MNKD Q4 2024 Earnings Call Highlights and Insights

MannKind (MNKD -3.19%)
Q4 2024 Earnings Call
February 26, 2025, 4:30 p.m. ET

Key Highlights of the Earnings Call:

• Prepared Remarks by Executives
• Interactive Q&A Session
• List of Call Participants

Prepared Remarks from the Operator:

Operator

Good afternoon, and welcome to the MannKind Corporation financial results earnings call for the fourth quarter and year-end of 2024. This call is being recorded on February 26, 2025, and will be accessible for playback on the MannKind Corporation website shortly after the call concludes, remaining available for approximately 90 days. Please note that this call may contain forward-looking statements that involve risks and uncertainties that could cause actual results to differ significantly from those anticipated.

To gain further insights into the company’s risk factors, please refer to the 10-K report filed with the Securities and Exchange Commission today, along with the earnings release and accompanying presentation slides. Joining us today are Chief Executive Officer Michael Castagna and Chief Financial Officer Chris Prentiss. I will now hand the call over to Mr. Castagna.

Please proceed, sir.

Michael E. Castagna — Chief Executive Officer and Director

Thank you, operator, and good afternoon to everyone joining us today. It’s an exciting time to be part of the MannKind journey. As I assess our future, I see five fundamental pillars.

We now have two FDA-approved products on our innovative Technosphere platform, a robust balance sheet showcasing double-digit growth that provides us with the flexibility to explore future opportunities, and the capacity to finance our two promising pipeline initiatives: clofazimine inhalation suspension and the nintedanib DPI, both of which I will elaborate on later in the call. Let me share some highlights from Q4 and year-end 2024. Firstly, our endocrine business unit achieved record revenues, reporting Q4 revenue of $23 million and a total of $82 million for the full year. This year commenced with the appointment of Dominic Marasco as president of our EBU, a strategic move that I will discuss in relation to our growth strategy shortly.

Additionally, we concluded the year with a significant milestone in India, where we received approval and anticipate launching our product in the latter half of this year. Furthermore, our collaboration with Amphastar, announced in December, allows us to leverage our U.S. sales force, enabling us to establish a pediatric market presence sooner than previously expected. We are on track to file for our pediatric indication in the first half of this year, with an anticipated approval in early 2026.

The collaboration related to Tyvaso DPI continues to thrive, and we are optimistic about the positive impact it will have on patients, especially those suffering from idiopathic pulmonary fibrosis (IPF). I will discuss our financials in more detail shortly. Our clofazimine inhalation suspension programs are advancing smoothly, with 70% of study sites activated. We are on course to meet our interim enrollment goal by the end of this year, targeting 100 patients, which will enable us to provide interim results in 2026.

Regarding nintedanib DPI, we held an FDA meeting at the conclusion of the quarter, and having successfully completed phase 1, we are eager to progress to the next development stage. In terms of our financial performance for Q4, we reported revenues of $77 million and a total of $286 million for the entire year. Our year-end cash position stood at $203 million, and we successfully reduced our debt principal by $236 million throughout 2024.

Transitioning to our diabetes business, our progression strategy is built on several foundational pillars. The first was the introduction of Dominic Marasco, who is not present today as he is attending our national sales meeting but will join us in May. As we evaluate Afrezza’s growth, we focus on four key pillars: first, assembling the right team and enhancing our clinical medical liaison support.

The second pillar is capitalizing on international opportunities in countries like India, which will enhance manufacturing efficiency and allow us to serve more patients globally. We are also actively seeking distributors in various international markets as we expand. The third critical focus is pediatrics. After years of dedicated work, we are excited to transform Afrezza’s growth potential in this area, which we will discuss further shortly.

We anticipate filing for pediatric use in the first half of 2025, with an approval expected in the second quarter of 2026. In the U.S., over 300,000 children are affected by type 1 diabetes, and administering injections can be challenging for both parents and children. We are eager to provide an alternative solution for these patients in the near future.

The fourth pillar focuses on addressing gestational diabetes. We aim to initiate an investigator-initiated trial in the first half of the year through the Jaeb Center, as over 300,000 women experience gestational diabetes annually. Reflecting on our Afrezza performance, we achieved a remarkable 17% year-over-year revenue increase. Despite challenges from GLP growth and innovations in insulin pumps, we are committed to profitability.

