MannKind Corp (MNKD) 2010 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. Welcome to MannKind Corporation second quarter 2010 conference call. (Operator Instructions) As a reminder, this call is being recorded today, August 2nd, 2010. Joining us today from MannKind are Chairman and CEO, Alfred Mann, President and COO, Hakan Edstrom, Chief Financial Officer, Matthew Pfeffer, and Chief Scientist Officer, Dr. Peter Richardson. I would like to turn the call over to Matthew Pfeffer, 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 second quarter of 2010 as reported earlier today. Next, Hakan and Peter will provide an update on key events and 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 the comments made during this call represent forward-looking statements within the meaning of the federal securities laws. It is possible that the 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 and Exchange Act of 1934. This conference call contains time sensitive information that is accurate only as of the date of this live broadcast, August 2nd, 2010. MannKind management undertakes no obligation to revise or update any statements to reflect events or circumstances after the date of this call.

Let's start with the financials. For the second quarter of 2010, total operating expenses were $37.4 million compared to $53.4 million for the second quarter of 2009, and $40.6 million for the first quarter of 2010. R&D expenses were $26.2 million for the second quarter of 2010, compared with $39.8 million for the second quarter of 2009, and $30.5 million for the first quarter of 2010. The decrease in R&D expenses for the second quarter of 2010 compared to the same quarter of 2009 was primarily due to decreased costs associated with the clinical development of AFREZZA as we filed our NDA in March of 2009. The decrease in our R&D expenses this quarter from last quarter was primarily due to timing of insulin purchases.

General and administrative expenses were $11.2 million for the second quarter of 2010 compared to $13.5 for the second quarter of 2009 and $10.1 million for the first quarter of 2010. The net loss applicable to common stockholders for the second quarter of 2010 was $42.3 million or $0.37 per share compared with the net loss applicable to common stockholders of $55.6 million or $0.54 per share for the second quarter of 2009. Our cash and cash equivalents and marketable securities ended the quarter total $30.8 million.

Our cash in hand and remaining credit facility [from Al] amounted to $138.8 million as of June 30th, 2010. Our cash burn in the quarter was again slightly decreased with $37.8 million spent in Q2 compared to $41 million in Q1. With our cash on hand, and the amount still available under the credit facility from Al , we believe we will be able to fund our operations through the first quarter of 2011. We continue to assess our operational plan for the balance of 2010 in order to find ways of extending our cash runway further in 2011. With that I would like to turn the call over to Hakan Edstrom.

Thank you. Good morning. You can imagine the time between the receipt of a complete response letter in March and the second quarter has been a very busy time for our organization. Not only did we digest the information provided in (inaudible) , but we prepared for and had a meeting with the FDA on June 9th and then address the issues put forth by the FDA in our response. That was submitted to the FDA on June 29th. As you know, our submission was accepted by the FDA and given a December 29, 2010 PDUFA date. Our clinical regulatory CMC (medivac) expense has done an outstanding job of analyzing the issue, addressing the outstanding questions and putting together our responses into an amended NDA.

The June 9th meeting with the FDA was an important milestone for us. It provided us the opportunity to better understand the issues that was raised, seek clarification and provide further insight into our NDA. Leaving the meeting with the FDA our team was so clearly motivated and encouraged that we were able to respond to the FDA in a timely manner. And fortunately from my extensive data base, we had most of the answers either almost available or almost complete. The fact that the amended NDA was classified as a Class II resubmission with a six month review time put us right where we have hoped and we would be at this point, potentially gaining approval of AFREZZA including the next generation inhaler at the end of 2010.

We actually may not have reached this point using our initial pathway of approval, first with the MedTone based version followed by supplemental NDA to seek approval of the next generation device. With the new pathway, we may have achieved this result with more certainty. We will certainly be working closely with the FDA going forward, responding to questions or providing supplemental information as necessary in order to complete this final stage of review.

