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Transcript:MannKind Corporation (NASDAQ:MNKD) Q4 2021 Earnings Conference Call February 24, 2022 5:00 PM ET
Company Participants
Michael Castagna – Chief Executive Officer
Steven Binder – Chief Financial Officer
Conference Call Participants
Brandon Folkes – Cantor Fitzgerald
Gregory Renza – RBC Capital Market
Thomas Smith – SVB Leerink
Bert Hazlett – BTIG
Operator
Good afternoon, and welcome to the MannKind Corporation’s Fourth Quarter and Year-End 2021 Earnings Call. As a reminder, this call is being recorded on February 24, 2022, and will be available for playback on the MannKind Corporation’s website shortly after the conclusion of this call until March 10, 2022.
This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from these stated expectations.
For further information on the company's risk factors, please see their 10-K report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Steven Binder.
I would now like to turn the conference over to Mr. Castagna. Please go ahead.
Michael Castagna
Thank you. Thank you, everyone for joining us this afternoon and sorry about the news this morning. I want to talk about three things as we look back on 2021. Number one, we moved Tyvaso DPI from concept to an NDA filing and passing the FDA inspection. And are fully staffed and moving into ensuring commercial product is ready upon FDA approval. Number two, we recapitalize the company early last year to put us on a sound path of success and ensure that we need to make dramatic changes to our operating model or our structure and our strategy. Given the types of setbacks that we did experience over the last six months that included the sale leaseback, the convertible debt and paying down old debt to make sure there's nothing major due in the near-term.
We continue to operate and focus on building out our strategic plan to grow in our company on the pathway to success. And third, the pipeline we really did advance the pipeline forward by purchasing Qrum. The feedback we're getting on clofazimine, the data we're looking at is very positive. The advisors have been giving us great feedback and we have our second advisory board in the month of March.
Additionally, we did three-pronged relation deals. I think two of which were public, and we continue to look at other opportunities in exploring ways to use our Technosphere technology and other assets to help other companies with their products. As you look back on Q4 and 2022, we were able to grow total revenues over $75 million and Afrezza in double-digits year-over-year.
Q4, we had a record revenue of $11.3 million with Afrezza, which is really exciting compared to heavenly face with COVID as we closed out Q4. Focusing the first pink box orphan lung disease, our unit of collaboration is strong and going forward, and we're extremely excited to help patients as we get through this made decision.
As I talked about, we're focused on building inventory and helping UT prepare for launch. On the pipeline, we’ve completed our first cohort in our SAD study. The second cohort is about to start and we expect to get SAD results in Q2 and MAD results in late Q2 or early Q3. MNKD-201, the first time you're seeing this product it's called the nintedanib, or which is Ofev brand. I'll talk about that later in this discussion, but we're now revealing that program. It's going to hopefully progress into Phase 1 in the near future.
MNKD-501 I've talked about in the – and that's the TGF-β program and both these are developed and progressing into developed milestones. We actually discontinued the development of imatinib AKA MannKind-701 as one of the things we try to do this year coming in is bring more focus and get rid of distracting things that weren't going to move forward in a way that we expected.
And that also led us into Afrezza. We looked at Afrezza where we were heading this year. One of the big strategic decisions we had to make, unfortunately was to reduce our 30 FTEs to reinvest some of the money to keep Afrezza going in the right direction and drive impact in 2022. While we saw positive script growth in 2021, it wasn't what we wanted to do. We thought we could do better, but COVID did hold us back a little bit.
However, we did launch a campaign in Q4 called seeing is believing where we provided a free CGM to doctors who didn't write Afrezza consistently. And in that pilot, we saw about 45% of the targets actually opt into the program. And that group grow three times national average versus what we saw in Q4. We also launched a primary care pilot in Q4, where we're focused on the sub-part of the country with 25 additional reps focused on helping drive success in primary care where there is very low awareness of Afrezza adoption or trial.
We also just recently filed at ClinicalTrials.gov, our ABC trial, Afrezza Tyvaso combination, which was also previous referred to as a pump switch trial. This trial provide meaningful data in a pilot study, looking at keeping people on their pump, adding Afrezza to a pump or switching patients off their pumps to receive Afrezza. We're really excited about this study. It'll be the first time we're running this type of study ever in the history of the brand.
