Morning, and welcome to the MannKind Corporation Third Quarter 2022 Earnings Call. As a reminder, this call is being recorded on November 8, 2022,
and will be available for
playback on the MannKind Corporation website shortly after the conclusion of this call until November 22, 2022. This call will contain forward looking statements. Such forward looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, please see their 10 Q report filed with the Securities and Exchange Commission this morning, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna and Chief Financial Officer, Steven Biner.
I would now like
to turn the conference over
to Mr. Castagna. Please go ahead.
Good morning. This is Mike Castagna, and I hope you can hear me okay. Okay. Good. Sorry, Peter.
Okay. Sorry, we're having technical issues. I just want to make sure everybody could hear me before I get started. Good morning and thank you for joining us for our earnings call today. Today marks the beginning of the new mankind.
You can start to see our execution from a single product to a sustainable growth company. We've never been more excited about our future than now. When you look down, you see 4 sources of revenue growth and 74% growth quarter over quarter. Our liver and lung business is really starting to shape up as you look at the collaboration and service revenue with Tyvaso as I'll talk about with plafizumab moving forward. The endocrine business is also doing well at double digit growth 28% quarter over quarter with Afrezza and V Go revenue.
When you look into orphan lung, we're well positioned with Tyvaso BPI growing significantly as we go forward and colizumine starting to enter patients hopefully in 2023. Our EVU is growing year over year, but in Q3 we made some changes and integrated V Go and start to as you'll see in a minute that we started to make As those changes took place, we started to grow our market share month over month and quarter over quarter. In the TAVESO side, You'll see our Q1 of commercial manufacturing. One of the first questions I get is this full manufacturing? The answer is no.
This is just the beginning. The Q1 of commercialization by UT, our royalties earned were about $6,000,000 which is significantly higher than Wall Street expected. Our capacity expansion is ongoing and quickly progressing here in Danbury. On our pipeline, we have reported out in September our Phase 1 results We're generally well tolerated up to 90 milligrams, no significant adverse events or QT prolongation, and we're planning to meet with the FDA here in late Q4. We're very excited about this program and excited to get this product to patients.
On Afrezza, really focused on PACE TRx, which grew 10% year over year at 4% Q3 to Q2. On INHIL-one, we're currently on track to hit our goals for enrollment this year with an expectation of completing enrollment by mid next year and results 6 months later. We also will be presenting our ABC results very shortly, which is the Afrezza basal combination trial where we switched some patients off a pump, we added Afrezza to a pump, where we maintained the people on the pump. On the Veeco side, we feel good that we stabilized the revenue and we're ready for growth. Overall, we have the $178,000,000 of cash to fund our growth and our 5 year plan.
Here's a quick picture just to see the team in Danbury working through making our devices 20 fourseven, not just devices, but also product and dry powder cartridges. It's very exciting time for people of mankind and our future. With the purchase of V Go, we really do become the mealtime solutions company. Let me start off by talking about Afrezza and what we're doing to kind of continue to grow market share there. We pivoted this year to focus on a subset of Doctors as well as ultra acting analog insulin, U RAA.
And So that market share, as you look amongst our key targets, has continued to grow after years of decline and watching our competition continue to take ultra active market share away from us. And we believe we're reaching for a faster insulin and Afrezza should be the fastest insulin of choice. And with that refocus this year, we've continued to grow market share quarter over quarter, month over month. When you look year over year, very excited that the new Rxs are a leading indicator of our TRxs and you can really see the NRx growth Q1 to Q2 to Q3, where we had 18% NRx growth year over year and how that translates to the TRx growth we will report it year over year. On the V Go, we gave guidance of $18,000,000 to $22,000,000 when we purchased this asset.
We're on the higher end of that expectations with revenue of $5,400,000 here in Q3 and we continue to see positive momentum of V Go here in Q4 and we're planning to implement this into 60 additional sales reps in January of 2023. We stabilized the TRx decline that's been happening for over 18 months and exited Q3 around 1200 TRxs a week. There's additional business units with Batrafol and Symphony in distributors as well as some of the TRICARE accounts. V Go will be in a P2 position for the Afrezza sales force as we exit this year's guidance to next year. So people ask me what does that mean for product segmentation.
