Welcome ladies and gentlemen and thank you for standing by. Welcome to the MannKind Corporation 2017 Third Quarter Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions]. As a reminder this call is being recorded on November 07, 2017 and will be available for playback on MannKind's website shortly after the conclusion until November 21st. Joining today from MannKind our Chief Executive Officer Michael Castagna; Chief Financial Officer, Steven Binder; Chief Commercial Officer, Patrick McCauley; and Rose Alinaya, SVP of Investor Relations. I would now like to turn the call over to Ms. Rose Alinaya. Please go ahead.

Good afternoon and thank you for joining us on today’s call. Please note that comments made during this call will include forward-looking statements within the meaning of Federal Security 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, November 7, 2017. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. Today our Chief Executive Officer, Michael Castagna will lead the call followed by our Chief Financial Officer, Steven Binder who will review our financial results for the third quarter. Our Chief Commercial Officer, Pat McCauley will provide our commercial review ending with Mike providing additional medical and regulatory and other highlights. I will now turn the call over to Mike. Mike?

Thank you Rose. Before our call begins, I would like to look back to where the company was the day I assumed the CEO role and later where we are today some five months later. On May 30th we had roughly $19 million in cash, a $10 million interest payments due in 45 days, $50 million of inventory principal payments in 2018, a significant warrant overhang with restrictions that prevented us from doing many parts of our recapitalization, and approximately 250 scripts a week, a U.S. only focused business with no CFO or CCO and a stock price hovering around $1.50. Today we have over $60 million in cash, only $20 million in payments due in 2018, no warrants restricting our recapitalization process, a world class CFO and new CCO who replaced me, a new label under which we can effectively market our product, we followed in Brazil kind of late stage discussions with other ex-U.S. distribution relationships and we're having a little over 450 scripts a week or an increase of 50% over the last five months. And a stock price right around $3.30. Clearly the financing constraints that we faced were both numerous and complex. Sales would go up over the last decade and couldn’t all be resolved in my first five months. Most of my time has been spent on building out the leadership team and recapitalization process. Steven and I spent a considerable amount of time getting our balance sheet in better shape to ensure MannKind has sufficient capital to execute our plan. While our work is not yet complete, I feel that we're on a clear path to a simplified capital structure and financial stability as we will describe in greater detail on this call. This is the first time since I've been here that…

Thanks Mike and good afternoon. We've been very busy both during and after the third quarter addressing our two top priorities, recapitalizing our balance sheet and growing Afrezza sales. Let me start with our recapitalization progress with much of the activity occurring after the quarter end. On September 29th we exchanged 1.3 million shares of common stock for the outstanding Series A and B warrants which freed up 8.4 million shares of common stock for use in our recapitalization plan. Next on October 10th we sold 10.2 million shares of common stock in a registered direct offering at $6 per share and raised net of issuance expenses $57.7 million. Then on October 23rd we completed two more transactions. First we exchanged the $27.7 million senior convertible notes through August 2018 for senior convertible notes in the amount of 23.7 million through October 2021 and exchange 973,000 shares of common stock to reduce $4 million from the senior convertible notes principal. The new senior convertible notes of $23.7 million have the conversion price of $5.15 a share. Second, we extend the maturity of the $10 million of senior secured debt to deal from October 31, 2017 to January 15, 2018 and reserved 4 million shares of common stock for conversion of this debt as well as applying any remaining shares after conversion of the $10 million to senior secured debt to Deerfield in 2019. So we take a step back and realize what was accomplished in a very short period of time. We freed up 8.4 million shares that had previous reserve for warrant conversion, we added $57.7 million to our September 30th cash balance of 20.1 million. We reduced debt by 4 million, we cleared out a near-term debt maturity by issuing a new four year note with a conversion…

Thanks Steve for the detailed review of our financials and good afternoon. I am very excited to share with you today our third quarter commercial efforts and successes and I tell you it has been a very productive quarter for the team and I know we've been working extremely hard. When you look back over the past few months there has been a lot of commercial progress in many different areas and it really is exciting to see the continued evolution of our commercial organization and its overall impact. So let's take a look at our third quarter commercial highlights. I think one of the most important places to start is with our Afrezza sales and they continue to grow in the third quarter and we're seeing this across multiple metrics including wholesaler shipments, prescriptions, total cartridges, and new riders. So we're going to look at these a little more closely in detail in just a minute. We're also going to update you on our progress from last quarter on the transition of the NDC portfolio. As Mike mentioned we've launched two new SKUs and continue phasing out another. We're going to continue to review some of the details in this transition. Clearly the positive FDA label update is a significant event for us that has generated a lot of discussion from our healthcare professionals. We definitely believe that the revised label truly strengthens and clarifies the Afrezza clinical value offering so we're going to get a chance today to hear some of the feedback from the field and some of the observation that we've had in the past few weeks since that update. And finally another milestone event for MannKind, we're very excited to launch our first TV commercial campaign. We know we have one of the key opportunities…

