Good afternoon and welcome to the MannKind Corporation Third Quarter 2026 Financial Results Earnings Call. As a reminder, this call is being recorded on November 5, 2026, and will be available for replay on the MannKind Corporation website shortly after this call for approximately 90 days. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties that may cause actual results to differ materially from these expectations. For further information on the company's risk factors, please see Form 10-Q for the period ended September 30, 2026, the earnings release, and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer Mike C astagna and Chief Financial Officer Chris Prentiss. I'd now like to turn the call over to Mr. Castagna. Please go ahead, sir.
Thank you, operator, and good afternoon, everyone, and thank you for joining us for our Third Quarter 2026 Earnings Call. I'll start with our quarter highlights, then provide some business updates while Chris walks us through our financial results, and I'll provide some closing remarks. Last quarter, I told you we had delivered all three catalysts we laid out for 2026. This quarter is about what comes next, moving from delivering catalysts to executing against them. Before we get into the quarter, I want to take a step back and look at how far MannKind has come. Five years ago, we were a company with roughly $75 million in revenue and one commercial product. Since then, we've grown revenue at a compound annual rate of more than 40%, and this year, we expect to be close to six times that size.
What I'm most proud of is how we've grown. We didn't get there on a single product or a single deal. First, our collaboration with United Therapeutics took off, and Tyvaso DPI became a blockbuster built on our DPI technology, and its royalties and manufacturing revenue has funded our transformation. Then we used this foundation to expand our commercial business, and today, FUROSCIX and Afrezza are leading our growth. That growth is now reaching the bottom line. We expect record revenue in Q4 will drive us to profitability as we close out the year, and none of this reflects our pipeline or external business development opportunities that can drive faster inorganic growth. Today, MannKind isn't a single-product story anymore. We're a diversified growth company with four FDA-approved products, no near-term IP cliffs, or a concentrated risk on any one brand or therapeutic area.
Today, we have three value engines driving growth. Each one plays a different role. First, we hit the key milestones laid out this year, and our commercial launches are growing nicely. FUROSCIX ReadyFlow is off to an exceptional start, with rapid conversion from the On-body Infusor and new patient growth, and the Afrezza pediatric launch is seeing strong early adoption. Second, our license agreement with United Therapeutics provides MannKind with cash flow that funds the development and will start to drop to the bottom line in 2027 and beyond. We anticipate $15 million in milestones from ralinepag DPI in 2027. Third, our DPI platform provides upside. This is long-term value creation. nintedanib DPI is our lung-targeted approach to IPF treatment, and key clinical evidence investors should look for is the data readout we're anticipating in the first half of 2028.
And with our out-licensed programs, Tyvaso DPI and ralinepag DPI, give us three potential paths in the IPF. Now let me hit the exciting highlights for the quarter. FUROSCIX ReadyFlow was approved, and by late October, roughly 75% of FUROSCIX shipments had moved to ReadyFlow, exceeding our internal expectations by several quarters. The marketing sales team did an amazing job, and it tells you physicians and patients were eager for this product. The Afrezza pediatric launch has exceeded all of our internal forecasts, including institutions and healthcare provider adoption, as well as our total prescriptions. In addition, average monthly new-to-brand prescriptions were up nearly 80% in Q3 compared with Q2, returning the brand to growth. On the pipeline, we reported positive phase I-B results for nintedanib DPI. INFLO-1 demonstrated the safety and tolerability, especially around cough in patients with IPF.
Several countries have now approved our new phase II protocol, enabling us to get clinical readout faster. And finally, we closed the $50 million private placement led by Frazier Life Sciences, which funded the $45 million CVR payment triggered by the ReadyFlow approval. This is a strong endorsement of our strategy from a high-quality, long-term investor. Now let's step back and look at the first nine months of the year. Total year-to-date revenue was $301 million, up 27% versus last year. Commercial product revenue from Afrezza and FUROSCIX more than doubled from $52 million to $112 million, up 116%, and royalties grew 8% to $103 million. The majority of our growth is now coming from products we promote, which will provide long-term sustainable revenue where we can bolt on other BD and pipeline opportunities to drive even faster growth in the coming years.
