MannKind Corp (MNKD) 2021 Q4 法說會逐字稿

Good afternoon, and welcome to the MannKind Corporation's Fourth Quarter and Year-end 2021 Earnings Call. As a reminder, this call is being recorded on February 24, 2022, and will be available for playback on the MannKind Corporation's website shortly after the conclusion of this call until March 10, 2022. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those -- from these 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 conference over to Mr. Castagna. Please go ahead.

Thank you. Thank you, everyone, for joining us this afternoon, and sorry about the news this morning. I want to talk about 3 things as we look back on 2021. Number one, we moved Tyvaso DPI from concept to an NDA filing and passing an FDA inspection. We are fully staffed and moving into ensuring commercial product is ready upon FDA approval.

Number two, we recapitalized the company early last year to put us on a sound path of success and ensure that we didn't have to make dramatic changes to our operating model or our structure and our strategy, given the types of setbacks that we did experience over the last 6 months. That included the sale leaseback, the convertible debt and paying down old debt to make sure there was nothing major due in the near term. We continue to operate and focus on building out our strategic plans and growing our company on the pathway to success.

And third, the pipeline. We really did advance the pipeline forward by [purchase] at quorum, the feedback we're getting on clofazimine, the data we're looking at is very positive. The advisers have been giving us great feedback, and we'll have our second advisory board in the month of March.

Additionally, we did 3 formulation deals, I think 2 of which were public, and we continue to look at other opportunities and explore ways to use our Technosphere technology and other assets to help other companies with their products.

As we look back on Q4 and 2022, we were able to grow total revenues over $75 million and Afrezza in double digits year-over-year. Q4, we had a record revenue of $11.3 million with Afrezza which is really exciting compared to the headwinds we faced with COVID [as we closed out] Q4.

Focusing on the first pink box, orphan lung disease. Our [United Therapeutics] collaboration is strong and going forward, and we're extremely excited to help patients as we get through this May decision.

As I talked about, we're focused on building inventory and helping UT prepare for launch. On the pipeline, we've completed our first cohort in our SAD study, the second cohort is about to start, and we expect to get SAD results in Q2 and MAD results in late Q2 or early Q3.

MNKD-201, the first time you're seeing this product, is called nintedanib, which is OFEV the brand, I'll talk about that later in this discussion. We're now revealing that program is going to hopefully progress into Phase I in the near future.

MNKD-501, I've talked about in (inaudible) and that's the TGF-ß program. Both of these are in development and progressing into development milestones.

We actually discontinued the development of imatinib, AKA MNKD-701, as one of the things we try to do this year coming in is being more focused and get rid of distracting things that weren't going to move forward in the way that we expected. And that also led us into Afrezza.

We looked at Afrezza and where we're heading this year. One of the big strategic decisions we had to make, unfortunately, was to reduce our 30 FTEs to reinvest some of the money to keep Afrezza going in the right direction and drive impact in 2022.

While we saw positive script growth in 2021, it wasn't what we wanted to do. We thought we could do better, but COVID did hold us back a little bit. However, we did launch a campaign in Q4 called Seeing is Believing, where we provided free CGM to doctors who didn't write Afrezza consistently. In that pilot, we saw about 45% of the targets actually opt into the program, and that group grew 3x national average versus what we saw in Q4.

We also launched a primary care pilot in Q4 where we're focused on the sub part of the country with 25 additional reps focused on helping drive success in primary care, where there is very low awareness of Afrezza adoption or trial.

We also just recently filed at clinicaltrials.gov, our ABC trial, Afrezza Tyvaso combination, which was also previously referred to as the Pump Switch trial. This trial will provide meaningful data in the pilot study looking at keeping people on their pump, adding Afrezza to a pump or switching patients off their pump to receive Afrezza.

We're really excited about this study. It will be the first time we're running this type of study ever in the history of the brands.

On the liquidity side, Steve and team have done a great job making sure we have cash and investments of over $260 million at the end of the year, and we completed the Danbury facility non-dilutive sale leaseback which hasn't changed our operating model, but did provide us excess capital to continue to execute our plan.

