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Executives

Matthew J. Pfeffer – Corporate Vice President and Chief Financial Officer

Analysts

David Friedman – Morgan Stanley & Co. LLC

MannKind Corporation (MNKD) Morgan Stanley Healthcare Conference Call September 10, 2013 3:30 PM ET

David Friedman – Morgan Stanley & Co. LLC

Thanks everyone for joining us here with this session. Dave Friedman, biotech analyst, joined on stage by Matthew Pfeffer, Chief Financial Officer and Corporate Vice President at MannKind Corporation. Some exciting developments in the world of inhaled insulin. And so I’ll have Matthew give a couple of minute overview and then we’ll jump right into Q&A. And I would always encourage this to be as interactive as possible, so please everyone feel free to raise your hand. We’ll get you a microphone and you can ask your questions, and we’ll go from there. So thanks so much for joining us.

Matthew J. Pfeffer

It’s my pleasure. It has been an exciting time recently, at MannKind certainly, and in the field. Our most recent news is we did complete our two most recent Phase III pivotal trials, I wish they were first and only ones but they were not. We were sent back to the drawing board to do some additional work by our friends at the FDA. The good news is we’ve completed that now. The trials were successful. They hit their primary and most of the secondary end-points as well.

So we are moving forward, preparing to re-file with the FDA. We expect we’ll do that next month, sometime during the month of October, remains to be seen when during that month, in spite of some people in the audience who press me on that I’m going to be a little bit vague still.

But we seem to be on track and I still expect we will get that filed next month. This would be a type II resubmission we expect, so that gives us a six month timeline. So we’ll be looking for a PDUFA date in probably April of next year. What the FDA’s asked us for here is pretty straightforward. They did want to see some efficacy studies, as most of you in the room will probably remember we changed the device slightly, maybe not slightly, quite a lot to a much better one and we’ve given them a lot of data around the new device showing it was bioequivalent, but [at the end of the day] [ph] they’d like to see some longer-term efficacy studies. So that’s what we did, and I hope there are not too many people surprised, they were successful given we’ve shown as bioequivalent, it’s not too surprising that the efficacy results and the safety results were similar as well. So that was what came out of the studies, so we’re moving forward as aggressively as we can.

The other question everybody always ask about is partnering, we do expect to ultimately partner this product. And we did announce during the call where we presented the results that we started a formal process, which is sort of code word for how that moves forward and engaged an external advisor Greenhill to help us with that effort given we’re a relatively small company and a relatively compact business development group, it’s nice to have some people who have done this a bunch more times than we have helping guide the process. This is not identifying partners, obviously we’ve been speaking to most of these folks for a long time. It’s really kind of sheparding the process through helping us with some of the analyses and making sure we get the best deal possible.

So with that I’m not going to talk too much about the basics of the product. You all know it’s an inhaled insulin product, not the first one of its kind, but we think the best. And in many ways a departure [in insulin] [ph] as the first of what - we coined the term ultra-rapid acting, we’ve stopped using that term quite so much and so [those are picked up] [ph] as well. But it’s a truly physiologic insulin with a kinetic profile that mimics natural healthy person’s release of insulin to a great extent, it comes on very quickly, not much slower than the pancreas can do in a healthy individual, and it is a prandial insulin, so it continues to synchronize with the meal and it does that very nicely, it doesn’t have long persistence. By the time you finish digesting your meal after two or three hours it’s gone as well.

So, what we would expect to see from that is greatly improved hypoglycemia and things like that, and that’s in fact what we’ve shown in the trials, we typically have [inaudible] there is less hypoglycemia, which we think is a pretty major advantage with the product and something that we’ve otherwise shown from an HbA1c standpoint is we’ll see non-inferior, superior in some studies, it depends on which one you look at. So with that I mean we should go to questions and not tell people stuff they already know.