Yesterday, United Therapeutics put up excellent numbers for Tyvaso DPI, which returned to growth in the third quarter with $379 million in sales. On the call yesterday, they described stronger underlying demand, more consistent commercial execution, and increased adoption of higher-dose cartridges. Importantly, UT also pointed to an improvement in referrals beginning in September, with further benefits from its expanded commercial organization expected in the fourth quarter and well into 2027. Our royalties were $37.5 million, up 16% versus Q2. As the sole manufacturer of Tyvaso DPI, we continue to benefit from both royalties and manufacturing revenue. This recurring cash flow funds our diversified growth strategy that investors will start to see in Q4, as we expect this quarter to be the best quarter in the history of MannKind. Now let me turn to business updates, starting with FUROSCIX.
FUROSCIX ReadyFlow fundamentally took an administration that used to be measured by number of days in a hospital to seconds at home. This radical shift matters to patients and prescribers and will fundamentally transform how health systems think about managing fluid overload in the coming years. And I'll share with you some new market research we just conducted in a minute. We began shipping ReadyFlow mid-September, and in six weeks, nearly 75% of the prescriptions have already converted to ReadyFlow. The majority of patients starting ReadyFlow are new to brand, and more than 1,600 prescribers have written their first prescription. These are all encouraging signs this early in the launch, and we expect to see faster growth for the balance of the quarter and estimate Q4 sales should match the entire first half of 2027. How big can FUROSCIX be? Our independent research we just conducted with L.E.K.
reinforces the opportunity across nearly every stage of the fluid overload journey. For patients, the value is treatment outside the hospital with easier access and affordable out-of-pocket costs. For providers, it is another option to manage fluid overload, supported by clearer patient selection and dosing guidance and evidence of value to health systems. For shareholders, the opportunity is broader adoption and long-term growth. The research points to roughly 1 million patients annually at each stage, with physicians indicating they would prescribe FUROSCIX to a significant share at each of these stages. To capture this opportunity, we are focused on three priorities: generating evidence and practical guidance for physicians and IDNs, building awareness and expanding our reach in nephrology as well as IDNs, and simplifying patient access through hub and distribution improvements.
When you look back a year ago, we purchased scPharma, where analysts had forecast peak sales of roughly $500 million. Today, with the ReadyFlow approval, along with our incredible team leading us forward and the rapid adoption by prescribers, we are more excited than ever about the opportunity to help transform the management of fluid overload and the growth ahead. Now let me turn to Afrezza. Afrezza generated $19.3 million in net revenue in the third quarter, up about 5% versus third quarter last year, and total prescriptions grew 17% sequentially. Pediatric patients now represent about one in four Afrezza prescriptions, and the pediatric launch is now returning the brand to growth. I also want to be candid about our adult business, which has underperformed this year. There are three reasons why this is.
First, turnover in our field team slowed activity with some of our key prescribers. Second, several new insulin pumps launched in type 2 diabetes, which created more competition for the same patients. This was compounded by our third, which we can now look back and see, Afrezza is promotionally responsive, as our share of voice in adults was declined about 65% as we diverted our resources across the pediatric launch and nephrology to support FUROSCIX. As we look ahead to 2027, the opportunity to build on that early pediatric demand while re-energizing and focusing on the adult business will allow us to return the brand to growth. The early adoption of the pediatric launch picture is strong. Four months in, Afrezza's share of the pediatric mealtime insulin prescriptions is more than double its share in adults.
We never reached that share in the adult market, and in peds, we got there in a matter of months. Also, average monthly new-to-brand prescriptions for Afrezza are up nearly 80% versus the second quarter. In fact, Q3 alone came close to matching new patient starts for the entire first half. That is the trend we are focused on building upon. Behind that foundation is in place is more than 2,000 pediatric patients who have been treated since launch, with roughly 600 pediatric prescribers, and all 60 of our priority pediatric institutions have now prescribed Afrezza. We continue to see institutions adopt Afrezza and create back-to-school protocols as patients are now starting to return after having early success and creating a flywheel that we hope will continue to drive further growth ahead. With that, I will now turn it over to Chris to discuss our financial results.
Thanks, Mike, and good afternoon, everyone. Third quarter total revenue was $101.9 million, up 24% from $82.1 million in the third quarter of 2025. The headline this quarter is our continued diversification of our revenues. Commercial product revenue was $45 million, with the addition of FUROSCIX roughly double the $22.3 million in the prior year quarter, making commercial products our largest source of revenue. At the product level, FUROSCIX generated $22.4 million in net revenue. ReadyFlow shipments began in mid-September, and September was a record month for both prescribers and prescriptions. As Mike noted, demand shifted to ReadyFlow faster than we expected, and that pace tempered reported revenue in the quarter as patients and prescribers moved to ReadyFlow before the product was available for dispense. Additionally, based on launch inventories available, channel inventory was limited to just days. We estimate the transition reduced third quarter revenue by roughly $3 million.