As we look at Q4 performance on Afrezza, you can see our scripts continue to grow year-over-year quarter-over-quarter. On the right side here, I want to point to is patient demand that's not visible to the public because we did move from a free goods program in 2020 -- 2021 -- sorry, ending 2020 into 2021, and that was in our AfrezzaAssist, our new hub. So you can see the volume growing in AfrezzaAssist from 221 patients when we first piloted it in Q4, all the way up to 989 patients coming in Q4 '21.

This is our first step into removing friction in the reimbursement model and making sure that patients starting Afrezza, and doctors prescribing Afrezza, can have a great experience. This starts the reimbursement process, sometimes they roll into free goods, which is FG/paid prescriptions on cash program. And you can see we're almost up to 1,000 patients in that -- 1,000 scripts, I guess, for the quarter, in that free goods/cash program. So we continue to see exponential growth in the cash payments every month.

These are not meaningful contributors to our Afrezza sales trajectory, but they are a bolus of patients that we continue to attract that we don't see (inaudible). As we look at 2022, we've optimized our Afrezza footprint to make sure all of our sales territories are viable and they have positive growth potential. We are expanding the Seeing is Believing campaign to all of our sales rep territories based on our Q4 pilot that will be launching in March to give everyone opportunity to expand that free CGM to really show what Afrezza can do when you use it in combination with CGMs.

The brand has the potential to be cash flow breakeven as we approach 2023, and that's one of the things that we had a lot of discussion around is how to make sure we continue on Afrezza and also make sure it's not a drain on the company, that it can be self-sustaining in the years ahead.

Our pedes trial is increasing enrollment every week. We've got invited to an MIDD modeling session with the FDA for Afrezza potential label change. We continue to see good progress in clinical data getting published on Afrezza as we look out. I want to bridge over to the next most important topic of the day, Tyvaso DPI. This is near and dear to our hearts and we want to get this to patients as soon as possible.

Unfortunately, the FDA requested information from United Therapeutics related to a citizen's petition very recently. The response that UT provided was solid and really well written and considered a major amendment, unfortunately to the NDA. As a result, the FDA extended this to May 2022 There's not much we can do other than continue to feel confident in everything we're doing. We prepared for this. UT has run a great study. They have lots of great data on FDKP and the safety of it. So we feel very good about our response to the FDA in helping UT get this across the finish line.

What MannKind is focused on is ensuring commercial product is available upon FDA approval, we also are anticipating continued expansion of the plant as -- UT has been running 2 additional trials for market indications down the road. And we want to make sure that we get well ahead of that in terms of supply and demand.

I want to thank everyone for all their help and support over the past year. I apologize about the news this morning, not ideal, not what we expected. However, I think we feel very confident about the resolution and where this is going to head over the next 90 days. And it's a minor setback in the grand scheme of this year and the grand scheme of life of Tyvaso. We're super excited to bring this product to patients, and we'll get it there as soon as possible. Steve?

Thanks, Mike, and good afternoon. I'm pleased to review select fourth quarter and full year 2021 financial results. Please supplement this call by reading the consolidated financial statements and MD&A contained in our 10-K, which was filed with the SEC this afternoon.

Let's start by looking at revenues for the fourth quarter of 2021. Afrezza net revenue was $11.3 million versus $10.1 million in 2020, a growth rate of 13%. The components of growth include a more favorable gross to net deduction percentage of 35%, mainly related to a onetime reversal of a reserve for product returns from a retail pharmacy where we entered into a consignment agreement in the fourth quarter, plus price, a volume increase, supported by patient TRx demand growth of 8%, and a more favorable mix of cartridges sold. Full year growth of 21% was driven by a more favorable gross to net deduction percentage, price, volume increase supported by patient TRx demand growth of 10%, and a more favorable mix of cartridges. Looking ahead, we expect the gross to net percentage for Afrezza to be approximately 40% to 41% in 2022.

Moving to collaborations and services. Revenue for the fourth quarter was $1.2 million versus $8.4 million for 2020. Revenue in the fourth quarter was mainly associated with the remaining deferred milestone recognition as discussed in the third quarter earnings call.

