Mannkind Corp Q2 FY2022 Earnings Call

Good afternoon, and welcome to the MannKind Corporation's Second Quarter 2022 Earnings Call. As a reminder, this call is being recorded on August 9, 2022, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until August 23, 2022. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from the stated expectations. For further information on the company's risk factors, please see the 10-Q report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Steven Binder. I would now like to turn the conference over to Mr. Castagna. Please go ahead, sir.

Good afternoon, everyone, and thank you for listening in. Today, I'll give a quick update on our performance for the quarter. Steve will go through the financials, and then I'll close on the pipeline and company updates. As you can see, this is the quarter we've all been waiting for. We're super excited about MannKind and the growth story that's becoming. Overall, we had 58% quarter-over-quarter growth, and we have several new sources of revenue. As you all know, we closed V-Go in May. We booked sales starting in June. That product is off to a great start, and I'll give a bit more details on that. We also were able to book a portion of the DPI Commercial Manufacturing revenue, which Steve will go into more of $4.7 million and Royalties, which will not be broken out as a percentage, but more as a dollar value as we go forward of roughly $300,000. And then you can see Collaboration and Services and Other, about $1.2 million. You may recall, previous years and quarters, a lot of that was the amortization of the payments that we received from UT over the time period of that contract. So I think it's good to look quarter-to-quarter now as we look at the way the revenue is looking given that contract ended last October. Total revenues for the quarter were up 58% in Q1, and we think that as you continue to look out, we'll see more royalties, more manufacturing, more Afrezza, more V-Go. And so we really feel this is the foundation of the growth story that we've been working towards the past several years. So a couple of highlights here on the orphan lung side. As you all know by now, the FDA approved our Tyvaso DPI for PAH and ILD. And then we began manufacturing and commercial product sales with UT in June with royalties recognized. You will notice that Steve talked that some of that inventory that was built in June is hung up on the balance sheet and will carry over the deferred next quarter. On the pipeline, clofazimine completed the SAD and MAD trials, single-ascending dose and multiple-ascending dose. We'll have those top line results here shortly, and we'll publish those publicly at the appropriate time. The other two pipeline assets are starting to move forward is nintedanib MNKD-201 as well as MNKD-501 TGF-beta and that development is progressing, and I'll give a few updates on these at the end of the call today. On the endocrine side, we saw a 7% growth in Afrezza from 2021. We saw TRx grow 12% from Q1 to Q2. Unfortunately, we did do a Primary Care Product for the last 6 to 9 months, and that did not produce the results we expected relative to the expense. And so we terminated that at the end of June. And so that expense will not be going forward much further than July. So that's some of what we'll see as we go forward in terms of expense production on the PCP pilot. On the INHALE-1 pediatric trial, that's going as expected. We added a few new sites in the last quarter as well as about 80 patients now and on track to hit our goals between now and the end of the year. And we also have the Afrezza Basal Combination study, ABC. And that's the one looking at maintaining a pump, adding Afrezza to a pump or switching off a pump to Tresiba Afrezza. And that's on track to give us results in early Q4. It's a small study, but I think will be very important results to give us opportunities for 2023 and beyond. And on V-Go, we'll get a little more detail there, but we had booked net revenue of $2.1 million just for the month. We will book revenue for April and May. From a liquidity perspective, as we look out over the future, you can see four sources of revenue. Additionally, Mann Group converted $10 million in debt in Q2. So now we have $10 million less in debt that we'll capitalize as we go forward. That does include some accrued interest that will be taken off the principal. Tyvaso DPI, you can see here the final packaging, the FedEx truck leave our Danbury facility. We are a 24/7 manufacturing. We continue to look for ways to drive more efficiency to the manufacturing process to get more cartridges per hour as we can. And we also broke ground on the expansion. As you all may or may not know, UT is pursuing two studies called the TETON and the PERFECT study, which are much larger patient population than the PAH and ILD. And so we have built the original plans a couple of years ago. That was to handle the first two indications of Tyvaso. We always knew we had to expand as UT starts to ramp up those trials over the next year or two. Again, those results, we need to get far ahead of that in terms of order and equipment building out the facility in order to be ready for that approval when and if it should occur. So that program here last quarter in Danbury. One of the big shifts we made for MannKind and Afrezza in the first quarter, specifically February, was really to look at market share in particular, new prescription market share relative to the ultra-acting class. And the reason is that class consists of Lyumjev, Fiasp and Afrezza has been growing. And more and more doctors continue to adopt ultra-acting insulins. While I don't necessarily believe Lyumjev and Fiasp will qualify, the reason doctors are writing those is because they believe they're faster, and I think their clinical data would say otherwise. The fact is Afrezza is competing indirectly or directly against those two launches, we felt it was