Good morning, and thank you for joining the H.C. Wainwright twenty-sixth Annual Global Investment Conference. My name is Oren Livnat, Specialty Pharmaceuticals analyst here at H.C. Wainwright, and it's my pleasure to welcome for a brief chat today, MannKind Corporation. And with us today is CEO, Michael Castagna. So I've covered MannKind, I think, longer than anyone else on the street at this point, and I've seen you take the company through a remarkable transformation from, I think, about $8 million in revenue and $200 million in debt to almost $300 million in revenue, no debt, $300 million bucks in the bank, and on the cusp of some pretty exciting pipeline developments. So congratulations and welcome, Mike.
Thank you.
I know everyone's really interested in the pipeline recently, but you've spoken at length about that in the last couple of weeks, so I thought it would be interesting to maybe lead with Afrezza, which is what I covered from the beginning, and I think a lot of people are maybe glossing over or not paying attention to some of the potentially exciting developments on that front. In fourth quarter of this year, you're expecting important data from both the adult INHALE pump switch study and also peds. So on the former, on INHALE-3, can you just remind us what data have you announced prior, and how is this new 30-week data different and important?
Yeah. So first of all, thank you for all your support over the years. It's been a fun journey. We started with Afrezza, and I guess, today's a good milestone where as you know, Afrezza was a turnaround, and part of the challenge was the proper dosing of the product. So when we set out with INHALE-3 and INHALE-1, it was about using new dosing in those trials to hopefully get better outcomes for those patients relative to our pivotals. INHALE-3 showed you at 17 weeks, we went up against what is perceived to be the best standard of care of AID systems, and we could see that within 17 weeks, things look good. The second part of the study is the remaining control arm that switched over from week 17 to 30, so only 13 more weeks.
So the first question is, how do the people do that started at week 0 to week 30, and then how do the people do that switch over midway through? And so we're gonna have two different data sets coming that we can share. And I think the key thing to look for as we get this data is we moved more people to goal over the standard of care at week 17. So how does that parity continue to trend over time, and do we get more people to goal by switching to Afrezza versus staying what you're on? I think that'll be one of the key things coming out of this trial.
All right. So you mentioned the dosing. One of the unfortunate overhangs of its development before your time was that the label was maybe suboptimal conversion or dosing of Afrezza. So I'm curious, with these results, are you confident or hopeful that you will actually be able to use this data generated to update the label?
Mm
... to include optimal dosing? And if that is possible, you know, what impact should that have, do you think, in the actual market?
I think when we met with the FDA for peds, we spent a lot of time making sure we could do the proper dosing for kids, 'cause kids are already non-compliant, so they want even a half dose to be half dose of that. We think that that was critical. To get the label updated, we'll shoot for the adults first, and then hopefully that will translate in ahead of the kids' filing. Until we get to the FDA, you know, do those two go in sync? Do they go in parallel? We'll get to that very shortly. We expect updated information in the label on figure one in particular, is what we've been talking about.
Mm-hmm
... is that first dose conversion. And, we've run those doses in the office to show you they're safe and effective in hundreds of people already, and we can see pretty much in the first dose. I think a study came out with the headline, "Inhaled insulin is superior to injectable insulin." And that's true in the first two hours, right? When we really look at those-
Right
... patients. So if you want, if you want fast mealtime control, you're not gonna find a better product to do that than us.
Right.
We've shown that head-to-head.
Do you find in practice that having suboptimal dosing has led to poor experience with the product? Maybe that's why some physicians aren't huge fans, and do you think this new label, if you can get it, would actually help address that issue?
Yeah. No, I think that's right. And so when you look and if you just read the package insert or up to date as a physician, and you're just finding that table, and you don't really know the history, you might just prescribe that to a patient, and they'll break through, whether it's on their sample or their prescription. And so as you think about a lot of kids and other places are treating academic medical centers, which are even harder to penetrate from an education, getting this label updated will then translate to all the software and all the databases-
Mm
... to make sure that people can start off on the right dose the first time. And that's important, because everyone's so afraid of insulin and causing hypoglycemia that they're afraid to give more.
