Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation Second Quarter 2011 Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, August 4, 2011. Joining us today from MannKind are, Chairman and CEO, Mr. Alfred Mann; President and COO, Mr. Hakan Edstrom; Chief Financial Officer, Mr. Matthew Pfeffer; and Chief Scientific Officer, Dr. Peter Richardson. I'd now like to turn the call over to Matthew Pfeffer, Chief Financial Officer of MannKind corporation. Please go ahead.

Good afternoon, and thank you for participating in today's call. I will summarize our financial results for the second quarter of 2011 as reported earlier today. Next, Hakan, Peter and Al will comment on recent events. We'll then open the call to your questions. Before we proceed further, please got comments made 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 with 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 4, 2011. MannKind's management undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Now let's start with the financials. For the second quarter of 2011, total operating expenses were $39.2 million compared to $37.4 million for the second quarter of 2010, and $38.1 million for the first quarter of 2011. R&D expenses were $30.3 million for the second quarter of 2011 compared to $26.2 million for the second quarter of 2010, and $26.3 million for the first quarter of 2011. The increase in R&D expenses for the second quarter of 2011 compared to the same quarter in 2010 was primarily due to a settlement reached with Organon in connection with the termination, by us, of the previous insulin supply agreement. In connection with a settlement, we received the first 2 shipments of recombinant human insulin from Organon and paid the first of 2 $8 million installments in the second quarter of 2011. Additionally, we recorded a loss contingency…

Thank you, Matt, and good afternoon. I think the best way to summarize the activities of the last quarter is to lay out the timeline of our interactions with the FDA, which should give you a sense of the frequency and the quality of our ongoing dialogue. As you know, we had an end-of-review meeting on meeting on May 4. Well in advance of that meeting, on April 29 in fact, we received preliminary comments from the agency which allowed us to resolve many of the issues, and to respond with clarifications regarding remaining topics prior to the May 4 meeting. And as we've previously reported, the meeting itself was very productive. We further refined the proposed protocol for the required Type 1 and Type 2 studies and reached agreement on several key issues. For example, the agency concluded that the pulmonary function measurements of DLco and TLC was not to be necessary. This reduction itself would simplify the studies and this relaxation of the requirement suggest that any pulmonary function testing in the final label will not become a significant marketing obstacle. After all, in all our testing, we have been only a tiny temporary effect on pulmonary function that has always been resolved at cessation, and is likely just a reaction to the powder inhalation. Then again, ahead of schedule on May 26, the FDA provided us with the minutes of the May 4 end-of-review meeting. In addition to summarizing details of the meeting, this document also gave us guidance on several topics that had not been covered at the meeting, but which the agency indicated wanted to discuss off-line. On the basis of all the feedback, we moved quickly to finalize the protocols for the 2 clinical studies involving the next-generation inhaler. On June 8, we submitted…

Thank you, Hakan. And good afternoon. At the recent ADA meeting in San Diego, we presented 4 posters. Two of these posters describe studies that confirm that there is no increase in cardiovascular risk associated with the use of AFREZZA. The first of these studies was a meta-analysis of all the clinical trials that found a relative risk of only 1.01 per cardiovascular events, which is another way of saying, there is no different from the controls. We also presented a clinical study that demonstrated no effect on heart muscle conductivity, a QTc study, that no cardiovascular effect has been observed should not be a surprise. After all, we are delivering regular human insulin. Another study presented at the meeting was an evaluation of patient's perception of insulin therapy using AFREZZA, including convenience, comfort and ease of bitumen adherence. In this trial, there was a greater improvement in patient's perception of treatment when using AFREZZA than in patients receiving standard therapy. The fourth poster was on the pilot study in Type 1 diabetes, investigating the addition of a supplemental dose of AFREZZA after a meal, when blood glucose measured too high. This study demonstrated a non-inferior improvement in A1C over 8 weeks compared to a rapid-acting analog with lower fasting blood glucose and fewer hypos. Turning now to our oncology program. We recently hosted recruitment in the clinical trial of our investigation on immunotherapy product for the treatment of melanoma. The trial has been recruiting very slowly, given the approval earlier this year of YERVOY. We are continuing to follow patients that have already been enrolled, while we evaluate the next steps for our immunotherapy vaccine platform technology. We're also continuing to explore a potential partnership and the other options for our pre-clinical oncology program. We're seen a high level of interest in our progress towards the pharmacological manipulation of the unfolded protein response. However, current circumstances have required us to conserve the sources that we would like to allocate to this program. Now let me turn the call over to Al to talk about the proposed Type 2 study, and our plans for moving forward. Al?