With ReadyFlow now moving through the channel, we believe FUROSCIX will generate more revenue in the fourth quarter than it did in the entire first half of 2026. This is important, as ReadyFlow has a meaningfully lower cost of goods than the On-body Infusor, so the faster we convert, the faster that margin improvement flows through to the bottom line. Afrezza generated $19.3 million in net revenue, up 5% year over year, with total prescriptions up roughly 17% from the second quarter, driven by the pediatric launch. Because of our pediatric access program, which runs through the end of 2026, prescription growth is running ahead of revenue for now. That said, more than half of pediatric prescriptions are already being reimbursed by insurance, and converting the rest to paid coverage is a priority as we head into 2027.
Our United Therapeutics revenue streams complement the growing contribution from our commercial portfolio and continued investment in our pipeline. Royalty revenue increased 12% to $37.5 million, driven by growth in Tyvaso DPI. Collaboration and services revenue was $19.4 million, compared with $26.5 million in the prior year quarter. As a reminder, UT sets its order quantity on an annual basis, thus quarterly fluctuations are a reflection of the timing of deliveries within the year and not a change in anticipated annual order volume. We continue to estimate that collaboration and services revenue for the year will be consistent with the 2025 total. Stepping back to the first nine months of the year, total revenue was $301.4 million, up 27% from $237.0 million in the same period of 2025. Commercial product revenue was $120.9 million, up 90%. FUROSCIX contributed $60.1 million, driving the growth in commercial revenue.
Afrezza was in line with the prior year at $51.6 million, but the trend improved after the pediatric launch in June, and the brand returned to growth in the third quarter. On the collaboration side, royalties grew 8% to $102.6 million, driven by continued growth in Tyvaso DPI, and collaboration and services revenue up $77.9 million, which was in line with the prior year. These collaboration revenues have allowed us to build a diversified business. Two years ago, the majority of our revenue came from United Therapeutics. Today, commercial products are a growing share of a larger revenue base with a durable collaboration business underneath it. Turning to the bottom line, GAAP net loss for the third quarter was $23.2 million, compared with net income of $8.0 million in the third quarter of 2025.
For the first nine months, GAAP net loss was $58.9 million, compared with net income of $21.8 million in the prior year period. In terms of our 2026 results, a significant component of our GAAP loss was non-cash and tied to the scPharma acquisition. In the quarter, that included $11.6 million of expense related to the CVR and $5.2 million in amortization of acquired intangible assets. Year to date, those two items totaled $33.3 million. As we've stated previously, 2026 was an investment year. It's not often a company of our size gets the opportunity to invest in two launches, as well as reach an important development milestone in our MNKD-201 program. Based on our progress to date in the current quarter, we expect to return to profitability in the fourth quarter on both a GAAP and a non-GAAP basis.
Based on the product set we have today, we expect to be profitable in 2027 on an annual basis, while continuing to invest in the growth of our commercial products. With that, I'll turn the call back over to Mike.
Thanks, Chris. Let me turn to our pipeline, the third value engine I described at the start. Everything in our pipeline starts with Technosphere. Our technology is built for highly efficient delivery to the lung, and it's proven. It's already used in two FDA-approved products, Afrezza and Tyvaso DPI. That's an advantage most companies developing lung therapies simply don't have. Why does that matter? Patients today face a trade-off. Oral therapies in IPF bring systemic side effects that cause many patients to stop treatment, and nebulizers are a real burden in a chronic disease. Our platform is designed to avoid both. It's practical, it's portable, it's handheld, and takes seconds, and no nebulizer setup, cleaning, or maintenance. When a patient may be on therapy for years, how a treatment fits into daily life determines whether they stay on it in the long term.
IPF is a disease where we see a role for more than one approach, and our platform lets us pursue several of them. That gives us three paths in IPF. Tyvaso DPI, through our UT license agreement, is already a blockbuster, approved in PA and PH-ILD, with a future potential expansion opportunity in IPF as well as PPF. We remain excited about the growth and opportunity that has to help more patients than ever. Nintedanib DPI, which is wholly owned by MannKind, is a proven molecule now paired with demonstrated tolerability in IPF patients, and a large global phase II study is now underway. Ralinepag DPI, also partnered with UT, is a next-generation prostacyclin with multi-indication potential progressing towards IND. Three potential paths in IPF at different stages of development, all built around our platform, all point to meaningful upside ahead.