Right.
Getting this updated, I think, is really important to the turnaround of the brand.
All right. And earlier you mentioned peds, of course, and that's coming in Q4. How... You know, what do you need to see efficacy-wise and safety in that study for it to be a home run for you? And what are the NDA or sNDA filing timelines you expect there? And I guess, how transformational could that be for the product?
Yeah. So I think when you go back in diabetes care and transformation, whether it's Al Mann, when he built the insulin pumps in the '80s and '90s, that turned into, you know, CGM, Dexcom started on kids, as well as Omnipod. So I think when you look at innovation in diabetes, outside of the Type 2 market, it really happens with children because the parents are progressive, the peds endos are progressive, and then they turn into adults, and they force the adult endos to learn new technology. Otherwise, the adult endos have been treating the same patient for forty years. They have no desire to really change what they're doing.
Yeah.
But if you drive that patient demand or they start seeing those patients come in, they're gonna be forced to learn.
Even though none of their patients are at goal.
Yeah, that's a different headache we continuously-
Absolutely.
I think with the kids, we need to be convinced that you can get 10-plus% market share, because that translates to about $150 million a year in revenue, and I think that's where you gotta be convinced that you would go forward, not just in the filing, but in terms of the launch and everything else. And I think that's... You know, you think about Afrezza doing roughly $60 million this year, you know, that's a tripling of revenue just there.
Right.
And then that spills over to adults, and then that compounds for the next decade or two.
Right.
So that's where I think you can see Afrezza's been growing every year since we got it back, and how do we now scale that even faster? And that's the peds is gonna be one of those critical moments.
To back out, and this is something we've talked about for many years at this point, but, you know, it's pretty clear to me that Afrezza is easily the best ultra rapid acting, you know, mealtime insulin available, yet you barely ever scratch the surface, big picture and market penetration. So, you know, what do you think the biggest hurdles are there, and is it really realistic, do you think, for a company your size to, even with better data, to make a big jump in penetration into that space?
So I think with the-- we're just finishing up a large project to kind of assess the market in different segments. And I think to your first comment is the PEDs filing. You know, we'll get the data here in Q4, and the question is: do we file on six months of data, which we'll now have right here in Q4, or do you wait for the full 12 months of safety? And part of that's the FDA. We'll have probably 75% of the patients done at month six, completed the study. So does the FDA want the remaining 25%, or are they happy to let us file and then support the thing? And so you can see a filing, I'll say, roughly between first half next year, and then it'd be around a 10-month review.
In terms of the peds part, I think that when you look and say: "Why aren't doctors writing the product?" The number one reason is their perception of safety.
Yeah.
And so after ten years on the market and twenty-five years of dosing inhaled insulin, we have no data saying it's not safe and effective, right? And so I get frustrated because we have every ounce of data saying high sugars are bad. And yet there seems to be this disconnect between controlling sugar versus perceived issues, that we've been dosing insulin now. 25% of the time we've invented insulin for inhaled insulin alone, and yet there's docs who still want to think about some IGF binding receptor theory that has never been proven out. And so it's like, "Hey, we've been on the market ten years with tens of thousands of patients. Knock on wood, we've not ever seen a safety signal at this point, and we feel very confident. Otherwise, we wouldn't be going forward in kids.
So the insulin space has gone through a lot of changes recently, some of it, you know, politically driven, all of it you know, hopefully good for patients in terms of prices coming down, out-of-pocket costs. I'm curious, you know, have you had inbound interest from larger players over the years or more recently, interested in potentially partnering or in licensing Afrezza? Cause, you know, I can only imagine injectables are less differentiated than ever from each other.
Yeah.
And margins have to be lower than they were a few years ago in those businesses. I would think it would make total sense to bring a differentiated complementary asset in-house.
