MannKind Corporation (NASDAQ:MNKD) Oppenheimer Fall Healthcare Life Sciences & Med Tech Summit September 22, 2021 2:55 PM ET

Company Participants

Michael Castagna - CEO

Conference Call Participants

Michael Castagna

Good afternoon, and thank you for joining us on our Oppenheimer Healthcare Life Sciences & Med Tech Summit today. My name is Mike Castagna, I'm the CEO of MannKind and I'm here to try give you an update, really quickly for new investors on the company and for existing investors any key updates we have.

This is our forward-looking statements. These could change from here on now. For those that are new to the company, I would like to remind people, our mission is to give people control of their health and the freedom to live life. We call our life more human here at MannKind.

We really believe that our technology helps alleviate symptoms in the moment that people can go on with their life, whether that’s high sugars with Afrezza or hopefully in the future with Treprostinil where people are suffering from pulmonary hypertension. These are areas that we can hopefully relieve these symptoms with a two three second inhalation and let people move on with their daily grind.

Our strategy is focused on two therapeutic areas, endocrine disease with our inhaled insulin, and orphan lung disease, with our partnership with United Therapeutics as well as our pipeline. We aren't limited to just inhaled dry powder. We will look for anything that we think we can make a difference in human life. And that's really important that we're just not limited to dry powders, although most of our activities are focused on dry powders with the exception of clofazimine. And I think at this point, the company, it's really important to focus, execute and deliver, as we think about all the opportunities we have to drive the company forward in the future.

We have a manufacturing R&D facility in Danbury, Connecticut with a little over 300,000 square feet, so you can make sure that if you think about the size of your house and put that in there, and our corporate headquarters with a lot of the key commercial and medical activities here are in Westlake Village, California.

We have partnerships with United Therapeutics with our dry powder formulation of Tyvaso DPI. That's currently at the FDA for review. And we have a pipeline of innovative products that we've started to work on that, you'll start to hear more about as we go into 2022.

Just think about the history and the evolution of the company, for those that may have been looking at the company, who've known the company in the early 2010-2015 range, it was really a manufacturing/inhaled insulin company trying to get their first product approved. And from 2015 to 2020, we’ve really transformed into a fully integrated commercialization company along with build out of a pipeline on our Technosphere platform. So we've done a deal with Unither [ph], we've done a deal with Receptor Life Sciences. And we sold off some non-strategic assets and oncology to Fosun for that area.

Since then Afrezza has been written by over 125,000 prescriptions through over 3,000 prescribers that write on a quarterly basis now. And as you look at, from last year, unfortunately on COVID, that's put on the world a little bit, as we looked at the next five years, our focus is really expanding our growth levers. And where we look at that is getting Tyvaso solely through the FDA approval process over the next month. From that MannKind will receive royalties and manufacturing revenue. And then they have funded two large trials on Tyvaso nebulizer for COPD and IPF that we would expect to roll over into our DPI formulation at some point in the future.

When we look at Afrezza, we're finally in a really good position financially. So now we can take some additional bets on Afrezza and hopefully drive stronger uptake in the U.S. And that we have an indication expansion we're focused on here in pediatrics, where we just had a couple of investigator meetings here in Q3, and looking forward to get our first patient enrolled any day now. So that's super exciting for the kids.

And as we think about long-term disease, and you look back at insulin pumps, you look back at CGM, a lot of new innovation and technology was adopted in children, and then moves into adults. And that's really what we think about is how do we show in our new trial we're doing here, really strong clinical results in that head-to-head against multiple injections and how does that translate ultimately as these kids grow up into adults. Hopefully, we can show people that there's a way to have great sugar control and live your life at the same time.

And then international market expansion, Afrezza is currently in the U.S. and Brazil. But we do believe there's a global market of 500 million people with diabetes that are growing rapidly, unfortunately, and there's an opportunity to help people around the world that we want to continue to serve.

On the business development front, now, we've done all this today with what we have internally, and then the acquisition of MNKD-101, which is inhaled clofazimine. That product has been something that's been used historically. We'll talk about in a second, but really excited about that opportunities as it goes forward this year in Phase 1.

And we'll look for new collaborations. We have several partnerships we've started to work on formulation deals with and hopefully we'll see some additional opportunities to use our technology in other therapeutic areas.

And as you kind of roll out the pipeline in the future, our goal is one new launch a year starting in 2025, which could be a product or an indication of invention and some of these products as they'll have multiple indications and opportunities. So over the next decade, I think MannKind is pretty well set in terms of revenue growth, opportunity growth, and it's all about execution at this point.

This is a slide I brought in to really start to show you why we believe our technology is so different than other dry powder technologies. There's two different things here to show you that the way we make our dry powder particles, they're really small microns and they're able to fly deep into the lungs and get very consistent lung penetration across the lungs. So you're able to throw all this powder in seconds across the lung that gets into the blood rapidly, and gives you an onset of action that's really best-in-class in my mind.