Thank you, Peter, and good afternoon. Our first quarter call was dominated by news of the complete response letter and its aftermath. We recognize that the FDA action and the substantial financial consequences of the delay would significantly impact MannKind. And if I can be so bold, also mankind without the double N. After all, AFREZZA addresses what is a poorly-met need in what, today, is the greatest challenge to healthcare worldwide. As you are well aware, I remain absolutely convinced of the importance of AFREZZA and am fully committed to this program. As you heard from Hakan, since our May 4 meeting, we've had a number of written and personal interactions with the FDA. One interesting input from the agency was an indication that it would accept a resubmission for the initial approval just for Type 1 alone, followed by data in Type 2 as an efficacy supplement. I do not know of any precedent for an indication for insulin in only Type 1, while we see this suggestion from the FDA as still another positive indication, and as an alternate opportunity, should it become relevant. In any case, our intention is still to submit for both indications simultaneously. Though we will be able to reassess this should it later seem advantageous to gain an early approval for the Type 1 indication. Hakan described study 171, the Affinity 1 trial in Type 1 diabetes. We anticipate that this protocol will be acceptable to the FDA and that, at most, only minimal changes will be appropriate. If that is so, we will be able to hold the investigator's meeting and proceed to open recruitment soon after the meeting. Evolution of the Type 2 study has been interesting. This trial was originally planned to be a basal/bolus study similar to a…

[Operator Instructions] And our first question is coming from the line of Jason Butler with JMP Securities.

Al, I know you don't want to give specifics about what the trial design discussion points are with the FDA. But maybe if you could talk broadly about how you see that trial in terms of patient population or endpoints, or how it differs from a traditional Type 1 -- what we're used to seeing in the diabetes Type 2 trial.

It's really difficult to answer you, Jason, because there are several variations. We're submitting to the agency 3 different variations of the trial, and we will discuss this at the meeting next Wednesday. And it would really be inappropriate to try to discuss those at this point. I'm sorry if I disappoint you, but I think we need to make sure that we have agreement with the FDA before we proceed.

Okay. Then maybe on the Type 1 trial, you said that you may be able to have the Type 1 and Type 2 trial done at approximately the same time. What are you thinking in terms of enrollment timelines for the Type 1 trial, and what are you doing to make sure that can happen in the timeframe you expect?

Well, once again, one can never really predict the time of enrollment. We would like to be able to enroll it in 6 months, but we also recognize it could be 9 months to complete enrollment. It could be more or less than that, so that it's hard to give you a very specific time. But the difference in the Type 2 trial is there won't be as much of a run-in period, or titration period than there is in the Type 1. So we hope to catch up.

Your next question is coming from the line of Steve Byrne with Bank of America.

Hey, Matt, can you help a little bit with the accounting on these payments to Organon? It looks like half of it is being expensed, half of it is being treated as a penalty. Where is it flowing through the income statement? And is it that roughly 3/4 of it is in the second quarter, another 1/4 in the third?

No, I'm sorry, I'm sure my comments were intended to make that clear and I guess I didn't succeed. No, they were -- total amount was $16 million for everything. Of that, some portion of it -- in fact the majority was actually in payment for insulin, with the balance a penalty. We split it into 2 actual cash payments to coincide with the 2 shipments of insulin. One of which we received in the second quarter, and one received at the end of the second quarter but we paid for in the third quarter. So what you see is, in the second quarter we paid $8 million in cash -- well, in addition, we accrued the portion of the next quarter's payment of $8 million that represented penalty. We didn't accrue the payment or the receipt of the insulin because you don't accrue receipts of insulin but you can occur expenses. So there's a little mixture here on actual cash going out and accruals. So the number that I was talking about was, the additional $3.9 million, was the penalty portion of the second $8 million payment that was actually paid in the third quarter. But we're in the third quarter now, it's now been paid. Does that make sense?

