8, welcome to the 42nd annual J.P. Morgan Healthcare Conference. My name is Edwin Zhang, a member of the J.P. Morgan Healthcare team and the moderator for this session. Today, I would like to introduce you to the team from MannKind Corporation. Please join me in welcoming our presenters, Mike Castagna, CEO, and Steven Binder, CFO.
Thank you for having us here today, and thank you, Edwin. We're excited about our ability to really drive shareholder value in 2024 and beyond. MannKind has been around a long time. It's an exciting journey, and we have a lot of great things ahead of us. Hopefully today you'll see a little bit deeper dive on our pipeline, where we're going with our endocrinology business, and how we're going to continue to drive the future. Here's our forward-looking statements, as I'll be giving some predictions about the future, which may change. You can read this online. At MannKind, our mission is to give people control of their health and the freedom to live their life.
When you think about what it's like to be tethered to a pump all day or be stuck in your house on a nebulizer all day, being able to take a 2-second inhalation and go about your life and get your sugars under control and get your hypertension under control, are game-changing for patients who felt like they've been locked up. As we think about clofazimine coming forward, another option treatment that people have to take long treatments, we're really shortening the duration and hopefully giving them a chance to get back on with their life.
We have two therapeutic areas of focus: endocrinology, which we've been in for, over 20 years, and orphan lung disease, which we pivoted technically in 2017 when we made the investment in Tyvaso DPI, and in 2019 when we pivoted our R&D efforts and shut down things that were not orphan lung related. We won't be limited by our technologies as much as we love them. When I think about, Technosphere and what this means, we are the only ones in the world who have FDKP as a novel excipient, who have the manufacturing know-how and scalability to do what we do. There's a lot of arguments in dry powder inhalation, and as a pharmacist, I never quite appreciated the differences between lactose blends, FDKP, bonded powders, and delivery devices, and how they all connect.
While many people try to make arguments about dry powders and their different delivery technologies, it's really about the system and the bioavailability of what you deliver to the lungs that ultimately gives the patient the effect and the side effects that they need or don't need in treatment. We have two products approved on the platform and several others as we move down the pipeline. When you look at our powders in humans, you get very deep and consistent lung distribution, and the majority of our powder is our carrier, called FDKP, which carries the drug to the lung and disassociates, and then the drug target is left behind while FDKP gets excreted. This gives you rapid systemic and deep lung penetration and requires very little inhalation effort.
We've shown as low as 4 years old to as high as 90 years old of patients using our device. It does not require a large effort. Additionally, when we think about our diabetes business, we've run over 75 trials. We did several trials in patient populations that were, COPD and asthmatics. As long as they were controlled, they demonstrated they got the drug, they tolerated it, and they got decent drug levels. So there's not an issue around underlying lung disease and absorption, that our patients have shown that they can continue to get drug levels despite compromised lungs, and we've seen that in our success with Tyvaso DPI across over 4,000 patients with United Therapeutics. As I think about 2023, we had several major, contributions to our success. Number one, we look back at Tyvaso DPI when we did the partnership with United Therapeutics.
This was a $400 million brand. We knew we were going to get a 10% royalty, and that would bring $30 to $40 million into MannKind and help fund our pipeline while we continue to grow diabetes. When you look at where we are today, Tyvaso with ILD has continued to exceed all expectations. The conversion went faster, the patient satisfaction was better, and the market growth has been phenomenal. UT did an incredible job. What that has done to MannKind is it meant we had to really build manufacturing capacity faster than we had anticipated because of the success of the product. And so as we had more naive patients, more conversions, everything put a lot of strain on the organization in 2023, and we were able to stay ahead of that demand and not stock out for any patient.
As we closed out the year, we had record manufacturing. We were finally able to build a sufficient inventory, that will give us more than enough leeway as we head to 2024 and 2025. We completed our expansion build-out, which UT has paid for, to get ready for IPF, and those, production in terms of fill finish and spray drying scale-up will be online this year. And we're looking forward to continue to build inventory and get ready for the, the next generation of launches for United Therapeutics. We've made meaningful clinical progress on Afrezza and our pipeline. I'll talk about INHALE-3 and INHALE-1 shortly, but long story short, INHALE-3, we started this year because we felt very confident that the pediatric trial will go the direction we anticipated, but we did not switch patients off insulin pumps.