And we're also able to deliver a lot more patterns in lungs because of how our device and our powders are formulated to work together. What that means is we have more consistent lung distribution and you don't need as much drug to get the same therapeutic effect as you may in other parts of formulations. That are generally older, lactose blend powders that don't fly like ours.

And so therefore, if you need less drug, you get better absorption, better consistency, you may get better therapeutic effects, less side effects from systemic approaches. So we're super excited about this and now we're excited to apply it to other molecules as we go forward.

And when we look at that I'm not going to spend too much time on that. The top part of the slide is that's really about Afrezza International. And the pipeline here is Phase 3 here with Tyvaso at the FDA, and MNKD-101 is non-tuberculous mycobacterium, I'll talk about in a second, that's Clofazimine.

MNKD-201 is idiopathic pulmonary fibrosis, we've not disclosed that molecule yet for competitive reasons. But we expect next we'll move that into tox and hopefully Phase 1. And then MNKD-301 is cystic fibrosis. That's a drug called [indiscernible] that's currently marketed by Roche and we think we're similar to Tyvaso DPI, we can make a nebulizer into a DPI for DNA cell, but we think that's a real opportunity help patients living with cystic fibrosis.

And then MNKD-701, is not disclosed either for partner due to competitive reason. So super excited about those molecules and there's other things we're looking at, like Thirona Bio I’ll talk about in a second.

And then there's a couple of third-party programs that have some upside if they come through. One is using our technology in the cannabinoid space and that company is Receptor Life Sciences and they're looking to go into Phase 1, hopefully, later this year, a panic disorder.

And then we sold off some oncology assets to Fosun. And that's been fast tracked by the FDA and it continues to progress. Those are additional opportunities for growth over the next five and 10 years.

So I'm going to talk quickly about the pipeline in terms of Afrezza. Here is the -- this is our PET study, that we initiated first site next week, I guess, two weeks from now. And [indiscernible] did happen here in August, so there’s the longer [indiscernible] what happened. And our first patient we expect to happen hopefully in the next week or two there.

This is a head-to-head trial against MDI. And after 26 weeks, that's the primary endpoint, the people in the control arm will roll over to Afrezza and will get additional follow-up data for the next 26 weeks, or 52 weeks of data and then we'll follow-up four weeks. Usual follow-up after discontinuation.

So pretty typical design, I think the big difference in this study is we are making sure that we dose the patients properly on inhaled insulin versus our older studies we did that were -- that those conversions from MDI to inhaled insulin wasn't always exact and consistently done in the trials. And so want to make sure every subject gets that first dose in the office and they see how it works. And they go home on the appropriate dose. I think that's a big difference in how we bunch 1,000. So super excited to get this one off the ground and the patients start to see how we can help more.

Recently in June, we announced Thirona Bio and that's a novel small molecule here for ALK-5 kinase inhibitor. These were originally a therapeutic class designed for oncology. They had lots of challenges, systemically and side effect wise. This particular molecule came from Pfizer years ago for dermatology applications.

And Thirona is looking at keloid scarring and in their market, we have in licensed yet we're testing it for a dry powder version, make sure we can formulate it. And then number two that we think there's a model here in the modeling for pulmonary fibrosis. As this is a lung disease, we think delivering this ALK-5 kinase inhibitor directly into the lungs will show a therapeutic benefit and for successful we will have certain rights to execute a full license for fibrotic pulmonary disease.

So love the team of Thirona, it's really exciting to work with them and we also made a small investment in them as we need them to continue Dermatitis to make sure that the key things you need for new molecular entity are done such as drug interaction studies and special populations et cetera are progressing because the derm will be ahead of the pulmonary indication.

The next one is NRx Pharmaceuticals and this is something we announced last year not NRx but our desire to try to help people living with COVID. We think there's a real opportunity here for this particular product to treat COVID-19 and respiratory failure and the government are trying to help fund some of this innovation and they can possibly help dry powder formulation and show that stable. So the team is currently working on that one and obviously, if this works, we have the ability to scale it rapidly.

And we're not just this, but is there another COVID looks to be here in society for the foreseeable future. I think finding treatments that are self-administered and keeping people at hospital, that will be appealing and that's something we really want to understand because there are other ways to apply our technology to help patients as we have the ability to scale 200 million to 300 million doses pretty quickly.

Just a little more on our orphan lung space here, United Therapeutics, for those of you who have not been familiar with the story. This was a deal done three years ago, actually, a couple weeks, we announced it in September; we closed it in October of 2018. And this was $105 million deal done, all those milestones have been met.

