twice a day or three times a day? I think that's our focus is getting one dose regimen into phase three. We don't expect to see a significant difference between these two arms. But but let's say there is a as you look at the subpopulations of patient characteristics, maybe we start to see signals in one or the other. And that would drive a potential dose regimen selection. But we don't expect to go at this point with two different doses in history. We expect to pick one and we'll look for group analysis and some analysis on patient characteristics is that does the BID verge versus TID show anything different? But our overall assumption is it's probably a BID exposure and that that's our working assumption. But we didn't want to get there and find out maybe TID had a better effect size or better receptor binding that we can't see. So part of this is you're going into a nature that no one else has ventured into in terms of inhaled and perceptive binding and directly impacting the lungs. So we feel very good about that exposure. But now we just have to understand the signaling that happens in that that tissue.

I see. And then a question on the 500 million loan agreement with Blackstone. Are you able to share under what conditions will be will you be able to draw additional capital and would that be based on commercial or clinical milestones, please? Thank you very much.

No, so it's up to 500 million. We we draw 75 million now. We have 125 million that is committed. We for the most part have the ability to draw that at our discretion. So there are no specific sales milestones or development related milestones that would that would be contingent upon. I think Blackstone just wants to make sure that this is growth capital and we're we're putting this forward in a in a way that makes sense.

Great. Thank you.

Thank you. I would now like to turn the conference back to management for closing remarks.

I just want to say thank you to everyone today for listening. We were very excited about where we're going in terms of the late stage development pipeline is really starting to mature. We spent a lot of energy and a lot of money over the years to get to this point. We now have the flexible funding that we need to make sure we can grow these assets, invest in these assets as funding at least stage phase three and at least stage phase two is important to us and being able to kind of get to the data readouts will only create more value inflection for shareholders and patients. And so we're very excited about those late stage assets and the opportunity coming at us with PEDS. That's now on file. That clock is ticking and we'll continue to update you guys on those opportunities. And thank you again for your time and look forward to follow up questions and investor meetings in September.

This concludes today's conference call. Thank you for participating. You may now disconnect.