MannKind Corporation (MNKD) Earnings Call Transcript & Summary

Great. Thank you all for joining us today, and welcome to the Morgan Stanley Healthcare Conference. Just a quick note on disclosures. For important disclosures, please see the Morgan Stanley research disclosure website. Or if you have any questions, please reach out to your Morgan Stanley sales representative. So welcome to the group here, and thank you for attending the fireside for MannKind. My name is Ross Cohen. I'm an Executive Director from the Morgan Stanley Healthcare Investment Banking team, and I'm joined here by Michael Castagna, the company's CEO. Welcome, Mike.

Thank you. Thanks for having us.

Of course. So maybe just for those of us in the crowd who aren't as familiar with the MannKind story, if you could spend a few minutes just kind of walking through the history of the company, and it's been a very busy last couple of months for you all. It would be great to get the update.

If you are paying attention to last week, it's a very different company in the next month as it was a month ago. For those of who don't know MannKind, we've been around 34 years this year this year from the original technology of FDKP and what we created, mostly known for inhalation therapeutics and diabetes in particular. I think what you've seen over the last 7, 8 years is really diversification away from diabetes and thinking about purposely where we best apply our inhalation technology to make the biggest difference and impact we can for shareholders, patients and employees. And I think in that respect, you've seen our late-stage development programs go into Phase III with clofazimine. You've seen nintedanib is now moving into Phase II. And obviously, Tyvaso has done great for us in terms of United Therapeutics partnership. And then you pair that up with kind of Afrezza is in the background, been moving along the last couple of years and really getting that ready for a relaunch next year with pediatrics and the label change coming in the fall. So all that's been moving. And then you just saw the last week our first major acquisition, I'll call it. We bought smaller things along the way, but nothing as big as this. And that's really been -- it was a transformative decision as a leadership team to kind of go out and think about how do we diversify our company, how do we grow our company faster. And we also announced another partnership with United Therapeutics as well. So a lot of things happening in the last week, but all really exciting things and keeping us up at night.

Yes. These are good problems. And then so you had the recent release of the T72 data. Maybe just walk us through some of the key growth drivers we could expect over the next few months or the rest of the year and then going into 2026?

I think as we get through just wrapping up '25, we have an October label change on Afrezza, which should solve one of the biggest problems we've had with that product around dosing. And I think getting that clear for the scale-up will be important. The Peds file should be accepted in the next 2, 3 weeks. And so I think that's another one that people wait to derisk that a little bit. Clofazimine should hit its 100th evaluable patient enrolled in the next 60 to 90 days. So those three things will happen, and then we got SC Pharma closing hopefully in Q4. So those are four major events for this year. They have to file subcu auto-injector, which we think is important as well, and that wraps up this year. And then we get into next year, and there's a whole another cascade of catalyst as we think about pediatric approval in May, auto-injector, if all goes well approval with SC Pharma will be in July. We'll have the interim readout midyear for clofazimine in terms of that's the right-sized trial, but we have to go up a little bit bigger. Nintedanib will be paying attention to the enrollment in the Phase II. And then obviously, how Tyvaso DPI going towards IPF and how that FDA discussion is going with UT and that filing. So that will be another big thing happening in the background. So a lot of good catalysts over the next 18 months. As we talked about the management team, 18 month from now, the company is going to be very different than it is even yesterday and a very, very exciting time for us.

No, that's super exciting. So -- and that leads to the recent deal with SC Pharma. Can you kind of walk through some of the rationale of why you thought about doing that deal and then ultimately, what the plan is for integrating?

