MannKind Corp (MNKD) 2018 Q1 法說會逐字稿

Ladies and gentlemen, thank you for standing by. (Operator Instructions)

Welcome to the MannKind Corporation 2018 First Quarter Conference Call. As a reminder, this call is being recorded on May 9, 2018, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until May 23.

Joining us today from MannKind are Chief Executive Officer, Michael Castagna; Chief Financial Officer, Steven Binder; Chief Commercial Officer, Patrick McCauley; Chief Medical Officer, Dr. David Kendall; and Rose Alinaya, Senior VP Investor Relations. I would now like to turn the call over to Rose Alinaya. Please go ahead.

Good afternoon, and thank you for joining us on today's call. Please note that comments made during this call will include forward-looking statements within the meaning of federal security 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, May 9, 2018. We undertake no obligation to revise or update any statements to reflect events or circumstances after the date of this call. A reconciliation to non-GAAP disclosures will be posted with this presentation on our website after this call.

I will now turn the call over to our CEO, Michael Castagna. Mike?

Thank you, Rose. Thank you everyone, and good afternoon. You may notice today we did update our platform, so there should be less of a delay between slides as we go through today's presentation. I want to say thank you, everyone, for your patience as we get into the Q1 information.

We had a fantastic quarter in terms of really looking at year-over-year growth of Afrezza and continuing to show the progress. Coming into this quarterly call, I've conducted 10 listening sessions with several key members of our team around the country in California, Texas, New York, as well as met with about 70% -- of the payers who make up about 70% of the lives, really sharing with them where the company is going, getting insights into the data coming out at ADA, and building our level of confidence as we continue to go forward to hit this year's guidance.

We continue to make progress on our prescriptions, our new writers, our new member patients coming into the brand, as well as the pipeline and international expansion. The build up of the scientific story is something that we believe has been missing on Afrezza since day one. And I'm really proud, with David Kendall here over the last 12 weeks, we've gotten several key data abstracts submitted, accepted, as well as publications that David will walk you through. And when people say when will you launch Afrezza, when are you going to make a difference, I think you're really going to start to see the scientific agenda come out for the brand starting at ADA.

One of the challenges we have had since we got the product back from Sanofi was really planning for the long term. And with the capital raise last year and the recent capital raise, we have been able to continue to lay out our plan for the next 18 to 24 months and execute against that plan. And you will see some of that in the upcoming slides.

What that means is we can have evening symposia. We can have CME events that we can sponsor. We can have booths at all the key conferences and really surround sound that scientific chatter around the brand that's been missing since day of launch. That will give the air cover to the sales force. We'll continue to bring thought leaders onboard. And David will share the direction we're going in that environment.

The balance sheet has continued to improve, and we continue to look for opportunities to grow Afrezza faster than we have the day before. One example of that was TV in Q4. We turned TV on a pilot and now, in retrospect, we can really start to see the impact that TV plus sales reps had in key markets. And Pat will walk your through. We are looking to reinvest certain funds to continue to accelerate the ability to turn back on TV in this quarter now that we know the impact that has on future sales.

Now I'm going to walk you through significant events, an overview of Q1, and things that have happened so far into Q2. Number one, you may realize we had a revenue recognition transition in Q1 of this year versus Q1 of last year. Because of that, we're going to show you both sets of numbers to eliminate any type of confusion.

So looking under the new ASC 606 guidance, we had 184% growth year-over-year. Looking under the way we previously did revenue recognition, it was 234% growth. The difference between the 2 is when you're booking sales off of prescriptions and recognizing them that way. The other one is booking sales off of wholesalers. And so Steve will walk through that, and we're happy to take any questions at the end.

Net cash used in operating activities was within our guidelines of $21.7 million. We rolled out an entire new promotional strategy in late Q1 and continued to fine-tune that in Q2. And I think we're already seeing a very early impact as a result of those opportunities that Pat will walk you through.

Strengthened the executive team; you met David Kendall in our last earnings call. David has done a phenomenal job at really building thought leader relationships, helping us articulate the science and really crunching through some new data analysis as we go forward. So look forward to continuing to see the scientific platform around Afrezza as well as our pipeline with treprostinil move forward.

We initiated a corporate reorganization that you may have seen in our earnings. We are moving corporate functions such as HR and finance from Danbury, Connecticut to West Lake Village, California. We also continued to make some other additional changes throughout the company to continue to get the right size and the right structure, with execution being the focus.

