MannKind Corporation (NASDAQ:MNKD) Lytham Partners Summer 2021 Investor Conference June 14, 2021 11:45 AM ET

Company Participants

Michael Castagna - CEO

Conference Call Participants

Robert Blum - Lytham Partners

Robert Blum

All right. Hello, everyone and thank you all for joining us during the Lytham Partners Summer 2021 Investor Conference. My name is Robert Blum, Managing Partner of Lytham Partners. Our next presentation comes from MannKind, ticker symbol of MNKD on the NASDAQ. Presenting from the Company is its Chief Executive Officer, Mike Castagna.

A copy of the slide presentation is available on your webcast screen. Today, I've asked Mike to run through the slide presentation, and we will then open it up for a brief fireside chat like Q&A session. So with that said, let me turn the call over to the presentation rather over to Mike Castagna, Chief Executive Officer of MannKind. Mike, please proceed.

Michael Castagna

Thank you for having us today, Robert, and looking forward to meeting all your investors at the conference. So real quickly for those who don't know about MannKind, I'll give a quick corporate overview, some details behind some of our programs, and then we'll finish up with a Q&A with Robert.

So I'm going to skip ahead to Slide 2 here, which is our cautionary statements as this presentation does include forward-looking statements, and things can change from here on as we go forward. Slide #3 on the corporate overview. For those who don't know, MannKind, we've been around 30 years this year. The technology behind the Afrezza, our leading market asset is there. It was originally built here in Danbury, Connecticut, that's where we have manufacturing and R&D. And our corporate offices where we house medical marketing sales is all out here in California -- Westlake Village, California.

Our partnerships are with United Therapeutics on Tyvaso DPI, which I'll talk about in a second. And we have several other pipeline opportunities that are moving forward and some other partners that license our technology as well. Technosphere Technology is really what makes us special. It's a platform technology for inhaled therapeutics. We have several assets in the pipeline that we're working on. And we also have several partnerships we continue to have on this technology platform.

We do have a lead asset named Afrezza, which was approved in the U.S and Brazil. We've continued to grow revenue year-over-year, quarter-over-quarter over the last couple of years. And Tyvaso DPIs, we just recently filed this with United Therapeutics in April. And we expect an approval hopefully later this year in Q4. And launching this and as quickly as possible to get this to patients.

And financially, MannKind was a turnaround company for those who haven't been following it, kind of had a little tough time there in '16 through '19, and then we slowly turned the corner here in '19 and 2021. So things are currently moving in the right direction. And I think the best is in front of us.

So Slide #4 is our technology. When you think about in health therapeutics, one of the things you look for is consistency from those dose to dose, it's actually a big challenge to get precise dosing in inhaled therapeutics. But that is one of the things that you can see here on the right side of the slide is that consistent, wide dispersion across the lungs, which we think makes us really unique. A lot of inhaled therapeutics are lactose blended powders that really get stuck in the upper airways, they don't have this consistent distribution. And that's what makes our technology platform very unique compared to other inhaled therapeutic platforms out there.

Slide 5, which I will talk about our strategy. We are focused in two disease areas of MannKind. Currently Afrezza in the endocrine space, and then we have a pipeline in the orphan lung space. So these are the two therapeutic areas we were looking at. We will look to build our pipeline, and if it works on our platform, great, but that's not what's going to be limited to our future. We are looking for opportunities to drive scientific differentiation and clinical improvements for patients, that’s really important to us.

I think another point of clarification I’ve been asked a lot lately is are we licensing our platform? We are. So, we are looking to license our platform from potential partnership opportunities. In fact, it's quite a busy year on that front. And what we're doing now, Robert, is just really trying to do formulation work to show that we can make a product, we can scale a product, and then from there we will turn that into a full development program. And our main focus right now is make sure we continue to focus on doing what's right, executing against our strategy and delivering for shareholders.