We expected to have a more significant amount of manufacturing revenue in the fourth quarter from our commercial supply agreement with UT, but the accounting literature guides us to where we can only recognize revenue associated with the agreement when we sell products to UT, which was not significant in the fourth quarter.

Revenue associated with the manufacturing activity for 2021 was deferred on the balance sheet in the amount of $13.6 million as of December 31, 2021, which I will discuss at greater length in a few minutes.

As we continue manufacturing activities in the first quarter of 2022 to support UT's launch of Tyvaso DPI, we do not expect to recognize revenue associated with a commercial supply agreement in the first quarter as it will continue to be deferred until we start to release products to UT, which we expect to happen in the second quarter.

From a cash standpoint, we're able to invoice and collect from United Therapeutics for these manufacturing activities. The full year revenue for collaboration services rose 11% to $36.3 million and consists mainly of revenue from our collaboration with United Therapeutics in the amount of $34.4 million.

The graph on our next slide shows the quarterly Afrezza gross margin trend. Our gross margin increased in each quarter during 2021 and closed the year at 62% for the fourth quarter, even though the fourth quarter included $2 million of inventory write-offs. Approximately $1.3 million for the write-off of Afrezza runs of cartridges that did not pass quality inspection and approximately $0.7 million for inventory repurchased from a retail chain when we entered into the consignment agreement in the fourth quarter, recorded an inventory reserve for product that is at retail stores, but is not likely to be sold before its expiration.

This inventory was repurchased at the wholesale acquisition cost. Additionally, sales associated with the consignment agreement in the fourth quarter had no gross margin because we repurchased the inventory at WACC, which became its cost basis. This negatively impacted our fourth quarter gross profit by approximately $0.4 million. Looking back at prior quarters, you may recall that we reported a $2 million amendment fee in the second quarter of 2021, which also negatively impacted our gross profit and margin for the year.

Looking to 2022, we expect to continue our favorable gross margin trend as we grow Afrezza revenue and start to manufacture commercial-scale Tyvaso DPI on a 24/7 basis, which helps absorb overhead costs. I realize that the accounting for collaboration revenues associated with United Therapeutics has become complicated and confusing.

So let me take some time to walk you through the manufacturing services performance obligation with UT, which is how we described this in our 10-K. The first line on this slide represents the costs incurred by MannKind associated with this performance obligation, which are recorded in our P&L. United Therapeutics is funding this cost. We have been invoicing these costs since the second quarter and have been collecting from UT.

The manufacturing services costs, as shown in the first line, identifies the cost in our P&L, increasing from $2 million in the second quarter to $6.5 million in the fourth quarter as we geared up our manufacturing and support operations to prepare for commercial-stage manufacturing. A total of $13.8 million in costs was incurred by MannKind associated with this performance obligation, which hit our P&L in 2021. We recognized only $0.3 million in the fourth quarter, with the sale of mainly Tyvaso DPI inhalers to UT.

The remaining $13.6 million should have revenue to offset it, but we can only recognize the revenue associated with this performance obligation when we sell product to UT. Therefore, we defer the revenue, which will be recognized in later periods. Entering 2022, we expect to defer most of the costs associated with this performance obligation in the first quarter of 2022, and start to recognize revenue in the second quarter as we sell product to UT to support the Tyvaso DPI launch. Deferred revenue will be recognized over the manufacturing services agreement life, which currently runs into 2031.

Let me conclude with some final comments. Today, we filed an updated S-3 universal shelf to replace an expiring shelf registration statement. We also filed a new prospectus linked to our ongoing ATM agreement with Cantor Fitzgerald. We do not have plans at this time to access the shelf or the ATM. We have done this as a matter of good governance and financial management.

We ended 2021 with approximately $260 million in cash and investments, which we plan to use to fund our growing pipeline, which Mike will update you on in a minute, and make target investments behind Afrezza, while looking for business development opportunities that are complementary to our business.

Thank you, and now I'll turn it back over to Mike for some final comments.

