Good morning, and welcome to the MannKind Corporation Second Quarter 2025 Financial Results Conference Call. As a reminder, this call is being recorded on August 6, 2025, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call and available for approximately 90 days. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty, which can cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, please see the Form 10-Q for the quarterly period ended June 30, 2025, now on file with the SEC, 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, Chris Prentiss. I would now like to turn the conference over to Mr. Castagna. Please go ahead.

Thank you, operator, and good morning, everyone. I appreciate you joining us for our second quarter earnings call. As we look ahead, our focus is on generating more shareholder value, reducing dilution, and increasing our flexibility as we enter the next stage of our growth. The upcoming six to eight quarters will reflect the culmination of our work over the past seven years. I want to discuss the five pillars of our success. First, we are approaching the TETON 2 readout in September, and we anticipate these results will positively impact our future business plans. Second, Afrezza is well-positioned for ongoing growth, with our filing completed. We aim to capture about 25% of all rapid-acting prescriptions, which represents a potential market of approximately $300 million for Afrezza. We have a robust balance sheet and, with today's announcement regarding Blackstone, we gain access to additional capital, granting us flexibility for the coming years. Fourth, we believe inhaled clofazimine deserves more recognition for its significant future potential. Lastly, I am proud to announce that our Nintedanib DPI will advance into Phase II, and I want to commend our team for their hard work. Chris will provide more details about the Blackstone deal later in our discussion. In terms of our Q2 highlights, we achieved record revenue from Tyvaso DPI sales and saw record patient referrals in Q2, positioning us well for Q3. For our inhaled Clofazimine targeting NTM, we expect to reach our interim goal of 100 evaluable patients ahead of schedule. Additionally, we have progressed our dry powder formulation into preclinical studies and anticipate those results will enable earlier lines of treatment. For Nintedanib DPI targeting IPF, we plan to launch our INFLO trial by the end of 2025. On the endocrine side, we are eager about the submission of pediatric indications, which prepares us for a launch in the next four quarters. Our endocrine business unit showed strong performance in Q2 with $18.3 million in revenue, a 13% increase over 2024 figures. We expect to submit our label update for Afrezza in Q4, with a decision expected soon. Financially, our Q2 revenues reached $77 million, reflecting a 6% increase over 2024, with year-to-date revenues of $155 million, a 12% increase. Chris will cover these financial details in greater depth shortly. Our balance sheet remains solid with $201 million in cash, and we now have $500 million in expansion capital from Blackstone to support our growth and innovation. Let us begin with our orphan lung opportunity through MannKind 101. The NTM market is projected to exceed $1 billion by the end of the decade, with a focus on the U.S. and Japan as these markets represent the highest opportunities for growth. These regions have also yielded the highest enrollment rates in our trials. The inhaled clofazimine development program is guided by three pillars: first, direct lung delivery may enhance tolerability and reduce side effects. We have not observed significant patient dropout early in our trial, indicating that tolerability is holding up well. Our active ingredient is a guideline-endorsed antibiotic with a proven clinical history worldwide. We see this as a transformative opportunity for patients. Finally, the convenient dosing cycle of one month on and two months off reduces treatment burden and may improve adherence. We introduced the ICoN-1 global Phase III trial, reminding everyone that our co-primary endpoint in the U.S. includes sputum culture conversion and patient-reported outcomes, while the ex-U.S. market focuses only on sputum culture conversion. We have received Fast Track QIDP & Orphan designation, ensuring 12 years of exclusivity. Currently, we have enrolled 90 patients, with 100 evaluable patients needed for our interim analysis in 2026. Some baseline patients might not have a positive sputum culture at enrollment and therefore won't factor into the interim analysis. Next, I'm eager to discuss MannKind 201. As we noted last quarter, our Phase I study, which explored three doses in a single ascending and two doses in multiple ascending formats, has been completed. Following feedback from our FDA meeting, we redesigned the trial for Phase II, and I will share the trial design with you. This trial, named INFLO, is expected to launch internationally in 2025 and will involve approximately 228 patients in a randomized placebo-controlled setting, featuring 12 weeks of active drug followed by a six-month open-label extension for all participants. We will assess two dosing regimens: either 2 milligrams three times a day or 6 milligrams daily, or 4 milligrams twice a day or 8 milligrams daily. The primary focus is on safety and tolerability for inhaled powders in this patient population, with secondary objectives around FVC and early efficacy signals at the 12-week mark. The doses tested are consistent with promising exposures observed in prior presentations. We are optimistic about this progress and eager for results in the near future. Turning now to Tyvaso DPI, we achieved $31 million in royalties in Q2, bringing our total to $1.2 billion over the past four quarters. Our manufacturing revenue decreased from Q1 to Q2 to $22 million, which Chris will explain. The ongoing work on products 101, 201, and dry powders requires adjustments to our manufacturing teams as we move forward. We are looking forward to the TETON 2 results as well as TETON 1 in 2026. Now, I will discuss our endocrine business unit. Afrezza grew by 22% year-over-year in the first half based on new prescriptions, with a 17% increase in TRxs. Our goal is to expand our prescriber base and the depth of prescribing, focusing on detailing and enhancing coverage at clinical conferences. This year, we have engaged over 3,000 healthcare providers, creating significant interest in Afrezza globally. We are enthusiastic about this product’s future potential, especially for children. Our strategy includes amplifying our messaging and expanding our sales force ahead of the pediatric launch. We aim to create a broad impact, not just for children but also for adult Afrezza users. A new campaign, Insulin The Moment, will launch later this year, emphasizing speed and control in daily patient life. We recognize the challenges patients and providers face regarding insulin management, and this campaign will address those issues while our sales force is set to be fully operational by the end of this year. Our efforts will enhance market coverage to approximately 50% by 2026. Additionally, upcoming data on gestational diabetes and other studies will further our potential in key areas starting in 2026 and beyond. Now, I will hand it over to Chris.

