MannKind Corporation (NASDAQ:MNKD) Lytham Partners Virtual Investor Growth Conference June 24, 2020 12:00 PM ET

Company Participants

Michael Castagna - CEO

Conference Call Participants

Robert Blum - Lytham Partners

Robert Blum

All right. Hello and thank you all for joining us today during the June 2020 Lytham Partners Virtual Investor Conference. My name is Robert Blum, Managing Partner of Lytham Partners.

Our next presentation comes from MannKind, NASDAQ ticker symbol, MNKD. Presenting today from the company is Michael Castagna, Chief Executive Officer. Today I've asked Michael to run through the company's slide presentation and then we will engage in a short fireside chat like Q&A session. The slide presentation is embedded into the webcast player allowing you to move along with Michael during the presentation.

With that said, Let me turn the conference call or the presentation here over to Mike Castagna, Chief Executive Officer of MannKind. Mike, please proceed.

Michael Castagna

Thank you, Robert. Thank you for having us today. Appreciate the time. The slides here for people listening on the phone, you can advance yourself, I'll just try to keep every slide or two to mention what slide we're on.

So, I'm going to go ahead and advance the slide two. Our cautionary statement, just as we always disclose this presentation will contain forward-looking statements that may or may not be true the next day.

So, we'll continue to progress here to slide three. And one of the things I'll try to do today is make sure your group of investors is potentially new to the company and so a lot of this is a company overview and then for our existing shareholders, some of its probably key updates that they're interested in. So, I'll try to do a blunt presentation here as we go for the next 20 or 30 minutes.

Our strategy on slide three is focused on developing innovative medicines for both endocrine and orphan lung diseases. As we'll talk about today, we're already in the endocrine space. We're moving a pipeline with a partner with United Therapeutics, which if we go to slide four here, we did a deal with them a little under two years ago for $105 million. I'll talk about that today because it's an important milestone driver as we go forward in the company's history.

And then we have a product in the market called Afrezza, which we got back in 2016 and relaunched in 2017, that's been going well. So, for those who don't know MannKind, we are based here in California. That's our corporate headquarters and functions and we have manufacturing and R&D in Danbury, Connecticut. And then over the last couple years, we've built several partnerships with AMSL in Australia, BIOMM in Brazil, Cipla in India, and Receptor Life Sciences, and cannabinoid space for our pipeline, and the other three are focused on international markets for Afrezza expansion.

It's a technology platform-based company, meaning, we can put lots of different drugs into the lungs. So, I'll talk a little bit about that technology, but that's really what differentiates us from other dry powder inhalation is really the technology and how we make and scale the Technosphere particles.

And then Afrezza was approved here in the U.S., we just got approval in Brazil this year and as everybody knows, Brazil's been getting hit pretty hard with COVID. So, unfortunate that happened right in the middle of our launched. But they're still marketing through WhatsApp and everything else that they do down there and virtual conferences and education. So, they're moving that forward as we speak.

And then BluHale is our connected technology. So, we're looking to move into connected care and virtual trainings. BluHale is a great way to help train patients and also for doctors to start to see dosing and I'll talk a little bit about that.

And then our financial position has never been stronger. We recapitalized the company back in August of last year, so come up on a year. And that really provided us the runway we needed to continue to invest and grow the company and give our shareholders some certainty around the future. So, we feel that that we're now finally in a decent financial position.

The next slide, slide five is just an overview of the pipeline. So, today Afrezza is approved for Type 1 and Type 2 diabetes here in the U.S., which impacts 23 million Americans. We focus on the insulin market, which has about 4.5 million to 6 million Americans depending on what you count and specifically within a segment this year; we're even more focused on Type 1 patients.

We are moving into pediatrics. So, we've gone to FDA later this year for feedback on our Phase 3 protocol design. And once they review and approve that, we'll have the green light to go ahead and move that forward. And that that'll be mainly a Type 1 market as most people who are living with Type 1 diabetes could diagnosed as a kids. We think this is really important if we're going to change the standard-of-care over the next five and 10 years is to get Afrezza approved for pediatrics. And so that's the direction where that's going.