Yes, that helps. And the portion that is actually for the insulin itself, is that a cost of goods line item?

No. We have traditionally always expensed all of our insulin purchases, so that's going just through R&D. It won't start going through cost of goods until such time as we have approval for the product and can start capitalizing those expenses. Insulin, or really any material purchases at this point are all expensed as we buy them.

Your next question is coming from the line of Michael Higgins with Rodman & Renshaw. Michael Higgins - Rodman & Renshaw, LLC: First on 172. Can you describe for us what's left in your discussion with the FDA, what the finer points are that you're working with that now?

It's 174. But once again, there are some very substantive questions as to what the comparator's going to be. We have 3 different proposals to the agency and we hope to refine that at the agency meeting next Wednesday. And it really would be inappropriate to try to describe all 3 of them today.

Michael, I hate to break in. Where you asking about 171? Michael Higgins - Rodman & Renshaw, LLC: No, I'm looking at the Type 2 trial. In terms of the 171, is this just a timing thing? I guess, we felt we may have had 171 starting by now and it sounds like you've got a meeting coming up shortly. Did you just need official sign-off from the FDA? Or what caused that delay?

Well, we said that we're going to wait till we had approval from the agency of the protocol. And we hope to have them effectively approve that next Wednesday. And we will be getting minutes of that meeting within 30 days. But we will start enrolling patients and doing some of the preliminary stuff before that happens.

[Operator Instructions] Your next question is coming from the line of Avik Roy with Monness, Crespi, Hardt. Avik Roy - Monness, Crespi, Hardt & Co.: Al, I apologize if you addressed this in your prepared remarks. But what's remaining on our credit facility with MannKind?

What -- about $80 million, I think.

Your next question is coming from the line of Keith Markey with Griffin Securities.

I had a question. I had to get off the line briefly during the discussion of the Type 2 trial and I was wondering if you could just run through the number of patients that would be involved in that, and the breakout between different arms.

Well that, Keith, again, that is one of the issues. Because the several trials, options that we're proposing include even questions of superiority versus non-inferiority. So that the number of patients will be essentially defined next Wednesday, hopefully.

Okay. I did miss that. And the goal would be -- well, how quickly do you think you'll be able get that trial started? Assuming everything goes reasonably well with the FDA at this coming meeting.

Well, hopefully, within a few weeks. But I can't commit that.

Your next question is coming from the line of Leah Hartman with CRT Capital.

Just a follow-up on the number of sites that you -- I know it depends on the number of patients, but the number of sites, and how quickly you think you can get those ramped up given the extent of the previous trials.

We are performing trials in Europe, in Latin America and certainly in the U.S. And I would say that it'll be in excess of 50 sites. And the contract is already underway with the sites and getting them ready. So as soon as we've had the investigative meeting, they should be ready to go.

And these were sites that you've used previously?

It's a combination of sites that we used previously, yes. In terms of the Type 2 Study, that may be of a different format, we are probably adding new sites as well.

Understood. All right. And then finally, once you got the minutes of the meeting, do you plan to come back to us, assuming those will be minutes ahead of the Q3 release?

If we find minutes that would be -- in some way change the circumstances under which we operate, we certainly would communicate that. Otherwise, we will proceed along what we've described today.

Sir, there are no questions at this time, so I'd like to hand it back to Mr. Alfred Mann for closing remarks.

Thank you all for joining us today, and we look forward to updating you as soon as things continue to develop. There's a lot going on now and we'll hope to be in touch very soon. Thank you.

Ladies and gentlemen, thank you for your participation in today's call. This does conclude the presentation. You may now disconnect. Have a good day.