MannKind Corporation (MNKD) Earnings Call Transcript & Summary

Good morning, and welcome to the MannKind Corporation's call to discuss its acquisition of scPharmaceuticals. The call will be available for playback on the MannKind Corporation website shortly after the conclusion of this call and will be available for approximately 90 days. During the course of this call, management may make certain forward-looking statements regarding future events and the company's future performance, including statements about the proposed acquisition of scPharmaceuticals, the expected timing thereof, and the expected benefits therefrom, MannKind's and scPharmaceuticals products and product candidates, including the ongoing and planned clinical trials, potential benefits and market opportunity thereof, and other statements that are not historical facts. These forward-looking statements reflect MannKind's current perspective on existing trends and information. Any such forward-looking statements do not guarantee future performance and involve risks and uncertainties including those noted in the Risk Factors section of MannKind's and scPharmaceuticals' latest SEC filings. Actual results may differ materially from those projected in these forward-looking statements. For the benefit of those listening to the replay, this call is being held and recorded on August 25, 2025. Since then, MannKind and scPharmaceuticals may have made additional announcements related to the topics discussed. Please reference MannKind's and scPharmaceuticals' most recent press releases and current filings with the SEC. MannKind and scPharmaceuticals decline any obligation to update these forward-looking statements except as required by applicable securities laws. Please also refer to Slide 2 of our investor presentation, which contains important information about the proposed tender offer and where you can find more information. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Chris Prentiss. I'd now like to turn the conference over to Mr. Castagna. Please go ahead, sir.