And as I get on the slide here, the next big driver is Treprostinil and that's one that's pulmonary hypertension. So, if people don't -- are afraid to this disease in particular said orphan lung disease and they have several different formulations of this product, but one of them is a nebulized formulation that we're making a dry powder of. And that nebulized formulation is called Tyvaso. And that product just had some great data coming out in February. And in fact, it's getting presented today, which we're very excited about because today there's about 3,000 patients on Tyvaso and this new indication that United Therapeutics is going after for idiopathic pulmonary [Indiscernible].

And it's just a lung disease, it will expand that WHO 3,000 to 30,000 patients and so it really has the opportunity to leapfrog the market of PH. So, we're excited about that partnership and where that molecule is going. I'll give an update in a slide on that program.

We started working in the COVID space. And as I suspected, as COVID resolved around the world, it's going to be hard to launch trials and then some of the programs we had in development, we want to see the readout, for example, on hydroxychloroquine before we move forward. As those things turned out negative, we didn't move our programs forward. So, we're kind of waiting and seeing the COVID-19 program. And one of the questions we ask is once there's a vaccine, can we make an inhaled vaccine, for example. Those are the types of things we'll be looking at as molecules look like they're working.

Now, there's inhaled Tadalafil, which is for erectile dysfunction also known as Cialis as the brand name and so that's one that we look at. Cannabinoids, Sumatriptan for migraine and then we get into some orphan lung disease, which is Dornase alpha and Tobramycin.

So, for the company, we're focused on Dornase alpha and an inhaled antibiotic in the future. The other programs, we expect to move to probably Phase 1 and then partner out at that point unless unless we get to an innovative launch model that we're seeing a lot of telehealth activity and that could expand our desire to bring some of those molecules forward.

Next slide is slide six. And this is an important one for our current shareholders and the new ones listening today, we just completed our third milestone received $12.5 million here in Q2. Some of our shareholders are asking me, did we get the money? Yes, we have received our funds. We've completed three out of the four milestones over the last 18 months and the fourth milestone will be completed in Q4. And that's bringing another $12.5 million this year; we fully expect that we'll be on track to deliver that.

A lot of questions I get is what is required for Treprostinil and what is on hold and how has that impacted development programs. So, I tried to bring some clarity for people to see visually here is that there's a BREEZE switch study, which we think we'll be opening back up shortly, United Therapeutics is in charge of that.

But that trial was almost halfway enrolled. Those patients have rolled over into the long-term expansion phase. They're doing great. And I know UT is working hard to identify new sites and get patients ready to go soon as that opens up, hopefully in July here to get that trial moving, but it's only a three-week switch study. So, as you can see here, it's not on the critical path yet.

Obviously, the shut down for three or four more months we will start to get to that point, but right now we're still within the track of what we've talked about, which is a filing no later than Q1 of 2021.

The second part is the PK study, and again, that's a very quick study and that one we finished part one and we have I think two more to do. And that should be very quickly resolved. And there's COVID testing plan in place to make sure that one goes smoothly.

And then there's human factor study and that one, we I think we're just waiting for final feedback and green light from FDA. But that's something we've done many times and learn how to make sure that they go well.

And so those are the three things that are in UT's control and we're collaborating with them on all three of those. And then the stability programs, what we're responsible for, as well as the CMC and getting FDA inspections ready at the factory as we built high potency factory, so that's all ongoing throughout the stability program.

So, this is a big thing that investors ask me is, where is this? How's it going? And what's our timelines? And so this gives you some clarity and transparency about -- nothing today that's on hold due to COVID is on the critical timeline. I'm expect these things open up over the next three weeks and months and that these will get back on track and you can see here, we'll finish on time.

