Good morning and welcome to MannKind Corporation Fourth Quarter and Full Year 2020 Earnings Call. As a reminder, this call is being recorded on February 25, 2021, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until March 11, 2021. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations. For further information on the Company’s risk factors, please see their 10-K report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Steven Binder. I would now like to turn the conference over to Mr. Castagna. Please go ahead, sir.

Good morning and thank, everyone for joining us today. We've never been busier and more excited about our future transformation. Let me start by acknowledging our Founder, Al Mann, who passed five years ago today. It's also today that I was excited to join MannKind and take our journey forward. We would not be here today without his generosity of him as well as the trustee, who will forward support us through the transformation over the last five years. I want to thank everyone again and look forward to sharing you strategic direction relating out for 2021 and beyond. I want to go back to what we laid out in January of 2020 and that is our strategy around the focus of endocrine disease and orphan lung. Today you'll start to see how that starts to shape out and what we did in 2020 to set us up for that direction in the future. Additionally, you can see with our acquisition of QrumPharma will not be limited by our current proprietary technology but we'll look for the best opportunity to bring shareholder value and therefore [indiscernible] example of stake and nebulized product and hopefully we can apply our technology, but even if we can, we believe will be a great asset for patients in the future and we'll focus, execute and deliver to generate shareholder returns as we go forward. The last thing I'd also add as we being 2021, I think you quickly see our technology is becoming a platform for our support with another one pharmaceutical companies, a capability that we'll be looking forward towards exploiting as we go forward. I'll discuss this at the end of our presentation this morning. Now let's reflect from 2020 where we had to deal with an unprecedented challenge of COVID. MannKind…

Thank you, Mike and good morning. Very pleased to review our 4th quarter and full year 2020 financial results, which show record quarterly Afrezza net revenue, continued Afrezza gross margin expansion and our continued focus on efficiently managing our cash resources. We will also discuss some details of the non-binding Letter of Intent we have entered into for sale leaseback of our Danbury manufacturing facility. During this morning's call starting select financial highlights and as we supplement this call by reading the consolidated financial statements and MD&A contained in our 10-K which was filed with the FTC this morning. Let's start up by looking at revenues for the 4th quarter and full year 2020. Starting with the table on the left, which is our 4th quarter results, Afrezza net revenue was $10.1 million versus $7.8 million in 2019, a growth rate of 30%. The increase was driven by volume growth from underlying of Afrezza prescription demand, which was up 5% year-over-year, a more favorable growth to net percentage, 38% versus 44% in 2019. The continuation of a favorable mix of higher insulin unique cartridges and a $1.1 million accrual reversal related to the termination of our prior year free goods program as of December 31, 2020. The termination of the program is anticipated to negatively impact of TRx by approximately 15% in 2021 versus 2020. Well, remember, these were free prescriptions and not generating revenue in 2020, so our net revenue will be positively impacted as a portion of these patients were paying insurance coverage with the help of our Afrezza Assist patient hub or purchase Afrezza through our cash program. Please note that an increase in wholesale inventories in the 4th quarter of 2020, this levels are anticipated to reduce in the first quarter of 2021 contributed approximately $0.5…

Thank you, Steve. For those of you who don't know, we've invested over $250 million in Danbury building out the infrastructure to scale for further, and as well as of DPI. We built the right time to maximize the value of this asset as the market is ideal for these types of transaction given the COVID has impeded experience in office and traditional retail real estate. This is a long-term commitment now on our part, but the part of investors to look out twenty years and believe that this will be a technology here to stay with multiple revenue expansion opportunities in order to pay back the terms that we're signing up for. This does not change our day-to-day operations, we will still be investing with new T to expand the facility for Tyvaso DPI. This provides us the capital, so if we run the company towards cash flow breakeven. Now let me talk about the pipeline and collaborations. First, the endocrine you see a new view here if we laid out versus traditional, this should be updated in our website today, if not already. Number one, is Afrezza approved in the new U.S. and Brazil and continue to progress there in those markets and grow. Number two, we expanded with Thyquidity, to give ourselves more opportunity with our current sales force infrastructure that we invested in. The third part is around indication expansion. We're currently focused on the pediatric setting and excited to get this off and worked with some very reputable third parties to get this successfully launched, hopefully in pediatrics in the coming years. I can tell you the early feedback from sites, the CROs that we reviewed is very exciting to get this product in the pediatric as soon as possible. And then the international expansion…

[Operator Instructions] And we'll take our first question from Brandon Folkes with Cantor Fitzgerald.