I think the new data sets might create more renewed interest in inhaled insulin because the reality is most pharmas, when a drug doesn't do well, relaunches is not what they focus on, and so I think it's up to us to turn it around. To your point, maybe there's ex-U.S. opportunities to find a bigger partner worldwide. But in terms of the U.S., I think, look, we've been able to protect our price and protect our margins, so that we can invest to grow this business, and I think that's been really important. Our patients are paying $35 for Medicare. We are part of the IRA law, and we also commercially buy it down to $35.
Okay.
We really have tried to make sure patient access is first and foremost. Worst-case scenario, we charge $99 cash. I mean, so for us, we've felt $3 a day, which is now cheaper than a Starbucks, is a worthwhile price, and so that's what we feel very confident about.
And I guess conversely, you've got a lot more going on now, and we'll talk about that in a second, but now that your factory is running at closer to capacity than ever before with your partner, do you consider that, you know, if you can't really get a hockey stick change in trajectory with Afrezza in the foreseeable future, that you say, "Our dollars maybe are better spent elsewhere," or do you really want to keep that commercial footprint in place to potentially bridge to your orphan pipeline, no matter what?
I think we believe the orphan pipeline and having the commercial infrastructure sets us up for launches, right? We focus on specialty distribution, we focus on reimbursement support, we focus on patient trainings, reimbursement specialists. This is all the infrastructure we will need to launch clofazimine and nintedanib. We think that that's really critical in terms of making sure we're successful.
All right.
Took us a couple years-
Yeah
... to work out a lot of those kinks. So
Now it's a well-oiled machine.
Yeah.
Let's talk about that pipeline real quickly, so 101, just can you remind us, what's the differentiation you're going for from Arikayce and either the efficacy, tolerability, or dosing regimen? And just, you know, how risky is it going directly from Phase 1 to Phase 3? You know, you have data there. It's a unique area with the, you know, mechanism of action. How comfortable are you? Are you pursuing speed over maybe de-risking?
Yeah. No, I think right now, outside of Arikayce, we don't. There's nothing in front of us now in Phase 3, and there's really nothing behind us meaningfully. So I feel like it's just us and Insmed to kind of build this disease and raise awareness, and hopefully improve diagnosis and treatment rates. As we look out, clofazimine is used off-label around the world for NTM. We know it worked in vivo, in vitro, right? And so we got the published data out there from people like in Japan, and we got the animal models, which really show you higher MICs and activity in NTM. Whether that's M. abscessus or MAC, we feel like both species can respond well.
And then there's other indications for clofazimine we're starting to consider as we go forward as well, in parallel to what we're doing. But I think if you ask me, the differentiation here is really this dosing regimen that we've picked for the nebulizer. So you dose it for twenty-eight days, has a very long half-life. You load the lung up, the macrophages really pull it in deep in the tissue, and then you're off drug for two months, and then you run it again for another twenty-eight days. And so at six months will be our primary endpoint. We've benchmarked our efficacy to be comparable to Arikayce in a refractory population, so call it about a 20% delta. And in this particular trial in the U.S., we're focused on sputum and quality of life.
In the rest of the world, it only requires sputum, and that's important differentiation. You know, do we get better sputum conversion? I don't know, right? We got to-
Right
... show that. But is there a high risk in going from Phase 1 right to Phase 3? There's a small risk, but I think we know clofazimine works. We know we're well above MIC, and we went with the higher dose than we had to, just to mitigate that type of a risk. And so if we're going with the lower dose, that might feel a little more risky.
Mm-hmm.
But the fact is, we knew the lower dose well covered us, and we just, because the two higher doses were even more tolerable, equally as tolerable, we decided not to risk the dosing side of that because of the speed we were going at.
That co-primary patient-reported outcome, I know this is a new area in this space. Are you thinking potentially that this much easier dosing regimen of your product versus Arikayce could actually benefit you on that front, if patients are maybe actually feeling a lot better about the experience?
