MannKind Reports Strong Q4 2024 Financial Results and Future Growth Strategy

MannKind Projects $200 Million Annual Sales Growth in Pediatrics and NTM Treatments

Projected sales are expected to exceed $200 million annually, nearly triple the current figures. Remember that every 10% market share in pediatrics corresponds to approximately $150 million in revenue in addition to existing adult revenue streams. Recent market research, conducted in the latter half of last year, indicates that around 28% of patients are likely to switch from metered-dose inhalers (MDIs), while 14% might transition from insulin delivery devices, including Omnipod and Tandem.

Typically, we would downplay such projections by 50%. However, insights from pediatric endocrinologists and caregivers reveal a significant opportunity to support children with diabetes. By easing the complexities of carbohydrate counting and insulin sensitivity ratios, we aim to simplify the management of diabetes for both patients and their parents. This focus on pediatric care excites us, and as we prepare for scaling our investments in this area, we’re not anticipating changes in the first half of the year as we work towards aligning our FDA submissions for the second half.

Pipeline Overview: Tyvaso and Future Developments

Turning to Tyvaso, we anticipate that DPI-related revenues will surpass $200 million by 2024, marking it as United Therapeutics’ first billion-dollar product—a milestone we are proud to support as their partner. The success of the Technosphere platform, having achieved billion-dollar status, presents an excellent opportunity for non-dilutive financing to fund our pipeline. A critical milestone is approaching with TETON 2, set for the second half of the year.

If positive results emerge from this initiative, we foresee strong prospects for Tyvaso DPI, especially in the context of idiopathic pulmonary fibrosis (IPF) in the future. Chris will discuss the revenue contributions from Tyvaso shortly. This time last year, we had two competitors ahead of us in nontuberculous mycobacterial (NTM) therapy; however, they did not advance as expected, leading to a clear path for us to potentially take a leadership role in this space.

NTM Therapy Development Insights

This product has benefited from nearly a decade of developmental efforts. NTM therapies currently face severe limitations in efficacy, safety, and tolerability. We believe that improving delivery to the lungs will be pivotal in transforming patients’ lives. Given the support for clofazimine from clinical guidelines and the familiarity it holds for patients and doctors worldwide, we expect good adoption rates when it’s made more convenient and effective.

Questions regarding dosing and the efficacy of clofazimine, particularly compared to oral formulations, often arise. Our preclinical data illustrates its superiority over traditional oral clofazimine, showing a significant reduction in colony-forming units. This efficacy is promising for patients, especially considering our dosing strategy, designed to mitigate drug accumulation with a regimen of 28 days on and 56 days off, supported by animal PK analyses.

This strategic approach has been validated by authorities in Japan, the FDA, and other countries, which is critical for our ongoing development and future market launch. These insights guided the design of our pivotal trial, ICoN-1, a global Phase 3 study. We expect to enroll 100 patients by year-end, which will inform subsequent enrollment needs and trial size adjustments.

Monitoring Patient Enrollment and Results

Once we reach 100 enrolled patients, an interim analysis will take six to eight months, allowing us to determine if we need to scale the trial. We plan to keep enrollment open while gathering these insights. If we maintain an enrollment rate of approximately 20 patients per month, we could reach between 220 to 240 patients by this point. Currently, we project about 25% to 30% of the required patients for our interim analysis will be enrolled by the end of Q1.

Addressing IPF: Unmet Needs and Market Potential

Turning to idiopathic pulmonary fibrosis (IPF), we face a progressive and life-threatening disease with a substantial unmet need. Despite their diagnosis, only one in five patients is on an FDA-approved medication. Current treatment options have high discontinuation rates and present challenges for patients.

Nonetheless, the two available products together generate over $4 billion in sales. We believe our approach to nintedanib offers comparable pulmonary exposure and efficacy. Furthermore, we foresee nintedanib serving as an essential foundation in treatment regimens. We believe new competitors will complement rather than replace existing therapies. Our Phase 1 study completed successfully in 2024, thus laying the groundwork for our FDA briefing scheduled for early Q2. If all goes well, we will move toward a Phase 2 trial in the latter part of the year.

We are enthusiastic about nintedanib’s potential impact on patients. However, we remain in the early stages of discussions and anticipate providing further updates throughout the year.