And while I obviously will be cautious regarding comments on our (inaudible) discussion, I can say that the discussions have already commenced following the acceptance of the amended NDA and several new (inaudible) including both global and regional players have also emerged. And while we still saver a global agreement, a number of regional players are demonstrating significant interest. I believe that the CRL and the acceptance of the amended NDA were helpful in promoting (inaudible) discussion since the issues are now well defined.

Whether will it will be enough to consummate the approval with (inaudible) economics remains to be seen. However, the interest is certainly there. It is clear that our (inaudible) be filling a pool in that need in diabetes care by offering comparable HbA1c control to existing (inaudible) therapy, but with significant benefits regarding postprandial glucose excursions, fasting glucose control, hypoglycemia and weight gain.

With that quick overview I'm going to ask Peter to give you an even greater insight into the June 9th meeting with the FDA and the activities we did in preparation for that meeting. Peter,

Thank you Hakan, and good morning. As Hakan has indicated, the past quarter has indeed been a very busy time for the scientific and (inaudible) team at MannKind. As we successfully filed our response to the questions raised by the FDA in the complete response letter. To remind you, there were three substantial areas to which the agency raised questions, clinical (inaudible) our (inaudible) projects and the product sit into the therapeutic with patients diabetes.

The assay methodology used in our studies demonstrated the bio equivalence with the inhaler used in our pivotal clinical studies and that to be marketed, and finally, the technical aspects of the requirements of the device such as how often does it change and how we (inaudible) identify each cartridge. As we indicated to you in our previous updates, we are confident that we will be able to test these on the basis of data we already had available or are in process of generating as part of the previously agreed development of our next generation device commonly known internally as Dreamboat.

We are able to have a very helpful and productive discussion in the meeting with the agency on June 9th during which we were able to establish the data that would be sufficient for them to resume the review based upon the addition of clinical data from Study 117. We also discussed our studies examining the initial inhaler to our new next generation inhaler, demonstrating bioequivalence using both electro chemical (inaudible) assay and the radio immune assay.

We were able to show the agency that since this is a systemic peptide we can make absolute measurements in venous blood and compare them directly (inaudible) doses.. This is done by maintaining the delivery of the same amount of powder in the range it is absorbed, while reducing the amount that's not absorbed, that's reducing the total amount of powder in each cartridge by 33%. This is reassuring in terms of safety and tolerability. Indeed, the data from our studies in detail of the airway reaction to powder show further reduction of the small (inaudible) function changes which earlier described with the original inhaler.

Studies of the performance of the new inhaler in the clinic showed it can be safely used by patients with no formal training and that by supplying replacement inhalers every two weeks there is no need for washing. In addition, we were able to address the size of the FDA that we color code each cartridge pen , and market with the name [Fetter] and the dose. The customers had all of these data in hand apart from the further assay of the samples collected on bioequivalent study, we were able to expedite the preparations for resubmission following the meeting and filed our fully electronic submission on June 29th.

Subsequently the agency confirmed and accepted the resubmission considering this the complete response of Category II with a PDUFA day of December 29th this year. I am delighted in my team's performance in responding so rapidly to the questions and feel we have a strong set of answers. Furthermore I am pleased we are now on course for the next generation device which causes such significant benefits. The new device in the studies are able to address the technical aspects of the complete response. It is clear that their evolution is the optimal approach of bringing our therapy to market in the most effective way and the shortest possible time frame.

In order to do this we have simplified the old device to the very basics and have not changed in any way the powder formulation or the amounts of fine particles absorbed. Because of there has been considerable interest in bioequivalences I will go over in some details the results of these studies showing that we met the FDA established definition using two well validated assays as agreed with the agency.

Study 142 has demonstrated the inhalation system used in safety channels in Generation 2 inhalation system to be bioequivalent . Bioequivalence is key to linking the pivotal clinical data from the MedTone inhalation system to be marketed Generation 2 inhalation system. This study followed the same vision principles that we used for previous bioequivalent study between the clinical Phase III MedTone inhaler Model C and the previously to be marketed MedTone inhaler Model D as submitted in the original NDA.