good to start measuring our market share and incentivizing our corporate executive management team, all of our employees as well as the frontline sales reps. And you can see that had a direct impact on our market share growth over the last four to five months here as we close out the quarter. So we did hit a level of 12, and we continue to grow through March all the way to June. Additionally, on the right side here, you can also see these are prescriptions that don't show up in Symphony, but we have a free goods program, a cash pay program and Afrezza Assist with your referrals coming in will ultimately become the funnel for new patients. And you can see on an average quarterly basis, a weekly basis that those have gone up from 122 to 223 over the last couple of quarters here. So that's also exciting. That kind of gives us the polls to come as we go forward. When you look at new prescriptions, we delivered 14% sequential NRx growth, which will lead you to the 12% TRx growth. So we need our NRx to grow faster than TRx in order to feel good about the next quarter as we look out. We also amplified our clinical message with health care providers. We had a major presence at ADA, AACE and ENDO. It was pretty impressive when I attended ADA. Typically, you'd walk in, and AstraZeneca and Novo Nordisk have the biggest booths. You couldn't get in without walking through them. And this year, MannKind was right up front and among the bigger booths. The large people who typically visit diabetes are some of the smaller or no goods. And it was really a technology conference, and that's what ADA is focused on. So I think the team really tried to showcase MannKind here because this is the first conference that people will go back to live back in June with ADA. So we'll continue to see focus on the remaining impact from the conferences and the investments that the marketing team made there. I want to talk a little bit about V-Go because we haven't had the chance since we closed that deal to have a deep dive on it. We really want to strengthen our commitment to mealtime solutions when it comes to running our endocrine business. We have about 60 sales reps. And when they go in, if the doctor doesn't want to write Afrezza of which we see a large majority of our customers after six years still not writing an Afrezza prescription, it's not efficient. V-Go is a device we watched many years, and they were doing at one time almost 2,500 prescriptions a week. And that was a lot more prescriptions than Afrezza at that time. And we look at it now, it's been on a decline. But they had a lot of utilization and a lot of prescribers that love the product. And those aren't necessarily prescribers who prescribe Afrezza or tried Afrezza. And we thought being able to build more efficiency and sales force being able to make MannKind more committed to mealtime solutions is really something that can differentiate us as a company. There really is no diabetes company today focused on mealtime solutions. They're all focused on cranial control or devices and then trying to get insulin on the go. We felt this was a very nice synergy with our portfolio. And when you look at the purchase price below, $15 million. That includes all the IP, $11 million of inventory and $3 million of equipment. So if you add up those two lines, we basically got V-Go for a net $1 million. So this was a good investment of shareholder money. We will return when we will get our return on that investment and hopefully grow and provide more solutions to the diabetes space than we ever had. We expect first-year revenue to be $18 million to $22 million and accretive in 2023. And that's a 12-month year, not necessarily the rest of this year. Commercial infrastructure, we've hired an additional 15 sales force as well as a leader to lead the V-Go business and a medical person in addition to the manufacturing people. So this did increase our headcount, but all that is in our expectations. And overall, we have the former Zealand employees who joined us up in Boston and outside Boston who are continuing to run the supply chain manufacturing network. So we're very excited about V-Go. I think you can see in the first quarter, it looks very good. When you look at the next slide here, the big thing was about stabilization. This has been on a 15-month decline mainly because they stopped promoting it back in March of '21. And prior to that, it was through a bankruptcy. And so it's just had a tough history. And so we were very happy to be able to get people on board and start to stabilize that decline in Q2. And hopefully, as we look at Q3, we start to turn that negative to positive growth. I would say the leading indicator of NRx and the NRx ratio over TRx is indicating that we are starting to make an impact. And we know the prescribers are excited to have V-Go and MannKind and really can't wait to give it in the hand of the rest of our sales force. Right now, we're only promoting it to those 15 reps. And those are the top reps in the top centers that probably cover 50% of the units. And to my earlier comment on prescriptions and coverage, you can see now in a given month, we have almost 9,000 patients filling a prescription for a MannKind product. And that gives us about 2% market share of all rapid-acting scripts. And so that's not just ultra-acting. That's all rapid acting, including Novolog, Humalog. And that gives us a reason to be optimistic. And we expect to continue to grow that share over the coming years and also reach nurse practitioners and PAs who are heavier users of V-Go and also heavy prescribers of insulin. So we feel like this is a really good opportunity to increase our share of voice, increase our commitment to diabetes and the endocrine business and give our sales force another tool to help provide solutions to patients who aren't in control for the most time. I'm going to stop there and turn it over to Steve. Thank you for listening.

