MannKind Corporation (MNKD) Earnings Call Transcript & Summary

Hello. Welcome to the 42nd Annual JPMorgan Healthcare Conference. My name is Edwin Zhang, a member of the JPMorgan Healthcare team and the moderator for this session. Today, I would like to introduce you to the team from MannKind Corporation. Please join me in welcoming our presenters, Mike Castagna, CEO; and Steven Binder, CFO.

Thank you for having us here today. Thank you, Edwin. We're excited about our ability to really drive shareholder value in 2024 and beyond. MannKind has been around a long time. It's an exciting journey, and we have a lot of great things ahead of us. Hopefully, today, you'll see a little bit deeper dive on our pipeline, where we're going with our endocrinology business and how we're going to continue to drive the future. Here's our forward-looking statements as I'll be giving some predictions about the future, which may change, you can read this online. At MannKind, our mission is to give people control their health and freedom to live their life. When you think about what it's like to be tethered to a pump all day or we stuck in your house on a nebulizer all day, being able to take a 2-second inhalation and go about your life and get your sugars under control and get your hypertension under control are game-changing for patients who felt like they've been locked up. As you think about clofazimine coming forward, another option treatment that people have to take long treatments. We're really shortening the duration and hopefully giving them a chance to get back on with their life. We have 2 therapeutic areas of focus, endocrinology, which we've been in for over 20 years. And orphan lung disease, which we pivoted technically in 2017 when we made the investment in Tyvaso DPI and in 2019, when we pivoted our R&D efforts and shut down things that were not orphan lung related. We won't be limited by our technologies as much as we love them. When I think about Technosphere and what this means, we are the only ones in the world who have FDKP as a novel excipient, we've the manufacturing know-how and scalability to do what we do. There's a lot of arguments in dry powder inhalation. And as a pharmacist, I never quite appreciated the differences between lactose blends, FDKP bonded powders and delivery devices and how they all connect. And while many people try to make arguments about dry powders into different delivery technologies, it's really about the system and the bioavailability of what you deliver to the lungs that ultimately gives the patient the effect and the side effects that they need or don't need in treatment. We have 2 products approved on the platform and several others as we move down the pipeline. And when you look at our powders and humans, you get very deep and consistent lung distribution. And the majority of our powder is our carrier called FDKP, which carries the drug to the lung and disassociates and then the drug target is left behind while FDKP gets excreted. This gives you rapid systemic and deep lung penetration and requires very little inhalation effort. We've shown as low as 4 years old to as high as 90 years old of patients using our device. It does not require a large effort. Additionally, when we think about our diabetes business, we've run over 75 trials. We did several trials in patient populations that were COPD and asthmatics as long as they were controlled, they demonstrated, they got the drug, they tolerated it and they got decent drug levels. So there's not an issue around underlying lung disease and absorption that our patients have shown that they can continue to get drug levels despite compromised lungs and we've seen that in our success with Tyvaso DPI close to over 4,000 patients with United Therapeutics. As I think about 2023, we had several major contributions to our success. Number one, when we look back at Tyvaso DPI when we did the partnership with United Therapeutics. This is a $400 million brand. We knew we were going to get a 10% royalty and that would bring $30 million, $40 million into MannKind and help fund our pipeline while we continue to grow diabetes. When you look at where we are today, Tyvaso with ILD has continued to exceed all expectations. The conversion went faster, the patient satisfaction was better and the market growth has been phenomenal and UT did an incredible job. What that has done to MannKind is it meant we had to really build manufacturing capacity faster than we had anticipated because of the success of the product. And so as we had more naive patients, more conversions, everything put a lot of strain on the organization in 2023, and we were able to stay ahead of that demand and not stock out for any patient. As we closed out the year, we had record manufacturing. We're finally able to build a sufficient inventory that will give us more than enough leeway we as we head to '24 and '25. We completed our expansion build-out, which UT has paid for to get ready for IPF. And those production in terms of fill finish and spray drying scale-up will be online this year, and we're looking to continue to build inventory and get ready for the next generation of launches for United Therapeutics. We've made meaningful clinical progress on Afrezza in our pipeline. I'll talk about Inhale-3 and INHALE-1 shortly. But long story short, Inhale-3, we started this year because we felt very confident that the pediatric trial will go the direction we anticipated but we did not switch patients