MannKind Corp (MNKD) 2007 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation fourth-quarter 2007 conference call. At this time, all participants are in a listen-only mode. Later, instructions will be given for the question-and-answer session. (OPERATOR INSTRUCTIONS). As a reminder, this call is being recorded today, March 4, 2008.

Joining us today from MannKind are Chairman and CEO, Alfred Mann; President and COO, Hakan Edstrom; the Chief financial Officer, Dick Anderson; and the Chief Scientific Officer, Peter Richardson. I would now like to turn the call over to Dick Anderson, Chief Financial Officer of MannKind Corporation. Please go ahead.

Good morning and thank you for participating in today's call. I will summarize our financial results for the fourth quarter of 2007 as reported earlier today. Next, Hakan and Peter will provide an update on key accomplishments during the past year. Finally, Al will comment on the current situation and our outlook going forward. We will then open up the call to your questions.

Before we proceed further, please note that comments made during this call will include forward-looking statements within the meaning of federal securities laws. It is possible that actual results could differ from these stated expectations. For factors which could cause actual results to differ from expectations, please refer to the reports filed by the Company with the Securities and Exchange Commission under the Securities Exchange Act of 1934. This conference call contains time-sensitive information, which is accurate only as of the date of this live broadcast, March 4, 2008. MannKind's management undertakes no obligation to revise or update any statements to reflect events and circumstances after the date of this call.

Let's start with the financials. For the fourth quarter of 2007, total operating expenses were $79.1 million compared to $71.8 million for the fourth quarter of 2006 and $75.6 million for the third quarter of this year. R&D expenses were $66.8 million for the fourth quarter of 2007 compared to $59.7 million for the fourth quarter of 2006 and $64.8 million for the third quarter of this year. The increase in R&D expenses was primarily due to increased manufacturing costs, including clinical supplies, for Technosphere insulin, offset in part by lower purchase services in the associated clinical development program.

General and administrative expenses were $12.3 million for the quarter compared to $12.1 million for the fourth quarter of 2006 and $10.7 million for the previous quarter. G&A expenses increased in the third quarter of 2007, primarily due to increased consulting and professional fees. At the end of December, we had 609 employees, which represents a decrease of 5% from the end of the third quarter of 2007.

The net loss applicable to common shareholders for the fourth quarter of 2007 was $75.0 million or $0.75 per share based on a weighted average of 99.6 million shares outstanding compared with a net loss applicable to common stockholders of $71.3 million or $1.30 per share based on 54.7 million weighted average shares outstanding for the fourth quarter of 2006.

For the full year ended December 31, 2007, total operating expenses were $307.4 million compared with $233.8 million for 2006. R&D expenses were $256.8 million in 2007, up $65 million from 2006, primarily related to increases in manufacturing costs, including clinical supplies for Technosphere insulin and associated clinical development program expenses. G&A expenses increased by $8.5 million to $50.5 million for 2007 as compared to 2006, primarily related to costs associated with an increased number of employees and increased professional fees. The total number of employees increased from 545 at the end of 2006 to 609 at the end of 2007.

The net loss applicable to common stockholders for 2007 was $293.2 million or $3.66 per share based on 80.0 million weighted average shares outstanding compared with a net loss applicable to common shareholders of $230.5 million or $4.52 per share based upon 51.0 million weighted average shares outstanding for 2006.

Our cash, cash equivalents and marketable securities at the end of the fourth quarter of 2007 totaled $368.3 million. On October 5 of last year, we received gross proceeds of $250 million from our registered direct offering of common stock. Thus our cash, cash equivalents and marketable securities on that date totaled approximately $454 million, which compares to $204.2 million at the end of September, September 30, 2007 and $436.5 million at December 31, 2006.

Our cash burn this past year was, by quarter, $70.9 million in Q1, $81.6 million in Q2, $79.8 million in Q3 and $85.7 million in Q4. As I said on our last call in November, we anticipate our cash burn could increase significantly over the next two to three quarters and would then decline. The fluctuations in the quarterly burn rate over the next few periods will be due in large part to the timing of our expenditures for our clinical trials and for capital costs for the new Danbury plant. With the cash from our October financing and the availability of the $350 million credit facility from Al, we now believe we will be able to fund our operations through the end of 2009.

