MannKind Corp (MNKD) 2020 Q2 法說會逐字稿

Good day, everyone. Welcome to the MannKind Corporation Second Quarter 2020 Earnings Call. As a reminder, this call is being recorded on August 5, 2020, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until August 19, 2020.

This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty which could cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, please see their 10-Q 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 things over to Mr. Castagna. Please go ahead, sir.

Thank you. And before I start, I really want to say thank you to all of our stakeholders as Q2 was a big unknown for everyone when we look back to March. We weren't sure how bad revenue Rxs would decline or how our cash position would be impacted or TreT would be slowed down and for how long. Our team, whether it be HR, finance, R&D, manufacturing, medical or sales, pulled through big time, as we will discuss here in our earnings call today, and we are now finally in a very solid financial position as we look ahead. I'm very excited about our future, whether it be the international expansion, TreT filings, the Tyvaso data readout in COPD and the incredible foundation of Afrezza we can build our future growth upon. The talent and interest in MannKind is very high right now, and the bench of diabetes expertise continues to grow each day. Thank you, again, to our employees, our patients, our customers and our shareholders for hanging in there during what could have been one of the darkest periods in the history of the company.

I remind people our mission, which is really to give people control of their health and the freedom to live life. And none of us today more than ever want the freedom to get out of our house and live our life. And hopefully, as we continue to grow our expansion within the treprostinil franchise and the Afrezza franchise, we can bring this to more people in the future.

Let me highlight some of the key updates here during Q2. First, Afrezza quarterly net revenue of $7 million was 15% ahead of 2019. Our sales to Biomm were $0.2 million in that number, and that COVID continues the impact the Brazil launch as they are the second worst COVID impacted nation in the country, followed by India. Our U.S. TRxs were only down 3%. And if you'd told me back in March that we're only going to drop 3% in the quarter despite the pull ahead that we had during Q1 in prescription demand and fulfillment, I wouldn't have believed you. Our team did a fantastic job, and we can see that we grew 11% versus Q2 of 2019.

Our United Therapeutics collaboration, we were able to receive our third milestone of $12.5 million in May, and we expect another payment later this year during Q4. COVID-19 did delay the clinical trials, and we are now opening back up for enrollment, as I'll talk about in a few minutes. As for our cash balance, we ended Q3 stronger than ever with our second best quarter as $63.5 million in the last 4 years. And our cash burn should be manageable for the rest of 2020, given the $12.5 million payment we expect in Q4 and now we can invest to growth a little bit faster, as I'll discuss in our second half opportunity.

Sorry, my slides were out of order here. Before I go ahead, on the cash balance there. I wanted to introduce Alejandro -- so my slide missed that. So I apologize, guys. I want to announce our new Chief Commercial Officer, Alejandro Galindo. He joins us as the President of Medtronic -- as formerly the President of Medtronic Diabetes. He has a great wealth of knowledge and experience in the type 1 space, technology and medical devices, CGMs and pumps, and had a very successful tenure during his 5 years at Medtronic. He also comes from a background in GE Healthcare, which is a company I followed over the years -- and as well as their ups and downs. Alejandro is a tremendous leader and really looking forward to having him to be part of our management team and leading our commercial efforts as we go forward.

His background in Spanish and Portuguese and multilingual is really going to help us as we continue to move forward with our international expansion. And his world knowledge of markets is going to be important as we go forward. So I apologize for the miss.

Okay. So we ended with -- sorry, just on the left slide there. We ended slightly with the debt change here. The PPP loan was $4.9 million, which we disclosed in the past. We've also repaid our promissory note to one of our debt holders of $2.6 million as scheduled in June.

So now let me talk about our business transformation during COVID.

First, our primary concern was our employees and making sure they're well, safe and protected. We did work from home and used technology within a week of making this transition. Second, we had to make sure we had adequate supply of Afrezza, and we kept TreT on track. Within the manufacturing, we were able to keep the facility open, limited to essential workers only, and we built inventory for the remainder of 2020, so that we have no risk in patient stockouts. Third was sustaining our future. We made a lot of tough choices during Q2 to reduce our spend to offset the expected sales impact from COVID-19. I will say things turned out way better in Q2 than we had expected. But we did take proactive measurements to reduce our pay by 20%. We were able to receive the PPP loan, which really allowed us to keep our -- all of our infrastructure intact and avoid any furloughs, which, we believe, was critical to the success we had in Q2 as the alternative would not have been ideal. We spent a lot of energy building this team up and the PPP loan helped us stay on track and stay on focus and pull through to where we are today.