Yeah
... and their, you know, dosing?
I think that's important, and even when you look at Arikayce, when they released their data last August, they measured month seven, which is one month after they're not nebulizing, right?
Conveniently.
So you saw a positive response on month seven, not month six.
Yeah.
And I think that was interesting. But I think you're trying to detect the impact of the drug versus the administration of the drug, right? And so I do think that's what you're looking for, is have you improved their quality of life and their most bothersome symptom? And I believe the way the team has gotten the FDA and the statistical plan around really measuring that impact, and the change in that impact is important. So it, it's a risky endpoint to begin with, and I'm not sure there's much you can do to de-risk it, meaning the FDA is fixated on this-
Mm
... this endpoint. It could have been just the primary. We did it as a co-primary, so we got at least a 50% shot on sputum, and a 50% shot on PRO. We'll continue to look at that. When we're 50% enrolled, we will reassess that.
The power
... the powering of the study.
Do you have an estimate on the timing of that sample size re-estimation?
Not yet. I want to see how fast sites get activated here in Q3 and Q4-
Mm-hmm
... because that's gonna be your biggest predictor of enrollment on the back end, and so as we progress this year, and we see those sites, we start seeing the screenings come in, we'll give a better update.
The company's built on this DPI technology, as well, you know, both the powder itself, the FDKP, and also the devices that are unique. But you're going with a nebulized formulation off the bat here with 101. Can you talk about that decision, and I guess, how quickly behind that, and what's the utility, I think, of having a DPI base?
When we bought this asset, there was already five years of work done, and we've been working on another four years. Clofazimine's been in development for nine years, and the fastest way to market was through a nebulizer, so we did the best we could with the dosing, and the regimen, and the speed. We weren't sure of what target dose we were going with, and so it's hard to develop a dry powder when you're not sure what your target dose is because-
Right
... depending if you're at 10 milligrams or 50 milligrams, right, that could be 12 inhalations or four. And so we wanted to kind of get the dosing down on the nebulizer and the delivered dose first, and then as we think about naive patients, for example, I think a dry powder could be more applicable, and maybe you give it once a day instead of, you know, every day for six months, as opposed to 20 days and then stop. So that's some of the work we're doing now. We have three dry powder formulations we've worked on. We'll be selecting one very shortly to go forward with.
So is that possibly refractory indication with the nebulized product and maybe go for frontline-
Yes
... with the? Okay. Very interesting. In refractory, have you ever given any guidance on how big an opportunity you think that could be in the presence of Arikayce?
Yeah, I mean, so we know there's roughly 100,000 patients in the U.S. and another 100,000 in Japan, total NTM, and if you think about the refractory population, there's about 15% patients in these markets, and growing. So I think that bucket of people will just keep growing as they kind of recycle through the current treatment options as well as Arikayce. That's just gonna keep building that market as an opportunity, 'cause a lot of these patients, even if they were treated, they relapse, and so they just either develop resistance or they're just not... They need something different.
All right, and switching to 201, your inhaled nintedanib, nintedanib, that's coming up in fourth quarter, I guess the end of your multiple ascending-dose Phase 1. Just first of all, dumb question: Is that in healthies or in patients? And I'm curious, what do you know about the tolerability of your DPI tech in patients with impaired respiratory status and maybe coughing fits already?
Yeah. So I think when you go back and say, we've studied Afrezza in over twenty-five hundred patients in clinical trials, 90% of the powder is FDKP, which is our novel excipient.
Mm-hmm.
When you fast-forward that to treprostinil, well over 90% is also FDKP, and that's used in orphan lung diseases, and a lot of those patients have COPD, or IPF, or ILD.
Okay.