In the pediatric market, it's all about time and range and, and parents and kids fighting for success. So we didn't want to wait for that data card to flip over and then hear: Well, what are you doing about pumps? So we started INHALE-3 in adults to show that you can safely switch off an insulin pump. This will be the largest switch study done. Whether you're in control or not in control, can you safely switch and move forward? That trial had so much excitement. Irl Hirsch is the principal investigator, and that study enrolled 2 months ahead of schedule. So we're super excited because that means we'll have the data first dose presented at ATTD, first 4-month primary endpoint in March, and the full study for, hopefully ADA and beyond.
And on top of that, we'll have the Peds readout study this year, where we which expect to achieve our primary endpoint in Q3 and share that at the appropriate time. The second two parts is, unfortunately, there was a fire. For those of you who haven't been following the company, we were ready to start our clofazimine trial in Q4 this year. However, there was a fire in Germany, where we were making the clinical supplies, which set us back about six months, and so as a result, we had to move the manufacturing to Connecticut, get that back online, get the clinical stability batches back up. And the team did an amazing job doing that in record time, and we expect to file the clofazimine IND here in Q1, in about 60 days.
The good news about that delay is it gave us more confidence in the program because Insmed was able to flip over the card on the PRO outcome. We knew that this tool now works. We're planning to use the same QOL-B tool. Additionally, we finished our chronic tox data, so that's now de-risked, and we were able to finalize the trial design with the FDA and the dosing, so there was no question that a single trial could be used for approval. So that delay, while felt onerous at the time, I think in blessing, it was a blessing as we go forward. In 201, we just completed our 28-day tox. We just selected the CRO partner to do the phase 1 study, and that will be going into humans very shortly. So we made a lot of progress in the pipeline.
I'm going to spend a lot of time today walking you through the rationale and why we have confidence in these two molecules. We're also in the strongest financial position we've been in a decade. We achieved profitability in Q3, and we've continued to reduce our debt as that's one of our main focuses. We have more than adequate ability to pay down our debt over the near term. Our royalty sale, in case you didn't see, we announced last week, was for $200 million. What that did was effectively sell 1% of our Tyvaso royalty, so we were able to keep 90% upside for MannKind and our shareholders.
A lot of people asked me, "How robust of a process was it, and, why did you only sell 1%?" And the reason is we don't need the cash. That's just probably the first time in history I can say that as MannKind. We believe in the upside of Tyvaso, we believe in the upside case for IPF, and we wanted to preserve that upside for us, and we felt interest rates are very high, which makes the discount on the royalty a little bit higher than we would like. And so being able to preserve all that upside from where we're going is really important to us and our shareholders.
What we really wanted to do was show the value because we believe our stock is severely undervalued right now, and being able to show you what 1% of this 10 would equal in value, which is about $2 billion risk-adjusted here, $1.5 billion, if you just counted the current base business of Tyvaso. So we're trading at about a billion-dollar market cap. That means everything else in the company is negative value, which we don't think is the case. And so that, that's where we got $150 million upfront. We're now sitting on $300 million in cash with another potential $50 million milestone, depending on the revenue over the next couple of years. This does not impact our collaboration and services and really gives a true valuation just on the royalty alone.
Now, I'm going to bridge over and talk about the orphan lung business that we started to enter in 2017 with Tyvaso. We did this ourselves, and then we partnered with United Therapeutics in 2018 and then worked with them over the following three years to get this ready for FDA approval and scale. As you guys can see, it's a very simple-to-use device, portable, high patient satisfaction, high patient tolerability. Very few. I think one person dropped out in the trial for cough. So we know that this is a simple device that has been widely adopted and converted here in the PH market. I do want to talk about our, our, our technology and what it means, because there's another company out there spreading some false noise.
I think what's really important is to show you that in humans, we get decent lung penetration, number one, not animals. And number two, it's not about the powder or the microns of the powder. It's about the delivery technology combined with the powder and how that gives you deep lung penetration. And at the end of the day, we can make all kinds of arguments about low flow, high flow, resistance, particle size. What matters is the bioavailability, the emitted dose, getting into the lung, getting into the and showing you that effect. And this study was our pivotal trial we did back in 2018, where we showed you the green line here is Tyvaso nebulizer, and the white circles on the top are the DPI version that we did. And so we tested this in 30 microgram increments.