Now I want to focus on our nintedanib DPI, which brings me to our INFLO-2 global phase II trial. It is a 12-week placebo-controlled study of two doses in patients with IPF, followed by a six-month open-label extension. Based on what we learned in phase I-B, we streamlined the study to about 150 patients. We believe this will get us data faster and help inform our phase III program. We are starting to see countries approve our updated protocol and are now in the process of activating our 85 sites around the world. We expect the data readout in the first half of 2028. Let me close with where this leaves us. We delivered on three catalysts in 2026, and we are more excited than ever about our growth ahead.
I started today with three value engines, and I want to end with them, because each one has real momentum as we head into 2027. As Chris said, our commercial product revenue is growing, led by FUROSCIX ReadyFlow conversion, as well as the pediatric launch. Our UT license agreement will continue to provide an expanding revenue base that we estimate will provide more than $1 billion in revenue from 2027 through 2030. And our pipeline gives us long-term upside with three potential shots on goal for IPF. Looking ahead, our upcoming milestones line up with the same three engines. First, we keep innovating on the products we already market. Next year, we expect approval of AFREZZA two-unit cartridge, launch InhaleIQ, a connected Bluetooth device that will bring CGM integration for AFREZZA users.
Beyond that, we are advancing FUROSCIX 40 milligram auto-injector pen and a high concentration AFREZZA that will bring us hopefully 16 and 20 unit cartridges and reduced powder per inhalation as we go forward. Each one strengthens our brands and gives prescribers and patients more reasons to choose them. Each of these milestones is an opportunity to create value as we move through 2027 and into 2028. This month, we will be in London for the UBS Global Biopharma Conference, followed by the Jefferies London Healthcare Conference. We are looking forward to continue the conversations with many of you over the next couple weeks. Now with that said, operator, I will open up for questions.
Thank you. At this time, if you would like to ask a question, please click on the raise hand button, which can be found on the black bar at the bottom of your screen. When it is your turn, you will receive a message on your screen from the host allowing you to talk, and then you will hear your name called. Please accept, unmute your audio, and ask your question. We will wait one moment to allow the queue to form. Your first question comes from the line of Ben Burnett of Wells Fargo. Please unmute your audio and go ahead.
Great. Thanks so much. It looks like you are seeing an acceleration in FUROSCIX scripts, which is really interesting, if I understood that chart correctly. Just curious if maybe you could quantify that growth, and also, where is this coming from? Are these current FUROSCIX users that are now using FUROSCIX more just given the ReadyFlow, or are you seeing the ReadyFlow being adopted in new treatment settings?
Ben, I think we lost you, but I think I got your questions. I think your first question was the growth in prescriptions is about 56% growth from post six weeks of launch versus the prior six weeks. So we feel pretty good about that growth, and some of that growth was limited by the first inventory coming in was a little bit short-dated, so the next inventory that goes out the door next week has longer dating. The patients are new to brand, meaning they have no history in the last year of getting FUROSCIX, and we also saw a significant jump in prescribers coming from nephrology as well as cardiology prescribing for the first time FUROSCIX.
I think a lot of the growth is also coming from new prescribers in addition to new patients, and we attribute that to the increased share of voice on neph as well as the continued focus here on cardio. Where we are not seeing big growth is in the IDNs because we actually were not really trying to ship ReadyFlow to them, so they are holding back some of the OBI business in terms of where it is going to ReadyFlow. But otherwise, the growth is coming from new starts, new-to-brand patients, and new prescribers.
Okay. That is fantastic. If I could just also drill into the comments around profitability. I think you kind of touched on this throughout the call and at the end, but I just wanted to understand kind of what the level of focus is on profitability kind of going into next year as you think about spending on the pipeline. Should we be kind of looking for a focus more on sort of revenue growth, or is profitability, is that a focus kind of going forward?
I'll pop over to Chris.
Yeah, I would say the focus is still on driving revenue growth. We're still very early in the journey on both of our commercial launches. I think the point is 2026 was the big investment year, so 2027 is when we should pay that off through growth on revenues, a stable, I would say, investment on the expense side, which should lead to bottom line improvement and profitability on an annual basis, not necessarily in Q1.