TreT/treprostinil Phase 1 single ascending dose study has started, and we are excited about that. As you may have seen last week, United Therapeutics did a deal for $200 million for a pump. We believe this asset is a significant opportunity for us. We're waiting for the Phase 1 read out. That will be Phase 3 ready as soon as we get those results.

We believe it's a 3 player market with intense competition for differentiation, and remain committed to treprostinil to demonstrate that we believe this will show differences in potential dosing and convenience in this category. It is something we are going to look to partner as we go forward so that we can continue to reinvest and capitalize the company and Afrezza.

The STAT study results are accepted for ADA. We announced that during Q1. That will be an oral presentation as well as a poster presentation. And just to remind you, that study was looking at -- using DexCom's CGM, looking at time in range and postprandial controls of 1 to 4 hours. We believe this is really important, as we've not had data to share in a head to head study against an mealtime injectable insulin. For the first time, we'll have that data out there and can reinforce what we've seen on social medial and people showing their charts.

Post Q1, we've had other significant milestones. We raised $26.3 million in the month of April. We executed this morning our license agreement for India with Cipla, which I'll talk about. We completed our REMS program earlier than expected. And the Afrezza inhaler device was approved in Brazil last week. The reason that is important is it makes sure that we continue on progress for our Brazilian filing.

And then the last thing I'll mention is we had an ADA late breaking poster accepted around hypoglycemia and really demonstrating the differences of Afrezza versus other mealtime insulin options. We believe the complete dataset -- when you look at the hypoglycemia plus STAT plus the history of the safety and efficacy of this product across the 65 trials, we start to educate the physicians on all the data we have, and they're very responsive.

Let me take a second and talk about global expansion. As we know, it's not an urgent need for this year. But it's something that, had we not started last year, we would be sitting here waiting to continue to build out additional revenue streams and opportunities to help people living with diabetes around the world. Last year we announced Brazil. That remains on track. We are excited to see that hopefully get approved in late Q4 or early Q1 this year.

The second one we just announced is India this morning with Cipla. So with this announcement, 1 in 4 people living with diabetes will have the option for Afrezza as we continue to expand. And we expect this to potentially get approved as soon as 6 months, but more realistically 12 to 24 months. We anticipate a small Phase 3 trial will be required, but there is a chance under new Indian [SCFDA] guidelines that we could get approval sooner. We have already started working with our partner on articulating the medical strategy and the regulatory strategy, so we've already got a head start prior to today's announcement.

We're also working on additional filings in other markets, and I hope to be able to share some of that information with you soon. Additionally, we have started negotiating term sheets for some other key markets which we will try to get done in the second quarter, but it could go into third quarter.

The reason we selected Cipla is because we believe they are one of the top leaders in healthcare within India. They understand the market. They have infrastructure in diabetes, and they have 70% market share in respiratory products. So when you think about a partner being able to understand the inhalation aspects of the drug and having diabetes experience, it's really incredible. You may or may not know they also had inhaled insulin in their pipeline that they were struggling with, and this really allows us to bring a partner in who is already striving to achieve what we're already accomplished. We believe they'll be a great partner.

And it's already been an extremely collaborative relationship, and we look forward to helping people in India get access to mealtime insulin. It's something that's very difficult when you don't have enough endocrinologists to teach and educators to help people learn and being able to approach them and say take oneyellow cartridge 3 times a day, or make it very easy to have mealtime control. It's something we find very important as we go into some of these developing markets. Per mealtime penetration has been severely underutilized.

The thing I wanted to show you before I turn it over to Steve is really looking at our net revenue based on our prescriptions, which was under the old revenue recognition model. So you can see from the first quarter of 2016 when MannKind first launched it with a very small sales force all the way through Q1 of '17 when we hired our own sales force outside of the contract sales organization. These are full-time MannKind dedicated employees.

We've continued to show you quarter-over-quarter growth as we progress. And if you were sitting here in Q1 of '17 saying we'll do $8 million, $9 million this year, you probably would have thought it was a stretch. We are here to reaffirm our guidance, that we've sold about $4 million in Q1 on the prescription basis. Steve will talk through that in a minute. But we do believe that we can continue to progress, especially post ADA as this data gets presented.

