MannKind Corporation (NASDAQ:MNKD) Lytham Partners Fall Conference Call October 5, 2021 11:45 AM ET
Mike Castagna - Chief Executive Officer
Conference Call Participants
Robert Blum - Lytham Partners
Alright. Hello, everyone. Good morning and thank you all for joining us during the Lytham Partners Fall 2021 Investor Conference. My name is Robert Blum, Managing Partner of Lytham Partners. Our next presentation comes from MannKind, ticker symbol MNKD on the NASDAQ and presenting from the company is its Chief Executive Officer, Mike Castagna. A copy of the slide presentation is available on your screen and today, I have asked Mike to run through the slide presentation. And if there are any questions that pop up afterwards, please feel free to reach out to me or the company and we will look to coordinate getting those taken care of for you. Also, if there are additional one-on-one meeting requests out there, please reach out to me. Again, my e-mail is email@example.com. And I will look to help coordinate that for you.
With that said, let me turn the presentation over to Mike Castagna, Chief Executive Officer of MannKind. Mike, please proceed.
Hi, thank you for having me this morning. I appreciate it. Hope everyone is having a great Tuesday. I want to give everyone a quick update on MannKind. Our first slide here is our corporate forward-looking statement. Anything can change from here on out. I want to remind people for those who don’t know MannKind, little bit of background on the company and our mission and strategy. Our mission is to give people control of their health and the freedom to live life. We call that life more human. When you think about our technology and what we do is really alleviate symptoms that happen to patients such as pulmonary hypertension or high sugars in the moment. So, that’s something that really differentiates us and our technology and how people feel when they take our products.
Our strategy is around focusing on two therapeutic areas, I am on Slide 4, for those of you following online, endocrine disease and orphan lung disease. We currently focus on trying to use our technology, which is a specialized inhaled platform, but would not be limited by that. For example, we purchased a company last year. We have got a nebulized product, but we are focused on airway deliberate endocrine and orphan lung disease opportunities. And we will continue to focus execute delivery against the strategy as we go forward.
On Slide 5 is our corporate overview, MannKind is a differentiated delivery technology with a robust clinical pipeline. We currently make our products here in the U.S. in Danbury, Connecticut, where we have manufacturing and R&D. And many of you may have seen last week, we announced a sale leaseback to the manufacturing facility for $102 million, which provides us sufficient capital to fund our innovation as we go forward. Our corporate offices are in Westlake Village, California and that’s where we house all the commercial and medical teams for [further] (ph) clinical development and a management team in finance. We have a partnership with United Therapeutics, which I will speak more to in a second as well as a pipeline of various molecules we will also speak to. But it is a technology-driven company. Everything from Bluetooth-technology enabled inhalers all the way through nebulized products as we go forward in development. Afrezza is currently approved in the U.S. and Brazil and we are working on international markets as we speak.
Slide 6 talks about the MannKind evolution. For those of you maybe new to the company, great opportunity to come in, where we are in terms of this point forward. For those who may have been familiar with the company historically, it’s a very different company today than it was 5 years ago. Over the last 5 years, we have really transformed the company from a pure-play inhaled insulin into a multi-product opportunity here with Tyvaso DPI launching hopefully in the near-term. We expect an FDA approval in October. We are scaling Afrezza for [Indiscernible] growth in the middle box here in U.S. We are looking for an indication expansion in the pediatrics as well as international market expansion.
And then business development, we purchased a company last year to build our pipeline for inhaled therapeutics and you see clofazimine there as well as new collaborations we have not yet announced, but continue to work again. So from where we were 5 years ago, pure-play inhaled influent to now multi-product opportunity with revenue drivers coming in to where we look out over the next 5 years beyond that 2025 to 2030 where we are setting a strategic goal and aspiration of launch one product a year and that could be a new indication or an indication expansion or new therapeutic. So, really much different company, much more diversified and now we have sufficient capital to continue to provide growth as we go from here on out.
Here is a good visual of our technology. You can get extensive distribution of our powder to the lungs. Many dry powders or lactose blends that are 50-year-old technology is about forced velocity of getting the powder into the lungs. What you see with our technology is really wide lung dispersion consistent on the right left lobe and deep lung penetration, rapid systemic delivery and local lung delivery, which is really important especially for products like clofazimine, where you don’t want the systemic side effects, you want to minimize the drug levels, because of drug-drug interactions or accumulation in the body and being able to deliver things through the lungs may give you a much better opportunity to help patients in various diseases.
Slide #8 is a quick overview of our pipeline and our collaboration. So today, we have Afrezza approved for Type 1 and Type 2 diabetes. We have a pediatric trial we just kicked off here in Q3. And as you may have seen yesterday, we announced the first patient was enrolled in that trial. So we are happy to kick that off officially here in Q4 and inhalation powder for international expansion, we have a partnership with Cipla in India and AMSL in Australia. And so that’s where we see a multi-opportunity growth in the brand over the coming 5 years.