The Gen 2 inhalation system delivers the same fine particle dose as the MedTone C inhalation system, but with a lower cartridge fill due to better (inaudible) of the powder and better cartridge emptying. The bioequivalent study MKC-TI 142 used both the (inaudible) assay and a fully validated immune assay, thereby using all of the requirements for bioanalytical the assays used in bioequivalence studies.

As (inaudible) comprises regular human insulin, absorbed on to tiny particles composed of fumaryl diketopiperazine, FDKP, bioequivalence in the two inhalation systems measuring insulin levels insures the efficacy will be the same. While equivalent exposure measuring the (inaudible) ensures that is the fine particle exposure to the lung is the same, therefore showing same systemic exposure insulin to the two inhalation systems is key to linking the efficacy data and further more, demonstrating bioequivalence in insulin and equivalent FDKP exposure combined is key to linking safety data from the extensive (inaudible) Phase D program to data collected from the studies using [digitally] marketed Generation 2 inhalation system.

In summary, as this inhalation system's designed for the delivery of the systematically active drug, our development approach to the Generation 2 inhalation system has been to match all performance characteristics that could affect system exposure. As we can reliably assess the systemically reactive levels of insulin and the executed FDKP in circulation, we have been able to develop a product that is bioequivalent to the one used in all of our Phase III clinical studies. The timing and objective of this trial is to show that the calculated confidence interval for the ratio of the average blood transformed insulin area under [concentration] 0-120 and Cmax with 20 unit cartridge used in the Generation 2C inhaler and the 30 unit cartridge used in the MedTone inhaler fell between the FDA standard limits of 0.8 and 1.25. Insulin exposure was evaluated throughout the study by comparing AUC 0-120 and Cmax (inaudible) C peptide (inaudible) for a insulin concentration.

The secondary objective of this study was to show that the calculated confidence for the ratio of the average blood transformed insulin AUC 0-120 and Cmax that is 20 unit cartridge used the Generation 2C inhaler and two 10 unit cartridges used in the Gen 2 inhaler fell between the 0.8 and 1.25 range. In addition, (inaudible) bioequivalent analysis were conducted using uncorrected or absorbed insulin levels, and baseline corrected insulin concentrations to all comparisons. The 90% constant intervals to the standard bioequivalence parameters maximum long-term concentration Cmax and the area under concentration time curve from 0-120 minutes post dose or AUC 0-120 ratios fell entirely within the required 80-125% interval. The ratio at the other end of the curve was actually 1.06, the confidence in [clinics] 0.981 to 1.145, and Cmax was 1.082, in confidence margins of 0.992 to 1.180.

Similar results were seen with the required variability and with the RIA and in each of the secondary analysis. Further details of these studies will be available on our Web site shortly following this call. (Inaudible) the data clearly indicates that in our in vitro studies under initial design confirmation studies are confirmed in this very carefully conducted bioequivalent study. In addition to these important data, we have been able to present results from our recently completed Study 117 which is conducted in patients with Type I diabetes, where we aim to show non-inferiority in HbA1c while reducing hypoglycemia using the dosing regimen. We announced these results a couple of months ago.

Although the study is a definitive study which was carefully conducted in several expert centers in United States. The powers appropriate, the question we asked, at over 90% and the duration to [mean the fast] changes in HbA1c. We met the timely end point and non-inferiority HbA1c has demonstrated. A higher proportion of patients reached A1c level in less than 6.5% and significantly low levels of fasting glucose that reached in the treatment patients even as though doses of background insulin were similar in both groups. Post-prandial glycemic excursions were significantly reduced at one hour, two hour and measured overall in the meal challenges. And importantly, significantly lower rates of hypoglycemia were recorded in the AFREZZA treated patients, independent of the trial A1c level at end point.