So you can see 30, 60, 90, all the way up to 180 micrograms we were able to get to before we saw any tolerability issues. So we knew this was very tolerable all the way out to 150 micrograms. So if you look at the C-max at roughly where the Tyvaso nebulizer dose is, that third green dot, you know, we delivered a higher C-max just on our second dose, which meant we were getting hopefully better powder and better remodeling of what that product can do for PH patients. When you look at competing DPI, they have to deliver almost 2x the dose just to get to the same C-max.
So if you compare it 50 to 50, we're significantly about 2.5 times higher C-max than they are at dose for dose, and they have to dose almost twice as much powder to get to the same effect size. And the way you can look at that is AUC and saying: What does the overall area under the curve look? And again, if you just took 50 micrograms, which is the dose that the nebulizer is at, you can see we were very comparable and parallel to the nebulizer. And when you look at the competing DPI, they were half of what the AUC was. Therefore, what that means is they need to dose higher, and in their particular case, they need more powder, and in a patient who has lung disease, more powder is not necessarily good.
Usually leads to cough and side effects and powder going everywhere. The other part of this is, as you get past 100 micrograms on their technology, now you need 2 capsules, which means you need 2 inhalations, and you got to clean the device every day. So our, our device, our technology, our distribution, and absorption are completely differentiated in these two things. Now I'm going to bridge over to nontuberculous mycobacterium. This is also known as MNKD-101, which is our inhaled clofazimine program. For those of you who don't know much about NTM, it's a rare disease. It's been evolving, and Insmed, in our case, have done a really good job at building up awareness in the marketplace. It's chronic, it's progressive, and it's usually caused by bacteria in the soil and water.
This is really presents itself often similar to tuberculosis or an infection. So people are misdiagnosed, routed through the system for years before they finally get properly diagnosed. It's what makes it very difficult to run a naive patient trial, and so you find yourself in a refractory patient population, where it's much easier to identify the centers and the patients and move these programs forward. We believe this is a really debilitating disease, chronic fatigue, cough, and has a 4 to 5 times higher increase in all-cause mortality. I will not—unless you're an image expert, I won't walk you through these two images, but you can see how it presents itself in terms of fibrocavitary disease... The prevalence continues to increase over time, and it's really endemic in humid areas and tropical areas.
So when you think about Hawaii, the Eastern Seaboard, Japan, Greece, these are the markets where it's really going to be penetrated. But when you really just take a step back, it's a Japanese opportunity and a U.S. opportunity. And you can see the market today, about 120,000 patients in the U.S. and about 160,000 in Japan, with only one FDA-approved treatment option. There's more than enough room for multiple players to change this disease. It'll become a combination disease of newer targets, and we're super excited to be, hopefully, one of the next generation launching here in NTM. The current therapies are unfortunately not that good. When you look at them, they're limited by their side effects. They exacerbate a poor quality of life. They have diarrhea, vision, hearing issues.
The regimens are mostly 18 months, some lasting as long as 5 years, and very few people often convert when they're in the refractory position. And so they're not getting a huge benefit with a huge amount of side effects. The NTM evades the macrophage, which usually picks up and cleans out the, the infection, and it gets stuck in the mucus. One of the things we like about clofazimine is the macrophage just picks it up and brings it deep into the lung and gives you that efficacy, when it crystallizes and uncrystallizes. And despite the lengthy treatment, only 40% of people may, may resolve their infection. And even if they resolve it, they may be free for a year or two, and then they get it reinfected, and they go back to treatment again. So this is kind of a chronic long-term condition.
I'd love to say there'll be a cure. It's unlikely. There'll be just more curing the virus, the bacteria infection, and you'll relapse, but hopefully, we can knock it out with deep lung penetration. Discontinuation of therapy is highly, happens very often because if you've known anyone with tuberculosis, I used to work in a hospital, these drugs are severely toxic and, have harsh side effects. So most people do give up, and therefore, you don't get the optimal treatment outcome. Why do we pick clofazimine? Well, well, the founder of the company we purchased spent five years working on this before we did, and we spent the last, four years almost. And so this has been in development for almost a decade, and it was used for leprosy back in the 1980s.
What they saw is it did have activity against NTM and other infections, but the systemic circulation has severe side effects. It's an orange dye, so your skin discolors, it accumulates in your organs and fat, and it has QT prolongation issues in the oral dose. So it's not optimal for oral delivery via tablet. However, when we make it nebulized, we're able to cut the dose by about 80% that we deliver directly to the lung, and that's why you see the red going from the systemic to the red going to the lung on this chart, because it's really about killing the bug in the lung. And so that's where you get a very high concentration and deposition with our suspension, and it gets in there and should have deep lung penetration.