I would now like to turn the call over to Hakan Edstrom, our President and Chief Operating Officer, who will provide an overview of our accomplishments in 2007.

Thank you, Dick. Good morning. We previously said that 2007 was going to be a quiet year in terms of outward signs of progress, but not in terms of actual accomplishments. From my vantage point, I believe that MannKind's performance this past year was extraordinary. I am very proud of the many significant accomplishments achieved by our employees during 2007 and let me share some of these highlights.

We executed a large and challenging Phase III clinical program for TI, involving over 300 sites in a dozen countries with many hundreds of positions. Our pivotal trials remain on schedule for completion later this year and I would ask Peter to provide more information about this program in a moment.

We initiated our first clinical trial program for Technosphere GLP-1, our second product candidate for the treatment of diabetes. In this study, we observed a pharmacokinetic profile for GLP-1 that suggests our platform may also have broad applicability to a variety of signaling hormones.

We completed two carcinogenicity studies for Technosphere insulin and our FDKP carrier that delivered clean results and these studies would also support follow-on Technosphere platform products.

We filed a second IND for our cancer immunotherapy product and trials should get underway this summer.

We moved forward with an ambitious construction project in Danbury, Connecticut. The expansion of our manufacturing facility is scheduled for completion this summer. The project is on time and below budget and we put in place a long-term agreement for the supply of insulin.

Our Danbury quality management systems have been certified as compliant with ISO 9001 and ISO 13485. We raised $250 million through an equity financing and we also put in place a $350 million credit facility that will fund us through the end of 2009 and we secured external funding to help support our drug discovery program that are pursuing small molecules for cancer indications.

Looking ahead to this year, we know that this will be a very important and exciting year for MannKind as our lead product candidate, Technosphere insulin, advances through the final stages prior to our filing of the NDA and I am sure that many of you would like to know when we expect to announce results for each pivotal trial.

Starting with Study 009, our 12-month pivotal efficacy study in patients with type 1 diabetes, we expect to complete the last patient, last visit in July and we expect to announce top-line results for this trial in the third quarter of this year.

Study 102, which are pivotal efficacy studies in type 2 diabetes comparing TI to premixed insulin over one year, we expect to complete the last patient, last visit in early September and we expect to announce top-line results for this trial before year-end.

Study 030 is a two-year partner safety study of TI. The last patient, last visit for this trial is also scheduled to take place in the beginning of September and we expect to announce top-line results either prior to our NDA filing or in our filing package.

And lastly trial 103 is a non-pivotal label expansion study and it is not critical to the filing of our NDA. We expect to announce top-line results for this trial later this summer after we have completed key elements of the NDA filing activities with our pivotal trials.

With respect to the NDA itself, our goal continues to be to submit by the end of December this year. Even though the last patient, last visit for Study 030 will be in early September, our team remains committed to this very aggressive goal. Moreover, the clinical module is only one of five modules that comprise the NDA. The scale-up or manufacturing operations in Danbury is proceeding well, but there are many activities that must be completed before the CMC module of the NDA is in a form suitable for submission.

Joining me now to provide more detail around our clinical programs is Dr. Peter Richardson, our Chief Scientific Officer. Peter?

Thanks, Hakan and good morning. As Hakan highlighted, we expect to announce later this year the results for our three pivotal TI trials, as well as for Study 103. I will now provide an overview of the several trials designed starting with the pivotal efficacy trial consisting of the 009 and 102 trials.

Our efficacy program is well-designed to support the use of TI in a broad patient population comprising type 1 and type 2 diabetics and compares the use of TI as the prandial insulin on top of basal background insulin versus rapid-acting analogs in type I and fixed mixtures in patients with type 2. The primary endpoint in the pivotal efficacy studies, 009 and 102, is noninferiority in changes in HbA1c from baseline. The secondary endpoint is looking at postprandial glycemic excursion, seven-point glycemic profile, as well as the assessment of rates of hypoglycemia. In addition, we have incorporated studies to evaluate a number of quality-of-life measures into this program.

