MannKind Corporation (NASDAQ:MNKD) H.C. Wainwright Global Life Sciences Conference March 9, 2021 7:00 AM ET

Company Participants

Michael Castagna - CEO

Conference Call Participants

Chaitanya G - H.C. Wainwright & Co., LLC

Chaitanya G

Good evening, everyone. And thank you for joining H.C. Wainwright Global Life Science Conference. My name is Chait and I'm an Equity Research Associate here at H.C. Wainwright. While you're virtual here the content we are going to be able to provide value to with our 445 companies presenting at this conference. H.C. Wainwright is a full services investment bank dedicated to providing finance, strategic advisory and related services public and private companies across multiple sectors and regions. We have a total of 80 publishing senior analysts and 490 companies covered across all sectors. Please visit hcwco.com for more information.

From a logistics standpoint, please make sure the reference to your virtual conference online portal that provides the individual link to your meetings and authorizations. And analysts and all presentations are live and on demand online from March 9th. With that said, have a productive and enjoyable day. And I'd like to give you our first presenter. I'd like to welcome Michael Castagna, CEO of MannKind Corporation, the biopharmaceutical companies focusing on the development of therapies for diseases such as diabetes and pulmonary arterial hypertension.

Over to you, Michael.

Michael Castagna

Thank you for having me today, and I good morning, good afternoon or good evening depending on where you are in the world these days via Zoom. Looking forward to presenting an investor update here at the H.C. Wainwright Global Life Sciences Conference, I've enjoyed this conference every year in startups virtual, but thank you for hopefully expanding the number of investors we can talk with today.

Here's our cautionary forward looking statements as things are based on what we know today and our future could change.

Further you don't know MannKind, we were founded originally in 1991. We'll be celebrating our 30th anniversary this year. We are a commercial stage biopharmaceutical company with a differentiated delivery technology and robust product pipeline. We have a manufacturing and R&D facility here in Danbury, Connecticut, and our corporate offices with many of our management teams that based out in Westlake Village, California. We have partnership with the United Therapeutics as a global leader in pulmonary hypertension for our product called Tyvaso DPI, which we'll be talking about today as well as the pipeline focused on Technosphere nebulized formulations and additional things which we'll talk about shortly.

For those who know MannKind have traditionally been known for our present product. As you look at us going forward, you'll continue to see the Technosphere technology is unique and held delivery platform that's going to drive shareholder value in the coming years. Afrezza was approved here in the U.S. and launched by MannKind in 2017. And it launched in Brazil, unfortunately, unfortunately in 2020, during the middle COVID. And Tyvaso DPI is on track to be FDA solid here in Q2, with an expected approval by the end of 2021.

I want to first talk about our MannKind performance year-to-date, given the news and noise last week in stock. Our performance year-to-date is up 17%. The XCI index was negative 1.43%. The Russell 2000 Biotech index was at negative 2% and the S&P was at 2.29%. So despite the reaction of the stock prices this week due to our convertible debt offering, we feel MannKind is still on track to have a great future and we're very excited to share with you where we're going today. I thought it was important to put the shareholder performance in context of the broader equity markets as we're seeing some troubles over last week at the various indexes here.

Our strategy is on two corner of these areas, endocrine business which includes fibroids today and diabetes and orphan lung disease or orphan rare disease I'll say in the future. There are five revenue growth drivers that we expect are going to create shareholder value. Number one, Tyvaso dry powder inhalation royalties which is in the low double digits as well as manufacturing will be the commercial manufacturer for United Therapeutics between now and in the future. Our Technosphere platform we expect additional opportunities with partners as we're working on 10 different molecules here, some for Mannkind, some for partners, but we expect continued opportunities on Technosphere platform in the coming years.

We will drive growth and expansion within our endocrine business. Afrezza international, as you see here, one new attribute is the EU market. Now that we've financed our capital future, we believe filing Afrezza in Europe which will take time for approval will be a nice revenue growth driver in the future years, and finally, our pipeline growth which I'll share with you in a second. But before I jump into that, I think it's important to highlight the executive team that some of you may not know, and we've added a lot of new people here in the last year.