Yes. I think we've been looking for another asset to purchase over the last couple of years. And sometimes we bid, sometimes we didn't overbid to just walk away. And ideally, we found something in the orphan lung space to complement where we're going in the future, but there's just not a lot there that's meaningful or worth the regulatory risk. Then we pivoted to something that was derisked as we paid off our debt in December. We really freed up our balance sheet to look for a bolt-on acquisition in a more serious way. And so we really engaged a few ideas this year, and this one came up. We look at this and said some things we look at and we say they're great and the company management team is doing great. So the more value we're going to bring. And that's kind of hard to justify those deals because you're just arguing over cash flows. This particular acquisition, we looked at and said the team has done a great job. They're in the early stages of launch, and this has a lot more legs to grow a lot faster. It wasn't obvious in the beginning that there was a nice mutual fit, but I think there's a great fit culturally between the companies and what we stand for. I think the overlap in terms of diabetes, which we don't think about, but in heart failure, probably 40% to 60% of those heart failure patients were fully over with actually on insulin and probably the same in chronic kidney disease, a large percent of them have diabetes and probably are at the insulin stage. So you start to think about how do you optimize the footprint, how do you maximize the investments in these two areas. You really do have a lot of endocrine and metabolic overlap between these two. And now when you think about these two sales forces of our diabetes endocrine side and their heart failure and CKD, there's other things that may come on our lap in kidney disease or cardiovascular disease or even endocrine now that you have all these people, how do you best maximize the value and upside from where we are today. So we have a really nice footprint going into next year. We're excited about SC Pharma. We love the work they're doing. And I think as we close out Q3, Q4 with them under our books, we'll start to see. I think shareholders start to see like this has really good momentum, really good depth of prescribing, repeat prescribing and how does that continue to drive future value for shareholders will be important.

Yes. No, that's great. Makes a ton of sense. And so -- and then how did you kind of view the ReadyFlow in the broader sort of the deal terms for the transaction?

Yes. I think in any of these deals, there's always a gap in value and you're trying to figure out to best close that gap and if management is that confident, you want to share that risk with them. And so we built our deal forecast, and we were comfortable with that number. And the upside to the model are going to be an auto-injector, not just because of the -- has a nice uptake as we talk to doctors, they really think that will be much easier to overcome injections from their staff around the on-body infuser versus an auto-injector. But more importantly, the COGS. So the COGS on the on-body infuser are quite expensive, and that eats up a lot of the margin. And so if you can really get to an auto-injector, it frees up the margin, whether you redeploy that capital to grow the brand faster or contract [indiscernible]. So we'll discuss with the management team with the best -- next best opportunity to grow faster. So that's what's so important, I think, around the auto-injector to see you go there. And then the last one is the revenue stream. So when you think about management is always much more about the [indiscernible] may be great. And then you got disruption, you got integration. And so how do you just have a reasonable forecast that's acceptable. And MannKind doesn't give guidance. And so hopefully, they can see roughly what we see next year is $110 million, $120 million run rate plus Afrezza plus Tyvaso plus manufacturing the pipeline. You got a lot of nice things for MannKind happening in '26.

Yes. Yes. That makes a ton of sense. And so -- and you briefly touched on it earlier, but as you think about the commercial rollout for the SC Pharma product, where do you feel like you can add value based on what prior management did? They had some capital constraints, for example, as an organization. And so how do you think you can expedite and potentially create more value with that product?

So as we double-click down, we did some of our own spot calls, obviously, for diligence. And we clearly see the management team has done a really nice job on the perception of the product, where the product fits and the unmet need that they're solving. And that to me is clear black and white. Then you get into some who just don't even know about the product, which is a lot of people because they had 40 FT equivalents on cardiovascular and 40 FTE equivalents on CKD. In CKD or cardiovascular, that is a drip in the bucket of number of share of voice that you need. So I think the first thing is how do you increase share of voice and marketing support within each of those respective call points. I don't want to get into what they do, but I think there's a lot more reach and frequency, a lot more top of mind that can happen. Then you get into the conferences and how you raise awareness at the conferences and then you get into the health systems. And they have 5 key account managers, which are doing a great job, and you've really seen that growth. But the reality is you might need more, right? We see the discharge protocol, the heart failure readmission rates. That hospital protocol administration is critical in my mind. Once you're in that protocol and you can help reduce those readmissions, that's huge for the health systems. And then you see next year, what came out in the middle of the deal flow was this Medicare CMS guidance on taking cuts in '27 on personal physician payments, right? So if you have 20 heart failure patients, you may take a 9% pay decrease or a 9% increase, depending on how your outcomes are now still draft guidance. But I think having an 18% swing on someone's pay really drives good behaviors usually. So I think as we look at this, I think the product next year has an opportunity to fit into the paradigm shift to heart failure and what's kind of happening even faster.

Yes. And then maybe shifting focus to Tyvaso and IPF. With positive TETON-2 top line results with United Therapeutics and they're planning a bridging study, the royalty stream is obviously expected to grow there materially. Can you share what these developments, along with the anticipated TETON-1 data in the first half of '26 could mean for the broader outlook?