Year-over-year, we're up 234%. I think it's important as we go forward to start to compare MannKind to MannKind, and we've really had that opportunity just because of the nature of how the product came back. At this point, as we progress for the rest of the year, all of our indicators are very positive when we look at MannKind Cares referrals, new member prescriptions, co-pay cards, wholesalers. These all give us the confidence to continue to invest to grow to achieve our corporate objectives that we laid out during Q1.

With that, I'll turn it over to Steve.

Thanks, Mike, and good afternoon. 2018 has seen solid progress in both our balance sheet restructuring and recapitalization plans, as well as advancing our selling and promotional efforts for Afrezza.

Let's start by reviewing the first quarter 2018 financial results. I'll be discussing select financial highlights, and urge you to read the condensed consolidated financial statements and the MD&A contained in our 10-Q, which was filed with the SEC this afternoon.

For the 3 months ended March 31, 2018, Afrezza net revenue was $3.4 million, a 184% increase over Q1 2017. The net revenue increase was favorably impacted by volume, cartridge mix, and price. Please be aware that our revenue recognition has changed between 2018 and 2017 under the adoption of ASC 606. revenue is now recognized based on sales to direct customers like wholesalers, whereas 2017 revenue was recognized when right of return for Afrezza no longer existed, which is generally at the time when a patient fills a prescription.

If we had continued to recognize revenue under the 2017 revenue recognition standard, we would have recognized $4 million in net sales for Q1 2018, or a 234% increase over Q1 2017. The difference in the 2 amounts, $3.4 million recognized under ASC 606 and $4 million that would have been recognized under the 2017 standard, was primarily due to channel inventory levels decreasing between December 2017 and March 2018, which resulted in prescriptions being filled based on patient demand at the retail level but no corresponding increase in sales to wholesalers.

Our gross to net percentage was 35% in Q1 2018 versus 27% in Q1 2017, due mainly to the price increases taken in 2017 and the resulting rebates for managed care and government programs such as Medicaid. We expect our gross to net percentage to increase in the mid single digits for the remainder of 2018.

We've been working diligently on our balance sheet restructuring, which has delivered significant interest expense reductions, approximately 57%, over the last 4 years. This includes successfully negotiating the forgiveness of the Sanofi debt, as well as reducing the facility financing obligation, commonly referred to as the Deerfield debt, the senior convertible notes, and the notes payable to a related party, also referred to as the Mann Group debt.

By continuing to restructure the balance sheet, we are saving considerable amounts in interest expense, which allows us to reinvest this money behind Afrezza. For the first quarter of 2018, interest expense has been reduced by $900,000 versus Q1 of 2017, a 34% reduction. And the principal balance of our debt at March 31, 2018 has been reduced by $17.6 million, or 13%, over the last 3 months from December 31 of 2017.

We remain extremely focused on the sources and uses of our cash. We started the year with $48.4 million in cash. In the first quarter of 2018, we had $21.7 million of net cash used in operating activities, or our cash burn, and we tapped the ATM, raising $0.5 million, bringing our total cash at March 31, 2018 to $27.2 million. Just after the first quarter ended, we raised $26.3 million net of expenses in a registered direct equity offering, putting us in a position to start Q2 with $53.5 million of cash.

We reaffirm our net revenue guidance, as our revenue model continues to put us in the lower end of the $25 million to $30 million range for 2018. We expect our gross to net percentage to increase in the single digits for the remainder of the year, which tempers our 2018 net revenue forecast.

In addition, we experienced softer than expected TRx growth in Q1, but anticipate a different growth trajectory for the remainder of 2018 resulting from our new promotional strategy and from physician interactions on new scientific and medical information at major diabetes conferences later this year. Pat McCauley, our Chief Commercial Officer, and David Kendall, our Chief Medical Officer, will describe in more detail later in this presentation.

We also maintain our guidance for net cash used in operating activities in the $90 million to $100 million range. We started the year with $48.4 million in cash and raised $27 million in equity offerings year-to-date, giving us $75 million in cash before the impact of cash used in operating activities.

This means that we will still need additional cash in the range of $15 million to $25 million for 2018. We're confident that we'll be able to raise these funds through a number of different possible sources or combinations of sources as you see listed on the slide, and we are weighing all of our options to determine the best path forward for the company.

I hope this provides analysts and investors with a transparent view into our financial results, cash position, and expectations for the remainder of 2018. To provide insights into our commercial achievements, plans, and activities, I'll turn it over to Pat.