Thanks for taking my question and congratulations on the progress. And maybe just three from me. Firstly, just on Afrezza, probably gross to net. How should we think about this in 2021 and beyond and maybe often upfront at Danbury, you talked about general corporate and did pay down. Can you provide some color in terms of how much you expect to reinvest in the business on that should it go through. And then lastly on business development is a party in Boston being at the versus our licensing and with that pipeline. I know in the past, you talked about in that some of the programs to proof of concept and then looking to partner, has that changed. Now, just given all the progress you have made over the last many 12 to 18 months. Thank you.

But make sure I heard your question. I got one is not, which Steve will answer. Another one is use of proceeds and how we think about that and then the third one is around the pipeline and how we previous communication, and business, did I capture all three?

That's it. Thank you.

So let me take the first one on gross to net so our expectation for 2021 is that we have growth to net between 40% and 42%. So we continue to work on strategies to drive down our gross to net, if sometimes in the marketplace there may be transactions that happen that help us in sometimes when they go against us, let's will estimate between 40% and 42% for 2021 . Turning to Danbury reinvestment. Mike I know do you want to.

So I think on this we will seems to be prudent with cash management and just because we have more cash doesn't mean we want to spend a lot more money. I think we got to make sure the company is in a secure cash position for the long term and that it provides us opportunities we see to grow the business faster or redeploy capital to the end pipeline faster, we're in a position to do that. So, back to your question on the BD side, we want to take something now, the Phase 2, Phase 3, we believe we have adequate capital resources to do that between the cash on hand, plus the royalties coming in the future. So we haven't changed our strategy, we continue to want to fund the pipeline where you see the narrow focus on orphan lung disease is we do expect to continue to bring those products forward and probably build out commercial infrastructure down the road for clofazimine as well as the other ones we're working on. I recommended outlicensing, we are still debating internally, do we go ahead and fund the trip in the Phase 1 and do we have a partner lined up, that will take that on. And partner that out. So that's under discussion right now, so I won't speculate what happens, but I'll just say those programs, we believe we can partner with somebody at this point, but then funded the Phase 1 and collect the upside and the share and the success on those products but the orphan one that we announced today, most of those, we would look to bring forward in one or two of those will go into the partnership, but we probably keep one or two for ourselves. So that's how we're thinking about it, but will it be opportunistic and open minded, but right now, things are looking pretty good for the company to be able to fund our innovation and our does make sure we deploy capital efficiently and effectively to grow shareholder value. So that's our main focus right now.

And next we'll go to Oren Livnat with HC Wainwright.

You've got a lot going on all of a sudden or at least it seems all of a sudden to us. Let just follow-up real quickly first on Afrezza and follow-up on Brandon's question about gross to net. I guess I just want to clarify separate from the actual gross to net, just in terms of realized value per script in terms of the scripts we see given you're fully transitioning now, what started already it looks like in 4Q, now fully into Q1 the switch of free drug into these specialty pharmacy, we should expect to see an additional incremental increase in Q1 and then you going forward the realized net value reported revenue first like IQ script correct?

Thankfully we're not worrying about much Q4 but starting here in Q1 the environment and stations were refilled not new patient and starting in Q1 January they shifted either out of the market in the longer given for retail or you'll find out when you be there. There are a lot of patient and there are many, so once they run out of that supply, we'll hopefully come in back into our reimbursement. We'll now make sure one of the number one things we found was PAs were not being done. So we're providing free drugs that would have been reimbursed by insurance. So we changed that process to ensure that PAs are now gone and that we see transparently why the patient is getting rejected and what we need to do to help get their insurance coverage because when you talked insurance companies, they want to see the demand. So we want to assure here in 2021 majority of the scripts of 98% will be paid prescription since you have a revenue prescript in your models. The free goods and cash do not show up in.

Okay. So volume went down 15% all else equal in Q1 versus Q4 your revenue would be flattish, correct?

Correct. There is some equal percent of it, but maybe different.