Christopher B. Prentiss

Chief Financial Officer

Thank you, Mike, and good afternoon, everyone. I will now summarize our financial results for the fourth quarter and full year 2024. For detailed financial information, refer to our press release issued prior to this call and our Form 10-K filed with the SEC. Fourth quarter revenue reached $77 million, reflecting a 31% rise from the same quarter last year.

For the full year 2024, revenues totaled $286 million, a 43% increase year-over-year. Our Tyvaso DPI royalties accounted for $27 million in the fourth quarter, representing a 28% increase compared to the previous year’s same quarter.

Strong Financial Performance in 2024 Driven by Tyvaso DPI Growth

In 2024, our total revenue reached $102 million, marking a substantial 42% increase, largely thanks to UT’s boosted net revenue from sales of Tyvaso DPI. Collaboration and services revenue, consisting primarily of manufacturing income from production volumes sold to UT and the recognition of deferred revenue, increased significantly, reaching $27 million—a 55% increase from the previous quarter. For the entire year, collaboration revenues totaled $101 million, representing a 90% year-over-year growth.

Specifically, Afrezza’s net revenue for the fourth quarter amounted to $18 million, up 18% due to rising demand and enhanced growth-to-net adjustments. Overall, Afrezza’s annual revenue for 2024 was $64 million, a 17% increase compared to 2023. This growth reflects improved demand, pricing strategies, and better growth-to-net adjustments. Meanwhile, V-Go net revenue for the fourth quarter was approximately $5 million, a modest 1% increase year-over-year, although its full-year revenues fell to $18 million, down 4% from the prior year. This decline corresponds to lower product demand, counterbalanced somewhat by better growth-to-net adjustments and increased pricing.

It’s important to note that, as of the fourth quarter of 2024, our sales force has ceased promoting V-Go. Nevertheless, the product remains available for patients. We believe that V-Go has now reached its maximum annual sales potential due to diminished promotional efforts. Our overall business demonstrated robust double-digit revenue growth compared to the previous year, driven primarily by Tyvaso DPI, which surpassed $200 million in revenue for the year. Our annual revenue trends from 2020 through 2024 demonstrate a consistent upward pattern of double-digit growth year over year.

The year ended strongly, with considerable growth across our three revenue streams, resulting in an annualized run rate of $300 million. Revenues for 2024 soared by 43%, propelled by Tyvaso DPI revenues, which provide non-dilutive funding for our pipeline. In 2024, we reported a net income of $28 million, or $0.10 per share, contrasting sharply with a net loss of $12 million, or $0.04 per share, for 2023. On a non-GAAP basis, we recorded $68 million in net income, translating to $0.25 in earnings per share for 2024, compared to $6 million in non-GAAP net income, or $0.02 per share in the preceding year.

Throughout 2024, we focused on strengthening our balance sheet by paying down $236 million in debt across three instruments. This effort reduced our remaining debt to just $36 million related to senior convertible notes. We financed this effort through a combination of cash and stock options, avoiding the potential dilution of 12 million shares of common stock while also saving $9 million in interest expenses as a result of debt maturity. With a minimal debt balance and a robust cash position of $203 million, we are well-positioned to pursue our objectives, including driving commercial growth and funding our pipeline.

Michael E. Castagna — Chief Executive Officer and Director

Thank you, Chris, for your exceptional contributions in 2024. As we prepare for 2025, we anticipate key catalysts across our areas of focus. For Afrezza, we plan to launch the product in the second half of 2025. Regarding INHALE-1, our pediatric opportunity, we are positioned for potential filing in the first half of 2025, paving the way for further developments in 2026.

INHALE-3 is also on our radar; we’ve submitted a label change and await FDA feedback in the latter half of this year. Concerning project 101, we aim to have 90% of our sites activated by the end of the first half, achieving our study enrollment targets by year-end. For project 201, we have scheduled a meeting with the FDA to set the stage for the next development phase. The positive outcomes of the TETON 1 study next year and TETON 2 this year are also anticipated to be significant for patients suffering from IPF.

Looking ahead, our travel schedule is busy over the coming month. We will attend conferences hosted by Leerink and Barclays on March 11 and 12, followed by the ATT event in Amsterdam, where we have scheduled five presentations and several meetings with key opinion leaders. In addition to these engagements, we look forward to connecting with investors through non-deal roadshows, conferences, and individual meetings. There is substantial interest in our turnaround story, and our stakeholders express enthusiasm about the next phases of growth we are pursuing.

