MannKind Corporation (MNKD) Earnings Call Transcript & Summary

Welcome to the MannKind Corporation Annual Meeting of stockholders. As a reminder, this broadcast is being recorded on May 21, 2020, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this meeting. I would now like to turn the meeting over to Mr. Kent Kresa, Chairman of the Board of Directors of MannKind Corporation. Mr. Kresa, please go ahead.

Thank you very much. Thanks to all of you, and welcome to the MannKind's Annual Meeting. It's being held virtually for the first time, and I hope that it all works out well, which I'm sure it will. I'm Kent Kresa, as I said, Chairman of the Board. I will preside as Chairman of this meeting, which I now call to order. I would first like to introduce first, the Board of Directors of the company who are present online with us today. Michael Castagna, our Chief Executive Officer, who will provide a corporate update after we adjourn the formal meeting; Mr. Ronald Consiglio; Dr. Michael Friedman; Ms. Jennifer Grancio; Mr. Anthony Hooper; Ms. Christine Mundkur; and Dr. James Shannon. Continuing with further introductions of our officers in attendance at this meeting are Mr. Steve Binder, our Chief Financial Officer; Dr. David Kendall, our Chief Medical Officer; Mr. Joe Kocinsky, our Chief Technical -- Technology Officer; Mr. David Thomson, our General Counsel and Corporate Secretary; Mr. Stuart Tross, our Chief People and Workplace Officer; and Ms. Rose Alinaya, Vice President of Investor Relations and Treasury. Also participating virtually is Ms. Heather Ziegler of Deloitte & Touche, our independent public accountants. Ms. Ziegler will be available to answer questions you may have during our Q&A period. This meeting is being held pursuant to the notice of the special meeting mailed to all of the company's shareholders on April 9, 2020. Mr. Thomson will serve as Secretary of this meeting. Ms. Alinaya was appointed as the Inspector of Election for the meeting. Ms. Alinaya has taken and subscribed to the customary oath of office to execute her duties with strict impartiality. We will file this -- her oath with the records of the meeting. The Inspector of Elections decides upon the qualifications of voters, accepts their votes and when -- on all matters is completed, tallies the final votes. Broadridge has provided MannKind with a certificate indicating the number of votes represented by proxy at this meeting. I will now ask Mr. Thomson for his report. David?

Mr. Chairman, we have obtained a list of the holders of common stock of the company at the close of business on March 22, 2020, the record date of the meeting. Only holders of record of common stock on the record date were entitled to notice of this meeting and to vote at the meeting. I also have a copy of the notice of this meeting together with a declaration as to the mailing of the notice. The holders of a total of 170,033,845 shares are represented at this meeting either in person or by proxy. Since there were 213,128,580 shares of company common stock outstanding on the record date, a majority of the outstanding common stock is represented here today and a quorum is therefore present. The meeting is authorized to transact business.

Thank you, David. At this time, we will address the items of business set forth in the notice of this meeting. But before beginning, I would like the operator to explain to the shareholders how to submit questions. Operator, would you do that, please?

Shareholders may ask questions in a designated field on the web portal.

Very good. Hopefully, you all see that on your portal. So now let's go to the proposals. There are 5 to be voted on at this meeting today. These proposals were further described in the proxy statement dated April 10, 2020, which was made available to all shareholders and stockholders. The first proposal is the election of 8 directors. Each director that is elected will hold office until the next Annual Meeting of Stockholders. The 8 nominees are myself, Kent Kresa; Mr. Michael Castagna; Mr. Ron Consiglio; Dr. Michael Friedman; Ms. Jennifer Grancio; Mr. Anthony Hooper; Ms. Christine Mundkur; and Dr. James S. Shannon. These nominations need no second and the nominations are closed. The second proposal to be voted on is to approve an amendment to MannKind's amended and restated Certificate of Incorporation, to increase the authorized number of shares of our common stock from 280 million shares to 400 million shares. The third proposal to be voted on is to approve an amendment to MannKind's 2018 equity incentive plan, to increase the number of shares of common stock authorized for issuance by 12.5 million shares. The fourth proposal to be voted on is to approve, on an advisory basis, the compensation of the named executive officers of MannKind, as disclosed in MannKind's proxy statement for the annual meeting. And the last proposal to be voted on is to ratify the appointment of Deloitte & Touche LLP as MannKind's independent registered public accountant firm for the fiscal year ending December 31, 2020. Now if any of you have any questions on any of these proposals, please ask them. Hopefully, you've pushed your button by now. And we'll pause just for a second to see if there are any questions that have come in.

Yes, Kent, there are a number of questions in the queue, as I'm scrolling through them. I believe that they're all so far, pertaining to operations and there are topics that Mike will cover in his comments after the formal portion of this meeting is concluded. Just -- if you just give me a few more minutes just to quickly skim through. I'll see whether any of them are related directly to the proposals that we -- that you just outlined. And it looks like we'll be addressing these topics in comments to follow. So at this point, I'll explain -- I need to share...