David Friedman – Morgan Stanley & Co. LLC

Sure, so maybe if we can just start – if you can just very briefly sort of – you sort of alluded to a history with the drug. Can you just briefly go back to your past FDA interaction was and what their main issues were whether it was around route of administration, device, data. And then how confident are you that these two Affinity studies have solved, whatever they were concerned about?

Matthew J. Pfeffer

Well, starting with the end and moving backwards a little bit. I think we are as confident we can possibly be. I can go back to that. You remember we’ve had two Complete Response Letters at this point, so a third time’s a charm here. The first one had a number of issues most of them are not [certainly] [ph] relevant because we solved them in the first response to the Complete Response Letter. But there was one section in that letter that was a little different. They were device specific. They had some issues around the old inhalers so called Medtone inhaler and most of them were fairly small. But a couple of them were rather difficult to fix even though they seemed somewhat trivial, mechanically they were kind of awkward to fix.

And given that we’d already announced to the world and to the FDA that we were not going to launch that old Medtone device but we were going to wait for the new one, frankly our expectation was that we would get the approval on the first product, immediately turn around and file a supplemental NDA with the new one and make the swap. So that’s was what we’re expecting then lo and behold, we didn’t get the first approval without the Complete Response Letter. That gave us a nice opening to rather than try to address those issues with the old inhaler just make that change then as part of the response.

We had already spoken with the FDA about what might be required to make that change and they’ve given us some limited guidance and we’ve done what they’d asked for which was essentially bioequivalent. They didn’t say that was all that’ll be required; they said that amongst the things that we would be required was that. So we took the chance, put that back into our resubmission, and put it back into the FDA relatively quickly, but ultimately they came back and decided that some longer-term efficacy studies were required.

So at that point, we thought well, these - we’ve done some 60 plus trials now with many thousands of patients, the chances of those trials not being successful seemed relatively small to us. The risk we saw from a clinical standpoint was not doing exactly the right trials, as opposed to not being successful. So we invested a good part of that coming year in multiple meetings with the FDA, bringing back clinical trial designs and meeting with them to discuss them to make sure we’re all on the same page what was necessary and what they were looking for.

And it threw us a couple of curves in that process. I mean the type 1 study that we ultimately did was very much like we originally proposed to them. They by the way had asked for that to be a three-arm study with one arm being the old Medtone inhaler, because they were looking for a bridge to the rather extensive safety database we had. So you’re looking for a safety comparison, not an efficacy comparison in that study.

And that one remained more or less a change, there were some tweaks. But in the type 2 area, they threw us a bit of a curve in that they surprised us a little bit. I mean essentially every insulin today has been approved in a basal/bolus setting, much like you have to do in type 1, because they’re all insulin dependent. But we’re doing more or less the same thing in type 2 as well, where they were all in insulin and just substituting our product for injected insulin, and that’s what we had gone back to them again with originally and they surprised us a little bit by suggesting that rather than do that why wouldn’t we consider an early stage type 2 study.

It would only surprise us, I mean it was very much to say we wanted to do and actually had planned as Phase IV study for label expansion, what surprised us is they would do it as a Phase III pivotal, but we were kind of pleased by it at the same time, but it did cause us to have to go back ultimately twice more to make sure we settled on the final ultimate design and have nice FDA minutes to demonstrate that we’re on all agreement on what was required.

So I think we’ve invested all the time and money upfront to make sure that we did the study as they wanted us to do, and now that they’ve been successfully hitting their end points, I guess we’re as comfortable as we can be about it. So I kind of answered both parts of that question I hope.

David Friedman – Morgan Stanley & Co. LLC

No, yes, yes. And then maybe, if you can just go through what the key differences are between the Medtone and your current device in terms of both changes that were made that satisfied the FDA, but also I assume you made changes because you just thought it would be a better device?

Matthew J. Pfeffer

Yeah. I’d be happy to, so this is not going to satisfy anybody who is listening on the call since I have those devices here that I can show you.

David Friedman – Morgan Stanley & Co. LLC

Shame on them for not coming to the meeting.

Matthew J. Pfeffer

You should come to the conference, how do we encourage that? You can also find pictures on our website, I’m sure.