Thanks, Mike, and good morning, everyone. Before we get into the details of the quarterly results, I want to highlight our revenue growth over the last 3 years as we compare the trailing 4 quarters on an annual basis. This annual double-digit growth has resulted in total revenues over $300 million for the trailing 4 quarters, and we expect this growth to continue through both our commercial products and our revenues earned through our collaboration with United Therapeutics. Our overall revenues in the second quarter grew 6%, led by royalties earned on Tyvaso DPI. Tyvaso DPI royalties contributed $31 million in the second quarter, an increase of 22% over the same quarter last year. Collaboration and services revenue consists primarily of manufacturing revenue based on production volumes sold through to UT and the recognition of deferred revenue. We recorded revenue of $23 million in the second quarter, a 12% decrease from the prior year as a result of the net impact of one-time items in both periods. Afrezza net revenues for the second quarter were $18 million, a 13% increase over the prior year. As Mike discussed earlier, we are encouraged by the recent performance of Afrezza in new and recurring prescriptions year-over-year and expect this trend to continue. V-Go net revenue was approximately $4 million for the second quarter, an 8% decrease from the prior year, driven by lower product demand. As V-Go is not actively promoted, we are pleased with the results of the product thus far this year. As we look ahead to the second half of the year, we anticipate continued growth in our royalty revenue driven by net sales of Tyvaso DPI. We expect collaboration and services revenue for the second half of 2025 to be in line with the $51 million recorded in the first half of this year. The quarterly results of CNS revenue have fluctuated this year. This is primarily driven by the timing of manufacturing as we balance the production for the period in terms of Tyvaso DPI, Afrezza, and our development programs. Lastly, we anticipate Afrezza will continue its growth trajectory based on the recent underlying performance and our expanded promotional efforts. On the expense side, R&D has increased over the prior year period as enrollment in the ICoN-1 trial of inhaled clofazimine is progressing well, and preparations are underway to initiate the Phase II IPF study for our MannKind 201 program later this year. Additionally, our team is developing a DPI formulation for our clofazimine program as well as additional potential pipeline assets. Selling, general and administrative expense has increased compared to the prior period, primarily driven by investments in expanding our commercial infrastructure. As you may recall, we had paused investment in Afrezza at the beginning of 2024 while awaiting pediatric trial data and reduced the sales force. With the potential approval of Afrezza in the pediatric indication, we're now enhancing our commercial organization, having deployed a medical science liaison team and will expand the sales force later in the year. Today, we also shared that MannKind has entered into a strategic financing arrangement with Blackstone, providing access to up to $500 million in nondilutive funding. This capital, secured on favorable terms and combined with our quarter-end cash and investments balance of $201 million, reinforces our strong liquidity position and is available to be strategically deployed across our key growth initiatives, including supporting our commercial build-out for the potential pediatric launch of Afrezza, advancing our development pipeline, and allowing us the ability to move quickly on business development opportunities. Mike and I and other members of the management team will represent the company at the Wells Fargo, Cancer, H.C. Wainwright, and Morgan Stanley conferences in September. We look forward to seeing folks there and in other forums this quarter. With that, I will turn the call back over to Mike.