Okay. And then on to more exciting things, Tyvaso DPI, I know you're limited in what you can say given that you're a partner here, but just it seems like a crucial part of this exciting revenue story is both in the expansion of the indications in the April timeframe for Tyvaso and also user's ability to file the DPI formulation with both indications included PH and the PH ILD. Can you just remind us why users are so confident in the ability to immediately after the PDUFA include both indications in the DPI? Did you not need or did they not to study the DPI and the PH ILD population at all? Is it just a bioequivalent pathway or did they in fact included in the most patient in network and breathe or other places, thanks?

On that one there is two things I think, number one is we actually went through that meaning we also did and they went to the FDA and asked them the pre-NDA filing and we expect to get the ILD if it was approved for Tyvaso would be extrapolated to Tyvaso DPI and yet they came back in that respond and said yes. So that gives us the confidence of why. The second part is to your question is we did include ILD patients in our human factor studies, so that we know they can handle the device and inhale properly. So that was something that was proximately to make sure we were able to file that study back in Q3. So there are two things we did to make sure and when you think about the products for their Tyvaso being equivalent for PH or ILD it's the same molecule that we delivered consistently and the dosing is roughly correlated and I think that you can expect with other indications we will continue and hopefully file those for the Tyvaso DPI formulation of the expectation. So yes and I've done this in another biologics in previous lives where we can extrapolate these situations or NDAs.

Okay. So the fact that there is an increased study based on higher dosing let's say higher micrograms per day in this population versus PH, that's fine because your product essentially -- the DPI is essentially bioequivalent. So if they dose higher in Tyvaso and they dose higher in years that's still apples-to-apples and all good from the dose proportionality of your products.

Correct and remember we proved that we could dose much higher in Tyvaso and nebulized up to 150 micrograms with no safety concerns. So I think we'll see even as patients dose higher, you're probably going to see better tolerability and we can see that already with UT [ph] and I think we'll publish that data -- present that extension phase how high did patients go and how probably it and it's really good to have that. Now we have patients and how powerful was it? And it's really good to have that, now we have patients going on over a year in the extension phase. So we're excited, our team is very excited, they're a great partner, and we look forward to continue to work with them.

All right, and I won't hog any more time, I’ll jump back into queue. Thanks.

Thank you.

Next, we'll go to Thomas Smith with SVB Leerink.

Hi, good morning. This is John [indiscernible] being for Tom. Just couple of questions real quick, first on the United Therapeutics partnership, can you give us a little bit of a sense of the differences in tolerability profiles between Tyvaso and Tyvaso DPI and how much expense do you see based on patient's well being, being suitable for the DPI formulation? And then as a follow-up question on the pediatric study, can you give us an idea of how large of a study you're considering and whether what the titration plan is with patients, whether you're going to be incorporating from [indiscernible]?

The question there on?

On the pediatric study, how large are you anticipating this being and whether what the titration strategies for the program and whether you're incorporating the findings from doctor study that was presented at ADA couple of years ago?

Perfect. Okay, so on the tolerability, I would say you can see that, the majority of patients on switching from Tyvaso to Tyvaso DPI, I think it was 49 out of 51 we’re able to complete the three week switch. So that that shows you the majority of patients will tolerate dry powder, who already taken a nebulized formulation. So that's pretty well established at this point. And not only that, you can see the percent of people, you will see very shortly that the large majority of patients can tolerate the Tyvaso DPI or going on over a year. So we don't expect the eligible patient population that cannot tolerate Tyvaso DPI, we think will be very low. And that is a separate question here that we don't have data on with UT, which is how does a naive patient who's titrating up feel in terms of tolerability versus Tyvaso nebulizer versus Tyvaso DPI and I think that'll be work that UT works on over the coming years. But in general, we haven't seen any signals or concerns between the two formulations, people get cough on nebulizers, they get cough on DPI, they get flushing and things like that, that can't happen. So we do think the less variability is important. And we do believe hopefully, better lung activity will result in great outcomes. And I think that's what you saw in the early release of UT. So that is good lung penetration, we think will be great. And if we can have less systemic absorption, that's even better. So that that we think is really important. The next part of this is ped. And so on that one it's roughly 260 persons study, we expect about 20% dropout rate. So that tell you, we got to get to…

Great, thank you very much.

And we’re aware of that, so we got to make sure we do great to kids for the future, the franchise that's where you're going to transform the standard of care over the next 10 to 20 years.