Thank you, operator. Good morning, everyone, and thank you for joining us today. We're excited to share a transformative milestone in MannKind's journey, our agreement to acquire scPharmaceuticals. At MannKind, our mission is simple, yet powerful to give people control their health and the freedom to live life. This acquisition is a direct extension of that mission. Strategically, this will expand our footprint in the cardiorenal medicine, a natural complement to our existing presence in diabetes. It will accelerate our growth, strengthen our commercial portfolio and reinforce our long-term strategy to seek opportunities that build on our core strengths, extend our reach into adjacent therapeutic areas, and reinforce our commitment to delivering innovative patient-centric solutions for those living with significant unmet medical needs. Our strategy is anchored in 5 key pillars. The first two, Afrezza and Tyvaso DPI, our revenue-generating products today, and now FUROSCIX will be part of our key pillars. FUROSCIX will add a high-growth asset to MannKind as we look to build upon scPharmaceuticals' late 2024 sales force expansion, and its Q2 launch in CKD. It will also strengthen our infrastructure by integrating the proven commercial model, cardiovascular expertise and experienced team. Looking ahead, our clinical stage pipeline forms the final two pillars, Inhaled Clofazimine now in Phase III for NTM lung disease, and nintedanib DPI entering Phase II for IPF later this year. Together, these 5 pillars will offer a balanced mix of near, mid- and long-term growth, positioning MannKind to deliver sustained value for our employees and stockholders. I would like to provide a brief overview of the proposed transaction. Under the terms of the agreement, MannKind will commence a tender offer to acquire all outstanding shares of scPharmaceuticals' common stock at a price of $5.35 per share in cash, plus one non-tradable contingent value rate worth up to $1 per CVR, payable upon achieving certain regulatory and net sales milestones. Additionally, at closing, MannKind will repay the perceptive debt and revenue share obligations currently estimated to be $81 million assuming a 9/30 closing. To support the acquisition and our broader strategic objectives, we've amended our recently announced financing agreement with Blackstone, securing $175 million in additional funding. The deal is expected to close in Q4 2025, subject to regulatory approvals and the satisfaction of customary conditions. Now we would like to turn your attention to why we believe this acquisition unlocks meaningful synergies and positions us for sustained growth across cardiometabolic and chronic care markets. The acquisition of scPharmaceuticals will diversify our revenue base and growth. With Afrezza, V-Go and FUROSCIX, we will have 3 marketed products generating revenue. Combined with Tyvaso DPI related revenues, our annualized run rate exceeds $370 million based on Q2 '25 results. This positions us to accelerate double-digit annual revenue growth and expand our market reach. Next, FUROSCIX is gaining significant traction. The sales force expansion in late '24, the ongoing launch in the nephrology, and the accelerating growth in integrated delivery networks have laid the groundwork for continued growth. In addition, the anticipated ReadyFlow Autoinjector approval will not only enhance FUROSCIX market potential but also reduce COGS. Finally, MannKind and scPharmaceuticals share a strong cultural and strategic alignment, both committed to delivering patient-centric therapies for those living with significant unmet medical needs. There's strong synergy across our commercial products with a significant percentage of CHF and CKD patients, with fluid overload also living with diabetes. We feel that this provides a meaningful opportunity to unlock significant growth for the combined portfolio. By integrating scPharmaceuticals' drug device combination expertise, and its Boston-based team, we will strengthen our therapeutic presence in cardiometabolic care. Now I'd like to discuss the significant unmet need that exists for patients living with CHF and CKD. Fluid overload is a hallmark of CHF and CKD. While oral diabetics are commonly used in stable patients, their effectiveness becomes highly variable when fluid retention worsens. Nearly 60% of heart failure missions are directly linked to this issue, yet the current treatment paradigm often fall short with 25% to 30% of patients readmitted to the hospitals in 30 days. FUROSCIX offers a way to interrupt this cycle, helping patients keep their symptoms in check, and potentially avoid unnecessary hospital emissions. Now let's talk about FUROSCIX and why we're so excited about this product. The burden of fluid overload is an immense and FUROSCIX addresses a critical gap in care by helping to break the cycle of hospital missions and readmissions. FUROSCIX is a wearable at-home treatment that delivers furosemide, the gold standard hospital diuretic delivered subcutaneously via an on-body infuser, offering IV-like effectiveness without the need for hospitalization. It's pH-neutral, well tolerated, and has near complete bioavailability, meaning patients receive consistent and reliable absorption, a key problem with oral diuretics and patients with worsening fluid overload. It's a great example of how MannKind is delivering on our mission to give people control their health and the freedom to live life. One of the most exciting aspects of this acquisition is scPharmaceuticals' strategic approach to life cycle management. The development of the ReadyFlow Autoinjector reflects a clear focus on patient expansion through formulation and device innovation. By reducing treatment time to less than 10 seconds, the ReadyFlow Autoinjector is designed to dramatically improve patient convenience potentially enabling broader adoption across CHF and CKD populations, if approved. From our perspective, this kind of forward-thinking product strategy is exactly what we've been looking for. The FUROSCIX ReadyFlow Autoinjector aligns with our commitment to optimize drug delivery and patient-centric innovation. The strategic importance of this launch is reflected in our deal structure. We've offered up to $0.75 of the CVR to the Autoinjector's FDA approval, a substantial portion of the total CVR value. With an sNDA submission target of Q3, '25, will be focused on supporting a successful launch as early as Q3 '26, if approved. FUROSCIX continues to deliver strong performance with $28 million in revenue in the first half of 2025 representing 96% growth year-over-year. Sales to integrated delivery networks continue to increase, reflecting growing provider confidence and increasing integration into various care pathways. This level of momentum gives us confidence in FUROSCIX long-term growth trajectory, that's why we've tied the remaining CVR of up to $0.25 to achieving $120 million in sales by the end of 2026. We believe MannKind is uniquely positioned to scale FUROSCIX and unlock its full market potential in the future. First, we bring strong financial foundation and commercial infrastructure to support continued growth in CHF and accelerate the CKD launch. Second, our deep expertise in drug device combination products, from development, through regulatory approval and commercialization positions us successfully to launch ReadyFlow Autoinjector, if approved. Third, there's natural synergy with our endocrinology footprint. The significant percentage of patients with CHF and CKD also live with diabetes, allows us to leverage existing relationships, sales channels and care models to deliver adoption. Fourth, integrating FUROSCIX into our broader portfolio will enhance scale and efficiency, shared infrastructure across sales and marketing, distribution and payer engagement will reduce fixed cost and improve agility. Finally, this acquisition is expected to strengthen our long-term sustainability, diversify our revenue base and increased strategic optionality, making MannKind more attractive to employees, partners, investors and a broader health care ecosystem. Lastly, I want to highlight our stairway to building value. Tyvaso DPI continues to be the foundation in the near term providing non-dilutive funding and anchor in our inhaled therapeutics platform. Looking ahead, our newly re-branded cardiometabol business, formerly the endocrinology franchise represent a major growth engine. With Afrezza, V-Go and FUROSCIX we will expand our reach across diabetes, heart failure and chronic kidney disease. FUROSCIX is expected to add immediate momentum with multiple near-term catalysts. First, rapid revenue growth and growing hospital system adoption. Second, the recent CKD approval and expanded share of voice. And third, the upcoming ReadyFlow Autoinjector sNDA submission. Beyond cardiometabolic, we're advancing our orphan lung franchise with Inhaled Clofazimine and nintedanib DPI. Together, these programs are expected to form a scalable, synergistic portfolio that will position MannKind for sustained growth and long-term value creation. As we close today, I want to reiterate that we're thrilled to soon welcome the scPharmaceuticals team to MannKind. This acquisition will strengthen our portfolio, expand our reach, and enhance our ability to deliver value to patients, employees and shareholders. Thank you for listening. I'll now turn the call back over to the operator to open the line for questions.

