MannKind Corp

NASDAQ:MNKD

Earnings Call Analysis

MannKind Reports Growth and Profit Milestone

MannKind celebrated a historic profitable quarter with over $20 million from Tyvaso royalties and $13 million in manufacturing, culminating in a 56% quarterly and 121% nine-month year-over-year revenue increase. The leap toward profitability drove a GAAP net income milestone of $2 million, contrasting a $14 million loss a year prior, and marked a break-even period ahead. Afrezza growth continued at 24% year-over-year, despite a strategic reduction in expenses. MannKind also anticipates pipeline advancements, including initiating Phase I trials for nintedanib and starting Phase II/III trials for MNKD-101. With a business strategy pivoting towards deleveraging the company, investing in growth drivers, and enhancing shareholder value, MannKind sets expectations for future stability and expanded market coverage in both the orphan lung and endocrine segments.

Impressive Revenue Growth with a Focus on Tyvaso DPI

The company reported a strong revenue increase, with total revenues growing 56% compared to the third quarter of 2022 and 121% for the first nine months of the year. A significant portion of this growth came from royalties of $20 million and collaboration and services revenues of $13 million related to Tyvaso DPI, primarily from a partnership with United Therapeutics. This collaboration saw a remarkable increase from $25 million to $87 million in total revenues compared to the same period in 2022.

Strong Earnings Per Share and Positive Net Income

The firm reached a notable financial milestone with earnings per share of $0.01 in the third quarter, transitioning into what the company calls a 'break-even period.' A comparison with the same period last year shows a significant turnaround from a GAAP net loss of $14 million to a positive GAAP net income of $2 million, and a non-GAAP net income of $4 million.

Debt Reduction Through Operational Cash Flow

Debt reduction has been initiated, with the company starting to pay down its senior secured debt. The plan is to clear this debt within two years using operational cash flow, a strategy supported by the expectation of achieving positive operating cash flow in the near future.

Pushing for Pediatric Approval and Global Market Expansion

The company is focusing on demonstrating lung safety and efficacy in pediatric populations, expecting this to have a 'halo effect' on the drug's perception. With education and advocacy led by reputable figures, and the promise of new trial data, the company aims for a successful 10-year mark since the FDA approval of Afrezza. Plans are also in place to tackle the European market, citing a competitive edge in cost advantage over insulin pumps and pods.

Maintaining Market Coverage and Anticipating Regulatory Tailwinds

As the insulin price declines and Medicare covers inhaled insulin for 2024, the company expects stable market access for Afrezza and V-Go. The Medicare Part D coverage for the inhaled version of Tyvaso DPI might also stimulate demand as out-of-pocket costs for patients are set to be capped, providing a potential tailwind for the product's adoption going into 2025.

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon and welcome to the MannKind Corporation 2023 Third Quarter Financial Results Earnings Call. As a reminder, this call is being recorded on November 7, 2023 and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until November 21, 2023. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainty, which could cause actual results to differ materially from these stated expectations. For further information on the company's risk factors, please see their 10-Q report filed with the Securities and Exchange Commission this afternoon, the earnings release and the slides prepared for this presentation. Joining us today from MannKind are Chief Executive Officer, Michael Castagna; and Chief Financial Officer, Steven Binder.I would now like to turn the conference over to Mr. Castagna. Please go ahead, sir.

[Michael Castagna, executive]