We just got the ABC results and market research telling us where we need to fix on Afrezza to continue to accelerate the growth. We expect to focus on 2023 on a narrow focus on a set group of providers that write both V Go and Afrezza, which is around 3,000 providers. Additionally, we want to make this business a cash flow breakeven and really choose to win where we choose to play. On the Afrezza side, you'll continue to see us focus more on Type 1, younger population, commercially insured, endocrinology focused. On the V Go side, we continue to focus on Type 2 for patients looking for a simple way to deliver their insulin to basal control.
Older population typically Medicare at endo NPPA PCP. The bottom right corner shows you Afrezza will be a P1 target for our core sales force and Type 2 will be a P3 target and V Go will be a position 2 target in that sales force. As we go forward, We're very excited about the Endocrine business unit, our pipeline I'll talk about at the end of today as well as the impact Tyvaso is going to have on the future of MannKind. I will turn it over to Steve. Thank you.
Thanks, Mike, and good morning. I'm pleased to review Select's Q3 and September year to date financial results. Please supplement this call by reading the condensed consolidated financial statements and MD and A contained in our 10 Q, which is filed with the SEC this morning. This is the 1st full quarter of revenue activity across all four sources of commercial revenue. Afrezza Vigo for our endocrine business and Tyvaso DPI Manufacturing and Tyvaso DPI sales royalties for our orphan lung business.
Looking at how our business is growing year on year, please focus on the bottom of the table, where it shows we had a 48% increase in total revenues, which amounted to $32,800,000 for the Q3 of 2022. Breaking down the Q3 by source of revenue, Afrezza net revenue was $10,800,000 versus $9,800,000 in 2021, a growth rate of 11%. The increase was mainly driven by price, including a more favorable gross to net percentage and higher patient demand with paid TRx growth of 10%, partially offset by wholesale inventory ordering patterns, which resulted in lower channel inventory levels for the Q3 of 2022. Lower channel inventory levels have been recurring theme this year as we have seen channel inventories lowered by approximately $1,100,000 in the 6 month period ended September 30, and almost $2,000,000 since a year ago at September 30, 2021, which has adversely impacted our revenue our net revenue growth this year. We believe that the Afrezza channel inventory levels have likely hit their minimum maintenance balances and shouldn't lower much more.
Year to date Afrezza growth came in at +13%, which was mainly due to favorable price, including a more favorable gross net percentage, higher product demand and a more favorable cartridge mix. Next is our net revenue for V Go, the recently acquired wearable insulin delivery device where we had $5,400,000 in net revenue for the 3rd quarter $7,500,000 for year to date, which represents the 4 months of June through September. We expect Zio net revenue for the 12 months post acquisition to be in the range of $18,000,000 to $22,000,000 and we are tracking to the mid to high end of that range. Moving to collaboration services, revenue for the Q3 was $10,300,000 versus $12,500,000 for 2021. The main driver of collaboration revenue has shifted from the amortization of United Therapeutics milestones in 2021 to Tyvaso DPI Manufacturing revenues in 2022.
Included in the Q3 of 2022 collaboration and services Revenue number of $10,300,000 is $9,900,000 of Tyvaso DPI Manufacturing revenue. The September year to date revenue of $18,400,000 is mainly lower in 2022 versus 2021 because of the prior year UT milestone amortization and the first half twenty twenty two deferral of revenue associated with the delay in the start of Commercial Manufacturing. In addition to UT related revenue recognized in 2022, We had $32,200,000 of deferred revenue on the September 30, 2022 balance sheet associated with United Therapeutics, which we recognized to income through 2,031, which is the remaining term of the commercial supply agreement with United Therapeutics. And lastly, we recorded royalties on sales of Tyvaso DPI by United Therapeutics to their customers. The Q3 was the 1st full quarter of sales of Prabaso DPI by UT and we earned $6,200,000 of royalties for those sales based on a low double digit royalty.