Thank you, Chris, and thank you for the team's hard work on the Blackstone deal, which is really going to provide us the capital we need to produce these anticipated catalysts over the coming quarters. As you've seen, we've executed the first half successfully, and we have several planned opportunities here in the second half for continued execution of our plan. As we look to our stairway of building value, Tyvaso deep dive will continue to be the foundation in the near term. As you look out into the longer term, the endocrine build with international expansion as well as pediatric expansion will continue to not only make MannKind more efficient but allow us to help more patients around the world as we go forward. Inhaled clofazimine is a meaningful opportunity, and let me remind you that every 1,000 patients is approximately $100 million in revenue. We've also advanced this dry powder inhalation because we believe in order to penetrate the earlier lines of treatment, you're going to need something that's much easier for patients versus the refractory population we're currently studying. Nintedanib DPI is well underway. We've now selected the CRO, and we plan to initiate the INFLO trial here in the near future. As you continue to see Ofev as a meaningful contributor to growth in the IPF space, we're hopefully excited to provide another option for patients as we go forward. We'll be sharing some of the new data at upcoming scientific conferences with ADCES in August here in Phoenix as well as ISPAD, which is a pediatric conference here in the fall. I want to thank everyone for all their hard work this quarter as we really can start to see the fruition of all of our work over the last 7 years coming together this year and next year, and we look forward to continuing to execute our plan and share those updates in the future quarters. Thank you for your time today, and we'll now open up for questions.

Our first question comes from Olivia Brayer of Cantor Fitzgerald.

Congrats on a great deal with Blackstone. Can you maybe walk us through what a best case might look like just in terms of timelines for a potential bridging study in IPF? I think the BREEZE study took 2 to 3 months. And I believe with DPI already on the market, maybe there's a much faster timeline to approval than what we saw for PAH. And then I have a follow-up on the nintedanib program.

Sorry, the first one was around what the bridge could look like for Tyvaso DPI and IPF.

Yes, exactly. I'm curious about the timeline for it, given that it should be much faster than what we experienced with PAH, and hopefully, we won't encounter any complete response letters. I'm wondering how it could realistically unfold if TETON 2 results in a positive outcome and then TETON 1; when might this ultimately be available in the market for DPI?

Yes, it's difficult for me to comment on UT's regulatory and clinical strategy. As UT has indicated, there will be data readouts in September and TETON 1 will be next year. This gives some time to engage with the FDA and possibly complete as much work as possible ahead of the TETON 1 readout since that is primarily for the U.S. market. We are hopeful that TETON 2 results will come in and that UT will expedite discussions with the FDA. The effect size observed in the trial could influence the opportunities with the FDA. However, it's too early for us to make any predictions about the clinical strategy, and I prefer not to speak on behalf of UT.

Okay. Understood. And then on your nintedanib DPI program, can you maybe just talk about how you're thinking about this drug in context of some of the new updates in that space? Is this basically a replacement for current oral background therapies and then hopefully gets used in combination with newer treatments as they come to market? And then also just a question around whether you guys were able to come to an agreement with the FDA regarding which patients to enroll in that Phase II around naive patients versus patients that are already on background therapy?