Well, fine. We'll -- Go ahead. So that being the case, let's go forward. And I'll turn it over to you.

Yes. So each share of common stock is entitled to one vote. Voting is by proxy and written ballot. You do not need to vote through this portal, if you have already sent in your signed proxy. Those who wish to vote via the portal, please do so now. [Voting]

And I see that 9 of you have submitted your votes at this time. I'll just -- 10, okay. I'll wait a little bit longer for any voting to conclude. Okay. It's been 20 seconds since -- back, wait another few minutes. Hey, we haven't had any further votes in the last 30 seconds.

The new problem of us and it's working.

It's working.

Those on the phone, we can see live, the votes, the number of shares, every 2 seconds, an update. So thank you for -- Germany has aligned a new technology here, and it's -- because it's here working.

All right. And it's been 40 seconds since we had any update to the vote. Every time I say that, it refreshes me. We'll say it again. Any more questions David on the -- David in the interest of time, I think we should move forward. And if something else comes in, you certainly can elect to add it to the total?

Well, we have -- I think we'll give another 30 seconds just to allow anyone else, who is in attendance to walk-in their votes, and then we'll move on. All right. Well, the time is 10:12 a.m. and the polls are now closed for voting. Mr. Chairman, the report of the Inspector of Elections indicates that each of the 8 nominees for Director has been elected. The amendment to MannKind's amended and restated certificate of incorporation to increase the authorized shares was approved. The amendment to MannKind's 2019 equity incentive plan to increase shares authorized for issuance was approved. The proposal to approve on advisory basis, the compensation of the named executive officers of MannKind was approved. And Deloitte & Touche has been ratified as MannKind's independent auditor. We will report the final tally of votes in our current report on Form 8-K, which will be filed within 4 business days. Kent?

Well, thank you very much. And I'd also like to thank all of you for your interest and attendance at this meeting. This concludes the formal portion of the meeting. But now, Michael Castagna, and the executive team will be able to provide a corporate update and also be available for questions. And I think with this new technique, we're getting swamped. So this is quite good for allowing everybody to sort of join the meeting and ask their questions. So Michael, why don't you take it over?