We are excited about the prospects for 2025 and appreciate your attention. We are now ready to address any questions you may have, operator.

Questions & Answers:

Operator

[Operator’s instructions] We will now take questions, starting with Olivia Brayer from Cantor Fitzgerald. Please proceed.

Olivia Brayer — Analyst

Hi. Good afternoon, and thank you for the question. Congratulations on the progress you’ve made. I appreciate the updates on the pipeline programs.

Chris, can you discuss how we should consider margins over the next few quarters and upcoming years, especially with the investments planned for the Afrezza business later this year? Also, I have a couple of follow-up questions regarding Tyvaso.

Christopher B. Prentiss — Chief Financial Officer

Regarding margins, I am focusing on revenues, which relate to the cost of goods. The usage of our manufacturing plant, with the increase in production of Tyvaso DPI alongside Afrezza, has improved our margins. We anticipate this will stabilize at a consistent level going forward.

Olivia Brayer — Analyst

Understood. Can you provide any detailed insights regarding the gross-to-net discounting and rebates from this quarter, and whether this is expected to be the norm moving forward? Additionally, as we approach the TETON readouts for IPF, what is your central expectation for when a DPI bridging study might occur, along with the subsequent steps and timelines for DPI and IPF?

Michael E. Castagna — Chief Executive Officer and Director

Of course. Olivia, it’s Mike here. Based on insights shared during United’s recent earnings call, their perspective is that the new norm aligns with what we observed in Q4 and is expected to persist through this year. We anticipated this increase leading into the new year.

As for the bridging study, UT has publicly mentioned intentions to carry out this study. We have a meeting scheduled for Q2, where we expect to discuss its structure and anticipated outcomes, which will outline the subsequent steps.

# Strategic Insights on Afrezza Launch and Upcoming Studies

TETON 2 will be the first major study available this year; however, TETON 1 is essential for our U.S. filing.

If we receive favorable results here in Q3 from United, it could provide sufficient time to align with the FDA for the bridging study. We aim to complete this quickly, aiming for proximity to the TETON 1 readouts expected next year. We are prepared to collaborate closely with the FDA, and I believe we are approaching a point where these discussions will progress rapidly.

Olivia Brayer — Analyst

Thank you.

Michael E. Castagna — Chief Executive Officer and Director

Thank you.

Operator

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

Faisal Khurshid — Analyst

Hi, everyone. Thank you for fielding my question. How do you balance operational profitability against investments in the potential pediatric launch of Afrezza?

Michael E. Castagna — Chief Executive Officer and Director

The positive aspect is that we have capital available to deploy. Our focus is on optimizing capital allocation to achieve the best returns for shareholders.

Our immediate priority has been the Afrezza project, and now we will turn our attention to launching the pediatric version. The spending will be controlled, but we see this as a substantial growth opportunity besides the clofazimine and nintedanib trials.

Investors are seeking top-line growth and milestones; thus, we are committed to achieving significant clinical data readouts in the next two to three years. If Afrezza can capture a revenue potential exceeding $200 million, it represents the largest upside in the next 18 to 24 months. We must prepare this product for success.

Faisal Khurshid — Analyst

Understood. Additionally, what are your thoughts on pipeline expansion opportunities? Is this a priority relative to cash stability and other goals?

Michael E. Castagna — Chief Executive Officer and Director

We are exploring several additional product opportunities not yet public. Expect to hear more about these later this year or early next year. Our activities include lifecycle management for Afrezza and clofazimine, focusing on lower and higher dose cartridges.

A dedicated team is working hard on clinical supply and scaling manufacturing while managing Tyvaso expansion and Afrezza lifecycle efforts. We are committed to formulating and developing new molecules for patient benefit in the coming years. So, there is plenty on our plate, and we are far from done.

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, everyone. It’s Anish standing in for Greg. Congratulations on the progress this quarter and toward 2024. I have two questions regarding Afrezza.

Firstly, what is your anticipated trajectory for the pediatric launch, and what challenges do you foresee? Additionally, regarding your agreement with Cipla in India, how should we evaluate its impact on Afrezza’s revenue in the coming years?

