Simos Simeonidis - Rodman & Renshaw Llc

Tom Russo - Baird

John Newman - Oppenheimer Jon Lecroy - Hapoalim Doug Dieter - Imperial Capital

Ladies and gentlemen, thank you for standing by. Welcome to the Mannkind Corporation’s second quarter 2010 conference call. At this time all participants are in a listen-only mode. Later instructions will be given for the question-and-answer session. (Operator Instructions) Joining us today from Mannkind are Chairman and CEO, Alfred Mann; President and COO, Hakan Edstrom; Chief Financial Officer, Matthew Pfeffer; and Chief Scientific Officer, Dr. Peter Richardson. I would now like to turn the call over to Matthew Pfeffer, Chief Financial Officer of Mannkind Corporation. Please go ahead.

Good morning and thank you for participating in today’s call. I will summarize our financial results for the second quarter of 2010 as reported earlier today. Next, Hakan and Peter will provide an update on key events and finally Al will comment on the current situation and our outlook going forward. We’ll then open up the call to your questions. Before we proceed further, please note that comments made during this call will include forward-looking statements within the meaning of federal securities laws. It is possible that the actual results could differ from these stated expectations. For factors which could cause actual results to differ from expectations, please refer to the reports filed by the company with the Securities and Exchange Commission, under the Securities and Exchange Act of 1934. This conference call contains time-sensitive information that is accurate only as of the date of this live broadcast, August 2, 2010. Mannkind’s management undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Let us start with the financials. For the second quarter of 2010, total operating expenses were $37.4 million compared to $53.4 million for the second quarter of 2009, and $40.6 million for the first quarter of 2010. R&D expenses were at $26.2 million for the second quarter of 2010, compared with $39.8 million for the second quarter of 2009 and $30.5 million for the first quarter of 2010. The decrease in R&D expenses for the second quarter of 2010 compared to the same quarter in 2009 was primarily due to decreased costs associated with the clinical development of AFREZZA, as we filed our NDA in March of 2009. The decrease in R&D expenses this quarter from last quarter was primarily due to timing of insulin purchases. General and administrative expenses were $11.2 million for the second quarter of 2010, compared to $13.5 million for the second quarter of 2009, and $10.1 million for the first quarter of 2010. The net loss applicable to common stockholders for the second quarter of 2010 was $42.3 million or $0.37 per share, compared with a net loss applicable to common stockholders of $55.6 million or $0.54 per share for the second quarter of 2009. Our cash, cash equivalents and marketable securities at the end of the quarter totaled $30.8 million. Our cash in hand and remaining credit facility from Al amounted to $138.8 million as of June 30, 2010. Our cash burn in the quarter, again slightly decreased with $37.8 million spent in Q2 compared to $41 million in Q1. With our cash-on-hand and the amount still available under the credit facility from Al, we believe we’ll be able to fund our operations through the first quarter of 2011. We continue to asses our operational plan for the balance of 2010, in order to find ways of extending our cash runway further into 2011. With that I would now like to turn the call over to Hakan Edstrom. Hakan?

Thank you Matt. Good morning. Well, as you can imagine, the time between the receipt of the complete response letter in March and the end of the second quarter’s been a very busy time for our organization. Not only did we digest the information provided in CRL, but we prepared for and had the meeting with the FDA on June ’09, and then addressed the issues put forward by the FDA in our response. That was submitted to the FDA on June 29, and as you know our submission was accepted by the FDA and given a December 29, 2010 PDUFA date. Our clinical, regulatory, CMC and manufacturing staff have done an outstanding job on analyzing the issue, addressing the outstanding questions and putting together our responses into an amended NDA. The June 9th meeting with the FDA was an important milestone for us. It provided us the opportunity to better understand the issues that was raised, seek clarification and provide further insights into our NDA. Leaving the meeting with the FDA, our team was so pleased and motivated and encouraged that we were able to respond to the FDA in a timely manner and fortunate, from our extensive database we had most of the answers either already available or almost complete. The fact that the amended NDA was classified as a Class 2 resubmission with a six-month review time put us right where we had hoped, that would be at this point, potentially gaining approval of AFREZZA, including the next generation inhaler at the end of 2010. We actually may not have reached this point using our initial pathway of approval, first with the MedTone based version, followed by supplemental NDA to seek approval over the next generation device. With the new pathway, we may have achieved this result…

