Mannkind Corp Q4 FY2022 Earnings Call

Good afternoon, and welcome to the MannKind Corporation 2022 Fourth Quarter and Full Year Financial Results Earnings Call. As a reminder, this call is being recorded on February 23, 2023 and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until March 9, 2023. 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 those stated expectations. For further information on the Company's risk factors, please see their 10-K 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 call over to Mr. Castagna. Please go ahead, sir.

Thank you, Lisa, and thank you, everyone, for being here today. This weekend marks seven years since I joined MannKind, and sadly, it’s also the anniversary of Alan's passing. The journey has been incredible, albeit more challenging than expected. The year 2023 is significant as it marks the start of our new growth strategy. We are closer to achieving our long-term goals despite the challenges we faced. We are well-prepared for our next growth phase, and I want to express my gratitude to our employees, shareholders, foundation trustees, and other stakeholders who have supported us along the way. Our best years are still ahead. I’m eager to start our Q4 earnings call today. Our mission is to empower individuals to take control of their health and enjoy life, a vision we call "life more human." This has never been more evident as we share patient stories from our Tyvaso DPI launch and the positive feedback we receive for V-Go. Every day, we strive to make life easier and more fulfilling for people. The year 2022 was transformative for MannKind. A year ago, we had just one marketed product and were dealing with a delay in FDA approval for Tyvaso DPI, along with one compound in trials for Afrezza’s INHALE-1. Today, we have three marketed products, including one by United Therapeutics, two compounds in clinical trials, and four sources of commercial revenue. This is a pivotal moment in the company’s history as we approach $100 million at the end of 2022. Steve will discuss how this translates into our run rate for 2023 and beyond. Our collaboration royalties have increased by 20% compared to last year, and our endocrine business has grown by 44%. These new revenue streams will provide the necessary capital to support our growth and make a meaningful difference to the patients we serve. The early stages of Tyvaso DPI with United Therapeutics have been revolutionary. Comparing this to last year's performance highlights our continuous progress. While collaboration services revenue in Q4 remained stable, royalty revenue saw significant growth. It’s important to note that our collaboration services revenue is relatively fixed, but as we increase the production volume from our facilities, we expect to see continued growth. The EBU business gross profit accelerated in 2022. Our net revenue climbed by 44%, resulting in nearly 80% growth in gross profit, rising from $22 million to $30 million in the endocrine business unit. This growth has occurred without any increase in cost of goods sold, even with V-Go’s addition. We have maintained stable costs, allowing additional revenue to contribute directly to our bottom line. We are focused on efficiency as we integrate this business and drive future revenue growth. Last year, we initiated a small primary care pilot that didn't proceed as we had hoped, so we exited that business and will repurpose those funds to drive growth as we move forward. Turning to Q4 highlights, we experienced strong demand for DPI, which will contribute to our future manufacturing revenue. Our royalty revenue increased by 50% compared to Q3. Manufacturing capacity expansion is already underway, and we anticipate another FDA meeting soon. We plan to advance this asset into a Phase 2/3 trial design later in 2023 and will share more details in Q2 and Q3. We submitted a pre-IND request for MannKind 2.0, expecting feedback shortly as we progress into a Phase 1 study. In our diabetes business, Afrezza saw a growth of 9% compared to 2021 and a 4% sequential increase quarter-over-quarter. The INHALE-1 trial is on track. Just yesterday, we announced favorable results from the Afrezza with Basal Combination study, and we’ll present full results later this year. These insights boost our confidence in launching a larger Phase 4 study, positioning us as a leader in managing Type 1 diabetes. V-Go generated $5.4 million in Q4 net revenue. We're stabilizing this business and looking forward to future growth. We ended last year with $173 million in cash and cash equivalents. Following our V-Go acquisition and as the competitive landscape stabilizes, MannKind is establishing itself as a mealtime solutions provider. Other insulin products have struggled over the years to make a meaningful patient impact, while insulin pump companies have faced challenges with mealtime control. We believe V-Go can significantly improve the quality of life for Type 2 patients, as demonstrated by our results. Last year, we advanced our scientific understanding of Afrezza, with key results emerging from five years of research. The dosing we implemented in INHALE-1 has been positively validated in our pediatric trial. We believe these findings will yield significant benefits in terms of mealtime control over the coming months. The ABC trial results will be forthcoming, and subsequent analyses will be shared at upcoming conferences. We have also published results from the DAS study and continue to progress with our pediatric study to help patients safely switch from insulin pumps to Afrezza. We’ve enhanced our patient support services for Afrezza and are working on reducing authorization hurdles in the process. We advocated for including inhalants in the Inflation Protection Act, which positively impacts patients requiring insulin coverage under Medicare. We've improved our product dating from 24 months to 36 months. This is crucial as many of our gross-profits are affected by product returns, and we expect a decrease in returns as demand grows. We purchased the V-Go asset in Q2 and focused on its integration throughout 2022. We’re now launching it across our Afrezza sales force. Last year, we prioritized increasing market share for new prescriptions, achieving a 17% year-over-year growth in NRx through Q4. Early indicators show positive momentum, with a 24% growth in the first six weeks of Q1 compared to the same period last year, suggesting strong future performance in TRxs. Likewise, we anticipate NRxs for V-Go to stabilize and eventually grow as we move throughout the year. The success of Afrezza and V-Go is vital for our company. We have tailored our Afrezza strategy to target the younger Type 1 population with commercial insurance, while also addressing the significant Medicare segment of our market. We will continue to focus on improving our gross-to-net ratios by partnering with specialty pharmacies for better patient service. V-Go predominantly serves an older Type 2 demographic, with a significant Medicare presence. In 2023, we are positioning these assets to enhance our overall strategy. Over the next 12 to 15 months, we have several exciting developments in the pipeline. We recently initiated the InHealth Ridge program for AATD and are launching BluHale, which will integrate CGM technology with the Afrezza device for predictive dosing solutions. We aim to read out the Phase 2 INHALE-2 trial for Type 2 diabetes and, assuming a successful limited launch of BluHale, we plan to roll it out fully in the latter half of the year. By year-end, we expect to enroll subjects in the INHALE-1 pediatric study and deploy the INHALE-3 trial early next year, with results expected shortly thereafter. Now, I’ll turn the call over to Steve, who has been an invaluable partner over the past six years. Thank you, Steve.