On the liquidity side, Steve and team has done a great job, make sure we have cash and investments over $260 million at the end of the year. And we completed Danbury facility, non-dilutive sale leaseback, which hasn't changed our operating model, but did provide us excess capital to continue to execute our plan.
As we look at Q4 performance on Afrezza, you can see our scripts. We continue to grow year-over-year, quarter-over-quarter on the right side here, I want to point to is patient demand. That's not visible to the public because we did move from a free goods program in 2020 – 2021 sorry, ending 2020 into 2021. And that was in our Afrezza assist our new comment. So you can see the volume growing in Afrezza assist from 221 patients when we first pilot it and Q4 all the way up to 989 patients coming in Q4 2021. This is our first step into removing friction, the reimbursement model, and making sure that patients starting Afrezza and doctors prescribing Afrezza can have a great experience. This starts the reimbursement process. Sometimes they roll into free goods, which is FG/paid prescriptions, our cash program. And you can see we're almost up to 1,000 patients in that 1,000 scripts, I guess, for the quarter in that free good/cash programs.
We continue to see exponential growth in the cash payments every month. These are not meaningful contributor to Afrezza sales trajectory, but they are a goal as the patients that we continue to track that we don't see in the subsequent data. As you look at 2022, we've optimized our Afrezza footprint to make sure all of our sales are territories are viable and they have positive growth potential. We are expanding the seeing is believing campaign to all of our sales rep territories based on our Q4 pilot, that'll be launching in March to give everyone opportunity to expand that free CGM, to really show what Afrezza can do when you use it in combination with CGM and T2. The brand has the potential to be cash flow breakeven as we approach 2023. And that's one of the things that we have a lot of discussion around is how to make sure we continue on Afrezza and also make sure it's not a drain on the company that it can be self-sustaining in the years ahead. Our PH trial is increasing enrollment every week.
We've got invited to an MIDD modeling session with the FDA for potential label change. We continue to see good positive clinical data getting published on Afrezza as we look out. I want to bridge over to the next most important topic of the day Tyvaso DPI. This is near and dear to our hearts. We want to get this to patients as soon as possible. Unfortunately, the FDA requested information from United Therapeutics related to a citizen's petition very recently. The response that UT provided was solid and really well written and considered a major amendment unfortunately to the NDA. As a result, the FDA extended this to May 2022. There's not much we can do other than continue to feel confident, everything we're doing, be prepared for this. UT's run a great study. We have lots of great data on FDKP and the safety of it.
So we feel very good about our response to the FDA in helping UT get this across the finish line. MannKind kind is focused on is ensuring commercial products is available upon FDA approval. And we also are anticipating continued expansion of the plan as UT has been running two additional trials for market indications down the road. And we want to make sure that we get well ahead of that in terms of supply and demand. I want to thank everyone for all their health and support over the past year. I apologize about the news this morning, not ideal, not timely, what we expected. However, I think we feel very confident about the resolution and where this is going to head over the next 90 days. And it's a minor step back in the grand scheme of this year and the grand scheme of the life of Tyvaso.
We're super excited to bring this product to patients and get it there as soon as possible. Steve?
Steven Binder
Thanks Mike and good afternoon. I’m pleased to review to select fourth quarter and full year 2021 financial results. Please supplement this call by reading the consolidated financial statements and MD&A contained in our 10-K, which is filed with the SEC this afternoon. Let's start by looking at revenues for the fourth quarter of 2021. Afrezza net revenue was $11.3 million versus $10.1 million in 2020, a growth rate of 13%. The components of growth include a more favorable gross to net deduction percentage of 35%, mainly related to a one-time reversal of a reserve for product returns from a retail pharmacy, where we entered into a consignment agreement in the fourth quarter, plus price, a volume increase supported by patient TRx demand growth of 8% and a more favorable mix of cartridges sold.
Full year growth of 21% were driven by a more favorable gross to net reduction percentage, price volume increase supported by patient TRx demand growth of 10% and a more favorable mix of cartridges. Looking ahead, we expect the gross to net percentage for Afrezza to be approximately 40% to 41% in 2022.