Thank you, Steve, and thank you, everyone, for all the help this year. So when you look at the MannKind pipeline here, we've updated this slide, and I think this will be reflected on our website shortly. I wanted to first bring a little more clarity to MNKD-201, which is a new reveal here, which for people who don't know this product, the brand name is called OFEV and it bills over $3 billion a year.

Idiopathic pulmonary fibrosis is a very difficult disease to treat, and we believe that this product in the [intelli] route can show hopefully equal or better efficacy with less of a side effect profile than exists today.

We're really excited about this program as it continues to progress into the tox studies [in animal models] to project exactly the dosing we will need to move forward into human dosing.

The other one here we've talked about in the past is 501. And you can see we've refocused our pipeline, as I think it's really critical to do a few things well. Clofazimine is going very nicely. We had a great meeting this week on just preparing on how we get to Phase II, file the IND and accelerate timelines as best we can so we can ensure this product gets to patients as fast as possible.

There's nothing else on this slide that I'll talk about, so I'm going to progress to the next slide on 2022 milestones.

As you see every year, we try to lay out some of the key milestones for our investors to look at quarter-by-quarter, and then we generally scorecard ourselves against these milestones. For the rest of this quarter, you can see we got Tyvaso DPI manufacturing, initiated our Phase I and Afrezza ABC study was IRB-approved, which is now [going to be opening for enrollment].

As we get ready for Q2, I want to make sure we have continued manufacturing inventory quantity for United Therapeutics, that we get MNKD-201 and 501 in the PK/PD study, and really look at the animal models to project do we see any benefit at an early stage or any tox that we didn't expect. And then in Q3, we should have the readouts for clofazimine, which will be the filing for the IND there in Q4 to get this into Phase II as soon as possible.

We take a step back. Number one, our job is to be stewards of the capital that shareholders are providing to us, and we need to sit here and look and say, how do we best maximize our investments behind our growth drivers that are going to drive shareholder value. When you take a look back from 2017 until now, we've been able to take the company from $11.7 million in annual revenue all the way up to $75 million this year. And over the last 24 months, we grew despite massive setbacks on COVID on Afrezza as well as continue to keep our manufacturing teams in place, growing against all odds in terms of COVID, the work environment, getting through a really tough environment of the FDA inspection preparing for, hopefully, a launch here in 2022.

As you look to the future on the right side, our future is really bright. We're super excited, and we really have a lot of opportunities to drive shareholder value. Number one, we continue to expect Afrezza to grow. Number two, Afrezza pediatrics will be a pivotal point where we think that will be an inflection of the future for Afrezza once we get this data.

We've done everything we can. This will be the first time in the last 12 years where we've done a large Phase III trial head-to-head that we think is we're dosing the product right and we should get exceptional results as we look to it.

Now the one challenge is these are kids, and kids are unpredictable. So we have to get the data to feel good but we've designed the trial based on all the inputs that we've learned over the last 4 years and mistakes we've made in the past. We expect to continue to see Tyvaso royalties upon FDA approval. Manufacturing revenues piece, I already talked about.

Additionally, investors have placed little value on our pipeline, and we think as these programs continue to progress, there'll be additional interest either from international partners in some of the markets or continued opportunity that shareholders will get some value in our share price as a result of the investments we're making in the pipeline. And none of this includes any new collaborations or international opportunities that we're pursuing as we speak.

So we feel very good about our future diversification of revenue and continued levers that generate shareholder value from here on through the next decade.

I want to thank everyone for their time, and I'll open up for questions.

(Operator Instructions)

Our first question comes from Brandon Folkes with Cantor Fitzgerald.

Congratulations on all the progress. Yes, look, granted, all the progress you've made in the business over the last few years, you're in a very strong capital position. How do you think about business development, and maybe bringing in some more commercial assets in the near to midterm? Obviously, you've focused the pipeline, but just with sort of the United Therapeutics, Tyvaso remains a big opportunity.

But how do you think about bringing in some more commercial assets that would be wholly under your control?