When you think about our Technosphere platform, last year during COVID, we did about five formulations of different therapeutics. Some of them were internal, some of them were COVID. But just this year alone already, we're probably looking at 10 programs, and majority of these will be external collaborations that we're working on. So quite a bit of work here happening for us. We have two device platforms in addition to our inhaled platform.

Now one of the Dreamboat device on the left side, that's a reasonable device. On the right side, we have something called a Cricket, which is a single use device for something like an epinephrine where you want to fast on, so you don't have a lot of time of panic attack, things like that. This is a great opportunity to leverage that device platform as we go forward.

When you think about our evolution, really establishing our commercial base used to be just a manufacturing and really Afrezza R&D company. And so when you look at what we've done in the last 5 years, we got Afrezza approved in the U.S and Brazil. We've done a pipeline deal with unither, Receptor Life Sciences and [indiscernible] IP2. We've had over 125,000 prescriptions written for Afrezza and well over 8,000 patients on it today. As we look over the next 5-year time period, we expect United Therapeutics will launch Tyvaso DPI. This will bring in royalties of manufacturing revenue, and additional indications I'll talk about in a second for Tyvaso, which could provide some upsides in the future.

On Afrezza we want to scale our growth there. It's an underappreciated asset in our company today and for valid reasons. But today, we are looking to get stronger uptake. We are looking to indication expansions and we're looking to grow in international markets.

And then on the business development side, we expect to bring in continued new innovation here. We purchased the company back in December called MannKind -- the company is called Qrum. The asset is now labeled MannKind 101 MNKD, and that's for inhaled clofazimine, which I'll talk about in a second as well. We continue to look for new collaborations which I think will allow [ph] us more announcements right around the conference here.

Pipeline launches. So our goal as we look out is to really have one opportunity for years. So when you think about whether it's an indication expansion or pipeline, new product launch, that's really our goal as we get to 2025 and beyond.

I'm going to skip ahead real quick on Slide 8, it is the MannKind pipeline. So you look -- we talked about Afrezza, that’s approved in the U.S., Brazil. We have a co-promo with Thyquidity, which is exciting for us to help build our relationships in the pediatric community and serve to help patients who are struggling with thyroid levels.

We are launching a trial here in Q3, Q4, for pediatric indication for Afrezza. And we're also looking to expand here in international, Europe, Canada, and India and Australia as our next markets. And then on the orphan lung side, we have quite a few assets keeping us busy. Tyvaso DPI, a lot of work getting prepared for scale of manufacturing, field inspections, etcetera. So that's exciting here between now and the end of the year we hope to see a positive FDA review.

MNKD-101 is a Qrum company we have bought that should be in Phase 1 by the end of this year for nontuberculous mycobacterium. MNKD-201 is for drug we’ve not released publicly for IPF, idiopathic pulmonary fibrosis disease; MNKD-301 is for cystic fibrosis. We have said the name of that compound, it's for [indiscernible]; and MNKD-701 is another molecule we're not disclosing for competitive reasons. So quite a bit on [indiscernible] space keeping us busy as we look out over the coming years.

Cannabinoid is Receptor Life Sciences. We license our platform to them. They're looking at a proof-of-concept here in Phase 1 this year for that product. And then we license a small molecule oncology program to Fosun and that was fast tracked by the FDA. So a lot of excitement in the pipeline and lots of opportunities for growth -- in platform growth.

Let's skip ahead to Slide 10, which is our orphan lung strategy, the first asset that we expect to put on our platform outside of Afrezza is Tyvaso DPI and this is expected to be improved. And when you look at this, it's an asset with an asset when you think about the world's largest brand Humira, it's not just rheumatoid arthritis that became psoriasis and Crohn's disease and all these other indications which made it a very large brand.