The other part about this product is, you know, it's not a crapshoot, and when you do R&D on this particular product, it's got lots of real-world data published that clofazimine works and helps these patients. It's in the guidelines already. And when we did the preclinical work that we looked at, when you look at saline and you look at oral-delivered clofazimine in a tablet versus our nebulizer, you can see whatever you want to compare it to. The nebulized version had a significant bacterial... You know, bacteria did not recover, meaning 99% reduction in the bacteria. So a very good preclinical model that shows that this drug works, and we're super excited to finally get it into patients, where we are. So what have we done to date? We've completed the short and long-term tox. We've seen no signal of the upper dose toxicity.
We dosed it every day for six months in the animals, and it looks clean, which is great. We relocated our manufacturing from Germany to Danbury, Connecticut. We've identified a powder formulation, which we wanted to get down to the dose, which we're now at, and we'll look at moving that powder formulation forward because we think, long-term, to compete in early naive patients, it'll be good to have, oral delivery. We completed our phase 1 study with no safety or tolerability issues. We've selected the CRO to help us. We've been identifying sites because we're ready to go in December. So now we have about 70 sites identified.
So hopefully, when we do file the IND and get the approval, we should be able to activate and get patients in very quickly, and we'll be doing some work to hopefully identify those patients early. We've met with Japanese regulatory authorities. We do believe a single trial with a sputum endpoint will be appropriate for Japan, and we're super excited to set this up for that market. And we've aligned with the FDA on our development program and now expect our IND to be filed here as soon as we get the data for the manufacturing batches we made. This is the first time I'm revealing the trial design. It's the study will be called ICON-1, Inhaled Clofazimine for NTM, and this is the design post-FDA feedback. We were going back and forth on a single trial. Was it a phase two, three trial?
Where we landed was a single-dose trial. Over time, it'll be six months as a primary endpoint. The way you take clofazimine, for those who don't know, it's 28 days of dosing, then you're off for two months, and then 28 days of dosing. So four courses in the first 12 months, not every single day you're taking a nebulizer for 15, 20 minutes. So this will be a very patient-friendly delivery. It'll be about 12 minutes in a nebulizer for 28 days, and then you're off. And it has about a, you know, 40, 50 day half-life, so that's why you can... It gives you a very high peak concentration in the lungs, and then it comes down over the next two months.
And so we've replicated this in two animal models, in our PK, in our humans, and we feel very good about the dosing and the dosing regimen. It's also about 180 patients, and so it'll be a 2-to-1 randomization. And what we have to fund is to the first 100 patients. That's what's important for shareholders to know. This is not a $200 million program. This is less than a $70 million investment over a couple of years, and we'll be able to manage that within our current cash flows and expenses. This trial, to get to 100 patients, should be somewhere in late 2025, is what we're estimating, and that will give us the size estimation to say, "Is our assumptions right?
“Do we power the trial right?” There will be a co-primary endpoint of sputum conversion as well as a PRO. And we know PROs are a challenge, but fortunately, we've had a very good dialogue on this one, and we feel very good about the trial. Single study is all that we need, and we're ready to go.... We've also done a lot of market research, and then we look at the product. The most appealing thing is the tolerability profile as well as the dosing. That, that is really, you know, the efficacy in this class, even if we have comparable efficacy, these two things are gonna what make it a gold standard for these patients. We know that they need more options for refractory. It's a familiar molecule.
The world's thought leaders use it already, in oral form, so they're very well aware of it. It's available for free through a Novartis access program, and this is also gonna become a brand within a brand. Now that we're through the NTM design, we're now looking to say: What other disease indications can we use this for? For example, it works in NTM, Buruli disease, TB, and others. So we're looking to see what's the next investment that we can think about that will make this a brand within a brand.
You can read these quotes later, but I think when you hear thought leaders say, "Anyone would love to have this instead of inhaled amikacin, this would be amazing." Short duration of therapy changes the on/off period uptake for a patient, or in Japan, where people are very worried about the color of their skin, turning yellow is not a good thing, and therefore, where this is the second biggest market outside the U.S., having a product that's currently used in an oral, available as an inhaled will be a huge benefit for this population, let alone the tolerability and the safety. And the other part I didn't mention is, it works in MAC as well as M. abscessus. And the reason that's important is the patients, 20% of the people with MAC are co-infected.