David Friedman – Morgan Stanley & Co. LLC

Yeah.

Matthew J. Pfeffer

I think the old device is still up there. The original Medtone device was quite a clever gadget for its day. So we had - compared to anything that had come before, it was a very neat device, relatively compact, we usually compared it to about the size of a cell phone and it worked quite well. But as is often the case, when you have a kind of an innovative product like this, new versions come along. And we found out this was really more complicated than it needed to be after a lot of work and a lot of clinical study.

This came apart because it was intended that about every two weeks you clean it, because you do get some powder accumulations inside, you just run it into, it wasn’t a real big deal, let it air dry. But ultimately we found out that while there is some relatively complex air metering systems in the [inaudible] - you probably can’t see unless you’re in the front, and there were some hand assembly steps that made it a little more expensive to produce that ultimately if you did it right, you could get most of the benefits of this device with just this part.

And the key here is you need the air to swirl through the cartridge properly, because like most powders they tend to clump up and you want them back into the individual particles again. So you need to swirl through there, declump, they call it de-agglomerate the powder, that’s the scientific term I guess, and put it back into the individual particles, because if you don’t have the particles in the individual pieces and you have clumps, what happens is that those clumps tend to stick at the back of your throat or in your airways and they are essentially wasted. You need to get the powder into the deep lung to have any efficacious effect.

So getting it de-agglomerated - I’m trying to use that term, it sounds too fancy for me, is very important as a part of the process. We found that that this much more simple and we can see how the evolution came about, device does a much better job of it. So it’s not only simpler, cheaper, easier to use, it’s frankly I won’t put anybody’s lips on this but you can actually inhale through this much more simply and it’s pretty much foolproof compared to this. And it’s also cheaper for us to produce, so much so in fact that we expect to just give these away where we would have to have sold these.

So we would expect - the marketing assumption is that we would, this we said clean every two weeks, this has gone so inexpensive, don’t bother to clean it. We’ll give you two in every month’s supply, just every two weeks throw it away and you start using a new one. So that’s a benefit. But really the key benefit that caused us to say, don’t launch this one, wait for this one is that, this one does such a better job, I call it being more efficient, getting the powdering into the deep lung that we start with a third less powder in this device, remembering it’s the same powder. And we get the same amount into the bloodstream. We get the same amount into deep lung. We’ve demonstrated why this is, they have very fancy high-speed cameras in model lungs and everything else in the lab. And they can see – you can actually see in the high-speed cameras those clumps flying through the air with the old one that don’t exist with this one. Looks kind of like a mist, but it’s a very fine powder. So it does a better job getting into the deep lung, it’s much more efficient. And while we start with a third less powder we get exactly the same amount in the deep lung and we’ve shown the bioequivalent studies. We chart out how much gets into the bloodstream, how long it takes and the graph just very beautifully it aligns. So that’s why, and that’s the key thing.

This is obviously simpler and easier, you can - you saw it, I usually carry one in my pocket, usually they have a little dust thing to keep the lint out of the mouthpiece I’ve lost it along the way. So that’s the key differences in the product.

David Friedman – Morgan Stanley & Co. LLC

Got it. And then, I guess with any inhaled drug and historically with inhaled insulin programs, there has always been a focus on pulmonary safety and you guys had pulmonary endpoints in these Affinity studies. So if you can just review what you saw there and then per the FDA was there a sort of a window of FEV 1 or another measurement that they were comfortable with, did they give you sort of a stated window of comfort for changes within the trial?

Matthew J. Pfeffer

I wouldn’t go so far as to say they gave us a stated window for comfort. They wanted to see that they are more or less the same. They – I believe they were pretty comfortable with this old Medtone device. So backtracking a little bit, what do we see? We do see a pulmonary change with inhaled powder, it’s fairly typical of inhaled powders, certainly insulin powders, you see a very slight decrease, it’s not clinically meaningful, but it’s measurable these days. We can measure quite small changes and you can see it, it happens virtually immediately, and then it stays constant throughout.