Yes. I think TETON 1 and 2 are phenomenal investments that UT is making to place a huge bet in IPF. It's not just that, but it's the manufacturing plant that they're building in North Carolina, the expansion that they put in Danbury, Connecticut with our plant. They placed a $1 billion bet here on IPF. And so when you think about and similar questions I get, are they really going to go after UTI? Of course, why would they spend all this money on manufacturing. So we feel very confident UT will work as quickly as they physically can to get to the FDA to get to the bridging studies to get that to patients as fast as humanly possible. Personally, I think the TETON 2 results, we, as a company, because of the financial upside to those data points, we don't want to depend on those for our survival or our BD decisions or clinical investments because it didn't pan out, then you got to pull back everything. So we kind of fully run our company without that in the plan. And now that you have that, I mean, this can be meaningful contribution to MannKind and our shareholders and then the patients that they're going to serve is going to be huge. And I think the results of TETON 2 surprised many on Wall Street in a good way. No one expected a lot of discussion. It's funny we have debate at dinner last night. A lot of discussion is treprostinil antifibrotic or not. And a lot of pulmonologists who works for us who says, of course, it is high level discussion point. But I can tell you how many other doctors don't understand it and it is a discussion point. So UT, I don't think ever wavered. I think my pulmonologist never wavered. And so it's just kind of funny how you get this result and everyone seems surprised, but I think those that really believe in treprostinil and how it works did weren't surprised. So it's nice to see a big win for UT and we're their biggest cheers.

No, it's nice to see a big win for you and UT and also the IPF patient community, to be quite honest, given what's been going on there last...

Failure is horrible.

Yes. Stuff. Great to see. And then maybe shifting focus to your internal IPF program and then inhaled and so maybe can you just walk us through the INFLow Phase II trial design and including some of the key endpoints and the expected time line for enrollment and top line data?

Yes. So we're giving guidance right now. We expect the first half of '27 for top line data. That depends obviously on the enrollment. So the trial kicks off. This year, we've already got the CRO. We're doing sites. We're hoping to have the first patient in, I'll call it, late this year, early next year, just depending on how quickly we get through IRBs. And this will be about a 220-person study, 4 arms. So 2 arms will be active, 2 arms will be placebo because we're testing a BID and a TID regimen, you have twice as much placebo because they're blinded. So that's -- and those patients after 12 weeks of dosing, we will be able to switch to open enrollment. And so we'll have people going on hopefully 6 to 9 months of data that we can look at longer-term effect. But in the short term, we'll have about 150 on active nintedanib. And we think that is enough number in the shortest amount of time you could do ethically to do a placebo-controlled trial. That was one of the big challenges is the FDA really wants a placebo trial and they went on top of background therapy, which we don't think is feasible. So outside the U.S., you can actually probably get IRBs to approve a 12-week treatment while they're waiting for the standard of care to come in.

Yes. No, that makes sense.

And then we tested -- we're testing 2 doses. So basically a 6 milligram a day exposure and 8-milligram a day exposure. And some people say, why are you doing TID? It's -- we just don't know whether nintedanib, it's a receptor binding issue, it's the frequency of hitting, it's an AUC or Cmax. So we want to kind of -- we feel like the dose is in the right range, the low and the high should work. But those hitting the receptor somehow differently have a different effect size, and that's what we're looking at. But we don't -- we expect a combined analysis to show some early read of data at 12 weeks.

And I guess with those specific doses, I guess, what gives you the confidence that those are the right ones to push for?

Yes. So if you back up a second on OFEV, it's got severe GI side effects, right? 50% of people drop out. And even those who take it, there on tons of doses of Imodium, they just can't get through the diagnose cases. So I'd rather not take anything than take what's approved. And that drug does $4 billion a year despite those setbacks. It has about 5% bioavailability. So if you were to look at, say, what's available that's actually carrying any type of therapeutic effect size and then you calculate what you think you need to get into the lung, I think those are the bets that we're taking that we're treating a lung disease that we're getting to a specific dose within the lung and then we ran animal models to kind of calculate that and triangulate our dose calculation. And the good news is whether it's us or a competitor, they both got to the same ballpark independently. And I do think there's a minimum dose you need to hit for an attendant to work. And then above that, you might get more efficacy. And I would say we're both probably in the ballpark at the minimum. And the question is, can you get higher exposure or higher impact on these higher doses, and we don't know yet. So that will be part of it. And the last thing I'll say is whether it's Avalyn or with their pirfenidone inhalation data or even TETON 2 results, you're showing that treating the lung directly is creating a nice effect size. And I would say a lot of people wonder whether you've given OFEV inhalation versus OFEV orally, will you still have that effect size. And I would say now we have a proof of concept of two that have very nice outcomes. And so I feel even more excited today, if you ask me where the risk was 6 months ago, it was did we get the right dose and could the lung target have an effect size. And I would say TETON 2 just demonstrated success in a good way for Tyvaso, but I believe this product well. And then Avalyn, we did not present our data publicly, but the Avalyn data gave us more confidence that we got the right dose.