Thanks, Mike, and good afternoon. Pleased to review the select fourth quarter and full-year 2022 financial results. Please supplement this call by reading the consolidated financial statements, MD&A contained in our 10-K, which was filed with the SEC this afternoon. We're very proud of hitting the $100 million mark in total revenues for 2022. I just showed our transition as a company with one source of commercial revenue to a company with multiple sources of commercial revenue. Let's start with the fourth quarter financial table, and then we'll come back to the full-year results. Net revenue was $12 million versus $11.3 million in 2021, a growth rate of 6%. The growth was mainly driven by higher patient demand with underlying TRx growth of 9% year-over-year. In previous quarters, I have been discussing the adverse impact of the lowering of post-sale inventory levels, which impacted our revenues for the first three quarters of 2022. We can now confirm that we saw the bottom out of this in the third quarter as expected. Year-to-date, Afrezza growth came in at 11%, which was mainly due to favorable price, higher product demand and a more favorable cartridge mix. Our gross to net held steady at 39% year-over-year. This is related to V-Go where we had $5.4 million of net revenue for the fourth quarter and $12.9 million for year-to-date, which represents seven months from June through December. We continue to see V-Go net revenue tracking at the high end of our forecast range of $18 million to $22 million for the 12 months post-acquisition. Moving to collaboration services. Revenue in the fourth quarter was $9.5 million versus $1.2 million for 2021. The main driver for the fourth quarter 2022 collaboration revenue is associated with the manufacturing of United Therapeutics, while this 2021 revenue was impacted by the end of the amortization of DCI R&D milestones and delaying the FDA approval for the drug, which meant that we had to defer revenue until we could manufacture commercial products and sell to UT. The full-year revenue of $27.9 million largely reflects manufacturing revenue recognition that began in the second quarter and is lower in 2022 versus '21 because of the prior year UT milestone amortization and the first half of 2022 deferral of revenue associated with the delay in the start of commercial manufacturing. In addition to UT-related revenue recognized in 2022, we had $37.9 million of deferred revenue on the year-end balance sheet associated with TRx activities, which will be recognized to income through 2031, which is the remainder of the universal supply agreement with UT. I will review this in further detail in a few minutes. Lastly, we recorded book fees on net sales of Tyvaso DPI by United Therapeutics to their customers. The $9.1 million royalty recognized for the quarter is almost 50% higher than the third quarter and demonstrates strong demand for the product. We have recognized $15.6 million in revenues for products launched by UT in June. The next slide shows 2022 growth on a quarter-to-quarter basis. This graphic shows the change in our company this past year, growing 20% from the first quarter to fourth quarter. The second quarter of 2022 marked a change to multiple sources of commercial revenue when we began to benefit from commercial production of Tyvaso DPI, the launch of Tyvaso DPI by UT for which we are in low double-digit royalties and the purchase of V-Go. As we exited 2022 and lean forward to 2023, our fourth quarter run rate of $36 million is almost halfway to $200 million in total revenues. Now let's look at the profitability of our endocrine products, Afrezza and V-Go. Afrezza's gross margin increased from 62% in the fourth quarter of '21 to 92% in the fourth quarter of 2022, and the gross profit associated with Afrezza increased to $11.1 million in the quarter. The increase in the fourth quarter gross margin versus 2021 was due to a decrease in cost of goods sold, mainly from lower inventory write-offs, lower cost per unit, lower excess manufacturing capacity costs and a high level of manufacturing activity in the fourth quarter of 2022, which capitalized a higher amount of cost of inventory, plus an increase in Afrezza net revenue. When looking at the profitability for the full year of 2022, Afrezza had a gross margin of 80% and gross profit of $34.6 million, which were both markedly improved from 2021. The main drivers of the improvement were lower cost of goods sold, meaning from a decrease in excess manufacturing capacity costs which is a benefit from Tyvaso DPI production absorption, lower cost per unit, a $2 million fee incurred for an amendment of our insulin supply agreement in the second quarter of 2021 and lower inventory write-offs plus increased net revenue. Please note that there will always be some variability in Afrezza gross margin between quarters due to the timing of manufacturing spend and activities as we are not yet at maximum production capacity. The far right table shows V-Go year-to-date gross margin of 43%, which has remained consistent quarter-to-quarter since we acquired the product. 2022 was the year focused on the commercial manufacture of Tyvaso DPI at our facility in Denver and Connecticut, but we were also focused on increasing the efficiency of our current manufacturing lines as well as building out increased manufacturing capacity. These activities led to both Tyvaso DPI revenue being recognized as well as being deferred in 2022. The left-hand side of the table shows our revenue recognized for the year. Revenues mainly associated with the manufacturing of Tyvaso DPI and activities for the next-gen R&D services totaled $27 million, while royalties accumulated $16 million in revenue for a total of $43 million in Tyvaso DPI-related revenues for 2022. Moving to the right side of the table, we started the year with a deferred revenue balance of $19 million and added another $19 million in revenue deferrals, mainly associated with the Tyvaso DPI facility expansion, manufacturing process improvements and pre-commercial activities. We expect additional revenue deferrals in 2023 while conducting activities paid for by UT related to the facility expansion and further manufacturing process improvements. Please note that UT is paying MannKind promptly for all activities where the revenue was recognized or deferred, so cash flow is not adversely impacted by any of these activities. Let me conclude with some final comments around the liquidity. We ended the fourth quarter with $173 million in cash, cash equivalents and investments, a decrease of $5 million from September 30. We achieved this low level of cash burn because of the fourth quarter collection of monies owed to us from UT New Zealand that were outstanding at September 30. Looking ahead to 2023, we expect to reduce our cash burn as we benefit from the impact of increased cash flows from our collaboration with UT and reduced cash burn associated with our endocrine commercial business unit as we move that unit towards profitability. But also note that we'll be increasing intent behind the development of our product pipeline, which is quickly becoming our next lever of shareholder value. Thank you, and I'll turn it back over to Mike.