Although a matter for review by the agency, we believe this data will be helpful in further establishing the utility of AFREZZA as an option for physicians looking to better manage their patients with diabetes and can provide important benefits, not only in terms of glycemic targets but doing so more safely than in the measures used widely today. Now let me turn the call over to Al Mann who will provide greater color on some of these

Thank you, Peter. Good morning, ladies and gentlemen. This past quarter was momentous for MannKind. We just received a complete response letter in March raising several questions resolved before approval. The CRL invited us to request a meeting with the agency that was ultimately scheduled for June 9th. Our objective in that meeting was to gain clarity on path to approval of AFREZZA . The meeting with the FDA was very positive and we believe we have addressed all the questions raised in the CRL and they were in (inaudible) path to approval of AFREZZA.

We told you we would file our amended NDA before the end of July. We actually completed preparation and submitted our response early on June 29th. This documented incorporated additional data from studies 117 and 159, the data package from the studies related to protocol for our next generation inhaler and responses to the several other questions raised in the CRL. More importantly, the FDA accepted that filing as a Class 2 complete response submission and set a PDUFA date of December 29th. The agency has not required any further studies. There are just a few subjects to review in a file of only about 19,000 pages compared at that 521,000 in the original NDA. We believe that our resubmission addresses the CRL in its entirety and we look forward to working with the FDA for timely approval.

That said, we cannot predict what action the agency will take or whether the action will come before or after the PDUFA date. Given the enormity of issues before the FDA, we are very encouraged that the agency has moved forward so expeditiously and constructively with the AFREZZA resubmission. The PDUFA schedule is more or less in line with our earlier expected approval for commercial product using the next generation inhaler. When we had been proceeding along this path that involved approval of the AFREZZA using the MedTone device , followed by a supplemental NDA agency approval of the next generation device. Thus, we have seen no direct impact on our overall regulatory time line or commercial launch.

We appreciate our relationship on the collaboration with the FDA, and now we with are looking forward to launching AFREZZA to fill what today is a fully met need in diabetes therapy. Our extensive clinical program has demonstrated that AFREZZA significantly improves postprandial excursions, lower type of glycemic incidents, lower fasting glucose, lower weight gain, probably weight neutral, and mimics normal curtailment of gluconeogenesis. Moreover, we have carefully evaluated all adverse events in the presented to the agency and the extensive safety package updating the safety experience and showing no pulmonary damage or clinically significant pulmonary effects. No cardiovascular impact, and no indication of any cancer risks. The only adverse effect likely associated with AFREZZA is mild to moderate coughing in early use with some patients because people are not accustomed to the feel of inhaling product not just AFREZZA. This effect moderates with use and less than 3% of patients find it objectionable enough to discontinue.

Our Study 117 clearly demonstrated the benefits of AFREZZA. Actually the data is very persuasive and emphasizes the need and the opportunity for a better prandial insulin. The FDA has accepted Study 117 for detailed review and it appears that the study results any concerns raised by the statistical analysis of Study 009. We have shown AFREZZA to be non-inferior in reducing HbA1c compared to the very best prandial insulins available today and also that it provides many other very important advantages over all current insulins. We believe these other advantages even with only comparable effects on HbA1c will likely propel AFREZZA to become a major antiglycemic drug.

But AFREZZA isn't really much more than non-inferior in HbA1c and we see a great opportunity to conduct some trials to demonstrate even greater benefits that are possible with AFREZZA. We will therefore be turning our attention to clinical studies that will show the unique and important advantage of this therapy. We want to conduct several new trials to confirm an additional patient population that was out complex dose titration AFREZZA can provide potentially HbA1c as well as superior postprandial glucose controls and lowering fasting glucose levels with weight neutrality and almost no risk of hypoglycemia for this drug.