When we look at Tyvaso, it's a very similar strategy. The United has done a great job on PH. They just recently got PH-ILD approved. And they have two other readouts coming here with COPD and IPF, and its Perfect Study and Teton Study. And what we expect would happen is as the Technosphere formulation called Tyvaso DPI gets approved, we do expect approval for PH and ILD. And then hopefully as COPD readouts are positive, then that will be another future indication same as IPS. So a lot of excitement. Opportunities on this asset where it becomes an asset within the assets platform.

The good news is we have some good clinical results here on this asset. So with a 3 weeks switch study and then that study was really looking at safety and tolerability to make sure patients didn't do any worse when they switched over from the standard of Tyvaso -- nebulized to Tyvaso DPI. And the good news is most -- majority people completed the treatment, no serious adverse events. And we had some really nice secondary objectives on the efficacy side. So 6-minute walk test improved, improving overall satisfaction with the patient and improvement in patient reported outcomes. And now most of these patients have enrolled in the Optional Extension Phase. And so the good news is, by the time we get to Q4 of this year, we'll have people going on for 2 years in the Optional Extension Phase. So we'll get a lot of good data showing you what happens now in just 3 months, but 3 weeks ago or 3 months and 6 months and 1 year.

One of the analysts out there, Steve over at Oppenheimer, the recent KOL [ph] Interview series and presentations and a bit his analysis on what this means. And if you look at the blue area, that's Tyvaso DPI. So Tyvaso revenue we expect, hopefully a large portion of that will be Tyvaso DPI. But they see this going from a $400 million asset here in 2020, $470 million, up to $1.5 billion, $1.6 billion over the next 4 or 5 years. So a lot of excitement as we think about these indications and what this means for patients and our technology being able to help more patients.

Slide 13 is our acquisition of Qrum. And so that product -- that company is acquired back in Q4. We got Inhaled Clofazimine, which they've done a lot of work on NTM, understanding the target, the API supply, the polymorphisms, etcetera. And this has FDA orphan designation and QIDP. So we expect to be in Phase 1, and the NIH is currently funding the development for TB outside the U.S. And some of its original tox studies in our large animal tox study. Just recently its wrapping up and we've seen those signals here. So everything's on track to hit Q1 -- sorry, Q4, Q1 timeframe for Phase 1 study.

The other benefit of Qrum is we’ve got Dr. Thomas Hofmann now as our Chief Scientific Officer. He's a pediatric pulmonologist, great addition to the company and extensive experience in drug discovery and inhaled therapeutics. Why do we like this asset so much? This is slide 14. And it's really got the NTM opportunity. And this is a very difficult to treat lung infection, it's very difficult to penetrate the lungs with a systemic oral tablet.

And so what you see here is a day one , 27 and a saline control where not a lot of reduction obviously with impact on saline, placebo I call it, and we even want to give Clofazimine as an oral tablet, not a large reduction in bacterial recovery. And so this is where you look for bacteria, can they grow, or can they not? You see a 99.99% reduction in these models when you add MNKD-101 into the mix. So we think given a direct inhibition of this product into the lungs is going to show really good systemic -- I'm sorry, really good localized effects here in the lungs with minimizing systemic side effects.

Let's get back to slide 16 about Afrezza. So Afrezza is a oral inhaled insulin. It's a one of a kind of treatment. We take our specialty of Technosphere particles. And we use human insulin and water and we make these Technosphere particles. And when it's inhaled, it dissolves rapidly into the blood and you really get a really quick uptake. And Afrezza is indicated for -- more on Slide 17, type 1 and type 2 diabetes. You take it as soon as your meal comes that really improves your time and range and has less hypoglycemia. And it's a very unique mealtime insulin.

People always ask me like, Mike, why do you keep marketing Afrezza investing. And the reality is, despite all the innovation of insulin pumps and CGM, 80% of the people on its own in this country are still [indiscernible]. And so that's 8 out of 10 people, these are the sickest people when you look at the cost of care. They're progressing to dialysis. And we really are seeing outcomes get worse in this population, despite the technology improvements that have come along over the last 10 years. So, we think there's a large opportunity to have a differentiated insulin because we still aren't hitting the mark despite all the innovation that's happened.