Third is our TreT collaboration. Our temporary suspension of clinical trials caused concern for everybody, but I will say MannKind and Uni Ther worked very closely together to maintain the momentum and keep our clinical support and milestones on track as best we can, and I'll talk about that in a second.

And then finally, Afrezza. Let me talk about a little bit on what we've done with Afrezza here during COVID. We quickly pivoted our business model as safer-at-home orders were implemented across the U.S. First, our biggest investment in the field, we had to make sure we're impactful as possible as they move to or move to a remote sales support position. We trained them on inside sales best practices. We've created e-mail templates to enhance their communication with their customers. We created digital versions of all of our marketing materials. We had over 800 virtual lunches during this time. And we launched several training initiatives to ensure the clinical impact as they got back out there and selling. At the same time, we expanded our sales force during COVID, so that we could come out of this stronger than ever. And finally, we were able to create a virtual Dreamboat training. Dreamboat, for those of you who don't know, is our Afrezza device, and we're able to help train patients virtually to keep new starts going.

As far as our commercial operations, we were able to ship FEV1 devices to patients to make sure that patients could start Afrezza if doctors desire to. As we know, many visits were down and new starts were down during the quarter for many companies. We also altered our sampling program, which meant we reduced not only cost, but increased customer service and our new patient initiations at reduced costs.

And then finally, we're launching several digital marketing campaigns and webinars, and we had over 17 webinars with 22 thought leaders reaching over 1,000 physicians in the last 4 months. So I think what you can see is the team here really executed on the commercial side as best we could during COVID-19.

And the results here during the quarter speak for themselves. We were able to stabilize TRxs, relatively speaking, for the quarter, down only 3%, but our revenue dropped slightly more due to the decline in channel inventory, as Steve will discuss. When you look at our new patient starts, while they were down from Q1, it started to increase above the 300 back here as we exited Q2. And I think as we continue to look forward here in Q3, we'll see these new Rxs continuing to improve as we go forward.

We continue to look for ways to innovate our business model, and one of those is growth in the specialty pharmacies. This will continue to help improve margins as we go forward. And you can see from Q1 -- really from January went from 7% of our sales to 16% here in June and continues to grow every single month. We don't have any guidance on where this will plateau, but it's an area we continue to want to see higher quality customer service to our patients and our providers through our specialty pharmacy network, and this is something we think is critically important to the future and will help improve our margins.

And the final question before I turn it over to Steve is where are we on TreT? And the good news is this continues to be on track. As I talked about, roughly a Q1 2021 filing. This is in United Therapeutics' control, not ours, but everything we're doing is to make sure we're on track to hit these key milestones. Number one, the BREEZE trial. This is the most important part of this package. There is 45 patients that need to be switched for 3 weeks. This trial is back up and enrolling. There's a long-term extension phase. 7 sites are up and running, and there's 26 sites in total that we expect to be up and running in the near future. So this trial should wrap up here in the second half of the year and will be no longer the long pole in the tent.

The next one is the pivotal PK trial. This study was almost complete during COVID. We are probably 5 or 6 patients away and should be up and running and completed in the near term. At this point, we don't see any risk in the pivotal PK output or trial design. The human factor study is something that's in our control. It looks good. It's something we've done many times here with Afrezza, and that will kick off here in Q3. And we just got some FDA feedback that we've incorporated and looking to launch that very shortly.

And then the final part of the package is the stability program, and that's what MannKind has been working on over the last year, where we had to build out the manufacturing plant, run the commercial batches and get things up on stability. And that will be partly finished up here in Q4 and looking forward to wrapping that up.

And in the end, we're very excited about the future with our partnerships. We continue to look for opportunities to work together on other molecules. And the potential for Tyvaso expansion here in COPD as another data readout from the future is exciting as well as our ILD as they continue to wait -- await FDA feedback on an accelerated approval, which will be important to our TreT forecast in the future.

I'm going to stop there and turn it over to Steve.

Thanks, Mike, and good afternoon. Very pleased to review our second quarter and first half 2020 financial results, which showed meaningful Afrezza net revenue growth, even with the impact from the pandemic, gross margins holding steady at just under 50%, and our cash balance ending the second quarter at its highest level since December 2018. I'll be discussing select financial highlights and ask to supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC this afternoon.