Okay, great. Thanks so much, and congrats on the quarter.
Thank you.
Thank you, Ben.
Your next question comes from Rainer Ruiz at Leerink Partners. Please unmute your line and ask your question.
Yep. Thanks. Afternoon, everyone. So follow-up on the ReadyFlow question. I was curious if you're considering expanding the field force in the near term and possibly devoting more resources toward promotion to build on the momentum that you're seeing early out of the gate? Along that, are you thinking about any key launch metrics that you would want to watch that could trigger such investment?
Yeah. I think we were waiting on two things, that have now come to fruition. The first one is the L.E.K. report coming in, kind of giving us the roadmap of growth that we see in front of us. We felt pretty confident, but it was nice to see that now really articulated out. There's obviously another 100 slides behind the one I showed. So we feel very good that there's a roadmap of data generation, sales force expansion, and IDN adoption that will play out over the next six, 12, and 18 months. The other part is the conversion of how fast ReadyFlow to OBI was going to come from OBI, and how many new prescribers and new patients are coming in.
I think the great news on all those metrics are, the conversion happened faster than we expected. I think the sales force did an amazing job there in the first six weeks. The second part is that expansion provides a lot more margin to the bottom line, which gives us a lot more flexibility, because obviously there's a big cost benefit between the two products. We do expect to increase our share of voice and our sales force footprint going into 2027.
Yep. Super helpful. Then another question on Afrezza and the pediatric launch. I was curious, at what point do you think the inflection in pediatrics could offset any possible pullback in the adult trajectory? Could you highlight any of the strategies or education efforts that you're pushing that are getting the most traction with pediatric prescribers of Afrezza?
Yeah. I think on the adult side, we did several things this year that contributed a little bit to that decline, mainly around share of voice and reallocation of those resources in the field. Some of that decline was really driven by two top prescribers with the turnover in the field. I would say that has all stabilized. It's now behind us. So I think as we look at Q3, Q4, we should continue to expect to see adult growth, and that turn the corner going into next year. On the pediatric side, we continue to hear new protocols being put into hospital systems, new hospital systems come on board, more deep depth of prescribing. I think just last week, we had a record high in pediatric referrals into our hub. So we feel like we're still in the beginning stages of this pediatric launch.
I think you'll see the adult return back to growth, and that'll be compounded positively by peds. Some of that'll be offset a little bit as we exit the $35 cash pay program this year. Going into next year, we do not intend to keep that. But the good news is half the, excuse me, half the pediatric prescribers were coming from non-targets, roughly. What I mean by that is, the social media work, the radio stations, the conferences, the Instagram videos coming out from patients, that is continuing to drive a lot of demand and awareness out there. So it's exciting. So I do believe everything we continue to see and hear and do is educate nurses, educate CDCES educators, as well as continuing to go deeper within the institutions that have adopted.
Yep. Sounds good. Thanks.
Your next question comes from the line of Andreas Argyrides with Chardan. Please unmute your audio and go ahead with your question.
All right. Fantastic. Congrats, guys, on the quarter. Thanks for taking our questions here. Regarding INFLO, the roadmap puts that readout in 2028 or later. Just curious what's driving that timeline for a 12-week study. What are the enrollment targets. Is there any interim look. Beyond safety, will you report FVC or other exploratory efficacy measures. Then I have one follow-up.
Yeah. I think the number one thing, Andreas, is really the change in the protocol. Some of the countries, we were already in the middle of submitting the initial protocol, and we decided to wait for those to get approved to modify the protocol. In a couple countries, we didn't yet submit, so we waited till the final protocol was done, that we modified going from 220 patients to 150 patients. The good news is, so far, I think we got four or five countries already approved on the new protocol. The rest are pending, but the new protocol is now in, I think, everywhere. We also have a big meeting coming up next week with the FDA, and that will help decide some of that timeline here.
Meaning, if the FDA does agree to one of our requests, then we would add U.S. sites to the trial, and that will pull the timeline even faster. But until we have that clarity, we are kind of sticking to the first half 2028 as our expectation. And again, maybe that could be earlier if the FDA comes our way, or sometime that first half if it doesn't. So, we feel pretty good about that. There will not be any interim analysis or resizing. It's really looking at safety tolerability with early reads on lung spirometry, FEV1, FVC type parameters. So, those will be the key attributes we will be looking at. It will be a Bayesian borrowing part of the trial, so we will be able to bolster up the control arm a little bit in terms of looking at the statistical support there.