Thank you, Steve. So as we look at MannKind's products and pipeline, you continue to see this get bolstered up year after year. Afrezza is now on track to hopefully get forward to IND filing this year, pediatric wrap-up and V-Go's launch. On the pipeline, what people don't appreciate is how much time it takes in the early stages of the pre-IND formulation and getting the dosing right and tox data right in order to progress these into Phase 1, 2, and 3. Rest assured 201, 301, and 501 had a lot of work behind them that we will start to see the fruits of that labor over the coming couple of years. Right now, 101 has been full speed ahead, 201 is right behind it and hope to share continued updates with you on 301 and 501 as we go forward. This pipeline momentum over the next 24 months, whether it's the endocrine business or the orphan, you can see we have two major pillars of continued momentum that will drive shareholder value over the coming quarters. I won't go through each one of these, but you can really start to see how 101 and 201 in the pipeline really starts to march ahead and MannKind build out the scientific agenda. I won't spend a lot of time on V-Go, but a lot of people ask me when you bought it, what else are you planning to do. We continue to drive innovation and ideas around how do we create other opportunities for this device to biosimilars, buy and build, or just clinical improvement with slow infusion. As one of our thought leaders behind V-Go said, if you were to go along and put a big hole in one spot, you get bud. When you spread that out over the lawn, you get green grass. I think that's one of the reasons you continue to see V-Go improve people's A1C and you're spreading that bolus in that base over a long period of time and continue to spread that water over a larger space. I think that's important, and we think there are other ideas that we can generate as we continue to allocate time, energy, and money to this product. A lot of people ask me, have I missed the run-up with a company? Where is MannKind going? I think as we step away and look out, we see three key value drivers: Afrezza growth and V-Go growth as number one; number two, Tyvaso continues to grow in new patients, conversion, and improved coverage through Medicare, as that donut hole closes in '24 and '25. Additionally, there's a large upside to that Teton study readout positive by United Therapeutics. Then you have pipeline progress which is 101, 201 and any other additional business development opportunities that have come our way. We anticipate any other partnerships that we could put on the platform. So that's the fourth pillar of growth. But at the end of the day, we really look and see there's lots of upside from where we go. When you look out over the last five years of history, every year, we've continued to end on a higher note than when we started. And I think that's critical to our future success and believing in our shareholders and what we're doing to continue to allocate capital and do a great job for everyone who is a key stakeholder of MannKind. And I want to say thank you again for all the work everyone is doing, Steve, for your partnership, but it really feels great to be through that transition of capital balance sheet challenges, product innovation, business development. We are now a self-sustaining, fully integrated, midsized pharmaceutical company, and it feels really good to close out '22 and kick off '23 being in that position. So thank you, and we'll open up for questions, Lisa.