Thanks, Mike, and good afternoon. I'm pleased to review select second quarter and June year-to-date financial results. Please supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC this afternoon. As Mike pointed out, this is the first quarter for three new sources of revenue for MannKind. With the approval of Tyvaso DPI in May and the subsequent launch by United Therapeutics, we have begun to recognize manufacturing revenue and royalties in our second quarter P&L. In addition, with the purchase of V-Go effective May 31, we have recorded net revenue for the month of June. This slide shows revenue for the second quarter in the left table and June year-to-date revenues in the right table. Looking at revenues for the second quarter of 2022, Afrezza net revenue was $10.6 million versus $10 million in 2021, a growth rate of 7%. The increase was mainly driven by price, including a more favorable gross-to-net percentage. Growth in underlying paid TRx demand of plus 8% was substantially offset by a decrease in channel inventory. Year-to-date Afrezza growth came in at plus 13%, which was mainly due to favorable price, including a more favorable growth to net percentage, higher underlying patient demand and favorable cartridge mix. Next is our net revenue for V-Go, the newly acquired wearable insulin delivery device where we had $2.1 million in net revenue for the month of June. We expect V-Go net revenue for the 12 months post acquisition to be in the range of $18 million to $22 million. Moving to collaboration and services. Revenue for the second quarter was $5.9 million versus $13.3 million for 2021. The second quarter includes the sale of Tyvaso DPI commercial product to UT. The decrease in revenue from the second quarter of 2021 was mainly due to the recognition in the prior year of amortization of United Therapeutics milestone payments. I will dive more deeply into the UT manufacturing revenue and deferred revenue on our next slide. The June year-to-date revenue of $8 million is mainly lower because of the prior year at UT milestone amortization as well. Also new for MannKind, we recognized $300,000 of royalties associated with the sale of Tyvaso DPI by United Therapeutics in the second quarter based on a low double-digit royalty. We have previously communicated that we will provide the exact royalty rate upon approval of Tyvaso DPI, but we have agreed with United Therapeutics to keep the royalty rate confidential for competitive reasons. The next slide breaks down the collaboration services revenue that was discussed on the prior slide, but we also added the associated deferred revenue, which sits on the balance sheet. The UT associated revenue includes manufacturing services and additionally, next-gen R&D services, which are mostly pass-through costs. For the second quarter, we recorded collaboration services revenue associated with UT of $5.4 million, including manufacturing services revenue of $4.7 million. And we deferred $4.1 million of revenue to the balance sheet in the second quarter, of which approximately half is associated with inventory that sits on our balance sheet and is expected to be sold to UT in the third quarter when we will recognize the associated deferred revenue to income. Beginning in the second quarter, we have started to recognize prior period deferred revenue for manufacturing services and expect to do so throughout the life of the manufacturing contract with UT, which runs through 2031. There was a total of $29.8 million of deferred revenue associated with UT on our balance sheet as of June 30, 2022. Now let's look at the profitability of Afrezza and V-Go. Afrezza gross margin increased from 56% in the second quarter of 2021 to 68% in the second quarter of 2022. And the gross profit associated with Afrezza increased 31% to $7.3 million. The increase in the second quarter gross margin versus 2021 was due to an increase in Afrezza sales coupled with a decrease in cost of goods sold mainly due to a $2 million fee incurred for the amendment of our insulin supply agreement in the second quarter of 2021. When looking at the profitability for the first half of 2022, Afrezza had a gross margin of 72% and gross profit of $14.8 million driven by higher sales and lower cost of goods sold. There will always be some variability in Afrezza gross margin between quarters due to the timing of manufacturing spend and activity as we are not at maximum production capacity for the product. The far right table shows V-Go gross margin of 40%, which is about where we expected the margin for this medical device to be based on a review of the seller's financial information. Prospectively, we will focus on improving the margin for this product. Let me conclude with some final comments about liquidity and performance. We continue to transform the balance sheet. In the second quarter, there was a reduction of $10 million of debt that was converted to equity by the Mann Group, resulting in reduced debt and interest expense. We spent $15 million to purchase V-Go, including inventory and equipment valued at approximately $14 million, which infers that we got a bargain purchase price. With rising interest rates, we are well positioned with very little interest rate risk due to the low fixed rate for most of our debt. For our one floating rate loan with MidCap, we anticipate rising interest rates and negotiated an interest rate cap with a maximum exposure of less than 1% above the current rate. Also associated with the MidCap loan, we did not exercise our right to borrow up to $60 million under Tranche 3, which was accessible to us once Tyvaso DPI was approved by the FDA and was available until June 30. Operationally, we are showing continued progress in generating sales growth and gross profit for Afrezza, which should turn Afrezza into a moneymaking brand. We have added V-Go to the endocrine business unit, which will expand our footprint with insulin-prescribing physicians as well as help synergize our cost base and infrastructure. Our collaboration with UT is strong and has a ton of potential. We are producing Tyvaso DPI on a 24/7 basis and are seeing increased efficiency in our manufacturing output while recognizing manufacturing revenue and royalties for the first time during the second quarter. We are excited about our future as we now have four growing sources of revenue in addition to an early stage but established product pipeline. Thank you, and I'll turn it back over to Mike for additional comments.