Over the next 24 months, we plan to accelerate Afrezza’s growth through the initiatives outlined earlier. The pediatric opportunity is projected to drive sales to over $200 million annually, nearly tripling our current revenue. It’s important to note that every 10% market share in pediatrics corresponds to approximately $150 million in additional revenue on top of our existing adult sales. Our recent market research indicates that about 28% of patients could transition from multiple daily injections (MDIs), while 14% could switch from automated insulin delivery (AID) systems like Omnipod and Tandem.

While we typically adjust such projections down by 50%, insights from pediatric endocrinologists and caregivers reveal substantial opportunities to assist many patients, particularly in simplifying the complexities of carbohydrate counting and insulin sensitivity ratios. We are genuinely enthusiastic about the pediatric segment and will continue to prepare and scale our investments in this area, although we do not expect significant changes in the first half of the year as we await FDA filing progress.

Now, let me transition to our pipeline. Starting with Tyvaso, DPI-related revenues exceeded $200 million in 2024, marking it as United Therapeutics’ first billion-dollar product, a significant achievement we are proud to be part of. The success of our Technosphere platform reaching billion-dollar status presents an exciting opportunity for us to fund our pipeline through non-dilutive financing. Looking ahead, we recognize a major milestone with the TETON 2 study in the second half of this year.

Positive results would significantly enhance our prospects for Tyvaso DPI in the IPF market. Chris will provide further insights into Tyvaso’s revenues shortly. Last year, we faced two competitors advancing in the NTM space, but unfortunately, they were unable to reach the end of 2024, presenting us with a clear path to lead in this area.

The product we are developing for NTM has benefitted from nearly a decade of development work. We believe that addressing the limitations of current therapies—particularly regarding efficacy, safety, and tolerability—will be crucial in transforming the lives of patients. We anticipate good adoption rates for clofazimine, supported by clinical guidelines and the positive experiences that patients and physicians have had with clofazimine globally.

Concerns regarding dosing and establishing the proof of concept for clofazimine’s effectiveness are common inquiries we receive. To address this, I would like to present some data from our preclinical studies, demonstrating that clofazimine inhalation has superior efficacy compared to oral administration.

In our preclinical trials, we observed significant reductions in colony-forming units, with a 99% reduction compared to control and oral clofazimine. This promising efficacy is indicative of what we hope to achieve for patients. When considering dosing, we had to make informed decisions regarding the long half-life of clofazimine and concerns about drug accumulation. Our analysis led us to propose a regimen of 28 days on and 56 days off, supported by our pharmacokinetic (PK) analysis from both animal studies and phase 1 trials.

Our insights and recommendations have received approval from regulatory bodies in Japan, the FDA, and other countries, which is vital for our current development program and the successful market launch. This culminated in the design of our pivotal trial, ICoN-1, which is our global phase 3 study. We are on track to achieve our interim enrollment target of 100 patients by year-end.

To clarify, once we reach 100 patients, we will require an additional six to eight months to conduct the interim analysis, which will help us determine whether our trial size is adequate or if adjustments are necessary. We do not plan to halt enrollment while awaiting this insight. If we reach 100 patients and maintain a monthly enrollment rate of about 20 patients, we could potentially enroll 220 to 240 patients by that time. This proactive approach allows us to make necessary adjustments based on interim findings.

Now, I want to address idiopathic pulmonary fibrosis (IPF), a progressive and life-threatening disease with significant unmet medical needs. Currently, only 20% of diagnosed patients are receiving FDA-approved treatments, despite knowing options are available. The existing medications have high discontinuation rates and can be challenging for patients to manage.

Despite these hurdles, the two approved products on the market generated over $4 billion in combined sales. In comparing nintedanib to Ofev, we believe we can offer comparable pulmonary exposure and efficacy. We anticipate that nintedanib will serve as a foundational treatment option in the evolving therapeutic landscape, complementing existing oral and inhaled therapies.

Our phase 1 study was successfully completed in 2024, laying the groundwork for our FDA briefing book, with a meeting scheduled for early Q2. If all progresses well, we aim to move into phase 2 trials in the second half of the year.

We are genuinely excited about nintedanib and its potential impact on patients, and we look forward to providing updates as discussions with the FDA progress. Now, I will turn the call over to Chris for a review of our financial performance.