United Therapeutics released 3rd quarter earnings last week. And on their earnings call said that the Physician engagement and enthusiasm around Tyvaso DPI is extremely high and we continue to manufacture on a 20 fourseven basis to supply UT. I consider MannKind to be a new commercial growth story. The next slide shows our revenue growth quarter to quarter for 2022. Moving from the left to the right, we grew total revenues from $12,000,000 in the Q1 to $18,900,000 in the 2nd quarter, a 58% increase and then grew total revenues from $18,900,000 in the 2nd quarter to $32,800,000 in the 3rd quarter, a 74% increase.
Our quarterly revenues grew almost 3x from 1st quarter to 3rd quarter. Driving the revenue growth are our 3 new sources of revenue, Tyvaso DPI Manufacturing revenue, royalties associated with the sales of PIVASO DPI and sales of V Go. We're pretty pumped about the future revenue growth potential across all four revenue streams. Now let's look at the profitability of our endocrine products, Afrezza and V Go. Afrezza gross margin increased from 61% in the Q3 of 2021 to 81% in the Q3 of 2022.
The gross profit associated with Afrezza increased to $8,700,000 in the quarter. The increase in the 3rd quarter gross margin versus 21 was due to an increase in Afrezza sales coupled with decrease in the cost of goods sold mainly due to a decrease in excess manufacturing capacity costs. When looking at the profitability for September 22 year to date, Afrezza had a gross margin of 75% and gross profit of $23,600,000 driven by higher sales and lower cost of goods sold, mainly due to a decrease in excess manufacturing capacity costs and a $2,000,000 fee incurred for an amendment of our insulin supply agreement in the Q2 of 2021. Please note that there will always be some variability in Afrezza gross margin between quarters due to the timing of manufacturing spend and activity as we are not at maximum production capacity. The far right table shows V Go September year to date gross margin of 44%, which is about where we expected the margin to be.
Let me conclude with some final comments around liquidity and performance. We ended the Q3 with $178,000,000 in cash, cash equivalents and investments. And with our growth across all four commercial revenue streams, We're able to invest behind our pipeline and strategically behind Afrezza and V Go. Our collaboration with UT is tight And the Tyvaso DPI launch is off to a strong start. I feel like the company has turned a corner.
We are focused on maximizing the potential of our collaboration with UT. We are focused on profitably growing our ENDICRIM business and we are focused on developing and bringing innovative products to patients from our emerging pipeline. Thank you. And now I'll turn it back over to Mike to review key milestones and provide a pipeline update.
Thank you, Steve. Great summary, great future. So looking over the next 18 months, I'm just going to share a couple of things that have a good purview on the endocrine business unit and where we are with Afrezza. First, we launched a quick start program to get patients started quickly here in Q4 to pilot that as we get ready for next year to help scale our business. In 2023, we fully expect that Afrezza will be covered in Medicare as $35 under the Inflation Protection Act Bill that was passed.
That changes the game is one of the major objections for Afrezza around access. I really want to continue to see that patients only have to pay $35 for Afrezza and is not assured we'll have a low cost cash program available. We expect to finally launch Bluehill Viz, which is our patient addition integrated with CGM in Q1 as a pilot with a full scale launch in Q2 next year assuming that goes well. Simplus fully enrolled in a Type We expect that readout to happen by Q3 next year and then inhale 1 readout for PEACE could happen late Q4 or early Q1 at the latest. I'm going to bridge over to our MannKind pipeline.
This is a position that we started 3 years ago when we look at the orphan lung business. In 2019, we decided to pivot and focus on Orphan Lung as we thought that was the best opportunity to help patients. Hearing the patient stories on non tuberculomycobacterium as well as TABASO DPI are heartbreaking, but we are fundamentally going to extend and enhance people's lives as it comes to using our product and our technology to give them the freedom to live their life. With clofazamine, we are fully engaged in getting this ready for FDA submission in terms of a Phase 2, hopefully 3 study, that's one study. On latatinib, we're progressing that rapidly into a Phase 1.
On 301, the team is working hard on the formulation. We're almost ready to go to the next stage there. And the TGF beta will be getting Final study report very shortly in the next couple of weeks. On the cannabinoid program, RLS just released recent data and they're going forward with their second trial. And on nifostim, we continue to watch that progress in the oncology space.