Thank you, Steve, for your efforts in tracking the complexities we have developed over the past few years. I am very excited about our pipeline, which reflects decisions made years ago, and every year brings us closer to seeing those decisions come to fruition. For instance, we decided to pursue Tyvaso in 2017 and partnered with UT in 2018, leading to an approval nearly three years later. Though it took longer than expected, it was ultimately approved and will be a key growth driver for MannKind moving forward. I won't delve into the specifics of Afrezza just yet, but I want to highlight MNKD-101, which is set to quickly move into Phase II/III and meet with the FDA. Although nintedanib is still early in development, it, too, is expected to progress swiftly once we engage with the FDA. We are beginning to see a pipeline emerge that can drive long-term value. Investors have primarily focused on getting Tyvaso DPI approved, but as we continue growing Afrezza, V-Go, and Tyvaso, I believe there will be increased activity and updates on our pipeline, particularly regarding safety and ongoing animal studies. This is shaping up to be an exciting narrative moving forward. Additionally, we began two other programs: Cannabidiol, which dosed its first patient last quarter, and a small molecule from Fosun. Cannabidiol is making progress with support from the FDA after years of development. Regarding our pipeline, I mentioned the pediatric and Afrezza Basal studies, both of which are on track, and we anticipate the Basal Combo study results by early Q4. Clofazimine completed its phase, and we expect a data readout soon. Nintedanib has finished its animal PK/PD studies, and we feel positive about the findings. We are also advancing our TGF-beta program, which is notable due to its unique characteristics and dosing capabilities compared to previous efforts. Overall, our pipeline is developing well, particularly for a company of our size, as we maintain a consistent revenue stream and expand our pipeline. We are executing the milestones set at the beginning of the year, including the completion of enrollment in ABC studies, and we will have a Phase I readout next month along with the completion of animal PK/PD studies. By the end of the year, there will be significant FDA activity along with many developments happening simultaneously. The company is in excellent shape. The primary question we face is whether we are on track for profitability. As Steve mentioned, we opted not to take the $60 million tranche loan as we see no need for additional capital. We are effectively managing our expenses, observing growth in Tyvaso, and anticipating pipeline developments. As we look ahead, we see a promising future with multiple revenue streams growing significantly over the next several years. Although we are not concerned about our sustainability past 2030, we have various initiatives that will keep propelling us forward. We are nearing 400 employees, which fosters a new organizational culture and attracts new shareholders. We have seen institutional investment grow, and we continue welcoming new visitors to our Danbury facility. Overall, our company is thriving, and I extend my gratitude for everyone’s support. We are thrilled about Tyvaso's progress and the overall potential it brings to our operations. Thank you to UT for their partnership and unwavering support to MannKind and our shareholders. Let’s open the floor for questions.

