Welcome to the Jefferies Healthcare Conference. My name is Dennis Ding, Biotech and Spec Pharma Analyst here at Jefferies. I have the wonderful pleasure of having Michael Castagna, CEO of MannKind, here with us. Welcome. Thank you. Nice to meet you. Before we kick off, would love to get an overview around MannKind for people who aren't generally familiar with the company. Maybe, of course, talk a little bit about Afrezza and some of the exciting developments there over the last week. Sure. Good morning, everyone. Thank you for coming out today. For those of you who don't know MannKind, we've been around since 1991, so most dry powder companies don't survive 35 years with good fortunes that we've had. We've gotten two FDA-approved products, one inhaled insulin, which got approved in 2014 and just last Friday got approved for pediatrics. We also have another product called TYVASO DPI that got approved a couple of years ago, and that's in PH and now being pursued for further development now with United Therapeutics. We've announced another partnership with them, with a product called ralinepag, and we're also working on additional dry powder inhalation products. It's really an inhalation platform company. Last year, we bought a company called scPharmaceuticals to bridge into more of the cardiometabolic space. When you really look at the company today, we're firing on all three engines. We got Afrezza pediatrics, we got FUROSCIX scaling with the auto-injector, and now we have a pipeline. Just today, we announced a positive momentum going into our 201 nintedanib program for the pipeline. Sounds good. For the pediatric approval and the expansion, maybe talk a little bit about just the history around that indication for you guys and how big of an opportunity does that label expansion unlock? Yeah. When you think about, Afrezza has been on the market 10 years, most people would say, "Well, any drug that's been on the market 10 years has never had a real inflection," I would agree with that conceptually. I've turned around several failed launches throughout my career. I thought Afrezza would go faster in adults. One of the challenges were the development program underdosed the product, we tried to fix a lot of the flaws in the initial launch, that we did. The adult segment is much more fixated on where they are in terms of they don't change a lot, when they do, they don't change again. That's the good news, is as you think about evolution, GLPs have been around 20 years. They just got adopted finally. Things take time, that's just an example here. When you look at the pediatric market, whether it's been Al Mann with his insulin pumps originally, Omnipod, Dexcom, they all started with kids and expanded into adults. That's been the footprint and blueprint we've been focusing on with peds. When you think about the pediatric market, 83% of kids are actually struggling every single day to control their sugars. I was just watching a parent the other night, daughter's crying, "I've been taking insulin for a year. How do I get rid of this disease? How do you take it out of my blood?" It's a horrible disease to deal with every single day as a parent, and it's 24/7. I think bringing children and families an opportunity to have something that can be inhaled and bring them equal control to what they're doing, but you take the quality-of-life aspects, you take those speed of action. Nothing worse than sitting on your CGM waiting two hours for your sugars to come down. With Afrezza, you can start seeing in 20, 30 minutes. That whole experience as a family, as a child, that initial feedback, taking it when you eat, the less predictability you have. With injectable insulin, that brings you predictability with inhaled, is a fundamental game changer for kids, and I think we've seen that in the first 96 hours of launch. Remind us how much Afrezza is doing right now in terms of the adult population, and how much bigger can peds be relative to what you guys are doing in adults? There's about 4 million people taking insulin, and I would say it's half the population taking insulin. Those insulin units are Type 1, and most Type 1s start as children, so your average age of diagnosis is 10-12 years old. Adults last year did $70 million in sales. We have less than 1% market share there. On the kids segment, we expect 25%-30% share. When you think about every 10% share of insulin, of pediatrics, will be about $150 million. You're talking a $300 million-$500 million run rate just on the pediatric indication. Then those kids every year turn into adults, and so that compounds over the next 15-20 years. What you really are getting is a lifelong treatment of a patient who's diagnosed at 10 years old and will go to 70 or 80, hopefully. What underpins your assumption that penetration would look between 20% to 30%? We've done several studies independent of MannKind. We