2023 Q2 Earnings transcript

[liane]

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[prcgorman2]

Thank you liane. I hope there’s no unfortunate(?) transcription errors as has happened in the past (at least once). Much appreciated regardless.

[peppy]

" Additionally, our orphan lung pipeline is starting to come into the purview. We expect to have 2 INDs filed and going into Phase 1 and Phase 3 in the next 12 months. INHALE-101, as we just notified you previously, there was a fire, unfortunately. We are now moving GMP manufacturing to Danbury, Connecticut. And fortunately, we have facilities there where we can move the equipment into. Our chronic tox study is now complete, and we’ll have a full study readout on that here in Q3."

As you look at Q2, Afrezza TRxs grew 16% versus last year, mainly driven by the Medicare access that was created under law in January of 2023.

Tyvasso
to give clarity for our shareholders that for every 10,000 paying patients, we expect annual revenue demand kind between $250 million to $300 million.

Additionally, we are on track to complete our high-volume capacity expansion, which is now in the end of next year. We have both spray drying scales happening with 2 new spray dryers being installed as we speak. And we have a fill/finish line coming in here in August that hopefully will be online between now and early next year.

[sayhey24]

Afrezza TRx grew 16% versus last year, mainly driven by the Medicare access that was created under law in January of 2023

[prcgorman2]

Aug 8, 2023 6:41:44 GMT -5 sayhey24 said:

Afrezza TRx grew 16% versus last year, mainly driven by the Medicare access that was created under law in January of 2023

Yes, I caught that Mike emphasized that fact in the earnings report yesterday.  I was dismissive about the possible impact, but glad to be wrong!

[ptass]

Aug 8, 2023 6:31:58 GMT -5 peppy said:

" Additionally, our orphan lung pipeline is starting to come into the purview. We expect to have 2 INDs filed and going into Phase 1 and Phase 3 in the next 12 months. INHALE-101, as we just notified you previously, there was a fire, unfortunately. We are now moving GMP manufacturing to Danbury, Connecticut. And fortunately, we have facilities there where we can move the equipment into. Our chronic tox study is now complete, and we’ll have a full study readout on that here in Q3."

As you look at Q2, Afrezza TRxs grew 16% versus last year, mainly driven by the Medicare access that was created under law in January of 2023.

Tyvasso
to give clarity for our shareholders that for every 10,000 paying patients, we expect annual revenue demand kind between $250 million to $300 million.

Additionally, we are on track to complete our high-volume capacity expansion, which is now in the end of next year. We have both spray drying scales happening with 2 new spray dryers being installed as we speak. And we have a fill/finish line coming in here in August that hopefully will be online between now and early next year.

Based on the math it seems like we currently have 1,000 patients; probably a little less since some of the revenue was for pharmacy inventory requirements.

[ptass]

My bad. $250-$300m is annual revenue. So we probably have 4,000 or so patients. Does this sound correct?

[uvula]

Aug 8, 2023 10:02:25 GMT -5 ptass said:

My bad. $250-$300m is annual revenue. So we probably have 4,000 or so patients. Does this sound correct?

I'm pretty sure MC mentioned approx number of patients during the conf call. Don't remember the number but 4000 sounds about right.

[prcgorman2]

You guys are conflating patient counts and revenue.

Mike mentioned the quantity of Afrezza patients (and 4000 might have been the number, don't remember).

He also said they're estimating $250M to $300M revenue per 10,000 patients of Tyvaso DPI.

The jump in share price today is based on the latter of those two (with perhaps some little additional enthusiasm over the prospect of Afrezza finally getting a respectable chunk of the prandial insulin market post INHALE study results).

[cretin11]

Aug 8, 2023 6:23:40 GMT -5 prcgorman2 said:

Thank you liane. I hope there’s no unfortunate(?) transcription errors as has happened in the past (at least once). Much appreciated regardless.

Rest assured the transcript is accurate and we will continue to grow revenue moving forward!  

[LongMNKD]

For INHALE-1, we’ll have an interim analysis telling us either trial is properly sized, it needs more patients, it’ll take a little longer or is a field exercise that keep going. Obviously, we believe the primary endpoint is sufficiently and statistically will be sufficient. But until we get to that interim analysis in October, which would be late October, so we’ll have that information by the next quarterly earnings call. That will be important to share with shareholders that we think that it will be on track in order to drive to that read out there in the first half of ‘24.

Regards to INHALE-1, can someone help me understand what exactly is interim analysis and what can we expect from it in the next call?

[prcgorman2]

Aug 8, 2023 11:23:32 GMT -5 LongMNKD said:

For INHALE-1, we’ll have an interim analysis telling us either trial is properly sized, it needs more patients, it’ll take a little longer or is a field exercise that keep going. Obviously, we believe the primary endpoint is sufficiently and statistically will be sufficient. But until we get to that interim analysis in October, which would be late October, so we’ll have that information by the next quarterly earnings call. That will be important to share with shareholders that we think that it will be on track in order to drive to that read out there in the first half of ‘24.

Regards to INHALE-1, can someone help me understand what exactly is interim analysis and what can we expect from it in the next call?

I don't know if the recording is available but I recommend listening to it if the transcript is too hard to follow.  Mike mentioned more than once, and answered a question from an analyst about the "interim analysis".  I'm guessing agedhippie can helpfully chime in here too.