Yes. And then maybe just pulling a little bit more on that point around OFEV. Naturally, it's had a lot of GI tox issues historically. And so what gives you the confidence in the inhaled approach of OFEV effectively to be better positioned than the adherence challenge had to date?

So we did a Phase I study, and I can't exact number of patients in there, but we went to small, medium high dose, we'll call it. And then we did repeat dosing. We saw no diarrhea in that trial. We saw no dropouts for cough for tolerability. So people do get cough for the dry powder, but that's about the cough you get. So honestly, most IPF patients do that 20 times a minute. And so 21 is not going to hurt them. I think they'd rather have a tolerable drug, no diarrhea, no Imodium 4 times a day than have an extra for cough. And so I don't think we have major cough issues, but the data will show that, hopefully.

Yes. And I guess, would you position it as replacement therapy, add-on therapy, combination?

Our core belief is this will be a combination evolution. So as you think about the future state, we're excited as we come back to '27 to do a larger Phase III. You'll see Tyvaso to be approved. You'll see hopefully the new BI drug approved, you'll have tend on pirfenidone. So you'll have 4 drugs out there and 3 of them we'll be able to use on top of. And so I think a combination treatment study that we'll have to do along with naive patients will be a good study design, and we should be able to roll that pretty quickly by then.

Yes. And then as you think about the broader competitive landscape, when you compare 201 to other inhaled IPF candidates, for example, even Tyvaso DPI and those currently in clinical development, how do you think about that?

We'll be at ERS looking at the Tyvaso nebulizer data, and I think we'll see what does the subanalysis look like? I don't know any more than the public knows. And so trying to see -- the good news about UT is they got 2 large trials, roughly 600 patients each arm in each trial. And you're going to see the combined analysis is going to have a lot of power, right? So what does it look like on nintedanib? What does it look like on pirfenidone? What does it look like in naive patients? That maybe not on treatment. And I think that will give us some good information that will hopefully give us some confidence. But my bet is hopefully Tyvaso and pirfenidone combination looks good.

Yes. And then how are you approaching the regulatory strategy around it, particularly in light of the ex U.S. piece, too?

So I think we met with the FDA in April, which was right after all the changes they were having. They really -- if you think about MannKind as a company, Tyvaso DPI went to the cardio division. Afrezza has been in the metabolic division and our pipeline is square in the orphan lung division. And the lung division has only had to consult on our development programs in terms of Afrezza. They never had to actually evaluate our technology in wholesale. And so I think some of the questions they didn't quite understand was how the technology binds the APIs, what it does and it goes along, where it goes. We spent a lot of time just explaining that to them. And I did that because whether it's Tyvaso DPI coming, it's nintedanib coming, it's clofazimine oral coming, pirfenidone coming, we're going to have 3 drugs on the platform coming within the next 18 months. And so that feedback that they wanted was -- I may not agree with people with IPF are dying and they die at a higher rate than HIV patients today. And I feel like we have to have a higher sense of urgency around getting innovation to these patients because they don't want to wait for the next innovation. And we got a 12-month trial and it takes 2 years to enroll and do it, that means 40,000 people died, right? And I think we can do a better job as society helping patients have access to treatment earlier. And so rather than argue with FDA for a year, which we could have done and got to a better spot, we just pivoted the trial design to ex U.S. and know what they want, we're incorporating that. We'll just come back in Phase III. So I feel fully confident, we'll achieve what they want, placebo, first dose tolerability, those things. And then that will be done, that will answer their questions, and we should be wide open to go to Phase III with them.

Yes. No, makes a ton of sense. And then maybe shifting gears to 101 and NTM. So enrollment for the ICON -1 Phase III trial is progressing ahead of schedule. Can you walk us through some of the expectations for the 2026 interim analysis?