Yes, one of the challenges we faced was recreating the trial. Initially, we aimed to include patients who either were treated with nintedanib or failed that treatment in a non-inferiority design. However, the FDA insisted on a placebo-controlled trial along with standard background therapy, similar to their feedback provided to others. This approach is impractical given the treatment landscape in the U.S. and the necessary IRB approvals. Conducting a placebo-blinded trial for six months is just not feasible. Therefore, we shifted our focus to the ex-U.S. market, where it generally takes about three months to gain access to standard care. We believe we can conduct a placebo-controlled trial while securing safety and clinical IRB approvals in a way that ultimately protects patients. We've incorporated all of the FDA's recommendations into the trial, but it will primarily take place outside the U.S. This strategy should provide us with the robust data necessary for moving to Phase III. We've also increased the trial size to ensure stronger results. Looking ahead to Phase III, we expect that BI's product and Tyvaso DPI will likely receive approval, contributing to a potential total of four or even five drugs for IPF. These treatments will align with the FDA's expectations and complement existing background therapies, as trials typically incorporate background therapy about 70% of the time. An additional important point is that many patients are unable to tolerate the two existing options, which could result in a significant number choosing not to undergo treatment due to severe side effects. We recognize a large group of patients for whom inhaled nintedanib could provide substantial benefits and potentially extend their lives. We identify two key populations: those intolerant to current treatments and those who will benefit from an expanding market of combination therapies. As we proceed to Phase III, the anticipated approval of other drugs will be instrumental in enhancing our trial execution.

Our next question comes from the line of Faisal Khurshid of Leerink Partners.

I wanted to ask also on 201. Can you discuss your level of confidence in using nintedanib DPI on top of background pirfenidone, both from a safety perspective and also the ability to clear a difference versus a placebo arm that includes background therapy on an efficacy basis as well?

I have Wasim here. Wasim, why don't you comment on pirfenidone?

The combination of oral nintedanib and oral pirfenidone is currently not being pursued due to the side effects associated with that pairing. Instead, we are focusing on inhaled nintedanib, which we expect to have very low systemic exposure. From a safety and tolerability standpoint, we plan to conduct a trial to further investigate this. We anticipate that any drug-drug interaction should be minimal. Regarding efficacy, we believe that if both pirfenidone and nintedanib can be tolerated together, they will demonstrate combined efficacy. This is our hypothesis. We think similarly about the potential approval of the upcoming treatment. Ultimately, we believe the future of IPF treatment lies in combination therapies, which are not currently available with the two existing medications.

We will be allowing both of those agents in the background treatment in this upcoming Phase II trial.

Yes. Got it. And then what do you need to show to bring that development program into the U.S.? And would that be something that could occur during the course of the Phase II? Or would that be just for the Phase III downstream?

I think we are confident that if we obtain the necessary results from Phase III, this could be a U.S. global trial. The timing will be crucial, as enrollment outside the U.S. could progress quickly based on our current plans. The challenge lies in ensuring we gather a sufficient number of patients to present to the FDA and secure their approval. In the U.S., we face difficulties because we can't administer nintedanib simultaneously, and a washout period is required. Executing this trial will be complex in the U.S. The challenge is not primarily with the FDA; rather, it's about how willing investigators will be to enroll patients for 12 weeks on a placebo in an IRB-approved study. We anticipate that recruiting participants will be quite challenging, and given the time and costs involved with IRB approvals, the number of patients we can enroll will likely be minimal.

Our next question comes from the line of Andreas Argyrides Oppenheimer.

Can you provide an update on the progress made this quarter? Regarding the Phase II treatment effect for 201, what are your expectations considering the small size on the indiscernible side? Additionally, could you elaborate on the rationale for expanding outside the U.S. and any specifics about patient profiles abroad? I'm looking for insights related to the TETON 2 study. Chris, could you also discuss the reasoning behind choosing a revolving credit facility for the Blackstone deal instead of traditional financing options?