So we're allowing those in the trial, so have a little bit of ability to enroll a little bit faster, and it, it should work in multiple infections. We looked at ARIKAYCE and what the peak analyst projections are for this product, and they had a great year last year. They just gave guidance this year, and that really shows on track consistent with the slide that, you know, as ARIKAYCE grows, this creates a bigger opportunity for us because we do think it's improved over this product, number one, and number two, it paves the way for us and patient population and growing. So huge opportunity that's growing and should continue to grow over the next decade.
A lot of IP, so we feel very good about where the rest stands, and upon approval, we'll get QIDP as well as orphan designation for 12 years. Now I'm gonna bridge to another asset that I don't think most people are aware we've been working on for over four years, and that's idiopathic pulmonary fibrosis with 201 inhaled Nintedanib. The reason I say that is I showed up to a fibrosis conference last year, and somebody in the audience said: "What we need is an inhaled Nintedanib," and I was very happy to hear that as I sat in the back of the room and said, "It's coming." No one in the pulmonary fibrosis community realized that MannKind had this moving forward.
We've spent a lot of time on this, and this is a huge opportunity, and as I've dug into pulmonary fibrosis, unfortunately, I have a family member who suffers, and I've watched him suffer. This is a very debilitating disease. 80% of people die in five years, and, as we've done due diligence on assets, we see that unfortunately, the patients are dead by the time you finish these trials many times, unfortunately. And so huge unmet need, and when you talk to the patients, the side effects of these products are so severe that they'd rather die than take the drug. And so we do believe there's a huge opportunity in this, and if you don't know much about IPF, I think most people do, it's scarring of the lung tissue.
It makes it difficult to breathe, and it progressively gets worse over time. So how do you design trials where you capture them at the right moment and can show that, that effect that you need? It affects 100,000 people in the U.S. There's about 15,000 or so in treatment, and the reason there's no one in treatment is because people cannot tolerate the treatments. So despite whatever happens with the generic in a couple of years, there is a large population who cannot get the efficacy, who cannot get the tolerability, and there's 1.3 million people worldwide who need to do this, and unfortunately, a lot of new people getting diagnosed. As you look, there's two approved products.
Ofev has the lion's share, and you can see here in this slide, it was about a $4 billion market in 2022 with, you know, well over 80% to 90% of the sales going to Ofev. Expect this to be a $10+ billion market in the 2030s, and we really look to have an innovative product, even if, as we look at other IPF treatments, they have severe GI side effects. And for those of you who don't know about Ofev, it really is dose limiting, meaning they were at the peak dose they could deliver orally. It only has about 5% bioavailability, so you can't dose any higher to get any more efficacy because the GI side effects are so severe.
And so that's really what we saw, was how can we deliver this directly to the lung, get the dose that we need, and we've confirmed that now in our animal studies. Additionally, we haven't published the data yet, but the bleomycin study we did showed similar efficacy to the oral tablet, and that's before we dose escalate. And so we really look forward to bringing this forward. Our tox study looks clean, and the chronic tox is underway, and we met with the FDA on the phase one.
We switched it to healthy volunteers, so that'll be great because the study will be similar to the Tyvaso study we did, where we continue to escalate the dose from dose cohort 1 to cohort 3, single ascending dose, and then once we get to our max dose, then we'll go into multiple doses per day, showing you, hopefully, that tolerability over 7 days. So this is super exciting, as we go forward, and that study will start in Q2, and we'll have results we expect in Q3. I'll go a little faster now as we wrap up and get to the Q&A part. Why are we excited about Afrezza and endocrine? Why has MannKind spent so much time on this opportunity? And the reality is, Al Mann, our founder, built this. He built the insulin pump.
He knew that we needed a faster insulin if we're gonna resolve the mealtime control problem in this country. We have not seen any impact on GLPs to our success, and we don't expect that because we are focused on helping type ones, reducing hypoglycemia, thinking about gestational diabetes and pediatrics, and these are all segments that GLPs will not impact. And so as we look at Afrezza over the long term, we have a very long-term growth trajectory. And what have happened when the drug launched is there was no KOL support, there was not a lot of published data, a lot of questions around safety, and we kind of fast forward where we are today. This is our pivotal year. This is the year for inflection in this asset. We have two studies that'll read out, U.S. only done, U.S. thought leaders, and that's really important.