Thanks, Steve, and good afternoon. I'm very excited to share with you our first quarter 2018 commercial highlights as we continue our transformation at MannKind. I know the team has been working very hard to ensure we continue to make Afrezza successful in supporting patients living with diabetes. And over the past few months, we've been focused on building our core commercial capabilities, and we'll talk a little about that today.

Now, you may recall that back in February, and Mike mentioned this, we transitioned from a contract sales organization and now have 1 full year of selling experience. And we've learned many different things along the way. We've also hired about 20 new sales representatives in the past few quarters, and are excited about what they bring to MannKind. As you know, sometimes it takes as much as 6 to 12 months for a representative to have full impact in a new territory, so we're really excited about what this group will be doing.

And as we move into year 2, one of the reasons that I'm really excited is that each and every day our sales team gains additional clinical selling experience and we build deeper relationships with our customers. And this is really going to help us as we move forward.

Also we're going to continue investing in the skills and capabilities of our sales team in our second year, such as diabetes disease state knowledge and business acumen. And finally, we're developing additional promotional materials to help our sales team drive Afrezza awareness and adoption with our customers.

Now, if you look at the chart, you can see the sales team has had an impact. If you go from February of '17 through the end of '17, prescriptions had just about doubled during that time period. Also you'll see that Afrezza declined 2% from the fourth quarter of '17 to the first quarter of '18. And this is generally in line with the rapid-acting class, and we believe this happened for a few reasons.

As you guys know, insurance plan changes and deductibles reset in the new year. We saw decreased voucher utilization in the first quarter. Some territories went through resizing that caused some customer disruption. And the Afrezza NDC mix transition has been ongoing. I'll talk about that in just a minute. And as a reminder, the regional TV pilot ended in the fourth quarter.

Now, while these things did occur in the first quarter, we've moved through these. And as you can see in March, our prescriptions returned to growth. Now, we have very high expectations for our sales team delivering results, and we know that we can drive more Afrezza demand. We believe that we're well positioned in '18, and our focus is on executing against the plans that we have in place.

So let's take a closer look at our prescriptions. And from the first quarter of '17 to the first quarter of '18, Afrezza prescriptions demonstrated strong growth at 85%. And also, based on some of the questions that we get quite a bit on refills, I wanted to take a closer look into our new prescriptions and specifically the portion that are truly new to brand.

Now, as many of you know, whenever you see an NRx, it can mean a lot of different things. For example, it could be a current Afrezza user that's simply renewing a prescription with a new insurance provider, or it could be a current Afrezza unit that's switching to the new NDC package. On the other hand, there are NRx prescriptions that represent patients who have not been on Afrezza that are actually new to brand. So let's take a closer look at those, and you can actually see them in the 2 bars at the bottom of the slide.

In the first quarter of ' 17, there were 453 new to Afrezza patients. And this increased to just over 1,400 patients in the first quarter of '18, and that represents about a 214% growth. So if you think about it, in the first quarter of '17 14% of all of our Afrezza patients were new to brand. And over the year, this increased to 24% in the first quarter of '18.

So when we look at our patients today based on 1Q of '18, approximately 1 in every 4 patients on Afrezza are truly new to brand and 3 of every 4 represents TRx refills and renewals. So this is the type of growth that demonstrates we're building our base of new Afrezza patients, and we expect this to continue and increase over time.

So let's take a closer look at something I know we've shared with you before, and that's our Afrezza packaging and cartridge transformation. And I'm really excited to share with you a lot of great progress that's gone on there. As you guys know, we're working closely on refining our offering to 5 primary SKUs and, at the same time, discontinuing 3 additional SKUs.

Now, if you look at the left-hand side of the chart, you can see this transformation taking place. If you go back to the first quarter of 2017, 63% of our sales were in the SKUs that are currently being discontinued. And there's been a very nice progression into the first quarter of 2018, and you'll see that just under 80% of our sales are now based in our 5 primary SKUs. Also as of April 1, 2018, we are only shipping the 5 primary SKUs into the wholesalers.

So why is all this important? Well, when you think about the wholesale channels, this is going to provide for a smoother process for stocking and ordering. We know with our healthcare providers it's going to be much easier to prescribe Afrezza, especially within the electronic health records. Also patients; most important, it really provides flexibility in individualized dosing and titration.