And then recently, UT purchased a priority voucher to get this approved earlier. And that PDUFA date is coming up here on October of 2021. And there's additional indications as I previously talked about 10 conditional candidates that we work with UT on NPH that we're looking hopefully continue to progress with them in partnerships.

Now, there's also going to be a combination of BluHale, our digital technology, we Bluetooth enable our device and working with UT to bring that to market for patients, as well. So a lot going on with United Therapeutics all really positive. And that we’re super exciting, hopefully patients to [indiscernible].

What was the primary study that we did with UT on Tyvaso DPI, this was the brief study, they just recently released some results here? The top line was released in January, which is the primary objective three weeks safety trial and tolerability and you can see 96% of patients completed that no major study drug related adverse events. And then secondary objectives we saw which is improved six-minute walk test compared to baseline, improved overall satisfaction and patient outcomes.

So overall, three weeks we'll demonstrate those positive outcomes. And now we can see patients going one and two years, what's happening uptitration, what's happening to satisfaction six-minute walk test. And some of that data was recently presented. Right now we're focused on scaling up the manufacturing, building out the facility, and getting ready for an FDA approval and hopefully launch to help patients here very shortly.

Why is this important? Well, when you look at Oppenheimer's researchers and spread their conferences on the left side, you can see what they and for Tyvaso revenue growth, and this is really important, not just to MannKind, but to UT. And that could be a $1.5 billion asset in the next four years.

And so that's the blue area here and on the right side, you can see RBC Capital recently shown what they think the DPI market, that's one of the most common questions we get is, how fast will convert and how much level will be UT and how much of the MannKind product. And so we're not giving guidance, specifically released, you can see some independent research and what they're projecting out here.

So very similar sales numbers. And you can see the breakdown on DPI, hopefully versus Tyvaso. And we'll see where this goes very shortly, hopefully with the FDA.

I’ll now switch over to clofazimine and why we brought this product in and the CEO of the company is now our Chief Scientific Officer. When you look at bacterial infections, one of the things you look at is synergy as well as bacterial recovery. And you can see here that day one and day 27 versus sailing control, versus clofazimine, orally delivered in a tablet, which has many drug interactions and systemic absorption issues.

It was a challenge and when you look at MNKD-101 delivered via the nebulized route and 99.99% reduction in bacterial recovery is huge. And you can see how fast that works in 27 days, versus what we see in a sailing control versus the oral tablet. So we're super excited to get this into Phase 1 and move that quickly and then hopefully go in the Phase 2 rapidly after that.

So far on this in the last year, we've now completed two tox studies on 28-day dosing with recovery for to go through 84 days, the protocol is set for Phase 1. And the studies expected to start here with a sad mad arm taught by PK endpoints. And the preparation for GMP drug supply in Phase 2 will move forward in so many positive results here.

On the endocrine space, I'm going to swap over to Afrezza, for those who don't know Afrezza was approved and launched here by MannKind in 2017. It's indicated for type one diabetes and type two diabetes. It was taken at the start of a meal, so there's no guessing about the timing of your meal. Really looking to improve the outcomes at the end of the day. And so some of the work we've done recently is using Afrezza with CGM, and that is really shown people value time and range and is there a correlation between time and range and outcomes.

And so it's unique mealtime insulin and because it's unique, it takes a lot more effort to change the standard-of-care than we'd like. But the reality is we do believe this will become the standard-of-care at some point in the future. Because when you look at the challenges people face with mealtime control 80% of people aren't goals I'll show you in a second.

And how does Afrezza work and what are the ingredients. I always like to remind people, we have these particles called FTKP. And when human insulin and water and we make them in an acidic environment, and that's called Technosphere, insulin, and then once you inhale, that your lungs are basic environment, and this associates the FTKP, from the human insulin, the human insulin gets thrown into the body with a fist up into the pulmonary bloodstream and you really see that this works very, very quickly there, the rapid area the lungs is half the size of a tennis court.

So you're really starting to see almost IV like insulin response here through the pulmonary bed. And that's something that we really think is differentiated and the fact that the drug is binded in a monomeric state as opposed to a hexameric state, which means it's active when you inhale, versus has to break down for roughly 45 minutes in an injectable form, are what really differentiates us from the market products today.

On the use of technologies, I mean, I think this is something that the whole entire diabetes space has focused on the last 10-20 years is developing insulin pumps and CGMs and hopefully faster injectable insulin. All these technologies are trying to make up for the challenges that come with injectable insulin, and even T1D exchange, which tracks data from top diabetes centers. You can see over the last decade, that patients are actually getting worse their onesies are going up despite the adoption of pump use, despite the adoption of CGM.

And the reason is daytime mealtime control is still a challenge and 70% of the contribution to day time control through a role control is mealtime control. And that's why we believe Afrezza has a unique opportunity that we've not given up yet, because 80% of the people after 20 years of taking injectable insulin are still not changing their outcome of goal they want to see. And that's really what we see as the unique opportunity that we can deliver on that I will tell us we get to repeat study.

