MannKind Corporation ($MNKD)

All right. Good afternoon, everyone. Thank you for taking the time to join us for our next presentation. We're excited to have MannKind Corporation here with us. For those of you who don't know me, I'm Glen Santangelo. I'm the analyst at Barclays. I cover the specialty pharma sector, among some other things. We don't cover MannKind, but we've been doing some work on the company, and we're very excited to have Michael Castagna, who's the CEO; and Chris Prentiss, who's Chief Financial Officer, to his right here with us today. So we just want to say welcome, and thank you all for taking the time. For those that may be in the room or on the webcast that are sort of newer to the company, maybe I think a good place, Michael, to start might be a thumbnail sketch on the business because 2025 was a very interesting year for the company. You closed out with some strong momentum and you sort of transformed the company from being a single revenue stream to more of a diversified commercial stage organization with multiple FDA-approved products. So maybe why don't you just spend a minute or 2 and just sort of give people a thumbnail sketch, and then we can sort of dig in from there.

Yes. No, thank you, and thank you for having us today. MannKind has come a long way. Most of us have known us as an inhaled insulin company, but I think the one thing I've tried to do over the last 10 years is really move to a new direction. And so when you think about where we're going, especially with the purchase of sc, almost 1 out of 5 emergency room visits are related to diabetes or heart failure. We're tackling the #1 issue around heart failure, which is admissions due to fluid overload. When you think about that, it's a $20 billion-plus expense to health systems. We can get patients out of the hospital early. And if you can give them those discharge protocols and become the standard of care, we're going to help a lot of people. When you think about where we're going, we're going to have an autoinjector as we'll talk about an on-body infuser and an inhaled version. So [indiscernible] fluid overload is a major problem in this country. And in 60 years, we've not been able to solve it. MannKind is now working in that space. In diabetes, we've had a tremendous amount of innovation in the last 20 years. But despite all that technology, we still have more people to goal. And why is that? Because meal-time control is really hard. And there's not been any innovative breakthrough mealtime insulin in the last 20 years. And Afrezza is the first time as we go into kids, we'll be able to start demonstrating how do you make this happen and bring it to life. So we're excited about that. And then you got the nintedanib DPI in the pipeline and our partnership with United Therapeutics. We have nothing but great opportunities as we look forward in every single domain of the company. If you just look at our exit run rate from last year, it puts us on track to $450 million plus this year in revenue. And we're really excited about the 2 launches coming up and all the stuff that's going to be happening. So I know a bunch of questions where we're going.

But since you touched on the $450 million exit run rate, I mean, that was the benefit with the scPharmaceuticals acquisition included in that December quarter. And I know you don't really give any formal or official guidance, but maybe you can set the stage for 2026, and then we'll sort of dive right into the products?

Yes. So I think as you look, we come into this year, we hopefully expect 2 FDA approvals, and we will be ready to launch those products and launch with excellence this year. We expect our Tyvaso -- I'm sorry, our nintedanib DPI, right, to get through Phase I and get into Phase II. And we expect to have significant revenue growth with our partner, United Therapeutics. So lots of opportunities, all growing, hopefully, large double digits as we continue to go out there.

Okay. Can we start with the United Therapeutics partnership? Is that a fair place? Let's talk about that because there's many moving pieces here with the minimum supply agreement with Tyvaso DPI and the royalty. And I know there's been a number of questions around that, but maybe you could frame that the discussion for us around that relationship.

Yes. I think we all had a little bit of a surprise a little over a week ago. And it was unfortunate, but we did have the opportunity to sit down with United Therapeutics this week and have a discussion around what is the future and how does it look like? And I think we're really happy to hear Tyvaso DPI is a critically important component to our future growth plans. When you think about where we started with them 8 years ago, Tyvaso was a $450 million brand nebulizer. Today, it's over $500 million. So despite us moving and growing with United Therapeutics, 70% market share with Tyvaso DPI, that old brand still has $500 million. And so if you think about the future, Martine, she's doing, she's going to be expanding the treatment population. So the market is going to continue to grow. Tyvaso DPI will have a significant share and a much bigger pie. And so even though the softness may launch, when you think about what has happened, you treat more patients by default, 40% or 50% of $4 billion is still a big number. And so we're pretty excited with where UT is going and the opportunities there. On the supply agreement, that's a good question. We signed the supply agreement believing we were the backup supplier to UT's primary. What we since have learned is that we will be the primary supplier, which means our minimum revenue and our minimum things we previously talked about will actually be probably quite higher in the next couple of years than we expected. So that's good work for us to do and keep us busy. But more importantly, it shows you the demand and the double-digit growth of Tyvaso DPI that they expect over the coming years. And so that's going to be.