Thank you, Didi. Thank you, everyone, for joining us today. It's been 6 years since Steve and I became CEO and CFO and we've turned this company from losing well over $100 million a year to our first profitable quarter in our history. We've helped over 20,000 people on a MannKind manufactured product last quarter and our pipeline is moving faster than ever to help more as we continue to live our mission to help patients live a better life. As we think about our highlights this quarter, we've made great progress on the clinical and financial aspects of our company. In the orphan lung space, we've seen Tyvaso royalty revenue of over $20 million and manufacturing of $13 million. On the pipeline, MNKD-101 cannot be in a better position. We came from our last earnings call when we just had learned of a fire in our facility at our partnership in Germany to successfully moving CMC here in Danbury and we have manufactured our first clinical batch in record time.Our MNKD-201, our inhaled nintedanib program, has continued to progress to its filing an IND and starting our Phase I trial in the first half of '24. Feedback from our KOL leaders has been very positive on this program and we're excited to get this into humans as quickly as possible. On the endocrine business, we've achieved our first quarterly positive contribution. This is 1 quarter ahead of our expected Q4 goal. We made $0.5 million in Q3 of this year and that was driven by our Afrezza 24% growth year-over-year. As we think about INHALE-1 and INHALE-3, we were super excited on the clinical progress that these 2 trials have made as they are pivotal for our future in the diabetes business. On INHALE-1, we achieved our prespecified interim analysis, which was run when we hit 50% enrollment to determine if the size of the trial was appropriate or not. We now expect to finish up enrollment and continue to progress this trial for filing hopefully in 2025.As we look at INHALE-3, this was an incredibly exciting trial. I'll talk a little bit more about it, but we are 2 months ahead of planned enrollment. And on the financial, net income of $2 million and we've also begun paying down our midcap debt. We are continuing to deleverage our company so we can drive greater shareholder value. This way we continue to free up cash flow to drive future growth by reducing our interest expense. As we look at Tyvaso, many of you may recall from the last quarter when there were some questions around what happened at the end of Q2 in the inventory and the $30 million number we heard from Unither. And so what we plotted here was a continued quarter-over-quarter including that $30 million. Now that it's transparent of what our royalty rate is, we can show you the breakdown between what $30 million would mean to MannKind in terms of our royalty rate on those $30 million in sales.And when you look, patient demand continues to be very strong quarter-over-quarter since launch last year. The next question I often get is around manufacturing and I would like to hopefully put this to bed as we go forward for shareholders. As we exit 2023, we expect our new fill/finish to come online for 2024 improving our ability to build inventory and supply the market growth for many years to come. And as you look out, we expect new bulk capacity to come on in the second half of next year continuing to bring more efficiency and more upside production as UT gets ready to wrap up their IPF trial hopefully showing a positive impact for patients. As we look out, you'll see MannKind can make 25,000 to 35,000 patients a year we can serve with our manufacturing capacity and we can build that up to 35,000 to 50,000 through additional efficiencies without any additional manufacturing planned.As you all know, the IPF market is well over 100,000 patients and UT will be able to supply to the upside scenarios in addition to what we can manufacture. We're extremely grateful that United is investing over $0.5 billion in CapEx to duplicate our facility there in North Carolina and we look forward to supporting them on that transition. As we turn back to MNKD-101, we've made our first batch since the fire. This is amazing work by our team in Danbury who did this in record time on top of the buildout of Tyvaso, on top of the progress of the pipeline getting ready for IND. We expect chronic tox data here this quarter as well as FDA feedback on our final protocol design and all of this will put us on track to start our Phase II/III trial in the second quarter of next year. And here's a nice beautiful picture of our first 1,000 vials coming off our production line. Thank you to the team in Danbury for incredible work.Now if I bridge to Afrezza, we hear a lot of noise about GLPs and the impact they may or may not be having on various aspects of the health care system and/or consumer. It's a lot of noise, but you can see not much impact on Afrezza and the main change here in Q2 to Q3 was self-driven. But the overall insulin market in the gray line, you can see the insulin market year-over-year is relatively flat to a small single-digit decline. On Afrezza, year-over-year we had growth. But in Q2 to Q3, we made significant changes to our infrastructure to drive our focus to profitability. Number one, we decreased our T&A, which changed our salesforce bonus structure. We actually are in the process of moving our marketing team from California to Danbury and we merged 2 salesforces into one that impacted over 30% of all territories. The new team is now in place so we put some incentives here in Q4 to close the year strong.But this impact has nothing to do with GLPs and has everything to do with internal change to set us up for 2024. The next slide you can see here is our first 9 months year over year comparing the first 9 months of each year since we launched the product as MannKind in 2017. I'm really excited to see that we've doubled our growth over last year when you look at '21 to '22 versus '22 to '23, significant growth driven by our Medicare Part D $35 insulin program that was part of the IRA with the government. As we've refocused back on INHALE-1, this is our pediatric trial where we met the sample size we originally projected. One outcome could it be we needed more patients and that would have dragged on the length of this trial. We now expect completion to happen and this is very positive as we can wrap up this trial next year and start to prepare for launch.As you may or may not realize, most type 1 diabetes innovation has happened in kids, whether it's been Omnipod with the Podders, Dexcom with CGM or insulin pumps that our founder, Alfred E. Mann, built. As I bridge over to INHALE-3, here we are who would have thought 20 years later running one of the largest switch trials in type 1 diabetes away from the standard of care, which is including the AID automated insulin pumps where half the patients in this trial are on an AID system and switching in record time. We're using the latest CGM technology with G7 and we're also including 20% of people whose A1c is less than 7. So this is going to show you whether you are at goal or above goal, how can you best use Afrezza and a daily Tresiba to show how you can maintain control or improve control hopefully with less hypoglycemia.These are top tier sites and we are well ahead of schedule and looking forward to releasing this data in Q1 and Q2 of next year. Flipping the card over here to V-Go. The decline in V-Go has been abated after a 2-year decline. We are focused on improving the margin for 2024. As you will hear from Steve, our gross to nets went from 49% to 58% mainly because of rebates. We've now started the process of changing these contracts and improving them and we'll provide guidance on our next call as we're in the middle of negotiation. However, we've had some early wins with Kaiser and some of the DME suppliers and are now working on the PBMs. So we'll continue to watch this closely. With V-Go, we believe we can continue to drive demand and improve the margins as we go forward.Now I'd like to turn it over to Steve. Thank you.