did market research years ago funding the phase III trial, we just did it again right before launch, both of those studies came out with the 15-25 on the low end. Now with the new data coming out that we just had last year, we did head-to-head studies against insulin pumps. Now doctors can see that you can choose to use an insulin pump, you can choose to use inhaled insulin and a basal. Your outcomes are going to be very similar, which is actually not something most people believed a year ago. Even today, if you ask most docs, "Is Afrezza as good as an AID system?" They'd say, "No, AIDs are way better." Well, that's not what the data shows. Back to getting our marketing out there, getting our clinical data out there. We published the data. It's all public now. We get more people to goal by switching away from the standard of care than staying on what you're doing. That perception of efficacy and speed has to translate into commercial success now. Okay. Is that a main, a core part of your commercial messaging to doctors and patients? I guess a follow-up to that would be where do you see Afrezza in the pediatric population fit in relative to all the closed- loop systems that are out there? Yeah. There's just a doctor yesterday. He was our lead investigator. He just did a Wall Street meeting yesterday, and he said, look, 25% of his patients, he expects to use Afrezza full-time, and up to 75% of the patients will use it on top of a pump. I think when you look at the, Al Mann built the insulin pumps, but he also spent $1 billion building this company. It's not because the insulin pumps don't work. What are the insulin pumps trying to do? They're trying to modulate the insulin to try to anticipate what's going to happen in your body, because the insulin doesn't work fast enough. When you look at what Afrezza's solving for, it's solving for that 90-minute lag effect every time you eat. There is data. We've gone out and tried to generate data, and we'll have some this weekend, showing what does Afrezza look like on certain pump algorithms. I think you'll start to see some pump companies include Afrezza in their algorithm. I think that's going to help patients who have high sugars at sporadic moments to bring that back in control. I think the use case of Afrezza probably will be pediatrics grown into adults. That's going to teach the adult doctors how to use it. I think there's going to be, not that we control it, but the pump market and AID systems will want Afrezza to help improve their pump algorithms, and that'll be another use case in the market. The last one is gestational diabetes. We have a trial wrapping up with 30 patients in gestational. When you think about those pregnant moms only have two options, metformin or injectable insulin. If they could take inhaled insulin for 12 weeks, they'd love to do that. That's a couple hundred thousand patients a year. When you look at Afrezza now, the pediatrics, you'll hopefully have gestational, and you'll have multiple segments growing that are all really important populations. Remind us what your commercial footprint looks like right now, and do you plan for any additional expansion? Yeah. Most of the investment in the commercial infrastructure is there. When you look at our expenses in Q1, we're not adding many people here in Q2 or Q3. Really what you'll see is contractors moving over to full-time employees, but nothing significant from an incremental investment other than maybe some extra marketing spend. But again, I would say in the first 96 hours, we've had probably 50 docs register for our hub. We've had 50 patients come into the hub. We're seeing reimbursement support start off very strong. We're seeing that widespread adoption across multiple patients come in quickly, and we're getting them out the door through our new pharmacy network. From all that, it's really there. There's about 1,500 prescribers, and pediatrics make up 85% of the volume. It's a very concentrated office. We have about 20 key account managers calling on health systems, and then we have 70 full-time reps supplementing that noise. When you think about the coverage, we'll cover all 1,500 docs pretty well with our sales force. Okay. The 70 reps that you have right now, I'm assuming they've historically just gone after adult endocrinology? Without expanding the sales force any further, you're kind of telling them to split their time— Yeah. Too, with the pediatrics. Coming into 2026, we actually scaled up the sales force from 50 to 70. Okay. We had to fill most of those jobs in Q4, Q1. We took some effort off the adult segment, actually, and put it into nephrology for FUROSCIX. Okay. We just are now moving them into the pediatric segment. When you think about adult, that's the base of Afrezza, but the growth is going to come from peds, the growth is going to come from FUROSCIX, and adult will come