Thank you Hakan and good morning. As Hakan has indicated, the past quarter has indeed bee a very busy time to the scientific and regulatory team at Mannkind, as we successfully filed our response to the questions raised by the FDA in the complete response letter. To remind you, there were three substantive areas for which the agency raised questions; clinical utility, or where does the project and the product fit into the therapeutic armamentarium with patients with diabetes; the assay methodology used in our study to demonstrate bio equivalency of the inhaler used in our pivotal clinical studies and that to me marketed; and finally, technical aspects of the requirements of the device, such as how often is it changed and how we mark the amount of drug and identify [ph] each cartridge. As we indicated to you in our previous updates, we are confident that we will be able to address these on the basis of data we already had available, or in the process of generating as part of our previously agreed development of our next generation device, formerly known internally as Dreamboat. We were able to have a very helpful and productive discussion in the meeting with the agency on June 9, during which we were able to establish that the data would be sufficient for them to resume the review, based upon the additional clinical data from Study 117. We also discussed our study comparing the original inhaler to our new next generation inhaler, demonstrating bioequivalence, using both an ElectroChemiLuminescence assay and Radioimmunoassay. We’re able to show the agency that since this is a systemic peptide [ph], we can make absolute measurements in venous blood and compare them directly in subjects with a range of doses. This is done my maintaining the delivery of the…

Thank you Peter and good morning ladies and gentlemen. This past quarter was momentous for Mannkind. We just received a complete response letter in March raising several questions to be resolved before approval. The CRL invited us to request a meeting with the agency, that was ultimately scheduled for June 9. Our objective in that meeting was to gain clarity on the path to approval of AFREZZA. The meeting with the FDA was very positive and we believe we have addressed all the questions raised in the CRL and that we’re now on a path to approval of AFREZZA. We told you we would file our amended NDA before the end of July. We actually completed preparation and submitted our response early on June 29. This document incorporated additional data from Studies 117 and 159, the data package from the studies related to the protocol for our next generation inhaler and responses to the several other questions raised in the CRL. More importantly, the FDA accepted that filing as a Class II complete response submission and set a PDUFA date of December 29. The agency has not required any further studies. There are just a few subjects to review in the file of only about 19,000 pages, compared to 521,000 in the original NDA. We believe that our resubmission addresses the CRL in its entirety and we look forward to working with the FDA for timely approval. That said, we cannot predict what action the agency will take or whether the action will come before or after the PDUFA date. Given the enormity of issues before the FDA, we are very encouraged that the agency has moved forward so expeditiously and constructively with the AFREZZA resubmission. The PDUFA schedule is more or less inline with our earlier expected approval for…

Thank you. (Operator Instructions) Our first question is from Simos Simeonidis from Rodman & Renshaw. Go-ahead, your line is open. Simos Simeonidis - Rodman & Renshaw Llc : Could you tell us if you received the minutes from your meeting with the FDA, and if so if you’ve been able to share them with your potential partners?

We have not received the minutes yet from the FDA. Simos Simeonidis - Rodman & Renshaw Llc : Okay. In terms of your discussions on the REMS program with the agency, what is the latest update or status of these discussions?

Yes, Simos, I think that we are going to get it before in terms of the REMS discussion. We’ve had some feedback and discussion in the original review and complete the small slider [ph]; there were no significant changes to that. We submitted again our proposal for the REMS program, which has not significantly changed from that which we had previously and we anticipate that there will be further discussion towards the end of this cycle, all of that is (inaudible). Simos Simeonidis - Rodman & Renshaw Llc : Okay, final question for Matt. It seems like you have, you spent another close to $40 million this quarter and it seems that you have about three more quarters to go and obviously a lot of people are concerned about dilution. Obviously if you have a partnership before that that can possibly alleviate those worries, but is there a possibility where Al could extend his line of credit, instead of having to raise capital in the market?