Moving to collaborations and services, revenue for the fourth quarter was $1.2 million versus $8.4 million for 2020. Revenue in the fourth quarter was mainly associated with the remaining deferred milestone recognition as discussed in the third quarter earnings call. We expected to have a more significant amount of manufacturing revenue in the fourth quarter from our commercial supply agreement with UT, but the accounting literature guides us to where we can only recognize revenue associated with the agreement when we sell products to UT, which was not significant in the fourth quarter. Revenue associated with the manufacturing activity for 2021 was deferred on the balance sheet in the amount of $13.6 million as of December 31, 2021, which I will discuss a greater length in a few minutes.
As we continue manufacturing activities in the first quarter of 2022 to support UT’s launch with Tyvaso DPI, we do not expect to recognize revenue associated with the commercial supply agreement in the first quarter, as it will continue to be deferred until we start to release products to UT, which we expect to happen in the second quarter. From a cash standpoint, we’re able to invoice and collect from United Therapeutics for these manufacturing activities. The full year revenue for collaboration services rose 11% to $36.3 million, and consists mainly of revenue from our collaboration with the United Therapeutics in the amount of $34.4 million.
The graph on our next slide shows the quarterly Afrezza gross margin trends. Our gross margin increase in each quarter during 2021 and the closed the year at 62% for the fourth quarter, even though the fourth quarter included $2 million of inventory write-offs, approximately $1.3 million for the write-off of Afrezza run of cartridges that did not pass quality inspection and approximately $0.7 million for inventory repurchased from a retail chain when we entered into the consignment agreement in the fourth quarter and recorded inventory reserve for product that is at retail stores, but is not likely to be sold before its expiration.
This inventory was repurchased with the wholesale acquisition cost. Additionally sales associated with the consignment agreement in the fourth quarter had no gross margin because we repurchased the inventory at whack which became its cost basis. This negatively impacted our fourth quarter gross profit by approximately $0.4 million. Looking back the prior quarters, you may recall that we reported a $2 million amendment fee in the second quarter of 2021, which also negatively impacted our gross profit and margin for the year.
Looking to 2022, we expect to continue our favorable gross margin trend as we grow our further revenue and start to manufacture commercial scale Tyvaso DPI on a 24/7 bases, which helps absorb overhead costs.
I realized the accounting for collaboration revenues associated with United Therapeutics has become complicated and confusing. So let me take some time to walk you through the manufacturing services performance obligation with UT, which is how we describe this in our 10-K.
The first line in this slide represents the cost incurred by MannKind associated with this performance obligation, which are recorded in our P&L. United Therapeutics is funding this cost. We have been invoicing these costs since the second quarter and have been collecting from UT. The manufacturing services cost is shown in the first line, identifies the cost in our P&L increasing from $2 million in the second quarter to $6.5 million in the fourth quarter, as we gear up our manufacturing and support operations to prepare for commercial stage manufacturing. A total of $13.8 million in cost was incurred by MannKind associated with this performance obligation, which hit our P&L in 2021.
We recognized only $0.3 million in the fourth quarter for the of mainly Tyvaso DPI inhalers to UT. The remaining $13.6 million should have revenue to offset it, but we can only recognize the revenue associated with this performance obligation when we sell products to UT. Therefore we defer the revenue which we recognized in later periods.
Entering 2022, we expect for most of the costs associated with this performance obligation in the first quarter of 2022 and start to recognize revenue in the second quarter, as we sell products to UT to support the Tyvaso DPI launch. Deferred revenue will be recognized over the manufacturing services agreement life, which currently runs into 2031.
Let me conclude with some final comments. Today, we filed an updated S-3 Universal Shelf to replace an expiring shelf registration seat. We also filed a new perspectives linked to our ongoing ATM agreement with Cantor Fitzgerald. We do not have plans at this time to access the shelf for the ATM. We have done this as a matter of good governance and financial management.
We ended 2021 with approximately $260 million in cash and investments, which we plan to use to fund our growing pipeline, which Mike will update you on in a minute and make target investments behind Afrezza, while looking for business development opportunities that are complementary to our business.
Thank you. And now I’ll turn it back over to Mike for some final comments.