60 sites, over 350 patients, and one of them is pediatrics. So when you think about safety, being able to demonstrate safety in the lungs will be really important, and so far, our data safety monitoring board showed and told us that there's no safety concerns. So we feel very good about the probability of achieving success in the pediatric market, which is why we pulled the trigger on the INHALE-3 trial. We will present this data upon availability and get it out there as quickly as possible, and hopefully file label updates with the FDA. As you think about where we are, we grew Afrezza 31% on new prescriptions, 24% year-over-year on TRXs.
As you look here, when you think about where we started at $5 million a year, now we did about $14 million a quarter, $12 million a quarter. We're now doing a quarter what we did in a year, 5 years ago. There's nothing slowing this down. This asset should continue to compound and grow. When you look at the 26% growth in the first 9 months of last year and compare that to every previous year, that's consistent with our TRx growth. So we feel very good about the growth trajectory. And why do we continue to invest when the whole world's talking about AID system and pumps? The reason is, whether you deliver insulin via a pump, a pen, a pod, it doesn't change the profile of the insulin.
The insulin is the insulin, and all we do is spend $ billions trying to manipulate the profile to avoid the late hypoglycemia that it causes, as well as the lack of speed of onset. So when you eat, it's an everyday challenge, 3 to 5 times a day, your sugars are skyrocketing. You can see this in an AID system, a head-to-head trial we did last year, and Afrezza, hands down, shows you we reduce sugars faster, and that's what you need in a mealtime control. And you do this over the 120 minutes or all day long. That gap gives you better control, less damage to your organs, less peaks to your eyes, hopefully less heart attacks when we hear the peaks are causing this.
So that caused us to do the ABC trial I just showed you, called. That was a head-to-head AID pump, where we didn't... It was a small study. We didn't see a big difference in outcomes whether you run an AID, AID plus Afrezza or Afrezza alone. And we did this INHALE-3 trial, which switches people. About 60 will be on a pump, 60 will be on MDI to once daily degludec, basal plus Afrezza. And this trial, primary endpoint, will be achieved in March, we expect. And at the end of the 4 months, everybody switches over to Afrezza. So we're gonna have 120 new data sets to look at against pumps, different AID systems, looking at CGM as well.
This is the enrollment, again, using Dexcom G7, and we also allow people who wear a V-Go to enroll. INHALE-3 was our pediatric trial, and that's not much updates there other than we're waiting for the final thing. As we think about Endocrine in 2024, you may or may not have heard, we did have a restructuring last week where we tightened up the organization and redeployed a new sales model going into this year. So now we have field reimbursement specialists, field trainers, as well as key account managers. So doing the same thing over is not gonna get you more success, so we had to change it up a little bit this year. We feel like we have the right leadership team to move this forward.
We moved all of our marketing to Danbury, and we really retooled this organization for success. And when we start to see that growth hopefully happen a little bit faster, we now have the capital and abilities to scale it, as we go forward. So when I think about 2024, I think about momentum. Momentum is where the organization is. Last year was a major inflection year for the company. Tyvaso success gave us more confidence to fund the R&D, and you're seeing now R&D kick in, you're seeing Afrezza kick in, you're seeing the readouts, and you're seeing major milestones happen this year. Whether it's the purple here in diabetes, the orange here for clofazimine, or the blue for the IPF asset, or in the magenta here for Tyvaso. We have multiple things happening in the first half of the year.
We'll continue to fill out this grid as we get to the second half of 2024. But super excited, lots of momentum. What does that mean? That means we are at the early stages of growth. This company's been around 33 years. We've been public for a long time. We've had a pretty good track record since Steve and I became CEO and CFO. We're not happy with the shareholder performance. It's one of the reasons we did the royalty deal to show what that value is. We are severely undervalued when you look at the future growth in front of us, and whether you pick Afrezza and Peds as the opportunity, nintedanib, clofazimine, we have multiple shots on goal, including Tyvaso, if they get IPF. So we're very excited about where we're going, and I wanna thank everybody.
We have a long range of IP available into the late 2030s for most of our assets, and we couldn't be here without our employees. Our employees are critical. We're probably close to almost 450 employees this year. When I got here, we were at 120. So when you think about being recognized as a great place to work, being able to recruit people and retain people is really the critical key to our success. And, it's very specialized in what we do, and I just wanna say thank you again to our employees for everything, and thank you for J.P. Morgan having us. Let's move to Q&A.