later. We had 25 requests in the first two days of this week for doctors asking our sales force to come in. I can tell you that's more requests than I've had in two years combined of people wanting to see our reps. There is a lot of excitement. Patients are coming and asking. They're calling their docs, and all of a sudden, docs who said, "We'll see you in August," are saying, "Can you get in here next week? That's exciting. We've never really had that type of exposure with Afrezza. Okay. I know it's super early, but in terms of reimbursement and access in these peds? We are removing one of the perceived access hurdles of Afrezza's cost. We've charged $99 cash for a couple of years. Yet, if you talk to doctors, they'll talk about this cost perception. I remind docs that patients spend $200, $300 a month on pump supplies, and that most doctors don't even think about writing an insulin pump. You can get Afrezza cheaper than you get your pump, and yet that's 50%-70% of the market. From a cost perspective, we've made it $35 for children, and we'll run that program through the end of the year. We'll assess it and see how it worked and how it helped. We expect most patients' co-pays, even once it's approved, will still be $35 for commercial. It's $35 by law for Medicare, and Medicaid could be cheaper, right? We expect state Medicaids to pick this up. So far, I think of the patients that came in, I think 75%, 80% were commercial. Okay. Remind me what consensus is for Afrezza this year. Also talk a little bit about what you expect in terms of the revenue trajectory and contribution from peds this year and then over the next several years. Yeah. MannKind hasn't given guidance this year. I think we've guided to, overall, we were on a run rate of around $450 million coming into 2026. We've guided FUROSCIX to $110 million-$120 million, but on Afrezza, it did $70 million last year. I say traditionally, Afrezza's grown $7 million-$10 million a year. I think that's a base assumption. The question is how much more upside can we get with kids? I'd say give us a few more months here on the pediatric launch, and we'll have some better guidance here. Well, it sounds like the early signals are there. As you go into second quarter, third quarter earnings, what sort of disclosure should we expect from you in terms of the pediatric launch? Yeah. In terms of the uptake and the breadth and depth of prescribing? Yeah. I think people should be looking at if there's 1,500 prescribers, how many of them are prescribing? We never expect all 1,500 to write. If you can start to see 50, and then 100, and 200 prescribers building up quickly, and then how many patients are you seeing come in, and then how are the refills building? The good news is we're trying to really force everything through our reimbursement hub and our pharmacy network. We should start to see how those prescriptions are building pretty quickly on the refills, because that's the only way you get the $35 program, right? We'll know that pretty often. We'll also know how they come in. Are they full-time use? Are they on top of a pump? Are they naive? I think that's the one big surprise for me in the last six months is that the doctors, one out of four patients could be coming as a newly diagnosed patient. I thought that would happen two, three years into launch. It looks like it's going to happen earlier. We're also doing this naive trial so that the first 10 patients, they're looking pretty good. To see a newly diagnosed child be able to offer this option and maybe it delays a pump, maybe it stops them from going for a couple of years, but, this is a wonderful opportunity for families. At what point would you consider expanding the sales force even further to, as you grow revenue, maybe in one or two years as you hit critical mass, could you consider expanding that and perhaps, by how much? Yeah. I would say we'll probably be roughly steady Eddie over the next 18 months. I think we have enough to cover a good percent. We're probably targeting right now 50%-60% of the entire insulin market. To get to the next 10%-20%, you need to add another 50-100 reps, right? When would you do that? You do that if you're expanding more into the Type 2. You'll do that if you want to just have bigger share of voice, and I'd say our success over time will drive more of that naturally. We'd like to get the high dose concentration cartridges we just announced last week as well. Those we expect roughly in the 2028 timeframe. Once we know those are on the file with the FDA, we'd probably look at another expansion there, because that will solve a lot of the Type 2 market opportunity. Mm-hmm. Okay. Type 2 is much bigger. Yes. For sure. Okay. FUROSCIX, I believe you said guidance was $110 million-$120 million? Yes. Right. I guess, you guys acquired sc Pharma several years ago. Talk a little bit about the progress you