I'll start off, and I'll ask Wasim to add. I think on the effect size, the main thing we'll be looking at is tolerability and safety because that's really the weakness of nintedanib. When you look at the pivotal trials of that product, you can start to see a response in 12 weeks. That's why we set the primary endpoint. We believed that 12 weeks was a suitable duration with placebo that would allow for safe participation and ethically enrolling the trial. After 12 weeks, it will shift to an open-label extension. We hope to have a solid group of patients continuing for 6 to 9 months, but that will be their choice. I think we will start to see that effect size increase over time, not just at the 12-week mark but also among the patients who continue. Remember, anyone on placebo will have the opportunity to switch to active drug at week 12. I think that will provide us with a valuable data set to properly power a Phase III trial. Those effect sizes will need to be significant enough in FVC. The secondary endpoint will be efficacy, but it won't be specifically powered for that. Another crucial aspect of the trial is really the BID and TID dosing. The market and experts are still unclear about how nintedanib produces its effects. We are exploring this in the trial design comparing TID versus BID. Obviously, based on available data, it could even be QD, but we want to avoid generating an unclear result during the PK/PD assessment between QD and BID. We believe these insights will clarify our future direction and will assist us in appropriately designing and powering a Phase III trial. Wasim, do you have anything else to add?

Yes. To add to that, the study is primarily a 9-month trial, with a 12-week double-blind period. We will have data on safety, tolerability, and efficacy for 9 months for most of the patients who received active doses compared to placebo. The placebo group will also have approximately 6 months of data after their transition. Regarding treatment effect assumptions, we have our expectations based on previous findings. Last year, we conducted studies with healthy volunteers, which helped us understand its pharmacokinetics. The inhaler is not new and is already used in approved products, so we are confident in our method of delivery, as well as the pharmacokinetics and pharmacodynamics, which are well understood.

And then, Andreas, on the financing front, as we look out the next 18 to 24 months, we see a number of key catalysts for us. We have our 2 late-stage development programs, starting to focus on commercial prep for one of those programs in clofazimine. Obviously, we have the pediatric launch that we hope to have in 2026, if approved. As we look at all these, having access to flexible capital at this time just makes a lot of sense to have this instrument in place. One of the key tenets here is the ability to be reactive if business development opportunities arise. Speed in those situations, I think, is important. Being in a position of strength on that side makes this instrument the right choice for us, and we are really happy to be working with a partner like Blackstone.

Our next question comes from the line of Brandon Folkes of H.C. Wainwright.

Congratulations on the update. I'd like to shift focus to Afrezza. Can you describe the typical Afrezza patient today and where you are gaining the most traction as you continue to see double-digit growth? Have you noticed any changes over the last 12 months since the inhaled data sets were published? How is the unaided awareness of these data sets currently? Are they making an impact in the prescribing community, considering the outreach you’ve done without promoting it? Additionally, when we consider the depth and breadth of prescribing, where are you seeing the most traction with Afrezza?

Yes. The first comment I'll make is that we just received a database breakdown, and it indicates that approximately 45% of patients have type 1 diabetes and 55% have type 2. Over the past year, we've been shifting our focus more towards type 1, and we've observed that the growth for 4- and 8-unit strengths is outpacing that of the 12-unit strength. This suggests that our efforts in the type 1 segment are effective and that the demand is increasing. I'll let Nick provide more insights into the depth and breadth of the work being done.

Thank you, Mike. I agree with your observations. Overall, we are seeing increased awareness as we've slightly adjusted our strategy by targeting unique prescribers through our field sales force. Our presence at congresses has significantly increased compared to the past, and we are more actively engaging in scientific and clinical education to highlight the science and benefits of Afrezza in its competitive landscape. We are concentrating on the adult community to boost the number of unique prescribers and enhance awareness of the science and clinical data. I believe we are making good progress in this area, and we plan to maintain this focus for at least the next two to three quarters.

I apologize for the delay. As we consider the sales strategy and growth with the pediatric label and the new capital available, will you go for a full pediatric launch from day one? Or will you take a more gradual approach, evaluating the results and potentially adding more resources to target the pediatric market over time? How should we view the investment in Afrezza beyond 2025?

