Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation 2017 Fourth Quarter and Full Year 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 February 27, 2018. And will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until March 13. Joining us today from MannKind our Chief Executive Officer, Michael Castagna; Chief Financial Officer, Steven Binder; Chief Commercial Officer, Patrick McCauley; Chief Medical Officer, Dr. David Kendall; and Rose Alinaya, Senior VP Investor Relations. I would now like to turn the call over to Rose Alinaya, please go ahead sir.

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 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 of 1934. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast, February 27, 2018. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. I will now turn the call over to our CEO, Michael Castagna. Mike?

Thank you, Rose. As I look back in 2017, I want to walk through today's agenda. We're going to go through some highlights and I'll walk us back through. Steve Binder will give us a finance overview, Pat McCauley will walk through the commercial review and David Kendall joins up today with a medical and regulatory overview. I realize there's a slight delay on the slides and we'll try to best manage that to minimize that disruption for you. As we go through, I want to firstly, thank you to Dr. Kendall for joining us. He's been a tremendous addition to the team. I'll now - just before I get started, I'll let David talk a few minutes about why he chose to join MannKind and what his first two weeks have been like? David?

Mike, thank you, and welcome everyone. It's a pleasure to be here to have had the honor of joining the MannKind leadership team. Many of you I know or will get you know, I hope in the coming years. My background is as a clinician and scientist in the diabetes space having worked for the past seven years at the Eli Lilly and Company as Vice President for their global medical affairs group in the Lilly diabetes. Prior to that, I had biotech experience at Amylin pharmaceuticals in San Diego as well as clinical research and academic experience at the University of Minnesota at the international diabetes center. Having spent nearly 35 years in diabetes and diabetes research, when Michael and his team came to me with the opportunity to join what I truly believed to be a unique leadership team and support a very unique asset in the diabetes space namely AFREZZA and its continued development. It was relatively simple answer when Mike and his team along with board of directors came and asked if I would be willing to join and help put AFREZZA on top of mind for the individuals with insulin requiring diabetes. So Mike, thanks to you and obviously thanks to all who helped support me in through my career in diabetes.

And Thank you, Dave for joining us, I think, you come at great time as we go forward and we'll talk - definitely [ph] with our shoulders. So when I look back on 2017, we just eliminated our contract sales organization back in January last year, we completed a major internal restructuring in the fall, which really hurt morale and the confidence in our team that remained was skeptical at best. When you fast-forward to today, we've been able to completely transform the company without increasing our cash burn because we made the difficult trade off that enabled us to get through 2017. Three things I need you to walk away with over in the next hour. Number one, the recapitalization plan is almost complete. Number two, we built a platform for scale and compounded growth and number three, we continue to focus on efficiency and execution where we manage our expenses. The leadership team today complete with Dr. Kendall joining us is now growing as one team in the same direction against the same set of objectives. The slide you should now see says transformational growth is built around AFREZZA. So I look back we've been through three stages of assets [ph], I called them. The first stage is survival, when I joined here in 2016, we got the product back from Sanofi with zero capabilities, limited cash of roughly about $20 million when I got here, and no infrastructure in the commercial and medical affairs arena. In 2017, we continue to build upon the medical infrastructure we built. In 2017, we established the full integrated commercial sales team. And we stabilized our employee base. For example, we were striving to really recruit talent in early '17 and by the end of '17, we had hired over 100 people…

Thanks, Mike, good afternoon. We continue to make progress on recapitalizing and restructuring our balance sheet to support the sustained growth of AFREZZA. Mike just finished showing how we are clearing out our near-term runway to enable us to focus on investing in our business to grow AFREZZA sales. Let me know review our recapitalization progress, how we have used equity to raise [ph] cash and reduced debt, which results in simplifying and strengthening our balance sheet. In summary, we've raised $58 million to use in operating the business. We have reduced debt by $19 million and reduced corresponding interest expense by $1.6 million annually. And we've set a future conversions of debt for the amount between $51 million and $75 million depending upon the conversion price at the time of conversion by Deerfield. So assuming all convertible debt is converted to equity and depending upon the actual future conversion price for Deerfield, we've completed transactions over the past 10-month to raise cash and reduce debt with equity totaling a combined $128 million to $152 million, which translates to using equity in an average per share range of approximately $3.80 to $4.50. We believe these transactions support the long-term strength and sustainability of our company. Moving on to the fourth quarter and full-year 2017 financial results, I'll be discussing select financial highlights and urge you read the consolidated financial statements contained in our 10-K so as our fourth quarter condensed consolidated financial statements contained within our press release. Both of which were filed this afternoon. For the 3-months ended December 31, 2017, AFREZZA net revenue was $4.5 million, 238% increase over Q4 2016, which was the second quarter that MannKind sold AFREZZA commercially. Net revenue for the fourth quarter was favorably impacted by increased volumes, price, product mix favoring our…

Thank you, Steve and good afternoon, everybody. I am very excited to share with you today our fourth quarter commercial highlights, as we continue our transformation at MannKind. Today we are also going to review some of the key annual performance metrics, as our MannKind sales team had started back in February of 2017 is almost completed, one full year of promotion. Now as Mike earlier stated on the call, we are shifting indeed from a stability phase in '17 to one off sustained growth in '18 and I can assure you that the team is working very, very hard and is fully committed to building upon our strong foundation that was established back in 2017. So let's start out by taking a look at our fourth quarter commercial highlights. Most importantly we look at sales and our AFREZZA sales continue to grow in Q4 and we're seeing this across multiple metrics, including grow sales to wholesalers, TRX, NRx prescriptions, cartridges and riders. We look at these in detail in just a moment. Also the 8 and 12 units of AFREZZA are not only growing in volumes, but they are also showing significant contributions in sales, so we're going to take a deeper dive here and specifically look at some of the movement of the 12 unit dose over 2017. Without a doubt recruiting and hiring top talent in key positions is critical, whenever you're trying to establish year-over-year success, so we'll talk a little bit about how we continue to look for the top talent and also which sets our own individual performers. And finally, on the last earning call, we did talk about initiating our first regional TV commercial pilot and we did that in Q4, so I'd really like to share with you what we've learned in…