I became CEO four years ago, this May of MannKind, Steve Binder joining me on that journey is our CFO. And then Alejandro just joined us here in August of 2020, where he was President of Medtronic Diabetes a $3 billion business. Excited to have Alejandro here and driving our future here on endocrinology. Dr. Thomas Hofmann just joined through our acquisition of Qrum in December, a Chief Scientific Officer, driving our pipeline forward and business development efforts. Joe Kocinsky, who's our Chief Technology Officer, who built the Denver facility and working on all the expansion there, Joe has been a great asset to MannKind almost last 20 years and deep PPI experience with Schering Plough.

Stuart Tross, the Head of People Management and People Workplace. And finally David Thomson, our General Counsel. We also have three new executives joined us between the value and access team. Kevin Kaiser is a pediatric endocrinologist as well, Karen and Jeff, Head of Regulatory. We have a full and robust and well experienced executive teams that are going to drive us four to three years to come.

In terms of our pipeline, we have Afrezza here in the U.S. and Brazil already approved and marketed. We just launched THYQUIDITY last week for hypothyroidism, which is the liquid formulation. We have a pediatric indication for Afrezza that we are expected to go for Type 1 and Type 2. We just got FDA feedback. I'll sure update their shortly. And Afrezza international, we've just talked about with the EU, India Cipla NDA trial kicked off as well as a filing for Australia we expect here in 2021.

Tyvaso DPI is running fast and furious here towards the final finish and touches to be ready to file in April. MNKD-101 which is the clofazimine product the NTM is moving down our pipeline through animal toxicity studies, and then post that will go into Phase 1, hopefully as Q4 of this year. And then MNKD-201 is for idiopathic pulmonary fibrosis and for competitive reasons, we not revealed what the target is. And MNKD-301 is a previously disclosed compound for cystic fibrosis called DNase alfa which is called pulmozyme, which Roche launched and coming dose, I think, will be approximately $800 million a year. And we're looking to build a dry powder version of that product. And MNKD-701, which is undisclosed molecule here for orphan lung as well.

Two other opportunities we'll continue to hear about it in the coming years as the cannabinoid business which licensed through Receptor Life Sciences. They recently got FDA feedback and we will look and move that forward and towards the proof-of-concept study. And we have a small molecule enzyme inhibitor sold the first one, which again was first fast track by the FDA back in 2019 and continues to move down the development pathway, and we will get royalty payments upon that launch of that product.

So MannKind has many growth drivers here in the future. Let me talk a little bit about orphan lung disease. For Tyvaso for those of you who don't know, we read all clinical studies and stability testing in Q4, and United Therapeutics purchased a priority review voucher, which means we can file for FDA approval and get an accelerated review and approval, which should bring us hopefully to an expected PDUFA date in Q4 2021.

In UTHR recent released top-line BREEZE and PK study results, which I'll share with you in a second. We are finalizing the NDA submission file and UT expects to file its application here in early Q2. We expect the FDA acceptance through that process at very shortly and we at MannKind will begin to manufacture prelaunch commercial products as we get ready for a launch towards the end of 2021 or early '22.

How do we think about prepping for DPI? This is an opportunity that will continue to grow for years to come. If we continue to see positive data readouts on what the United Therapeutics is laid out. In 2020, Tyvaso delivered 483 million sales according the United Therapeutics. You can see their future investments and additional indications for Tyvaso, for PH-ILD under FDA review, PH-COPD, WHO Group 3 and the perfect study, as well as the TETON study for IPF.

We expect that Tyvaso DPI MannKind's Technosphere formulation will be followed here for PAH and ILD, and as UT gets readout an additional study, there will be additional future potential indication expansion opportunities. We're excited to partner with UT. They've been a great partner. They feel the same way about us and we're looking forward to bringing this innovative product to patients suffering from PAH.

So with our top line results readout that you UTHR reported this month; number one, the primary objective was safety and tolerability and switching from Tyvaso to Tyvaso dry powder inhalation. Now as you can see, 96% of people completed the treatment phase with no studying drug related serious adverse events. The secondary objectives were a nice surprise and then we saw an improvement in the six minute walk test and the three weeks switch, as well as overall satisfaction in Tyvaso DPI inhaler and our patient reported outcomes.

We're super excited about these results and led that UT will be sharing these at a future conference. The optional extension phase when enrolled 100% of the patients that were in the first primary objective, and then we have patient now going on well over a year, in that optional extension phase, demonstrating where continuous safety and tolerability look like as well as what the uptime duration looks like from the extension phase.