Michael Castagna
Thank you, Steve and thank you everyone for all the help this year. So when you look at the MannKind pipeline here, we’ve updated this slide and I think this will be reflective on our website shortly. I wanted to first bring a little more clarity to MNKD-201, which is a new reveal here, which people don’t know this product, the brand name is called [indiscernible] over $3 billion a year. Idiopathic pulmonary fibrosis is a very difficult disease to treat, and we believe that this product can be tailored out, can show hopefully equal or better efficacy with less of a side effect profile than exists today.
We’re really excited about this program and continuing to progress in the talk studies and animal models to project exactly the dosing we will need to move forward into human studies. The other one here we’ve talked about in the past is 501, and you can see we’ve refocused our pipeline because I think it’s really critical to do a few things well. Afrezza is going very nicely. We had a great meeting this week on just preparing on how we get to Phase 2, file the IND, and accelerate timeline as best we can. So we can ensure this product gets to patients as fast as possible.
There’s nothing else on this slide, I’m going to talk about some of the progress in the next slide 2022 milestones. As you see every year, we try to lay out some of the key milestones for our investors to look at quarter-by-quarter, and then we generally scorecard ourselves against these milestones. So the rest of this quarter, you can see, we got Tyvaso DPI manufacturing, initiate our Phase 1 and Afrezza ABC study was IRB approved, which is now going to be open for enrollment.
As we get ready for Q2, we want to make sure we have continued manufacturing, inventory quantity for United therapeutics and we get MNKD-201 and 501 in the PK/PD studies, and really look at the animal models to project do we see any benefit as early stage or any talks that we didn’t expect.
And then in Q3, we should have the readout for clofazimine which will be the filing for the IND there in Q4 to get this in the Phase 2, as soon as possible. We take a step back, number one, our job is to be stewards of the capital that shareholders will provide to us. And we need to sit here and look and say, how do we best maximize our investments behind our growth drivers that are going drive shareholder value?
When you take a look back from 2017 till now, then I will take the company from $11.7 million annual revenue all the way up to $75 million this year. And over the last 24 months, we grew despite massive setbacks on COVID, on Afrezza as well as continue to keep our manufacturing team in place, growing against all odds in terms of COVID and work environment and getting through a really tough environment of the FDA inspection preparing for hopefully a launch here in 2022.
As we look to the future on the right side, our future is really bright, we’re super excited and we really have a lot of opportunities to drive shareholder value. Number one, we continue to expect Afrezza to grow. Number two, the Afrezza pediatrics will be a pivotal point where we think that will be an inflection of future for Afrezza, once we get this data. We’ve done everything we can, this will be the first time in the last 12 years where we’ve done a large Phase 3 trial head to head that we think is we’re dosing the product, right and we should get exceptional results as we look for here.
Now, the one challenge is these are kids, the kids are unpredictable, so we have to get the data to feel good. So we’ve designed the trial based on all the inputs that we’ve done over the last four years and mistakes we’ve made in the past. We expect to continue to see Tyvaso royalty upon FDA approval manufacturing revenue Steve already talked about.
Additionally, investors have placed a little value on our pipeline, and we think as these programs continue to progress, there’ll be additional interest either for international partners in some of the markets or continue opportunity that shareholders will get some value on our share price as a result of the investments we’re making in the pipeline. And none of this includes any new collaborations or international opportunities we’re pursuing as we speak.
So we feel very good about our future diversification of revenue and continue to leverage that generate shareholder value from here on through the next decade. I want to thank everyone for their time and I’ll open up for questions.
Question-and-Answer Session
Operator
Thank you. [Operator Instructions] Our first question comes from Brandon Folkes with Cantor Fitzgerald. Your line is open.
Brandon Folkes
Thanks. I have questions and congratulations on all the progress. You granted all the progress you’ve made in the business over the last few years, very strong capital position. How do you think about business development and maybe bringing in some more commercial assets in the near to midterm? Obviously, you focused a pipeline but just with sort of the United Therapeutics, Tyvaso remains a big opportunity. But how do you think about bringing in some more commercial assets that would be hardly under your control? Thank you.
Michael Castagna
Thank you, Brandon. Great question and we find ourselves in a really good position despite the new today in terms of business development. We’ve had lots of inquiries around opportunities. We continue to evaluate those. And we do know there’s a lot of single product companies that are struggling, that are burning a lot of cash and that there are ways to harmonize those infrastructures with the infrastructure we have. We’ll continue to look for those opportunities.