off insulin pumps. And in the pediatric market, it's all about time and range and parents and kids fighting for success. And so we didn't want to wait for that data card to flip over and then hear, well, what are you doing about pumps. And so we started INHALE-3 in adults to show that you can safely switch off an insulin pump. This will be the largest switch study done, whether you're in control or not in control, can you safely switch and move forward. That trial had so much excitement, [ Earl Harsh ] is the principal investigator, and that study enrolled 2 months ahead of schedule. So we're super excited because that means we'll have the data first dose present at ATTD, first 4-month primary endpoint in March in the full study for hopefully, ADA and beyond. And on top of that, we'll have the peds rollout study this year, which expect to achieve our primary endpoint in Q3 and share that at the appropriate time. The second 2 parts is, unfortunately, there was a fire for those of you who haven't been following the company. We were ready to start our clofazimine trial in Q4 this year. However, there was a fire in Germany where we were making the clinical supplies, which set us back about 6 months. And so as a result, we had to move the manufacturing to Connecticut, get that back online, get the clinical stability batches back up. And the team did an amazing job doing that in record time, and we expect to file the clofazimine IND here in Q1 about 60 days. And the good news about that delay is it gave us more confidence in the program because Insmed was able to flip over the card on the PRO outcome. We knew that this tool networks. We're planning to use the QLB tool. Additionally, we finished our chronic tox data. So that's now derisked, and we were able to finalize the trial design with the FDA in the dosing, so there's no question that a single trial could be used for approval. So that delay felt onerous at the time, I think in blessing was a blessing as we go forward. And in 2001, we just completed our 28-day tox. We just selected the CRO partner to do the Phase I study, and that will be going into humans very shortly. So we made a lot of progress in the pipeline. I'm going to spend a lot of time today walking you through the rationale and why we have confidence in these 2 molecules. We're also in the strongest financial position we've been in a decade. We achieved profitability in Q3, and we've continued to reduce our debt as that's 1 of our main focuses. We have more than adequate ability to pay down our debt over the near term. Our royalty sale in case you didn't see we announced last week was for $200 million. What that did was effectively sell 1% of our Tyvaso royalty. So we were able to keep 90% upside for MannKind and our shareholders. A lot of people asked me how robust of a process was it? And why did you only sell 1%. And the reason is, we don't need the cash, which is probably the first time in history, I could say that as MannKind. We believe in the upside of Tyvaso. We believe in the upside case for IPF and we wanted to preserve that upside for us. And we felt interest rates are very high, which makes the discount on the royalty a little bit higher than we would like. And so being able to preserve all that upside from where we're going is really important to us and our shareholders. And what we really wanted to do is show the value because we believe our stock is severely undervalued right now and being able to show you what 1% of this 10% what equal in value, which is about $2 billion risk-adjusted here, $1.5 billion if you just counted the current base business of Tyvaso. So we're trading at about $1 billion market cap. That means everything else in the company is negative value, which we don't think is the case. And so that's where we got $150 million upfront. We're now sitting on $300 million in cash with another potential $50 million milestone depending on the revenue over the next couple of years. This does not impact our collaboration services and really gives a true valuation just on the royalty alone. Now I'm going to bridge over and talk about the orphan lung business that we started to enter in 2017 with Tyvaso. We did this ourselves, and then we partnered with United Therapeutics in 2018 and then worked with them over the following 3 years to get this ready for FDA approval and scale. As you guys can see, it's a very simple-to-use device, portable, high patient satisfaction, high patient tolerability, very -- I think 1 person dropped out in the trial for cough. So we know that this is a simple device that has been widely adopted and converted here in the PAH market. I do want to talk about our technology and what it means because there's another company out there spreading some false noise. And I think what's really important is to show you that in humans, we get decent lung penetration, number one, not animals. And number two, it's not about the powder or the microns of the powder. It's about the delivery, technology, combined with the powder and how that gives you deep lung penetration. And at the end of the day, we can make all kinds of arguments about low flow, high flow resistance, particle size. What matters is the bioavailability, the admitted dose getting into the lung, getting into the -- and showing you that effect. And this study was our pivotal trial we did back in 2018, where we showed you the green line here is Tyvaso nebulizer. And the white circles on the top are the DPI version