Thank you, Kent, and thank you, everyone, for bearing with us as we all get used to running a virtual shareholder meeting here, and I'm proud to say we have almost 400 people online between guests and shareholders. So thank you for joining us today. Before proceeding, I just want to remind everyone that this call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from the stated expectations. For further information on our risk factors, please see our most recent 10-Q report filed with the Securities and Exchange Commission. I will now give a brief presentation and then flip over to the questions. And so please continue to submit your questions. If they're related to international expansion, please don't submit anymore. We have plenty of those. I will address here, and look forward to other ones. Let me start today by just talking about where we are as a company and our mission. We rebranded and refocused our company to reflect where we are going internally and externally. I'm really excited to say that this year, we've seen more calls -- people calling us either for an opportunity to come work for the company or in terms of partnering with our pipeline or looking at our technology. It's nice to see this reverse from where we were 3 years ago. Afrezza and TreT, as we call it here, and the pipeline products reflect our new mission to give people control of their health and the freedom to live their life. Recently, we all had to go through the COVID-19, which created a great challenge to not only MannKind, but create a very scary moments for all of us as individual/humans, companies, shareholders and employees. We are coming out of this more aligned and excited about our future. And while it's very scary going into it, I'm very proud of the action and activities we took to get through this time. Now I'd like to talk a couple of slides around our journey over the last 3 years. First, I'll talk about corporate governance and leadership. Number one, thank you for our 2020 Annual General Meeting of Stockholders for supporting our 5 proposals. Number two, we continue to update the Board and change with our changing business needs and rules and regulations that are out there. Two longtime board members have retired in the last year, and I want to thank most recently, Hank, for all the work he's done in supporting the company over the last decade. We have 3 new board members who've joined with great biopharmaceutical experience and increased diversity, which we think are critical to success of any viability of long-term for a company. Number three, we've had leadership changes to bring in commercial and biopharmaceutical experience. We've attracted, engaged and retained our key talent and we built on MannKind's knowledge of manufacturing, legal, Investor Relations, in addition to new telecomm and commercial, finance and medical. We have a few key openings left and people are reaching out to join us, which is very exciting. And I expect to announce a new Chief Commercial Officer in Q3. Additionally, we've instituted a new call back policy and stock ownership guidelines for all of our executives, so that our interests are aligned to shareholders. Next, I want to talk about the company. The corporate strategy now, we are focused on 2 disease areas, endocrinology and orphan lung and ever since we've defined this, opportunities have been coming at us to think about and consider in these 2 particular areas, which allows us to make better strategic choices and invest our time wisely. Number two, collaborations. Building on our Technosphere platform. We will achieve our third milestone this week, which are possible and are very excited about the overall TreT program and where this partnership is going with United Therapeutics. TreT and the PH category was $105 million deal plus royalties that we announced in 2018. As a result of this collaboration, we've built new manufacturing capabilities with high potency scale up and continue to work with United Therapeutics on Bluetooth technology as well as pipeline opportunities. Additionally, we don't hear a lot about our Receptor Life Sciences partners, but they continue to progress in the medical cannabis space and look for opportunities and insights every day as we look at different substrates of the products they're working on. We continue to protect our intellectual property of over 900 patents globally which has been evaluated by top-tier companies like United Therapeutics, Sanofi and Cipla, as we look out and look at opportunities to continue to leverage our platform in other therapeutic areas. And then finally, we strengthened our balance sheet. We provided liquidity to grow and we manage our cash wisely. Our debt today is lower than it was 5 years ago. We recapitalized with the new senior secured lender in August. United collaboration is strong and growing. This year alone, it will bring in $25 million into MannKind, with $12.5 million expected this quarter. Our capital raises have enabled us to fund the company over the last 3 years, and we haven't had a meaningful equity raise in over 18 months. All of this, including tight capital management of our expenses, has reduced our loss per share from $1.13 in 2017 to $0.27 in 2019. This is driven by a decreased interest on our debt, continued keeping our labor force costs flat, reducing our expenses and being prudent with everything that we do on behalf of shareholders. Now I want to bridge to Afrezza's commercial and scientific progress and hopefully, here, I will answer some of the questions I saw coming in. On Afrezza, we've increased net revenue 7x over the last 3 years and 2 other prescriptions 3x over 3 years. And we expect this trend to continue well into the future, as I'll discuss next slide. We changed our packaging and moved our patients from very complex multiple prescriptions, multiple [indiscernible] prior alls to very simple 108 count packages, which now make up over 70% of our sales. This also moved to linear pricing, which is how insulin is priced, which is something different than we were 4 years ago. We now have commercial contracts covering over 70% of commercial lives, and I see a lot of questions coming in same we will take to move up to Tier 2. Our strategy is to be Tier 3, Tier 4, depending on the Managed Care Plan because the majority of the people on insulin, as you'll see in a second, are not doing well, and the discounts in injectable insulin are upwards of 60% to 70%. It is not a viable business to have a commercial infrastructure in medical and give away 70% of your sales plus your gross to nets for distribution. We are very comfortable with our position. We'd see good high prior authorization approval rates, we continue to make progress with payers where we don't have contracts going forward. Last year, we launched the startup program and a co-pay assistance program so that anyone that's commercially insured only pays $15 regardless of the prior authorization in process. That program has resulted in continued patient retention and opportunity to get insights on which payers we continue to work on to get better coverage going forward. Recently, in Q1, we launched a specialty pharmacy channel with national player, which we tend to add another one, as well as about 6 to 8 specialty local regional players. This normally helps us to improve our margins, but hopefully, we'll reduce our returns and our distribution costs as we go forward. We have a relentless focus in 2020 on Type 1 diabetes, and some of the questions coming in was why not Type 2. Type 1 is an area we think best shines where Afrezza's clinical effectiveness can show which is continuing glucose monitoring. Very reasonable dosing to show great tight control. We think in the Type 2 segment, we will continue to progress there. But when you look at the challenges in Type 2 around Medicare and Medicare coverage, it's a little bit harder than we think about commercial lives and more Type 1. However, that does not stop us as 40%, 50% of our business continues to be Type 2. We will not give up on those patients. And then finally, we're excited as BluHale continues to progress, we will be launching BluHale PRO very shortly, as I'll share with you in a second. And we'll continue to make new technology enhancements, as you may see, where your probably can't download on the app store, but within the android and the Apple Stores now, we've recently updated the BluHale app, which really looks great, and I can't wait to get this out there in Q2 and Q3. On the international partnerships, I want to take a minute on this one because I see a lot of questions coming in. Brazil recently launched in January. And unfortunately, as we all see now, Brazil being severely hit by COVID-19. The launch there is in progress, but I'll say going slow as people are in lockdown, and they're slowly coming out of it. But the trends there do not look positive over the next few weeks. When Biomm comes out of