All right and next we’ll go to Steven Lichtman with Oppenheimer.

Thank you. Hi, guys. Mike, you've been putting pieces in place around Afrezza with Afrezza to Blue Hill, wondering if you could just update on the commercial side. Any perspective on the changes or hundreds of making and impact you're seeing on the ground?

Yes, I think number one thing I'll address and bring it as a call them, you call them muscle reflex, really starting to get everyone into and across all territories, all geographies, all managers moving in the same direction to the same sheet of music, I think that's one of the big things that we were always consistent across the field that we really spent a lot of time on the New Year, we just had our sales meeting, which was like, a couple hours each week or many weeks. And so I think bringing that discipline and bringing the business acumen down to each manager and helping them understand this is our business to run has been a very nice shift that I've seen. I think the second part of this is, having the ability to invest when we see opportunities, we now always had an opportunity back, it's always been a cost reduction mode, whether it was last year because the COVID or the year before because we didn't see DTC. So I think right now, what we're telling the team is, hey, show us what's working, you have your budget, but we have capital to deploy, if we could start to see things work. And I think that's really what we’re trying to show is, hey, this works really good. For example, we got telemedicine, we launched, how do we show that that works. As that works, we can scale it up. But if it's not working, we're not going to continue to push money there. But we think these are good opportunities now. For example, we just scaled up to more than half the country on a pretty large digital campaign, pilot in five states in Q4, it looks great and the team just scaled it…

Got it. And then Mike, you mentioned ADA, I wasn’t sure you mentioned some of the areas of focus that we could see in terms of paper presentation. What should we be looking for generally?

Yes, I think the two things, it's interesting because one of the things we learned with our interaction with the program with FDA is they are not there on timing range. And using CGM to measure some of these, I'll call them new ways of looking at diabetes control, the FDA does not feel like these metrics have been validated. And therefore they're still at the traditional A1C reduction mindset, finger sticks for hyperglycemia. which is unfortunate because we designed the study to really show significant advantages with CGM. But that is not what FDA is. So we're happy to revert back. We still think we're in a good spot. We will still have CGM data and they also agree that next two, three years is likely to shift their position to collect the data, we'll deal with what's the statistical plan is before submission. But at this point, they're not correlating time and range to outcomes, or time less than 70, for example, and how we measure that. So that's a big surprise in terms of where they are but they'll catch up to the market. They just need to see more and more data surrogates to correlate it to. Well, I think what you'll start to see is we're headed this one, we started doing CGM studies with Afrezza over the last three years. We've had three studies presented and almost published now. And I think you'll see here at ADA, one of the interesting insights we've added around nocturnal hypoglycemia, and we think that's going to be critical for children but we did see some opportunity there to improve reduce nocturnal hypoglycemia with Afrezza. And that's one of the data sets that we generate it as well as improvement in data, time and range. So those will be the two areas that you'll start to see the headlines here at conferences.

Great. Thanks, Mike. And just lastly, Steve, of course, margin continues to push-up higher here obviously, could you share the runway here. Anything we should be thinking about in terms of, a step-up in cost of goods required over the next several quarters? Or should we continue to see a nice pay?

From the Afrezza perspective, we expect cost of goods to remain within the same range, as we saw in 2020, we will be scaling-up manufacturing for Tyvaso DPI. So there will be some shifting of costs within the manufacturing operations. So I'll put that question out there, we haven't totally calculated what that will be. But it should be more absorption going to Tyvaso DPI. But we'll see that the year, so I would select 2021 to be year similar to 2020 for Afrezza.

And the way to think about that Steve is the majority of the first three quarters of the Afrezza sales in terms of production. And in Q4, we'll start ramping-up, so there won't be a significant shift from where we’re. But we're working on the commercial supply agreements up with UT and that will once we get all that finalized, that'll bring some clarity that we'll share with you. But no significant, you see a little bit year-over-year on the employee costs, but nothing after the scale-up of Salesforce last year. So you'll start to see that flow through this year, but nothing significant this year, we continue to look at managing the cost very prudently. So we’ll watch that closely.

Got it. Thanks, guys.

Welcome.

Next, we'll go to Bert Hazlett with BTIG.