They have to make sense, they got to fit our strategy and they have to be good for shareholders. So we are open to those ideas. We’ll continue to be open. But those things often take time and energy and we want to make sure they’re not distracting us from driving core value that we’re doing. But we do know there’s a lot of companies that’ll be running out of money and assets that really need home and that maybe MannKind can be a place for them. So we’ll continue to evaluate those things as they come forward.
Brandon Folkes
Great. Thank you very much.
Operator
Thank you. Our next question comes from Gregory Renza with RBC Capital Market. Your line is open.
Gregory Renza
Yes. Michael, thank you for the update today and thanks for taking my questions as well. Just wanted to follow-up a little bit on, as you explore fleshing out the pipeline and maybe just layering in some of the COVID 19 impacts. I think firstly, as we serve exit from pandemic, endemic and some degree of stability or normalcy, how do you think about the landscape for pulmonary partnerships? To what extent has the pandemic provided some learnings or opportunities where your technologies can kind of fit in to that scheme as a potential benefit.
And then maybe secondly to that respect to COVID-19, I’m just curious if you could provide some color, how you’re seeing exiting Omicron and how Afrezza trajectory could potentially look sequentially throughout the year. Thank you very much.
Michael Castagna
Lot rolled up into that question. So I’ll do my best, Greg, but thank you. I think the first thing I’m thankful that clofazimine is where it is in terms of development, because in our discussion with the advisors the number of trials backed up that are in pulmonary infectious disease are really high right now. And therefore us getting right in line, if we were in Phase 2, right now, for example, would not be ideal. We’d be paying a lot of money for not a lot of progress.
And we see several other companies stuck in that situation where they’re burning cash against the pipeline without a lot of delivery of patients. So we are optimistic that by the time clofazimine goes into Phase 2, a lot of that backlog will be cleared out and we are anticipating no resurgence of COVID this year. I’m sure there could be some pockets, but that’s not – we’re assuming in more normal head forward as we go. And we’ll watch that before we go ahead and launch Phase 3 trial of clofazimine.
In terms of the opportunity in partnerships, you saw we did a small development deal with NRX Pharmaceuticals. They have an opportunity for COVID treatment. We’ve done several other COVID formulations last year, maybe 2020 when it first started. And if COVID is going to become more of a chronic annual thing that we got to treat, we want I think our technology can be used for partners, whether that’s vaccine boosters, it’s other meds that can be a self administration. That’s a great opportunity.
But on the flip side, unfortunately, there are millions of people who now have damaged lungs and that’s going to probably expand some of the market opportunity as we look out, whether it’s IPF or COPD or pH the indications that UT’s going after. We think this is going to – fortunately going to be a grown segment, given the number of people who have that COVID. So I think net-net, fortunately COVID is not good for society, but I think it will set up MannKind for a multitude opportunity in the future. I think hope that answers the question on the platform and how we’re thinking about it as well as our own products and development.
On COVID 19 and Afrezza, that was one of our challenges as we looked over the last two years. We had hired about 20 some people, maybe about almost 30 people between 2021 and 2020 in anticipation of getting out and growing faster. And unfortunately with the opening, closing multiple times over the last two years, we weren’t able to make as much impact with all the extra expense. And as we came into this year, we were right in the middle of COVID and we just weren’t feeling like is this thing going to go away or come back? Or we shut down again.
So we made the tough choice to kind of reallocate some of our expenses to where there are things that we can control, things that we can shut on our office COVID changes. And that’s how we’re imagining the Afrezza business. So the more confidence we have that COVID is not resurging and our reps aren’t going to be locked out of offices, the more confidence we’ll have in terms of continuing to build back up on that sales force, as we get a new team in place, we have all new marketers, all new managers really good focused team here driving us forward on Afrezza.
And I think our first sales meeting in three years will be in a few weeks. I’m really looking forward to that. And I think coming out of that, Brandon is when we can – sorry, Greg is when we can start to see that continued growth that we start seeing right now that we expect to see coming out of that meeting. So that answers a lot in there. But we still believe despite COVID mainly because a lot of our business is private practice, we still need to get academic centers on board and they’ve been the last ones open up and continue to be the last ones open up. So a lot there, but hopefully it gives you a little bit of clarity on how we’re seeing 2022.