[Operator Instructions] So your first question comes from Brandon Folkes from H.C. Wainwright.

Congratulations on the acquisition. Maybe just 2 from me. First up, if I look at scPharma's SG&A line, any color in terms of sort of on that spend, what's marketing versus -- sales and marketing versus overhead? Just any color on potential cost synergies and when you expect the deal could be accretive. And then secondly, maybe can you just talk about scPharma's manufacturing footprint, what you intend to do with that and how that fits into Danbury and your overall capacity? That's it for me.

Can you hear me, okay?

I can.

Great. So on SG&A, I think it's too soon to comment on that breakout and how we're thinking about it. We expect the deal obviously to close in Q4. So that will be an update as we get closer to the end of the year. In terms of accretiveness, we do expect this to be accretive as we look at the -- late next year when we think about a year out from the close of the transaction. On the manufacturing footprint, obviously, as we've gotten to know the Seacoast team. A lot of work is outsourced justifiably so where they are. We will look to see what we can do in Danbury in terms of -- is there different types of testing, different things we could do there, especially as it gets ready for the subcu launch. Obviously, we have a large footprint as you have seen. So it's not built as a biologics manufacturing, or fill finish for sterile injectables, but that's stuff that can be modified if appropriate and make sense. But otherwise, so far, we looked at, as we look at the growth opportunity, they have enough manufacturing capacity to continue to sustain the growth that we look at in the future.

Our next question comes from Olivia Brayer from Cantor Fitzgerald.

Can you just maybe talk a little bit more about why you decided to move into cardiorenal and where some of the biggest synergies are between sc and your existing franchise? Obviously, both from a therapeutic perspective, but also just considering that this is an Autoinjector device versus your typical inhaler approach?

Olivia, I think as you look at us, we've always been, I'll say, platform agnostic, meaning like we bought Clofazimine, that's one nebulizer, a lot of our history is in respiratory. But we were looking for something that would diversify our revenue stream that kind of culturally fit with the company and had some adjacency or overlap with -- in the areas we're looking to be, whether it's lung or endocrine. And this fit a lot of those check boxes that we're looking at. In terms of the overlap, I think when you look at the patients living with heart failure and CKD, that are having fluid overload challenges, a lot of them do live with diabetes, and there is a large overlap. These are probably the sickest patients. They're probably on insulin. And especially if we look at like the nephrology launch, there's a large synergy in terms of where those centers are located, where our diabetes centers are located. So we believe scPharmaceuticals has done an amazing job to get to where they are today. But we're bringing more sales efforts, and more marketing will help grow this product faster, especially as the subcu can potentially come to market next year. So that was a lot of the work there. And I also think the platform, when you think about that part, we actually own V-Gos, as you know. And so having, I'll say, an on-body injector platform, we have some experience with that. And I think just there's not a lot of people that -- there's only really 3 meaningful platforms out there and the on-body injector experience. As a company, we have a lot of deeper experience in drug device combinations as well as injectables. So we feel pretty confident in terms of being able to integrate and work together and make sure we fulfill manufacturing challenges and opportunities that come up as well as drug device challenges. These are things that the company has dealt with over 20 years.

Our next question comes from Yun Zhong from Wedbush. [Operator Instructions]

My question is on the modification of the loan agreement with BlackRock (sic) [ Blackstone ] [Technical Difficulty] Is that additional $175 million just for this acquisition immediately accessible? And is that on top of the original $500 million that you announced back in early this month? And how does that -- or would there be any impact on the original agreement in terms of the structured timeline, please?

Thank you. It sounds like a great question for Chris.

So we amended the Blackstone deal that we did just a few weeks ago. So in summary, we have now borrowed $325 million that will be effective with the close of the transaction. And then we have $50 million remaining, which is committed but unfunded from Blackstone. So that's the summary of where we ended up after the amendment.