One of the things I was talking to some investors yesterday was how do we start to help people understand our pipeline and the I think this slide is in good summary. When you look at NTM, pretty much a big unmet need, most of the drugs are generic and have severe toxicities. Competition is narrow and our market value for this is in the $3,000,000,000 to $4,000,000,000 range. We look at this as about 58,000 patients ultra orphaned here in the U. S.
With 15,000 in treatment as well as Japan is another large market for this opportunity. In the IPF space, the market is littered with failure. It's a very tough disease. It's called idiopathic pulmonary fibrosis because it's very hard to treat, very hard to diagnose, very hard to get a consistent patient population. However, we believe the only 2 products approved are natinib and profanazone give us an opportunity to reformulate natinib in an orphan lung delivered product, where we know one of the brain limiting side effects of natinib is the dose related adverse events that cannot dose much higher.
We're excited about this as there's 100,000 patients at IPF who need more options. On the cystic fibrosis side, I was actually privileged to be at the CF Conference this past weekend, hearing all the great progress and life expectancy that's been extended in this patient population. Despite the life expectancy extension, there's a subset of patients who continue to be sick and there's a subset of patients who continue to have exacerbations and infections. In fact, one of the conversations there was the fact that people's lungs are getting better are masking the infections because these patients are no longer producing sputum. And how do you continue to treat infection if you can't culture this view.
These are great opportunities and challenges to develop drugs in this space, I think they'd point to the unmet needs in the CF community and the interest that the CF Foundation has in our product pipeline as we go forward. As every year we lay out all of our milestones, we feel pretty good that we're on track to hit all of them. Nothing here is surprised. And in Q2, we released the 101. Pretty soon, we'll be on ABC results and the MannKind firewall results will be in short.
Q4, we're lined up to have a great quarter, Close-up the year strong and get ready for 2023. I'll stop there and get ready for questions.
And our first question comes from Brandon Folkes with Cantor Fitzgerald. Your line is now open.
Hi. Thanks for taking my questions and congratulations on another very good quarter. Maybe just 2 from me. You talked about The manufacturing on TinyBase are running 20 fourseven. Can you just give us an update in terms of how you sort of have been with Staffing, obviously, we've had staffing challenges across the board in 2022.
But do you have the staff there? Do you have sort of The ability to kind of ramp up should this strong ramp on TADHIC DPI continue. And then maybe just a point of clarification, I think you mentioned 60 additional sales reps that are going to target they're going to detail FICO. Are these current reps that you have detailing Afrezza or are these new hires to the company?
Great, Brandon. Thank you for dialing in this morning. Just to answer that one easily, it's our existing infrastructure. We bought V Go not to add a ton of more infrastructure to the diabetes business, but to leverage the existing infrastructure we have. So we have 60 current Afrezza salespeople across the country and we'll be dropping V Go in that bag around late January.
So that hopefully clarifies that one. On the TAVESO 20 fourseven manufacturing, fortunately, we've had a really good year of staffing, very low turnover And on the ramp, the real issue on the ramp is continued production. I think that's the biggest thing is When equipment starts and stops, that's when we have headaches. When equipment is running 20 fourseven, it actually gets more efficient over time. And so I think that's really where the team is focused on is making sure As you ramp up production, that equipment continues to manufacture and fill cartridges at the right we need.
And then hopefully, we get better on the supply chain in terms of packaging and shipping to the pharmacies. So we don't anticipate having to hire more people in the near term for production outside of the scale up facility. Remember, we're building a major expansion at Danbury and that facility requires some extra employees next year, which will be reimbursed by UT. So currently, we've already worked with UT to anticipate upside demand and we will make sure we're able to supply that demand in 2023.
Thank you for both of those. Do you mind if I just sneak one more in? Just given your strong cash balance, I know you talked about you mentioned sort of getting investors to understand your pipeline. But How do you think about capital allocation going forward just given sort of the strong position you've built in the company on your balance sheet now? And then that's it for me.
Thank you.