If you think about it for a minute, a patient can now get either the 12 or 8 unit cartridges in a single mono pack, and that was not even an option prior to the SKU transition. So when it comes to packaging, we're excited about this offering for our customers and our patients, and believe it well positions us in 2018 and beyond.

If you look at the right-hand side, for the first quarter of '18 to the first quarter of '17, you can see basically the growth of the 4, 8, and 12 units. And the 4 and 8 units grew similarly at 69% and 64% respectively. But I think what's important on this is the significant growth of the 12 unit cartridges at 259%. Now, this is important because, based on customer feedback and in reviewing some of our clinical trials, we know that some patients require more mealtime insulin to achieve glycemic control.

For example, in our type 2 patients, they may need between 12 and 24 Afrezza units with each meal. And we believe the 12 unit and the growth that we're seeing there is great news for these patients and our execution of our type 2 strategy. Secondly, as a reminder, insulins are linear priced. And with compounded growth of the 12 unit cartridges, this also represents an increase in value contribution.

So let's take a look at some of the additional efforts to help drive education and awareness of Afrezza. And I am very excited to share with you that our enhanced consumer website is now live. And this really helps patients understand how Afrezza works, how to get started, and very important safety information. At the same time, we're leveraging our digital advertising to drive traffic to the site, and we've already seen a definite increase in website registrations and overall traffic.

With social media, we're going to continue to invest in Facebook, Instagram, and YouTube. We know that these are a great resource for sharing not only product information, but obviously patient experience as well.

Now, with the TV commercial, Mike mentioned this earlier. From our fourth quarter pilot, we gained many insights. When comparing our TV markets versus non-TV markets, we definitely saw an increase in both prescriptions and writers in the TV markets. And this reinforces something that we continue to see, and that's that Afrezza is promotionally responsive. Since our results of this, we're definitely looking at the most effective ways to continue our Afrezza TV advertising in the different markets that we have.

Now, all of our investments involve decisions and tradeoffs. We will continue to invest each dollar on where we can drive the highest return on Afrezza. As an example, we know that TV combined in geographies with strong sales representatives definitely make an impact. So as we move forward, we're going to continue to assess things such as our open territories, where we're trying to recruit absolute top talent right now. And we can leverage those to invest additional dollars into advertising as we need moving forward.

We also get a lot of questions about managed care and what are we doing to assist our patients. And I think this was another significant highlight in the first quarter, and it's about our progression and our development of MannKind Cares. A large part of the first quarter was enhancing our hub capabilities, and I'm excited to share that April 1 we launched our MannKind Cares patients experience and support center. And these are enhancements that really help our patients work through the benefit verification process and improve their overall patient experience.

Now, while it's only been a few weeks, we did want to share some early weekly trending that we're seeing. There have been almost 200 patient referrals to MannKind Cares since April 1, and many of these have not yet converted into prescriptions. Now, this tells us that the sales team is executing effectively in communicating the advantages of MannKind Cares with healthcare providers.

We also know it's a key indicator for future growth. In 2018, approximately 8 out of 10 patients who are referred to MannKind Cares get their prescriptions filled. So we're certainly going to watch this closely in the future, but we wanted to share some early trending with you today.

So when I look ahead, we believe that we have clear catalysts for growth in 2018, and I believe it all starts with the successful execution of our Afrezza marketing messaging. We had an FDA label update back in the fourth quarter of 2017, and we expected more of an uptake. As Mike mentioned earlier, we listened to a lot of our customers. We conducted extensive market research, and we gained a lot of great insights from PCPs and endos.

And what we heard is that there was a high level of interest in learning more about the lung and dosing absorption as a competitive advantage of Afrezza. We also heard that providers were interested in the efficacy and safety profile in both type 1 and type 2 patients, and also a high interest in using Afrezza earlier in the disease progression.

So we took a lot of these insights, came back as a team, redesigned some of our core visual aid and selling materials, brought the sales team together, and we've been out executing on this since March. So we think, moving forward, that's going to be a critical piece of our success.

I'm also very, very excited about the multiple customer engagement opportunities at upcoming meetings and congresses. I know David's going to talk about this and some of the great plans that we have in place. But as you know, these are great opportunities to have one-on-one engagements. Certainly we'll have a representation at the booth. There'll be some data being presented. So we're going to take full advantage of continuing to talk about the Afrezza clinical value proposition.

I already mentioned the targeted direct-to-consumer campaign. The pilot has definitely informed us, so we're going to look at more effective ways to achieve responses and similar rates in the broader audiences. And when it comes to payer access, we're really excited about MannKind Cares, and we're going to watch that in the future.