Thank you, Brandon. Great question, and we find ourselves in a really good position, despite the news today in terms of business development. We've had lots of inquiries around opportunities. We continue to evaluate those. And we do know there's a lot of single-product companies that are struggling, that are burning a lot of cash and that there are ways to harmonize those infrastructures with the infrastructure we have.

We'll continue to look for those opportunities. They have to make sense, they've got to fit our strategy and they have to be good for shareholders. So we are open to those ideas and continue to be open. But those things also take time and energy, and we want to make sure they're not distracting us from driving core value that we're doing.

But we do know there's a lot of companies that will be running out of money and assets that really need a home and maybe MannKind can be a place for them. So we'll continue to evaluate those things going forward.

Our next question comes from Gregory Renza with RBC Capital Markets.

I just wanted to follow up a little bit on as you explore fleshing out the pipeline, and maybe just layering in some of the COVID-19 impacts.

I think firstly, as we sort of exit from pandemic, endemic and some degree of stability or normalcy, how do you think about the landscape for pulmonary partnerships? To what extent has the pandemic provided some learnings or opportunities where your technologies can kind of fit into that schema as a potential benefit?

And then maybe secondly, to that with respect to COVID-19. I'm just curious if you could provide some color on how you're seeing exiting Omicron and how Afrezza trajectory could potentially look sequentially throughout the year?

A lot going on into that question, so I'll do my best, Greg, but thank you. I think the first thing. I'm thankful that clofazimine is where it is in terms of development because in our discussion with the advisers, the number of trials backed up that are in pulmonary infectious disease are really high right now. And therefore, us getting [very] in line if we were in Phase II right now, for example, would not be ideal. We'd be paying a lot of money for not a lot of progress. And we see several other companies stuck in that situation where they're burning cash against the pipeline without a lot of delivery of the patients.

So we are optimistic that by the time clofazimine goes into Phase II, a lot of that backlog will be cleared out. And we are anticipating no resurgence of COVID this year. I'm sure there could be some pockets, but that's not -- we're assuming a more normal path forward as we go. And we'll watch that before we go ahead and launch a larger Phase II trial for clofazimine.

In terms of the opportunity on partnerships, you saw we did a small development deal with NRx Pharmaceuticals. They have an opportunity for COVID treatments. We've done several other COVID formulations last year, maybe 2020 when it first started. And if COVID is going to become more of a chronic annual thing that we've got to treat, one, I think our technology can be used for partners, whether that's vaccine boosters and some other meds that can be self-administration. That's a great opportunity.

But on the flip side, unfortunately, there are millions of people who now have damaged lungs, and that's going to probably expand some of the market opportunity as we look out, whether it's IPF or COPD or PH, the indications that UT is going after. We think this is unfortunately going to be a growing segment, given the number of people we have had COVID. I think net-net, unfortunately or fortunately, COVID is not good for society, but I think it will set up MannKind for a multitude of opportunity in the future.

I think -- I hope that answers the question on the platform and how we're thinking about it as well as our own products and development. On COVID-19 and Afrezza, that was one of our challenges as we look over the last 2 years. We had hired about 20-some people, maybe almost 30 people between '21 and 2020, in anticipation of getting out and growing faster. And unfortunately, with the opening and closing multiple times over the last 2 years, we weren't able to make as much impact with all the extra expense. And as we came into this year, we were right in the middle of COVID and we just weren't feeling like is this thing going to go away or come back or are we shut down again.

So we made the tough choice to kind of reallocate some of our expenses. So there are in things that we can control, things that we can shut on our office if COVID changes, and that's how we're managing the Afrezza business.

So the more confidence we have that COVID is not resurging, and reps aren't going to be locked out of offices, the more confidence we'll have in terms of continuing to build back up that sales force as we get a new team in place. We have all new marketers, all new managers, really good, focused team here driving us forward on Afrezza. And I think our first sales meeting in 3 years will be in a few weeks, so I'm really looking forward to that.

And I think coming out of that, Brandon, is when we can -- sorry, Greg, is when we can start to see that continued growth that we start seeing right now that we expect to see coming out of that.