Slide number seven is -- just talks about Afrezza and so for those who don't know Afrezza, it's the only inhaled insulin on the market today, it's the only one that we foresee, be on the market in the next seven to 10 years. And we take these micro particles called FDKP and we bind them with human insulin and water. And that makes a Technosphere particle, which gets really deep into the lung and that's part of the magic of our technology and how we make powders fly deep, and the micron size of these particles as well as the inhaler all together, work together in sync and a lot of people will come to us and say, can you take our powder and put it in your inhaler.

And we'll see as sometimes those powders will fly like bricks and they don't fly very far. So, part of the magic here is actually making the powders and designing those powders and our team in Danbury has done an awesome job on the pipeline for those.

And then the insulin here is a monomeric insulin, so what that means as soon as you inhale, it basically starts working and so if we go to the next slide eight, the blue shaded area is what a normal healthy pancreas looks like. The purple line here is Afrezza's 12-unit cartridge. And you can see they overlap. The black line is what we see is today's injectable insulin, which is what we've been using for the last 20 years, is the nature of injectable insulin just takes about an hour and a half, two hours to start working. And it's not until then that you start to see your sugar's come down over the next four to six hours.

And so you can see the mismatch very easily in this profile between Afrezza and injectable insulin. And that's important for physicians that we're going back out to and educate them because they've never really had a physiologic insulin. Everything's gotten closer to physiologic -- physiology compared to where it was 34 years ago. But you could see Afrezza mimics that very nicely.

Slide nine just shows you -- if I'd done the study three years ago, most doctors would have said Afrezza is as good as the standard-of-care, or worse some with perception. Now, what you see when we look at the top drivers of why you pick a mealtime insulin, Afrezza beats the standard-of-care on 11 out of 13. And the only two that I highlight here that we couldn’t improve upon, which will put things in places we'll talk about in a second, is managed care access. And we do have coverage, but there's a perception that's not covered. And that's something that just comes with clinical experience.

And the other one is in the middle here, it's called flexible dosing. And you'll see the pink line is higher than the blue line and that's because people are so used to dosing insulin in half unit, one unit increments, they don't understand that a four, eight, and 12 cartridge is as good and convenient as a 2.1 or 2.5 units of insulin. So, that's just a misperception of dosing and again, it comes back to doctors' clinical experience. So, as they get that clinical experience, they'll understand, A, the drug is covered and B, the dosing is pretty flexible. And they'll talk about that because that's some of the data we've been publishing, presenting here at ADA recently.

Slide 10 here is NRx trends are stabilizing post-COVID. And the reason that's important is none of us really could predict back in March where the bottom would be and how bad things could get. And I think what you can see here is our overall business is pretty sticky. We were relatively flat to Q1. We obviously saw pull-forward in Q1 if you look at that spike cone from 749 to 907, in the middle there that that was some pull-forward from Q2 demand around stocking of insulin and things like that.

And that bled off and we've been relatively stable and you can see NRx, which is the green line did peak back in late February, early March, and recently came in about 239 below and it's been growing back and so we think the salesforce is now back out there. It's obviously difficult out there for them, but not every doctor's office is open, but we have added 19 new reps this year that came out of training in March and in May. So, they're out there in June. So, we've increased our salesforce and we hope that that extra capacity will overcome some of the difficulties out there, meaning not every rep is at 90% or 100% capacity right now, they're doing their best with the access they have in the offices.

Slide number 11 is something we had a really good ADA meeting, we've had a lot of good highlights on this data. And I would say that the data is important, but it reinforces what we've been saying. I think that's really when we go back, getting data out there, keep it fresh at conferences, and answering key questions amongst thought leaders that we have and users is what's important. So, if we go to slide 11, it's really starting to highlight the ultra rapid-acting profile that I shared with you back on the physiology slide. They supersede the perceived precision of objective mealtime insulin dosing. That's a really big important point that patients have the ability to flexibly dose based on your glycemic response because of the speed of action of Afrezza.