Let's start out with looking at revenues for the second quarter and the first half of 2020. Starting with the table on the left, Afrezza net revenue was $7 million for the second quarter versus $6.1 million for the corresponding quarter of 2019, a growth rate of 15%. The second quarter included $0.2 million of sales to our Brazilian marketing partner, Biomm. Domestic Afrezza net revenue grew 12% versus the prior year, driven by volume growth from underlying Afrezza prescription demand, which is up 11%, price and a favorable mix of cartridges, but was partially offset by the impact from the COVID-19 pandemic. The pandemic affected our second quarter Afrezza net revenue in a number of ways.

First, we disclosed in our Q1 earnings call of approximately $0.5 million of Afrezza net revenues shifted from Q2 to Q1 from increased wholesale buying patterns in March. The increased March 31 wholesale inventory levels have come back down by the end of the second quarter, which negatively impacted our second quarter Afrezza net revenue by approximately $0.5 million.

Second, our sales force worked from home for much of the second quarter, and were able to -- and when able to meet with physicians, had limited access to their offices, which impacted the effectiveness of our selling efforts.

And third is the effect on new prescriptions being written by physicians. Some patients have been reluctant to visit their physicians to minimize their exposure to the virus, and some physicians have been increasing the use of telehealth to see patients, both of which impacted new patient starts. As Mike explained earlier, we quickly pivoted our business model as the pandemic took hold to enable our team to be better positioned for success in this new environment. We believe that a combination of business model changes and the gradual return to normalcy will favorably impact Afrezza prescriptions and Afrezza revenue for the second half of 2020.

Looking at the first half comparisons on the table to the right, Afrezza net revenue grew 35% versus the first half of 2019, driven by volume and mix, which is up 30% and price up 5%. By looking at the first and second quarters together, it helps to eliminate the fluctuation from the timing of wholesaler purchases during the first and second quarters that I was just talking about. Gross to net was 41% for the second quarter, which was slightly favorable to our expected range of 42% to 44%, while the first half gross to net came in at the lower end of the range at 42%. Revenue from collaboration and services was $8.1 million for the second quarter of 2020 versus $8.9 million for the corresponding second quarter of 2019. Reduction in revenue was expected, was mainly due to the recognition of the $10 million United Therapeutics research agreement over the period of fourth quarter 2018 to the second quarter of 2019 when our performance obligations were substantially completed. Inception to date, we have recognized $53.6 million from United Therapeutics license agreement and the entire $10 million from the United Therapeutics research agreement for a total of $63.6 million recognized in inception to date.

The next slide shows how our product mix continues to favorable impact our Afrezza revenue growth. Our successful commercial messaging and execution has resulted in patient titration to higher doses, which has driven the 12-unit cartridge growth rate faster than the 8-unit and the 4-unit. As a reminder, our 12-unit cartridge is priced 3x the 4-unit and the 8-unit cartridge is priced 2x the 4-unit cartridge. We showed 4-unit equivalent cartridges on the slide to enable easy comparison of growth rates for the first half of 2020 versus 2019. And this showed the favorable impact on Afrezza revenues and cartridge mix. Faster growth of the higher unit cartridges results in a higher growth rate of Afrezza revenue compared to prescription growth.

Moving to Afrezza gross profit and gross margin. The table on the top is a familiar one, which shows gross margins in the first quarter 2019 through the second quarter of 2020, where our gross margin was 47.4%, basically flat with the first quarter of 2020. We have had and continue to have excess manufacturing capacity, which results in our cost of goods sold remaining relatively flat quarter-to-quarter due to production volumes remaining lower than our production capacity. This results in a majority of manufacturing expenses recognized as cost of goods sold in the quarter incurred. As TreT clinical product production has ramped up in 2020, we are now able to absorb costs over 2 products being manufactured at the Danbury site, resulting in a favorable impact on Afrezza cost of goods sold as compared to the prior year.

Cost of goods sold, excluding inventory write-offs, were $3.7 million for the first and second quarters of 2020. The first quarter of 2020 included an inventory write-off of $0.5 million, resulting in a higher COGS charge of $4.2 million. The table on the bottom of the slide shows Afrezza gross profit growth of 156% between the first half of 2020 and 2019. The primary reason for such a large increase in gross profit is the growth of Afrezza revenue, and to a lesser extent, a lower level of cost of goods sold, driven by manufacturing efficiencies and a higher level of manufacturing activity for Afrezza. As Afrezza revenues increase and cost of goods sold remain relatively flat in the near term, we expect to see increases in both gross profit and gross margin.