Our first question comes from Gregory Renza from RBC Capital Markets.

Congrats on the quarter. I have a couple of questions about Tyvaso DPI. Could you clarify the agreement with UT regarding the manufacturing margin? I understand the royalty rate is confidential, but I'm curious about the manufacturing margin. Additionally, can you explain how the macro environment related to inflation, labor, and supply shortages has affected your manufacturing capabilities?

I think regarding the manufacturing margins with UT, we're not ready to provide clarity on that yet. Let's wait for full manufacturing data over a quarter or two. We will continue to evaluate internally whether we can disclose that specific markup on manufacturing revenues as they come in. It was too early in Q2 and we had only a partial quarter of production, so we want to avoid any confusion. As for your second question, I didn't catch it entirely, but it seemed to relate to the impact of inflation.

Yes. So let me touch on that. So this year, we are seeing a mix of some rising costs, in particular, around energy. We're also seeing some savings as we increase our volumes of purchases of certain supplies that go into making our products that drive the cost per unit down. So this year, we don't see a significant increase in costs. I think next year, you probably will see a little bit of an increase. But so far, nothing significant or material to our balance sheet or our P&L at this point in time.

And closing on that, I think the only area we continue to see is the people side, we've been very fortunate to not have a lot of turnover at the company, a lot of excitement amongst our employees. They're all shareholders, so they're all committed to our journey and what we're doing. And so I think that's the area that we see a lot of inflation across society, but we've kind of tried to manage that through efficiencies and delay hiring and things like that to make sure we're not incurring additional expenses anticipated this year.

And your next question comes from the line of Brandon Folkes from Cantor Fitzgerald.

Congratulations on all the progress. Can you provide any commentary on inventory levels for Afrezza? How does that compare now, and is it at a normalized level at the end of the second quarter? Additionally, how should we prioritize products moving forward in terms of Afrezza versus V-Go, particularly regarding potential revenue growth? Any insights on these two products in the sales representatives' portfolios for the future?