As best as I can describe it is an "interim analysis" is a checkpoint.  It's a planned waypoint to measure progress and make adjustments to the trial (including termination if necessary) such as adjusting goals, length of trial, quantity of participants, et cetera.  I'm no expert on this so hopefully I'm not messing up the description too badly.

I assume making some adjustments are simple and not difficult to ingest the data from the change such as increasing the length of the trial or adding new participants, but other changes could make it difficult to assess results.

In any case, it's a planned waypoint to assess and adjust if needed/wanted.

[agedhippie]

Aug 8, 2023 12:04:18 GMT -5 prcgorman2 said:

Aug 8, 2023 11:23:32 GMT -5 LongMNKD said:

Regards to INHALE-1, can someone help me understand what exactly is interim analysis and what can we expect from it in the next call?

I don't know if the recording is available but I recommend listening to it if the transcript is too hard to follow.  Mike mentioned more than once, and answered a question from an analyst about the "interim analysis".  I'm guessing agedhippie can helpfully chime in here too.

As best as I can describe it is an "interim analysis" is a checkpoint.  It's a planned waypoint to measure progress and make adjustments to the trial (including termination if necessary) such as adjusting goals, length of trial, quantity of participants, et cetera.  I'm no expert on this so hopefully I'm not messing up the description too badly.

I assume making some adjustments are simple and not difficult to ingest the data from the change such as increasing the length of the trial or adding new participants, but other changes could make it difficult to assess results.

In any case, it's a planned waypoint to assess and adjust if needed/wanted.

You pretty much nailed it. You don't want to be continuing a large trial if the results are bad because you are just throwing away money. It's hard to modify a trial that's in flight, but what it can do is let you decide if you want to do an extension, or start another trial to expand a particular aspect that is showing up.

[prcgorman2]

Aug 8, 2023 17:36:37 GMT -5 agedhippie said:

Aug 8, 2023 12:04:18 GMT -5 prcgorman2 said:

I don't know if the recording is available but I recommend listening to it if the transcript is too hard to follow.  Mike mentioned more than once, and answered a question from an analyst about the "interim analysis".  I'm guessing agedhippie can helpfully chime in here too.

As best as I can describe it is an "interim analysis" is a checkpoint.  It's a planned waypoint to measure progress and make adjustments to the trial (including termination if necessary) such as adjusting goals, length of trial, quantity of participants, et cetera.  I'm no expert on this so hopefully I'm not messing up the description too badly.

I assume making some adjustments are simple and not difficult to ingest the data from the change such as increasing the length of the trial or adding new participants, but other changes could make it difficult to assess results.

In any case, it's a planned waypoint to assess and adjust if needed/wanted.

You pretty much nailed it. You don't want to be continuing a large trial if the results are bad because you are just throwing away money. It's hard to modify a trial that's in flight, but what it can do is let you decide if you want to do an extension, or start another trial to expand a particular aspect that is showing up.

Thank you agedhippie for improving on my attempt at an explanation of the concept of interim analysis as mentioned by Mike Castagna in yesterday’s quarterly earnings report.

longmnkd also asked, what can we expect from the interim analysis waypoint in the INHALE-1 study?

The INHALE-1 study is the “Peds” or “Pediatric trial” initiated by MannKind near the outset of COVID-19 which I think negatively impacted the timeline.

Successful completion of that clinical trial will be important for a number of reasons.  First, a successful trial should prove the efficacy and most importantly, the safety of Afrezza mealtime insulin for pediatric patients with Type 1 or Type 2 diabetes.  Second, it should pave the way for FDA approval to prescribe Afrezza for pediatric patients with Type 1 or Type 2 diabetes.  Third, Type 1 diabetics are considered the experts at diabetes.  In some regards even more expert than endocrinologists, at least when it comes to treating their own personal experience of Type 1 diabetes.  Their life depends upon their self-medication and because the stakes are higher they are more attuned to managing their diabetes.  Doctors and their patients with Type 2 diabetes listen to and learn from persons with Type 1 diabetes.

And, as Mike has observed in the past, if you can reach the young patients with Type 1 diabetes with Afrezza, you can make them a customer for life.  I’ve seen a couple of anecdotal videos produced by young T1s which illuminated for me how much of a radical “life changing” experience Afrezza for mealtime use was compared to Multiple Daily Injection (MDI) of legacy so-called “Rapid Acting Analog” (RAA) insulins into their abdomens.

It’s a long play.  Basically, spend the money on a trial with the dramatic goals of proving superiority (not non-inferiority) and safety of Afrezza, and it’s for pediatric patients into the bargain.  If you can find posts sharing the enormous numbers of prescriptions each week for legacy RAA insulins, and the revenue the big 3 RAA manufacturers earn from it, and you look at the unfortunate size of the market of persons with Type 2 diabetes (roughtly 30 million or so in the US, and growing), you can see that even a modest but respectable portion of the mealtime insulin market could dwarf the revenue we’re so pleased with this quarter, mainly from royalties on Tyvaso DPI.

Even though MDs and endocrinologists can prescribe Afrezza for pediatric patients with diabetes, it is off-label.  Successful completion of the INHALE-1 study should be a disruptive accomplishment beyond just being able to prescribe Afrezza to pediatric patients, and so the “interim analysis” is an important milestone.

For more information on the INHALE-1 study see the government document at URL: classic.clinicaltrials.gov/ct2/show/NCT04974528