Moving on to operating cash efficiency. On the next slide, we are comparing the first half of 2020 versus 2019 versus 2018. The top of each vertical bar is our present net revenue, which has more than doubled in 2 years, and the bottom is non-GAAP net cash used in operating activities. Please note that for non-GAAP purposes, net cash used in operating activities has been adjusted to exclude the United Therapeutics milestone and the Cipla license payments. We reduced operating cash burn by 37% in the first half of 2020 versus 2019 and an additional 14% when looking at the previous year's comparison. The increasing threat -- Afrezza net revenue helps drive down the cash burn, but to a larger extent, it's also the major focus on managing our operating spend and it shows in a reduction of $27.4 million in the first half of in 2020.

Our restricted cash balances -- I'm sorry, our unrestricted cash balances at the end of June for the last 3 years are shown at the bottom of this slide. We ended the second quarter with $63.2 million in unrestricted cash and cash equivalents, our highest cash balance in 18 months. In addition to lowering our cash burn, during the second quarter, we received the United Therapeutics milestone payment of $12.5 million, $11.6 million from the exercise of outstanding warrants, $11.6 million from equity sales to the ATM, including a sale to a strategic institutional investor, and $4.9 million from the PPP loan.

Wrapping things up, we experienced headwinds from the COVID-19 pandemic, which impacted our second quarter results, but we have repositioned the company to be successful in executing in such an environment and to be able to weather the uncertainty caused by the pandemic. Our improved cash position should enable the company to better navigate the changing landscape as we continue to take appropriate actions to keep MannKind moving in the right direction for all stakeholders.

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

Thank you, Steve. And I want to talk about growing our future, not just in the second half, but as we continue to look out going forward. So the first thing that I think we were able to do during COVID was to get back in touch with many of our current shareholders, but also reach out to new shareholders. It's something that's been important to us. And as we continue to transition the story from an Afrezza story to a pipeline story, to an expansion story, we think now is the time more than ever to start to build up our investor base.

So as part of that, we've reached out to several new institutional investors, as Steve highlighted, some of which will buy off our ATM and build their position in MannKind over time, and sometimes that helps us in the short term. Our investor discussions have been a 2-way street. We tell them our story and the reasons to believe in our future. We've also been listening and taking away feedback on key issues, for example, on say on pay. We're surprised of how new our story is to many of these people, and we really look at our investors in 1 of 2 buckets: those that have been with us on Afrezza and either knew about MannKind in the history, but dropped us years ago; or those that are very interested in Uni Ther and look at MannKind as an opportunity to capitalize on this growth story with TreT and the additional benefit of the company becomes the Afrezza growth story.

We start to see 2 different bases of shareholders forming in our future which ultimately will converge into a growth story for the company, whether that be because of people's belief in Afrezza and our growth in that story or because of the upside in the company as we look at Uni Ther and Tyvaso and other partnerships going forward. Long story short, we're really excited to continue to implement now our next part of our strategy that we rolled out in January, which is continue to look at opportunities in orphan lung and endocrine area to supplement what we've been doing and build out our pipeline even faster. We've had lots of discussions with institutional investors with assets under management over $250 million as well as small family offices who are very interested in the story, sub $250 million. These discussions are all been excellent. And also on top of that, many great discussions with our research analysts, new and current ones.

The #1 question I did get from investors and prospective analysts was why do you continue to invest in Afrezza? This is a really important question that we did some research here during COVID to reach out to some of the top insulin prescribers who've never tried Afrezza and said, "What are we missing?" We've generated all this data, and we really want to understand what more we can be doing to continue to lay the foundation for the future. And the best news I can share with you is despite all the hard work, we still have room to improve. The other benefit here is Afrezza continues to serve an unmet need for mealtime control as 4 out of 5 patients are on goal. And in fact, if you look at the latest T1D Exchange data, outcomes on patients living with type 1 diabetes have gotten worse over the last decade despite the adoption of CGM and insulin pumps. This data has not changed really in the last 20 years when you look at percent of people, less than 7%, is generally about 20%. We think we have an opportunity to continue to enhance this as we publish our data on hypoglycemia, dose titration, weight loss in type 1 or weight different beneficial in type 1 and continuing to help doctors understand how to start new patients.