Michael E. Castagna — Chief Executive Officer and Director

Preparing for the pediatric launch is a high priority as we approach Q2. I aim to provide a more detailed update during the next earnings call. I see three critical factors influencing our success with Afrezza in the pediatric space:

First, we need to ensure a top-notch reimbursement hub that makes it easy for customers to obtain the product. We are implementing necessary changes that should be ready in Q2, facilitating smoother access for the pediatric market.

Secondly, we’ve historically excelled in private practice settings, but as we progress, we must enhance our sales capabilities within institutions. We are assessing ways to enhance our approach with key account managers, especially at the 40 academic centers that participated in our clinical trials.

The third factor is education and awareness. Engaging the community through social media and both consumer and physician conferences will be vital. Although Afrezza has been available for ten years, there is still lingering concern regarding its lung safety profile. Effective messaging around pediatric safety data is crucial for dispelling doubts.

If we adequately address these three areas, we anticipate strong uptake in the pediatric market. However, failing to fully execute any of these elements may hinder progress. Thus, we are making strategic investments in these areas in the second half of the year.

Regarding India, we expect import manufacturing approval around Q3. Depending on packaging and logistical factors, our first shipment could occur by the end of the year, barring any delays in India or complications in our supply chain.

# MannKind Prepares for Growth with Upcoming Shipments and Regulatory Milestones

At this stage, our goal is to be ready by year-end for our first shipment. However, I advise against heavy forecasting for the coming years. We anticipate some impacts on volume, which should enhance factory efficiency and improve our overall cost of goods sold (COGS). As we establish clearer long-term supply agreements with Cipla, I’ll be able to provide more insights into future forecasts. When considering Afrezza for pediatrics in ’26 or potential opportunities in India and returning to some distributors that year, we should see a noteworthy increase in Afrezza sales starting in 2026.

Anish Nikhanj — Analyst

Thank you very much.

Operator

Next, we have Andreas Argyrides from Oppenheimer. Please go ahead.

Andreas Argyrides — Analyst

Good afternoon, and thank you for your updates. Congratulations on a solid year. I’d like to delve deeper into the contracting dynamics discussed earlier. Is this a one-time change for the quarter? Moreover, could there be an opportunity for recovery in Q1? On another note, regarding updates on 201 later this year, you mentioned plans to meet with the FDA in the first half. What safety and efficacy endpoints are you considering, and how might a phase 1 trial look?

Michael E. Castagna — Chief Executive Officer and Director

Regarding the contracting dynamics, I have little to add beyond what was shared about Tyvaso and United Therapeutics. It appears that Q3 saw an uptick, with Q4 stabilizing at an even percentage. Volume referral and contract strength looks promising, granting patients decent access to Tyvaso DPI throughout the year. As for gross margins or net revenue, I don’t foresee significant shifts given current trends and embedded discounts. Essentially, we are planning for a steady state for the remainder of the year.

Someone inquired about the idiopathic pulmonary fibrosis (IPF) bridging study. We aren’t counting on potential revenue from that study to fund our growth; we aim to self-finance based on ongoing trends. Any success from IPF would be considered upside for capital allocation.

Our meeting with the FDA regarding 201 is expected to take place in early April, and I will attend. That week includes two meetings, making it quite busy, with both Afrezza and 201 on the agenda. These meetings will solidify our plans and milestones for the next 12 to 18 months. This includes the pediatric filing timeline and the phase 2 progression of 201. If successful, we could see updates on clinical progress in early ’26, which would lower the relative risk of our assets.

For the phase 2 trial, we have designed a four-arm study. We plan to propose to the FDA a control arm against nintedanib, along with different dosages to evaluate frequency and dose target effects. This study is designed to last approximately 30 weeks. Although I can’t recall every detail offhand, it remains open for discussion with the FDA. We aim for comparability; if results are better, that’s ideal, but even improved tolerability would be favorable.

Andreas Argyrides — Analyst

Sounds promising. I look forward to the updates this year. Thank you.

Operator

Next, we have Brandon Folkes from Rodman and Renshaw. Please proceed.

Brandon Folkes — Analyst

Thank you for taking my questions, and congratulations on the progress made thus far. Regarding TETON’s potential success, how should we view the manufacturing possibilities for MannKind? Should we model it strictly as royalties, or is manufacturing more on the table at this stage, pending successful TETON data?