And why is that? Well, this really goes into the physiologic nature of Afrezza. And the blue shaded areas what a normal healthy pancreas looks like in terms of one set and offset of the of the insulin.

And you can see Afrezza in purple here in terms of the one set and offset really mimics that physiologic need. For injectable insulin, you can see has a bit of almost 90 to 120 minutes before you start to see the peak effect and then it's in the body for four to six hours. And that's really the big challenge when it comes to managing your diabetes. Your sugar is clear and your food clears and your sugars are getting back to normal and you still have insulin hanging around. And that's really what we're trying to solve for with Afrezza.

And where are we today commercially. So we've demonstrated a lot of new data published -- a lot of old data published, but a lot of new clinical data sets have been present over the last three years, we've gotten a base of prescribers of roughly 3,000 a quarter now, you can see our scripts are grown each year, even despite COVID we grew year over year, and 2021 continues to grow this year last year.

So continue to progress despite many headwinds against us. And we've taken the last year to upgrade a lot of our key opportunities in terms of as we had turnover, bring in some great talent from other companies and really take us to the next level.

So UT profile has been well established, it's been FDA approved in 2014. And we are now looking towards possible pediatrics as well as exploring gestational diabetes as we go out there.

Just a quick update near term in Q2, we did see 6% growth over Q1 was a lot of activities we turned on here in Q3 really starting to increase our patient our digital opportunities we did a lot on the social media, we did a lot of sponsor accountability and racing.

And a lot of HCP education, I think this is key to our future is how do we get HCPs healthcare providers to understand the clinical data, understand the scientific differentiation, and understand all the reimbursement programs we've put in place to help patients. So I think these are all really, really important in terms of execution here in Q3 and beyond.

And then as we go to BluHale. This is continuing to progress here and we've shown this data in the past, which is those who have never had any clinical experience with Afrezza felt their conference was about two out of five and then once they showed the BluHale device and trained with it, the conference goes way up.

So we are meeting with FDA very shortly to understand as we go forward BluHale is become a regulated device or as a device we can use. That's not telling you anything to treat, but more telling you what you actually did in Retrospect. So that discussion will happen here in the next quarter and then we'll have some clarity on the direction of BluHale and timing as they get them done.

And then you can look as MannKind with revenues of 8x since Q1 of ‘17. So we started our first quarter we did about 1.2 million on Afrezza and don't read too much into the 10 number here in Q4 to Q1, the Q2, because a lot of that’s inventory and demand, but overall demand has continued to go up each year, quarter-over-quarter as we look at the future, there's nothing stopping us from continuing this growth trend as we go out over the next 10 to 20 years. So we see that we're uniquely positioned to continue to help patients in a really effective way. And the investments we're making should help continue to drive this growth in the coming years.

As we look at Q2, net revenue, increased 43% and collaboration increased 64%. So that's really important year-over-year. We continue see progress here in our collaborations and working with other parties. And total revenues went up 54% year-over-year, and year-to-date up 30%. So these are pretty big numbers to deliver year-over-year growth. And if you look back at our quarterly and annual reports, you see that we've been growing double digits for a while.

And this is due to collaborations with United, collaborations we haven't announced in some of that formation work we're doing. And there's a lot of excitement here in the pipeline, and what's happening across the company.

On the IP side, a lot of people ask us, how long we're going to be here we have many different patents going out into the 2030s. We have all the patents pending that we think carry us as we can look.

And so it's not just the IP part of the company, but the fact that we have a lot of knowhow and we've employed people for 20 years, making dry powders that gives us a unique competitive advantage. And that hundreds of millions of dollars have been invested in building the technology custom for us, that doesn't exist anywhere else in the world. So we continue to think that we have a differentiated platform that will help patients across many different diseases.

We just take a step back and talk about 2021 milestones we laid out most of the ones in green and blue here, were original, and then a couple of the black ones popped in that we weren't planning for that happened. And so we really are excited about companies executing against everything we've laid out and committed to.

So here in Q3, we are pre-launch commercialization production that started we are expected here approval in Q4 nebulized Clofazimine should go in Phase 1. Pediatric trial first patient first visit here, and we have additional cash available in the event that we needed for the future.

So we're in a really good spot. I hope you found this presentation valuable that you become a shareholder today and if you're not, thinking about becoming one and if you are one, hopefully you continue to maintain our increased share position or company. But really excited about the future we're in one of the best positions we've ever been in with multiple opportunities on growth [indiscernible] as we go forward.

So happy to take any questions you can always reach out to us at IR@mannkindcorp.com and look forward to hopefully engaging our shareholders as we go forward more. Thank you.

Question-and-Answer Session