Where do we go in the second half of 2020? First, I want to acknowledge that David Kendall will be departing our MannKind family to pursue other interests. While his impact here will forever be lasting. I want to say thank you, David, for all you've done for patients now and in the future. David will be with us for a transition period as he sets on his next opportunity. He's also the lead author on several of our scientific publications. David has made a tremendous impact, as I'll talk about all the new data coming out over the rest of the year.

Despite his departure, I will say we're excited with the new commercial and medical leadership, the deep diabetes experience that have been joining the company. In fact, we made 2 new hires in the last 24 hours and 3 to 5 more coming over the next week. Because one of the things I learned in the ad board was how much more room we have to do to educate providers on all the clinical data sets that we've been able to get out there over the last 3 years. And one way to do that is increase our share of voice. And so we've expanded our sales force, and we're expanding our medical footprint as we speak. And we also enhanced with Alejandro joining and a few others from other diabetes companies to really give us a rounded outside of experience across the commercial and the medical team as we go forward.

Next, we've been building our stepping stones for an integrated care model. And what that means is you look and say, we're building out Afrezza assist to have a closed loop patient reimbursement support system to make sure it's easy and consistent experience that our patients and doctors experience. Second, due to the nature of telehealth and where we see the future, we believe COVID just accelerated telehealth by 5 years, and this is a great opportunity for us to help partner with some external collaborators and launch a telehealth platform and support Afrezza here -- as early as the end of Q3 here is what we're looking at. And we continue to look at enhancements with our distribution model, either by expanding our specialty pharmacy or other distribution partners, which will lower our costs. Additionally, we'll be hiring a Head of R&D to help build out our R&D platform even further than we have over the last couple of years.

And the last 2 parts here is launching BluHale for health care providers, which (inaudible) our batteries in from China, the devices are made, and we'll be launching that very shortly with our sales force. And we put a team in place to help get dose detection moving even faster. So we're excited about the connectivity in the future and Alejandro's background here is going to be very helpful as we go forward.

And then as I'll talk about in a second, we have lots of new scientific publications and data dissemination that David and his team worked hard to get published over the last few years.

Next I want to talk about our collaborators. We received -- we expect to receive our fourth milestone from Uni Ther here in Q4. We will complete our clinical and CMC support work for the NDA and we'll continue to look for other opportunities to enhance our relationship with Cipla, Biomm down in Brazil and other international markets as we go forward. On the pipeline, we started the sumatriptan toxicology work, and we expect to get to pre-IND by Q1 of next year. So excited to continue to move the pipeline forward.

On the next slide, I won't go over in detail, but I think it's really important to lay out that we have had over 24 scientific disclosures over the last 12 months between December of '19 and by the December of 2020, 3 of these publications, of which 2 came out in the last 2 weeks and 1 more we expect to come out in the next week. The team here has been really hard at work, and this is data that's been sitting in our warehouse for years, if not more than a decade, in some cases, as doctors just aren't aware of. And this is the #1 reason we're expanding our medical footprint. As we speak, we have to get this information in the hands of providers. It's meaningful information and really answers a lot of the scientific questions that have been out there around Afrezza over the last 4 years. But I'm happy to say, most of the data will be out between now and the end of the year, and now is the time more than ever to summarize everything that we've been working on, wrap this up and really go out and execute as we move forward.

My last part here is the pediatric study, which I didn't mention previously, is we're finishing up the Phase III protocol design, plan to go to the FDA here in the second half, and we'll be ready to kick off that trial in 2021.

I want to stop there and open up for questions. And really just say thank you again to everybody. It's a tremendous effort in the quarter, and I'm really happy with our performance, our teamwork and how we pull through to make this company stronger post COVID. Thank you.

(Operator Instructions) We'll hear first today from Thomas Smith with SVB Leerink.

This is Dylan Dupuis sitting in for Tom. A couple of quick questions. First, can you give us a little insight into what your expectations are for the new territories and the new sales reps that you brought on line on this year? What are your expectations or how quickly they can get ramped up and producing at full speed? And then kind of related to this, what are some of your target points and metrics that you're evaluating to consider opening new territories in the future? And then I have a couple of quick follow-ups after this.

Okay. I apologize. I missed your first...

New territories and so what are the expectations for the new territories, sales.