Thank you for the presentation, Mike. It's, it's highly informative. Now we'll kick off the Q&A portion of this session. I just want to remind the audience that if you do have a question, please raise your hand, and we will deliver a mic to you, so the rest of the room can also hear your question as well. I'm happy to kick off with the first question, if that's okay. This is regarding the Tyvaso DPI. Is the royalty sale to Sagard a strong indicator of Tyvaso DPI's potential in both PAH and PH-ILD? And do you have confidence in Tyvaso DPI's growth trajectory despite upcoming competitive launches in the PH space?
I do. I mean, that, that's one of the reasons we, we had that confidence, and we talked a lot about how much do you de-risk the debt? How much do you have confidence in your future? And that's why we only sold 1%. When we look at the growth, you know, UT's did a phenomenal job, but we're only at 4,000 or 5,000 patients out of 50,000 in the U.S., plus worldwide, plus IPF. So when you think about the future, we're, we're really at the, at the, at the pivotal moment where we're in the beginning, not, not the middle or the end. And so, it's a small bet to think about IPF. That's a very hard disease, but that is huge upside, and we didn't think it was worth, risking that for our shareholders.
Gotcha. Thank you.... So maybe a follow-up question. What has been the impact of your increased manufacturing facility in the second half of 2023?
Yeah. I think just being able to have flexibility on switching packaging, 'cause as you know, there's a titration box and then there's maintenance buckets. So when you change your forecast, that takes about 8 to 12 weeks to flow through. Now that you have adequate inventory, there's no longer the stress in either organization. I know UT obviously is worried about life-saving drug, making sure you don't stock out. Being able to have confidence to continue to scale your business, invest in growth, and, you know, whether coming from naive or experienced, now we feel pretty good about that. It takes a lot of stress off the organization. More importantly, it makes us more profitable, right? So the more product we make, the more money we make, let's be clear, and that's important for our employees. The more consistent we make the product also brings efficiencies and scale. So-
Gotcha.
- you hopefully will see that as we wrap up Q4.
Gotcha. Thank you for that. So as you described, you talked about United Therapeutics, do you see future research collaboration opportunities with them?
Yeah, I mean, we've talked to them on and off over the years around different opportunities, and I think as we, the reason you don't see anything major is everything we looked at relative to where Tyvaso was going. Tyvaso was so huge that, you know, was this gonna be a $200 million opportunity or $800 million? And so I think it's about finding the right opportunity, and they have a right to use our technology exclusively for PH. And so we wanna continue to find that. And while there'll be new launches, you know, these are combination treatments. These are very hard-to-take products, and so I think you're always gonna see innovation in a disease as this one is growing, as the people live longer. I think there's always opportunity, but we'll keep looking, so.
Gotcha. Thank you for that. So moving on, we can sort of talk about the existing pipeline. So what gives you confidence in the development of the MNKD-101, as you move forward? And sort of what can you expect—can we expect from your spend for the program between now and approval?
Yeah. I think the proof of concept data in the in vitro models is really important. The good news about antibiotics is you have a bug, it kills it or it doesn't, right? And so then you worry about resistance, then you worry about side effects and tolerability and safety. And, you know, we've worked through a lot of those issues over the last three years, and so I feel pretty good we got the right dose. I feel very good we got thought leader support. The FDA is super excited about this asset. I can't tell you how collaborative they've been. Despite our setbacks, they really want this product.
They want it there fast, and so we're trying to go as fast as we can, and that's really the pivotal trial we spent a lot of time designing, to feel confident that we'll get the outcome we need, because it's not always predictable, and that's why when ARIKAYCE had the PRO quality of life survey look positive in NTM, that's the first time it was validated five months ago. So, so we're super excited about the trial, the product, and the target profile that we get, and we think it's gonna have a good, good run, and let's see the-- let's see the enrollment. That's gonna be critical. You know, a lot of excitement, but until you see those patients enroll, that's gonna give you some signal.
Great, thank you for that. We actually have a question from the online portal. So the question is: Can you please characterize the Tyvaso royalty stream from UTHR over time? For example, does a 10% drop over time or over various sales milestones? So the person asking has some... his question is puzzled by the chart on slide 40, which seems to suggest that the total royalty here plateaus in the next 3 to 4 years.