So, you go forward to the next slide here is 19, really just shows you the Afrezza here all the way to the right is the Monomeric in this little green slices. Injectable insulin is generally a Hexameric. And it takes about 45 minutes for that injectable insulin to break down and start working, where in the case of Afrezza as soon as you inhale, you're getting into the pulmonary system, you're working right away.

Actually, what you see here on Slide 20 is Afrezza's very close to physiologic insulin. The grey area is where the normal healthy person does or blue area on your slide. And the purple is Afrezza. And the black area is subcutaneous insulin and what you really see is a mismatch between the peak of your food in the blue and the peak of your insulin about 30 minutes apart. And that mismatch is what causes all the headaches of food insulin matching. So you're trying to match the profile of Afrezza and this has been the biggest misconception out there is how physiologic is injectable insulin.

So since we launched Afrezza, we’ve now a little around 3,000 prescribers. We've grown every year even during COVID, despite that against us and society, and we're looking to move towards new indications in pediatrics and potentially gestational diabetes. And we just recently expanded our team coming into 2021. So, we're very excited to get everybody on board and start to see what we can do now that we are well funded company and what we can do to properly market Afrezza as we go forward.

And one of those opportunities is BluHale. So, we have this little adapter called BluHale Pro that goes on the back of the device and shows you proper inhalation technique. And on the right side, you can see before training skill, two out of five on people's confidence in using Afrezza and after training with BluHale it goes almost a five out of five. So, we have a tremendous impact on that initial start and initial acceptance by the patient and the provider by adding technology.

And then 2.0 you see bottom left here, we're starting to ingest CGM data and show you what time you took your dose, how much you took, and then what did that do your sugars? And one of the next big studies we're doing here is pediatric study with Afrezza. So, you can see it's a 101 randomization. Afrezza against standard of care of MDI. And this will be a 26-week primary endpoint with a switchover everyone to one arm, and then follow them up for another 26 weeks. So super excited about the pediatric community.

As we think about the 10 and 20 year view, the way you really change type 1 diabetes is through kids. And we think this will become a really big inflection point, as we get these results and start getting FDA approval marketing the product. I just want to close out on the financials for our shareholders and prospective shareholders here. So hopefully you see our stock and I think it's a good opportunity to buy in.

We are on Slide 24, if you're following on the deck. So, slide 25 is our sales. So, if you look back at Q1 of '17, we did about $1.2 million in Q1 of '17. And now you can see we're doing that almost a week. So tremendous growth over the last 3, 4 years. We've always wanted it to grow faster. But the reality is Afrezza is still here, and we're still alive and we're now able to scale this business. And hopefully you can start to see this as we go into Q2, Q3, that Afrezza can grow faster than we have historically. But despite all odds against us, you can see every year, quarter-over-quarter, year-over-year, we continue to grow the product in a positive way.

Slide 26 just talks about our financial position now. So we did a convertible note back in Q1. We raised $230 million. We're in a really good financial shape. We see no big dilutive events in the near future. So midcap, we have additional $60 million to pull down upon Tyvaso approval. We got our interest rate lowered, we have our interest only period extended and Mann Group was a convertible note, they reduced their interest rate there. And we also paid off some fixed debt as well. So we reduced our debt by $50 million. And therefore we reduced our interest expense on an annual basis

Slide 27 is our IP, so we have lots of IP going in all different directions or covering manufacturing to devices to formulations. So we expect we've got a good 15, 20 year road in front of us on continuing to make sure our technologies from center is the leader. And then we look at 2021 milestones, it's been a busy year already. I can't believe it's June. It's already flown by, but we expect the FDA probably near-term milestone coming up for our shareholders listening today are prospective shareholders is we expect the FDA to accept the application for Tyvaso DPI, the first step in their view. We just got our new -- [indiscernible] data published and some new data just came out last week at ATTD. In about 2 weeks at ADA, so lots of good things happening. And lots of good milestones for the members. So super excited by where we are.