I hope that I answered -- there's a lot in there, but we still were able to grow despite COVID, mainly because a lot of our business is private practice. We still need to get academic centers onboard, and they've been the last ones to open up and continue to be the last ones to open up. So a lot there, but hopefully it gives you a little bit of clarity on how we're seeing 2022.

Our next question comes from Thomas Smith with SVB Leerink.

Congrats on the progress. Just one on so Tyvaso DPI. Any additional color you can share on the regulatory update this morning? I know UT is responsible for the regulatory interactions here. But can you talk about your expectations for the label? Any change in your expectations relative to the October communication, where I think UT communicated the latest version of the draft labeling was for both indications with no box warnings or contraindications.

Yes. Tom, thank you so much for joining us today, and appreciate the question here. I think on the labeling, the short answer is we don't know, right? The FDA didn't give us an updated label. They haven't commented on any changes in the discussions I've seen in the last few weeks when we went through the journey here.

I think if you take a step back, a lot of the citizens' petition was focused around bronchospasm and FDKP. I think the good news is, we've had over 20 years of experience with FDKP, running it in trials of people with asthma, COPD, placebo. We have a lot of data there. And I think being able to -- we were prepared to respond when we had to -- with UT, and I think we took all the information and packing that up with UT. I think that's in front of the FDA.

So I think the short answer is, we believe in FDKP. We feel it's a safe and effective excipient. We don't believe the accusations in the citizens' petition to be fully true and portrayed the right way. And then we have a lot of data that is kind of misleading in the way they've structured their CP, and I think that's important. Probably over 100, almost 200 patients in some of our trials where we retrospectively identified them as having lung disease, COPD or asthma and they were fine, there was no bronchospasm concerns or scares.

So I think a lot of this is due process, the FDA needs time to go through everything. And we feel very confident that in the end, we'll get to a good spot (inaudible) our partner and that the label, what could happen, who knows. But I think this is a really big opportunity. It's going to help a lot of patients, and whether there's a label change or warning or a black box, I don't think it's going to fundamentally change the main opportunity in front of us and UT to help patients.

These patients have a severe unmet need. They're stuck on the nebulizer all day, and this is really going to change the opportunity for them to really use the easy-to-use product compared to what they're doing today.

And we saw in the prestudy, there's no safety concerns raised on those patients who have already an underlying lung condition. And that was [specifically enough] emphasized to get the drug hopefully approved, and it should suffice on some of the concerns that we have. So we responded, we feel good, and we do have a lot of data in COPD that we don't see some of the bronchospasm that raises concern.

Got it. Yes. I appreciate the perspective. And then just on the nintedanib program. Can you talk about the strategic rationale here? Just thinking about nintedanib and I guess why you think this is a particularly strong fit for the Technosphere platform? And maybe kind of compare, contrast versus I think there's at least one other inhaled nintedanib effort that's out there. Why do you think this is a particularly strong candidate for your platform?

I think when it came to this class of molecules -- there's 2 molecules, there's perfinidone and nintedanib. We were actually developing both. We did not move perfinidone forward last year, we killed it mainly because we felt the dosing was too high, and there was another perfinidone out there, and we didn't see a huge benefit relative to that product to our platform.

On nintedanib, we do see a big opportunity because it's got very low bioavailability and being to able to deliver a single cartridge to the lungs in a very simple way. We think with IPF, if you read the label of these products, they don't improve life expectancy. The Kaplan-Meier curves continue to show very little delay and they may stop progression of FEV1, but these patients are not getting better. They're not stabilized as much as anybody wants, and I think that's where we believe, hopefully, our technology, getting it directly into the lungs maybe will help improve FEV1, help their quality of life and maybe extend their life.

It's a really tough disease. There's not a lot out there for these patients. The market is littered with failure, and we think applying our technology to this molecule in a way that gets directly into the lung will help improve patients' lives and whether that's going to be just a quality of life with an equal efficacy and better safety profile, I think the data will drive that out there.