The other pivotal trial is the 030 trial, which is a two-year pulmonary safety trial. The primary endpoint for this is change in FEV 1. The second endpoint are changes in FVC, total lung capacity and [DLCO], change in A1c from baseline, as well as episodes of hypoglycemia and the other usual safety metrics.

The 009 and 030 trials have been conducted under special protocol assessments with the FDA and the one or two objectives are virtually identical to 009, so we don't anticipate further requirements from the agency. Moreover, all of our pivotal trial designs are in line with the draft FDA guidelines, which were issued recently.

Studies 103 and 009 will be completed by midyear and some patients in both of these will be entering (inaudible) observational study, off-treatment Study 126. Pulmonary function will be evaluated in patients from both these studies and we will be releasing results later this year after we have all patients from these two studies completing this follow-up.

It is important to realize that we are trying to reaffirm the absence of an effect of TI on pulmonary function in contrast (inaudible) reported with other inhaled insulins. And the extent and quality of this program will be key in providing the data needed to convince physicians and regulators that we are different.

The quality of our program was recently acknowledged at the American Society of (inaudible) in which MannKind's pulmonary testing specialist, Rusty Hammer, was named Diagnostic Section Practitioner of the Year by this association to reflect the contributions we have made in the areas of pulmonary clinical trial methodology.

All our studies incorporate extensive pulmonary function assessments, which is an innovative program in which we standardize testing in central labs.

Now, I would like to move onto our TI platform expansion program, starting with MKC-253. As reported in our call in November, we have completed our first in-man safety and tolerability trial with MKC-253, a Technosphere formulation of GLP-1 that is inhaled using our MedTone device. As you will recall, we observed very rapid bioavailability of GLP-1 with a [tmax] of less than three minutes.

In patients that received one of the two higher doses, 1.05 milligrams or 1.5 milligrams, blood concentrations of GLP-1 exceeded 100 picomoles per liter. Yet even in these patients, there were no reports of the side effects normally associated with such levels of GLP-1 such as profuse sweating, nausea and vomiting. This lack of side effects may be another benefit of administering MKC-253 in a pulsatile manner through the lung rather than administering longer-acting formulations of GLP-1 analogs that linger in the bloodstream for hours or days.

We are encouraged by these exciting results and felt that MKC-253 warranted additional evaluation. Therefore, we have moved forward with a second Phase I trial in subjects with type 2 diabetes. The clinical trial applications for MKC-253 002 were submitted in December 2007 and cleared by the European Competent Authority. This trial is designed to evaluate patient tolerability and safety in subjects with type 2 diabetes and to measure drug levels and postprandial glucose and insulin. Enrollment began in January 2008 and the trial is currently ongoing and we expect results from this trial in mid-2008.

In our clinical oncology program, we also gained approval to commence the second of our cancer immunotherapy studies using our novel approach of the plasmid [trident] stimulus followed by peptide boosts delivered intralymphatically.

This second regime, known as [1106MT], is targeted against melanoma and was reviewed under an IND by the FDA. We will be commencing recruitment to a study shortly.

Our 1106-PP regimen is progressing satisfactorily with several patients now advancing onto (inaudible) therapeutic cycles. I would now like to hand the floor back to Hakan.

Thank you, Peter. I now want to provide some additional details regarding our manufacturing expansion product and our commercial readiness activities. We are approaching an inflection point in 2008 when our corporate efforts will transition from supporting the development of TI to supporting the commercialization of TI and in order to make this transition, we must implement a number of new business processes, systems and supply relationships.

The 250,000 square-foot expansion of our TI commercial manufacturing facility is progressing according to plan and our experienced team in Danbury is expecting a physical completion in the third quarter of 2008. Currently, the project is transitioning from construction to commissioning and scale-up, which will take place in the second quarter of 2008. Preparations for the FDA preapproval inspection are ongoing.

One example of our progress in this area was our ISO 9001 and ISO 13485 certifications in October of last year. Additionally, our compliance audit group is working closely with key suppliers to ensure their readiness for commercialization and preapproval inspections. Based on rigorous manufacturability assessments, we have finalized the commercial version of our inhaler, which offers functional ease and benefits to our patients. It is suitable for automated assembly and effectively manages supply costs.