Thank you Pat. One of the big things as we progress into Q4 is the stability of the organization, raising the financing, getting everything organized that we've been working on for the last year and executing against that plan has been critical. I now want to talk a little bit about our Afrezza clinical program progress. So, tell me you've seen the slide before. We have cleaned up the colors a little bit to make it a little clearer for you. And at the top three bars our post marketing commitments we originally had five and now we're down to three with the label change we eliminated two of them. In the third quarter we started our pediatric PK study. This is enrolled in three sites, we've had four patients enroll already. We have seven more sites coming in the next 30 to 60 days. There are two other trials that we expect to kickoff in 2018. The Phase 3 part of the pediatric program as well as late 2018 a long-term safety study. The next two bars are the grey bars. These are company initiated trials. The first one is an Afrezza dynamic dosing study. This is done with some well known -- really looking at how do you dose Afrezza based on certain meals and we get those algorithms and are able to think about ways to integrated into some of the technology that we see going down the road. The next trial is called the APEC Study this is a Type I patient experience trial that we expect to start enrolling in early 2018. This trial as well as the pediatric Phase 3 trial will be influenced by the outcomes of the STAT study. The STAT study for those of you who don't know was a time…

I am going to turn it over to our operator.

[Operator Instructions]. And our first question comes from Jason McCarthy from Maxim. Please go ahead.

Hi guys, I have a question about the commercial strategy that you are implementing, can you give us a sense of the timing of those commercials, meaning will they be on specific time slots like on Sunday afternoons or Saturday afternoons or at night and how do you expect that impacts sales and how do you project the cost of those commercials going forward?

Hi Jason, this is Mike. Thank you for the question. We expect it to be a mix of morning, evening, prime time, and throughout the day commercials seven days a week. So this isn't expecting, there are some options where you can just look at impressions and buy last minute advertising. These are buys on the channels that we've shown and we expect to see them throughout all hours of the day. And one thing I'll add is that these are -- we went deep in this particular market that we believe are over indexed and ready for continued success. We want to really show the tri-effect of a good sales rep with good physician support, TV and digital all going into a market. So if you just think about scale up and optionality in 2018 we can get a pretty quick read on what we need to do.

And just a follow-up to that because we've been covering this space for a while and the last company that we covered, that did this was Dendreon and for them it was kind of the last step before the company ran into significant difficulties with their debt. I'm just curious if that's something that you guys are thinking about?

No, we have always had in our capital plan a Q1 increase in TV advertising. Given that we raised the $61 million, this was really a pull forward from 2018 because there was no reason to sit on cash and not invest it to grow. We tested this commercial extensively, really looking at the patient feedback, patient recall, patient intent, how fast it was for doctor, and in over 500 patients studied whether you are Type I, Type II, on insulin or orals there is a very high intent and desire to try our presence. So to me there is a very big difference than Dendreon which is treating in immunotherapy in cancer and prostate with a very complex system and a drug that's wide scale use and a product like Afrezza that impacts one out ten Americans. These are very different scenarios and we're just very excited to get the information out there for patients because you may or may not know the average patients spend less than 10 minutes a quarter with a doctor. That doctor is worried about running A1C test, checking their eye sight, and getting them out the door. We need patients to really be informed of healthcare choices and we saw 98% were not aware that Afrezza exist. We know we had to make this investment, it was just a matter of when and not if.

Okay, thank you guys.

And our next question comes from Oren Livnat from H.C. Wainwright. Please go ahead.

Hi, can you hear me.

Yes Oren.

Great, sorry, had headset problems today. Thanks. There's a whole lot packed in to that call so I have several questions and if you want to cut me off I can get back in a short line. Firstly, on the new label, can you just talk about to what extent your newly trained field force within the rules that exist in the law you can help physicians understand the side-by-side advantages of your new PK data represents versus overlog or hemalog [ph]?

Why don’t I just let Pat comment on this, the field feedback. He has been in the field in some of the rep back in the field. And I will comment on the side-by-side comparison part and some of the FDA changes.