I think that chart's for illustrative purposes, so I wouldn't look at any one line. It's just more generally, when you look at the company, multiple growth opportunities. I wouldn't... You know, we purposely didn't put a scale in there because the scale is not accurate. But I think directionally, that's what you see. When you think about the royalty, it... I mean, there's nothing that I can see slowing it down. Obviously, if IPF didn't work out, that would be an issue. But, but we feel, you know, pretty confident that that gives you the opportunity to go to Europe, it gives you another indication, and it gives you the ability to scale to Japan and other markets. So there's a large global market for PH.
I had somebody today talk about, you know, why is this product not-- you know, why is PH not as big in Europe, for example? And, you know, having a differentiated, compelling product gives you an opportunity to bring value to those markets and to those patients. The other thing I'll talk about is our royalty does not change over time, so that, that, if that's what that person was asking, like it stays 10%. We will-- even though we sold the royalty, we still book the sales. And so while that creates a little bit of a, an accounting issue, I think it's really important to know we will continue to show non-GAAP accounting. So don't let all the noise of how we calculate the royalty and how it's flowing through the, the balance sheet.
It'll be very clear as we have quarterly earnings what is truly the revenue of Tyvaso DPI, and the accounting will show non-GAAP to make that very clear for people.
I can add one other thing. The 10% royalty stays until such time as there's an interchangeable generic that comes into the marketplace. We have patent protection out through 2035, with pending patents through 2042.
Thank you for that. So, maybe just a couple more questions to close out the session. So regarding the capital structure, you know, with MannKind's strong balance sheet heading into 2024, what is the focus with respect to capital structure and funding the orphan lung pipeline programs?
So, you know, when we laid out the royalty deal with UT back in, back in 2018, we had a long-range focus to-- that if this all worked out as planned, we would-- we funded the basic research, the formulation work, the tox studies, the Phase I, which we could afford, and we starved the diabetes business in order to do that. So when people say: "Why didn't you grow Afrezza faster?" It's because we needed to get the clinical data that showed appropriate dosing and get the label updated to do that, and that just took time. And so we pivoted those funds to the pipeline, and, so now as you look forward, we'll be able to fund-... hopefully the, the R&D with our, with our cash proceeds from Tyvaso.
So when you think about the diabetes studies, and we're spending probably close to $30 million, those will phase out over the next year, and then the Phase III trials start to kick in. So we're not gonna see a $100 million increase in cash burn because of these trials. We're gonna see, you know, $10 million, $20 million, $30 million, you know, change each year as these things build upon each other. There'll be some overlap if the nintedanib and clofazimine are both in phase III, but then that'll be like one year. So we feel very adequate. I'll let Steve see if he has anything else to add, but.
No, between the cash that we have on hand and our expected cash flows over the next few years, we expect to be able to fund our, our pipeline adequately.
Thank you both for that. Maybe just one final question to close out the session. So are you surprised at all at the market response to the $200 million royalty deal? And how, as you go to, into 2024, how do you best sort of think about creating shareholder value?
I mean, we have every incentive to drive the share price in the right direction as a management team. So we feel, you know, getting the royalty deal would, would bring some clarity to the market on what this really is. This is, you know, knowing there could be a competitor to launch. This royalty deal, it was done after that. We've modeled all that. We feel our products are differentiated, they're high quality, they're sustainable. They've been around the test of time, around devices and scale, and the stuff we have coming is game-changing for patients. And so when you think about 2024 with all the clinical data readouts, unfortunately, they take years to do, right? All the baseline work no one ever sees. Every week, our team is fighting for manufacturing headaches and quality and everything through the system.
For a company like MannKind, it was a single-product company for 20 years, to all of a sudden have 4 products, right? Plus 5, if we include V-Go. You know, it's a lot of stress on a small organization, but the team has stepped up, and we're firing all cylinders, right? Whether it's R&D, it's manufacturing, it's marketing, these are important capabilities, and when we go to launch them, the good news is the diabetes infrastructure, whether it's training, it's reimbursement, it's the reimbursement hub, the key account managers, these are all critical areas that we're gonna need for the orphan lung business.
So, you always go back and forth around how much do you invest, and we wanna have best-in-class services and support with the diabetes business because we're gonna need those capabilities for the lung business, and so that's important.
Gotcha. I think that concludes our session today with MannKind Corporation. Just another round of applause to Mike and Steven for being with us today.
Thank you.