And most recently, we initiated a [technology] review as part of our lifecycle management effort to identify cost reduction opportunities to be implemented after product approval.

And finally, with regard to our partnership activities, we are in discussions with potential partners with the goal of reaching a collaboration agreement for TI with a partner who shares our commitment to and vision for improving the lives of patients with diabetes. We remain focused on selecting the right partner who can provide the key elements that will set TI apart from other forms of diabetes therapy on the market today.

Well, with that review, I would now like to return the call over to Al Mann, our Chairman and Chief Executive Officer.

Thank you, Hakan and good morning, ladies and gentlemen. I am certainly pleased with our continuing progress with TI and with our readiness plan for commercial operations. As Hakan discussed, 2008 is becoming a very important and exciting year for MannKind as we begin to see the results of our Phase III trials and prepare to submit our NDA.

Dick reported that our October financing package will now provide funding through the end of 2009, which is one quarter longer than previously indicated. Our commercialization operations are moving forward and remain on schedule. We continue to execute according to plan.

Now I would like to comment on our strategy going forward. We are committed to establishing Technosphere insulin as the preferred mealtime therapy within the broad population of people with diabetes. Let me say once again that I believe that Technosphere insulin is the most effective means ever created to control prandial glucose excursion and to do it safely. We believe the advantages that I have repeatedly described in terms of safety, efficacy and convenience of the Technosphere insulin system as compared to other therapies will enable us to significantly penetrate the broad diabetes population, not just the insulin-using market.

Importantly, Technosphere insulin has the potential to prove really valuable in treating type I and the entire spectrum of type 2 diabetes, even pre-diabetes. Our target markets include type 2 patients who are currently using conventional therapies other than insulin, even including those currently using diet and exercise therapy, but who are having difficulty achieving proper blood glucose control.

Indeed, key opinion leaders have hypothesized that Technosphere insulin's unique kinetics of using pre-diabetes metabolic syndrome could even prevent or at least significantly delay disease progression. It is thus our intention to eventually to target people even before they would have started oral medication, as well as patients currently using insulin and other diabetes therapy. We realize that we will need to perform additional trials that will clearly show the benefits of such aggressive therapy and in the interim, there are plenty of potential patients that clinicians will recognize to be suitable for Technosphere insulin therapy by more conventional standards.

What Technosphere insulin does is to control prandial glucose excursion better than any other product, insulin or otherwise, but what Technosphere insulin does not do is to control fasting glucose levels. Because of the overriding fear of hypoglycemia in the real world of diabetes therapy, most physicians manage their patients at shockingly high fasting glucose levels that can surely lead to serious complications. With a fasting level of 180 milligrams per deciliter, a common clinical practice today, it is the fasting level that primarily determines the HbA1c. With a fasting level of about 100 milligrams per deciliter, a near normal level, prandial excursions effectively determine HbA1c. To achieve a nominal HbA1c, a patient must control both prandial and fasting levels.

People essentially face two independent sources of glucose -- that from meals and that supplied by the liver to fuel the body between meals. What we have here is truly just a classic case of two various controls. Basic control theory teaches that for good control, both of the glucose sources must be independently addressed. The only insulin formulation that does address prandial load separately from fasting load is Technosphere insulin. No other insulin even comes close. Good control cannot be achieved without prandial kinetics that are at least as good as those achieved with Technosphere insulin.

So please don't compare Technosphere insulin to Exubera. Exubera was simply a relatively inconvenient means to deliver insulin with no clinical advantage and at higher cost and with questions about safety. And don't either compare Technosphere insulin with any other inhaleable insulin. The Lilly-Alkermes product has a tail that lasts long after a prandial glucose challenge. They assert that the long tail helps to address basal requirements. But as I have said earlier, good control requires independence, so their approach is unlikely to offer any clinical advantage.

Novo Nordisk discontinued its AERx program for the second time, stating that in today's world, a product must have a differentiated value proposition to be successful. That is certainly true and that is precisely why we are confident that Technosphere insulin will be very successful. Technosphere insulin does have the potential to demonstrate a very significant, differentiated value proposition with clinical benefits not otherwise achievable with any other therapy.