that we did. And so we tested this in 30-microgram increments, so you can see 30, 60, 90, all the way up to 180 micrograms we were able to get to before we saw any tolerability issues. So we knew this was very tolerable all the way up to 150 micrograms. So if you look at the Cmax at roughly where the Tyvaso nebulizer dose is that third green dot, we delivered a higher Cmax just on our second dose, which meant we were getting hopefully better powder and better remodeling of what that product can do for PAH patients. When you look at competing DPI, they have to deliver almost 2x the dose to get to the same Cmax. So if you compare it 50 to 50, we're significantly about 2.5x higher Cmax than they are a dose for dose, and they have to dose almost twice as much powder to get to the same effect size. The way you can look at that is AUC and saying, "What does the overall area under the curve look?" And again, if you just took 50 micrograms, which is the dose that the nebulizer is at, you can see we were very comparable in parallel to the nebulizer. And when you look at the competing DPI, they were half of what the AUC was. Therefore, what that means is they need to dose higher and in their particular case, they need more powder. And then a patient who has lung disease, more powder is not necessarily good, usually leads to and side effects and powder going everywhere. The other part of this is, as you get past the 100 micrograms on their technology, now you need 2 capsules, which means you need 2 inhalations and you've got a clean-up device every day. So our device, our technology, our distribution and absorption are completely differentiated in these 2 things. Now I'm going to bridge over to nontuberculous mycobacteria. This is also known as MannKind-201, which is our inhaled clofazimine program. For those of you don't know much about NTM. It's a rare disease. It's been evolving. And Insmed and ARIKAYCE has done a really good job of building up awareness in the marketplace. It's chronic. It's progressive, and it's usually caused by bacteria in the soil and water. And this is really presents itself often similar to tuberculosis or an infection. So people are misdiagnosed routed through the system for years before they finally get properly diagnosed. It's what makes it very difficult to run a naive patient trial. And so you find yourself in a refractory patient population where it's much easy to identify the centers and the patients and move these programs forward. We believe this is a really debilitating disease, chronic fatigue, cough and has a 4 to 5x higher increase in all-cause mortality. I will not -- unless you're an image expert, I won't walk you through these 2 images but you can see how it presents itself in terms of fiber cavity disease. The prevalence continues to increase over time, and it's really endemic in humid areas and tropical areas. So when you think about Hawaii, the Eastern Seaboard, Japan, Greece, these are the markets where it's really going to be penetrated. But when you really just take a step back, it's a Japanese opportunity and a U.S. opportunity. And you can see the market today about 120,000 patients in the U.S., about 160,000 in Japan with only 1 FDA-approved treatment option. There's more than enough room for multiple players to change this disease. It will become a combination disease of newer targets, and we're super excited to be, hopefully, 1 of the next generation launching here in NTM. The current therapies are unfortunately not that good. When you look at them, they're limited by their side effects, they exacerbate a poor quality of life. They have diarrhea, vision, hearing issues. The regimens are mostly 18 months, some lasting as long as 5 years. And very few people often convert when they're in the refractory position. And so not getting a huge benefit with a huge amount of side effects. The NTM evades the macrophage, which usually picks up and cleans out the infection, and it gets stuck in the mucus. One of the things we like about clofazimine is the macrophages picks it up and bring us it deep into the lung and gives you that efficacy when it crystallizes and crystallizes. And despite the lengthy treatment, only 40% of people may resolve their infection. I mean if they resolve it, they may be free for a year or 2, and then they get it reinfected and they go back to treatment again. So this is kind of a chronic long-term condition. I'd love to say there'll be a cure. It's unlikely they'll be just more curing the bacterial infection and you'll relapse, but hopefully, we can knock it out with deep lung penetration. Discontinuation of therapy is highly happens very often because if you've known anyone with tuberculosis they used to work in a hospital, these drugs are severely toxic and have harsh side effects. So most people do give up, and therefore, you don't get the optimal treatment outcome. So why do we pick clofazimine. Well, the founder of the company we purchased spent 5 years working on this before we did, and we spent the last 4 years almost. And so this has been in development for almost a decade. And it was used for leprosy back in the '80s. And what they saw is it did have activity against NTM and other infections. But the systemic circulation has severe side effects. It is an orange dye, so your skin discolors. It accumulates in your organs and fat and as Q2 prolongation issues in the oral dose. So it's not optimal for oral delivery via tablet. However, when we make it