I believe we will be able no demonstrate that with AFREZZA a much larger percentage of patients can reach HbA1c low 6.5%. Of course, that is just my projection and new trials will be directed to support these predictions. I am confident we will be able to provide a vision into the future in which therapy for Type I diabetes will be simpler and more convenient using AFREZZA than with rapid analyzed and will enable both patients to safely achieve a much lower HbA1cs. I also look forward to trials of AFREZZA along with a basal insulin expected to become available in three or four years so that we can further demonstrate the superior efficacy and effectiveness of AFREZZA, For Type II patients the path is even simpler.

What we saw in Study 119 and other supporting studies is that there's really no need for titration from yield with carbohydrates content from zero all the way to 150 grams. For the most grandiose meals or meals that digest very slowly, a second dose of AFREZZA may be taken at the end of the meal and probably all that's needed. The yield postprandial excursions within the ADAs target range and also enable better HbA1cs. The important question for Type IIs is at what point in the disease progression should AFREZZA be started. This query is all the more relevant given the recent concerns about Avandia and possibly the entire class of TCDs as well as side effects and safety concerns with the other anti glycemic drugs. After all, it is primary anti glycemic drug, but which insulin should be the first influence?

Loss of prandial control begins many years before loss of basal control, [Atlantis] has become so successful as the first insulin used in Type II diabetes is really because of the problems with today's prandial influence. This advantage has been effectively marketed by [Synopiaventis] But AFREZZA does not have the deficiency of excessive persistence in hyperinsulin seen with today's prandial influence and as other advantages as well.

I predict that with little, if any titration in early Type II, AFREZZA will prove to be very effective producing low HbA1cs as well as better postprandial levels and with a very low risk of hypos. We must not construct studies that I believe should go far in demonstrating these benefits and distinguishing AFREZZA as the major tool in glycemic therapy. But those studies are for the future and now we need to concentrate on what we have already established and our priority must be to gain approval with the data now available. We will continue working closely with the FDA to bring AFREZZA to the market due to the enormous body of data that has already been compiled.

Based on this data I believe AFREZZA will fill with today's fully met need and the later trials will be directed to expanding the labels with new data. Now that we have much more clarity regarding the regulatory tasks we are moving forward in finding the commercial launch. Toward this end a partnership is surely the paramount concern for most of you on this call.

All I can say now is that we have just begun to resume launch discussions with a number of leading partner contenders to commercialize our presence. In addition, as Hakan said new contenders expressed interest in exploring the AFREZZA opportunity We are considering creating a formal process in order to manage a discussion with multiple parties.

We cannot say more about partnership talks at this time but we will certainly announce anything that develops when appropriate. I am enthused that the data I am seeing as the positive progress for the FDA and at the interest of our potential partners. I must say that I am personally more confident that ever of the success of AFREZZA. I look forward to the excitement of the launch and seeing how AFREZZA will improve diabetes therapy. Thank you all for joining us today. We'd now like to open up the call for your

(Operator Instructions). Our first question is from Simos Simeonidis from Rodman and Renshaw Go ahead your line is open.

Could you tell us if you received the minutes from your meeting with the FDA? If so, if you have been able to share them with your potential partners?

We have not received the minutes yet from the FDA.

Okay. In terms of your discussions on our REMS program with the agency, what is the latest update or status of these discussions?

Peter.

Yes, Simos, I think that we have indicated before in terms of the REMS discussion. We've had some feedback and discussion in the original review, and complete the small (inaudible) with no significant changes for that. We submitted, again, our proposal for the REMS program which is not significantly changed in that which we had previously. And we anticipate that there will be further discussion toward the end of this cycle of that response.

Okay. A final question for Matt. It seems like you have -- you spent close to $40 million this quarter, and it seems that you have about three more quarters to go. Obviously a lot of people are concerned about dilution. Obviously if you have a partnership before that that can possibly alleviate those worries, but is there a possibility where Al could extend his line of credit instead of having to raise capital in the market?