And Robert, I'll stop there and just say thank you for anyone that listened this long, and hopefully, again, some good Q&A.

Question-and-Answer Session

Q - Robert Blum

Perfect. Thank you, Mike. Yes, let's dive on a couple of questions here. Let's sort of start where you ended there on Afrezza there. So when you think about the total market opportunity for that, help those that may be new to the story understand what that market opportunity really is?

Michael Castagna

Yes, we are just looking at some data yesterday to kind of see if you pull away, pumps and pediatrics and some of the places we don't have indication. The insulin market is very large, right, there's over 3.5 million people on insulin and 80% of them are not a goal. So, we feel pretty good about the population we're targeting. And really just trying to help those 3 million people on insulin is our first step. And then we have a 5-year plan on how we're going to scale that up. And we'll be sharing it with shareholders very shortly. But from our perspective, there's over 300 some thousands of prescriptions a week, we only have 1% market share. So, we see nothing, but upside from where we're sitting here on Afrezza.

Robert Blum

And then, talk about some of the key sort of commercial changes that have been made over the last few years, and what sort of impact that they've had on the business?

Michael Castagna

Yes, that's a good question. We've made a lot of changes, especially during COVID. We expanded the sales force quite a bit. We expanded our marketing team, we expanded our medical team, we got the peak study ready. So, when we look at Afrezza now I'd say we finally have everybody up and running. We have all new people and make positions who can now come together post-COVID and start working together. Our sales force has been out there. I really want to thank them because they really kept us going through 2020, which could have been a very difficult year [indiscernible] great year, and transformative year for the company. So now our reps are out there hitting all the offices, they're getting open access. And so, in fact, I was just talking to somebody today around the difficulties they're having with their sales force getting into offices.

And I think that's one area we are doing well. We are getting into well over 50% of our offices and things continue to open up each and every day for COVID. So that's exciting. Made a lot of changes on packaging, we made some changes in our marketing program. We've just improved our digital marketing. We're starting to work with some of the influences a lot more, so just to see an overall a better MannKind and more disciplined MannKind and improved marketing and sales execution along with medical. So, I think it's all good.

Robert Blum

I think we probably just touched on their leads probably into my next question maybe you've kind of already addressed it. But how do you compete against the bigger players in the market? You mentioned, you have 1% market share, how are you competing against everyone else out there?

Michael Castagna

A good event is that Novo and Lilly are making a lot of money of basal insulin and GLPs these days and oral tablets. So, they're becoming weight loss companies in the case of Novo and really you see not a lot of competition on mealtime insulin. In fact, we think it's an opportunity to actually go and educate the market on mealtime insulin because nobody is really doing that. And there's really not been any innovative differentiation in the marketplace in 10 years. So, we think it's time that somebody goes out and really puts the facts out there around PKPD profiles, timing of administration, how insulins work. You'd be shocked at how many endos [ph] do not know the speed or slowness of injectable insulin or inhaled insulin. They just don't know how fast or slow these drugs are.

And probably as when you think about training, they've not been trained on anything new in over a decade. So we have a good opportunity now that we're well funded to go out educate the market, and help people understand what meal plan insulin controls is not doing well, in this country, it's probably the biggest one that we have. We think Afrezza will solve a lot of it on that lead. So we should win as people start to understand what the challenges are with patients, what’s the challenges are on timing of the insulin, and what the data really shows on non-inferiority or superiority around mealtime control. So, we were very excited about that.

So long story short, that part of the big competition, I mean, what they do is they contract for rebates, and they block access, but we are still going to get patients covered. And I think that's really what our focus is, how do you help patients get better outcomes, and the competition tries to block people who have access to that, but we find that to be not right for patients. We think patients have access to choices, and that's really our focus.