nebulized, we're able to cut the dose by about 80%, that we deliver directly to the lung. And that's why you see the red going from the systemic to the red go into the lung on this chart because it's really about killing the bug in the lung. And so that's where you get a very high concentration and deposition with our suspension and it gets in there and should have deep lung penetration. The other part about this product is it's not a crapshoot and when you do R&D on this particular product, it's got lots of reward data published that clofazimine works and helps these patients. It's in the guidelines already. And when we did the preclinical work that we looked at, when you look at saline and you look at oral deliver clofazimine in a tablet versus our nebulizer, you can see whatever you want to compare it to, the nebulized version had a significant bacteria did not recover, meaning 99% reduction in the bacteria. So a very good preclinical model that shows that this drug works and we're super excited to finally get it into patients where we are. So what have we done to date? We've completed the short and long-term tox. We've seen no signal of the upper dose toxicity. We dose it every day for 6 months in the animals, and it looks clean, which is great. We relocated our manufacturing from Germany to Danbury, Connecticut. We've identified a powder formulation, which we wanted to get down to the dose, which we're now at, and we'll look at moving that powder formulation forward because we think long term to compete in early naive patients, it will be good to have oral delivery. We completed our Phase I study with no safety or tolerability issues. We've selected the CRO to help us. We've been identifying sites because we're ready to go in December. So now we have about 70 sites identified. So hopefully, when we do file the IND and get the approval, we should be able to activate and get patients in very quickly, and we'll be doing some work hopefully to identify those patients early. We've met with Japanese regulatory authorities. We do believe a single trial with sputum endpoint will be appropriate for Japan, and we're super excited to set this up for that market. And we've aligned with the FDA and our development program and now expect our IND to be filed here as soon as we get the data for the manufacturing batches we made. So it is the first time I am revealing the trial design. It's -- the study will be called [indiscernible] inhaled clofazimine for NTM. And this is the design post FDA feedback. We were going back and forth on a single trial, was it a Phase II/III trial. And where we landed was a single-dose trial over time. It will be 6 months as a primary endpoint. And the way you take clofazimine for those who don't know, it's 28 days of dosing, then you're off for 2 months and then 28 days of dosing. So 4 courses in the first 12 months, not every single day you already taken a nebulizer for 15, 20 minutes. So this will be a very patient-friendly delivery. It will be about minutes in a nebulizer for 28 days and then you're off. And it has about a 40, 50-day half-life. So that's why you can -- it gives you a very high peak concentration in lungs and then it comes down over the next 2 months. And so we've replicated this to animal models in our PK in our humans, and we feel very good about the dosing regimen. It's also about 180 patients, and so it will be a 2:1 randomization. And what we have to fund is a -- to the first 100 patients, that's what important for shareholders to know this is not a $200 million program. This is less than a $70 million investment over a couple of years. And we'll be able to manage that within our current cash flows and expenses. This trial to get to 100 patients should be somewhere in late '25 is what we're estimating. And that will give us the size estimation to say, is our assumptions right? Do we power the trial right? And there will be a co-primary endpoint of sputum conversion as well as a PRO. And we know PROs are a challenge but fortunately, we've had a very good dialogue on this one and that we feel very good about the trial, single studies all that we need, and we're ready to go. We've also done a lot of market research, and then we look at the product, the most appealing thing is the tolerability profile as well as the dosing. That is really -- the efficacy in this class, even if we have comparable efficacy, these 2 things are going to what make it a gold standard for these patients. We know that they need more options for refractory. It's a familiar molecule. The world's top leaders use it already in oral form. So they're very well aware of it. It's available for free through a Novartis Access program. And this is also going to become a brand within a brand. Now that we're through the NTM design, we're now looking to say what other disease indications can we use this for? For example, it works in NTM, Buruli disease, TB and others. So we're looking what's the next investment that we could think about that will make this a brand within a brand. You can read these quotes later, but I think when you hear thought leaders say, anyone would love to have this instead of inhaled amikacin, and this would be amazing short duration of therapy changes the on-off period uptake for a patient or in Japan, where people are very worried about the color of their skin, turning yellow is not a good thing. And therefore, where this is the second biggest market outside the U.S., having a product that's