Gregory Renza
You bet. That’s very helpful. Thanks for taking my questions.
Operator
Our next question comes from Thomas Smith with SVB Leerink. Your line is open.
Thomas Smith
Hey guys. Good afternoon. Thanks for taking the questions and congrats on the progress. Just one on Tyvaso DPI, any additional color you can share on the regulatory update this morning. I know UT’s responsible for the regulatory interactions here. But can you talk about your expectations for the label, any change in your expectations relative to the October communication where I think UT communicated the latest version of the draft labeling for both indications with no box warnings or contraindications.
Michael Castagna
Yes. Tom, thank you so much for joining us today and appreciate the question here. I think on the labeling, the short answer is we don’t know, right? The FDA didn’t give us an updated label. They haven’t comment on any changes and discussions I’ve seen in the last few weeks as we went through the journey here. I think if you take a step back, a lot of these citizens petition was focused around bronchospasm and FDKP. I think the good news is we’ve had over 20 years of experience with FDKP running it in trials of people with asthma, COPD, placebo. We have a lot of data there and I think being able to – we were prepared to respond and when we add to with UT and I think we took all the information and packing that up with UT, I think in front of the FDA.
So I think the short answer is, we believe in FDKP, we feel it’s safe and effective excipient. We don’t believe the accusations and citizens petition to be fully true and portrayed the right way. And then we have a lot of data that that is kind of misleading in the way they structured their CP. And I think that's important, at probably over 100 almost 200 patients in some of our trials where we retrospect, identified them as having lung disease, COPD or asthma and they were fine there was a bronchospasm concerns are scarce.
So I think a lot of this due process, the FDA needs the time to go through everything. And we feel very confident that in the end, we'll get to a good spot UT and our partners. And that the label, what could happen, who knows. But I think this is a really big opportunity. It's going to help a lot of patients. And whether there's a label change or warning or a black box, I don't think it's going to fundamentally change the mean opportunity in front of us in UT to help patients. Patients have a severe unmet need. They're stuck on the nebulizer all day, and this is really going to change the opportunity for them to really use the easy-to-use product compared to what they're doing today.
And we saw on the brief study, there's no safety concerns raised on those patients who have already underlying lung conditions. And that was just really not emphasized to get the drug only approved, and it shouldn't suffice on some of the concern that we have. But so we responded, we feel good, and we do have a lot of data in COPD that we don't see some of the bronchospasm that state is concerned.
Unidentified Analyst
Okay. Got it. Yes. Appreciate the perspective. And then just on the nintedanib program. Can you talk about the strategic rationale here? Just thinking about nintedanib. And I guess why you think this is a particularly strong fit for the Technosphere platform and maybe kind of compare contrast versus I think there's at least one other inhaled nintedanib effort that's out there. Why do you think this is particularly a strong candidate for your platform?
Michael Castagna
Got it. I think when it came to this class of molecule – there's two molecules, there's pirfenidone and nintedanib. We were actually developing both. We did not move pirfenidone forward last year we killed it, mainly because we felt that dose was too high, and there was a lot of pirfenidone out there, and we didn't see a huge benefit relative to that product to our platform.
On nintedanib, we do see a big opportunity because it's got very low bioavailability and be able to deliver a single cartridge to the lungs in a very simple way. We think with IPF, if you read the label of these products, they don't improve life expectancy. The Kaplan–Meier curve is continue to show very little delay and they may stop progression of FEV1, but these patients are not getting better. They're not stabilized as much as anybody wants. And I think that's where we believe, hopefully, our technology getting it directly into the lungs maybe will help – prudently one helps their quality of life and maybe extend their life.
It's a really tough disease. There's not a lot out there for these patients. The market is littered with failure. And we think applying our technology to this molecule in a way that gets directly into the lung will help improve patients' lives and whether that's going to be just a quality of life of an equal efficacy and better safety profile, I think the data will drive that out there. On the other program that's out there, we're aware of it. We watched it. There's not much to say about it. I think we're well funded to continue to move our products forward, and that's what differentiates us. We have an FDA-proven platform.