I am not sure that's a question for me, but it is certainly always a possibility. We have been pretty open that our first choice would always be a partnership but the timing of that is obviously uncertain, and we don't want to leave ourselves in a position where we might be viewed as over a barrel, so to speak, with a partner. So, we are evaluating a lot of different options, that's certainly one of the ones we are evaluating.

Okay. Thank you very much.

Our next question is from [Steve Byrne] with Bank of America. Go ahead your line is open.

Hi. I was wondering if, in your meeting with the FDA, whether there was any discussion about an [add com], do you think that it is any more or less likely than your views previously?

There was no specific discussion now, (inaudible) in the meeting at all. As we have indicated to you previously, the agency has been cleared in the previous review cycle, and quite early on, that there -- in their mind, would be the requirement for an advisory committee. We've seen nothing to indicate that that has changed, but at this point, the agency will of course re-evaluate and look at that. From our point of view, we will be well prepared should there an advisory committee. And we'd actually see that as a very positive opportunity for presenting the data, and -- but at this point there's no reason believe that there will be one.

Peter, the bioequivalence data that you discussed earlier, will those be available in any form to us?

As I said, we are trying to -- we will probably during this day have a grasp of some (inaudible) verbally up next. I realize it is always difficult for you to transcribe those numbers. The message around the bioequivalence is that it looks like a very robust package, and I think when you see the curves, you will see the, the remarkable overlays and between the MedTone device and the single (inaudible) cartridges of the new devices. It's a very robust set of data that is going out.

Just one last one for me, is the manufacturer of the Dreamboat device required to be inspected, and has that been scheduled?

We have certainly not heard any indication of that, and I wouldn't expect at this point to have an indication on a requirement for inspection of any supplier -- the agency is going to inspect any supplier.

Thank you.

Our next question is from Tom Russo with Baird. Go ahead. Your line is open.

Good morning. Thanks for taking the question. Could you comment, maybe provide a little bit of additional detail on how firmly and definitively FDA, on its side, indicated concurrence with switching the device and seemingly the dose, now and not after approval of the device that was used in the pivotal trials, and then maybe what divisions at FDA, did or did not concur with that approach?

I think if the agency hadn't concurred we wouldn't have sent in the submission. Clearly, what we're trying to talk about here is the fact that we have an unusual situation. (Inaudible) you can measure systemic levels, and that was the discussion with the agency, in terms of the ability to clearly demonstrate in the (inaudible) and also the carrier, and the, very clear bioequivelence, that we are able to show, I think also, in terms of that, as one of the things that is very important part of doing that.

This will be subject to full review by the agency, and normally inhaled products are more of a challenge usually get (Inaudible) the ability at all, it is one of those that we try to avoid (inaudible), and it is also not known, so you are only looking at what the action of the drug is in the lung, and ultimately the site of action of the systemic prevailable prep time (inaudible). So we had a very productive discussion with the agency around that, and I think the major thing from their point of view is that we have not changed the formulation in any way.

It is exactly the same powder, and what we have done, as I stated, was just make the device more efficient in reducing the amount of powder that doesn't contribute to the efficacy, and that which is not inhaled, but is actually left in the cartridge or deposited in the mouth. That actually is the reason that we can take this approach and the patent, we've made absolutely no change to the formulation.

Okay. And then, regarding the comments about considering regional partnership or that there's interest from regional players, should we assume that would be US only? Or is there, in some way, is the current status with FDA in some way relevant to regional players outside the US.

Actually, we have been approached by both regional players from within the US and from, certainly, a number of other parts of the world. So it is not restricted just to the US. The US approval usually certainly a critical component of those partnership discussions as well. But the interest is coming in from several parts of the world.

Okay. And then lastly, you made a comment in the press release about initiating installation and validation of equipment for the new device. Can you give some additional color on that, and what work is left to be done? And what regulatory steps are left to be done with regards to the equipment for the new device?

When we move to the, the so-called Dreamboat inhaler, the filling system for that is, of course, quite different, and of course all of the packaging is different, so that we have spent this past year designing -- working with our supplier with developing the system and the first machine is to be delivered -- it was supposed to be delivered about a week or two ago, but it is now scheduled for either this week or next week to be delivered and installed.