Robert Blum

And then maybe one more on this sort of topic here, when you look outside the U.S here, what are some of those opportunities and any sort of key milestones that might surround that?

Michael Castagna

Yes, ex-U.S., you got to get our cost structure down a little bit as we think about packaging and things like that. But Europe is a big opportunity in front of us, Canada, China will be there at some point, and I'll show you -- we're looking to file an NDA in the middle of doing a trial. Despite COVID, they're enrolling patients. So I think what we'll see is international expansion play out over the 2 to 5-year horizon. That’s going to do a lot in the next year or two. But as you look further out, I think this will help do quite a bit of growth either to help more patients, or we have insulin supply commitment that we have to deliver against. All these things are helpful. Every little bit we can on patients helps make MannKind even stronger.

Robert Blum

Okay. And then maybe we'll switch to Tyvaso for just a moment. You had the one slide to kind of walk through some of the opportunity there, but it just help folks understand where the royalty and maybe some of these other revenue streams that come from it due to MannKind?

Michael Castagna

Yes, if you go back to our Q1 earnings call, pay attention to the collaboration revenue, because people really don't focus on that, Robert, and I think that's going to be an area you see the company continue to grow. And whether that's because United Therapeutics or it's because our partnership revenue is going to come there. But that collaboration line is going to be equally as important as Afrezza revenue line as we go forward. And so you'll see a royalty stream. We've said low double digits from United Therapeutics on Tyvaso DPI and then you'll see some manufacturing stuff come through as well. So we'll get a manufacturing cost plus ex model plus royalty. So that's [indiscernible] new collaboration revenue.

Robert Blum

Okay. And then on that, to speak something you can, how quickly do you expect for that uses to shift from Tyvaso to Tyvaso DPI or any sort of good analogues or indicators there that might, you might be able to share?

Michael Castagna

Yes. Look, I think this one is going to be in YouTube's hands as much as anyone. I mean, the good news about United Therapeutics is they know literally every single patient on Tyvaso. So their ability to reach out to their patients and contact them and let them know there's new options is very high. I think they have every incentive to convert as quickly as possible from Tyvaso to Tyvaso DPI. And you see the patients are tolerating it. They enrolled in the trial. They got better 600 walk test in 3 weeks and no safety signal. So I think all these are very positive for patients and I just -- anyone that goes through treatment, it's very hard at the end of the day living with PH. And so I think the use of the technology behind Afrezza on Tyvaso, we really help these patients have a little more freedom in their life to go out and have drug on [indiscernible].

Robert Blum

And then, maybe one more just sort of talked about the pipeline here. On some of these potential new products, do you anticipate commercializing these. These products in your portfolio yourself, how do you sort of look at that as you move forward?

Michael Castagna

Yes, it's another great question. I get as people saw a nice deal with United Therapeutics 3 years ago, and they want to know if we're going to see another deal. And the answer is, you may. There's no reason we can't partner these programs. But I think we look to create shareholder value. And I think, being able to market these products, build the infrastructure in the north amongst base over time will allow us to really capitalize on that opportunity more.

So, if the right opportunity comes along, we'll definitely weigh in the pros and cons of that. But we do intend to fund our pipeline, and long-term pipeline. So I think that is our number one goal. But we'll always be open to opportunities on partnerships, whether that's on the platform or on the orphan lung space.

Robert Blum

Okay, perfect. Well, Mike, I -- we greatly appreciate your time today to everyone that joined us here. If you haven't already, maybe signed up for a one-on-one here, please feel free to reach out to me, look to try to get you connected here with the company. And again, Mike, thank you very much for your time. We appreciate it.

Michael Castagna

Thank you, Robert. And I look forward to -- I got a full agenda. So thank you for -- look forward to meet everybody.

Robert Blum

Right. We hope you all have a rest -- great rest of your day. Thank you very much.