But the field team is also focused on executing pull through plans especially where we have no prior authorizations or restrictions. We are in constant dialogue with top tier payers to improve Afrezza access and remove restrictions. Our clinical team is focused on ensuring that our payers fully understand the Afrezza clinical value proposition.

And with our field force, we're going to continue investing and training in them, whether it's disease state knowledge, the evolving landscape, our refined methods with Afrezza, or selling skills. And as always, people are our number one asset at MannKind. We're excited about recruiting and bringing in top talent, but also retaining our top talent as well.

In closing, we know we have a lot of work to do in moving forward. And we believe that we have the right plans in place to be successful. It's all about going out and executing against those. I really am excited about the people, the culture, and the foundation that we're building at MannKind to ensure that Afrezza becomes the standard of care for mealtime insulin.

And with that, I'll turn it over to David Kendall.

Thank you, Pat, and pleasure to join my second of these calls. And as Michael referred to earlier, it has been an incredibly exciting first 3 months for me and my medical team here at MannKind. And I'd like to highlight several of the activities that have occurred in the first quarter and that are planned for the rest of the year, and would like to begin by introducing a group that we have convened now as the scientific advisors for MannKind and Afrezza.

This scientific advisory board was item number one on the list that Mike and I talked about when we were discussing the needs for supporting both Afrezza and the effective use of mealtime insulin. And you can see from this list of individuals, many of whom you may know, a group that is expert not only in clinical diabetes, expert end users such as Jeremy Pettus and Satish Garg, but an extensive array of experience in diabetes drug safety, including John Buse, Derek LeRoith, and Elizabeth Seaquist. And we've represented both primary care and pediatrics, very important components of the diabetes care system, and in particular diabetes care using mealtime therapies.

We're pleased to convene this board, and will be working with them not only looking at the existing data from the 65 trials that have been completed, but looking very carefully and judiciously at any future trials that may be necessary and most useful in assuring the safe, effective, timely and appropriate use of Afrezza.

An example of some of the outcomes of the work that was started both before my arrival here at MannKind and our understanding of Afrezza as a clinical asset, as Mike referred to earlier, is the scientific chatter. Scientific information forms the core of both the medical communications that we as a company have with providers. And making certain that well designed and well performed clinical trials are part of our future is an essential part of our medical activities.

You see here our planning for the American Diabetes Association Scientific Sessions that will be held in Orlando at the end of June of this coming year. As was noted by Pat, he and his team will have a commercial presence. We will have a medical presence and have a number of executive encounters with professional organizations, including the American Diabetes Association and organizations around the world.

We had previously announced the acceptance of both an oral presentation and a poster presentation from the so-called STAT study, a study that was first developed in collaboration with Satish Garg and colleagues at the Barbara Davis Diabetes Center looking at continuous glucose monitoring. And these results will be available in the poster sessions beginning on Saturday of the Scientific Sessions, with an oral presentation being presented on Monday of the scientific sessions.

I'm also very pleased to announce that a team here within our medical group took the opportunity to look at data performed from a trial in type 1 diabetes and assess not just the rates of hypoglycemia but adjusted total and severe hypoglycemia rates, comparing Technosphere insulin with insulin aspart. And these data will be presented as one of approximately 100 late breaking poster presentations at the American Diabetes Association.

We also are supporting -- through an independent educational grant, MannKind is supporting a discussion on the approach to postprandial glucose control, to inhale or inject, to try to share scientific information with colleagues at the meeting to understand the clinical use of inhaled insulin, comparing it to the 95 year history of injected insulin.

While I've emphasized our presence at the American Diabetes Association, this is by no means the only scientific presence that our medical team is investing in in 2018. In just 2 weeks’ time, we will have both a scientific and commercial presence at the American Association of Clinical Endocrinology to be held in Boston in the middle of May.

The American Diabetes Association Scientific Sessions we've already discussed. MannKind has been actively involved in the Keystone Diabetes Meeting sponsored by the Barbara Davis Diabetes Center in July of this year. And we'll be active both with a commercial and medical presence at the American Association of Diabetes Educator meeting in Baltimore in August and the European Association for the Study of Diabetes to be held in Berlin in October of this year.