Yeah, I think the heavy focus for us when we look at our field training and some of the early time in the field promotion has been obviously the clarity of our tables which really refers to the two points I referenced in my comments. And I think even having been out in the field myself I think it's really providing clarity of the time action profile and I think what that means is it's really helping in the eyes of the physicians and patients plan their day more accordingly and I think it's giving them more flexibility around the prandial insulin dosing. So I think that's where for the most part the clarity that we've had and some of the specifics that we haven't had in our previous label has been one of the areas that we focused on. And again as you know we promote obviously from our own prescribing information. So that's what we've been focused on from the field perspective and that's what the doctors have been I would say most interested in.

And then just two comments. I think it's a good question as many of you may have noticed, the FDA pulled out an overlog comparison and one thing you should just understand that they're doing that for all new insulins, they are only showing the PKPD curves of that particular insulin label. So you can go back and look at Ciaz [ph], Toujeo, Tarceva, they all went head-to-head in market comparisons and the FDA pulled out the competitive arm in all those labels. So this isn’t anything special for us. However what I will add is we've had numerous trials competing ourselves head-to-head against various mealtime influence and we have a good robust data package that we expect to be able to use that looks at the hypo rate, that looks at weight gain, weight loss, and weight neutrality and as well as lung function we know is important. So we -- remember one of the restrictions that were in the label was we get in the body fast but we don't work as fast. And so that really limited how and when and where we would use some of that data. But as you've seen with a lot of the FDA also lawsuits that have been out there around using fact based data, pivotal data, and we have a lot of pivotal data on this trial. We have done a lot of good Phase 3 work and we intend to make sure the market is aware of that. So just to give you one example, some of our pivotal trials have been published that really highlight the various aspects by A1C reduction, rates of severe hypo, and as well as hyper rates. But not only that we have a lot of trials we've done that have not been published. A lot of our lung data has not been published. So we want to really work to get our clinical information out there. And then the only other thing I will add is the dosing and in titration section was updated in the label. That was a really critical moment for us to be able to go out and really articulate what a 4 unit cartridges does versus the 12 as well starting and then titrating up very quickly. I can tell you just some of the feedback from the doctors has been, you know I used the product and it didn't work and now that I feel using 4 and 4 works so quickly I probably do need to increase 8 and 12s. And so that's consistent with the trends we're seeing in the business and I think that's just the overall health of the business. So the more we see 8s and 12s get adopted we feel that really means we're getting better and better titration in the local market which should result in outcomes. Does that answer your question.

Yeah, I guess it sounds like are we still in the -- I mean we are still in the very early innings but I guess is it clear that your average physician does recognize that your data is faster and faster?

I can tell you the feedback we get in little weekly has been very positive on this topic. It is nice to see the curves. Just managed care companies we've had several discussions over the last three weeks since the label change. Those discussions have been very positive inviting us back in. So I feel really good about the label change. I think it articulates exactly what we're looking for and I think so for the market reaction has been very positive.

So you segued right into my follow-up which was on managed care and what impact the label could have there. I mean obviously you have some pretty onerous restrictions on certain plans that require patients to be I guess suffering on therapy they're not compliant on before they can even try yours. And I guess how is that changing, when will that change so that patients can have the right to try something that might work better for them?

I mean I think you have seen two lawsuits, one Pfizer versus J&J and one Shire versus Allergen looking at the some of the market behaviors around access to care on different product profiles. This is something we're watching closely and studying. We've had many good discussions with the payers and we have a lot of good support out there with thought leaders as well as patient advocates. And so we know we have a slightly higher dropout rate because of the actions between the competition as well as the payer. But we also have a lot of success given our limited contracted lives. Remember we only contract for roughly 20% of all the prescriptions. And so as we go out there we get 70% to 80% coverage when we do the prior authorization works. So the doctors play for the patient, those get approved many times even though we don't contract for that business. So it makes sense for payer now with this new data to really revaluate some of those previous decisions honestly that were made three years ago under the regime of Sanofi and so very few categories reviews have happened in the last two years as there hasn't been much innovation on mealtime influence. With this label change I can tell you a few of payers are reviewing the category in Q1 and we do expect to continue that good progress there. But it's always been about these payers but we feel good about to the direction and the discussions that were going on.

So when do you think we should start thinking about expecting a positive momentum reflected in scripts as a result of payer adjustments, is that a half 2018 or even later?