Well I’m not sure if that’s a question for me, but it’s certainly always a possibility. We’ve been pretty open that our first choice would always be a partnership, but the timing of that is obviously uncertain and we don’t want to leave ourselves in a position where we might be viewed as over barrel so to speak with the partner. So we are evaluating a lot of different options and that’s certainly the one of the ones we are evaluating. Simos Simeonidis - Rodman & Renshaw Llc : Okay, thank you very much.

And our next question is from Steve Byrne with Bank of America. Go ahead your line is open.

Hi. I was wondering if in your meeting with the FDA whether there was any discussion about an outcome [ph]. Do you think that it’s any more or less likely than your views previously?

There was no specific discussion about an outcome in the meeting at all. As I’d indicated to you previously, the agency had been cleared in the previous review cycle and quite early on, but in line with the requirements in the answer committee, and we’ve seen nothing to indicate that has changed, but at this point the agency will of course reevaluate and look at that. From our point of view, we’re going to be well prepared should there be (inaudible) committee and actually see this as a very positive opportunity for advancing the data, but at this point there is no reason to believe that there will be one.

And Peter, the bioequivalence data that you discussed earlier, will those be available in any form to us?

As I said, we will probably today have (inaudible) verbally update, I realize it’s always difficult for you to transcribe those numbers. The message around the bioequivalence looks like a very robust package and I think when you see the curves, you will see the remarkable overlay between the MedTone device and the single and the two cartridges of the new device. That’s the best set of data that we can bring up.

And just one last one from me, is the manufacturer of the Dreamboat device required to be inspected and has that been scheduled?

We’ve certainly not heard any indication of that and I wouldn’t expect at this point to have an indication on a requirement inspection on – any supplier. The agency does not inspect any supplier.

Thank you.

Our next question is from Tom Russo with Baird. Go ahead, your line is open. Tom Russo – Baird: Good morning. Thanks for taking the question. Could you comment, maybe provide a little bit of additional detail on how firmly and definitively FDA on its side indicated concurrence with switching the device and seemingly the dose now and not after approval of their device that was used in pivotal trials, and then maybe what divisions the FDA did or did not concur with that approach?

I think if the agency hadn’t concurred, we wouldn’t have sent in the submission. Clearly, what we are trying to talk about here is that we have an unusual situation of an inhaled drug (inaudible) and that was the discussion at the agency in terms of the ability to clearly demonstrate the speculation of the active drug and also the carrier. The clear bioequivalence that we are able to show, I think also in terms of that is one of the things that’s a very important part of doing that. This will be subject to full review by the agency and normally inhale products are more of a challenge initially to get any success or favorability [ph] at all, it’s one of the things you try to avoid or it is minimal. And it’s also novel as you are looking at what the action of the drug is in the lung, the site of action of the systemic prevail of the peptide which is very good. So we had a very productive discussion with the agency around that. I think the major thing from their point of view, is that we have not changed the formulation in any way. It’s exactly the same powder, and what we’ve done, as I stated was, just make the device more efficient in reducing the amount of new powder that doesn’t contribute to the efficacy, and not which is not inhaled, but is actually left in the cartridge or deposited in the mouth. That actually is the reason that we can take this approach and we made absolutely no change to the formulation. Tom Russo – Baird: Okay, and then regarding the comments about considering regional partnership or that there is interest from regional players, should we assume that that would be U.S. only or is there in some way -- is the current status with FDA in some way relevant to regional players outside the US?

Actually, we have been approached by both regional players from within the U.S and from certainly, a number of other parts of the world, so it’s not restricted just to the US. The US approval usually is a critical component of those partnership discussions as well, but the interest is coming in from several parts of the world. Tom Russo – Baird: Okay. And then lastly, you made a comment in the press release about initiating installation and validation of equipment for the new device. Can you give some additional color on that and what work is left to be done and what regulatory steps are left to be done with regard to the equipment for the new device?