Thanks, just couple of quick ones in terms of timing. If everything goes well, with regard to the sale leaseback, at what point do should we actually start modeling the impact of that? And then with regard to RLS, when should we get the data? Again, I was cut out. So apologies if you've addressed these already, and I have one or two more.

Okay. On the sale leaseback, pretty much everything is announced you could start amortizing the monthly payment pretty sure with our rates, once you do that finalized, then you can start and complete.

That 2Q, any sense of the timing?

Yes, roughly Q2, mid-Q2 I say, early to mid-Q2.

Then RLS?

On RLS, I don’t want to speak too much for them, because I know they’re going to have a lot to come out. But we'll be a partner here, we talked about what CMC could look like, what devices look like, and how's MannKind continue to play strong support role in them as they go forward? So I think you're just going to see a lot of renewed positive information coming out of them. And I think that'll be great. So not much to share at this point. But I think you'll see more from them.

Okay, just one or two more in partnerships and liquidity, obviously a nice deal. Could you just discuss whether or not you have an appetite for more of that type of deal in the near-term and then with regard to UT? And there are other elements, discovery as well as research elements to that deal. Do you expect any visibility on either of those components in 2021?

On liquidity, I think this is our first time leveraging our infrastructure with the second product. There are other products I've looked at and companies that talked with that we could bring in another product, and maybe even hire more reps to get more coverage of Afrezza. I'd like to make sure we handle this one appropriately, we do a good job on launching and our team executes well, and that they can walk and chew gum by selling Afrezza as well as liquidity with two products. So assuming we see some nice continued focus here in Q1 and Q2, yes, we'll have a bigger appetite to take on more and later this year, early next year. So that's something that we’ll continue to look for, having single product companies is very hard, as you know. And so we think diversifying our revenue base and bringing in more products and leveraging the infrastructure is a good thing. And I think we want to just show that, this opportunity we can take advantage of, I'm pretty happy. I mean, honestly, we went through this pretty quickly with the partner here, they know we have the infrastructure and expertise in this particular segment. They're actually focused on just so primary care, they're going to have another Salesforce out there covering a larger audience than ours and as well as all the other not going to expect. So we're really just focused on endocrinology, as they're responsible for starting a lot of patients but they don't always maintain patients. And so that's exciting there and I just want to show that we can make impact in another product outside of part of a physician. So that to me is critically important. On UT, I think the main thing there with our conversation with Martine and the company is, there is additional opportunity to work on. Her and I've talked about many ideas, as well as her team. So we feel like there are I think number one, two and three is we don't want to mess up on to possible. So nothing's more important than both sides of the equation here, making sure Tyvaso DPI is filed at early April, and that this is moving forward, that's critical to their future. It's obviously a large impact to our future. And so once all that's off the ground, I think you'll start to see some opportunity to work with them on the research side that we've previously disclosed an agreement there. But we do have discussions and we expect that there'll be more partnership opportunities beyond just possible.

Okay, thank you.

And that does conclude today's question-and-answer session. I'll now turn the call back over to Michael Castagna for any additional or closing remarks.

Thank you to all the analysts for your coverage, your comments and questions, I appreciate it. And the team here does appreciate your reports and the insights you provide, which kind of gives us the guidance that we're looking at and make sure we're all aligned in the right direction here. I want to say thank you to everybody, it's been a long journey to get to where we’re. We know we were always placed in the right decisions and the right bets. And there's some twists and turns in that road over the last couple of years. But I think we can see the foundation we laid out, which is really commercial infrastructure and endocrinology and orphan lung focused pipeline, and leveraging Technosphere is going to provide multiple revenue streams for the company over the coming years. And now we have a capital to deploy to grow the company faster. And so that's really our focus is making sure we're prudent. We execute successfully. And we now take a measured approach on how we take the company from here to the next level. So thank you, everyone. Thank you to all our employees. I know 2020 was a tough year on everybody. But we got through it, we came out with flying colors. And everyone here made huge sacrifices on behalf of shareholders. And I just want to say thank you to everybody that all worked. And we came out stronger as a company, and hopefully for society safe, things calm down and COVID gets behind us and we can march back to a normal world in the second half of 2021. As it goes faster, we'll be ready to go faster here in 2021. So thank you again and everyone have a great day.

And that does conclude today’s conference. We thank you for your participation. You may now disconnect.