Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation Fourth Quarter and Year-end 2011 Conference Call. [Operator Instructions] As a reminder, this call is being recorded today, February 22, 2012. Joining us today for MannKind are Chairman and CEO, Alfred Mann; President and COO, Hakan Edstrom; and Chief Financial Officer, Matthew Pfeffer. I would 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'll summarize our financial results for 2011, as reported earlier today, and also our recent financing activities. Hakan will then discuss our current operations and Al will conclude with an overview before we open the call to your questions. Before I 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, February 22, 2012. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. For the fourth quarter of 2011, total operating expenses were $30.6 million compared to $32.1 million for the fourth quarter of 2010 and $32.8 million for the third quarter of 2011. R&D expenses were $20.2 million for the fourth quarter of 2011 compared to $24.2 million for the fourth quarter of 2010 and $23.1 million for the third quarter of 2011. The decrease in R&D expenses for the fourth quarter of 2011 compared to the same quarter in 2010 was primarily due to the termination of our insulin supply agreement as we did not purchase insulin in the current quarter, partially offset by an increase in clinical trial-related activities as trials MKC-175 and MKC-171 were initiated in the fourth quarter of 2011. The decrease in R&D expenses this quarter from last quarter was primarily due to our final purchase…

Thank you, Matt. And good afternoon. Let me provide a high-level overview of the ongoing efforts [ph], activities. In general, we remain on target for resubmission to the FDA in the first half of 2013. The FDA continues to provide guidance with regard to clinical and CMC development. All key clinical trials have been initiated and we are actively enrolling subjects. Enrollment in our pivotal Type 1 study, the MKC-171, is well underway. There are 42 U.S. sites that are operational, and having had successful experience with the clinical centers in Russia and Ukraine during earlier trials, we are utilizing some of those centers in the current studies. The Russian investigator meeting was held in December and the Ministry of Health has approved the protocol. The Russian site activation and recruitment have begun. Additional sites and recruitment in Ukraine will begin next. The Type 1 trial has 3 arms, each scheduled to finish with 133 patients. 2 arms will deliver AFREZZA: 1 with the Dreamboat device, the other with the MedTone inhaler, as a bridge to our earlier trials. The third arm will use a rapid-acting analog and conventional injection therapy. All 3 cohorts will use Lancet as the basal insulin. Our pivotal Type 2 study, the MKC-175, was initiated on schedule following the start of the Type 1 pivotal study. Site activation is well underway, with 35 U.S. sites already established and with additional sites currently being activated. The MKC-175 investigator meeting in Russia was held last week and Russian site activation and recruitment are now beginning. This is to be a superiority study in early-stage Type 2 patients failing on Metformin or Metformin plus another oral drug. AFREZZA is provided in 1 arm. The other arm is Technosphere placebo without insulin, and each arm is scheduled to finish with 123 patients. Both pivotal clinical trial expect a complete recruitment in the second quarter so that study completion should occur around the end of 2012, with an FDA submission in the first half of 2013. The primary focus on the CRL was the device change. In addition to the 2 noted clinical trials, the agency called for information on CMC-quality device, human factors and product labeling. We submitted an information package in response to the FDA in November, seeking advice from the agency on any remaining comments noted in the CRL, and response to those remaining peripheral matters is expected from the agency shortly. So with that, let me now turn the call over to Al for an overview of our situation. Al?

Thank you, Hakan. And good afternoon. Many of our long-term stockholders have expressed concern about the loss of value of their investments. That is certainly understandable given that MannKind's stock has dropped by about 3 quarters since the CRL. I have shared in that loss of value. In fact, my loss has been the greatest of all. I had personally invested $575 million to purchase what is about 40% of MannKind and the current value of that equity is but a fraction of my actual cash investment, yet I expect that loss to be reversed by developments over the next couple of years. I am certainly continuing to hold my stock and I'm even converting some of my loans with the company into stocks so as to maintain my ownership position. As you know, out of concern for potential dilution to our many stockholders, I had earlier personally provided to MannKind an additional $350 million in a low-interest credit line. We had expected that amount to have been sufficient to fund the company past the launch of AFREZZA. However, with the delay in approval, at year end, there was only $45 million left in the credit line and there were mounting obligations. It therefore became critically urgent for the company to raise additional capital. We are continuing to work on several minimally dilutive financings, but in today's world, it seems to take much longer to complete such transactions. We therefore certainly needed to act decisively and quickly to raise capital, not to do so would have been very foolish. We therefore undertook the recent equity offering with net to the company about $81 million. Unfortunately, that financing was quite dilutive, yet it will provide resources for the company while we continue our pursuit of non-dilutive and minimally diluted financing to…

[Operator Instructions] Our first question comes from Ian Somaiya with Piper Jaffray.

I was hoping to get a similar update on the ongoing negotiations in terms of licensing of AFREZZA. I don't know if you can tell us if the tone of the discussions have changed given your recent financing, or just as additional market research is conducted, what the thoughts are on the overall opportunity for the drug, as portrayed by potential partners.