So even in two-year studies you see the immediate decline a little bit, and then the curve stay parallel throughout the whole duration of the trial until you come off it then they come back up. So that tells you that last point is important, because it reaffirms what we think we know from high resolution CT scans and other things to show that there’s really no tissue changes, that it’s not affecting anything in a negative way because you take this stuff, take in the drug and you immediately come back to normal. So it’s not changing anything permanently and the change is not clinically meaningful, so it’s not progressive, it’s not clinically meaningful, and it’s kind of minor. And they were essentially looking us to demonstrate that it was the same and that’s kind of what we did, there’s no meaningful difference between the two.

David Friedman – Morgan Stanley & Co. LLC

And why does it stay at that depressed level for as long as you are dosing? Do you – I mean what’s the mechanism that would keep it level but lower?

Matthew J. Pfeffer

Yeah, that sounds like a question more for someone more of a scientist than I do. I think it’s fairly, I mean, I’ve seen a lot of this data and I know it’s fairly characteristic of inhaled powders. Is it just the reaction of the powder? I’m not really honestly sure. We need to do a little more and can see how quickly it recovers or how fast it happens to maybe understand the mechanisms. But it’s pretty well – pretty much anticipated with something like this because you see it generally. So I think there hasn’t been an issue so far.

David Friedman – Morgan Stanley & Co. LLC

Got it. Any questions? Yes.

Question-and-Answer Session

Unidentified Analyst

[Question Inaudible]

David Friedman – Morgan Stanley & Co. LLC

Question is why is this product better than what’s on the market?

Matthew J. Pfeffer

Happy to. So I kind of alluded to some of it. I think the key difference is the kinetics of the product. It really is a much more physiologic form of insulin. So it mimics for the first time ever I believe what the – a healthy pancreas does in a non-diabetic person. And if you look at the curves they look fairly similar, there’s a fairly characteristic insulin response curve to a meal challenge that we can come pretty close to, it’s a very rapid spike, which is important because the body uses that partly as a signaling mechanism to other parts of the body.

For example, that spike signals the liver where you normally get glucose between meals to stop producing glucose, because you’re getting it from another source, you are digesting food and you’re getting glucose from that source. So the liver shuts down otherwise you’ve got sort of like if you’re trying to stop your car you want to take your foot off the gas too. So it’s easier to deal with the issue if you take or – you stop producing glucose out of the liver.

Injected insulins don’t do that in the same way. They don’t signal the liver and it takes a lot longer to get that liver to stop producing glucose, so that’s also a little bit of the problem. By the same token, so you get a very rapid uptake, which starts signaling the liver, but that’s a smaller point compared to some of these things.

But that does arrest the raise in glucose, and I’m just -- actually just in the last hour listening to something on YouTube from Dr. Skyler in Florida. He was talking about what you call the prandial problem, which is just that. I mean you start a meal, and you take a dose of insulin, and the insulin just takes too long to start working. so, you get this raise in your blood sugar, which has a negative effect, because it takes half an hour to an hour typically for the insulin you inject to start working, whereas we can usually reach [peak] (ph) concentrations in about 8 to 12 minutes. We are just pretty close to what the pancreas does, so we can arrest that raise in glucose.

The other side of the equation is, when you finish digesting your meal, you don’t want that insulin around anymore. If you have all that extraneous insulin after meal is digested, that long duration that can cause hypoglycemia, which is probably the thing that most diabetics fear the most, because it’s scary if you are by yourself or if you are sleeping, it could be very dangerous; if you are operating machinery and so forth.

It’s also one of the things about insulin, I think doctors like the least, because it’s the most – the thing is most likely to get their patients into the emergency room. Doctors don’t like that very much and insurers don’t like that very much either, so you can reduce hypoglycemia in a significant way, I think it’s an important benefit of the program, and I think those are the key ones.