First question I have is from Brandon Folkes of Cantor. Please go ahead.

Congratulations on all the progress this year and the last seven years. Maybe just two for me. Just any update on the Tyvaso manufacturing inventory scale? Just given comments from UT about sort of how they view that product longer term. How should we think about manufacturing scale-up there? And then secondly, on the ABC trial, can you just talk us through how we should think about the revenue pull-through from the readout, obviously recently and then later this year? And then I have three anyway. Any very early feedback you got from the last two days since that press release?

Brandon, last question is any feedback?

Since you put out the press release on the...

Okay, sure. So I'll take each one of those. I think on the manufacturing inventory listed by United Therapeutics yesterday, one of the things I heard was the order patterns had some impact, but also the pharmacy days on hand inventory. And the demand has been very strong on Tyvaso, which is great, but it also puts a lot of stress and strain on our manufacturing. We've been able to stay well ahead of the demand, but that has not allowed people to build as much inventory as they want as production goes right in. We can modify each week on which cartridge strength we fill, which pack size we send to the packager. But we haven't reached full capacity manufacturing yet as we continue to look over the last six months. There are definitely lots of things to work through in the equipment and scale-up that have been worked through, and we consistently expect Q1 to show a much more consistent productivity impact in Q1 versus Q3 and Q4. We don't anticipate any inventory issues. We continue to stay well ahead of demand. I think you'll continue to see that productivity out of our plant and the efficiencies this year, so we're doing things to add additional production capacity just in case demand continues to go faster than we would anticipate. Remember when we built a factory and that we made Tyvaso DPI, we made it for PAH and ILD at a time when the new team was doing $400 million, $450 million revenue with ILD expected. Obviously, that product is now well and away from over $1 billion plus this year. And we want to make sure we continue to stay well ahead of that ability to convert as much of that as you can do. So we don't anticipate any issues with the factory build-out itself. Again, we expect that to be completed later this year. Part of it will require an FDA inspection that we'll just deal with that when the time comes. But we don't need that factory expansion to complete in order to keep ahead of supply. So we're pretty good with that there. The factory expansion is really to handle IPS demand that could come in '24 and beyond. And so we're well ahead of that readout for that clinical trial. On the ABC trial, in terms of revenue pull-through, the way to think about this is a pilot study that I've been wanting to do for many years, showing that you don't need insulin pumps that they're not adding as much control as people think. Every doctor you talk to believes pump therapy is the best you could do and that there's nothing better. Even though there's very little head-to-head data showing pumps are better than multi-daily injections. In fact, I believe there's a data set, I don't know if it's public yet, but it should be this week at TTP that all the benefit of pumps is happening in the first day. You really get the bolus of improvement, and then it kind of stops. We think that the diabetes burden of wearing a pump and a CGM is really starting to wear out people as they live with this disease and pumps for 20, 30, 40 years. They're running out of real estate on their skin. They're having scarring. There are a lot of issues because we do believe there's an opportunity that's going to be created over the next one or two years. When the data piece reads out, that's our pivotal Phase 2, the next question we're going to get is what about insulin pumps? So we're trying to get ahead of that question by running this larger PUP switch trial, which will switch patients off of MDI and pumps and run head-to-head at the end of the day. We'll have more design on that Phase 4. Now there's an advisory meeting this week at ATTD, and I'll give that feedback next week. But I would say the feedback so far, the data has not been presented until Saturday. But the feedback at the conference and the word about MannKind has actually been really nice, and we're hearing really good things from people we were asking about. So that's the only feedback I have so far. The data set has also not been presented yet.