Yes. I mean clofazimine is NTM, unfortunately or fortunately, there's nothing in front of us and there's nothing behind us. So we're -- and ARIKAYCE has done a nice job paving the way. It's a great product. It's doing very well. They got a naive or early treatment trial, they're enrolling and finishing up. So for us, we'll have the refractory population with the co-primary endpoint interim analysis next year for the U.S. and then the ex U.S. market only needs sputum. And so we'll have those answers next year. And if all goes well, we should hopefully be wrapping up 101 at the end of next year, early '27 for file. The data could tell you need 230 or 300 patients. And if that's the case, we'll hopefully keep enrolling, but maybe need another 3 to 5 months, we'll see. But I don't think it's like years. I think we're talking a quarter or 2. And I think that's in the preview of society that say this is real and it's coming. And so far, we're on track for early Q4 to hit the 100 evaluable patient enrolled. And we are just finishing up the animal studies for the dry powder we developed for that product as well. And the tolerability seems to be there. So I think when you look at ARIKAYCE, there's a lot of dropouts and a lot of tolerability issues. We are not seeing that so far in the first 100 or so people have come into the trial. So that's great. People are staying on. They're rolling over to the extension phase. They're rolling over to second dosing. We're just not seeing major dropouts, which is great.

Yes. Good to hear. And then as you -- on the ARIKAYCE point, right, and how do you -- as you compare the Phase III ICON-1 study design to the CONVERT and ARISE studies on their part, are there differences in the endpoints, patient selection, dosing?

I think when you study drugs at different times, you always have different patient characteristics. We've been very conscious of that, meaning how sick were the ARISE patients -- how sick were their patients in their original trials versus the latest trial. And even in our trial, we started looking like Japan took off on enrollment and you start looking at how many people had exposure to ARIKAYCE, how much of a risk is that creating? Do we cap that? Do we not? We wind up capping the number of cavities in the holes that people have in their lungs because we think someone has 4 centimeters is not going to respond to anything. So I think it's just not rig in the trial. It's just nothing is going to work for that population probably. And so how do you make sure the effect size is there that you're looking for and how do you make sure you're helping the population that can benefit the most I think that the baseline characteristics are probably better than AM2, but slightly -- these patients are a little bit sicker than you probably saw in the original ARIKAYCE trial.

Yes. And then maybe around the commercial profile, I guess, how do you envision positioning 101 against ARIKAYCE?

So I think the research would indicate that it's the only treatment option doctors have today, so they use it. Patients would rather try ARIKAYCE and go to a placebo-controlled trial. So I think our enrollment would have been -- we argued for years about not having a placebo in this population. The FDA mandated it. So we finally did it. But I would tell you the #1 objection we have is someone doesn't enroll in a placebo trial and not get active drug when they think their life is limited. So that's slowed down enrollment a little bit. But despite that, we're still ahead. But in terms of us versus ARIKAYCE, I think we got to make sure we hit the sputum and we benchmarked the ARIKAYCE efficacy at 20% delta from placebo. So placebo dose 10, which is roughly our estimate, and we do 30, we feel like that's an approvable product. We will have the PRO that ARIKAYCE used in the early treatment phase trial. That data has never been generated in a late-phase treatment refractory population. So that will be a difference. We'll have that data. We'll see what it looks like, and that will be there. And then you get into dosing. So today, a patient has to take ARIKAYCE every day for 6 months. And then if it works, congratulations, you have one more year of treatment. In our case, you have 28 days where we load up the lung with clofazimine. It's got a 70-day half-life and then you stop taking it for 56 days. We have two treatment cycles every 6 months. And then if you're successful, then you'll have 4 more. So it's really about minimizing the patient burden, hopefully maximizing the efficacy and tolerability. And I think those things alone are going to differentiate the product pretty well.

Yes. Yes. No, that makes sense. And then how do treatment paradigms differ between, I guess, the U.S. and Japan for NTM specifically? And how does that affect the strategy?

I don't think they differ dramatically. ARIKAYCE had a very strong start in Japan. It was just later than the U.S. But I think when you look at people coming into our trial, there's probably an equal number roughly that got exposed ARIKAYCE in Japan as the U.S. when you look at roughly X percent had ARIKAYCE. So I think ARIKAYCE had a nice uptake in Japan where ARIKAYCE in the U.S. with COVID launched a little bit slower, but have done better over time. So I don't think we'll see a big difference there. I think the backbone of treatment used in the refractory population is very similar. So we see the patient populations being pretty comparable. Maybe some of the patients in Japan came in a little bit thicker because they didn't have as many options as long. But I think that will even out as the trial progresses.