Yes. And I think that's a question we just had with our Board last week around the future of the company, the 5 year plan, priorities for investment. I think the way we look at the company is continue to run the diabetes business on a tight leash in terms of budgets and returns for our money that we're spending there. We think the pipeline has a huge amount of opportunity and we also will look for external automation. We haven't We're really decided on which of those focuses will be priority for 2023, but we do believe Afrezza and V Go are off to a great start.
We do believe there's some milestones in that business unit that will give us some information that should we invest more in 2024? Should we invest harder in pediatrics? Let's get the data let's let the data drive some of the uptake of Afrezza as we go forward in the 2024. We also believe you'll start to see V Go as a platform. I I think that's something I don't want to talk about now, but as we get ready for next year, that's probably where some of that capital can go, which is how do you repurpose V Go outside of diabetes.
We think it's a platform device that can be leveraged for other products. So that's an area that we're looking at. And then I think in the future, is there investments in automation? How do we bring down our cost structure across the company given the inflation, the impact on employees and the growth we have, we got to get more efficiencies out of the company. So is there ways to And that's to bring more efficiencies in the future.
For example, one of the decisions we'll make today is around lab automation and manufacturing automation on data and how to transfer us from a manual process to a digital process. So things like that bring efficiencies as we continue to scale the company as we go forward. Steve, I don't know if you have any additional comments on that. That's good, Mike. I hope that answers the question, Brent.
Thank you.
Thank you to you both and congratulations on all the progress.
Thank you. Thank you.
Thank you. And our next question comes from Gregory Renza with RBC Capital Markets. Your line is now open.
Great. Good morning, Mike and Steve. Congrats on the progress on the quarter and thanks for taking my question. Mike, just to perhaps piggyback on the previous question when it comes to capacity, I'm just curious if you could maybe provide just some additional color or highlights just On that process through which you intend to meet the advancing demand, any color on the runway through which you can lock down product currently, how that engagement works? And maybe to be Peter Rick, you've mentioned the collaboration with Euther is It's healthy and engaging and strong.
I'm just curious, do those engagement points change? Are there ongoing touch points that I'll provide that closeness for anticipating the demand and meeting the supply now that the product is launched and underway, say, versus the previous development process. Thank you very much.
Yes. There's really 2 things when it comes to Production number 1 is how much product can you spray dry and what is that yield? And second one is how quickly can you fill that cartridge per minute? And currently there's 2 different rate limiting steps in that process. And as we continue to build efficiencies on the cartridges per minute, one of the product Production lines next year that will be coming in online hopefully will be the fill finish part of the cartridges.
And that will then the brain doesn't expect to be how much powder can we produce The other part that's shifted a little bit is the dosing. So probably more naive patients than UTA expected. But on the flip side, higher dose patients also as they titrate off in ILD. So we kind of got both ends of those spectrums and 64 unit cartridge, for example, It requires 4 times as much patterns of 16 units. So that those are some of the things that drive production volume and time and capacity that we've seen a balance as we're in this initial launch phase.
The good news is every week we can adjust that production volume, we can adjust that with the packager. There's no limitations in the short term that we can see As we continue to watch the launch phase every week, we talk to UT Weekly. We feel good about where we are, great communication, collaboration and continue to prioritize the most needed packaging, for example, to get this to patients to make sure there's no stock out. So far, everything is really tight and going very well. On the capacity side, we are we ordered equipment, the manufacturing build out is happening And we continue to see that the rate limiting factor is really the construction as opposed to equipment, which is what you hear from many other companies I'm buying stuff these days.
So we feel pretty good about getting the expansion done next year, getting it ready for 2024. And when we built the factory, we anticipated high end of demand where we are and we anticipated ILD and PH. So we have enough production capacity By the market from where we are today that we can see. I think that answers the questions there.
Absolutely. Thanks So much helpful color and congratulations again.
Thank you. Thank you. Thank you, Greg, for coming to the business.
Thank you. And our next question comes from Steven Lichtman with Oppenheimer, your line is now open.
Hi, this is Ron for Steve Lichtman. I just wanted to ask if you can you guys can give a bit more of an update on the Blue Hill launch. Are you seeing any easing on the Chip shortages that you spoke about in the past, what's you gave a new timing for 2Q 'twenty three. So and if you can please remind us about the opportunity you see for Blue Hills? Thanks and congrats.