Sure. Let me take the first one, Mike. I'll take the channel, and then I'll drop it off to you for the revenue. So yes, the channel inventory moves around as much as $0.5 million quarter-to-quarter. It's not up to us. The wholesalers are the ones who are managing their own inventory levels. So we see it. It happens in some quarters, not every quarter. Is it normalized now? It's in the right ballpark. I don't see material changes happening. Yes, we had an offset this quarter that, say, offset our growth in patient TRx increase. It was unfortunate, but we did have an 8% growth in the prior year in paid TRx. But I don't think, again, it's going to be material quarter-to-quarter, but it will fluctuate.

Another thing I'll add, Steve, is we did see a 13% decrease in days on hand, so they did drop a few days of inventory. So that impacted Q2 a little bit. But if you normalize for inventory, there would be slightly higher sales on the present. I think your second question, Brandon, was how do we think about V-Go versus Afrezza as we think about the future. Is that what I heard?

Correct, yes.

Yes. There is a significant difference in margins for the company, as well as the number of prescriptions needed to break even on one product versus the other. We were aware of this when we made our purchase. However, it's essential to encourage doctors to consider different options, especially since we know that 80% of individuals using mealtime insulin are not achieving their goals, and many are not being advanced to better alternatives. Our focus is on enabling sales representatives to engage doctors more effectively. If doctors are hesitant to prescribe Afrezza, they could consider V-Go, and vice versa. It’s crucial to take a different approach and, more importantly, to provide patients with choices. After six years of promoting this, we're wrapping up some research, which indicates that while patients are asking for Afrezza, doctors are not presenting it as an option. It’s vital to change this perspective next year to emphasize patient choice and their rights regarding treatment options. This will be particularly important for both Afrezza and V-Go. We want patients, especially type 2 diabetics, to choose what best suits their lifestyle and mealtime management. We do not expect one product to hinder the sales of the other, and it’s worth noting that we do not have 98% of the market share for these patients. Our goal is to attract more patients to our brand. With V-Go, we can now introduce a nurse trainer in selected markets since there isn't enough volume to justify it otherwise. This role provides necessary support, which hasn’t always been feasible with just Afrezza. As we approach the end of this year and move into 2023, we will discuss the best ways to maximize our impact and support the sales team effectively. We will have a dedicated V-Go sales force, as these are top accounts managed by experienced representatives. The challenge lies in figuring out how to best integrate Afrezza with this team and whether we have overlapping or distinct accounts for both products. This planning is just beginning, so I cannot provide much guidance until we reach the next quarter, but I anticipate that we will have clarity by then.

Your next question comes from the line of Thomas Smith from SVB Securities.

Congrats on the progress. Just on Tyvaso DPI, can you comment on kind of the early days supply chain as you guys manufacture the drug product? Any challenges you see on the supply chain side of things here as UT gets out there and launches DPI into the market?

Not right now. Fortunately, we have some time to build inventory as they launch. The pulmonary market typically requires two to four weeks to start a patient, which includes getting them approved for insurance, completing the necessary forms, and providing proper training. These treatments usually last a lifetime. This process is managed by UT, which sees referrals coming in weekly. They indicated that the initial launch focused on converting patients from lower dosages, and the next step involves the titration pack that was introduced in July aimed at new patients. We expect to see these new patients coming in soon, with additional packaging planned for later in the fall. UT has a comprehensive strategy for this launch and we do not anticipate any supply challenges since everything has passed validation and is on track. We have sufficient inventory and do not foresee stockouts or delays; things are in a good position. Additionally, we are also the distributors, shipping to pharmacies weekly as orders come in, and that process is going smoothly as well. We were initially concerned about potential issues since this is our first time managing this, but everything is set up, with large storage and weekly deliveries, and we are very excited about it.

Okay. Great. And just a couple on V-Go. Appreciate all the color on the acquisition and the strategy. Can you just help us understand how you're thinking about longer-term revenue potential here? And then can you also help us understand how you're thinking about the cost structure a little bit? Are you planning to make additional investments here on V-Go? And I guess help us think a little bit about the longer-term gross and operating margin profile and how that compares versus Afrezza.