made there, the integration of sc Pharma, and just what's really driving the growth? Yeah. First, the integration has gone extremely smooth. We're really happy with the acquisition. We're happy with the performance of the team. The auto-injector's on track for a July approval, so we've not seen any showstoppers yet from the FDA. When you look at the phasing of last year's sales, I think 2/3 of the sales came in the second half versus the first half. If you look at that same trend, we're right on track for the year to deliver these numbers. The opportunity we saw was really in the IDN segment. We did not see sc focused enough on the IDNs, and we immediately went and hired 10 people just to call on IDNs. I would say Q2, we're starting to see some impact there. The growth there is faster than the national growth overall, and I think as we get to Q3, Q4, especially with the auto-injector, we think that's really going to open up the IDN strategy even more. For those in the room, you can see the auto-injector's so easy to see and use, and you take this versus a five-hour infusion. It's just going to leapfrog the adoption. We're hearing that from a lot of people that they'd much rather use this, and that they'll adopt it, and we're not hearing any objections to going from a five-hour infusion to a 10-second injection. That seems to be very exciting, and we just need the approval here in July. Yeah. Be up and running in August. Okay. How is FUROSCIX being used? You mentioned IDNs. They're making a lot of progress, but give a little bit more color there in terms of the use case and what patients typically come in for, and where is it most used? I would say 90% of our use has been in the prevention of patients going into the ER. That's they're sitting at the community doctor, they're doubling the dose of the oral, patient's progressing, and they need something, right? This has become the go-to over the last three years. The brand did roughly $78 million last year. When you think about that segment, that's the bread and butter that's been there. To me, the real opportunity is in the hospitals and either getting people out of the hospital two, three days early or really stopping them from going back into the hospital. Even when they're sitting in the ER, do you hold them overnight before you admit them, and how long can you hold them and get them this dose? I think there's a lot of use cases, and I would say the large bulk of the future growth is going to come from those scenarios as opposed to the preventions aspect. The prevention will always be important. If you become the de facto standard on hospital discharge— Yeah. You win, because once patients are aware, they're not going to want to go back to the hospital. How are you thinking about the profile of FUROSCIX, especially with the auto-injector relative to ENBUMYST? Look, I think this is a whole new category. There's 700,000 patients a year going in the hospital. There's enough room for all competition. I would say the competition so far in the first, we're sitting here in June now. It's been nine months since they both got approved. We've seen less than 150 scripts come out in nine months. We're getting 500+ scripts a week some weeks. They're not even remotely there. I'm not sure, at the end of the day, we're working on an inhaled version. If you really want IV-like diuresis from our platform, we can deliver an inhaled version of bumetanide. The reality is bumetanide's been cheap and available in hospitals for 50 years. It's still got less than 20% share. I'm not sure the go-to gold standard is FUROSCIX and furosemide, and we think that's really going to continue to be the gold standard for patients. Okay. I guess, Esperion acquired ENBUMYST, or the company's selling bumetanide p art of the idea there was Esperion has bigger sales force, and that'll help accelerate that growth relative to what that product had before in terms of the support. Maybe that's a little bit TBD with Esperion getting acquired. I'm just curious, it does make sense that if you are private equity, you have this huge network, you can sell this with a bigger sales force. How does that impact FUROSCIX? Maybe remind me how many reps you have selling FUROSCIX and if you kind of expect to expand that further just in anticipation of that dynamic evolving. I don't think that there's a large opportunity to react to what they're doing. Meaning, if you've worked for a private equity firm, if you miss your number, they cut your expenses right away. Your sales force isn't getting stock to be stay put. Their ability to thrive and grow, in my mind, will be very different than a publicly traded company that's recruiting cardiology reps. We lose reps to Pfizer, we lose reps to Bayer and AstraZeneca. We're not losing reps to these other areas. I think from a competition viewpoint, yes, they cover a lot of the cholesterol