In the orphan lung side, we have Tyvaso DPI that’s partnered with United Therapeutics and we are have an application down with FDA with them for pulmonary hypertension and pulmonary ILD and that should hopefully see a PDUFA date here in mid-October. MannKind-101 is clofazimine. I’ll talk more about in a second. 201 is an asset for a disease called idiopathic pulmonary fibrosis. That molecule is not disclosed yet, but I expect will be disclosed in 2022 for competitive reasons. And then 301, we haven’t disclosed, that’s DNA [alpha] (ph) and that’s a molecule for cystic fibrosis, similar to Tyvaso nebulizer where we have made a dry powder version, we believe we can make a dry powder version of this opportunity and get deeper lung penetration for people suffering from cystic fibrosis. And 701 has not been disclosed yet and may come out a later date. And then there is two third-party programs just for shareholders to be aware of, one is partnered with Receptor Life Sciences in the cannabinoid space and they are going towards Phase 1 this year. And along with our clofazimine products, we have two assets on our technology moving towards Phase 1, Phase 2. And we have made a dry powder version of the NTM product as well that we hope to come forward in the future. And we sold off some oncology assets that were fast tracked by the FDA so want to remind shareholders that if that was to succeed or go forward, there are some opportunities for royalty payments from that opportunity.
Slide 9 is two announced collaborations recently Thirona Bio which we are really excited about this is a new chemical entity. ALK-5 kinase inhibitors were originally developed for oncology. This particular molecule was developed by Pfizer for dermatology. Thirona was working on it for the dermatology in terms of keloid scarring and we are working on it for pulmonary fibrosis. So we believe there is a signaling pathway here that could work and to lung, these things are high risk, high reward, very early stage opportunity, but we believe putting in our technology, delivering into the lungs, showing that it’s stable could be a great opportunity to help more patients in suffering from IPF. And then NRx Pharmaceuticals we announced in August an opportunity to help patients potentially with COVID-19. This is a molecule that is being backed by the government and NRx Pharma. And they have asked us to apply our technology here. So lots of opportunities we are working on as well as third-party partnerships will continue to come our way as we go out.
I am going to bridge the Slide 11 on our next molecule that’s here on our platform. That’s FDA Tyvaso DPI, DPI for dry powder inhalation. We had top line clinical results come out earlier this year. The primary study objectives was achieved, which was safety and tolerability, and 96% of patients completed that first phase and enrolled into our extension phase and that data was just presented, some of that data was just presented recently. Secondary objectives in this trial were improvement in 6-minute walk test, patient reported outcomes and overall satisfaction both improved. And so really excited to show that our technology in 3 weeks we could switch somebody from Tyvaso nebulizer who hypothetically is titrated to max dose to switch over to our technology and show improvements in 3 weeks. This is great opportunity to help patients. And we really look forward to seeing this opportunity get through the FDA here in a few weeks.
By the way, you asked me what does this mean to the company and MannKind? And so we are not giving sales guidance, but I did want to show what two different analysts here have given updates on, OpCo Research put out a report back in February which you can see in the blue here, Tyvaso as a franchise, nebulizer and DPI is a big blue area and then on the right side here you see RBC Capital recently in May put out a forecast and what they saw the conversion being as we go forward and you can see the majority of their sales they expect to be on our platform of Tyvaso DPI. So, we are super excited to help patients in this particular disease. This looks like its going to be a $1.5 billion opportunity for United Therapeutics or more and we will receive royalties and manufacturing revenue as a result of this launch, so looking forward to helping patients very surely in the near-term.
MNKD-101 is clofazimine and that’s the company we have bought last December. We are super excited to get this in the Phase 1 here in Q4. And what you can see on the right side versus the oral tablet is a significant reduction in bacterial recovery. These are the types of models you look at for bacterial infections and antibiotic impact. And here you can see Day 1, Day 27 control as well as oral MNKD-101 did a great job at reducing bacterial recovery. We are very excited to get this to help patients. So far today we have completed our two species Tox studies, they are – final reports are just coming in as we speak that was needed to finalize the protocol for Phase 1. And we are in preparation, making sure we have GMP drug supply as we get ready to not only get past Phase 1 as we expect that will go well, but ultimately get ready for Phase 2 in 2022 and beyond.