We're absolutely as to able to show this at ADA meeting a favorable weight profile, which I'll actually share with you that data in a second that when you use insulin in general, you get a weight gain. It’s a metabolic hormone, there's always this perception that you're going to gain two to five pounds, at least, you could just consistently see in Afrezza, our patients actually lose weight or don't gain as much weight. And that what puzzles doctors because they feel like it's been the history of insulin.

We've switched, this is the third Type 2 study we've done, but the second switch study we've done the last three years, where you just switch off your injectable insulin, so swap one for another, and you can improve day 1c [ph] of 0.8 to 0.9. So, again, not adding another copay, not adding another new drug, you're just switching a drug that you're already taken and you're seeing an almost an improvement of what is equivalent to a new drug -- adding a new drug to your regimen.

So, we think these are important meaningful data. And the other part of the study that I'll talk about is the first time we had quality life data coming out, small study, but nice to see that patients had an improved quality of life as well.

And then because it is inhaled, there's a lot of questions around absorption and effect on the long. And we can see here, overall 98% of those treated with Afrezza versus 99% with mealtime insulin had no change or transient change. So, no major effect going over two years and that's something that a lot of docs just don't know that data, but we want to get that out there.

On slide 12, just shows you the median weight here. So, if you look at the standard-of-care on the right, that's the gray bar. That's reflecting today that a lot of people use -- I apologize looks like my figures got -- I didn’t put that -- color-coded which regimen it is, but the gray bar is Novolog, I believe. And they in the dark gray bar on the right is the 70/30 premix. So, what you can see is aspart had a 0.61 gain and then biaspart had 1.2 kilogram gain, and we actually lost there. So, it's almost a kilogram weight of 1. -- 1.5 half kilograms does add up, and that was statistically significant.

And the next slide here is slide 13 and that's a small investigator initiated trial that we sponsored with Kipnes, that saw improved A1c quality of life while maintaining time and range. And one of the things you can see in these patients when we look at the CGM was they were really high. Not just A1c, but they're really high on their sugars. And so being able to bring the overall sugar burden down, they may not get into the timing range of 180 -- 70 to 180, but they're just -- their whole profile has come down from maybe 220 to 250, down to 190, 200. So, we'll continue to say more data coming out.

Slide 14 is the visual of that data. So, baseline A1c of about 8.3 and you can see here and by week 14, 7.5. So, again, 0.8 A1c reduction, highly statistically significant, improved glucose control, acceptable time and range, no significant hyperglycemia. So, this is again showing you can safely switch the drug without adding any more side effects from your insulin.

So, overall, good data for us at ADA. We're very excited about this and there will be about 20 data sets over the three conferences coming up between ADA, the CD Conference in August, and there's another one in September, I believe. So, lots of more analysis coming and also publications, David Kendall, our Chief Medical Officer and his team has done an amazing job just getting data out there from all the data we generated over the last 20 years.

So, slide 15, and I'll talk about where are we in 2020. And so a big focus for us is T1D, that's Type 1 diabetes and that's because we see CGM which people have heard of Dexcom or Libre, where you can watch your sugars 24/7 and we think the profile will present where you can see that activity happening live is the best place to see Afrezza's usage and doctor's confidence there.

So, that's been a major focus for us is driving more into the Type 1 diabetes, which means we're going to be interacting with our patients more and making sure they're trained better and that's been going very well.

And then we launched recently a specialty pharmacy network and there'll be more innovation around the reimbursement support coming and then BluHale down the bottom right, is something that allows us to teach patients visually and see how they're inhaling properly and how much effort is required. So, all this goes into connected care in the future and that's what we're excited about.

Slide 16 just talks about what are we doing different this year to bend the curve. And here you can see the pink stars we've added 11 new market expansion territories, so places like Boston and Connecticut, Harris, Pittsburgh, Seattle, Utah. So, these are big diabetes markets that we've just not been in in two, three years and in a meaningful way. So, it's almost like a new launch in those markets. So, that's exciting.