Our team is over in, it's being built in Germany, they're over in Germany now, doing testing on it, and it will be installed momentarily, and when it is installed it then has to be validated. It's not clear whether the agency will feel that they need to do another inspection, but that's always a possibility.

And aside from the inspection of the physical site, can you comment on what type of a regulatory change it is just simply, as a process change?

It is a process change as part of the CMC package.

Can I help, it is not a process change. This is purely filling and packaging, and actually the filling principle and the machine design of that (inaudible) to reduce the clinical matches and production that we've used for the Dreamboat device. And that's important in terms of the processing of the actual insulin formulation remains exactly the same. This is dose technology.

Okay. Thanks.

The powder itself is unchanged. It is just how you fill it.

Thank you.

Our next question is from Michael Tong with Wells-Fargo. Go ahead, your line is open.

Hi. Just a quick follow up on the, on the installation in the new equipment. Is there any validation data that you need to supply to the FDA, and how quickly can you do that, given the timing of the scheduled PDUFA date?

Peter?

In terms of specifics there. It is really the equipment as we scale up and introduce the commercial batches. That would be a not requirement, and the timing at which we do that with the agency is subject to the discussion around. You know that we can get performance in terms of the cartridges in the device that's there, and so this is really a scale-up type of activity in terms of putting down equipment and helping putting in the new process on the changes.

Great. Thank you.

And our next question is from John Newman with Oppenheimer. Go ahead, your line is open.

Hello. Just had a couple of questions. The first one is, it seems like a month or so ago you had raised the point that there was some sort of a hemoglobin A1c issue that was raised by the FDA regarding the 009 trial.

Just wondering if you could expand upon that, give us a little color there. And also for 117 study, it also seemed like the, the enrollment target that you originally had was reduced. And I am also just wondering, given the fact that the efficacy from the control arm there seemed a little different than what we would expect. I am just wondering how you are positioning the result with the FDA? Thanks.

Okay. John, to take the 009, this is one we've discussed at length, that the margin of the upper bound of the confidence interval is actually (inaudible), which is right at the edge of non-inferiority, and I think that the discussions that we've had around 009 is that, although the meaningful analyses and those analyses that show non-inferiority with that, we wanted, in terms of with 117, to look at how we could improve the confindence interval (inaudible). And I just feel like in the results with 117, that's (inaudible). The numbers in that study alone, which we had originally projected, that was done with the original device and we stopped that study when we stopped producing the old device and decided to make that change over to the new device. We looked at the power of that study.

In order to be able to address these questions and looked at that and (inaudible) whether we have sufficient power. As I said, a 90% power to address that which is really what our staff physicians say, and more than adequate to answer the questions that we had. Your question around the control arm. I actually always find difficult because it is actually in keeping with what with we see in a lot of other registration-type studies. Both groups here started the (inaudible) HbA1c's, and they were recently well controlled patients that were going into this study.

So, we wouldn't expect to see really marked improvements in the HbA1c's in either group. They both follow the same pattern at the end and we clearly show non-inferiority there. So, I think it's entirely consistent with what you'd expect in the study, treating this type. Indeed, I think the important things are as we are seeing first hand I think it is very, very important that we are getting more patients to less than 6.5. We are doing that with (inaudible) improvements, and hypoglycemia. Those are important data, I think, and really show what we have been talking about in terms of what you can do, with an improved prandial insulin.

Great. Just a quick question for Matt. I know you have already had one question on financing, but just curious if you can give us any sort of guidance or sense as to how we might want to think about just the way that MannKind would address cash needs issue? Would you maybe think about a raise or are you happy with cash that you currently have on the balance sheet? I know you had a question already about possibly extending the line of credit, just curious as to how we should think about it?