this, we've lowered the price in Brazil, to drive more demand, and we think this will get things sparked as they come out of COVID and help more patients. However, the patients that have started at before COVID-19 hit the country, are very happy with the product and very excited, and we're getting very positive comments from the patients who did start. In terms of booking revenue, I think we will have the small booking in Q2, but this is not something we expect meaningful in the next quarter or 2 as we look forward. We'll continue to update you on Biomm's progress on our quarterly earnings calls. In terms of Cipla in India, the clinical trial is designed. It's approved. We're ready to go. We had to make some placebo cartridges. We had to get some certifications for import licenses. And we've had to work with Amphastar for several things with the Indian regulatory authorities. All of those are underway. And again, COVID has locked down India and as they come out of COVID, we expect to kick off this trial sometime late Q2 or early Q3. And then finally, Australia, our partner with AMSL, we're in discussions. The file is ready, and it's really a matter of the fees that come associated with the filing that we're negotiating together. We believe all 3 of these markets will provide meaningful opportunity for patients to get access to Afrezza and while they may be low margin businesses, we hope to help change the people's lives as these 3 countries will represent over 100 million people or 1/5 of the world's population living with diabetes. Additionally on the commercial progress, we just expanded our sales force. We technically had about 70 FTEs available in January, but only about 60 of those positions were filled. So when you think about from January through June 1, we expect the majority of our team to be back out there, will have increased our footprint by 33% over the last 5 months. We think this will provide meaningful progress through the month of June and beyond as we go through the second half. Additionally, we've had 3 new managers join the company, not only join the company or promotions from within to lead our sales team forward. On the scientific progress, I want to thank David Kendall specially and his team because he's done a lot with very little resources here. We will have 18 publications and presentations of scientific data coming out in 2020 alone and if you go back into 2015, 2016, I believe we had maybe 2 or 3 presentations coming back. So significant improvement, and this just takes time and I -- we've all been patient, as David called these veins of gold, and we know this gold is starting to pay off. So thank you, David. On the COVID-19 response -- sorry. I just realized. I skipped that -- investigator-initiated trial. So we've also supported at least 3 or 4 investigator-initiated trials, which continue to show how powerful Afrezza is. Many of these started in '17 and '18 and '19, and we're now seeing the results in '19 and '20. This will be important as we continue to focus on how we best deliver mealtime control in Type 1 and Type 2 diabetes. And I'll point out back to some of the questions of Type 2. 3 of these trials are focused on the Type 2 population. And one of them were in the Type 1 population, but a lot of it's focused on real-time mealtime control, which we think is critical to the future of diabetes. On the COVID-19 response, the #1 thing we were focused on is keeping our company and our employees intact so that we can get -- weather the storm and see the light at the end of the tunnel. We've also evaluated several opportunities on -- to user on our platform, and we'll continue to see where things go next in the next few months. Two of these, as I mentioned on our previous earnings call, are no longer being perceived, proceeded, progressed. One of them is on hold as we continue to watch some of the clinical data readouts. And a fourth one, we think has opportunities for orphan lung and can be repurposed for COVID-19. So we'll continue to take a watch-and-see approach before we invest too much more time or energy and people on this platform. So the question I get is, why do we continue to invest in Afrezza? And the reason is because that's meaningful upside, all the pumps and CGMs in the world will not address the slow acting nature of mealtime injectable insulin. The T1 -- T community confirms this, when you look at this slide here. Despite the increased and use of technology such as CGM and insulin pumps, outcomes are getting worse. This data comes from over 22,000, 23,000 patients from the T1D Exchange, which is roughly the top 60 centers in the country. And you can see here, despite continued adoption of CGM and pumps, almost 65% at a time, mean average A1c has actually gotten worse over the last decade, not better. That reflects today that 1 out of 5 patients are only a goal and 4 out of 5 are not a goal. And this is what society is paying for. We believe there's meaningful opportunity to move the percent of people, 80% that are not a goal into the goal range, and this is our main focus. Let me talk to you about what we're doing to accelerate growth, going into the second half. In addition to the new sales reps we brought on and the new sales leadership team, we've expanded our footprint. You can see on the pink stars, 11 new territories this year, which now increases our state coverages from 33 to 39. Additionally, we replaced 8 sales reps this year and 3 new managers. So you can see we're making a lot of progress on continuing to increase our coverage on not just the country zip codes, but the number of patients with rapid-acting insulin. Here, you can see 75% of all rapid acting insulin in the country, now following on footprint and 96% of Afrezza. It's important to note that even though we've increased our territories by 10, our -- this is all new opportunity for Afrezza. So many of these doctors, for the first time in 2, 3 years, we'll be hearing about Afrezza from MannKind. And so we're excited to get that team going. Another area that we've kind of gone back and forth over the last 4 years is around a one-stop hub. We've decided that the best path forward and the doctors are wide open to having simplicity around the journey of a patient, whether that journey is around patient training, reimbursement, free goods, or distribution. This is an important opportunity for the company and the team is working diligently to get something out there in Q3, which will be called Afrezza assist. Previously, you may have heard of our support system being called MannKind Cares or MannKind Customer Experience Center, all these will not be handed as Afrezza Assist in Q3. We have a great team in place who intend to make this work successful for patients, to make sure they have an amazing experience not only for their patients, but the providers themselves and the Allied Healthcare Professional. Next, I want to talk about quickly is BluHale. You've been hearing about this for several years, and we're excited that the app is ready to go, the batteries are coming in from China and that the assembly is currently working as we expect, and the marketing team is preparing to launch this in late Q2 or early Q3. What's important here is, we've also launched patient training. When you can see here is using BluHale and giving better patient training, people's confidence level before training, and after training, go from a 2 to a 5. We get a lot of great feedback, a lot of great insights and build people's confidence. I think all of us can see that despite the challenges we face with COVID, our patient retention is really high. And while sales did dip from our peak in March to a low in May, we've kind of stabilized here into a normal base, where we're at the pre-COVID levels is where our weekly prescriptions are coming in. And we hope that this is the new base that we can grow upon in June and beyond. The transformation of our growth drivers should deliver future shareholder value. This is a slide you've seen many times. And we believe the Technosphere platform is critical to our future. U.S. Afrezza will continue to grow exponentially. Afrezza International expansion is well underway, and we expect to continue to work on pipeline opportunities that will bring in royalties or find in-license opportunities to leverage our infrastructure that much better. In this area, we'll see pediatrics. I'll talk about that in the Q&A. And a lot of questions on marketing around social media that I'll also talk about in Q&A. So I want to thank all of you. And now I'd like to open things up for shareholder questions and comments that have come in through our meeting platform. Please note, we will attempt to answer as many questions as time allows but only questions that are germane to the meeting will be addressed. We cannot address all questions that are confidential or sensitive information to be disclosed that I haven't been disclosed to others.