Thank you, Ron. I want to make sure I heard your question properly, sorry. I think you asked for any shortages on Tyvaso launch
And No. Sorry. An update on Bluehill and you've talked in the past that Some of the issues with the launch were because of chip shortages. And are you seeing anything with that? Because we heard from other Companies that are shortages have been eking up a little bit.
So I wondered if that affects you as well. And if you can remind us about the opportunity you see for Bluehill.
Sure. Yes, so on the chip, yes, so Bluehill was in terms of large scale production, but it was limited by chips in the short term. The chip the main chip that we were using became obsolete and so we had to reprogram the motherboard and redo all the Bluetooth technology around that. We're on our next iteration that's almost done or should be wrapping up shortly. So we have enough units we'll be able to make for Q1 launch.
By the time we get for Q2 launch, We believe that chip shortage and parts shortage should be behind us, at least in the short term. That should not be our rate limiting factor. Much worry about the reliability and consistency of the device, the patient feedback and the patient experience. So we feel like that's the most critical part of Fluhail. The Protosymp looks great.
The app looks great. The team did an amazing job. And I think it's going to be really nice for patients. We're just working through the last minute device Finalization and technical aspects there, but otherwise, it looks like it should be ready to go in 2022.
Thanks. Just a follow-up, could you remind us about the opportunity you guys see for
Bluehill? Opportunity, I think the real opportunity is as we continue to go deeper in Type 1s, we know technology and dosing and feedback loops are important. And so that's really where we're really repositioning Afrezza. We tried for a long time to help Type 2s. The Type 2 market got really crowded With especially modular launch, we just feel the best place for Afrezza to win is really in that type 1 market.
Yes, we'll be able to get the pumps and Omnipod. So if we think about Omnipod's success with the pay as you go model, Afrezza fits right into that mindset. And I think with the data sets that we're seeing, People do want faster insulin, they do want faster control, they feed on their CGM. We think Afrezza is really well positioned and with the PEAT study readout, we think that's going to reinforce a new data set in Type 1s. And we also know from the market research that the more doctors get used in Type 1, they will by default use it in Type 2.
And now with V Go, we think that's a natural segue for them. They've already used that phone. They really like the device and being able to have nice simple device for Type 2 is a nice growth opportunity. So we feel really good about the co positioning of those assets and really providing
Thank you guys. Thank you so much and congrats again on the progress.
Thank you.
Thank you. And our next question comes from Robert Hazlett with BTIG. Your line is now open.
Thanks. Thank you for
taking the question and congrats on all the progress. It's terrific to see. So 1 or 2 for me. 1st on gross margins for V Go, I think 40% to 45% was where you said that came in and that was in line with expectations. Is there an opportunity for expansion of gross margin with that product?
Love to hear the what the potential is there?
Yes, I think there is. We just met with Jeffrey, the Head of Manufacturing yesterday. It's going to require some automation investment, but that's when I think the earlier gentleman asked me on capital allocation. These are the types of things we can now do when we have to 5 year view on capital allocation. Short term is always hard to make any investments in the company because we were just focused on survival.
We think now, we are focused on gross margin, we are focused on profitability, we are focused on advancing the pipeline. So we got to make these plants now as they come to fruition. I think when you look back in the last 5 years, where we made the risk based decision to bring play based on DPI forward, we made the decision to continue to vet the pediatrics and Afrezza. Those decisions are paying off now. And I think the same thing is true over the next 3 to 4 years.
How do we V Go will be here as we expect to invest in that product. And you're right, the gross margin can be improved through automation and manufacturing. We're also going to look at gross to net as we go into 23 and understand, are we getting the value from the payers that we expect in terms of formulary access and restrictions Laura, they make it easy for patients to get access. I think these are all really important attributes to continue to help those 2 products get more profitable. Terrific.
And then just one on the pipeline with regard to clofazamine. If you could just touch on what the goals are for that program? Is it to Reduce the AEs, maybe the skin AEs you see with the product in Different routes of administration and what are next steps and we're going to see any data anytime in the Near future in terms of publications of the results you have. Thanks.