You're seeing Tyvaso very successful, so you see a high tolerability of our technology and our ability for patients to inhale and deliver. I don't have any concerns at this point. Even in the trials developing Afrezza, we showed that smokers and COPD still got proper absorption of insulin. When you think about delivering drug to the lungs in our technology and what that can do, it's about that delivery system that gets the target there. Whether the drug works or not is really the question we're asking, so-
Have inhaled versions of Nintedanib been attempted before or even Pirfenidone? And if so, you know, how is your technology most likely differentiated?
Yeah. Yeah, so there's a company that developed inhaled pirfenidone in a nebulized formulation, and what that gave me was more confidence as we went forward. We had developed inhaled pirfenidone and inhaled nintedanib, and just because of resources, we said, "We don't need to develop both of these." We killed the inhaled pirfenidone and doubled down on nintedanib in terms of going forward. And that's really because they showed pirfenidone, when you cut out the oral delivery to the lung, they still got good efficacy and better tolerability. And so I think that gives you some proof of concept that delivering these drugs directly to the lung in the appropriate dose should give you the efficacy you need. And then the question on nintedanib for us was tolerability. So can we eliminate or minimize the GI side effects?
We think that's the biggest unmet need, and then the second part of that is, we know that you can't really go much higher on oral OFEV, so could we get a higher concentration into the lungs directly and bypass all the GI stuff?
Right.
That's really been our focus.
I mean, you sort of segued into my next question, which is, ultimately, you know, what do we think the goal is here? Or I guess, well, TBD, but... Is it, "Hey, we can get similar doses to oral lung concentrations with much lower dose and have a better GI tolerability profile?" Or is it, "Hey, we can actually get superior efficacy here by being able to dose higher tolerably?" And I assume those two different paths have different regulatory paths to market, but also a very different product profile in the end.
Yeah, I think we're focused on helping patients as quickly as we can first, meaning it's obvious if you can lower the dose and lower GI side effects, that this drug will be a home run. I don't think we need to demonstrate the lack of diarrhea in the Phase III program. I think it's demonstrating people can tolerate the drug and not have any safety issues and tolerability issues. If you get equal efficacy and has better tolerability, I think it's a home run. If you were to get better efficacy 'cause you could dose even higher, then I think it's bases loaded home run.
Right.
I think we're in a place that we know the drug works, we know it can be delivered to lung, we know roughly our target dose. We're going after higher doses than that, and that's our focus.
What are the potential timelines there? I guess if you're going for superiority, that might be a different pathway, but in general, IPF studies have usually 12-month safety endpoints, though I've seen different efforts of the FDA to streamline these things. You know, what are your expectations, I guess, given it's a known molecule and you're essentially just reformulating at a lower, presumably safer dose. Do you think you could maybe get a streamlined approach?
I mean, the FDA is very conservative in this disease, and so they're forcing a lot of people to do the fifty-two-week endpoints. You know, there is a belief, at least on my side, that we should be able to get a lower threshold.
Mm-hmm.
Is that gonna be twenty-six weeks? Is that gonna be thirty-six weeks? I think that's TBD. But the FDA does stress fifty-two weeks of data. So do we do a phase II, III design that you'd have the phase II go out to, call it sixteen weeks, and then bridge over to a phase III? 'Cause a lot of the trial activation cost and time is around the site activation.
Mm-hmm.
So if we can identify those sites and have a two-step protocol, that's our focus right now.
Study particulars aside, do you believe that a single pivotal study is sufficient, though, based on your understanding of this market?
Historically, it would be, and we'll confirm that with the FDA at our end of Phase I. But I think when you think about 505(b)s, we've been able to... You know, whether it's Teva or things like this, it should be a single study that would get you approval.
All right. And I think we're actually right up against our time. We didn't even get to Tyvaso DPI, which has been driving the story a lot and obviously has some potentially game-changing catalyst second half of next year. So I guess you'll have to promise to do one of these again with me before that.
Absolutely. We can do a call anytime.
Okay.
Thank you for your time.
Take care. Thanks.
Thank you, guys.