And given the concerns and the volatility here, I think it's probably worth just spending a minute on the competitive landscape for this product. I guess, I mean, it sounds like you're somewhat more optimistic than maybe what the market might have been suggesting. So if you could just sort of talk about that. And then just sort of remind us the royalty structure around the agreement.

Yes. The competitive landscape, there's always going to be competition in any market, and I think there's always room for 2 players. I think UT has a good vision for how it looks short term and long term, and I think they're placing bets as evidenced by another partnership program that's not really too much clarity around the public, but they reinforce to us that, that partnership on this other compound we're working on is important. And that's a key component to their future growth and evolving in the competitive landscape that exists. So I think UT is always moving ahead. They're always thinking about different ways to bring more value to patients. And I think when you look out there, we're going to have a lot of innovation and a lot of indications and a lot of growth and MannKind will continue to be part of that journey with them, whether it's the existing Tyvaso or the other compound that we're working on.

And you touched on that minimum supply agreement just a minute ago, and that maybe there's a little bit more responsibility there for you in that role than you had originally thought and that is a good thing, right, because it's going to provide you with some incremental cash flow in the next couple of years that might fund other areas of your business. Maybe could you just elaborate on the runoff of that cash flow stream and how meaningful it can be for you and what you can do with that cash on the other side?

Yes. I think any upside to the current trend is all upside. So we've kind of built our 5-year plan. We had our own expectations way before UT had any announcements. And we don't control that partnership, right, in terms of revenue and discounts and what they do. And we get a 10% royalty. We booked 9%. We sold 1% of that. But I think in terms of the direction and the cash flows, how do we take that money, reinvest for faster growth, right? And that's one of the things we've been doing over the last 4 years since this product launched, and it's one of the things you'll continue to see. Any upside beyond our forecast will be great upside. But we are pretty much self-sustainable as you look beyond this year with the 2 launches and the cash flows coming in.

Okay. Can we talk about FUROSCIX and the acquisition of scPharmaceuticals and what sort of drew you to that asset? I mean, a while ago, we used to cover scPharmaceuticals. So I'm reasonably familiar with the company. And it seems like for those that are unfamiliar, it's -- you described the product to people, and you highlighted in your sort of initial comments that 1 in 5 hospitalizations is somewhat related to congestive heart failure, right? And so you can talk about the market opportunity and what sort of attracted you to the scPharmaceuticals acquisition?

Yes. If you go back to Q3 of 2025, Tyvaso royalties versus our diabetes portfolio was about 70% Tyvaso, 30% diabetes and take out the manufacturing because that line is going to be steady and it really doesn't -- whether it goes up or down, doesn't change our profitability that much. So when you just look at pure royalties versus pure revenue we control, we even look for an acquisition that would make a meaningful change in that trajectory because if every earnings call is 70%, there's not much excitement besides what UT says. So when you exit this year in Q4, we should be roughly 70-30, 70% MannKind revenue driven, 30% royalties. And that was really one of the things we were looking for is how do we continue to diversify the company and make it less reliant on an opportunity like FUROSCIX that came along. So when we looked at sc, it wasn't just is it a product? Is it doing well? Is it revenue? It's what can we do to generate faster revenue growth. And that's really an opportunity we saw with scPharma was an undercapitalized company with a great product with great innovation and a great life cycle management. And this has been a smooth integration with a great team. And this opportunity is probably going to be bigger than any of us think. When you look back, peak revenue from the analyst was $500 million. And we believe that's a really good starting point, not a peak. And so we're really excited as we look at this year.

And I'm sorry, did you say an undercapitalized company? I mean, so when you look at sc, do you think that was one of the issues, right? I mean the fourth quarter was great. I think there was 90% growth on the product, but maybe was the exit or for the full year 2025, this product generated $70 million, and you're talking about peak sales in this product of $500 million. I just want to be clear.

That's what analysts had it at, but we think it's higher than that.

That's what -- who has it?

Analysts had it.

Analysts have it at. Okay. Excellent. All right. I know the company, I think, expanded the sales force, maybe double the size of the commercial reps that they had up to 160. They were seeking new indications on the product. Could you just sort of bring us up to speed maybe on their commercial efforts to sort of grow that product and what you think MannKind can sort of bring to the equation to maybe accelerate that process?