All right, great. And just quickly on ralinepag DPI, you have got a milestone expected next year. What triggers that? I am assuming it's some type of clinical development milestone. Beyond those, what are the economics, royalties, manufacturing revenue, or both? Is it structured like Tyvaso DPI? To whatever you can explain on that. Thanks.
Yeah. I think there are two things on The royalty is 10%, just like Tyvaso, so that's clear. Manufacturing, UT has publicly indicated they intend to be the sole supplier of ralinepag, and they built that facility. I just saw it a few weeks ago. It looks amazing. That facility should be making commercial supplies of ralinepag, when and if it's approved. Whether we are making the clinical supplies or they are making the clinical supplies, I think is still TBD, as they may want to do that in their new facility, or they may need us to help get that done. So that's all still under discussions. The milestones aren't disclosed around what they are, but they are obviously things that are in our control somewhat. But we have As long as this program's moving forward, we have reasonable confidence that those will come in in the first half.
All right. Appreciate it. I will hop back in the queue, and congrats on the quarter.
Thank you.
Our next question comes from Olivia Brayer at Cantor. Please go ahead with your question.
Hi. Good afternoon. Thank you for the question. For FUROSCIX, how are you thinking about patient and specifically revenue growth from here, just given what you are seeing so far into the fourth quarter? Are you guys seeing a real-time inflection into October and November, or does that market still need to build before we really start to see more of a ramp-up, looking to next year?
I think you heard our comments in that Q4 should be roughly equal, plus or minus a little bit, to the first half, and that puts you in the $38 million range. So, I think we are pretty confident in that number, and we are five weeks into the quarter, roughly four weeks. So, let us see another few weeks. But the biggest thing was getting the new dated inventory in stock and out next week, because some doctors were either hesitant to prescribe, or if the patient is going to pay the copay, they want to make sure they can use it beyond the next seven days. So, I would just say that that will help drive, I think, faster growth as we close out the quarter.
But we are seeing it come from broader prescribing and broader adoption in neph. I think then we are going to open up IDNs a little bit more in the rest of the quarter, so that again will drive faster growth. But so far, it is coming from a lot of good places and a lot of good execution on the front lines.
That is helpful. Then on inhaled nintedanib, maybe just to follow up there around how you plan to communicate whether you will be incorporating U.S. sites into that study. I assume it will take some time to get those sites up and running if that does happen. So, is the potentially faster enrollment with the addition of those sites, is it because there is a high level of enthusiasm for inhaled nintedanib-type approaches, or is it more just about adding additional capacity and sites there?
Yeah. I think it is both, number one. We have an update at Jefferies as well as UBS, so we will be speaking about it there. We should know the FDA high-level feedback by then, so we will be happy to share that once we have clarity as well. But the acceleration, I will tell you that the team did an incredible job here in the closeout of the phase I study, where the U.S. sites put a record number of patients in four to six weeks. Those are the same sites we want to get in the trial for phase II. They were very interested in participating. They were very happy with the tolerability, and we think that will be great to have those sites on board, plus another eight or 10 that we would add across the U.S.
I think it is the enthusiasm plus the expansion and the experience we already have with some of those sites and the speed at which they can enroll. So, all that gives us a little bit of confidence on how fast the U.S. will add to our success of getting this trial done quickly.
Okay. Awesome. Thank you, Mike.
Thank you.
Your next question comes from the line of Gregory Renza at Truist Securities. Please go ahead.
Hey, guys. Congrats on the progress. Thanks for taking my question. Mike, maybe just touching back to your mention on the collaboration side and the royalty growth. How should we think about the Tyvaso DPI royalty growth, maybe separately from the manufacturing and the collaboration revs over the next two years? Are any competitive developments altering or influencing your production plans, be it your capacity needs or expectations for that partner revenue stream? Then I have a follow-up. Thanks.
Yeah. I think the good news is, us and UT have been working pretty closely on the inventory. We are comfortable with any increase in demand that we will be able to supply. We get our orders a year in advance. We tweak them quarter to quarter on strengths and things like that. Otherwise, we feel pretty good about the order volume for next year. I think that should be able to supply any upside cases in the market, and if we have to go higher, we will be prepared to do that. Obviously, with the settlement with Liquidia and UT's comments yesterday, we feel pretty confident Tyvaso DPI is going to do very well in Q4 as well as next year. So, we will be prepared to make sure we supply anything that comes our way on that one.