side of the market, but they're doing internal medicine, they're doing primary care, they're doing cardiologists. I'm not sure their strength is in hospital discharges and things like that. Honestly, they have no data. I think the bigger problem with their product is not that it's good or bad, they just have no data. We don't know whether you need four doses in heart failure or eight to get IV Lasix equivalent. They have to do those studies and show what that looks like. We have data in discharge, we have data in admissions, we have data showing you within 48 hours you're going to the hospital. We think that this is a tough market, and at their price point it's even tougher because you got to get a lot more patients just to keep your sales force employed every day. Remind me, for FUROSCIX, what proportion of revenue comes from nephrology, cardiology, and the hospitals? Yeah. Traditionally, about 10% in the IDN segment, that's growing faster. Nephrology's been in the 15% range, if you look at Q4 last year. This quarter it's trending upwards the last few weeks, probably closer to 20%. We'll keep watching that. We got a lot of people selling neph now, so hopefully that just keeps compounding as we build those prescribers up. Neph's hitting all-time highs right now on prescribers and breadth of prescribing, so we feel pretty good about that. IDNs have been hitting pretty strong the last few weeks, so we'll see. Ideally, where would you like that split? There's a lot of overlap in CHF and neph. Some of these patients have CHF, they happen to be in nephrology. I think the reality is the hospital segment is where I want to see the growth continue to happen, and I think that's going to be the long-term indicator of this getting to a multi-hundred million dollar opportunity for patients. I think the unmet need is so significant, no one, even payers, I'm shocked that they realize this is an acute episode. From a restriction viewpoint, 40% of our scripts have no PA. I expect that number to continue to improve. I've been explaining to the payers, when you have a prior auth, you're forcing people in the hospital because if they come in on a Friday, within 48 hours they're in the hospital. You're forcing hospitalizations, and they didn't like to hear that. I think the payer side of this will be, whether it's ENBUMYST or us or anything, I think everyone's going to have access is our strategy, not to block anybody. Ultimately you want to get to this hospital segment. This is really what's going to help a lot of patients avoid infections and drug issues in the hospital. I believe you mentioned you had 10 reps focused on IDNs. Do you think that's an appropriate number given how quickly that is growing? Maybe eventually at steady state you want IDNs to be 30% or 40% of revenue. Yeah. We can choose to either reallocate talent, right? We can choose to put more talent there. I think part of the strategy there was we wanted to make sure peds was approved because we had 20 people calling on institutions for pediatrics, and we didn't want to employ 20 people and then not have peds get approved. Now that peds is approved, we'll continue to look at the IDN segment for FUROSCIX and look at that independently. I'm sure we can add more headcount there as the year progresses or going into next year. I'd like to see the early success of the people we've hired, and then multiply that out and see what's necessary. Sure. You mentioned the 201 that's started today, right? Maybe remind us around the profile of that product and when should we expect data from that program. For those of you who don't know, 201 is our inhaled nintedanib, that's just another extension of our platform. The big question here is tolerability, number 1. Is there a cough issue in IPF patients? Is there a tolerability in IPF patients? We did a phase I-A healthy volunteer study last year that showed no tolerability issues, no cough concerns, no diarrhea. So far we got 24 patients in. I'd say at least 22 have been dosed. Within IPF patients, we're not seeing, again, intermittent cough, which is that's the cough we see. This is not a serious productive or repeatable cough. It's really related to the powder hitting the back of the throat and that's it. We don't see cough being an issue. We also haven't seen diarrhea again in another 20+ patients now. I'll remind you, this next dose cohort that we're doing, the first one was 2 mg three times a day. Now we're doing 4 mg twice a day. I don't believe adding a second inhalation after the first inhalation is going to add that much more cough or any problems. Our dose and the dose of our competition is roughly in the same ballpark, which should give us some confidence that two smart companies came up with similar dosing. I believe our technology will deliver higher concentration to the lungs, and we're going to find out whether this is a