currently used in oral, available as an inhaled will be a huge benefit for this population, loyal on the tolerability and safety. And the other part I didn't mention is it works in MAC as well as in [indiscernible]. And the reason that's important is the patients, 20% people with MAC or co-infected. So we're allowing those in the trial. So we have a little bit of ability to enroll a little bit faster and it should work in multiple infections. We looked at our case and what the peak analyst projections are for this product. And they had a great year last year. They just gave guidance this year, and that really shows on track consistent with the slide that as ARIKAYCE grows, this creates a bigger opportunity for us because we it's improved over this product, number one. And number two it paves the way for us and patient population and growing. So a huge opportunity that's growing and should continue to grow over the next decade. A lot of IP. So we feel very good about where that stands and upon approval, we'll get QIDP as well as orphan designation for 12 years. Now I'm going to bridge to another asset that I don't think most people are aware, we've been working on for over 4 years, and that's idiopathic pulmonary fibrosis with 201 inhaled nintedanib. And the reason I say that is I showed up to a fibrosis conference last year, and somebody in the audience said, what we need is an inhaled nintedanib, and I was very happy to hear that as I sat in the back of the room and said, it's coming. And no one in the pulmonary fibrosis community realize that MannKind had this moving forward. We spend a lot of time on this, and this is a huge opportunity. And as I've dug into pulmonary fibrosis, unfortunately, I have a family member who suffers and I watched him suffer. This is a very debilitating disease. 80% of people die in 5 years. And as we've done due diligence on assets, we see that, unfortunately, the patients are dead by the time you finish these trials many times unfortunately. And so a huge unmet need and when you talk to the patients, the side effects of these products are so severe that they'd rather die than take the drug. And so we do believe there's a huge opportunity in this. And if you don't know much about IPF, I think people do. It's scarring of the lung tissue. It makes it difficult to breathe and it progressively gets worse over time. So how do you design trials where you capture them at the right moment and you can show that effect that you need. It affects 100,000 people in the U.S., there's about 15,000 or so in treatment. And the reason there's no one in treatment is because people cannot tolerate the treatment. So despite whatever happens with a generic in a couple of years, there is a large population who cannot get the efficacy, who cannot the tolerability. And there's 1.3 million people worldwide who do this. And unfortunately, a lot of new people getting diagnosed. As you look, there's 2 approved products. Ofev has the lion's share. And you can see here on this slide, it was about a $4 billion market in 2022 with well over 80%, 90% of the sales going to Ofev. Expect us to be a $10-plus billion market in the 2030s. And we really look to have an innovative product, even if -- as we look at other IPF treatments, they have severe GI side effects. And for those of you who don't know about Ofev, it really is dose limiting, meaning they were at the peak dose they could deliver orally. It only has about 5% bioavailability. So you can't dose any higher to get any more efficacy because the GI side effects are so severe. And so that's really what we saw was how can we deliver this directly to the lung, get the dose that we need, and we've confirmed that now in animal studies. Additionally, we haven't published the data yet, but the bleomycin study, we did show similar efficacy to the oral tablet, and that's before we dose escalate. And so we really look forward this forward. Our tox study looks clean and the chronic tox is underway. And we met with the FDA on the Phase I. We switched at the healthy volunteers. So that will be great because the study would be similar to the Tyvaso study we did, where we continue to escalate the dose from dose cohort 1 to cohort 3, single ascending dose. And then once we get to our MAX dose, then we'll go into multiple doses per day, showing you hopefully a tolerability over 7 days. So this is super exciting as we go forward, and that study will start in Q2, and we'll have results we expect in Q3. I'll go a little faster now as we wrap up and get to the Q&A part. Why are we excited about Afrezza and endocrine. Why is MannKind spend so much time on this opportunity. And the reality is, Al Mann, our founder built this. He built the insulin pump. He knew that we needed a faster insulin if we're going to resolve the mealtime control problem in this country. We have not seen any impact on GLPs to our success, and we don't expect that because we are focused on helping type 1s, reducing hypoglycemia, thinking about gestational diabetes and pediatrics. And these are all segments that GLPs will not impact, and so as we look at Afrezza over the long term, we have a very long-term growth trajectory. And what had happened when the drug launched is there was no KOL support. There was not a lot of published data, a lot of questions around safety, and we kind of fast forward where we are today. This is our pivotal year. This is the year for inflection in this asset. We have 2 studies that will read