Yes. We've already started that journey. I think number one is just pure share of voice, right? They were trying to launch neph and launch cardio with the same sales force. We split that out. We have 150 reps dedicated to -- we have 80 to cardiology, 70 to nephrology. That's also the diabetes sales force. So those offices are often co-located near each other. And then we have a hospital team that also launched. And when you think about we have over 160 people dedicated to the field force share of voice of FUROSCIX 6. That's a significant jump over the last 2 years. And we believe there could be even more opportunity to increase that share of voice. So it's just -- there's such an untapped potential here. It's how fast can we go.

Back from my scPharmaceutical days, I sort of remember that one of the issues might have been the on-body infuser, they had to do education to all the people in the physician's office to get them to use -- to learn how to use the product and they have to teach their patients. And I know one of the catalysts for the company was the autoinjector that they were testing. And so could you bring us up to speed in terms of the product innovation there? Because it feels like that by dramatically increasing the terms of use of the product, that could really be a triggering event, right, to increase adoption at a much faster rate.

Yes. I think you're spot on, Glen. The On-body Infusor has been great. It's the first innovation in 60 years to do what it does, right? That's the starting point. The autoinjector, whether we like it or not, it's so easy to use. And people are going to perceive that -- if they perceive an On-body Infusor or nasals 4 to 8 times a day, they're going to perceive an autoinjector, so much easier to give, and they're used to giving autoinjectors in these diseases. So this is a real opportunity to simplify and grow faster.

So there's a way for patients to sort of buy the injector, have it at home. They have an event, right, they can just inject themselves with furosemide and hopefully avoid the hospital stay. Is that basically the thesis?

Yes. I mean prevention is one of the critical parts of CHF readmissions, right? And then to your point, some doctors have said, this is like an epinephrine pen. You need to have it if you have CHF.

And so it sounds like the product in your mind is sort of on its way. Things are trending in the right direction. Can you remind us any sort of milestone structures or anything related to the agreement that you had for the acquisition?

Yes. As every deal, there's a deal gap in value, and one of them was around the autoinjector and the value that could bring and the second one was around revenue expectations. I think we're happy to say on the revenue expectations, we communicated that we believe $110 million to $120 million, which was the CVR is achievable. And so that's really good to see a deal actually hit its expectations, and we'll do everything we can to meet those. But that CVR is $15 million that could be payable in 2027. Then the other CVR is around the autoinjector. And there's a lot of history of drug device combos not getting approved by the FDA on time. I would say sc has done everything in their power to make sure it does get approved on time. This is really good work. And so if that does get approved in July, they'll get a $45 million CVR and we'll be really happy to pay that because the cost savings on the COGS alone will pay for the CVR in one year. So we're pretty excited about that.

Okay. Exciting. All right. Can we shift gears and maybe talk about Afrezza? You exited the year at a very sort of strong rate, big growth in that fourth quarter. Can you sort of talk about your commercial efforts there and maybe what drove that elevated growth in the fourth quarter to help us assess the durability of that recent trend?

Yes. I mean Q4 is always a strong quarter. I think in general, Q3 probably missed a week and Q4 got a week. But I think Afrezza, we really made a lot of transitions in Q4 and Q1. And I think what you're going to see as we come into this year, we are making investments for growth. And so while Q4 was decent, I think really what we're trying to do is set up what does this year look like for Afrezza and FUROSCIX to deliver faster growth, and that required some sales force changes and honestly, a little bit of a deprioritization on adult and an increased focus on peds because we took some of that sales force capacity and put it on the nephrology side for FUROSCIX. And so that Afrezza team, we want to see that they can sell 2 different products and drive fast growth on both products. And I think we'll see as we come out of Q1, how those 2 things are coming together.

I think you also had your first shipment to Cipla in the quarter, right, which opens up your commercialization partner for India. Is that a fair assessment? And is that meaningful? Can that be a meaningful driver in 2026?

So I don't think Cipla in the short term is going to be a meaningful driver, meaning we did this deal a long time ago. At the time, our factory had no other things manufacturing. And so today, for us, we're trying to fill up manufacturing capacity. India has 80 million people living with diabetes. I will say the launch in India is off to a fast start. I'm heading over to Barcelona tomorrow for the ATTD conference and I actually have a bunch of local doctors from -- many who want to come meet with me and share their perspective. So there's a lot of excitement over there. They've already placed their second order, so that's good. We'll get that out the door, hopefully, off to them soon. And there's a lot of excitement. Is it going to be a huge revenue driver? I hope it becomes one because there's a lot of people that need our help, and I think it can get there.