Yes. We are developing our pediatric plan. Initially, we have reduced our sales force as we approach 2024. Our aim is to ensure that Afrezza is profitable by 2025, starting from late 2024 into early 2025. With the recent pediatric data we've gathered, our confidence in the pediatric launch has increased, particularly concerning lung safety and the potential opportunities. This year, with the addition of Nick and our team expansion, we have targeted only about 25% of rapid-acting prescriptions, which is primarily to maintain our current business. For growth, we need to aim for a larger market share. One major concern is that doctors often forget about Afrezza; it doesn’t come to mind readily. Our representatives aren’t visiting them regularly, unlike companies that sell insulin pumps. This is critical as we wrap up this year while anticipating a label change in October that needs to be communicated to the sales force broadly. Furthermore, the pediatric market requires a different approach compared to our usual Afrezza use. Much of our Afrezza usage comes from private practice doctors who understand our data and are open to scientific discussions. However, the future lies in academic institutions and children’s hospitals, where our sales model has not been as effective. Building a dedicated team of key account managers with experience in institutional sales is vital since most pediatric patients, nearly 80%, are treated there. In our clinical trial, 39 out of 50 targeted academic centers in the U.S. participated. We see a significant opportunity to further educate and expand our efforts in the pediatric space. Regarding the uptake, we believe it will be more rapid in children than in adults. Feedback from advisors and conferences has been overwhelmingly positive, with parents expressing excitement about Afrezza. Many were surprised to learn that it has been available for so long. We see a substantial chance to relaunch the brand and shift our entire strategy. While we will continue to grow in the adult market, we prioritize engaging with the pediatric community early and consistently, which is essential to our approach.

Our next question comes from Anthony Petrone of Mizuho Americas.

Great and the Blackstone agreement. Maybe a couple on clofazimine and a follow-up on Afrezza. When we think about clofazimine ICoN ahead on the interim getting to 100 patients, if you get the desired sputum conversion outcome at interim, how does that change just the timeline? Can it really be fast-tracked for clearance if you get that sputum conversion? When you think about building a sales force, a pulmonology-facing sales force, like what is the size of that team if you look ahead to a positive outcome? Then I'll have a follow-up on Afrezza.

I think on the sputum, obviously, that's where we're weighing the trial statistically. If we get that interim result next year, we're going to let the trial enrollment keep happening even if we were to hit the 180 mark. If it says it's good at 180, some of the debate we'll have at that time will be; do we lock the database at 180 or do you wait for the remaining 20 to 30 people to hit the 6-month endpoint? That will drive the timeline there with FDA. It does have QIDP designation as well as fast track. There is an opportunity for a faster review and a rolling submission, I believe, with FDA. The FDA has been nothing but collaborative with this NTM asset and clofazimine. There is nothing else in development that's meaningful. We're the last option for patients at this point. I think the FDA wants to see this product succeed if we have the data to support it; that's on that. Regarding the pulmonary sales side, I wouldn't speculate the size or investment there. That's one of the reasons we put the capital up. As we get closer, we'll assess the right opportunity. It's not a huge footprint; this is a very specialized disease. The biggest thing is weighing as we continue to watch ARIKAYCE in Japan, what to do in the Japanese market? How do you either partner on that or build it yourself? Those will be the key strategic questions we face over the next 12 months. There is significant opportunity in Japan, especially as we look at trial enrollment and KOL support; I've been in Asia for the last few weeks and I've seen a lot of support for clofazimine. We're really excited about it. I think it's going to be a meaningful opportunity for trajectory inflection for MannKind, and it's coming before we blink; next year around this time, hopefully, we'll be seeing what the interim says and going from there.

No, that's great. And then on Afrezza, maybe just that patient profile in pediatrics from a utilization intensity standpoint. Do you imagine this is going to be kind of more mealtime? Or will it involve some aspect of basal plus bolus? Just trying to get an understanding of the intensity of a pediatric patient on Afrezza versus an adult patient.