Our next question will be coming from Steven Lichtman of Oppenheimer. Please go ahead.

This is Ron on for Steve. I was hoping you could provide an update on the launch of BluHale next month. Last time, you mentioned the chip shortage, and I'm curious about how that issue has been addressed and your outlook moving forward. How are you preparing for the launch given this situation? I would also appreciate a brief follow-up if possible.

Sure. Regarding BluHale, I don’t think the chip shortage is a problem. There are some other components that have become outdated, which we are updating while we work on the device. Everything is progressing well. We have devices prepared to initiate the pilot, which will be essential for informing our understanding of user experience. The feedback we receive will influence our launch strategy and investment plans in the latter half of the year. What’s particularly exciting is that this will be the first time we integrate dosing with the Dexcom CGM as we expand into type 1 diabetes. We believe providing these insights to both patients and healthcare providers is crucial, especially transitioning from type 2 to type 1 with Afrezza. Assuming we receive positive feedback from patients, this will be an important device for us in the second half of the year. We do not expect any shortages with the next 1,000 devices we plan to launch; we believe everything will be sufficient based on what we currently see.

Okay. You mentioned that this will be integrated with Dexcom. Are there plans to integrate with any other glucose monitors, or will you be sticking with Dexcom?

No. I think Dexcom is the easiest because they have open APIs, and we are able to work with them and get that agreement done. I think Libre is obviously the next big one, especially Libre 3. Additionally, Senseonics, now that they're getting to the one-year sensor and starting to launch that, that will be a nice opportunity to look at some Calix as well. So we want to be platform agnostic at the end of the day for CGM, but we do believe CGM is something that's really important.

Next question is coming from Anthony Petrone of Mizuho. Please go ahead.

Congratulations to the team on the execution. Maybe one on BluHale, just when you think of sensor opportunity, you certainly have some synergies with Afrezza. Just want to confirm, is that going to be also used with Tyvaso? And when you think of the ability to monitor inhalation and usage, how do you think that plays out over time? If you're capturing that data, do you get better drug adherence and ultimately, does that drive better consumption down the road? And then I'll have a few follow-ups.

Sure. BluHale has been a long time in development and has faced many challenges as we drive innovation. These things naturally take time. However, your question about Tyvaso and Afrezza is particularly important. When using a new device for the first time, as we increase the number of doctors prescribing and educators training, users sometimes don't feel the medication being inhaled, especially with the lower dose cartridge, leading to uncertainty about whether they received their dose. Demonstrating the correct inhalation technique and acknowledging the dose taken can boost users' confidence, which we noticed early in our trials with healthcare providers. It significantly enhances their confidence in training and ultimately their success with patients. This data is valuable not just for patients but also for providers, as it can inform compliance and be compared with CGM data in diabetes. Over the long term, we see potential in following what One Drop has achieved with data collection and predicting outcomes, which we believe is crucial in healthcare. We are at the initial stage, with much progress to be made in data modeling related to sugar intake and dose effects. There is significant potential for growth as we consider incorporating data scientists and other expertise that we currently lack. Regarding UT, I cannot comment extensively, but they are utilizing the pro version to demonstrate proper inhalation techniques, which has been launched. I expect they will continue to use it in their PH work, but I will allow them to provide further details on that.