On the other program that's out there, we're aware of it. We watched it. There's not much to say about it. I think we're well funded to continue to move our products forward, and that's what differentiates us. We have an FDA-proven platform. We have manufacturing scalability and formulation know-how. We feel very good about our ability to move these molecules down the road. I think that's something that Wall Street sometimes takes for granted. But there's a lot of work that goes into scaling up these products and manufacturing them in a way that they can get through an FDA inspection with the drug-device combo.

And while I think that is DPI is a great example, it's been difficult to get to where we are, but we have not had many issues when it comes to the drug-device combo or passing FDA inspection. Many dry powder products do not have that same luxury first round out. So we feel pretty good about using our technology (inaudible).

And our next question comes from Stephen Litchman with Oppenheimer.

This is David on for Steve. Just maybe one question on -- a follow-up on the COVID impact. Have you seen any disruptions to your supply chain from employee absenteeism that could potentially slow down the manufacturing event ahead of the Tyvaso DPI launch this year?

No. I think the team is really good about getting ahead of any type of supply chain challenges. Back in 2020, we overstocked to make sure we have enough -- and the biggest thing is around PPE equipment and stuff like that, that was running short around the country. We were always able to continue to protect our employees and continue manufacturing.

The biggest risk, honestly, was the whole manufacturing line going down during COVID and training and scale up. And I think we've been able to avoid a lot of that. So less on supply chain, much more about disruption in the workplace. And it was only the first week of January back, I think we had a few people go down in 1 particular week.

But otherwise, it's been relatively well managed, and I don't expect any major COVID challenges from here on out in the supply chain (inaudible).

And then -- the only area it did impact, but I don't think it's a major issue, it's very minor is the number of BluHales that we can manufacture for launch. And so I think that's -- and that's more related to the chip shortage than it is a COVID issue. So that's it.

Okay. Great. And then just one follow-up. Is there any early insights or feedback from the primary care pilot that you can share at this point?

Not yet. I think it's too early. We do have some early script data. We have a number of prescribers. The only thing I would say that is slightly encouraging is, I think, the last 2 weeks, they've been running speaker programs. We've been seeing oversubscription to 30, 40, 50 attendees per week.

And I do think when it comes to the primary care pilot, we're at that awareness stage. We did the research before we kicked it off. Very few doctors, I think 1 or 2, heard of Afrezza, and all they heard was that it's was an inhaler (inaudible). So their awareness was very, very low of anything related to the product. So I do think it's going to be -- it's been about 2 months now. So we should be coming out of the awareness stage amongst our top 10, 20 targets, and hopefully into the trial stage. And I think that's where we'll start to see uptake and get people to try it, prescribe it and then adopt it.

And then within that pilot, we did find we had to correct. We were targeting a $35 cash pay with no prior authorization through Walgreens. And we did find there were some hiccups in that on the front lines and so we're trying to address that. And I think that's been addressed or will be addressed this week.

So that was probably the only thing that may have slowed down some adoption early on. But otherwise, the only thing I'd add is 90% of the scripts that we saw so far come in were actually reimbursed, which is a lot higher than we would have expected because this is targeting earlier lines of insulin treatment where hypothetically insurance reimbursement should be a little bit harder. So we'll wait to see more data. It's very early, but that was the one statistic I saw that caught my eye. It's a little bit different than what we expected in our model. So we'll keep watching it. But thank you for the questions, David.

Our next question comes from Bert Hazlett with BTIG.

My questions have been answered.

All right, guys. Thank you, everyone. Thank you for the questions. I think it's really got to show the next couple of months how this all looks, to get through the May deadline here with FDA. But we're full speed ahead. We are not changing any of our plans. There's very little impact to this decision with FDA for the company this year. So we're continuing to march on, and we'll continue to hopefully drive performance and help people live with diabetes, pulmonary hypertension and lung disease as well as getting into NTM as we launch that trial forward.

So thank you again to everyone. Thank you to our team here at MannKind for all the work they did under pretty stressful circumstances and looking forward to a successful 2022.

This concludes today's conference call. Thank you for participating. You may now disconnect. Everyone, have a great day.