Q1 2008 MannKind Earnings Conference Call - Final.

Original Source: FD (FAIR DISCLOSURE) WIRE

OPERATOR: Ladies and gentlemen, thank you for standing by. Welcome to the MannKind Corporation first quarter 2008 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, May 5, 2008. Joining us today from MannKind are Chairman and CEO, Alfred Mann, President and COO, Hakan Edstrom, the Chief Financial Officer, Matthew Pfeffer, and Chief Scientific Officer, Peter Richardson.

I would now like to turn the call over to Mr. Matthew Pfeffer, Chief Financial Officer of MannKind Corporation. Please go ahead.

HAKAN EDSTROM, PRESIDENT, COO, MANNKIND: This is Hakan Edstrom. Good afternoon, and thank you for participating in today's call. 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 the actual results could differ from these expectations, and for factors that could cause actual results to differ from expectations. Please refer to reports filed with the Securities and Exchange Commission under the Securities Exchange Act of 1934.

Let me start by recapping our activities during the past quarter. All of our key programs are on-schedule, and are on and below budget. We are nearing the end of our pivotal Phase III trials and put in place the necessary personnel and systems, so that we can lock the databases this fall, and conduct the analysis leading to the NDA filing. We are also approaching the completion of construction phase of our manufacturing facility in Danbury.

Much of the equipment has already been installed, and our validation activities are well under way. Our target submission date for the NDA, particularly Insulin remains the end of December 2008. Although this target is still considered an aggressive goal. Our clinical operations especially Study 117, a Phase III clinical trial that will examine the effect of TI, in patients with tightly controlled fasting glucose levels. As you know out of fear of hyperglycemia, patients to-date tend to be managed at high fasting levels, so high as to invite the risk of long-term complications, and at these high levels, fasting glucose, not standard glucose, primarily controls the A1C.

Our goal in this study is to use insulin more aggressively by taking advantage of TI's superior hypoglycemia profiles and observe the effect of this aggressive insulin use on A1C levels. We also have a number of non-insulin trials under way having recently initiated a second clinical trial of our inhaled GLP-1 product, the MKC253, and a trial of the second cancer nanotherapy product, the MKC1106MT, and these other programs also appear to be outstanding opportunities. We believe that we have done everything that we have told you that we would do and even a little bit more.

Nonetheless in the wake of the withdrawal of Novo Nordisk and Eli Lilly from the inhaled insulin market, and more recently the revised labeling of Exubera, many investors and analysts have changed their perception of the inhaled insulin opportunity, and MannKind's prospects, and our stock price has plummeted. All of this has led to a great deal of discussion and additive speculation in the last few weeks about the future of MannKind Corporation, and of inhaled insulin generally. The bottom line is this, Technosphere Insulin is progressing well. There is nothing that we have heard from Pfizer, Lilly, or Novo Nordisk that has caused us to change our opinion about the safety or expectation of Technosphere Insulin.

We still believe that we have a very safe, effective, and differentiated diabetes therapy. Of course, we have not yet completed our Phase III clinical trials, and as you know we are still blinded to the data. When the data are available, we and you will have substantially more information about the safety and efficacy of Technosphere Insulin, than what is currently available. You will mately we believe the exit by these companies may enhance our opportunity with TI, even though we first must be able to deal with some of the negative perceptions that they have created.

We are only prepared to make decisions about the future of our product, based on solid clinical data, not on the basis of suggestions and speculations. All of our data to date, and also our extensive underlying science, supports the safety and efficacy of Technosphere Insulin. Thus we have every reason to move forward, and we are continuing the clinical development of Technosphere Insulin, as one of the completions of the build-out of our manufacturing facilities.

Indeed assuming that the data from our pivotal trials continues to support the view that Technosphere Insulin is safe, effective, and a significant improvement of today's standard of care, as has all our data consistently demonstrated until now, we shall proceed towards submission of a new drug application with the FDA, and with the preparations, with the preapproval inspection of our manufacturing facility in Danbury. The cloud of uncertainty that has formed over the inhaled insulin space has nothing to do with Technosphere Insulin, and we believe that we can best dissipate these doubts by obtaining approval for our product.

I know many of you participating in this call have questioned what the FDA will do with our inhaled insulin, in light of the numeric imbalance in lung cancer cases with Exubera. I certainly cannot predict what precision the Agency will ultimately take on this issue, but I can tell you that we maintain an open and constructive dialog with the FDA, and that we expect this dialog to continue unabated. Please keep in mind that unlike others exploring the inhalation of insulin, in addition to extensive toxicology studies, that have shown no effect on tissue, we have specifically evaluated the cancinogenicity of our product in studies, not just in one, but in two species.

We undertook these animal studies not because we feel that insulin is carcinogenic, but because we wanted to thoroughly under the safety of our formulation. All preclinical cancinogenicity data indicated that neither our product, nor the carrier material alone, has any carcinogen potential although the final histology reports from the second study in immune compromised study, will not be received for another few weeks. We also know that our carrier is not biologically active and everything that reaches the lung is excreted in urine unmetabolized. Remember, the target for our product is not really the lung itself, but rather the arterial circulation that drains from the lung.

Our formulation gets insulin, and it is carried into the blood stream quickly, with neither material spending much time in the lungs. We can only speculate how our mechanism of action differs from that of the sugar-based formulation used in Exubera. Suffice it to say, we have not seen any of the adverse effect on the measures of lung function that have been reported to occur with inhaled insulins. Yet the recent publicity raises questions as to whether Exubera causes or accelerates cancer. Even if a casual relationship is eventually established, it does not mean that there is a class issue.

In fact, Lilly and Novo Nordisk as well as MannKind have seen no signal of cancer. All of these products are different. Indeed a minor difference in the formulation of an active…