Our challenge at MannKind is therefore to further demonstrate these benefits in carefully executed Phase IIIb and Phase IV programs. The science already supports the superiority, but we must now undertake studies and education efforts to help the medical community to transition from conventional therapies to scientifically-sound glucose control.

One of the key trials designed to evaluate clear differentiation and superiority is our study MKC-117, which is about to begin. This six-month trial will compare Technosphere insulin to Humalog, a rapid acting analog in type 1 diabetes patients in whom fasting glucose will be forced using a prandial -- using basal insulin to achieve near normal level, below 110 milligrams per deciliter. We hypothesize that this trial would show more frequent and more severe hypoglycemic incidents with Humalog than with Technosphere insulin. Indeed, the difficulty of using Humalog will be so serious that all these patients will be on continuous glucose sensors to warn of low blood sugar.

Furthermore, the presence of any serious type of glycemic incidents, the clinicians will then be allowed to increase fasting levels to minimize that risk. What we therefore expect to see from this trial is superiority in HbA1c for Technosphere insulin probably to near normal or near normal levels and low risk of hypoglycemia. Whereas for Humalog, there will be a higher HbA1c and more frequent and more severe hypoglycemic episodes. We believe it is this trial and others planned for both type 1 and type 2 diabetes that will demonstrate Technosphere insulin's unique benefits that result from its ability to more closely match a normal body's pattern of insulin secretion following a meal. This will differentiate our product from currently available insulins, including rapid acting analogs and long acting analogs, as well as all other prandial therapies.

In all of our completed studies, we consistently see superior prandial control, virtually no cases of TI-induced severe hypoglycemia, no weight gain, even weight loss, no need for complex meal titration and no impact on lung function. As a result of these differences and benefits, we believe physicians will be attracted to Technosphere insulin, especially given its ease of use and lack of any need for complex training as compared with some other therapies. After all, most type 2 diabetes patients are managed by primary care physicians and these physicians are in need of simpler insulin therapies that require less patient training and result in lower incidents of side effects such as hypoglycemia.

The questions and doubts about the market remind me of the skepticism and lack of understanding when I was rolling out insulin pumps at MiniMed. That market has become a $1.5 billion business, quite large for medical devices.

Being a pioneer is never easy and this is especially so when one needs to convert an existing and well-established market because it is natural for people to resist change, but change is necessary if we are going to bring people into the normal range of HbA1c and we must succeed if we are to avoid the ravages of the diabetes epidemic.

In order to facilitate the launch of Technosphere insulin, we plan to create a physician infrastructure support group to educate the broad medical community and make the transition easier and smoother. We are already developing our science supporting launch program. We are also implementing a program with scientific publications and we are launching medical education and opinion leader outreach programs.

We are encouraged by potential partners who share this same vision and understand that the launch of TI is not just another pill-pushing exercise. As Hakan mentioned, we want a partner that recognizes the potential of Technosphere insulin and that is willing to work with us to realize this opportunity. And we are looking past the approval and launch of Technosphere insulin to other aspects of our technology.

Many people have not focused on the potential for the Technosphere platform. This platform continues to demonstrate a very favorable safety profile. In fact, we have done extensive work in this area and neither TI nor FDKP show any signs whatsoever of toxicity or carcinogenicity. We previously announced the clean results of a two-year rat study and now a six-month transgenic mouse study with no evidence of macroscopic tumors. These and other extensive laboratory and animal studies have demonstrated that FDKP and Technosphere insulin do not, and I repeat, do not affect lung tissue. We have seen none of the effects, even any that are minor, that have been seen with some pulmonary insulin. We have been very thorough in evaluating toxicology and carcinogenicity with Technosphere insulin and with our FDKP carrier and we have seen absolutely no indication of any risk.

And MannKind has much more than Technosphere insulin in our pipeline. We believe that MKC-253 represents the next offering in a series of Technosphere formulations of peptide proteins that have the potential to demonstrate significant clinical advantages over existing therapeutic options in diabetes, endocrine disorders and obesity. Although it is still early, it appears that delivering these drugs into the arterial system circumvents significant side effects seen with other delivery modalities.