I think it just shows you also that this royalty is going to be pretty durable in the near term that we can see, and even the midterm, when you kind of roll everything through. So, we remain excited about manufacturing this for UT, but more importantly, helping the patients out there that will benefit from our technology.
Got it. That makes sense. As you and Chris talked about 2026 as an investment year, but also as you have really executed on two important launches for the company, as you think about, and you have been communicating even on the call today- your look externally or business development. How does this year sort of inform the levels of what you are looking for and maybe your appetite for external business development to maybe complement the launches that are underway, and also as you get to data in INFLO in 2028?
Yeah, I think one of the key things we wanted to see, right, this is the first time in really ever MannKind's history we were able to launch something from scratch in the case of ReadyFlow, and in the case of peds was a new indication that we could really launch from scratch. I think what we can see in our excitement is the capability of preparing for a launch, executing a launch, and seeing the results of that feel very positive in the first quarter here of where we are. That gives us confidence to look for other opportunities to bring in. On the BD side, each year the conferences and the agenda for people wanting to meet with us gets pretty large, and we find ourselves having to sift through a lot more ideas.
The other challenge is that there is a lot of things that come our way, but we got to make sure it is meaningful enough as we look out, because if it is going to just do $20 million-$40 million, that is not going to be enough for shareholders or our distraction. We really need meaningful opportunities coming in in front of us, and I think those are the types of ideas we will be looking for. We have plenty to execute now, but we are not against bringing in new ideas if they come our way. So, we continue to search is the short answer, and there is plenty of ideas and opportunities out there.
Got it. Makes sense. Thanks again, and congrats.
Thank you.
The next question comes from Brandon Folkes at H.C. Wainwright. Please go ahead with your question.
Hi, thanks for taking my questions, and congrats on the quarter. Maybe just firstly from me on Afrezza. Can you talk about the pushes and pulls in getting pediatric patients onto paid scripts? Just how different is the reimbursement cycle, I guess, here? Is it more similar to a new product launch, or was it a lot smoother just given this was sort of a label expansion? Then, as we sort of move forward into 1Q of next year, do you envision those challenges increasing just with deductible resets, or do you make progress every quarter and sort of you're able to improve as we begin 2027 from where we are today? Thank you.
Thank you, Brandon. Great to hear from you. I think on the push-pull in peds, the first few months where we could see some payers updated their criteria and knew the approval hit came and others had to follow. We have seen that, if you look at May, June timeframe approval rates and we look at October, they've definitely gotten much better. I think the other thing we saw that was a little bit of a surprise is how many patients went into the community setting, meaning not our pharmacy network, and we're seeing pretty good approval rates out there on fully paid scripts coming from that segment. So whether that's the doctor pushing the PA through or the patient using it, where when it came to us, we were filling for $35 first to get it out the door and then doing the PA.
In some cases, the patients are using it on top of a pump, so they're not in a rush to get the prior auth. They don't need the prescription right away. In other cases, they were using it full time and they were anxious to get it covered. So, we see some of the delay in coverages around how they were using it, and then also our hub ability to execute, to make sure they have all the information to submit the prior auth properly. So all that, I think, is now working in the right way. We've expanded some of the resources there on the reimbursement support, and I think we'll continue to see that progress.
The other thing that I'd say is going into next year and beyond, we've had several meetings with a lot of the payers around coverage of Afrezza and the cost benefit versus an insulin pump, for example. I think we're hearing that we should be able to get criteria updated to at least be a single step, meaning you tried and failed the preferred injectable product as opposed to, in some cases, we hear two or three steps of injectable products. Honestly, they're all the same, so it's kind of unethical to make the patient fail the same drug three, four times. So the nonprofits and the advocacy organizations are aware of that. The payers are responding to this request to at least minimize it to a single step. We're okay if it's injectable once first. It's cheaper. We get that.
And so far, that feedback seems to be positive. I think as long as we keep getting those updated, that is going to continue to improve the approval rates that do come through and make it easier. In terms of Q1, deductible resets are less of an issue for Afrezza than they are for FUROSCIX. On the Afrezza side, we ultimately see a Q1 dip more because people just fill an extra prescription at the end of the year as they go into the new year because they know they got new deductibles and they just try to maximize their insurance and their healthcare spending accounts. I think that is a bigger driver in Q1. Commercial copays, we buy down to $35. Medicare has a small reset, but that is a smaller percent of our business. I see less of an issue there on Afrezza.