Yes, I think it is a little premature to answer that question in any definitive way, John. I don't mean to be evasive. I'm happy, not just with the cash on the balance sheet but, of course, that's backed up by a line of credit that we access on a regular basis and tend to keep our cash on the balance sheet typically around $30 million at the end of every quarter.

So, it's been fairly consistent, plus or minus a million here or there. We have a lot of financing options. I think we're unique in having as many as we do, Simos brought up that Al is one of them before. I think that's certainly unique, and we are looking at all of them. It's premature to commit one way or the other. We obviously want a feel for how some of these things are going to play out before we come to a conclusion, so we've not made a determination at this point. When we do, we will tell you about it.

Okay. Thanks.

Our next question is from John Lecroy with Hapoalim. Go ahead, your line is open.

Thanks for taking my call. First want to touch on the 117 trial, it was an open label trial and it looks like the patients in the injected insulin arm had much lower fasting level glucoses implying -- or I'm sorry, the other way around, the technosphere had lower fasting glucoses implying they were on more basal insulin, and I'm wondering what the open label nature of that had to do with that data point?

I am sorry, you are just incorrect. They actually -- they --

We seem to be losing Peter. Hello. Peter? Peter.

Peter, we lost you there for a while. You may want to repeat what you said.

Hi, sorry. Yes, it was a very simple thing. They actually had exactly the same levels (inaudible), which is the long-acting insulin use in both arms, so the differences that we see are due to the differences in the (inaudible) insulin, we've talked about their rational for that and the reasons for that, which are not entirely clear. But we think it's probably the differences in insulin resistance. And that's been a very consistent finding that we have seen across all our studies, (inaudible) the label and nature is perfectly standard in insulin studies, as you know, and I think has no impact whatsoever.

Okay. Thanks. As far as Europe goes, what are your plans on more trials to do a European filing and timing on the European filing?

At the present stage, I think that would be a discussion, that after we had a potential partner on board, that would be very helpful to us in terms of that filing. Although not specific requirements, many additional studies may be required in order for us to do filing in Europe.

Okay. Thanks.

(Operator Instructions). Our next question is from Doug Dieter with Imperial Capital. Go ahead your line is open.

Good morning. Just wondering if you can focus on the discussions with partners, and I guess my first question is, what is the primary hiccup right now to get something done, what's the primary push back from potential partners?

There's really no push back, Doug. It is just that we were waiting to finalize or to really start serious talks until we got the, the minutes from the meeting of June 9th, which are obviously late from the agency. But we understand that. But, given that it has been delayed, we have started discussions but we won't get into any real negotiations until after we see the minutes.

And, in terms of your confidence level, I know you are not giving guidance here, but obviously, if your intent is to get approval by December, you want to have a partner probably by September, October, the time frame, what's your confidence around being able to do so and is it clear from the potential partner's side that that is the time line?

No. Early last year, I -- we were told by our partner that they wanted to, to close the deal in July, so I made the prediction, I am not going to do that again.

Yes, I would also say, Doug, that, as I mentioned in my part of the presentation, we've had new both global and regional contenders coming into the game and certainly, we want to manage, also, discussions in a way to hopefully, optimize the, the financial results of the discussions.

So, from that point of view, I would not hold ourself to a specific time line, September, October, but looking for what is the best possible deal that we can accomplish, trying to also bring the newcomers somewhat in line with people that have been without for a longer period of time.

And then, finally, from the liquidity perspective as a follow up to a prior question. Matt, is it safe to assume that the reason why you're not going to comment on additional liquidity is because you're waiting on what the partnership potentially brings to the table.

Certainly one factor.

Took the words out of my mouth, Al. It is certainly one of the factors but it's not the only one. And so, we want to make sure we do a thorough evaluation of what our options are before we come to a conclusion.

Fantastic. Thanks.

I would like to thank all of you for joining us today. We look forward to updating you at our next quarterly call and perhaps sooner. Good day, folks.

That does conclude today's conference. Thank you for participating. You may disconnect at this time.