With this in mind, we are conducting preclinical work to bring a third hormone to the clinic quickly. As we near the end of the development phase for Technosphere insulin, we are more confident than ever of the great potential of this product to make a real advance in diabetes therapy. This advance is fortunate because, if not reversed, the diabetes epidemic worldwide will devastate humanity and could bankrupt the world.

Thank you all for joining us today. We would now like to open up the call for your questions. Operator?

(OPERATOR INSTRUCTIONS). Elizabeth Bernstein, Banc of America.

Thank you for taking my question. A few follow-up questions on the draft guidance that was released a few days ago and specifically, first, are you -- how long is your washout period on the key trials? And then second, are you accessing also the relative rate of common comorbidities? And then just third, they outlined a number of lung function tests and then on aside, they also mentioned about the need for potentially for high-resolution tomography and just wondering if you are utilizing that technology? Thank you.

This is Peter. Yes, to answer your last question, we have high-resolution PET in the studies and I believe that we are in keeping with the guidance on all those aspects.

In terms of the washout, my reading of that, I think you are reading the specific washouts for the Phase II program where we did do washout. We have a short washout period for the Phase III, but if you look at that guidance, the difficulty of washing out patients or requiring insulin is difficult. I don't believe the guidances are there. You ought to read them very carefully in terms of that, which is applicable to insulin, that which would be more appropriate for all hypoglycemics and those where you wash out. So please be careful interpreting that.

And the third aspect of the -- I have forgotten the third point that you asked.

Assessing the relative risk.

Again, that aspect we have in the program, comprising over 3000 patients, we will be looking at the general safety readout. We have not prespecified comorbidities and again, if you are looking at that section of your guidance, I believe that specific indication is where you are looking at the claims around convention of comorbidity.

And one follow-up, if I may. And just in terms -- they also mentioned about special populations. Do you think that is now going to be required, those trials that you are running, as part of the NDA?

Well, we have already indicated that we have a comprehensive program in Phase I and Phase III studies in special populations by which we mean asthma and obstructive airways disease, as well as those in terms of hepatic and renal impairment. Those are all underway. We will have them ongoing and if you actually read the guidance again on those, I think the wording has been a little lucent in terms of absolute numbers there. We will have patients on those treatments with a plan that we -- with those indications in our NDA at the time that we make the submission.

Tom Schrader, Rodman & Renshaw.

Good morning. I just -- first, why the slightly unusual data release for the 030 data? Why wouldn't you press release that? What is the thought process between holding that until you -- or really never making it public until approval?

You are talking about the 030 or the 103?

I think the big long -- the two-year trial. You said you would release data on submission of the NDA.

I think there it is basically timing of that. That will be our last (inaudible) path study with 3000 patients where we will be doing a complex database [lot] from the third first week of September through to filing the NDA in December. I would like to concentrate on making sure there's data in the NDA and in fact, the release of that information will be at the time that we are putting together the entire package. So I think that is why we are looking at it in those terms.

It is just a rate-limiting step. You are not treating that data any differently is what you are telling me?

No, no, no. It is purely timing, Tom.

Okay.

It is what we have been saying all along, Tom.

So I am very glad to see the 117 study, Al and thank you for your impassioned account of it. Do you think you need those data to launch -- I mean -- those are really the difference between what everyone else has failed on and where you could succeed. Is that now part of the NDA or how does the timing of that come relative to a launch?

We have always planned for this to be available at launch. Clearly it is not a study that we will complete in time for it to make the NDA submission. But now we are moving into really what I think is the very exciting part of the program, which is executing some really challenging IIIb and some IV studies. This is the first of them. It is a very aggressive design. It is one which I think is really important to positioning TI and our plan is to absolutely have this available at the time of launch to support our message around there, but we have not run this during the busy time that we have had in terms of executing the Phase III program. Really so that we could focus on making the NDA the time that we said and then having these data to support launch and I think that is the optimal way of managing that.

Okay. And then just one niggling question, the lay of the land right now, although it is very different, is that pushing diabetics to normal HbA1c levels is dangerous, but I understand it was attempted in a very different way. But does that color your ability to get this trial started when you are -- I think at least Al's explicit goal is to get them to normal levels? I mean am I clear on what I am asking?