I mean in the past, it seemed like the company may have been more heavily focused on profitability, but now it seems like you're shifting more to a growth-oriented mindset. And could you maybe talk about some of that transition that's going on at the company? And I don't know if there's anything to sort of expand upon that or the way you think about things strategically today versus maybe 6 or 12 months ago?

Chris, I'll turn that to you.

I think our focus is we want to grow revenues, right? And so profitability is the end goal, of course, but growing revenues in the near term is what our main focus is. So the fact that we have 2 potential launches this year and the ability to invest in those fully is really where we need to focus. So that does have an impact on profitability in the short run. But we think as we get into next year, '27 and beyond, that will be reflected and rewarded to the bottom line.

And there are some recent changes with respect to the FDA guidelines around inhaled insulin. And I know you guys are seeking pediatric approval in late May. Do you want to talk about the timing of that? And do you feel confident in that approval?

I do feel confident in that approval. I mean it's FDA, so you never know. But I would say we had a pre-filing meeting with them. we've done everything they've asked. The data came out as expected. There's no surprises. We just got a label change with them in January. So everything we've done, their questions coming in are what we expected. There's not been any showstoppers and subanalysis that they're asking for. So we feel pretty good about that. And to your point, a lot of the scientific data we generated on Afrezza now resulted in the guidelines putting us a standard of care equal to an AID system, which everyone perceives to be the best thing out there, which we think is really exciting, right? So between the data guidelines getting updated, our label update and hopefully, a peds update, that will be a trifecta that really sets us up for the second half. And the noise is building. We just had 8 posters accepted for ADA. So the data dissemination and the KOL support continues to be exciting around this product.

Okay. Maybe can we shift gears again and maybe talk about the pipeline with respect to 201 nintedanib. Can we dig into sort of your efforts there? Maybe give us an update on the process, talk to us about the path towards commercialization and frame the opportunity for people?

So I think when you look at IPF, right, these people are given a death sentence. They've got 2 options for a decade. They just got a third one and Tyvaso just released data that hopefully will be a fourth one. And so there's not a lot of options for these patients and the side effects are sometimes worse than the alternative, which is dying. And so it's a really sad disease. I watch my uncle suffer from this disease. And really, what people are asking for is a more tolerable nintedanib. The product is well known. It's the gold standard. It does close to $4 billion a year in revenue. And we believe that the inhaled version will drive hopefully equal or better efficacy. And it turns out the customers I just talked to said, we take even less efficacy if the tolerability is better. So what we do know so far is the bleomycin data looks strong. Our animal dosing data hit our target dose. Our healthy volunteers took tolerated the product with no diarrhea. And now we're here in IPF patients right now this quarter and next quarter, Phase I U.S. that's enrolling nicely. We'll have that data here on tolerability, FVC, cough, all the things people want to ask about. We'll have that answer here in the second half. And next quarter, we're kicking off, we'll be dosing the first patient international. So this program is really running really fast and most people don't pay attention right now. And so it's going to be an exciting journey. And we hopefully expect that the enrollment hits our expectations, we will be releasing data sometime second half next year, at least top line results.

The second half of next year?

2027.

2027. And that's a Phase Ib program?

Phase II.

Phase II in 2027. Got you. And the inhalation potentially compared to the oral, is there a difference in the delivery mechanism of those 2?

So the oral tablet, only 5% is bioavailable, 95% sits in your gut and causes severe diarrhea. So what we're trying to do is take that 5% and deliver directly to the lung because we believe targeting the lung will actually give you a better effect size if we can dose higher. Nintedanib has always been limited by dosing and toxicity. And so the question is, can we get higher lung concentrations or equal lung concentrations and what does that do? Does it help tolerability? Does it help patients stay on the drug? And that's an answer that will be answered in the Phase II. But the first one is going to be can patients tolerate it? Is it safe? Can the coughs -- cough tolerable? In general, an IPF patient is going to cough several times a minute. When you're talking to them, that's what you hear. And so one more call from a DPI is not going to be a big deal, and we'll be able to hopefully show that in our Phase I data, which is going to be important, especially given all the noise we've heard about cough lately.