Actually, following the meetings with the FDA and the expansion of the clinical trials into earlier Type 2 patients, those patients are on orals, we have seen actually a significantly increased interest, with new potential parties coming, basically coming to the party and wanting to perform due diligence. So we are continuing discussions with potential partners that have been with us for some time and that we have guided through the CRL process and that have a comfort level with what we're doing right now in regards to the clinical trials, as well as accommodating newcomers that have been attracted by the, I would say, the significantly greater potential that AFREZZA offers now also in earlier Type 2 patients.

And if I could just ask a follow-up. Can you speak to the, their expertise within the endocrinology or and diabetes field, these new parties that are coming to the forefront? And then beyond that, has your, have your thoughts changed in any way regarding licensing of the drug in terms of whether it will be a global deal? Or are you looking more to partner individual territories?

Well, yes. On your first question, I would say that the company represents both companies that are certainly involved in diabetes and other companies that are more involved in metabolic type of diseases so, but at least have a familiarity with the market. In regards to the process going forward, I would have to say, actually, this is following a discussion with our Board, that since we see a significantly bigger potential for AFREZZA here in the marketplace, we are certainly entertaining the discussions, but we are not necessarily pushing to close those discussions until we do believe that we have a deal that, say, represents fair value for the company. Of course, if someone wants to preempt the process and come to us, we certainly would listen carefully. But again, we want to make sure that we have due process before we enter into any type of partnership arrangement. And yes, we do still look at a global partnership. There are certain parts of the world that we might look at a different type of arrangement, but as a basic principle, we are looking for a global partnership.

And our next question comes from Tom Russo with Baird.. Thomas J. Russo - Robert W. Baird & Co. Incorporated, Research Division: It's kind of a, I guess it's 2 parts of the same question. Maybe first, Hakan, can you give an update on the percent already enrolled for the 2 replacement Phase III trials? Or is it more that the sites are opening and they'll go from very low enrollment to completely enrolled by the second quarter?

Well, as I mentioned, I mean, we have, I think, 42 sites already enrolled and enrolling patients in the Type 1 and, if I remember correctly, 35 in the Type 2. So certainly, those are expanding by the day. So right now, basically, what I can confidently say, that we will -- we do expect certainly to complete the enrollment within the second quarter. That will allow us to complete the trials by, around the end of the year, allowing for a submission in the first half of 2013. So there are no indications at this point that we need to change those anticipated schedules. Thomas J. Russo - Robert W. Baird & Co. Incorporated, Research Division: And maybe for Matt. I was trying to put some numbers together, the $3.2 million in cash at the end of the year and the $6.3 million that was drawn down before the financing. It looks like only about $9.5 million of cash burned in the first, maybe 6 weeks prior to the range. And I guess I was just wondering, is that right? And then I know you also guided to sufficient cash into the fourth quarter, but at the rate of around $7 million a month would imply that you have more like 1.5 years, so I was just trying to maybe understand what the pace of cash burn will look like over the course of 2012.

Tom, that's an excellent question, and I'm glad to see you're paying such close attention. Yes, I'm trying to be somewhat conservative in my, in the guidance I've been giving for cash usage. You're right, I have been saying 10 to 12 a month is what you should expect during 2012. It's going to be a very lumpy process, but you're right. If you look at the fourth quarter, it was less than $7 million a month during the fourth quarter. And you're right, it was less than $7 million a month in the first month this year. So yes, the current burn rates are quite a bit less than that, but I'm projecting it to ramp up pretty substantially as we get the trials fully enrolled, and they're enrolling very rapidly right now. So I'm trying to err on the conservative side here. But it is going to reach a crescendo sometime after full enrollment is reached in the second quarter, and then it'll start tapering off from there as people roll off from the other side and come back down to a more typical burn rate. So that's what you should expect. But beyond that, I'm trying to keep it on the, I'd rather err on the positive side here.

Our next question comes from Steve Byrne with Bank of America.

I have a couple of questions about the MKC-175 study. In your design of that study, what level of power did you design it to, to demonstrate superiority?

It's at the 90% level.

90%, okay. And then the assumption, the key assumptions that would go into that estimate would be, well, 1 of them would be, what level of incremental A1C reduction are you assuming you can achieve with AFREZZA after the patients are at a stable level on the oral therapy?

0.5%. [indiscernible] That's what the, that's the goal.

Yes, 0.5% is the goal and we certainly...

Expect to do better.

Yes.

Okay. And then just a record-keeping question for you, Matt. Post the equity raise on a pro forma basis, what is the effective share count, the diluted share count right now?

Ah, boy, close to 200 million...

A little less.

But less than that. 165 million, roughly, right now. It does not include shares to Al yet, though. That doesn't include the shares to Al, just from...

They probably haven't transferred yet because of the SEC...

Hart-Scott-Rodino. Yes.