frequency issue, meaning is giving it three, four times a day more impactful versus twice a day? Is the Cmax more important getting higher doses? That's what we're going to explore in our phase II. Okay. When should we expect phase II data? We're aiming for late next year. I think it depends on how quickly this trial kicks off. If you'd told me that we were going to roll 12 patients in cohort 2 in four weeks, I wouldn't have believed you, but the team did an awesome job and for six sites, we had 12 patients come in in four weeks. This trial could go much faster once we get it up and running, but we just got the first patient dosed in phase II today, and we have another 30, 40 sites to activate in the next quarter. Let's see how fast they get activated and how quickly they roll. Okay. What would be clinically meaningful on the primary endpoint? Maybe remind us what that is. We are not scaling for a P- value here. We are looking for clinical differentiation at 12 weeks. We will be measuring cough scores, we will be measuring quality of life, we will be measuring FVC, FEV1. I will remind people that once you get to the 12-week endpoint, those on the placebo, because one-third will be on placebo, we will randomize to active, and we will be able to follow patients for another six months on the open-label extension. We will have some patients going three months. We will have a lot of patients going for six to nine months. Hopefully we will start to see a separation. We will be comparing twice a day nintedanib along with four times a day, that combined unit versus all the placebo. It is not really trying to compare four times a day, twice a day. We think both work well. We just want to look at that combined analysis versus the placebo. Sure. What else do you have going on in the pipeline? Yeah. Yeah. There's a couple things we're working on aren't public yet, but one of the ones that is public is bumetanide for an inhaled diuretic. We believe our technology really does give you that IV-like experience, whether it's the insulin. You can see that if you really want that IV-like delivery without the delayed effects that we think a diuretic would want, that'll be exciting to see how that looks, especially in these patients suffering from heart failure. Ralinepag was another opportunity announced with UT. We're excited about that program. It's going really rapidly from a formulation that'll get into patients hopefully this year, early next year. That's up to UT. Just from an overall company, we're cranking out in every single aspect you can imagine. Maybe in the last few minutes, just remind us the cash that you guys have currently, as well as the debt and also your capital allocation priorities. Yeah. I think from a cash balance, this year we had to pay $35 million in debt down. We paid in cash back in February. We have FUROSCIX, if all our injector gets approved, we have a $45 million payment due there. People ask me, "Where does the royalty money go?" Right. I'm trying to tell people we had a $30 million interest expense for buying sc, we have a $45 million payment, and we had $35 million in debt. That's where the royalty went this year. As you go to forward to next year, we don't have a $45 million payment. We don't have $35 million in debt. That pretty much drops to the bottom line. When you look at 2027, we expect Afrezza will grow, FUROSCIX will grow. The cost of the 201 trial is not that significant that it's going to cost us a bunch of money. I think 2027 is set up for a really nice story of growth and cash flow. I think this year we expect to be roughly break even. You might burn a little bit in Q2 and Q3 as you pay off these things, but Q3, Q4 should grow pretty substantially relative to the first half. I think net-net, we don't need to raise money. We've not been raising money for many years. We have debt. We have a $50 million still left on the Blackstone if we want that, but we're not planning to take it right now. From a cash balance, we're good. From a debt, we have no major debt due in the next four or five years. The only debt we have remaining is Blackstone, and that's an acceptable interest rate, and they've been a great partner so far. We feel pretty happy with the balance sheet there. On BD? BD, I think we want to see the current assets we have launch well. We do have other ideas in BD, I think from a board perspective and our perspective, let's commercially show we can launch drugs and do an excellent job there that will earn us more rights to do more BD. We got to get the stock price up, number one. I think that's the most important thing, I'm not sure buying another asset or buying another company is the most important distraction right now. We'll keep looking. Makes sense. All right. Well, thank you so much, Michael, for hanging out with us, and hope you have a great conference. Thank you. Thanks for having us.