We do see some other benefits as well. We do see less weight gain with the product, and that’s been very characteristic adversely in all of our studies. I can think of two exceptions, I mean if you talk about both, one was the two-year safety study we did. Everybody in that study including the non-diabetics – and there was a non-diabetic controlled group, everybody in that study gained weight. We gained less than anybody else, but there was some weight gain, and people just tend to gain weight over time, especially if you are in that age group. I think, I’m getting into that age group myself. But we think…

David Friedman – Morgan Stanley & Co. LLC

Whatever it is on there.

Matthew J. Pfeffer

(Inaudible) we think this is a weight neutral product, but insulins tend to cause you to gain weight and that tends to exacerbate your diabetes. So, not having that problem is an advantage of the product. Now the 175 Study, we did see some weight gain, that’s going to be a longer explanation I have, but I think that has to do with the way the study worked, and if we get there and you want to talk about it, I am happy to.

David Friedman – Morgan Stanley & Co. LLC

Yeah, question right there. The mic is coming.

Unidentified Analyst

Given the results coming out, you know three or four weeks ago, I’m just wondering what the strategy is inside the company to all looking at how they’re going to market it, are you going to wait till FDA approval or have you been getting calls from some of the people you’ve talked to in the past about partnering up, so you can get a running start and get this revolutionary new product in the marketplace as there really has been nothing under the diabetes phase, so I’m just wondering how you’re handling that.

Matthew J. Pfeffer

Well, as I mentioned before, we have engaged an organization to help us with this process and have launched what we’ve referred to as a formal process; that to me and I shouldn’t speak for our advisors, but that usually means you’re reaching out to all the potential partners, and we’ve talked to all of them from time to time some more actively than others to kind of re-engage. Some of them have been with us all along and following in. Some said, we’d like to see the data first and then we will decide. So this is their time to decide what they want to do, assess the data, go into the data room, do their diligence, meet with us and so forth, and try to get to a resolution of the process within some definite time period.

That said, I think it’s unwise to project a timeline for potential partnering, because frankly, we don’t know for sure. I think I caused a bit of a [stir] (ph) about three conferences ago, when I said I thought the ideal time to partner was post-data and pre-approval, but I think that is the ideal time. That said, it is bit of a trade-off, I mean you could arguably get a better deal if you wait for approval, but there is a cost to that, because you’re not going to be able to launch as quickly if you do.

so, we have to weigh the benefits in the costs of that kind of a delay, and my personal belief is we are better off having a partner sooner rather than later, probably because they would help us absorb (inaudible), having us absorb those costs, but also because we want to have a good running start on our launch and to be able to ride and this is not going to be a simple launch. It’s going to be a fair amount of education to go in -- go on here. Doctors are not as aware of this product as I wish they were, I think the specialists are quite aware.

You see that at ADA, but the general practitioners are not, and we see that in survey data quite often, and those that are tend to confuse us with Exubera far more than I wish they did, and they need to understand this is a fundamentally different product. It does happen to be an inhaled insulin, but that everything else about it pretty much is different, how it acts in the body and its potential risks and rewards are all very different, and we need to help them understand that.

David Friedman – Morgan Stanley & Co. LLC

Question down from here; you can just (inaudible), I will repeat it.

Unidentified Analyst

[Question inaudible]

Matthew J. Pfeffer

Yes. We have data for both of those…

David Friedman – Morgan Stanley & Co. LLC

The question is around time of insulin sort of, off action and leaving the body and the robustness of the data around hypoglycemic events.

Matthew J. Pfeffer

Okay. so for the first time today, I kind of wish I had my presentation to show you, because there are curves in that that will show you that very clearly where we’ve demonstrated that. Somewhere in that, I mean it’s not a drop off, it tends to taper off, but by the time you get to somewhere between 2.5 hours and 3 hours, it’s essentially back to baseline. So, we know we’re gone in that timeframe, which is very consistent. It does go away very quickly, frankly sometimes too quickly. If you are having a huge meal, you may need a second dose of AFREZZA at the end. But it is initially characteristic of this product, and you can’t make those kinds of corrections.