Now, I am going to bridge over on Slide 16, as we talk about Afrezza. Afrezza was approved in 2014 and MannKind officially launched it as MannKind in 2017. That has steppingstone with a partner that came back to us. And ever since then we have been rebuilding the business around Afrezza. We do believe this can become the next standard of care for mealtime insulin. And if you follow this market, there is about 6 million patients who live with diabetes and are on insulin. And we are indicated for both Type 1 and Type 2. We do have to take out anyone who has underlying lung disease like COPD or asthma, but for the rest of the population, this is really an important opportunity to help patients. You take it at the start of the meal and it really demonstrated improved time-in-range, improved A1c, and really excited to bring Afrezza to patients around the world. People always ask me, what is Afrezza made of and it’s really important to know that it’s just taken our unique technology FDKP as our novel excipient along with human insulin and water. And we make them into freeze dry powder that stabilizes the insulin and gets into the body very quickly. When you touch the lungs, it’s in an acidic environment, how we bind it, and then once the Afrezza touches the lung, it releases FDKP, which is 99% excrete and recovered here in urine and feces. And then you see the Afrezza really get into the body very quickly, very fast uptake and there is really not much to it in terms of the active or inactive ingredients.
Well, you can ask me why do we continue to market Afrezza and put money behind it? And the reality is despite all the increases in use of technologies as we hear for CGM with other CGM companies in some popular algorithms, 80% of the people, last time we looked [Indiscernible] as recent as 2018. That has not changed in 20 years, despite the adoption of technology. And in fact, what we saw in the recent database study that came out was patients actually got worse. Their A1cs went from 7.8 to 8.4 as you see on the right side here. So, this is why we believe Afrezza solves an unmet need, it’s barely been adopted. And I think that’s really important. As this gets adopted, we do see doctors get 20%, 30%, 40% market share. So, we know there is the opportunity and potential to make impact. We just have to do a much better job than we have been at generating more prescribers and depth of prescribing. But we see a big opportunity still in front of us for Afrezza.
And despite all the headwinds that we faced with COVID and employees and capital constraints in MannKind, we now have about a base of prescribers here of 3,000. I am on Slide 19, if you are following me online. Base of prescribers are 3,000 and we have published a lot of our data and presented at conferences last couple of years. And we have been able to grow TRxs year after year after year, despite many, many constraints. And now, the company is financially stable. We got a good team moving forward. We kind of made a lot of changes during COVID. We are super excited with pediatrics come in to move this brand ahead faster than we have historically.
A look here at historical slides from when we launched in Q1, we are $1.2 million a quarter. Recently in Q2, we had $10 million a quarter, so about 8x since Q1 of ‘17. And we don’t see anything stopping this trajectory. There is no another inhalants are really coming in the near-term and no novel [influents] (ph) coming that are going to make any impact. So, we are the last resort here for to help patients drive the difference. And when you look at this trajectory, we do believe we can maintain this type of growth as the years go forward.
A look at Q2, I am on Slide 21, net revenue for Afrezza was up 43% year-over-year and 21% year-to-date. There is obviously some quarterly fluctuations with COVID as you look at the numbers, but I think it’s a fair representation of double-digit growth year-over-year. And when you look at collaborations and services, we have quite a few things happening in that line item and again up 38% year-over-year and 64% quarter-over-quarter. In terms of the overall company is growing 54% Q2 2021 versus Q2 2020 and 30% year-to-date. So, very excited about where we are. And as we look forward, we see nothing, but opportunity continue to grow the business in many different ways.
From an IP perspective, we have a platform that’s patent protected into the 2030s. We expect that’s a very long time to drive a lot of growth for the company and continue to evolve and innovate. And from an analyst coverage up from six – from a couple of years ago, we now have 6 analysts covering the company and all with price targets in the $5 to $8 range. I think as we continue to de-risk the company as we look out, we believe it’s all about execution and delivery that should continue to hopefully take these [Indiscernible].
And on Slide 24 in terms of 2021, we laid out all the key milestones this year. We are really proud to have hit everything we have said we would hit this year and deliver against those expectations. Some of the ones we didn’t expect or expect gross proceeds of the sale leaseback this year, the debt restructuring really put the company in a strong financial position for the foreseeable future. And if you look here in Q4, we have Tyvaso DPI expected approval in October. We expect to go into Phase 1 for clofazimine, our pediatric trials I just said we got our first patient on Monday here. And we have additional capital available if we need it. At this point, we are well capitalized to fund our growth.
Thank you here, Robert, for having us today. We really appreciate it. Hope you guys find the opportunity and a window to come into our – to be one of our shareholders. And if you are a current shareholder, I hope you are happy and any questions, feel free to reach out to us at firstname.lastname@example.org. Thank you again for your time. Have a great day everyone and I will be available to answer questions.
Perfect. Mike thank you very much for your time today. We greatly appreciate it. To everyone else, have a great rest of your day as well. Thank you so much.