Okay. Mike, we have a few questions in the queue. Several of them are asking for details around the pediatric study.

Okay. Let me kick that off, and then I'll let David come closer. So the PED study, we went to the FDA in Q4 last year to get alignment to end Part 1 and the design Part 2 and tentatively the FDA has agreed to that direction, which means we're going to not go to 4 to 7 year olds, which we were comfortable with. And we're looking to design a Phase III study that will approach 8- to 17-year olds. And the medical team is working diligently with advisers and external consultants to make sure we get a tight protocol and don't repeat some of the mistakes we made in the original development programs of Afrezza. That we should get that done David by the end of this year and go back to the FDA. And once the FDA is aligned to the protocol, we will be ready for Phase III, I'll call, late this year, early next year. The trial, I think, we can say, is roughly a 6-month primary endpoint. That looks like that was tentatively we agreed to with the FDA, but albeit, a 52-week study. I'll stop there, David, anything else to add?

Yes. So to reiterate, this is David Kendall. The interactions with the FDA to review the results and the outcomes from the Part 1 of the pediatric pharmacology pharmacodynamic study. Those are complete in the 8 to 17 year olds, the final study report will be compiled within the next several months. As Mike stated, the full protocol for the 26-week planned pediatric Phase III protocol is underway. And we will return to the FDA with that final proposed protocol. As Mike stated, this is our anticipation that will have a 26-week primary endpoint with a 1-year safety follow up as is common for the vast majority of pediatric registration programs. As Mike also stated, we would anticipate interaction with the FDA in the latter part of this year, and plans for initiation either late this year or into early 2021.

And one of the things I'll just add that we're doing over the summer here is, bringing in some key talent to manage the pediatric program and also build the business case to ensure proper ROI. Obviously, this is a commitment we will deliver on, but the question is, are there third-party funders or other ways to fund this study that continue to make this an appealable opportunity. So I think those are some of the opportunities we're also looking at is how to best fund the study as we go forward.

Okay. Mike, there's at least 3 or 4 questions here asking about social media, online advertising -- what we're doing in that area?

So I think if you're following any of our channels or if you're not, please go ahead and follow them. There's 400 people on the line here who could increase our exposure. So please make sure you're looking for Instagram and our Facebook and so follow me on kind of LinkedIn. We're continuing to dedicate more resources to social media. We just recently updated our social media guidelines, and what our team can do. If you recall, we did get an FDA warning letter for, what I would call rather simple post on Facebook. And so that just shows you the level of risk that occurs with social media, and that's something that we just don't want to repeat. So we took a little bit of a pause there for a good year, while we resolved that and got comfortable with how to best use social media. And I think the talent in the company is continuing to grow, that the capability to come back in, to do more social media, especially as we go into the Type 1 population will be important and critical. So you'll see us continue to be part of the community and hopefully, drive change and awareness of Afrezza out there and we'll continue to experiment with that. So you'll see it. I think the team just launched a lot of new stuff in the last quarter. And I think that's the beginning of where we're going. So you should see more. But I'll remind you that we spent between 4 years ago at launch and the last 4 years, we spent millions of dollars on social media and websites and digital advertising and good Rx. And we didn't always see a big response. And so I would tell you for Afrezza, we have one of the best patient populations who talk about their own clinical success, and they post their own clinical results on social media than any other drug I've seen in my career. And that despite that, we don't see that kind of noise positively spread amongst others. So that's free advertising. And I thank all of our patients for doing that. It's great. People are comfortable sharing their own success. And I hope that continues to spread. As our population of patients grows, I think you'll continue to see social media take an important stance as we go forward.