And then we added eight new managers, or sales reps, we'll call them who replaced existing territories that may not have done as well. So, altogether we got 19 new reps out there this year and we also have four new managers who joined the company or who got promoted recently. So, excited about the management team as well, kind of moving us forward. So, that's -- one of things we're doing is just to continue to keep the salesforce growing and top talent there to move us forward.

And then slide 17 just talks about BluHale and this is really getting into connected care and diabetes as well ahead of many other markets. And so BluHale PRO we'll be launching, we're just waiting on the batteries from China, we believe will come in here in July. And so we'll get this out probably in August timeframe to our salesforce and our customers.

But this you can see the app here if you inhale properly, it turns green. If you do it improperly, it turns red and it's really meant to show you proper inhalation. And we've been testing this with our salesforce to make sure how our patients feeling today on the prototypes we have. And here you can see before training was 1.83 and after training with our salesforce with 4.9. So, these patients are leaving the doctor's office, not very confident, and then we come in and train them. And you can see we really build up their confidence in understanding the product and answer any questions they have.

And the bottom left, you see the future 2.0 we talked about is, this will be dose detection. So, we've already been able to hack some of the VGMs [ph] and test them on our product and see how they work. And we can see that within two hours, your sugars are consistently coming down. And so how do we start to get into this dose detection, dose predictability in the future that that's what we're excited to go to.

The next slide is slide 18, just showing our potential investors and current investors as we continue to make progress quarter-over-quarter, we feel like we should be growing a little bit faster given the profile of this product and the energy we're putting in, but you can see we've had some nice consistent growth with our growth here in Q1 of 2018, Q1 of 2020 being $8 million and so we are wrapping up the quarter here, so I don't yet have Q2 in, but that will be in probably early August we'll be releasing Q2 results. But so far, we feel pretty decent. Our scripts are maintaining above 2018 levels, so we can at least feel comfortable of a range of revenue and that's base.

The next slide is cash burn and this is something, Robert, that we've been really working hard to build efficiency into our investments and really be more choice with what we're spending our money against as we haven't or had to raise any major funds over the last 18 months, and that that's something that's been important to us is being very prudent with our outstanding shares and try to minimize pollution where we can and kind of grow as much as we can organically within redeploying cash to bigger investments or just conserving cash as we continue to transform the company.

You can see here in the first half of 2019, we burned through about almost $45 million and you can see down the Q1, we're down to $11 million and we will definitely be less than we were last year in Q2. So, I think you'll continue to see that efficiency in the company of growing sales and getting more with less even in a COVID environment, we feel we'll be doing pretty well here managing our cash.

And slide 20 just, you're neutral conference, so I can talk about all the analysts covering the company, but we've gone from zero three years ago to five analysts today and we expect more as we continue to grow the company, but lots of good discussions with the analysts, lots of good updates coming out of ADA from them. And so we can see price targets $2.50 to $4.

And I think some of the questions I get is why is the stock run recently, and I think it's a combination of a couple things. We're talking to lots of new investors, a lot of people are interested in the United Therapeutics story and how that fits in that brings in a new group of investors.

And then there's another group who have either -- before investors or current who want to increase their positions, and they believe in Afrezza and they see it stabilizing and believe we'll continue to grow this. And so those two types of ventures will converge and will continue to build our investor base and bring in new people to the capital structure of the company. So, we're excited about where we're going and the clarity that comes with UT going forward.

So, when you look at the future of the company, Technosphere platform is critical. We think we can move more things on the pipeline forward and we're continuing to work on things that will become public over time. And U.S. Afrezza is -- the U.S. market is the most profitable market for pharmaceuticals. So, we have to be successful here.

And then international expansion, we were just kicking off our trial in India a few weeks ago. So, that's moving forward. We're going to be discussing filing here in Australia very shortly, as well as Brazil launching. So, that's important to make sure Danbury our factories are running more efficiently and we continue to help more patients around the world.

And then the pipeline, so you see UT moving forward, we'll collect royalties from that in the low double-digits starting now once that's approved, and we're also looking to bring in other assets to complement our salesforce. So, can we drop it -- we can easily have another product in the bag and make sure our reps are more efficient and effective as well.