And then maybe just changing gears back to Afrezza. So Afrezza achieved another quarter of really strong script growth in the second quarter. And with the decision on the upcoming label update, how transformative could this be for adoption in both the adult and pediatric populations?

I wouldn't expect any major inflections in the rest of this year because we're not investing enough to kind of cause that to be realistic here. But I think the label change allows us to -- we have a new marketing campaign ready to go. We'll have new sales materials ready to go, new messages out to the sales force. All that will be implemented in Q4 with the label change. And you only got about 6 weeks of time before the year closes by the time it happens. So between Thanksgiving, Christmas and holidays, you're just only going to make so much impact the rest of this year. So I think it's really about gearing up for next year and setting us up for a January relaunch of the product in terms of that and then the Peds coming in roughly May, June. So I think as you look at next year, it's really a relaunch of Afrezza. And I think the label change for us is the first step because we know the 500 or 600 prescribers who write this drug consistently know how to dose it properly. But the thousands who have written 1 scripts or 2 scripts have never count it properly because they read the label and they under dose patients. Having that label change is more important for the academic centers, honestly, who just don't know how to prescribe it and teaching them how to prescribe it. If they only want to read the label, not see us as a company, at least they can get it right for the patient. And that's going to be important. And then peds to us is the -- when you look at diabetes innovation and breakthrough, it all starts with kids that goes to adults and whether that's Dexcom, [indiscernible] insulin pumps, Omnipod, all those innovations started with children and then became successful in adults. It didn't go the other way around. Unfortunately, we started the other way around, which is much harder. Changing 65-year-old endocrinologists who've been doing the same thing 40 years is probably one of the toughest jobs we have. And there's no incentives for them to spend more than 7 minutes a patient. That's the real problem. They're trying to change have it, that's really difficult.

Yes. And on the Peds point, I guess you've mentioned May, June is the planned launch. Like what can you share today around your intentions around the launch and the strategy?

Yes. So for kids, we studied the trial from 4 to 17. So we feel like we got a pretty broad age range. That will be the first thing, the FDA gives us all the way on the forward. They limit that in some way. The average age of the kids is 10 to 12. So as long as we're in that ballpark, we feel good. There wasn't a ton of patients below 10. We are -- we have 39 sites in the trial. There are roughly 50 sites in the country that treat most of the kids. So when you think about the almost 80% overlap of patients were in the trial or sites in the trial relative to the market, we're going to hire about 20 key account managers. They'll be responsible for [indiscernible] children's hospitals or those places that treat children connected to academic centers. And then there's about 20% of the community physicians that treat pediatrics, and that's where you'll see our sales force also target that with Afrezza adults, we'll fold those targets into that group as well. So you'll see 500 to 1,000 targets be added to our call plan next year just for pediatric launch, and that's between the account managers and the adult Afrezza reps. And the reason all that's important is when you take a step back, we target 27% of the market, they have all real-time insulin. Post these transformations, January 1, we should be around 45% to 50%. So it's a big leap up next year. So I'd say like we're not -- we're preparing this year, but the reality is we're going to have a much higher call percentage against the multi insulin market than we have this year.

Yes. That's significant. And so -- and also when you layer in some gestational diabetes, for example, to Afrezza, how does that also play into the long term?