out, U.S. only done U.S. thought leaders and that's really important, 60 sites over 350 patients, and one of them is pediatrics. So when you think about safety, being able to demonstrate safety in the lungs will be really important. And so far, our Data Safety Monitoring Board showed and told us that there's no safety concerns. So we feel very good about the probability of achieving success in the pediatric market, which is why we pulled the trigger on the INHALE-3 trial. We will present this data upon availability and get it out there as quickly as possible and hopefully file label updates with the FDA. As you think about where we are, we grew Afrezza 31% on new prescriptions, 24% year-over-year on TRxs and look here, when you think about where we started at $5 million a year, now we did about $14 million a quarter, $12 million a quarter. We're now doing a quarter where we did a year or 5 years ago. There's nothing slowing this down. This asset should continue to compound and grow. When you look at the 26% growth in the first 9 months of last year and compare that to every previous year, that's consistent with our TRx growth. So we feel very good about the growth trajectory. And why do we continue to invest when the whole world is talking about AID system in pumps. The reason is, whether you deliver insulin via pump, a pen, a pod, it doesn't change the profile of the insulin. The insulin is the insulin, and all we do is spend billions of dollars trying to manipulate the profile to avoid the latent hypoglycemia that it causes as well as the lack of speed of onset. And so when you eat, it's an everyday challenge, 3 to 5 times a day, your sugars are skyrocketing. You could see this in an AID system, a head-to-head trial we did last year. And Afrezza hands down shows you we reduce sugars faster, and that's what you need in a mealtime control. And you do this over the 120 minutes or all day long, that gap gives you better control, less damage to your organs, less peaks to your eyes, hopefully, less heart attacks when we hear the peaks are causing this. So that caused us to do the ABC trial I just showed you [ on the ] call that was a head-to-head AID pump where it was a small study, we didn't see a big difference in outcomes whether you're on AID, AID plus Afrezza or Afrezza alone. And we did this INHALE-3 trial, which switches people about 60 will be on pump, 60 will be on MDI to once-daily degludec, basal plus Afrezza. And this trial primary endpoint will be achieved in March, we expect. And at the end of the 4 months, everybody switches over to Afrezza. So we're going to have 120 new data sets to look at against pumps, different AID systems, looking at CGM as well. This is the enrollment, again, using Dexcom G7, and we also allow people who were at goal to enroll. INHALE-3 was our pediatric trial and not much updates there other than we're waiting for the final thing. As we think about endocrine in 2024, you may or may not have heard, we did have a restructuring last week where we tightened up the organization and redeployed a new sales model going into this year. So now we have field reimbursement specialists, field trainers as well as key account managers. So the understanding over is not going to get you more success. So we had to change it up a little bit this year. We feel like we have the right leadership team to move this forward, moved all of our marketing to Danbury. And we really retooled this organization for success and we start to see that growth hopefully happen a little bit faster, we now have the capital and abilities to scale it as we go forward. So when I think about 2024, I think about momentum. Momentum is where the organization is. Last year was a major inflection year for the company. Tyvaso's success gave us more confidence to fund the R&D. And you're seeing now R&D kick in, you're seeing Afrezza kick in. You're seeing the readouts and you're seeing major milestones happen this year, whether it's the purple here in diabetes, the orange here for clofazimine or the blue for the IPF asset or in the magenta here for Tyvaso. We have multiple things happening in the first half of the year. We'll continue to fill out this grid as we get to the second half of '24. But super excited, lots of momentum. What does that mean? That means we are at the early stages of growth. This company has been around 33 years. We've been public for a long time. We've had a pretty good track record since Steve and I became CEO and CFO. We're not happy with the shareholder performance. It's 1 of the reasons we did the royalty deal to show what that value is. We are severely undervalued when you look at the future growth in front of us and whether you pick Afrezza and [indiscernible] is the opportunity, nintedanib, clofazimine, we have multiple shots on goal, including Tyvaso if they get IPF. So we're very excited about where we're going. And I want to thank everybody we have a long range of IP available into the late 2030s for most of our assets. And we couldn't be here without our employees. Our employees are critical. We're probably close to almost 450 employees this year, when I got here, we were at 120. So when you think about being recognized as a great place to work, being able to recruit people and retain people is really the critical key to our success and it's very specialized in what we do. And I just want to say thank you again to our employees for everything, and thank you for JPMorgan having us. Let's move to Q&A.