Now, that we have this footprint, we think that's a great opportunity to leverage further. So, very excited about the future. I myself purchase more shares in the April market recently and feel very good about where we're going as a company and we'll get through COVID. It's a speed bump unfortunately for everyone, but it is traumatic and people are getting through it. And it's a tough environment, just getting people back to work as well as just getting the field back up and running in doctors' offices.

So, I think we still got some more bumps in the road with COVID across the industry, but we're looking at platforms like telehealth and distribution changes and things that we can do to drive more efficiency and more upside to where we are.

I'll stop there and take your questions.

Question-and-Answer Session

Q - Robert Blum

All right. Thank you very much, Mike, for the overview. Let's expand on a couple of those topics, but maybe first sort of take a step back you've been selling and marketing Afrezza since the first quarter of 2017 after Sanofi handed the product back. Talk about what changes you made to fix the initial failed launch by Sanofi and can brands be successfully relaunched?

Michael Castagna

Yes, I would say we're on our way now, right. I would say when Sanofi launched they did 7 million net sales in a year with spending $210 million; you can see we're doing 7 million a quarter and a lot less money. So, I think we have proven that we can be efficient and effective in relaunching and the thing that slows Afrezza down is just capital if we were to hire 200 reps, we could grow faster but is that faster going to offset the expense base and so we've taken a prudent strategy to continue to fix the scientific data behind Afrezza and that's what we've done.

One we've had to fix packaging and that just took time. So, we've changed all the packaging twice unfortunately, we had to first convert from Sanofi to MannKind, equivalent boxes and then we had to bring out new 180 count boxes. And so that just took about two years of transition time before we could get all the old packaging off the market. And to me that was really important because if doctor did not know how to prescribe Afrezza and it was a new box, new way to dose insulin. And we had to get the right packaging and now today probably about 70% of our sales are in our new packaging.

So, that was the right decision. It just took time to get that done. But that was a critical decision for the company and making sure doctors and patients could prescribe and titrate properly the product because that was one of the feedback from Sanofi, they felt a lot of people were dropping off and under dosing, which was probably true, we did see a lot of attention there in Sanofi where obviously doing COVID, you can see our base business is holding up pretty well. So, we think that's been important.

The second part was dose clarity, a lot of misperception and guidance over time to treat inhaled insulin like injectable insulin and there's nothing -- they're two different animals and so you got to learn how to dose them differently and be comfortable dosing them differently. And that's a lot of the data we've been generating and showing, you can dose up to 2x inhaled insulin over injectable and not have any more risk of side effects or hypoglycemia, which is the number one, 10% of days of -- almost 10% of people in Type 1 will die for hypoglycemia, which is scary that that's the side effect of your insulin could kill you. So, obviously that's a big concern for patients and doctors and we've been able to bring clarity that we've reduced that side effect by 50% to 80% when you look at our various analyses out there.

And then the last one is data publication. So, a lot of docs when I got here, I said, how can we don't prescribe the product? And they literally did think there's a lot of data behind it. And it turns out, they were right. There's tons of data, but it was never published. So, if you're an academic center or pharm D, you're looking for data, there's not a lot out there. So, David Kendall joined us two years ago and it takes a while to get data assembled and submitted to congresses and publications. But finally, this year, you're seeing quite a few publications starting last December with our hyperglycemia.

And I know there's three or four more coming. I've seen them coming. So, that's exciting getting the scientific data out there. And like I said, this is a big year for us to start to get the bulk of that data and in the next year, we'll start to look at some case studies and other special populations going out there.

So, made a quite a few changes. But the big, big ones are really packaging managed care access, reimbursement support, making sure that patients can afford the product and get on it.

So, -- and then the second part is relaunched. Yes, I've launched relaunched many brands. They've all been very successful. This one's been the hardest, but I will tell you is the hard work will pay off. It's an incredible drug that I know patients love and will benefit from. And I think we're well on our way past the hard part. So, it's just a matter of execution at this point.