Maybe with the pediatric launch, we overcome some of those historical trends, but we will find out. Where FUROSCIX, that reset on Medicare is a big barrier to patients where they almost would rather go in the hospital than pay the out-of-pocket cost, which is unfortunate. We are hoping ultimately CMS will issue some guidance here to help close that gap or that payers and health plans will start to see that that is driving up their cost, not shrinking their cost. But we do see patients trying to fill enough to carry them in the beginning of the year. But that is the phenomenon there for FUROSCIX that is different than Afrezza.
Great. Thank you very much.
Thanks, Brandon.
Your next question comes from the line of Yun Zhong at Wedbush. Your line is now open.
Hi. Good afternoon. Thank you very much for taking the questions. The first question is, do you have plan to maybe at some point break out sales from OBI versus auto-injector? For those patients who have not transitioned, are there any specific reasons that they are not switching? I have a follow-up question on Afrezza, please.
Yeah. Chris, I do not on the OBI and AI.
I think based on how quickly we are seeing patients and physicians both convert to the auto-injector, not sure it is going to be meaningful to have that breakout. There is probably a bit of both in Q4, but by the time you get into 2027, it looks like the vast majority will be on auto-injector.
Yeah. I think we'll have inventory through 2027 on OBI, and at this point, we probably will see 90% plus scripts in Q4 coming in via auto-injector. Then the institutions as they come online for January with the IDNs, that's probably where the remaining OBI is sitting. Then I was asking the field force, is there anything you're hearing of why a doctor would either write both products? Are they identifying a separate patient for OBI versus auto-injector? I'm not hearing any cases of that.
I'm not saying it's not happening, but there's no rationale we're hearing from the field of, Hey, a doctor would rather write this versus that, or this patient type versus that. I think the reason you're still seeing some OBI use today is either we haven't gotten to that office or gotten in to service that office, or they're part of the IDN direct purchase program. Again, we haven't allowed them to purchase any ReadyFlow until October, and that was mainly because of the dating of the product. We want to minimize any returns in that dating. We should be through that particular situation by next week.
Okay, great. Very helpful. On Afrezza, specifically related to adult patient, you say that it's a promotional sensitive and the reallocation of resources caused some decline, but you expect sales to rebound then. Is it through maybe adjusting resources or maybe related to your previous question, do you have a plan to maybe make a little more investment to expand the size of sales team to achieve higher revenues? Thank you very much.
Yeah. Two good questions. I think you will get there. The team is still working through this for 2027, but conceptually, what I think you'll see is the ReadyFlow territories that sell that brand are quite large, and we'd like to kind of shrink those over time so that they have less travel distance, less state boundaries. I believe that you'll see with the increased volumes and bringing nephrology into that particular audience, we had separated that earlier this year. We've now added it back to the cardio team. So they're calling on neph and cardio, and we think the ReadyFlow team can get there by expanding a little bit and covering both. We would then have freed up some capacity on the Afrezza side where they can still target more of the peds and double down on the adult segment.
We had pulled a lot of adult targets out of the pediatric, I mean, out of the adult sales force to free up capacity, and I think that is an area where we still have a dedicated peds sales force and we have a dedicated adult sales force, and I think the team will look to see what is the best optimal framework for that next year. We think continuing to have pressure on peds is important, and we think bringing more into that adult segment will be important as well. I think you will see more similar investment and capacity and a little bit increased investment on the FUROSCIX side.
Thank you.
Okay. Anything else?
Your final question.
Thank you.
Your final question of today comes from Sahil Dhingra at RBC Capital Markets. Please go ahead. Your line is now open. Please go ahead with your question.
Okay.
There are no more questions at this time. I'd now like to turn the call over to Michael Castagna for closing remarks.
Thank you for all your questions today. We know we had a few analysts drop off, probably went a little long, and they had other calls as well. But we appreciate everyone joining us this afternoon. I'm really proud of what our team has accomplished this year. It's been a very busy year, many long hours, nights, and weekends, and I just want to thank all of our employees for the extra work that they've put in to get us to this point. I think that you're seeing the hard work that got us to where we are on the launches, but there's still lots of work ahead of us going into 2027. We look forward to updating our progress in the next quarter.
We'll obviously expect to be meeting investors here in London in a few weeks and continue to update where we can on the FDA communications around INFLO-2. With that, operator, we're going to close the call. Thank you.