Well, when we moved to the so called Dreamboat inhaler, the filling systems for that is of course quite different, and of course all of the packaging is different, so that we have spent this past year designing, working with our supplier, developing the system and the first machine is to be delivered, it was supposed to be delivered about a week or two ago, but it’s now scheduled I think for either this week or next week to be delivered and installed. Our team is over – it’s being built in Germany, they are over in Germany now doing testing on it and that will be installed momentarily. And when it’s installed, then it has to be validated. It’s not clear whether the agency will feel that they need to do another inspection, but that’s always a possibility. Tom Russo – Baird: And aside from the inspection of the physical site, can you comment on what type of a regulatory change it is; just simply as a process change?

The process change is part of the CMC package.

And I hope it’s not a process change, this is purely selling and packaging. Actually the filling principal and the machine design is not exactly the same. It’s not much [ph] reduced in the eight clinical matches and the productions that we used for the Dreamboat device, and that’s important in terms of the processing of the actual insulin formulation remains exactly the same. This is dose [ph] technology. Tom Russo – Baird: Okay. Thanks.

The powder itself is unchanged. It’s just how you fill it.

Our next question is from Michael Tong with Wells Fargo. Go ahead, your line is open.

Hi. Just a quick follow up on the installation of the new equipment. Is there any validation data that you need to supply to the FDA and how quickly can you do that, given the timing of the scheduled PDUFA date.

In terms of specifics there, it’s really that equipment as we scale up and produce the commercial batches of that, and that would be a requirement and the timing at which we do that with the agency is subject to discussion. You know that we can get performance in terms of the cartridges and the device that’s there, and that’s really scale up type, all the activity in terms of bringing that equipment in, rather than putting in a new process when we change it.

Great. Thank you.

Your next question is from John Newman with Oppenheimer. Go ahead, your line is open. John Newman – Oppenheimer: Hi guys. Just had a couple of questions. The first one is, it seems like a month or so ago, you had raised the point that there was some sort of a Hemoglobin A1c issue that was raised by the FDA regarding the 009 trial. Just wonder if you could expand upon that and give us a little color there. Also for the 117 study, it also seemed like the enrollment target that you originally had was reduced, and I am also just wondering, given the fact that the efficacy from the control arm, they are seeing maybe a little different than what we would expect. I am just wondering how you’re positioning the results with the FDA? Thanks.

Okay. John, to take the 009, I think this is one that we discussed at length. You know that the margin of the upper bound of the confidence interval is actually a (inaudible) which is right at the edge on non-inferiority and I think that the discussion that we had around 009 has been although the meaningful analysis and there’s (inaudible) non-inferiority with that. We wanted in terms of 117 to look and we could (inaudible). If you look at the results of 117, that’s true. The numbers in that study alone which we had originally projected, that was done with the original device and we stopped that study, when we stopped producing the new device and decided to make that change over on to the new device. We looked at the power of that study in order to being able to address these questions and looked at that in light of whether we have sufficient power, and as I said we had 90% power to address that, which is really what our best physicians say and more than adequate in terms of questions that we had. Your question around the control arm, I actually would find it difficult because it’s actually in keeping with what we see and a lot of other registration types that is. (inaudible) HbA1cs that we recently well controlled patients that were going into the study. So we wouldn’t expect to see a really marked improvements in the HbA1cs in either group. They both follow the same pattern in the end and we are clearly showing non-inferiority there. So I think it’s entirely consistent with what you would expect in this study, increasing the time [ph]. John Newman – Oppenheimer: Okay.

I think the important things are we are seeing first hand [ph] and I think it’s very, very important that we are getting more patients down to last 6.5 [ph], and we are doing that without new improvements in hyperglycemia. That’s an important piece, I think I’m really sure what we’ve been talking about in terms of what you can do with an improved prandial insulin. John Newman – Oppenheimer: Correct. And then just a quick question for Matt. I know you’ve already had one question on financing, but just curious if you can give us any sort of guidance or sense as to how we might want to think about just the way that Mannkind would address cash needs this year? Would you maybe think about a raise or are you happy with the cash that you currently have on the balance sheet? I know you had a question already about possibly extending the line of credit. Just kind of curious as to how we should think about it?