Question about a consumer-based BluHale device. You want to talk about that, Mike?

Yes. So the device I just showed you was around the professional edition, which means that will be used in office -- or with our sales reps to properly train patients on proper inhalation technique. The next version will actually have dose detection, where we can hopefully overlay that with CGM graphs such as Libre or Dexcom, where you will see that real-time feedback of -- I took a dose of Afrezza at 6:00 and where I take a 4, 8 or 12, I take it at 6 or 6:45. And when people are looking at their CGM, they actually don't pay attention exactly to the hour a minute. They're human beings and live their live their life. And it'll be nice for them to be able to track and say, "Oh, yes, I did take an 8, I did take a 4, where are my sugars now? And do I have to redose? And I think that's the beauty of this, and that particular version is going through trial testing right now. We've talked to various partners to look at integrating our Bluetooth data into their platforms, and that's where we are right now, is making sure we launch this with the right platforms and with the right partners. But a lot of excitement there. And some of this will depend on what we do, will depend on the FDA as well. So -- but that's looking forward on that addition. And the earliest projection, I would say is Q1 of next year for launching that type of model.

I'm going to let Steve talk here. Did MannKind get the $10 million for mid cap? And also, there's a question here about quarterly burn rate currently versus previous years.

So the first question regarding tranche 2, which is $10 million from mid cap. We did not quest funding of tranche 2 for $10 million, and that tranche expired on April 15 of 2020. Second question is regarding operational burn. Refer to our Q1 earnings call, we do have the information in there, but our first quarter burn was $11 million which was lower than all quarters in 2019, and we continue to focus on managing our cash burn. We don't comment on forward-looking cash burn, but we are managing that very tightly.

Like -- 33 days -- if you want to add anything?

Sure.

Question here. Since the President have been approved, how come filings have not been submitted to Canada, Europe, China, et cetera. Two reasons. One, if you take Japan and China, in particular, they want additional Phase III trials, which is not something we're in a position to fund. And in the case of Europe, we had to get aligned on our pediatric program first before we'd even consider filing in Europe. And now that we're getting alignment with the FDA. Now we feel comfortable going to the EMEA and getting alignment there. And hopefully, those will line up, but that's the process you have to go for Europe, is they're very focused on what is your pediatric plan. And if you're going to get an exclusion, you've got to be able to prepare that and they argue why? And so that's really what the medical team has been working on. And I know we've had some thought leader support there, and David has been in International Congress, is talking to some European thought leaders and regulatory authorities. But Europe is -- we think the product is fileable and approvable in Europe. But we had to get the PEDs program in a place that we could articulate what that looked like for the European regulatory authorities. And then Mexico, I think we're continuing to hold on. That's not #1 priority for the market. And Canada, we'll continue to evaluate partners there as we go forward. One of the view is, just think about it, what happens in a parallel import and reference pricing. And there's been a lot of rhetoric around drug pricing and reference pricing around the world, and that's just something that the U.S. for all drug companies is the most important market. And we just can't jeopardize our success here for the rest of the world. But for me, personally, it's important to make sure that people around the world have access to Afrezza. And that's why we did launch the Tanner Group, where a name patient basis, people do buy Afrezza. We do see that growing year-over-year, as people getting on Afrezza in Germany and U.K. Latin, American countries. So we'll continue to watch that. But international expansion as you see is important. But I would say, when you look at drug companies and revenue and profitability, it's not the #1 place you'd go to for growth, but it is important to help people living with diabetes in those markets.

Here's the question for David Kendall. Why is that an FDA-approved repressor has 7 other Phase III clinical trial in every country to get approval.

Yes. Thanks, David. As Mike stated, particularly China and Japan often require specific registration trials in the populations in East Asia and Southeast Asia. This is precedent based on the regulatory pathways that are defined by PMDA in Japan, by the SFDA in China. So the question goes on further to say, are there significant differences on how insulin behaves in these populations? The high-level answer is, no. But the registration process and the regulatory oversight is unique to each of those larger markets, much as EMA, the European Medicines Association has oversight over the majority of EU counties and other parts of the world. So this is not wholly dependent on FDA approval, but is, in fact, driven by the regulatory guidelines in each of those geographies.