We have scientific information being presented at the ADA. We hope to have additional scientific information presented at each of these meetings. And many of the abstracts that have been developed by our medical team are currently under review and we hope will be accepted for presentation at these upcoming meetings.

So the scientific chatter is growing, and we believe making this scientific information available to clinicians to understand dosing, effectiveness, safety and appropriate use can do nothing but support the commercial efforts that Pat and his team have put forth to better serve the diabetes population who require more effective mealtime insulin therapy.

Very recently, you may have seen an announcement about the Afrezza risk evaluation and mitigation strategy, or so-called REMS strategy. REMS is part of the responsibility of ethical drug manufacture when a warning or precaution or black label -- sorry, a black box is included in the label. The FDA recently communicated to MannKind that it had determined that the Afrezza REMS program and communication plan had met its goals and is no longer necessary.

What this means in practical terms, and we really appreciate the collaborative work with the FDA, is that informing individuals of both the benefits and risks of Afrezza therapy has been done effectively and the REMS program that was put in place since the launch of this medication has fulfilled the need for our commercial team and our medical team to help both patients and providers understand the benefit-risk of Afrezza therapy. The release of the REMS means that the associated communication plan will no longer be necessary, and no further assessments will need to be performed.

Mike introduced earlier our efforts to continue to expand the footprint of Afrezza around the globe, and I'm pleased to announce that the Afrezza inhaler device was recently approved by the regulatory authorities, or ANVISA, in Brazil. As many of you know, in the U.S. a drug/device combination is reviewed collectively, as the Afrezza device was prior to its approval in 2014.

Our program in Brazil has 2 paths. The first is to seek approval of the device, which was announced recently, and the next is to seek approval of the final product registration, including the insulin and cartridges. And this is currently under analysis and progressing well with ANVISA, the regulatory authorities in Brazil. And we anticipate decisions on this by the end of this year or early next year.

To step back a bit from Afrezza and to reemphasize something that many of you have heard about just recently, is the expansion of the Technosphere platform to delivery of other therapies, in this case treprostinil for the treatment of an orphan disorder called pulmonary arterial hypertension. Our TreT development program, which extends over approximately 24 months, is shown here. And we have initiated and are in the midst of the first of the Phase 1 studies, a single ascending dose study. And we anticipate completion of this very early here in the second quarter.

Results will be available and analyzed mid to late year. And based on these timelines, we anticipate initiating a switch study comparing treprostinil Technosphere inhalation with the standard of care, which is nebulized treprostinil therapy. This will then proceed into a pivotal pharmacokinetic study, which is in this case a 505(b) pathway, what is necessary for Phase 3 development and ultimately the data that's required for a 505(b)(2) submission, which we anticipate in the latter half of 2020.

With that, I'd like to thank Mike and the entire team for the opportunities I have had to join MannKind and the wealth of information that we hope we can continue to provide, both from existing data and data that is accumulated from planned and ongoing clinical trials.

And with that, I'll turn it back to Mike for a summary of the first quarter of this year.

Thank you, David, Pat, and Steve. So we are focused on continuing to make Afrezza the standard of care. We had to come a long way on rounding out the data package that supports the brand. And as you can see, for the first time in 2 years, we'll have a nice continued congress plan of new data coming out and analysis of data, which starts to allow us to have thought leaders get behind us and teach and train others on how to use the drug. We've continued to see positive progress in new prescribers and total writers quarter-over-quarter and year-over-year.

In fact, if we were to show you the new member Rx data, we've already achieved 1% market share in the new members coming into treatment that are available for mealtime insulin. And several of our territories either have exceeded 1% share or are on track to exceed that in this quarter. So we know it takes a long time to get to where we are, but we're very happy with the continued progress, the understanding of the drug, and the listening sessions that I just completed around the country.

When we think about financing, we're planning for '18 and '19. We've already laid out our strategic plans for '18. And when I think about where we can go, a partner for treprostinil, a co-promote opportunity, additional international deals as well as new debt in the company, those are all non-dilutive ways to finance the company. The reason you haven't seen much more than we have is because we wanted to really see --.

I apologize for the interruption. This is the conferencing center and we are experiencing an emergency. We must proceed to a safe area immediately. You call will be left unattended. We apologize for any inconvenience and appreciate your understanding.

So sorry about that. You can't make this up.

So those are the sources of non-dilutive financing. We wanted to really see where Afrezza's trends continue to progress as we rolled out the new strategy in Q2 and how doctors will respond to the data coming out of ADA. We continue to get more and more comfortable as those things read out. And we'll continue to finish up the recapitalization process that we landed on back in June of last year and July.