Yes, but I think you have to be very careful. You are referring apparently to the ACCORD study --.

Right, ACCORD.

Frankly, that study could never have produced good control. The problem that exists today is there is absolutely no way to get truly normal glucose control with any current diabetes products. Unless you can address both prandial and basal levels, fasting levels separately, independently, you just cannot do it and so the ACCORD study is really -- really has some faulty conclusions and in fact, all of the people that I have talked to, the [KOLs] who look at this say they don't really understand and are not paying much attention to that because frankly the implications are just not supportable.

But you have seen no indication that IRBs are missing this point. They are all aware that it is very different?

I think that -- we are discussing with IRBs as we are moving through and that is not -- we have I think a very good set of answers to those questions. You are obviously very aware in terms of the surprise factor of that (inaudible) year-round. We have had a lot of discussions with opinion leaders in this field and I think that, until we see the published results on that, we have more questions than we have answers. Al is absolutely right in terms of -- potentially this is an opportunity for us in terms of looking and saying would something that is better-suited in terms of optimizing the rapid, the short acting prandial insulin that we have a tool, we hope that we will be able to use that.

I think the [4T] study as well in terms of demonstrating again the difficulty of getting HbA1c down with conventional, with rapid acting analogues again helps us in terms of understanding where we have to go in terms of taking our product to demonstrate the benefit.

Okay, thanks a lot.

Cory Kasimov, JPMorgan.

Hey, good morning, guys. Thanks for taking the questions. A couple of them have already been asked, so I will start with a partnership question, try to get more clarity there on the status of ongoing discussions. With pivotal TI results now just about six months away, at this point, should we be assuming that a partnership is not going to be signed until at least the initial results are available given the potential value inflection data may provide?

No, you cannot make that assumption. These discussions have been ongoing for some time and they have certainly done kind of their due diligence in regards to what they see in terms of the differentiated benefits of our product. So while certainly there will be important data, they are not kind of driving the pace of the discussions at this point in time.

So you don't think that you would get -- you would get more in return if you held out and waited six months or so until at least the initial pivotal efficacy results are out?

I would say that, no, we have not had that indication that the results of the clinical trial from their point of view would drive a different outcome.

Okay. And then with regards to the 103 metformin study, this was the trial that I remember was originally supposed to have data by the second quarter and given its complexity, that has been pushed back a little bit. Can you just review what is so complex about that particular study and more importantly, what you hope to learn from it?

It is not just the complexity of the studies. It is actually the fact that these patients we have continued into the offset study and we want to look at the data in terms of the entirety when we have the offset study completed.

All right. And then lastly with regards to TI, I mean Al again gave a very impassioned speech there about moving this much earlier, not just a prandial sort of salvage therapy type of insulin, but moving this ahead into even pre-diabetic populations and I realize it is very early now, but in thinking about that and designing long-term strategies there, what type of long-term outcome like studies do you think you would need to design and conduct in order to actually get patients at that stage to use a therapy like this?

Well, for the pre-diabetic population, I would refer you actually to the recently issued guidance, which actually gives us some help in terms of this is the first time that we have seen an approach being recommended in terms of the outcomes that we then measure and look at in there and I think that is encouraging in terms of we do have a path forward, which we could start to follow.

And then finally one housekeeping, did you submit the Phase I GLP-1 data for presentation at ADA?

Yes.

Great. Thank you.

Annabel Samimy, UBS.

Thank you for taking my call. Just really quickly on the guidelines again, was there -- I think I remember seeing some kind of mention that they may require very long-term studies to assess comorbidities for these patients. Can you give a little bit more color around that and if the FDA is going to come back and say, well, we want to see longer studies?

My reading of the guidance there is that if there is a safety signal that emerges there may be that requirement or if you're going for a specific and (inaudible). Clearly as the Phase III data evolves, any signals would normally be expected to direct to its subsequent post-marketing requirements and studies. We have no indication of that being the case at the present time, but I think that's what the guidance is really talking about.

Okay and just remind me again, I think it was asked already, but what -- are you actually measuring the comorbidities, any of the comorbidities?