You would never attempt that with an injected insulin, because its time of onset is too slow and its time of offset way too long, so you’ll be really chasing the curve. But if for whatever reason you eat more than you expected or you have more carbohydrates or whatever, and you find your -- you check your blood sugar after the meal and find it is too high, you can correct that by still taking another dose of AFREZZA. and if you’d have a Thanksgiving dinner and it went for two hours, you probably do need another dose of AFREZZA, but you can do that. And the duration of so-called rapid-acting analogs is very well known, that’s published data, we have shown that in some of the presentations as well. It tends to [fast] (ph)up to six, seven hours sometimes, (inaudible) of what it is. Regular insulin is even longer than that.

David Friedman – Morgan Stanley & Co. LLC

A question over here.

Unidentified Analyst

Do the devices you have up there have patents on and then if so for how long?

Matthew J. Pfeffer

They do, the newer one goes out much further, and I’m trying to remember how far, because it’s very, very far. I have to look it up and get back to you if anybody really wants to know. but these things are always extended as we broaden the field a little bit, and they saw – we recently got some pretty interesting patients around the powder underlying it to, which we think is a little more important. And I think if you really had to, you could come up with a somewhat [clumsier] (ph) device that use the same powder and get maybe close to the same effect, but the patent protection around the powder, I think is more fundamental, and over and above that, I think we have two areas of comfort. Number one is a lot of very interesting know-how that goes into this. It’s not simple to make, in fact we won some interesting awards for innovation and manufacturing for how we’ve done some of it.

Some of it, I think is quite clever, and we disclosed most of what we haven’t, but giving a [ramp] (ph) of that, people will say, well, could do come up with the generic of this. I think that will be extraordinarily difficult, and even us with the same powder couldn’t do what you normally do for a generic, get away with the FDA. they still want us to do Phase III trials. I mean, we (inaudible) same powder, it is not even a generic version. So, it is not something that would lend itself to something like a generic at all. It would have – they would have to go through a full clinical program (inaudible) and make the stuff. So, you have to get around the patent, figure out how to make it, and then you still have a full clinical development program. So, I think we feel pretty comfortable with that.

David Friedman – Morgan Stanley & Co. LLC

There’s a question in the back.

Unidentified Analyst

Yes, hi. Is the powder absorbed through at the alveolar level and instilled, isn’t that a very fragile tissue, and upon excessive use, would you think that it might be some kind of reaction by the lungs?

Matthew J. Pfeffer

It is absorbed at that level. it may not be as quite as fragile as you think. I mean we’ve looked very closely at this. Lungs are very good at transferring things into the arterial system that way. it’s most best known for oxygen, but it does transfer other things that way as well, and we’ve done it a lot for years and years, and they’ve not seen any effects and we’ve looked very closely for them, not only symptomatically, but at the cellular level and with high resolution scanning, and so for looking for any tissue changes whatsoever, and I’ve seen nothing so far.

We know our career which has some -- some of you don’t know this maybe perhaps, it has very unique properties. We attach insulin to this, in our carrier we use, we call it as [indiscernible] which we’ve demonstrated as the nerve passes through the body and metabolize, but it has some very interesting properties, which are very unique and perfect for our purposes.

first of all, these crystals self assemble in exactly the right size range we’re looking for to make them perfect in aerodynamic for to the deep lung. but the other characteristic, which is maybe more relevant to your question is that neutral pH like in the environment of the lung, it’s not (inaudible) liquid. So when it gets in -- we make it in a very slightly acidic environment to create these crystals in forming these crystals, but when it goes into the lung, I think a lot of people think about the time, even hits the tissue it’s already reverted back to a liquid.