Another question that has come in is one we've wrestled with and have taken to professional societies and to the regulators, a question of whether Afrezza itself can and should be defined as a unique class. We at MannKind maintained the strong position at Afrezza is, in fact, the only ultra rapid-acting insulin available that the definition of such is based on a number of clinical characteristics. We continue to have regular interactions with both professional societies who, in great part, provide that information for their treatment guidelines. And we'll be approaching both, both the American College of Endocrinology, which is holding virtual meetings throughout this year, including their guidelines committee, and interactions with the American Diabetes Association and its Professional Practice committee. So again, the position of MannKind is that, yes, we do have the only ultra rapid-acting insulin available for the treatment of diabetes, and we will continue to work vigorously with professional societies to continue to lobby for establishing that ultra rapid-acting insulin class.

David, there's a theme of questions here that I meant to give in my comments, I didn't -- around how long it's taken Afrezza, what have we've been doing? And what I want to remind people -- sorry, my microphone is far away. There's a theme of questions here around Afrezza, it's not hit a major inflection and why are we continuing to invest money. I want to address that, which is disruption technologies, disruptive technologies in diabetes take time. And if we go back and you just study any major disruption in Diabetes, metformin, which is now the gold standard, originally weren't getting approved for diabetes here in the United States. Finally got approved. And even then, it took years to become the gold standard, and now every person living with Type 2 is basically on Afrezza. Insulin pumps did not take off. Believe it or not, the conversion from vials to insulin pens took years and now is a simple innovation, and there was still a lot of debate on why we should be using reusable pens. Continuous glucose monitoring has been around for a long time. It's only been the last 3, 4 years, you've kind of seen that take off, as well as GLPs which are now a multibillion-dollar category every quarter, originally launched in mid-2000s. And only now are you finally seeing dramatic uptake in these products. So what I would say is, a lot of innovative disruptions that are multibillion-dollar products today are categories, were very slow in the first 5 years. And that is just the nature of diabetes. This is a very long lifetime disease. And the endocrinologists have been around a long time. And so drugs to them that are 5, 6 years old are still relatively new, believe it or not. And yes, we could have spent more money to push harder to drive faster sales. But I think, we would have just burned more capital for not a lot of return. And I think you're now seeing that we're able to -- willing and able to spend more money to market Afrezza better because we have over 3,000 prescribers now willing to prescribe Afrezza. We have -- are coming back into states that we haven't been in, in 3, 4 years. So our desire and ability to start to grow faster is now. And we're making those investments to make that happen because it's been on the market long enough. We've got enough clinical data showing you the safety and efficacy of the product. Couple of questions here around the black box warning. That's not withholding us back. GLPs, which again, we're doing $4 billion a quarter, have black box warnings for cancer in their label. Enbrel has a black box warning. Black box warnings do not stop drugs from being successful. I'm very comfortable with our label, and what opportunity provides us to be successful to help patients. So I just wanted to address that because there's several different things here. Kent if you want to -- can back up?

Yes. So there are a couple of questions that want us to say a little bit more about our pipeline and TreT, in particular.

Okay. There's not much to say on TreT other than we feel very comfortable that passing the next milestone, just derisk the program that much further. We've said, case not everyone listened to the earnings call or some of our Wall Street updates. We expect this to file between now and Q1 of 2021. Nothing's changed on that time line. United Therapeutics has done an incredible job updating the protocol, bringing on more sites. The PK looks great. So we're very excited about TreT team. I don't knock on what I don't want to say there's never any risk, but this is probably as low-risk as you can get for development program. I think the stability of the product, the manufacturing, the FDA preparations, everything is going great. And I couldn't ask for a better partner. And not only that, they're continuing to invest in building the treprostinil brand and expanding the market opportunity for that with the interstitial lung disease indication, which I think has tremendous opportunity to help more patients, and our technology will be used, hopefully, in that new indication as they go forward and receive approval, if all goes well. So I think treprostinil is a tremendous upside for the company. And hopefully, our shareholders and new investors coming into the company buy into that because we will receive double-digit royalties. And today, Tyvaso is doing over $400 million, and you can calculate that double-digit royalty on that amount. And that's in a patient population who has a high dropout rate on the nebulizer, and we know can always achieve the therapeutic doses they want. So I think we're going to bring a tremendous value for patients living with pulmonary hypertension. And hopefully, interstitial lung disease in the future. So I'll leave it to United Therapeutics to talk about treprostinil, but though, the experts on labor partner with the world leader and I don't know, I just think, everyone in the company is excited, and it's just a great partnership. So things are going very well there. And just to top that off, I mean, we have an opportunity to put more compounds into the PH platform using our technology and their expertise. And so we continue to explore ways to find other opportunities beyond treprostinil, and I think that continues to go well. Status of the Dexcom trial. Maybe, Dave, you want to talk about that, that new data coming up today, the AI for the fitness?