Thank you very much, Pat. And again thanks to all who've joined this call early evening or late afternoon, across the U.S. It is truly a pleasure to join this leadership team and I appreciate the afternoon you did follow on Mike openings comment, Steve review the financials and as Pat just described a coordinated effort between our scientific research clinical development and medical affairs activities. As I will detail in just a few moments, we have established a number of priorities that are shown on the screen, but before I dive into details about those, I want to make it very clear that part of my responsibility and accepting this job was to assure that our research, clinical development, medical patient safety and regulatory activities were being executed in a coordinated fashion and in a fashion that best serves the end-user that is patients living with diabetes. We need to assure that we provide the clinical evidence to support the effective, safe, timely and appropriate use of AFREZZA treatment for those individuals requiring additional improvement in meal time glucose control and I feel we have the responsibility to measure the improvements in the insulin treatment experience for patients with both type 1 and type 2 diabetes and as Mike referred to earlier, to assure that we not only continue to focus on overall control of diabetes for those living with the disease, but look to establish novel measures of continuous glucose monitoring, flash glucose measurements and establish those as critical elements of management including time of glucose in range, the frequency and disruption caused by hypoglycemia and the patient experience as measured by satisfaction with the treatment. So our research, clinical, medical regulatory and safety groups are all focused on those endpoints. To do so we have defined 3…

Okay. So thank you, David, Pat and Steve. Today I wanted to come back to the slide that kind of opened up with here. So when you look back AFREZZA truly is a novel therapy that does something different. However, there were two main things that were missing when we look back at our development program and we finally lock down. These two things are what is the conversion does for AFREZZA and what is appropriate titration of AFREZZA. When you continue to look back at all of our clinical trials, we see that we probably under dose people in the beginning and it took about 8 to 12 weeks to get people back to the baseline dose they started with and then you didn't change the dose for the second half for these trials. What we've have finally done is really try to understand when you look back by modeling our data and see what could happen, these data are a treasure [indiscernible] and one of the reasons that we decide to make this sacrifice and invest in the STAT trial that add one trial of Levin [ph] study. We believe we will clearly demonstrate was appropriate dosing what is possible for type 1, which we've given a follow up dose or a higher dose upfront, along with type 2 patients when really show a strong titration schedule giving much higher doses than people dose in individual trials. In the end we made a trade-off in 2017 to invest in these in trials versus hire more reps because we believe it's important to get data like real-time control and demonstrating technology that we think will continue to be adopted and ultimately what people will see is we need better meal time control. This is the one area in diabetes…

Thank you. [Operator Instructions] And we have a question from Oren Livnat from HC Wainwright. Please go ahead.

Hi. Can you hear me?

We hear you.

Hi, great. Thanks for taking the questions. Earlier in the call you guys talked about most recently after the not shocking seasonal I guess churn you get early in January, you're seeing some wholesaler ordering patterns and co-pay redemptions all of which indicates you - you're already seeing sort of an acceleration or a bounce back. I don't think we seen yet an IMS data through mid-February, so can you just talk a little bit more about very specifically what you are seeing, do that we can get confidence that the script trends are going to accelerate relatively near term so we can be on track to hit your guidance? Thanks.

Sure. So I think it's a good question. I think Pat will be able to show you 2016 going into 2017 or 2017 going into 2018. The decline wasn't that severe, half of that was driven by a lack of vouchers and the other half was driven by the typical renewals we see. What gives us more confidence is, as we see two things that the market does not see. We see wholesale orders every Monday morning for the previous week. We also see what pharmacies have drawn down from the wholesalers, which is an indicator of what they shipped out the previous year. All of those indicators over last three weeks have continued to trend very positive and we are back to where we were in December if not higher in some cases. So we feel generally good and I think that worst is behind us in terms of that lift, there's nothing indicating here that we're going to see anything else beyond what we've seen. We will take sales force for a couple of days for sales meeting, may be you get a little bit a noise around that, but in general I think we kind of - our view of the world is 2018 will have a nice success of growth pattern and we hope to continue to accelerate that with the new marketing tools we're rolling out.

Great. So –you talked about the new marketing tools, I guess that does back the question, you didn't give I guess, full year cash burn guidance, but can you talk about just the trend in SG&A, obviously you had that pilot program $5 million, mostly I think all in Q4. I guess where should we expect that SG&A to go near term are you going to keep investing in DTC or should we see that money spent elsewhere?

No. I think to be prudent, we sold $10 million in sales, obviously we will keep investing in DTC. But we wanted to see and measure the lag effect of DTC, we know that just takes some time and I think once we can really measure that we saw some early indicators that are positive. And so I think as we go through the recapitalization of the company those are trade-offs we'll make. But I don't think you can expect us to spend that extra $5 million in Q1 on DTC we'll probably communicate and update if we decide to make that investment but at this point, we're not giving guidance on quarterly spent from a phasing perspective.

Ladies and gentlemen this concludes today's conference. Thank you for joining, you may now disconnect.