I mean, Nick just came from the conference here in July. I'll give you my thoughts and then Nick, you can add any anecdotal feedback you have from the sessions. I think parents stress a lot around hypoglycemia and insulin pumps and chasing their child down with injections. I believe parents will want to use Afrezza full-time versus sometimes we hear sporadic use on top of an insulin pump, perhaps for highs and holidays, things like that. Nick, I don't know if you want to share any insights from the conference and the parent engagement you experienced.

Yes. What we hear largely from the caregivers, which tends to be the parents or the patients themselves, is post-diagnosis, the patients go through a series of steps, which is initiation of therapy, which tends to be MDI, perhaps looking to switch therapies or eventually going on an AID. Afrezza has the opportunity to slot in at many different steps along the diagnosis pathway and treatment pathway. I think there's also the opportunity for meal time and multiple controls throughout the day. These are younger kids who tend to be active, playing sports, grabbing meals on the go. The opportunity for pediatrics and adolescents will be slightly different from what we've seen in the adult community. We're making adjustments as to how we fit into that community now.

Thank you, Anthony. Yes, we see kids being much more active, and that's where inhaled insulin plays a much better role for patients.

Our next question comes from the line of Yun Zhong of Wedbush.

The first question on 201 study. I just wanted to confirm that I heard it correctly, that you said the placebo-controlled 12-week treatment period is not powered for efficacy. Is the goal to select one dosing regimen between the TID and BID and move it forward to Phase III? Or is it possible that both dosing regimens can move into Phase III? Additionally, what's the possibility of including an active control arm in Phase III or any requirement regarding the inclusion of an active control arm, please?

I think it's a bit early to discuss the specific design of Phase III. Based on our discussions with the FDA, we need to anticipate that more drugs will be approved. One of the difficulties is that nintedanib accounts for most prescriptions in the U.S., making it challenging to add new treatments alongside nintedanib and inhaled nintedanib. This limits us primarily to pirfenidone. I am hopeful that additional drugs will be approved in the next year and a half, so when we conduct this trial, we will have background therapies available to include in a placebo arm, as the FDA appears to be focused on maintaining a placebo control. This trial will not be comparing active treatments but will instead involve a placebo alongside background therapy, which is our current assumption. Regarding effect size and trial powering, if one or two dosing regimens receive approval, we will have some flexibility in choosing between different dosages, such as 2 milligrams or 4 milligrams twice or three times a day. Our primary goal is to advance one dosing regimen into Phase III. We do not anticipate a significant difference between the two dosing arms, but if we observe signals in subpopulations or patient characteristics, that could influence our choice of dosing regimen. However, we do not plan to test two different doses in Phase III; our intention is to select one and perform group and sub-group analyses on patient characteristics. We assume that the exposure will likely be twice a day.

I see. And then a question on the $500 million loan agreement with Blackstone. Are you able to share under what conditions will you be able to draw additional capital? Would that be based on commercial or clinical milestones, please?

No. So it's up to $500 million. We draw $75 million now. We have $125 million that is committed. For the most part, we have the ability to draw that at our discretion. There are no specific sales milestones or development-related milestones that would be contingent upon. I think Blackstone just wants to ensure that this is growth capital, and we are putting this forward in a way that makes sense.

Thank you. I would now like to turn the conference back to management for closing remarks.

I just want to say thank you to everyone today for listening. We are very excited about where we're going in terms of the late-stage development pipeline that is really starting to mature. We've spent a lot of energy and a lot of money over the years to get to this point. We now have the flexible funding that we need to make sure we can grow these assets, invest in these assets, as funding a late-stage Phase III and late-stage Phase II is important to us. Getting to the data readouts will only create more value inflection for shareholders and patients. We are very excited about those late-stage assets and the opportunity coming at us with peds. That's now on file. The clock is ticking, and we will continue to update you guys on those opportunities. Thank you again for your time, and I look forward to follow-up questions and investor meetings in September.

This concludes today's conference call. Thank you for participating. You may now disconnect.