No, I mean I think we -- we look at plans or we contract and remove PAs and see if we're trending above national and we do see that. So that gives us the feedback on where we should put our dollars next. And so we're just really balancing, giving money away versus growing share faster. And so we want to remove those restrictions and I think our number one focus is removing prior authorizations. We want to streamline how it helps the doctors prescribe, how it minimizes impact to the patient, and that's our main focus. And so before you will be reducing the prior off now we believe with this new label change we should be removing the prior off. Maybe it won't be a preferred brand but we're happy being tier three or tier four and just being covered. And so those discussions, I mean payers don't make moves in 30 to 60 days but as we go in there and lot of those discussions have started over the last month or next month we'll give you updates. But it's only going to get better, it's not going to get worse.

Okay, well I don't want to hog time, I will jump back in unless there is no one else waiting, and you will hear from me again soon.

Okay.

And your next question comes from Andrew D'Silva from B. Riley. Please go ahead.

Hey guys, thanks for taking my call. You have answered most of the questions I had but maybe we can just dive a little bit into sales and advertising. First off, just on the side of the sales team, do you feel right now that you are appropriately sized for your endeavors as you go into 2018 or do you think that you might need to add some more sales staff as you've recently gotten the label change and are you seeing some traction there?

We are working on a couple different plans so one is do we add more reps or do we add more to TV. So we started the TV campaign. We're also working on a sales force expansion, we just have to weigh do we put more money in reps, more money on TV or both, and if there might be synergy between both then we would do that. But we are sufficiently staffed to hit the targets that we're looking to hit but we believe we can expand the sales force and grow even faster. That could happen for example doubling down in certain markets like New York City and California where we see a lot of success. Putting another 5-10 reps in those markets will only drive grow faster. So I would say we add reps because we believe it's promotion responsive and the more reps we have the faster it's going to grow. So that's important as we go forward. So, yeah we are looking to add and I can tell you we've already started interviewing prospective candidates to supplement out where we are.

Okay, great and then on the advertising side you noted that 98% of potential candidates didn't even know that Afrezza existed. Could you -- did you ask any question related to 2% as far as if they were using it or why they weren't and then after you show them the advertisement do you know what percent it went up to that was actually interested?

Yeah, so on the 2%, I mean just picture that out of 500 people we are talking 10 people. I couldn't tell you maybe they were already on the product or they could have tried the product in the past. I wouldn’t have looked at the numbers in that level of detail for those particular 10 or they're just more educated consumers but that's good. The percent ask, I mean what I would tell you is the commercial recall of the Afrezza name was very high, the recall of inhaler one was significant, we are the only option out there. So as long as they remember that from the commercial we are in good shape where if they remembered like a cholesterol commercial there's a bunch of choices there. And then the intent was over indexed to what you would expect to see in general commercial. So we think we have a higher proportion of patients interested and we believe the name recall as well as the category recall is very, very high and all over indexed to benchmarks that we've seen and that I've done in my career. So I won't go on the specific numbers just because you want to run it and see and measure and compare interest but we've obviously discounted the results and try to make the impact we expect. And some of this is reaching frequency of the commercial and the duration. So, sometimes consumer campaigns take four weeks, sometimes it takes six weeks, we will watch them closely but we didn't launch it yesterday and that's what the market should be aware of.

Go ahead, I don’t want to interrupt you.

No, go ahead.

Okay, yeah, what metrics should we be looking at in the interim between now and maybe when you report next time to see if this is actually grabbing a toehold or not?

So, I think as Pat and I were trying to communicate is as we phase out the old SKU that have been in the market you've got to continue to look at cartridges and that's not readily available to everybody but that is the metric we look at as normalizing the cartridges per prescription. Because in many cases people were getting two scripts and now they're getting one and in some cases they were getting one script with two boxes and now they're getting one new titration box. So you've got to look at the cartridges, the normalized behavior and not get as distracted week-to-week by refills and NRx because that's what I think people are trying to say, oh, growth isn't there. Well we are looking at cartridges. We think that's the only way to normalize the shift in SKUs that we've been making across companies and packaging. The second one that we will be watching obviously is the number of doctors who prescribe each week and the breadth of that prescribing and growth of new prescribers. And we personally will be looking at the investment in those nine pilot markets to see how those look and then we'll be waiting for the STAT study results to give us a lot of information as we close out 2017 and 2018. So for me it's number of prescribers, breadth of prescribing, depth of prescribing, and the number of cartridges each week. The refills are going to bounce for the next three months as we continue work on the packaging side. And we expect TRx to continue grow. So that's all in there. I'll just close out with one more question because I know it's a question I've seen multiple places and I just want to put it to bed. I…

Thank you ladies and gentlemen, this concludes today's conference. Thank you for participating. You may now disconnect.