Robert Blum

Okay. And just I know you've touched on this in a couple of different capacities, but in terms of the changes that you're making to the commercial model to help bend that growth curve. Talk about some of the aspects of what you're doing going forward.

Michael Castagna

Yes, for those online, I mean, I think if you just go back to slide 15, which is the T1D circle slide. We think we were focused on Type 2 for last few years. And while the Type 2 patients are incredible, and that is really helpful, and we've seen great data in them, it takes a lot of work and a lot of money to push in that market because you're competing against GLPs and SLGT [ph] and all these other classes with thousands of reps and hundreds of millions of dollars. And we found ourselves getting into really unfortunate debates around do they need mealtime insulin or not? The answer is yes, they do. We've shown that they do. But so us focusing on Type 1, focusing on connected care, focusing on new specialty reimbursement hub, bringing different distribution model to the marketplace, and hopefully in the second half of this year, these are all the things we're doing in the second half that we've been building in the first half that will launch in Q3.

And part of it was you didn't want to launch new programs in COVID, you won't get the impact or effect. So, as markets open up, we'll be ready to go probably in the August timeframe with a lot of our new initiatives. So, we're excited and you can see with sales stabilizing now, if we get back to growth, and all the things we're doing, we should, start to see a break in the curve. And I think that's something we've been working hard for.

Robert Blum

All right. Maybe extend a little bit more on the Technosphere technology. How is it differentiated from other inhalation technologies out there and devices and how does this benefit patients?

Michael Castagna

Yes, that's a good question, and it's one I didn't appreciate even when I came here four years ago as the Chief Commercial Officer was -- to me dry powder is dry powder, they don't teach you much in pharmacy school about different dry powder inhalation technologies and so not until you get here, you do a landscape assessment you realize we haven't here is very special number one.

Number two; it's protected by almost 1,000 patents and probably over 1,000 patents by now. And it really is unique. So what we really do is make powders that can fly in our inhaler. And the way that the team works on these powders is the inhaler slows them down. So, think about turning your car go 90 miles an hour around the turn, you're going to hit a light pole. We slow down those powders, so that you can turn that corner safely and get around the deep ventricles of the lungs. And that's really, when you think about like a product like Advair, you just give him blunt force inhalation into the back of the throat you lose a lot of drug in that process. When you inhale our inhaler DreamBoat, we slow down the release of the powder through the resistant mechanism and some physiology, engineering, which is amazing how man thought of everything in the team there in Danbury.

And so we slow those particles down so they get deep into the lungs. And so we think that's going to be a benefit as we go into the orphan lung diseases delivering, hopefully more drug to the target organ. And that particular case with maybe less side effects, less dosage. So, maybe that's a benefit on some of these drugs.

And also just other therapeutics lungs are an incredible -- we get oxygen every day through our lungs. And it's a organ that's never been really widely used beyond lung diseases. So, how we use that ability to put more drugs into the lungs that could get to the blood quickly and give people a quick onset of action. That's what we've seen with our migraine. Some of the PPH drug data we generated probably over 10 years ago, that -- we get a quick onset and release symptoms of particular diseases, and that's really what makes us unique.

Robert Blum

Transitioning a bit here tells the story sort of, behind the collaboration with United Therapeutics, how did it start? How -- what is sort of the journey been and maybe expand a little bit further on sort of what the future looks like there?

Michael Castagna

Yes, and that journey started almost two years ago with Martin and I chatting, we had gotten Phase 1 readout on a single ascending dose and at that point, we knew we had a clear winner. And it's just a question of go it alone or partner with one of the three [PAH] companies. And for me, United Therapeutics was the market leader in this space, they own the innovative product we were going up against and you know, we just want to make sure we had the right partner we had a big partnership with a former company, we don't really want to repeat that a market leader picks our product and doesn't do anything with it.