And maybe a follow-up question on the sales force. I think how do you expect to coordinate between the existing sales force from sc and your existing sales force? And would there be any modifications in terms of the targeting the calling, for example, et cetera, please?

I think that's a great question, and it's probably one we'll hold until the deal closes to speculate what the future footprint looks like, and we'll give more updates as we get closer to that date.

[Operator Instructions] Our next question comes from Brandon Folkes from H.C. Wainwright.

Mike, I just want to talk -- sort of jump ahead a little bit. And can you just talk about sort of how you see MannKind longer term, just strategically, right? So your pipeline obviously very often drug focused. How does this acquisition change your thinking on perhaps sort of building an orphan lung commercial organization, versus sort of continuing to be acquisitive between now and the time those products come to market? And then maybe layer into that. Can you just talk about sort of the focus over the next few years. It looks like the cadence of launches between Afrezza peds, Autoinjector is sort of well laid out. But can you just talk about sort of the company focus, the reason to do it now ahead of the Afrezza peds potential launch as well?

Great question, Brandon. I think when you look out, so much -- thanks to United Therapeutics, Tyvaso DPI has been phenomenally successful. And so I think when you get to our quarterly earnings revenue and guidance here, it's really hard for us to really think about how do you drive faster growth? What can you control with just Afrezza versus the pipeline coming? And also the investment communities' days -- or momentum investors and are looking for milestones that are happening in certain periods of time. So I think when we look out over the next 2, 3 years, first, there when you think about the -- I'll say, orphan business and this business, what they have in common, I think, is important. Number one, drug device combinations is kind of the heartbeat of the company when you look at that. Number two, the advocacy that has to occur in these various disease states is critical. Number three, the distribution model we liked at scPharmaceuticals, it's a closed model. As you think about Clofazimine coming soon, that will be a closed model as well. As we look at global expansion opportunities in Japan and Europe with Afrezza and Clofazimine, these also become another product in our feather, in our [ armamentarium ] here to bring those markets as well. And so there's a lot of commonalities around what we are trying to build from a capability as a company and how these all fit together. If this was a low price point product that's going to require 500 reps, that's not what we're interested in. It's a very specialized product to help patients at a very important urgent need around hospitalizations, producing reemissions, and we're running hospitalization. And when you look back in time, there are several great examples of innovations around the space. One of which we deal with every day is insulin pumps, right? It's about a $5 billion market, delivering a 100-year-old product to really help patients manage their insulin better. We see the same thing in Neulasta when I was at Amgen in terms of preventing hospitalizations there with the drug-device combo. And so we do look at this as a large opportunity that really solves an unmet need. And it's really a difficult product to get to market. There's very few products that get to market that allow you to have this opportunity and the stage of launch that they're in. We looked at this as a great bolt-on that kind of fit our long-term strategic view within the endocrine space, and the metabolic space, as well as the orphan lung as we look at the company together.

Our next question comes from Tiago Fauth from Wells Fargo.

I'm just trying to understand here the revenue opportunity, right? Like the TAM is theoretically very large. FUROSCIX exited Q2 at an annualized rate of about 60 -- mid-60s and peak sales consensus is much greater than that. So what are the key drivers going forward? Is it further penetration and expansion in CHF. Is it mostly about CKD? Anything you can kind of give us at this point in terms of what can we expect from a revenue trajectory perspective?

Tiago, thank you for the question. I think it's too soon to give guidance or speculate. I think we have to close the deal. But I think in general, what I would say is we believe continued efforts of what scPharmaceuticals has been building around sales force expansion, bigger marketing opportunities, raising awareness. We think they're at that value inflection when you look for adoption of our product, the number of writers you're getting, the depth of prescribing you're getting, it takes a little bit of time. And I think they're right on the cusp of that opportunity to scale the business faster and keep going. And that's kind of what we looked at and saw in this opportunity. Yes, it's a large market, but it doesn't take a lot. As you know, there's not a lot of competition to do what this product does. And so we feel that unique area is going to be well served by scPharmaceuticals.

That was your last question team. I'd now like to turn the call over to Mr. Castagna for closing remarks.

Thank you, everyone. This is a great milestone in the history of mankind. Hopefully, our shareholders, our employees will start to see the opportunities that come together over the coming quarters and months. Look forward to working with you all and seeing you at the upcoming conferences. Thank you.