That's helpful. And then follow-ups would be on endocrine studies. You think of pediatric, but also the India trial. At JPMorgan, you put some math around this. So for every 10% market share increases, it's a $150 million revenue opportunity or TAM opportunity, let's call it. When you think about that in type 2, obviously, much larger patient pool. So is there an equivalent number of 10% in type 2s, which could be facilitated by India? How should we think about that number? And is the right way to look at it is share gains from GLPs? And I have one last one.

Sure. Regarding the pediatric market, that estimate is reasonable, but every 10% increase in market share among children in the U.S. could generate about $150 million in net revenue for MannKind. This is why we are cautious about investing in trials now; we want to position ourselves for success. This year, our efforts to streamline operations and enhance profitability have strengthened the branding of our two assets. As we gather data next year, we believe we can aim for market shares of 10%, 20%, and even 30% in children. Success with children is likely to have a positive impact on the adult market as well. It's important to consider that as these children age into young adulthood, they will transition into the existing market, contributing to sustained growth into the latter part of the decade. We maintain a long-term perspective on this asset. Although it has taken time to reach this stage, we are optimistic that, assuming our data aligns with expectations, the future of inhaled insulin will be very promising. In terms of our operations in India, I see it as a low-margin market, but there is a vast population living with diabetes. We expect to make strides in cost efficiency over time. Our focus here is on FDKP, and we plan to utilize our factory capacity, which is currently underused for the U.S., to support this venture. This strategy will lead to a more profitable model year-over-year as we improve efficiency, especially with Tyvaso benefiting both United and MannKind when we launch production in India in 2024. As for the type 2 diabetes market, I anticipate that the GLP medications will continue to have significant success, with the weight loss segment expanding. However, insulin's role may be affected, either declining or being used more selectively. Despite the successes of GLPs, patients will still require mealtime control and additional assistance, and I believe Afrezza can fulfil that need. We are considering whether to conduct a study on combining Afrezza with GLP therapy, but we currently lack data on that. Additionally, as we become established in type 1 diabetes, we expect that healthcare professionals will begin to use Afrezza for type 2 patients by default, even if they initially do not think about type 1 in that context. It remains a work in progress.

That's a pretty last quick one. Just Apple made some news this week about potentially hopping in here. You're collaborating with CGM providers. I don't know if you have any sense you can add on some of the news that came out of Apple.

Yes. Thank you. Look, I think Apple, Amazon guys continue to get bumped in health care technology and health care data at the end of the day. I think where we're going with BluHale, back to your question, having that data and being able to have that data to predict where people are going to have to go and start to think about outcome contracts. Everyone is looking at ways to drive better outcomes at a lower cost, and I think it's premature for us to think about where would Apple be in five years because I go back to my stage at Novartis, where we were going to have a contact lens that was measuring who goes with Google, if I recall, and that never came out. There's a lot of excitement, but it takes time for this innovation to happen. And health care is not an easy feat to kind of enter into, but we'll keep watching it.

The next question will be coming from Gregory Renza of RBC. Please go ahead.

Great. Mike and Steve, congrats on the year and the progress. Mike, just maybe a quick one. As you build on the success of Tyvaso DPI of course, what we all know about the potential option to license the platform for a second PAH product with UniTher. I know the pro levers you and Steve are describing really while the pipeline launches over the next several years, I'm just curious how you think about some of the parameters or potential with a second license with UniTher and how that potentially factors into some of your goals about one indication or product per year over the next several years in your pipeline?