They are not defined endpoints, but they are collected in terms of the safety outcomes as would be normal in all (inaudible) program [of] this.

Okay. Then on the data with the special populations, are we going to be seeing any of the data releases over the course of the year before it is included in the NDA package?

The Phase I data as that becomes available, but I haven't got specific guidance on the timings of when that will be available. It is coming through the course of this year.

Okay, great. And just one last question if I may, more on the GLP-1. I think I remember on the last call that you had mentioned that the GLP-1 is a native GLP-1 versus -- rather than an analog. I just wanted to understand specifically what the importance of that is versus an analog.

It is a native GLP-1 and the advantages there are, firstly, that is the naturally occurring peptide, which I think from that basis is fundamentally attractive. What we are exploring is the difference again just as we are seeing with Technosphere insulin with the characteristics of the peptide action can be changed by that time action. Giving it very rapid delivery by the lung enables you to do something different in terms of signaling and the clinical effects that you see because of that change in the pharmacokinetics.

Now the previous thinking with GLP-1 and I believe most other companies and developments in this area have (inaudible) extend the action profile. Just as with insulin the first of many years, we tried to extend insulin action. We are looking at those effects in terms of having a very rapid, short PK, but looking at what that would do in terms of glycemic control and I think you will look forward to seeing the data that we present at ADA.

Okay, thank you very much.

Tom Russo, Baird

Good morning. Thanks for taking the question. I was wondering if you could elaborate on whether you had any interactions with payers yet. I know you have a Phase IIIb/IV program kicking off. I am just wondering if you've had interactions with payers to this point.

Well, we certainly have a consulting group that is working for us in looking into all of the aspects of reimbursement, both in the United States and in the European arena. I couldn't tell you specifically who they have spoken to at this point in time, but actually in about two to three weeks from now, we will have their first report based on what they learned and what they have seen. So it certainly is on our agenda to make sure that we are fully aware of requirements that they may have.

Okay, I think you mentioned earlier interest in moving another molecule into the Technosphere system and I was wondering if basal insulin is an application that would be of interest to MannKind?

Sure, yes. But that doesn't mean that that is going to be the next one coming through.

Okay. Last question just in terms of the Danbury facility, when in the process would you expect the FDA inspection to occur?

Our preparation is such that we expect to be ready within 90 days of the filing. Our expectation is probably somewhere around the May of 2009 we would be FDA in our facilities.

Okay, thank you very much.

Michael Tong, Wachovia Securities.

Hi, just a quick question on the Phase IIIb/Phase IV study comparing TI to Humalog. How big is that study going to be and how long do you think patient enrollment will take?

Roughly 300 patients.

It's 300 and enrollment would -- we are planning to have this study completed in time for supporting the NDA filing. I think we have a lot to do in terms of enrolling, but I think this is a very attractive study.

Okay, so you are going to have it completed by the time you file the NDA?

By the time we launch.

Great. Thanks.

Salveen Kochnover, Jefferies & Co.

Hi, good morning. This is actually Brent Kelly in for Salveen. My question is has there been a common concern in your discussion with potential partners or underlying point of issue in terms of being a major hurdle for partnership and if so, how do we get over this hurdle? Thanks.

We missed a part of your question there. What was the major hurdle --?

The question is has there been a common concern from potential partners in terms of signing of partnerships?

No, I cannot say it has been anything that has been common. I mean those have been unique situations either on their side or in our assessment whether they are the right partner to take us forward in terms of the face and marketing of strategic partnerships.

Thank you.

Elizabeth Naldi, Piper Jaffray.

Hi, thanks. I have two questions on the preclinical program. First, do you guys feel comfortable your preclinical program will meet the requirements set forth in the FDA documents? And then second, are you going to release data from the six-month transgenic mouse study?

Yes, to the first and we will -- we have some further work on the histology and detail of the transgenic and when we have that, we will put that into the appropriate earnings call I expect.

There are no further questions at this time.

Ladies and gentlemen, we are grateful to all of you for your ongoing support and commitment as we pursue our mission and strive to reach and exceed our goals. Thank you all for joining us today. We look forward to updating you at our next quarterly call. Good day.

This concludes today's conference call. Thank you for your participation.