Christopher B. Prentiss — Chief Financial Officer

Thank you, Mike, and good afternoon, everyone. I will now delve into our financial results for the fourth quarter and the full fiscal year 2024. For a comprehensive summary of our financial performance, please refer to our press release issued prior to this call, as well as our Form 10-K filed with the SEC. In the fourth quarter, our revenues totaled $77 million, reflecting a 31% increase compared to the same period last year.

For the full year 2024, we achieved revenues of $286 million, a remarkable 43% increase over the previous year. Tyvaso DPI royalties contributed $27 million in the fourth quarter, marking a 28% increase from the prior-year quarter. For the year, royalties reached $102 million, a 42% increase, driven by United Therapeutics’ growth in net revenue from Tyvaso DPI sales.

Collaboration and service revenues primarily stem from manufacturing revenues based on production volumes sold to United Therapeutics and the recognition of deferred revenue. In Q4, we reported $27 million in this category, a 55% increase compared to the previous year, while for the full year 2024, collaboration revenues amounted to $101 million, a 90% increase year over year.

Afrezza’s net revenue for Q4 was $18 million, reflecting an 18% increase, attributed to higher demand and improved growth-to-net adjustments. For the full year 2024, Afrezza’s revenue reached $64 million, a 17% increase compared to 2023.

This growth was driven by increased demand, pricing adjustments, and enhanced growth-to-net metrics. The net revenue from V-Go was approximately $5 million for Q4, representing a 1% increase from the same quarter last year, while its total revenue for 2024 reached $18 million, reflecting a 4% decline due to decreased product demand, which was partially offset by improved growth-to-net adjustments and price increases.

As a reminder, as of Q4 2024, our sales force is no longer actively promoting V-Go. While we continue to provide the product to patients, we believe V-Go has peaked in annual sales due to the lack of promotional support. Our business exhibited robust double-digit revenue growth compared to last year, primarily driven by Tyvaso DPI revenues, which surpassed the $200 million mark for the year. Our annual revenue trends from 2020 to 2024 show a consistent upward trajectory, characterized by double-digit growth each year.

We concluded the year strongly, achieving significant growth across our three revenue streams, culminating in an annualized run rate of $300 million. Our 2024 revenues grew by 43%, bolstered by Tyvaso DPI-related income, which provides non-dilutive funding for our pipeline initiatives. In 2024, we recorded net income of $28 million, translating to $0.10 per share, compared to a net loss of $12 million, or $0.04 per share, in 2023. On a non-GAAP basis, our net income was $68 million, or $0.25 per share for 2024, compared to $6 million, or $0.02 per share, for the prior year.

In 2024, we significantly improved our balance sheet by reducing debt by $236 million across three instruments, leaving us with a remaining debt balance of just $36 million related to our senior convertible notes. We utilized a combination of cash and stock to avoid potential dilution of 12 million shares of common stock while saving $9 million in interest expenses through maturity. With this minimal debt and a robust cash position of $203 million, we have a strong financial foundation to execute our strategic objectives, including driving commercial growth and funding our pipeline initiatives. With that, I will now hand the call back to Mike.

Michael E. Castagna — Chief Executive Officer and Director

Thank you, Chris, and I appreciate your hard work in 2024. As we look forward to 2025, I want to outline the anticipated catalysts across our strategic pillars. First, regarding Afrezza, we are preparing for a product launch in the second half of 2025. The INHALE-1 trial, focused on our pediatric opportunity, positions us for significant advancements in 2026, assuming we can file in the first half of 2025.

For the INHALE-3 study, we have submitted a label change and are awaiting feedback from the FDA to update our label in the second half of this year. Regarding our 101 trial, we expect 90% of our sites to be activated by the first half and aim to meet our ongoing study enrollment goals by year-end. For our 201 program, we have a meeting scheduled with the FDA, which will set the stage for the next phase of development for this asset. Our focus on DPI represents a significant opportunity to support patients suffering from IPF, with readouts from TETON 1 next year and TETON 2 this year.

In terms of our travel schedule, we have a busy month ahead, with participation in the Leerink and Barclays conferences on March 11th and 12th, followed by an engaging presence at ATT in Amsterdam, where we have planned five presentations and several meetings with key opinion leaders as we gear up to scale our diabetes business. Alongside these conferences, we look forward to engaging with our stakeholders through non-deal roadshows, conferences, or one-on-one opportunities. There is considerable interest in our turnaround story, and our stakeholders are enthusiastic about the growth pillars we have outlined for our future.