Okay. Yes. So I think the first thing, as you think about -- we opened up 11 states and those reps are just getting out there really the last month, meeting the customers for the first time. And when you think about those 11 states, we don't expect a rapid uptake in the first month as it's basically launching from scratch. And I can tell you, I was on a call recently with one of the CDE organizations and it's amazing to me that their knowledge base is backward less 4 years ago, and they just missed all the new information we published. So I think the first step is making sure those new territories are supported with good medical support. And we're giving those employees the runway to be successful, and I think they'll have that. We're seeing some early success in a lot of these new territories. So they are growing, but they're starting from a base of 0 pretty much. And that's -- so that's exciting as we continue to see that base grow.

I think the first thing we look at in terms of metrics of success is really new prescriptions. That's going to be the earliest indicator of success. And like I said, we're looking at those, and early results are encouraging. And we'll look at that as we get to the end of Q3 and Q4 to decide, do we expand even more territories as we go into 2021 and see what our growth has been in the second half. And a lot of this is COVID dependent, guys. We're being prudent with the cash we've been fortunate to bring in here in Q2. But we also know that we've got to train people, give them the time, and that's just going to take a little bit of energy. So we're excited, we're looking at this closely, and the new employees have been excellent. The talent base we're recruiting is incredible. So we've got 4 out of 9 new managers in the field and probably over 19 new reps this year, so 35% improvement. So we feel very good about that and excited with those metrics. And the medical support team, we're looking to hire 3 to 5 MSLs, as we speak. So they'll have some support there at the new districts.

Yes. Great. And then real quick, if you can give us an update on the progress being made with AMSL in Australia as well as the pediatric program.

I heard AMSL in Australia. Ped, okay. So on AMSL, I was just on the phone with them a week ago. They obviously were hit by COVID and things were shut down there, and they're just coming out of it. We are working on filing, and we're just finishing up the gaps in the filing and seeing what we need to do, if anything, to modify, to get ready for filing. So that's now moving forward. Took a little longer than we would like for lots of reasons, but that's on track now to start moving forward, and it's probably going to be an 18-month process from the time that it's filed. So that's moving forward.

The next one on the ped study is we're doing a couple of things right now. The first is we're doing some market research to hear from patients and providers on the unmet needs in the pediatric space and the endpoints we're looking at in our trial. I'm really trying to get a better forecast for how big we think the pediatric segment can be for inhaled insulin. We're generally very optimistic, and we really want to hear from the providers on hearing their optimism. The second part is we'll be doing some pediatric advisory boards here to get feedback on the protocol design, the endpoints and really making sure that we design this trial for speed of enrollment, balanced by risk and assessment of how quickly we can move this forward. So I think that's important. And then the third part is really building up the pediatric thought leaders. And so we just hired a commercial person who joins us with a deep diabetes background from Novo and Lexicon. And he'll be moving out here and really starting to build up our thought leadership within the ped segment. And I'm sure, Alejandro, you've got a ton of connections in the pediatrics with your background. So we're excited about peds. We know it's going to take a little while to get there, but we're putting the right plan in place to launch it successfully and build that market up as we get ready for launch. But right now, we're just getting all the right ducks in a row to get the trial off the ground.

We'll hear next from Brandon Folkes with Cantor Fitzgerald.

Congratulations on all the progress in the quarter. So you mentioned to hold quite a -- as a growth driver or sort of a new dynamic you're moving towards. So can you just provide some feedback you've heard from physicians in terms of switching patients in the current environment, in the current health environment? Do physicians want to see patients in person at some stage? If so, how often? And then maybe segueing from that. Can you talk about some of the positive shift in the way we do business you've seen in COVID that you think will be tailwind coming out of COVID?

Thank you, Brandon. So I think initially when COVID hit, everybody was just trying to figure out how to survive. And the one small benefit we have at MannKind is a lot of our business is in private practice owners. And so they were the first to open up a little bit, and we can have at least more interaction probably than some of our industry colleagues were. So that's slightly different than maybe some of the academic centers, which are maybe different types of starts. And so I think a lot of us, whether it's MannKind or other companies or just physician offices, we're just trying to figure out how to survive during lockdown. And so there wasn't a lot of new starts or interest in starting patients. It was really a matter of keeping patients on therapy, keeping them engaged and making small tweaks. And I think telehealth was great for that. And then as we realize that COVID is going to go on longer than 4 weeks, we started shifting a little bit and getting some feedback on can you start new patients virtually with Afrezza, and how do you think about that with the FEV1 spirometry, how do you think about that with dose titration, and how willing will doctors be. And what's nice is we created this program, we had over 100 requests for FEV1 devices come in from providers who were shut down, but still giving virtual new patient starts. So that was a good inclination of a pilot for us to see could you make telehealth work as a part of your business expansion. And that's what gave us the confidence to start to build up the telehealth because there's little bit of coordination there with the spirometry, but we think it's possible.