Okay. Chris, maybe a couple of financial questions as we only have a few minutes left. Can you walk us through some of those revenue streams in the next 3 to 5 years when you think about the commercial assets available today, some of the things in the pipeline, the approvals you're sort of waiting for. Could you paint us a little bit more of a longer-term road map and how we should think about the revenue streams of the company?

Yes. We don't give revenue guidance, but certainly to characterize it a bit, you think about assuming we get both of these approvals. So with Afrezza, the pediatric approval, with FUROSCIX, the autoinjector, I mean, we would expect solid double-digit growth for as far out as we can see. Both of these assets are very durable from an IP protection standpoint. Afrezza goes in the mid-2030s, but this would be a very challenging device and delivery system to replicate. If we think about FUROSCIX, the autoinjector has IP protection in the 2040. So that really is the basis of the revenue that we'll be focused on. As we talked about earlier, our collaboration and services, which is really our manufacturing revenue, primarily to UT, that appears like it's going to be far more durable than was articulated a few days ago. And so right now, that's generating about $100 million a year, and I would expect that to be the case for the next few years as well. And then we'll have royalties that continue to flow through. So 10% on Tyvaso DPI and on the second program that we're doing with UT, if and when that was approved, we will earn 10% royalties on that as well.

Okay. Maybe could we just discuss the balance sheet for a little bit because there's $175 million on cash. And the company -- I mean, you talked about ultimately, the goal is to drive a profitable business. So you're sort of not profitable today. And how do you think about that transition and sort of with the cash available that you have, noting that you have manageable debt of converts on your balance sheet and stuff like that. Can you just put that all in perspective for us?

Yes. We paid off the convert last week. So that was a stub that was remaining of $35 million. So that was paid off at maturity last week. So what we have on our balance sheet is simply the term loan debt that goes out to the end of 2030. That was related to the sc acquisition. And as we've talked about, we really expect the sc, the FUROSCIX business to be able to provide for that debt service on its own beginning in 2026. So we're very excited about how we will exit the year. We did incur a net loss, as you said, in Q4. That's really directly attributable to closing the sc acquisition, certain costs related to that as well as starting to make the investments related to both of these launches in Q4. So a little bit of an investment year, but we think we're going to close out fourth quarter in really good shape and put us on a good path for '27 and beyond.

Michael, maybe in the interest of time, one last question for you. When you sort of package all this together, I mean, the company has expanded its sort of commercial footprint and in particularly, you have 2 potential approvals on 2 of your key products that could also be also very interesting. But there's also some of the elevated concerns around the durability of the royalty stream that we just sort of talked about. And so when you sort of mix all those things together, anything to talk to the investors about or what may not be fully appreciated in the valuation or maybe how people should think about those positives and negatives when bringing it back to the stock valuation?

Yes. I think when you look out over the next 5 years or so, MannKind will probably hit over $1 billion in revenue, right? We're sitting at $800 million market cap. There's a lot of opportunity to harmonize how you continue to grow, invest in that growth, pursue organic and inorganic growth. But if these FDA approvals come, we have really huge confidence that there's meaningful opportunity upside from where we are. So when you look at doing $450 million, $500 million this year, you start growing $100 million every year, that's meaningful growth. So we're excited. We don't think the Tyvaso royalty is going away tomorrow. Maybe it drifts off in 3 to 5 years a little bit, but it's not going to ever go away, and we'll be making that for a long time. So we're excited to help patients. We will get our share price back to where it belongs and demonstrate success with these launches.

Certainly seems like opportunity. So let me -- with that, maybe you kind of already did it, but I was going to flip it back to you to sort of give you the last word. And I don't know if there's anything we didn't discuss that you think was sort of worth touching on or any other message you want to deliver to the investors here today, and I'll give you the last word.

Just first, I want to make sure we spell MannKind right next time, but that's Mann -- and -- but no, all is great. Thank you for having us. MannKind is in a really good spot. We were profitable for a couple of years. This year, we're investing for growth. And when I look at the small biotech caps, how many of them are profitable, not a lot. And so we really want to make sure we're driving growth. That's what shareholders want. That's what patients want to see as more patients take on our products. Last year, we made over 30 million doses for patients. That's really important. It's really a high-quality product we make. And we have a lot of innovation ahead of us and a lot of success in front of us. So we are really excited to be here, and we'll keep executing like hell and making you guys proud.

Okay. Michael and Chris from MannKind, thank you very much. We really appreciate having you guys here today. Thanks so much.

Thank you.