Yes. Well, first, I just reviewed a publication last night that's getting accepted to one of the journals. So that's exciting. It's our first animal data and if reviewer comments were really positive around the unmet need that clofazmin Nebulization is going to bring the patients and so I thought that was really positive. The Phase 1 data is just wrapping up and coming in with a complete study report.
We'll publish that data as well showing the dose range effects and what we see in terms of dosing. And then I think the FDA feedback will be critical here in Q4. We have a meeting set up for late December. That should give us the green light to go forward in the Phase twothree design that we've laid out. That doesn't mean the FDA is going to agree with it.
It doesn't mean all the endpoints are going to be aligned, but we hope to be able to find some commonality with the FDA because there's a big difference with clofazamine or any of the NTM assets between how the Japan Japan thinks regulatory wise from a fume conversion and the FDA will still form and function. And so we think lupazimic can improve both, but as you know, this disease is very hard to treat and it takes a while to get those types of results. It doesn't happen in 2 to 3 weeks. And so that we feel good. In terms of what we want to improve on clifazamine, I think levazin is an incredible drug that's underappreciated.
And the number one thing as you think about it is the accumulation of toxicities Because of the long half life, we really will be reducing that through our dosing regimen and our dosing to the lung. I think the skin discoloration, you nailed it, that's a big one for patients. But we don't foresee that issue so far in our dosing. We haven't seen any complaints. We don't expect that to be an issue.
And then really just getting deep into the lungs and getting a very high concentration above MIC, we feel like that's going to give patients the effectiveness that they want without the systemic side effects. And lastly, the QT prolongation, that's a known side effect of glufazmin. We have not seen that on our highest dosing patients yet after 7 days and we feel really good about that safety profile given our dose. So I think clobazamine overall should be a better safer product for patients That really treats that lung infection at the site. It's very hard to penetrate from the oral route administration.
So we'll stay at the big need and we think the struggle helped
Terrific. Look forward to more progress there. Thanks.
Thank you, Rick.
Thank you. And our next question comes from Thomas Smith with SVB Securities. Your line is now open.
Hi, everyone. This is Mike on for Tom. Thanks for Congrats on a really strong quarter. On TAVASA VPI, can you provide any color on the preliminary commercial and manufacturing trends that you're seeing? And if you'd expect some seasonality in the Q1 of 2023, are there other dynamics that you kind of flag for investors trying to get a sense of the potential ramp here?
Yes. I think one thing I'll say Mike is, at least from our investors I've talked with a little bit, people are watching Symphony data and I think that's Okay. And to get some direction, but I don't think UT has a very close distribution network. So not all those scripts probably show up in And the framework out there. So we can't we can always say so much, right?
This is UT's launch. This is their product, their revenue. We are just the manufacturer and trying to make sure we keep up And so we don't see any we don't anticipate any problems there. We're doing a decent job. The team really looks at the inventory, the demand, the Product shipments every week, a lot of constant communication.
So I think we're on top of it. Things will always happen beyond our control. We can't see. But as of now, I think every week we get the orders, we look at the demand, we can adjust our supply chain pretty quickly. And it takes about 30 days to get through a batch in terms of we make it and by the time it's released and packaged, It's about that time.
So we can adjust pretty quickly on that demand forecast. I think what you heard from UT, which I thought was very encouraging Is of the patient referrals coming in 50% were for nebulizer, 50% were for DPI. And I thought that was a fairly good statistic because we know That this is going to continue to grow. It's going to be $1,000,000,000 plus product and how much of that becomes DPI is the $1,000,000,000 question. And obviously, we feel pretty good about that.
And if you heard the patient stories and freedom that they're getting, I think it's going to be a no brainer that more and more people want this. I think the other question I get around this topic is, Where do you see the market? I think the good news is the Medicare Part D, I know that's one of the reasons UT feels there's some limitation on conversion, But that whole closes in 2025. And so those patient out of pocket costs will be capped about $125 a month roughly. And That will create the next leg up.
So anyone that doesn't convert that's on Medicare, for example, will have that opportunity in the next 24 months to get there. This is a tough disease. People aren't going to die and they don't want to die. And so they really want to extend their life, enhance their life for the remaining years they have. And Tabeso DPI is doing an amazing job changing those lives.