And one of the things we've heard from doctors is, hey, if patients come in and ask for it, we're going to start them during COVID. But they weren't interested in a lot of switching right now, but I think that was 2 months ago, 1.5 months ago. But now where we are, I think, new starts are coming back. We're seeing it in our weekly scripts. We're seeing our -- in listening with our reps. So I think California and Florida, probably slower in Texas, but New York's pretty much back up and running. New Jersey is back up and running. So Boston, we have new people there. So we feel that things are going in the right direction. And as California, in Texas and Florida opened back up, I think you'll see some faster growth ahead of us. But we're happy with where things landed and where we're going. So long story short, during COVID, we learned we can start virtual. Coming out of COVID, we have a better footprint, we'll have telehealth, and we think there's a future here to get patients coming from both angles, and that's really important.

We'll hear next from Bert Hazlett with BTIG.

My congratulations on your meaningful progress in the challenging environment. Things are clearly moving in the right direction in a number of ways. With regard to TreT and the collaboration with the United Therapeutics, could you be a little bit more granular about kind of the state of manufacturing? Again, you comment on how that's helping gross margins overall. But any other kind of time lines for additional efforts with regard to manufacturing of TreT would be helpful.

Yes, Bert. Not a lot to say; meaning, we built up the manufacturing facility this year, it was a big investment in the millions of dollars that UT helped support. It's up and running. We call it Process A and Process B. We're switching over to Process B. And the team's working hard to kind of get that up and running because as you can imagine, getting ready for the filing, making sure the equipment, the packaging, everything is working in sync. The team is working night and day to make sure that's working positively. And they're doing that during pretty stressful working conditions. So I think just being [ground up] and being hot and then protecting from COVID is not easy.

And I just wanted to say thank you to the team because they haven't missed a beat. And we will be the contract manufacturer. So even now TreT in clinical supplies, sometimes even if you're [filling in] and sometimes we're helping out. But going forward in the clinical -- post clinical supplies, this will be delivered by MannKind in our manufacturing facility there. So all the equipment is installed, the stability factories are up and running, the tests are running fine, and everything looks really positive. So we don't see, knock on wood, we don't see any major hiccups going forward. There's always things you work throughout as you get ready for filing. But otherwise, we feel very good about the tightness of the process, the consistency and what we've learned throughout the last 2 years here. So I think UT has been an incredible partner and really just a great collaboration as we think about the R&D side as well as the manufacturing side. So we kind of, I think, have had a great relationship in [working].

And at this time, I'd like to turn things back to management for any closing remarks.

No, I just want to say thank you again to everybody. I think it was a spectacular quarter despite some major headwinds. And if had asked me in March, April, how kind of things would turn out, none of us could predict the situation we are in and how dark it would be, and we all expected a lot worse. And I'm just really thankful that the team pulled through, and we left the company in really good standing exiting Q2. And I feel like we got the financial resources to invest in growth. We got the team to take us forward and the talent and new people looking at us. I just want to say thank you, excited to have you on board. And Alejandro, you're our newest employee this week, but next week, we'll have 2 more. So every week, we've had some new employees. It's been great, and looking forward to moving this company forward in the right direction. And getting Afrezza where it should be is really one of the standards of care for insulin-treated diabetes.

So just thank you again, everybody. I think you can see we're moving on all cylinders, and I'm just really proud of the work everybody pulled through and where we're going to be. So look forward to talking to you soon. We'll have a couple of investor conferences in September, and maybe 1 or 2 in between them. So I think you'll hear from us a couple of times, and we'll try to -- we're working on some enhanced investor communications, which we know has been a big request, and that's been one of the feedbacks as well. So we're putting together a new letter. We'll be sharing that with you and hopefully, sign up on our website and make sure you're registered there to receive that. And I just want to say thank you again to everybody. And let's see how things continue to move here in Q3, but we're very excited about all the activities, all the teams coming together and the execution to make Q3 a success. Thank you.

And that will conclude today's conference. Again, thank you all for joining us.