Yes. You'll notice I carefully said that The Mann Group committed to purchase the shares. There were a couple of housekeeping things we had to do before those could actually be transferred so they'll be doing -- or actually, I'm not even sure they've done it today but they will be, shortly. So that number is strictly with the publicly offered shares.

Our next question comes from Steven Wilson [ph].

Dr. Mann, I've been an aficionado of yours for a lot of years, and I do remember when you first were very successful. This is strictly on the offering side. And I was very, very aware of the dilution and I do own the stock higher and I've been dialed [ph] across, averaging down. But I wonder why you didn't do a rights offering so that, in fact, existing shareholders weren't able to participate in this offering? And what was the thought behind that at this time? Because the dilution is so great. And I believe, anytime you're offering more than 10% of the outstanding stock, I mean, I think you're almost required to do a rights offering, but I could be wrong. And I tried to get a hold of you directly at your office, but seemed to have not been successful for at least the past year.

I'm not sure why you couldn't reach me because, certainly, I am reachable so I don't know. We need to somehow touch base and discover that. But I think I would rather turn your question over to Matt because I'm not sure what...

Yes. Without going into all the details, we did consider that, I'll be honest. We found that, that process is an extraordinarily complex one and very time-consuming. And uncertain and given the circumstances we were in, we thought that the course to be pursued was the best one for the company and, by definition, its stockholders as well.

Okay, and which leads also to one last question. Is the fact that we have so many shares shorter than it comes up on a percentage basis as for a company the size yours is, being short 37% of the outstanding float, how -- what sort of ideas did you guys come up with to stop the shorts from acquiring your shares to cover? Because I know that Warren Buffett always said the guys who go ahead and short his stocks are also buyers of his stock. But if in fact you're creating new shares, these guys are going to go in here and just be able to get the shares back again, cover, and they have done nothing to help the company except hurt it and hurt existing shareholders.

Well, you're certainly right. The shorters are not helping the company, but...

Yes, we'll see -- I think it'll be very informative when we see the short count in the next tally, which will be the first one that will follow the offering and see where we came out. I mean, we were very careful about where we placed those shares, but you can never be 100% certain.

We thought we were careful, but obviously, a lot of the shares were sold.

Agree. But again, Dr. Mann, I'd love to chat with you sometime specifically relating to this and I think you may find it to be a little illuminating.

Okay, I would appreciate hearing from you. And I can give you my office number...

Call the main number, and if Al is in the office, you can always get him.

Is that you, Matt?

Yes.

Matt, okay, thanks again. I'll be happy to do that.

[Operator Instructions] And our next question comes from Keith Markey with Griffin Securities.

A little while ago, when you were talking about commercializing AFREZZA, there was talk about having 3 different, still unfinished lines and I was wondering if the thought of being able to get approval in the United States and Europe at the same time has changed your feeling about what production capacity you'll need for the near future and how you meet, how you plan to meet that capacity.

Well, from a capacity point of view, we are fixed to have the capacity for at least, so it's 400,000 patients upon initiation and then certainly build out in a rapid pace on that and going up to sort of the 2 million capacity that we would see in Danbury. And at the same time, as Al has indicated earlier, there are a number of actually regions and nations of the world that have expressed interest in being part of, say, a fill-and-finish operation as we expand on a global basis. So really, nothing has changed in regards to our plans from that point of view.

Okay, great. And one other question. I was wondering if you could, Matt, give us the breakdown of the quarterly burn rate and how it changed. I'm sorry, I couldn't get the numbers down.

You want me to repeat the numbers for the each, at each quarter, the burn rate went quarter to...

Yes, that's, just the 2011 numbers.

Okay. So in the first quarter of '11, we burned through $32.7 million of cash. The second quarter was $40.2 million. The third quarter was $37 million. And the fourth quarter was $20.1 million, obviously a significant reduction from prior quarters. But it's interesting, the fourth quarter, in many ways, is the first quarter during 2011 that wasn't beset by something unusual in the way of a transaction. Remember, Keith, that in the first quarter of the year, we did a pretty significant restructuring and took out about 40% of our headcount in an effort to reduce costs. But of course, making reductions like that is expensive initially and so it takes a while for those costs or those benefits to filter through. In the second and third quarters, we had the 2 payments to terminate our insulin supply agreement which was split between those 2 quarters, so those 2 quarters had kind of some unusual final costs as well. And the fourth quarter is the first 1 that didn't see anything unusual happening, which is why, as was already disclosed earlier, the first quarter of 2011 was also relatively low. But again, I want to caution everybody that these expenses will trend upwards again in 2012 as we ramp up these trials.

At this time, there are no questions queued. I'd like to hand it back to Alfred Mann.

Thank you. Thank you, all, for joining us today, and we look forward to our call for the next quarterly conference in May. And we hope at that time to be able to report significant progress on the status of our clinical trials and some other developments. Thank you, all.

Ladies and gentlemen, that concludes today's conference. Thank you for your participation. You may now disconnect. Have a great day.