I mean, I just wish our shareholders and our investors and our analysts could hear the stories of the patients and the doctors have been Extremely motivating and positive and our team is so encouraged by the feedback that's happening. It just gives us that much more motivation for our pipeline There really are changing lives and extending lives. So it's just super exciting times here.
Got it. Yes, I really appreciate the helpful commentary there. And then just a separate one for me. With respect to Afrezza, you really did a nice job kind of laying out the important Kind of milestones that you have coming up there, is there a certain one in particular either clinical or regulatory that you think could be important We're seeing that next leg of growth for product sales.
I think next year is really an execution year. Every year we try to do something different to try to spike growth on Afrezza and we just seem to travel along and then COVID hits for a couple of years and I don't think it's fair to investors to Guessing where Afrezza is going to go. So what we really have done for the business is purchasing V Go, integrating those 2 next year and really just focus on execution and alignment. If we have an asset in a franchise that's going to do $80,000,000 to $100,000,000 and grow 10%, 20% a year for the foreseeable future, that's a good business for MannKind. And so we will continue to hope the data re ups demonstrate upside opportunities.
But I think being real about where we are if there's much time of getting this to be a profitable division for the company, helping as many patients as we can and really placing some strategic bets and pediatrics is one of them. We believe kids is where you're going to change Type 1 care. We think being able to show you as good as an AID system will be important. Those are the attributes that we're focused on. Those aren't going to happen in the next 6 months.
But those are really the key milestones we're looking at saying, How does Afrezza do in kids? That really could be the game changing opportunity to transform growth in 2024. And the data readout in India will be important, but a little less so important, meaning, I think important for India, but we're really focused on Afrezza type 1s. And so the India studies for type 2s, That will be nice to have additional data set to support what we think is a great drug for type 2s. But recognizing there's 1 point 5,000,000 people live with Type 1 diabetes or half the insulin market.
We got to the kids opportunity first to get that really Our foundation built work with JDRF a lot more in the patient walks and raising our awareness out there in the society. There's still too many patients not aware In type 1, especially that in yields is not an option. And so we think we just when we look at next year, it's really about making sure Afrezza is a choice amongst the doctors that we're targeting. And I just think we're not the choice set. We're like number 8 out of the 8 things they could do.
And we got to move up that ladder a little bit. And year by year we'll get better from the ground up. But we have a map, we have a plan and we got the team to do it and I feel very good about 2023 with the team we have.
Great. Thanks very much again for the color and congrats on the strong quarter.
Thank you. Thank you.
I would now like to turn the conference back over to Michael Castagna, CEO, for closing remarks.
Thank you, Daniel. Overall, monumental quarter for the company, super excited about where we are with Tyvaso. The company is in the best shape it's ever been. We got the best talent we could possibly have. We feel really, really good about our future.
We continue to make change and pivot us for the next 5 years. Afrezza and V Go will be great in 2023 in terms of pivoting to an endocrine focus, make sure that business is a cash flow positive unit by the end of the year. I think on the pipeline, you're going to see really nice progress over the next 12 months of moving assets from preclinical formulation stage into Phase 1, Phase 2, Phase 3. And we think that's going to be a monumental opportunity for investors to start to really understand that value. Just like Tyvaso for years, we had signed a deal with UT in 2018.
No one really appreciated it until probably 2021. And I think when you look at the pipeline, we started this progress in 2019. I don't think we have a lot of value or attributes on the pipeline. I think you're going to start to see that come out over the next couple of quarters and we think that's a nice upside for investors where we are and ultimately position the future of the company. And Entyvaso is just going to continue to rock the world.
It's just a great product. It's helping a lot of patients. UT is doing an amazing job. We will do everything we can to make sure we stay ahead of the demand curve and build that inventory to make sure we can supply to patients. So overall, great year.
Company is well positioned for 2023. It will be a great year. It's a tough economy, tough biotech investors, but we feel MannKind is well positioned for investors that double digit growth for the foreseeable future. We're very excited about where we are. Thank you.
Thank you. This concludes today's conference call.
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