Yes, that's a great question. Over time, I believe Tyvaso will be significant as we discuss options with UniTher. We want to ensure that this initiative starts off correctly, especially considering the potential assets of $1 billion to $2 billion or more, which I think falls under UT's domain. It's important for us to manage supply effectively without diverting our teams' focus. I believe we will discover additional ways to assist our patients. Martin is committed to this focus, and we are continually evaluating opportunities that arise through them or in other areas related to pulmonary arterial hypertension. Generally, at MannKind, we conducted a thorough review with our Board in the latter part of last year regarding how much effort we want to invest in seeking partnerships with large or mid-size pharmaceuticals versus innovating our own assets. We concluded that our priority is to advance our assets quickly and to double down on new ideas, whether within our platform or others we see, rather than pursuing many partnerships. Naturally, we are always open to new deals, but we believe we've identified many of the key opportunities for developing inhaled therapeutics that can truly make an impact. Our current focus is on even earlier-stage innovations as we look ahead to 2030 and beyond. We are likely exploring new chemical entities for future conditions. People often ask where we stand now, but the decisions we made three years ago are still relevant today. Our perspective is focused on 2028 and 2030. We feel confident in our pipeline's ability to drive substantial innovation in the upcoming years. Nonetheless, this doesn't mean we are not exploring opportunities; recently, I've received numerous inquiries for potential collaborations or sales. There's a lot of activity occurring, with many companies facing funding issues or reevaluating their strategies and divesting non-core assets. We will continue to explore, but we feel optimistic about our position and our ability to create future value.

And the next question will be coming from Tom Smith of SVB. Please go ahead.

This is Mike on for Tom. Are there any gating factors remaining for the adaptive Phase 2/3 study of clofazimine expected in the second half of this year? Can you briefly describe kind of the planned study design? And how quickly do you imagine we could start to see data from that study?

How quickly? I'm sorry?

Could we see data from that study?

Okay. I don't want to comment too early on some of the study details yet for competitive reasons that we're still finalizing that. But what I would say is the gating factors are really twofold, one, opening up the IMT; and two, just working with the international regulatory bodies to make sure we can import drug and hope the trial sites activated. Those are the two biggest gating factors. We are pretty close with the FDA in terms of some of the last-minute trial details we focused on. In particular, there's a quality life metric that people want to know about NTM and then there's the assumption on sputum conversion. And you can expect the trial design will incorporate some of those features. I can tell you it will not be established patients. We're looking at earlier treatment patients who were on general background therapy, so we're not going after naive. We felt that would be too hard to enroll and too expensive relatively to the time it would take. We're looking for earlier-stage people not responding to GPT in a global way, so we're focused on quality of the patient consistency, the patient type, and those who aren't necessarily the ARIKACE treatment that are the sickest that may not respond to anything, but really trying to get a little bit earlier in treatment. No other gating factor is just getting the IND filed, which requires us to get the manufacturing GMP batches produced. Overall, this document should be able to submit by late Q2 or early Q3, hopefully. And once that's filed, that will be the last thing before we can investigate and kick this off.

Understood. And then just one kind of follow-up. From a modeling standpoint, how should we be thinking about the trajectory of SG&A moving forward both throughout 2023 and over the next couple of years just based on the commitment to V-Go relative to the Afrezza sales force restructuring?

I'll let Steve take that.

Sure. I think SG&A, we don't talk too much about forward-looking financial information. We don't currently have large gap plans or plans to scale up. However, if we see opportunities, such as the trial readout that comes around, we may put money behind our endocrine business. So what I would say is to be determined, but we'll see how it goes.

I want to add that our focus on pediatric specialists is progressing. We do not need to incur significant expenses. There are approximately 500 pediatric specialists nationwide that dominate the market. Considering the investment for future indications, the infrastructure required is manageable. We may only need to increase our team by a few individuals. If Afrezza continues its positive trajectory, there is potential for growth, although our market share is currently low, limiting us to possibly hiring 200 additional reps. We are prioritizing profitability, and we believe there is a substantial growth opportunity that allows us to accelerate our expansion. This year, we have already entered three or four new territories where we previously did not have sales representation. These are the prospects we look forward to, while maintaining a stable approach and aiming to increase our revenue as we progress.

We'll now turn the call back over to Mike Castagna for closing remarks. Please go ahead, sir.

Thank you, again, everyone. Thank you for the questions. Thank you, Anthony, for joining us for the first time. It's good to hear some new analysts come in. I think that's important as we think about the next phase of the Company. A lot of the questions we're getting from new investors are really around the pipeline, the future, and what's next. We're excited as we anticipated that we think is there and attendance right behind it for us to start off the year strong. V-Go, we'll watch over the next six weeks as we just launched that in the sales force. But otherwise, super exciting before to hopefully wrap up Q1 in six weeks and share that with you in the next quarter here. But otherwise, just thank you, everyone, for everything, and we're always here to answer your questions and hopefully keep creating value by helping patients.

This concludes today's conference call. Thank you all for joining. Everyone may disconnect, and have a great evening.