The PK phase completes, the primary objectives were achieved. And the safety profile is consistent with the known process cycling effects. What a bridge to our next pipeline compound that we're going to talk about here and then MNKD-101, clofazimine suspension for inhalation. Why are we so excited about this opportunity? Number one is highly potent and MIC activity versus NTM is real and MABSC and MAC and the rodent models that we looked at.

The lung penetration is 2.5x that of clofazimine. So, therefore we're going to have a lower dose of potentially non-continuous dosing, which limits the systemic toxicities that we see with clofazimine which includes drug, drug interactions. The positive efficacy animal and NTM mouse models for these two, I'll share with you in a second. And the GLP tox studies are ongoing and on schedule, and we expect to kick off large animal studies this month in March.

This study was published for clofazimine nebulized inflation solution, here with 28 days of treatment, 14 treatments every other day, and where you can see as oral clofazimine and the red #tag graph here on the right in the middle doesn't have a consistent effect against the lung and the model here in MAC, MAC mouse model. This is not because of drugs does not work, the 28 days is likely not enough time to build up the lung concentration that you need to start to tackle this horrific disease.

As you look at NTM, it's very difficult to penetrate for orphan lung disease and delivering a view at nebulized route as we see here in MNKD-101, delivered a 99.99% reduction versus failing control. We believe the rodent models predictive of hopefully the human model as we go out and look to get the Phase 1 later this year and Phase 2 in 2022.

Let me put you over to the endocrine disease business of our company and that's Afrezza present oral inhalation solution, which many of you know, historically, it's a one of a kind therapy where we took Technosphere particles and human insulin and made Technosphere insulin where we spent a substantial amount of money, time and energy to get this product to market as our currently marketed product and delivered properly $32 million in revenue in 2020.

We believe Afrezza is building the next standard of care for mealtime insulin. We are indicated for Type 1 and Type 2 diabetes, that’s taken at the of a meal and does demonstrate consistent A1c reductions and improved time and range. We will be able to solve that unmet need and right now we've laid out a new -- not a new strategy, but our current strategy for 2021.

Number one, we got to increase patient and physician awareness. It's really upsetting to us that the large majority patients are still not aware that a handheld insulin is available. We believe moving into pediatrics will really help drive future opportunities and awareness expansion as well as continued investment in physician education.

We need to drive deeper prescribing amongst our 3,000 prescribers. We want to enhance our social media impact. We want to lead science on mealtime control. There's a lot of noise on time and range where we see is all the logarithms are great when patients are sleeping, but during the day when you're eating and having activities, it's very difficult to get mealtime control. And we believe Afrezza provides a very unique solution.

One of the exciting parts for us is the digital technology platform BluHale, which we believe we can use to give enhanced glucose control via digital integration with continuous glucose monitoring. These are really exciting opportunities in the future and we're excited about where this is going for patients as we move down the road. We think about the expansion indications. We're looking at pediatrics and possible gestational diabetes is we're funding and investigator initiated opportunity here and we'll go from there once we get the results.

What makes Afrezza unique? When you look all the way to the left long-acting insulin is to the left. That's the basal insulin that most patients need called basal. In the middle here is the hexameric is rapid acting insulin, which is all injectable insulin and some type of hexameric form. And then we look at Afrezza it's really made in the monomeric form, which means insulin as you inhale, you're getting a quick onset of activity, which is what you see here on the right.

You see the purple line in Afrezza, the blue shaded areas with a physiologic pancreas looks like, and you basically see that the onset and offset of Afrezza mimics your physiologic pancreas. Injectable insulin you can see has a shift to the right and then mismatch between the peak of your food and the peak of insulin is why patients struggle so much to maintain and gain mealtime control.

Today in the U.S., 80% of the people on mealtime insulin fanatical and that is not improvement in fact A1c have gotten worse despite the adoption of all these digital technology and insulin pops up. Here's the preliminary design of Afrezza pediatric trial where you see this is a 52-week study, head-to-head in the first 26 weeks with a switchover and with 26 of all patients in this trial will receive Afrezza, and we are submitting this protocol to the FDA so that we can hopefully launch this trial in late Q2 early Q3, but this is on track to be launched here in 2021.

Other opportunities, Thyquidity, so we're launching the launch of this product very shortly, our first week, we're able to see some prescription show up in the Bloomberg terminal. And we're excited about where this is going in terms of getting us into the pediatric endocrine space sooner. We think this is a great opportunity for children who suffer from thyroid disorders as well as our current prescribing of adult endocrinologist. This is a great opportunity for us to leverage our existing infrastructure and help bring more value to our office and our customers.