So it passes through very quickly into the bloodstream and you don’t see the accumulation they used to see for example with Exubera, which they used a sugar based formula they melt down. And you could find in the lung for hours and hours afterwards and since you’re probably taking another dose, you can kind of essentially say was always there. We pass through very rapidly and within the timeframes, we are talking about you can. I don’t know who they get to do these studies, like lung lavage studies would actually rinse it out. But they’ve done that and (inaudible) can’t find a trace of that anymore, so as you know trends the lung very quickly.

David Friedman – Morgan Stanley & Co. LLC

Question here.

Unidentified Analyst

Yes, are you expecting the advisory committee meeting and if so, what do you think will be the key issues?

Matthew J. Pfeffer

That’s an excellent question, but I don’t have an excellent answer for it. If you’d ask me a month or two ago I would have said, I think it’s extraordinarily unlikely. I think, I personally believe that’s still true, except that keeps reading accounts from people or think that maybe it’s not so unlikely. So I’m not sure what to think anymore.

We’ve been back and forth to the FDA about this multiple times and they’ve been pretty insistent before, that they didn’t think one was necessary on our prior two submissions they didn’t think one was necessary. So you would kind of wonder what might have turned since then that would make them think it’s necessary now. And I don’t know I mean, we did ask them and as this typical they said we’ll answer after you file the thing and we’ll see, and that’s what they almost always respond.

We’ll have to wait and find out I think it’s the real answer. My impression and take this as we had reports coming from a finance guy and not a regulatory person. The FDA likes to use both panels for answering various specific types of questions and the one common threat, I always seem to see is they are trying to weigh some perceived risk with the potential benefit of a product and say is it still worth it. So they are trying to evaluate some sort of a safety signal and given that I don’t think we have any significant safety signals. I don’t know why they would take you to a panel, but time will tell.

David Friedman – Morgan Stanley & Co. LLC

Yes, there is one more question.

Unidentified Analyst

[Question inaudible]

David Friedman – Morgan Stanley & Co. LLC

Okay. The question is around cash, cash burn, and sources of cash.

Matthew J. Pfeffer

Okay. So cash burn, I’ve been saying $10 million to $12 million a month for as long as I can remember, we seem to under-spend those projections, but I’m not going – I’m going to stick with those anyway, because a lot of the savings from the clinical trials are being used up frankly in gearing up for manufacturing again.

So we are kind of going down in one and going back up in the other and a lot of people’s comment on how many open job recs we have on our website. But we do need to gear up, back up for an inspection and get ready to produce this stuff.

As far as cash, we ended the last quarter with $25.8 million, subsequent. Literally, the next day, we got $40 million our first tranche from Deerfield. Last week, we’ve got the second tranche, so another $40 million. And later in the year in December, we expect to get the third tranche of $40 million. There is no particular conditions associated with that third tranche, it’s a passage of time.

The third tranche was intended to coincide with our 2013 deferred maturity. So those are the immediate sources of cash. The other one you should know about is, you may remember last October, we did a financing and we did 53-week warrants. The total proceeds from those warrants which are priced in the high twos, so we expect they will be exercised before they expire, would have been 89.7, but we’ve gotten a fair amount of that already.

Last time, I looked there was another 65 or so to go, but I actually haven’t looked recently. So let’s assume we’ll get another $65 million or so in October next month. That ought to take us comfortably into next year closer to the PDUFA date. If there is a delay what might we do? Remember, we still have $125 million available from now under the revolver and more or less promisingly we wouldn’t use that unless we absolutely have to, and will apply to extend our ability to borrow under that if we are able to at all.

And then, we’ll see – I do hope, we’ll have a partner in there somewhere too, which would obviously solve a lot of these issues, not only decrease the burn, because they’ll be funding some of this, but I would assume there will be some sort of upfront payment in other milestones along the way.

David Friedman – Morgan Stanley & Co. LLC

I think with that, we’re actually out of time. so maybe, you can ask in follow-up, but thanks everyone for joining and asking lots of questions. and thanks for being Matt Pfeffer.

Matthew J. Pfeffer

My pleasure. Thank you very much.

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Source: MannKind's Management Presents at Morgan Stanley Healthcare Conference (Transcript)
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