So, that was really important to be convinced that someone like a UT would take this and lead it and drive it and also be comfortable converting their existing patient base from product A to product B. And we found that partner do not know I think Martin the CEO, is an incredible individual, very visionary, cares about patients mentally just like us. And to me is transformative just like our man, our founder effect, those two knew each other.

Ironically, I found out when I met with Martin -- licensed 30 insulin pump that he had built back in 1998, for the UT programs to deliver Treprostinil back then, and really what that resulted in saving her daughter's life and building United Therapeutics.

So, a long history goes back over 20 years between the founders of this company and that company. And we're super excited; I think one of the best partnerships I've seen in my career. And I know we get lots of positive feedback from them. So, I think the partnership is strong; we're very excited about the future together. And I think the journey is just getting started. So, hopefully, we'll get some additional molecules working there. And it is an exclusive partnership, meaning that that we can make dry powders and pulmonary hypertension, and they can't launch other ones without at least trying our platform first. So, I'm so excited about that and continue to work on not just the Treprostinil, but other ideas behind that the technology and PH. So, that's exciting.

Robert Blum

All right, and then we'll maybe do two more here. I know you talk a little bit about your cash position here. But how should we be thinking about your current cash position, your burn, how the pandemic has impacted your thinking around maybe investments and spending in general?

Michael Castagna

Yes. So, we saw COVID happening, we made lots of tough choices across the company in terms of reduce spending to offset not just Q2 sales decline, but what happens in Q3 and Q4. And so we made some pretty deep choices, including salary cuts for employees and bonus cuts.

So, we think that more than offset was necessary. In addition to that, we were able to get the PPP loan for about $4.9 million. So, when you kind of look at the quarter and say we bought in the $12.5 million [from your nine] in partnership, we got the $4.9 million from COVID and we reduced our expenses. I would say our net cash burn this year will be in a good position and you kind of within what we expect to deliver for the year.

And then in Q4, we'll get another $12.5 million if all goes well and our partnership with UT. So, I think we'll be okay this year. And that should give us a nice cushion going into 2021. And the real question is what investments can we make to leapfrog grow faster, and I think that's really, you know, with the reduced cash burn and kind of increasing our cash position, we ended the quarter in Q1 with about $39 million. And if you just add up the numbers I just gave you we brought in at least 17 million here in Q2.

So, you shouldn't see no huge cash burn here in Q2, and then Q3 will be -- managed through and then Q4 will get $12.5 million. So, I think net-net for 2020, we feel pretty good about our cash positions going into 2021. And our big focus now is what investments can we make to grow the company faster and that's where we put the salesforce; we're putting our reimbursement hub. We're looking at telemedicine. So, there's several initiatives we have undergoing that we think are important investments to try to burn not worry about the cash burn, but how do we just grow sales faster? And that's what shareholders want to see.

Robert Blum

All right. And then maybe the final question here, just looking forward, what significant catalysts can investors be looking forward to?

Michael Castagna

Yes, I mean, I think for us, we got several new data sets coming out here in August and September. So, there'll be some conference releases there and some new analysis, some of the data you share with you from ADA.

There will be -- UT has presentation in about an hour or two. So, I think the ILD indication that they're working on is important to continue to watch and are filing for Treprostinil. So, those will be the next big milestones there for UT and us. And I think the pipeline is what can we work on the pipeline that is either another partnership? Those are things we're looking forward just moving things in towards the Phase 1 dosing with migraine. Now, I know the team is working hard for that and I'd say just is there any other BD opportunities that we can collaborate on with other companies either to chop another product in our bag or some type of Co-promote, but these are the things we're looking at is just, it's all around growing sales faster for Afrezza.

But we don't need any major new data sets now. That's the good news. We just have to execute and scale and skill. So, I think those will be some pipeline, R&D stuff. We're working on UT, and then the presence those will be the three main focuses here.

Robert Blum

All right, great. Well, Mike, thank you very much for your time. Thank you, everyone that that listened in on today's webcast. We greatly appreciate your participation. You all have a great rest of your day. Take care.

Michael Castagna

Thank you. Thank you, Robert. Bye, bye.