Yes. I'll say on the V-Go device, they've lost half their volume roughly over the last two years, and that's obviously hurt the margin of that product. And so I think that's one of the things we'll be looking at as volumes start increasing, how do those markets improve to what extent? And is there anything we can do to improve them even further? At this point, we don't have plans to add any additional cost. There's enough production there to handle a lot more volume. Now if we decide to move production or make it more efficient or automated, that's a different story. But we just got the product less than 60 days ago roughly. And so I think there's still a lot to learn, but the team there is doing a great job in managing the supply chain at V-Go. Think about them making almost 3 million V-Gos a year. So maybe more than that by now. So there's a lot of device production that happens with V-Go into the marketplace, and it's a pretty complex supply chain. So I think that's how we'll manage. We'll continue to look at it. We want to be comfortable that it was at least stable in the short term, and then we'll look at ways that maybe volume drives it, the automation drives it. We have a good team at MannKind as well as former Zealand team that really understands device manufacturing, device scale-up. So I think that's something we'll look at in the second half of this year. On the long-term expense base overall revenue, I do think V-Go will show some growth in the near term. I think there's a lot of pent-up demand. There's a lot of people thought that that was going away. So I think you'll see that come back a little bit faster than one would expect. We'll see in the coming months how the noise on the street at least is very positive. On the expense base, we expect to pretty much manage our expense base tightly. We're not looking to increase our cash burn as it comes to Afrezza and V-Go combined. We're looking to build efficiencies as we go. We see ways to grow faster. We are welcoming those opportunities from the marketing sales team to do that. But as you know, we've tried so many different things over the years. We really want to see productivity out of the existing investments we're making before we add more. And so that's how we're thinking about it. If we see something that's growing or an area that's growing, and we replicate that nationally. But at this point, we're buying the brands to cash flow breakeven and ultimately cash flow positivity as we look at '23 and beyond.

And our last question comes from the line of Steve Lichtman from Oppenheimer & Co.

Congrats on the quarter. This is Amir filling in for Steve. I have a question about the pump switch trial. Were you expecting to receive the data in the second half of this year? Additionally, could you remind us of your goals once you have the data?

Yes, we always expected it to be a 12-week trial with only 28 patients randomized. We actually included a couple more to ensure we reached our target of 25 patients. The surprising part was how quickly the enrollment happened; these trials usually take longer. It's a small trial, very manageable with just two sites, and they did an outstanding job completing the enrollment in about 45 to 60 days. As a result, we will receive those results much sooner than anticipated since enrollment was so swift. Now that everyone is enrolled, we just need to account for three months of the trial, so we expect to have the results around September or October. After that, we will determine the timing for sharing the results, possibly in late winter or at the ATTD next year. In this market, the focus is heavily on insulin pumps, and not many are considering switching away from them or adding Afrezza in various ways. This study is quite groundbreaking, and although it’s small, it will provide us with valuable insights as we move into 2023 and beyond. We aim to refine our strategy based on the results. If we achieve superior outcomes, we will adjust our approach accordingly; if the results are equal, we will take a different route, and if they are suboptimal, we will strategize anew. Our main objective is to see a change in A1C, assuming there's no difference between the control group and the other two. An improvement in hypoglycemia, time in range, or A1C would represent favorable scenarios for us. However, demonstrating that people can maintain A1C control and safety after switching from a pump is something the market currently doubts, and we will be monitoring that closely.

Yes, we don't have any questions for now.

Okay. Okay. I see a couple other analysts. So okay. Well, we'll have one-on-ones. People need any questions or comments, you can reach out to us. And otherwise, thank you for your time today. I look forward to really getting to the next stage in Q3 and sharing with you further results and growth as we go forward. So thank you, everyone, for your time. Have a great week.

Thank you, presenters. And this concludes today's conference call. Thank you for participating, and you may now disconnect. Have a good day.