Steve and I have been on the road show, meeting many new investors who have a lot of interest in the company and are very amazed at the progress we've made on the balance sheet and continued progress with Afrezza. And the number one question we all have is where risk has moved and when will the company get to break-even. And we're sticking to our guidance, and we hope that gives people some perspective on how we think about the progress for the rest of the year. And as we see the trends move, we'll give continued updates on where we go in terms of the cash flow break-even.

We've completed the SKU transition in Q1, which took us 18 months to get the new packaging out there. And in fairness, that was extremely critical in order to think about onboarding and going from 500 prescriptions a week to 5,000 prescriptions a week. When you have a doctor log in to their EMR system seeing eight SKUs for a drug they've never used, it's intimidating. And we had to make it very easy on how to initiate the product.

When you ask doctors why they've never used Afrezza, you get one of 3 responses. They're not aware of our data, they don't know how to prescribe, or they want to understand managed care coverage. Once they understand our data, the next biggest obstacle is really selecting the right prescription for the right patient and focused on dosing and titration. We feel that we've locked down all 3 of these things that will make it very easy for doctors to start to adopt this drug in a more accelerated fashion than where we've been. We have the funds to invest, and we're continuing to grow and execute our plan.

And when you think about the next 5 years, Afrezza U.S. will be the backbone of the company. International expansion will continue to layer on additional markets in the next 12 and 24 months. We hope to find a good partner for Treprostinil. We are also looking to bring in another asset that would supplement our field force capacity and offset that cost. And we believe pediatrics will be a nice meaningful opportunity as we continue to progress the Phase 1 part of the trial, going into the Phase 3 later this year.

I want to thank everyone for their patience as we've made significant progress, and we'll continue to make progress quarter-over-quarter. And thank you everyone for the tireless efforts of where we are today.

With that, I'll stop and take questions.

We apologize, Mike. Without operator assistance, we are not able to open up the lines for your questions. So please feel free to email or contact us directly at MannKind and we will take your questions that way.

I guess, Rose, I do have a couple questions that were emailed that I can go through. So apologize for the operator, but I do -- several of you have emailed me questions, so I'll try to touch those. One of them is around managed care access, and how do we think about that and what's the progress we've made.

I have been personally in contact with about 70% of the payers who cover people living in the U.S., which range from Medicare to commercial. They are constantly in discussions with us. We look to remove prior authorizations completely or minimize them significantly. I think the progress that you see at MannKind cares that Pat shared shows you managed care is not our number one hurdle. It will become a bigger resistance as you go into adoption. And right now we're in the awareness and trial period of our launch.

And so as doctors start going from one patient to 2 patients to 20 patients, that's where the payer conflict starts to increase. So today you've seen MannKind Cares. It's significantly increased. We are getting 8 out of 10 patients approved. And as that volume increases, payers will work with us to continue to remove those hurdles. So we don't anticipate this continuing to be a major restriction, and as we progress we'll continue to remove some of those barriers.

Another question I often get is what's holding doctors back. Why have they not used it? The reality is we've had 65 trials done in the history of the company to get to the point of approval in subsequent last couple of years. The majority of those trials were never published. And so when payers and database searches -- people look for PubMed to say what is the clinical data behind the product, they don't find a lot of our information.

And what we've discovered is, when we share our information with the doctors and why we believe the drug should be the standard of care, they're amazed at how much data we have. They're amazed at the lung function data and they really are a little bit surprised. And so I think the great news is, with David Kendall here, we've been able to really get in front of some really important people to take a look at our data, give us feedback on it, and understand why we truly think Afrezza is a unique product.

Two of the most important things that have come out of these discussions that we're going to continue to focus on is around the monomeric form of Afrezza being active as it enters the lungs. That is something that completely differentiates the drug and the activity profile that you see. And so in the research that came out from the label change, we discovered people didn't really get the PK-PD benefits. And so we had to translate that into speed of onset, really getting into the blood, and really showing what that tail means in terms of hypoglycemic events. So as we get to some of these new analysis, we believe this will be very clear to physicians in terms of the adoption and opportunity.

I'm going to stop there. And I apologize for not being able to take more calls. But we will try to seek calls and post responses on our website for the questions that do come in. I thank everyone again, and have a great evening.