Thank you for the presentation, Mike. It's highly informative. Now we will kick off the Q&A portion of the session. So I just want to remind the audience that if you do have a question, please raise your hand, and we will deliver a mic to you. So the rest of the room can also hear your question. I'm happy to kick off with the first question. That's okay. So this is regarding the TDPI. So is the royalty sale to Sagard a strong indicator of TDPI's potential in both PNH and PH-ILD. And do you have confidence in TDPS growth trajectory despite upcoming competitive launches in the PH space?

I do. I mean, that's 1 of the reasons we had that confidence and talked a lot about how much do you derisk the debt? How much do you have confidence in your future, and that's why we only sold 1%. When we look at the growth, UT did a phenomenal job, but we're only at 4,000, 5,000 patients out of in the 50,000 U.S., plus worldwide, plus IPF. So when you think about the future, we're really at the pivotal moment where we're in the beginning, not the middle or the end. And so it's a small bet to think about IPF. That's a very hard disease but that is a huge upside, and we didn't think it was worth risking that for our shareholders.

Got you. So maybe a follow-up question. What has been the impact of your increased manufacturing facility in the second half of 2023?

Yes. I think just being able to have flexibility on switching packaging because as you know, there's a titration box and then there's a maintenance buckets. And so when you change your forecast, that takes about 8 to 12 weeks to flow through. So now you have adequate inventory. There's no longer the stress in either organization. And I know UT obviously is worried about life-saving drug, making sure you don't stock out. So being able to have confidence to continue to scale your business, invest in growth and whether coming from a naive experience, now we feel pretty good about that. So it takes a lot of stress off the organization. More importantly, it makes us more profitable, right? So the more product we make, the more money we make, let's be clear, and that's important for our employees. And the more consistent we make the product also brings efficiencies and scale. So hopefully, we'll see that as we wrap up Q4.

So as you described, you talked about United Therapeutics. Do you see future research collaboration opportunities with them?

Yes. I mean, we've talked to them on and off over the years around different opportunities. And I think as we -- the reason you don't say anything major is everything we looked at relative to where Tyvaso was going, Tyvaso was so huge that was this going to be a $200 million opportunity or $800 million. And so I think it's about finding the right opportunity and they have a right to use our technology exclusively for PAH. And so we want to continue to find that. And while there'll be new launches, these are combination treatments. These are very hard to take products. And so I think you're always going to see innovation in the disease as this one is growing as the people live longer. I think there's always opportunity, but we'll keep looking.

Got you. So moving on, we can sort of talk about the existing pipeline. So what gives you confidence in the development of the MNKD-101 as you move forward? And sort of what can you expect -- can we expect from your spend for the program between now and approval?

I think the proof-of-concept data in the in vitro models is really important. The good news about antibiotics is you have a bug it kills it or a doesn't, right? And so then you worry about resistance, then you worry about side effects and tolerability and safety. And we've worked through a lot of those issues over the last 3 years. And so I feel pretty good. We got the right dose. I feel very good we got world leaders support. The FDA is super excited about this asset. I can't tell you how collaborative they've been. Despite our setbacks, they really want this product. They want it there fast. And so we're trying to go as fast as we can, and that's really the pivotal trial. We spent a lot of time designing to feel confident that we'll get the outcome we need because it's not always predictable. And that's why when Eric, has had PRO quality life survey look positive in NTM. That's the first time it was validated 5 months ago. So we're super excited about the trial, the product and the target profile that we get, and we think it's going to have good run, and let's see the enrollment. That's going to be critical. A lot of excitement but until you see those patients enrolled, that's going to give you some signal.