The financial side, I want to share with you where Afrezza has been since we got the product launched back in Q1 of 2017. As you can see, we've had consistent year-over-year and quarter-over-quarter growth, up to including COVID during 2020. We had to pull forward here in Q1 of 2020 with some decline in Q2, growth in Q3 and growth in Q4. We've continue to expect Afrezza would grow for years to come and our net revenues up 8x since we launched here in 2020 -- I'm sorry, here in Q1 of 2017.

Looking forward, we continue to see how we can expand Afrezza and grow faster than we have historically now that we're well capitalized. Speaking of this, you may be aware, we did a convertible debt offering last week on Monday and in that MannKind was able to raise $200 million in seniors notes due in 2026 with a greenshoe option of up to $30 million, maturity of five years with a coupon of 2.5%, conversion premium up 30, which closes at 5.21 that day.

We are excited about what this means to company when you combine the $200 million from the convertible debt offering, which was led by JP Morgan SVB Leerink as well as many co-managers like ACW Wainwright

We're also in the pursuit of a sale leaseback of Danbury. This will bring an approximately $95 million to $105 million in early Q2. We're well on track to sign a definitive agreement here in Q1. And when you take the $100 plus million opportunity here on the sale leaseback plus the $200 million raised in the convertible offering, plus the $67 million we started the year with, MannKind is well funded into the future to hopefully get us towards cash flow breakeven and remove some of the going concern language that we have in our filings.

How do we think about the future outlook of the Company? What to expect. Number one, we want to invest in our pipeline our business development efforts. We believe we can bring in new opportunities and partnerships with other companies to expand our Technosphere orphan lung capabilities and opportunities. Number two, we're going to be expanding our Denver facility to prepare for DPI growth, so you will see from job hiring to help support the facility as we expect to be running 24x7 to produce Tyvaso DPI as we exit 2021 and go into 2022.

We're going to increase our investment behind growth opportunities. As we look at them from Afrezza, it's specifically filing in the EU, digital marketing, pediatric expansion and clinical publications. We do not expect it to increase substantial investments behind Afrezza until we see those growth opportunities really arise that we see pilots working and we can push harder on the guests to drive faster growth.

Additionally, we expect to reduce the legacy debt. We'll be bringing to the market clarity on these couple opportunities, we will continue to progress at future conferences so you can see what we're doing and how we're being good shepherds of the capital we've received.

When you think about the growth of the Technosphere platform, we have two different device platforms. We have a reusable Dreamboat inhaler, and we have a single use Cricket family of inhalers that would continue to think two different ways depending on the formulation and target works we're going after.

For the Cricket family and make sense we're acute use like proof-of-concept in panic, we would love to see the Cricket using that product. We also have several other assets that require acute opportunities like epinephrine where the Cricket family is a great inhaler platform for those opportunities.

We're already working on 10 formulations for 2021. We expect the majority -- we expect that this will result in a couple of external development opportunities once these go from concept into full development.

In terms of 2021 milestones, there's a lot of activity here this year and they'll get even more next year as we continue to progress our pipeline. We're super excited about the future and particularly of new data coming out for Afrezza here in Q2, which was just accepted in ADA, and we're waiting on ATTD acceptance as well. We put in Afrezza pediatric Phase 3 trial here, first patient first visiting Q4. We hope to beat that timeline and get that close to the Q2 or Q3.

And we continue to remain well funded into our future to drive our own growth opportunities as we go forward. I want to stop that, and thank you for all your time, patients and shareholders. We're super excited about our future and thank you for everything that you've done to help support us in this journey.

Chaitanya G

Awesome, thanks for excellent presentation. And I'm sure we'll all be following your story and your journey as you navigate through a milestone rich and a capitalist rich couple of years. With that, I'd wrap it up in the interest of time, but I want to thank Michael and MannKind for taking part in what has been a very productive and informative series of presentations.

We appreciate the time and effort that many of you preparing them. Hopefully, our next conference will be one that we can pull in person rather than virtually. But in the meantime, we're very grateful for your flexibility and your presence online this year. Thanks again from the H.C. Wainwright team

Michael Castagna

Thank you for having me again, appreciated.

Question-and-Answer Session

End of Q&A