Michael E. Castagna — Chief Executive Officer and Director

Brandon, you came in a bit late, so let me clarify what I understood your question to be: you’re inquiring about shifts to our manufacturing revenue if TETON data comes through successfully, correct?

Brandon Folkes — Analyst

That is correct, yes.

Michael E. Castagna — Chief Executive Officer and Director

We are actively working on enhancing our manufacturing capacity and have received positive feedback from the FDA regarding facility expansions. This positions us well to meet potential supply demands from United Therapeutics, particularly if IPF results are favorable. Should product volumes increase significantly, it would alter our expectations regarding collaboration services revenue as well. We feel confident in our capacity to meet future demands.

Brandon Folkes — Analyst

Thank you. Additionally, could you clarify the timeline for the anticipated milestone of $200 million with Afrezza? Should we align that expectation with upcoming label updates following INHALE-3 and INHALE-1?

Michael E. Castagna — Chief Executive Officer and Director

Yes, we will benchmark our pediatric uptake curves against similar recent launches in diabetes, particularly diabetes devices. We believe that with appropriate awareness and execution, we can achieve faster uptake than in our previous growth experiences. It is important to note that we have not historically enjoyed the benefit of excess capital or recruitment of top talent.

MannKind Discusses Afrezza Uptake and Clinical Insights in Q&A

Introduction

MannKind Corporation is actively engaging with thought leaders to enhance the adoption of its inhalable insulin product, Afrezza. The company is focusing on building relationships with healthcare professionals as part of its strategy for broader market penetration.

Uptake Projections and Market Strategy

During a recent conference call, a highlight included the projected impact of Afrezza’s market share. The management indicated that each 10% share could generate approximately $150 million in revenue. Realistically, even adjusting for expectations conservatively, they aim to reach this 10% market penetration swiftly within the next 12 to 24 months.

The potential for Afrezza’s growth, combining adult and pediatric sales, indicates a shift from modest growth to substantial transition over the next three years. MannKind is preparing for this anticipated growth phase.

Analyst Insights

Brandon Folkes from an undisclosed firm acknowledged the insights provided during the call.

Market Feedback and Clinical Research

Yun Zhong from Wedbush Securities expressed interest in anecdotal feedback regarding Afrezza’s pediatric use and also inquired about adult subject feedback related to the INHALE-3 study.

Michael E. Castagna, CEO of MannKind, provided clarity on the pharmaceutical company’s plans and results. He noted high satisfaction levels among participants in the INHALE-3 trial; about 50% indicated they wished to continue using Afrezza post-study. This impressive retention rate suggests significant opportunities for patient engagement and market growth.

Physician Reception and Prescribing Challenges

During INHALE-3, many participating physicians prescribed Afrezza for the first time. Their positive feedback correlated with a better understanding of dosing and basal titration, essential for achieving optimal outcomes. However, inconsistencies in dosing led to some patients performing worse, which stresses the need to provide adequate support and education to healthcare providers.

Enrollment and Study Adjustments

The interim analysis for the 101 study involves 100 evaluable patients reaching their six-month endpoint. MannKind aims to maintain enrollment momentum even as interim results are awaited. Adjustments could increase the study size from 180 to possibly 300 patients to ensure statistically valid results.

Castagna emphasized an ongoing commitment to meeting FDA guidelines regarding safety databases, which may include expanding access programs for clofazimine to enhance patient enrollment.

Conclusion

In summary, MannKind is not only striving to enhance its market share through greater physician engagement but also addressing challenges that arise during clinical trials. Castagna expressed optimism about the progress made and reiterated the company’s commitment to driving growth across its commercial and clinical initiatives.

Final Remarks

Concluding the call, Castagna thanked stakeholders for their support, highlighting record progress for 2024 and anticipation of further advancements in both clinical and commercial sectors.

Call Participants:

Michael E. Castagna — Chief Executive Officer and Director

Christopher B. Prentiss — Chief Financial Officer

Yun Zhong — Wedbush Securities — Analyst

Brandon Folkes — Analyst

This article captures a transcript of a conference call for MannKind Corporation, produced for The Motley Fool. While we strive for accuracy, please verify information with respective sources.

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