Yes. As Mike mentioned earlier in his summary slides, we've been able to support a small number of investigator-initiated studies, one of which utilized CGM in a population of patients with Type 2 diabetes, then converted to Afrezza from their usual mealtime injected analog therapy. Dr. Mark Kipnes from DGD Clinics in San Antonio, Texas, will be presenting the results of that trial upcoming at the Virtual American Diabetes Association Meeting. So along with Dr. Kipnes' original study and the results of that Dexcom Afrezza trial and Type 2 diabetes, we'll have 3 other disclosures bringing forth additional safety, efficacy, clinical utility data. So I can't speak further to that until the boycott for the embargo of materials from the American Diabetes Association is lifted the weekend of June 13, 14. So please look ahead to those dates, when that information will be publicly available.

A couple of questions on applying our technology to other things like GLPs. What I would say is, when we're looking to apply our technology, it has to make a clinical meaningful difference, just to make something from injectable or an oral tablet to inhale, isn't going to be enough of a value proposition to warrant the investment. So I think that's when you look at our pipeline in the sumatriptan program and some of the other things we're working on. We think we provide meaningful differentiation or ability to help patients in those particular areas. And I think that's our focus. So just making an oral GLP is possible, but I'm not sure, when you got once-weekly is an oral tablets now that there's a big value there. Another question that's come in a couple of times, really around the long-term safety study, and I'm not ignoring that. That's something that we continue to work with the FDA on. We continue to -- we went to get the pediatric program settled. And we'll approach the FDA on the long-term safety next. But that study is still out there. And I think the good news is, the product has been on the market over 5 years. We've seen no safety signals and no plausible rationale for this. And so we think it will be very difficult to enroll that trial, it's designed, and that's one of the reasons we want to engage in a meaningful conversation as we go forward. Some question on Zoom Technology and Afrezza. I will just say we are using Zoom every day with our field. We're using it with webinars, with doctors on a weekly basis. It's going very well. And I do think there is a new sales force model of the future that we can help drive as MannKind. And it really takes having great reps, to have great relationships in order to make sure you can have a Zoom meeting, have a good dialogue and also engage with your patients, but we're seeing really good success with some of the things we're experimenting with during the COVID-19. So that give -- to our sales force, if they're listening because I think they've really tried hard to do some different things that we've not done historically. And it seems to be working as we look at our trends. [ Remodulin ] the second molecule to United, you don't hear much because we've completed the formulation work. United has an opt-in for up to 5 years, if I recall. And so they have not opted in yet. So therefore, that's why it's sitting there. If they choose not to want to develop it, we can always look to develop ourselves or look for other indications if it's applicable. So not much news there. And we don't expect much to do that, but we have continued to get some insightful data on it. And actually, we have an executive leadership team meeting with United next week. So there'll be big noise talk about -- some of the new data. But not -- don't expect much on that particular molecule in the near term. I think David talked about ultra acting. There's a question here. I'm going to skip that. A question on Amphastar in China. Our insulin is not made in China. Our insulin is made out of a plant in France, which has been operational for a long time, and we have adequate inventory of insulin. That's not any of our concerns. So we feel very good about where we are, our supply chain and the amendments we have to cover us 3 years to come. So Amphastar has been a great partner. And so I got nothing else to add there, but no, we don't expect any disruption to our supply chain at this point. So let me take a second guys. There's a lot of questions in. And I just want to make sure there's nothing else as a priority that perhaps will be answered here. Okay. I'll close out the conversation saying, obviously, shareholder return is not where we would like it. I would just say all of us are unified in our desire to progress shareholder return to be better than it has been. At the same time, we had to dig the company out of a pretty deep hole over the last 3 years. That's hurt our authorized share count, that's outstanding. But I think you've seen, Steve and I have been very prudent with those shares. We said they would last 3 years, they have lasted us 3 years that you gave us back in 2017. And we'll continue to be prudent. Thank you for the authorized capital today. There is no short-term need that we can see on the horizon, but we always want to have a corporate flexibility to run the company and pursue opportunities as they exist. But going into second half year, guys, we continue to see Afrezza growing. We continue to see us managing our expenses very tightly, good positive data readouts, David's got at least 11 presentations and publications in the next 90 days. Our sales force is being expanded. The reimbursement hub, the BluHale. And so we had a lot of positive things going into the second half. And additionally, trepostinil will continue to get derisked. So look out. We're very excited. I think the market will finally start to realize the value sitting here, as we look just at trepostinil royalties alone are probably worth as much as our market cap. So we're going to continue to pursue increasing shareholder return as best we can. No one's more frustrated than me, as I've invested a lot of money outside of any options and shares I get. I think this is a great buy, and we'll continue to look for opportunities to enhance that as quickly as we can. And just thank you for your patience.

This concludes the meeting. You may now disconnect.