Yes. I think that's a good question. So one of the -- if you talk to doctors today, they'll give you 3 excuses why they haven't tried Afrezza. They'll talk about the dose is not specific enough, we'll fix that with the label change. They'll talk about the lung safety. We have a large lung safety publication coming out. And then they'll talk about managed care. We charge $3 a day for a great experience. And you'll find most doctors when they give you the managed care objection, don't even know you have a $3 a day insulin. But we've decided $99 is a fair price for our product. We don't make any money on it, but we don't want people not to get access because the payers block them. And I'd say that's number one. And so when you really think about those objections you have and then how do you reframe that with the customers to make an impact, that's going to be important there. I'm sorry, I missed your question. Pregnancy, sorry, payer. So the payers have indicated for the first time ever that the rebates related to insulin are no longer there and that the prices of insulin have come down, and therefore, blocking Afrezza is not always in the best interest anymore and before they used have to block us because they collect $2 billion, $3 billion in rebates from the competition and there's nothing we could do. If they added Afrezza who lost $2 billion rebates, you can't bring them. And so we were restricted to the sickest patients. So now when you go forward, do you think payers want to be on the front page of New York Times for blocking pregnant women and gestational and kids? No, they don't. And so we feel like there's a real opportunity on the payer side, which will be one of the big objections to say, maybe we can contract it away and make kids approved easier, maybe gestational data still has to come out and see what that looks like. These babies have large complications and fetal maternal disease. And so can we really showcase Afrezza works well in that population. We just published a case series of 5 patients last month, and we're doing a study right now to double crossover from injectable insulin to us. And so I think we'll see, hopefully, in that study, a really good readout on control and pregnant women. So those are the things coming next year that you start to get away from is Afrezza just a mealtime insulin that's inhaled to does Afrezza, which our data shows gets more people to goal, you don't need an insulin pump, you can get great control without an insulin pump and you switch off it to gestational diabetes to pediatrics. So these are all 4 things that are happening right now as we speak next year that we can start to talk about guidelines getting updated, payer restrictions getting uplifted and really clearing some of those traditional hurdles for Afrezza out there.

Yes. And so look, there's a ton going on, clearly, the multiple launches coming up. You have data coming out over the next 12 to 18 months. How do you think about capital allocation priorities?

Nick's back there. He's got a lot of capital to press the gas on. But no, I think the good news is next year will be our toughest year financially, meaning we have the cash to do what we need to do. But if you really think about what we're doing, we're funding an insulin-naive trial first time ever, you're going to get newly diagnosed, you're going to get Afrezza first time. You want to change the next 4 years of diabetes, teach kids how to start with inhaled insulin and never get injected again. That's going to be game changing. Then you got the 201 trial with IPF. If that's positive, the stock is a unicorn stock, right? If 101 reads out, that's going to be another huge bolus for us. So these are big bets. We have the capital to place all of them, and that's our plan. If you fast forward to the end of the year, we closed SC Pharma, we'll have $325 million in debt roughly from Blackstone and you'll have about $150 million cash on the balance sheet. And we're profitable today. So we'll try to maintain that goal. But we're not worried about quarter, if a quarter dips negative or 2, that's not the end of the world because we have enough cash to fund all these growth drivers. And so next year, you got them all hit at the same time. You should start to see that revenue inflection happen and then '27, '28 gets easier. So we're okay. We're ready to make those investments.

Yes. And maybe a follow-on question on the capital piece is just the deal with SC Pharma, how do you see M&A being as part of your toolkit going forward?

That seems to be the big question we got in the last 60 minutes we had 7 days. So I don't want to guess on that one right now. I think, look, when you make a big acquisition like this, nothing is more important than making sure the employees are happy in the integration, you hit the numbers you set out for that your deal terms were solid and foundational and that you deliver on those deal terms. And then the Board has more confidence in management as well as your ability to do more, but you got to first deliver on the first bite, and that's where we're at right now. We think we're a nice midsized company that can look for more. But I think we just have to do an excellent job on this integration and really prove ourselves first before we start coming to the next thing.

Yes. No, it makes a ton of sense. And look, it's a super exciting time internally as it goes already and so the integration will be key. And look, that's really all I had in terms of questions. If there's anything else, maybe we didn't cover.

No, just because shareholders are listening and some people in the audience here. I think the last thing I'll just close is our stock has run up the last 7 to 10 days with all the announcements. And so some of the question I get, did we miss the run-up? And I just want to give some perspective, which is we did a royalty deal January of last year, and that was a value of the company and the royalty of about $1.5 billion. And then there was a milestone for -- really was IPF indirectly if you looked at the revenue stream. And so when you think about where the company is today, you still have that royalty stream still strong. Now you've got TETON derisked and now you have 101, 201, Peds, like there's so much more that's happened in 18 months that, that valuation to us is still quite undervalued from where we are. And people are looking for good stocks so good revenue growth and cash on the balance sheet to fund innovation. That's -- I think we're very unique in that situation compared to a lot of our peers.

Yes. No, we're looking forward to seeing it. Thank you for joining us, Michael, and I really appreciate all the time.

Appreciate your time. Thank you, Ross.

Thank you.