Yeah, I think it’s a little pre-mature to answer that question in any definitive way, John, so I don’t mean to be evasive. I am happy not just with the cash on the balance sheet, but of course that’s backed up by a line of credit that we access on a regular basis and tend to keep our cash on the balance sheet typically around $30 million at the end of every quarter. So it’s been a fairly consistent, plus or minus a million here or there. We have a lot of financing options. I think we are unique in having as many as we do. Al was one of them before, I think that’s certainly unique and we are looking at all of them and it’s premature to commit one way or the other. We obviously want to feel for how some of these things are going to play out before we come to a conclusion. So we have not made a determination at this point and when we do, we’ll tell you about it. John Newman – Oppenheimer: Okay, thanks.

Our next question is from Jon Lecroy with Hapoalim. Go ahead, your line is open. Jon Lecroy – Hapoalim: Yeah, thanks for taking my call. I first want to talk on the 117 trial. It was an open label trial and it looks like the patients in the injected insulin arm had much lower fasting level of glucoses implying -- or I’m sorry the other way around, that Technosphere had lower fasting glucose implying they are on more basal insulin. I am wondering what the open label nature of that had maybe to do with that data point.

I am sorry, you are just incorrect. They are actually …

We seem to be losing Peter. Hello, Peter? Peter, we lost you there for a while. So you may want to repeat what you said.

Hi, sorry. (inaudible) exactly the same levels of (inaudible) which is the long acting insulin used in both arms. So the difference that we see are due to differences in the prandial insulin. We’ve talked about the rationale for that, and the reasons for that which are not entirely clear, but we think there’s probably differences in insulin resistance. That’s been a very consistent finding that we’ve seen across all our studies. The open label nature is standard in insulin studies as you know and I think has no impact whatsoever. Jon Lecroy – Hapoalim: Okay thanks. And then as far as Europe goes, what are your plans on more trials to do European filing and kind of timing on European filing?

At the present stage we are looking in terms – are having -- I think that would be a discussion, but we’ll absolutely have a potential partner onboard and that would be very helpful to us in terms of that filing. There are no specific requirements of any additional studies required in order for us to do a filing in Europe. Jon Lecroy – Hapoalim: Okay, thanks.

(Operator Instructions) Our next question is from Doug Dieter with Imperial Capital. Go ahead, your line is open.

Good morning. Just wanted focus on the discussion with partners and I guess my first question is, what is the primary hiccup right now to get something done with the primary push backs from the best partners?

There is really no push backs, Doug. It’s just that we were waiting to finalize or to really start serious talks until we got the minutes from the meeting of June 9, which are obviously late from the agency, but we understand that. But given that it’s been delayed, we have started the discussions, but we won’t get into any real negotiation till after we see the minutes.

And in terms of your confidence level, I know you’re not giving guidance here, but obviously your intent is to get an approval by December. You want to have a partner probably by September-October timeframe. What’s your confidence around being able to do so and is it clear from the potential partner side that that’s the timeline?

No. You know early last year we were told by our partners that they wanted to close the deal in July. So I made a prediction that I’m not going to do that again.

No. I would also say Doug that as I mentioned in my part of the presentation, that we’ve had new both global and regional contenders coming into the game, and certainly we want to manage all the discussions in a way to hopefully optimize the financial results of the discussion. So from that point of view, I would not kind of hold ourselves to a specific timeline September-October, but looking for what is the best possible deal that we can accomplish, trying to also bring the newcomer is kind of somewhat in line with people that have been with us for a longer period of time.

And then finally, just from the liquidity perspective as a follow-up to a prior question, Matt is it safe to assume that the reason why you’re not going to comment on additional liquidity is because you’re waiting on what the partnership potentially brings to the table?

Certainly, one factor.

You’ve taken the words right out of my mouth Al. It’s certainly one of the factors but it’s not the only one and so we want to make sure we do a thorough evaluation of what our options are before we come to a conclusion.

Fantastic. Thanks.

All right. I’d like to thank all of you for joining us today. We look forward to updating you in our next quarterly call or perhaps sooner. Good day folks.

That does conclude today’s conference. Thank you for participating. You may disconnect at this time.