I eagerly anticipate sharing further updates with all of you and wish for a productive 2025. Thank you for your time. We are now ready to address your questions, operator.

Interactive Q&A Session:

Operator

[Operator instructions] Our first question comes from Olivia Brayer with Cantor Fitzgerald. Please proceed.

Olivia Brayer — Analyst

Hi. Good afternoon, everyone. Thank you for the question, and congratulations on the impressive progress. I appreciate the updates on all the pipeline programs.

Chris, could you elaborate on how we should interpret margins over the next few quarters and into the coming years, particularly in light of the investments planned for the Afrezza business later this year? I also have a few follow-up questions regarding Tyvaso.

Christopher B. Prentiss — Chief Financial Officer

As I consider margins, my focus is primarily on revenue and cost of goods sold. The efficient utilization of our manufacturing plant, particularly with the ramp-up of Tyvaso DPI alongside Afrezza, has positively impacted our margins. We are reaching a steady state that we expect to maintain moving forward.

Olivia Brayer — Analyst

Understood. Regarding DPI, could you provide additional details or specific figures concerning the gross-to-net discounting and rebates recorded this quarter and whether this represents a new norm? Additionally, as we approach the TETON readouts and the IPF space, could you share your current expectations regarding when a DPI bridging study could occur and outline the next steps and timelines for DPI and IPF?

Michael E. Castagna — Chief Executive Officer and Director

Sure, Olivia, thank you for your inquiries. Based on what I gathered from United’s call this morning, they believe the figures we observed in Q4 will likely establish a new norm moving forward.

Consequently, we have incorporated this assumption into our forecasting. We anticipated this increase as we entered the new year. As for the bridging study, United Therapeutics has publicly stated their intention to pursue this study. We have a meeting scheduled for Q2 to discuss the specifics of how that could unfold and what the associated timelines might be. It’s essential to note that TETON 2 will be the first study scheduled for this year, and TETON 1 will be necessary for U.S. filing.

If we receive favorable results from United in Q3, it would provide adequate time to align with the FDA on the bridging study and potentially expedite its completion in conjunction with TETON 1 readouts expected next year. We will collaborate closely with them to ensure timely execution of these discussions.

Olivia Brayer — Analyst

Thank you for that clarity.

Michael E. Castagna — Chief Executive Officer and Director

Thank you.

Operator

Thank you. One moment for our next question. Our next question comes from Faisal Khurshid with Leerink Partners. Please proceed.

Faisal Khurshid — Analyst

Hello, and thank you for taking my question. I am curious about how you are balancing the need for operational profitability with the investments required for the upcoming pediatric launch of Afrezza.

Michael E. Castagna — Chief Executive Officer and Director

Fortunately, we have capital available for deployment. Our focus is on effectively allocating this capital to maximize returns for our shareholders.

Our initial priority has been to achieve profitability. Moving forward, our next crucial focus will be executing a successful pediatric launch. While we do not anticipate excessive spending in this area, we believe it represents the next significant growth opportunity alongside the clofazimine and nintedanib trials.

This is how we envision deploying our existing profitability. Investors are keen on top-line growth and the potential for clinical readouts over the next two to three years, which is our primary aim. With Afrezza projected to potentially exceed $200 million in revenue, we see this as a significant upside opportunity as we progress over the next 18 to 24 months.

Faisal Khurshid — Analyst

Got it. And regarding pipeline expansion opportunities, how do you prioritize these projects relative to your other goals, especially considering cash stability?

Michael E. Castagna — Chief Executive Officer and Director

We are actively exploring several additional product opportunities that are not yet public. By the end of this year, we anticipate providing more details, potentially early next year. In addition to lifecycle management for Afrezza and clofazimine, we have numerous initiatives underway. These include exploring options for lower-dose and higher-dose cartridges for Afrezza, as well as clofazimine powder formulations.

Our dedicated team is focused on clinical supply manufacturing, scaling up production, expanding Tyvaso, and managing the lifecycle of Afrezza. There is much in progress, and I assure you, our pipeline is far from complete.

Faisal Khurshid — Analyst

Sounds good. Thank you for your insights.

Operator

Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Please proceed.

Anish Nikhanj — Analyst

Hello, and thank you for the updates and progress made this quarter and throughout 2024. We have a couple of questions regarding Afrezza.

First, as you prepare for a potential pediatric launch, how do you envision the launch trajectory and