We have manufacturing scalability and formulation know-how. And we feel very good about our ability to move these molecules down the road. I think that's something that Wall Street sometimes takes for granted. But there's a lot of work that goes into scaling up these products and manufacture them in a way that can get through the FDA inspection with the drug-device combo.
And while I think Tyvaso DPI is a great example. It's been difficult to get to where we are, but we have not had many issues when it comes to the drug device combo or passing FDA inspection. Many dry powder products do not have that same luxury first round around. So we feel pretty good about using our technology in each molecule.
Unidentified Analyst
Okay, great. That’s helpful. Thanks Mike. Appreciate you taking the question.
Operator
Thank you. And our next question comes from Steven Lichtman with Oppenheimer. Your line is open.
Unidentified Analyst
Hey, guys. This is David on for Steve. Thanks for taking the questions. Just maybe one question on a follow-up on the COVID impact. Have you seen any disruptions to your supply chain from employee absenteeism that could potentially slow down the manufacturing grant ahead of the Tyvaso DPI launch this year?
Michael Castagna
No, I think the team is really good about getting ahead of any type of supply chain challenges. Back to 2020, we overstock make sure we have enough. And the biggest thing is around PPE equipment and stuff like that, that was running short around the country, we were always able to continue to protect our employees and continue manufacturing. The biggest risk, honestly, was a whole manufacturing like going down door and COVID and training and scale up. And I think we've been able to avoid a lot of that. So less on supply chain much more about disruption in the workplace. And as only the first week of January back, I think we had a few people go down in one particular week.
But otherwise, it's been relatively well managed, and I don't expect any major COVID challenges from here on out the supply chain. And then – so I think the only area did impact, but I don't think it's a major issue. It's very minor is the number of BluHale that we can manufacture for launch. And so I think that's – and that's more related to the chip shortage than it is a COVID issue. So that's it.
Unidentified Analyst
Okay. Great. And then just one follow-up. Is there any early insights or feedback from the primary care pilots that you can share at this point?
Michael Castagna
Not yet. I think it's too early. We do have some early script data. We have a number of prescribers. The only thing I would say that is slightly encouraging is, I think, the last two weeks, they've been running speaker programs. We've been seeing oversubscription to 30, 40, 50 attendees per week.
And I do think when it comes to the primary care pilot, we're at that awareness stage we did the research before we kicked it off. Varied a few doctors, I think one or two heard of Afrezza, and all they heard was [indiscernible]. So their awareness was very, very low of anything related to the product. So I do think it's going to be – it's been about two months now. So we should be coming out of the awareness stage amongst their top 10, 20 targets and hopefully into the trial stage. And I think that's where we'll start to see uptake and get people to try it, prescribe it and then adopt it.
And then within that pilot, we did find – we had to correct, we were targeting a $35 cash payment with no prior authorization for Walgreens. And we did find there were some pickups in that in the front lines and so we're trying to address that. And I think that's been addressed or will be addressed this week. So that was probably the only thing that may have slowed down some adoption early on. But otherwise, the only thing I'd add is 90% of the scripts that we saw so far come in were actually reimbursed, which is a lot higher than we would have expected because this is targeting earlier lines of insulin treatment.
We’re hypothetically insurance reimbursement should be a little bit harder. So we'll wait to see more data. It's very early, but that was the one statistic I saw that called my eye. It's a little bit different than what we expected in that following. So we'll keep watching it. But thank you for the question, David.
Unidentified Analyst
Great, that’s great color.
Operator
Thank you. Our next question comes from Bert Hazlett with BTIG. Your line is open.
Bert Hazlett
Thank you. My questions have been answered. Thank you very much.
Michael Castagna
Come on, Bert, nothing?
Michael Castagna
All right, guys. Thank you, everyone. Thank you for the questions. I think it's really got to show the next couple of months how this all looks, to get through the May deadline here with FDA. But we're full speed ahead. We are not changing any of our plans. There's very little impact to this decision with FDA for the company this year. So we're continuing to march on, and we'll continue to hopefully drive performance and help people live with diabetes, pulmonary hypertension and interstitial lung disease, as well as getting into NTM as we launch that trial forward.
So thank you again, everyone. Thank you to our team here at MannKind for all the work they did on their pretty stressful circumstances and looking forward to successful 2022.
Operator
This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.