[Steven Binder, executive]

Thanks, Mike, and good afternoon. I'm pleased to review select third quarter 2023 financial results. Please supplement this call by reading the condensed consolidated financial statements and MD&A contained in our 10-Q, which was filed with the SEC this afternoon. Let's start by looking at the total revenues at the bottom of the table. Our total revenues grew 56% versus third quarter 2022 and 121% for the 9 months ended versus the same period in 2022, which highlights the second quarter 2022 launch and the subsequent revenue growth associated with Tyvaso DPI and to a lesser extent our endocrine business, which included the results of the V-Go product acquisition from May 31, 2022. Focusing on revenues from our collaboration with UT. Revenues totaled $33 million in the third quarter of 2023, which consists of royalties of $20 million and collaboration and services revenues of $13 million.Royalties earned in the net sales of Tyvaso DPI of $20 million was the result of continued strong patient demand for an innovative product. We recorded $13 million of collaboration and services revenue, which is primarily related to revenue associated with manufacturing Tyvaso DPI. This revenue grew 27% over the prior year as we sold more product at a higher price to United Therapeutics. For the September 2023 year-to-date period, total revenues from our collaboration with UT were $87 million as compared to $25 million for the first 9 months of 2022 representing strong patient demand for Tyvaso DPI. Additionally, the 2022 9-month period included the start of commercial manufacturing of Tyvaso by MannKind midway through the second quarter and the commercial launch of the product by UT toward the end of the second quarter.Moving down the table to our endocrine business. Total endocrine revenues were $18 million. Afrezza net revenue of $13 million compares to $11 million in 2022, a growth rate of 24% which was fairly consistent with our first and second quarter 2023 growth rates. The growth was mainly driven by a higher patient demand with underlying paid TRX growth of 12% year over year, a lower growth to net reduction and price. For the 9-month period ending September 30, 2023, the 26% increase was mainly related to increased volume from higher patient demand with underlying paid TRX growth of 18%, price and a more favorable gross-to-net adjustment. Net revenue from V-Go was $4 million for the third quarter of 2023. Revenues were 18% lower versus 2022 primarily due to a lower level of patient demand. However, we have stopped the downward trend as TRX has been about the same amount for each of the first 3 quarters of 2023.For the 9-month period ending September 30, the 92% increase is primarily related to the purchase of V-Go on May 31 of 2022 so the increase over 2022 is mainly from a 4-month versus 9-month comparative. The next slide shows our revenue growth by source on a quarter-by-quarter basis from the first quarter of 2022 through the third quarter of 2023. We like to show this graph because it highlights how dramatically our business has changed in the last 2 years and how we are executing against expectations. As Mike pointed out earlier, the royalties from Tyvaso DPI have been growing steadily since launch and the fastest-growing revenue source in our portfolio. United Therapeutics management stated during their second quarter earnings call that approximately $30 million of Tyvaso DPI sales in the second quarter related to specialty pharmacies purchasing product to enable them to get through the contractual inventory levels.And then in the third quarter call held last week, UT stated that the Tyvaso DPI revenues for the third quarter generally reflected patient demand. We have denoted the royalty associated with the specialty pharmacy Inventory stocking on the chart in the second quarter 2023 bar, which allows for a clear demonstration of the royalty related demand growth by quarter. Based on our third quarter revenues, we have a current run rate of over $200 million, of which approximately 40% represents royalties, which do not have any offsetting expenses therefore falling straight to the bottom line with the associated cash flow used to fund our pipeline and reduce debt. Below the graph, I have plotted the earnings or loss per share for each quarter and you can see the impact from the increasing revenues. In the third quarter, we recognized earnings per share of $0.01. This is not a typo. We have hit a significant financial milestone.We have now entered a period where we expect to bounce back and forth between earnings and loss per share, I'll call it a break even period, and then we expect to go earnings per share assuming Tyvaso DPI continues its upward trajectory and the endocrine business unit increases its positive contribution. The following GAAP to net GAAP presentation was started in the second quarter of this year to better highlight the noncash impact of certain items to our P&L. In the third quarter of 2023, we reached a milestone of positive GAAP net income of $2 million while a year-ago looking at the right column, we had a GAAP net loss of $14 million. When we adjust the 2023's third quarter GAAP net income for noncash items of stock compensation and a gain on foreign currency, we had net non-GAAP net income of $4 million for the third quarter of 2023.As highlighted earlier, we expect to be plus or minus GAAP breakeven for a number of quarters before we expect to see net income growing on a continuous basis. I will conclude with some additional comments. In the third quarter, we started to pay down our senior secured debt based on our contractual obligation to pay the loan over 24 months beginning in September and we expect to be able to pay off this debt over the next 2 years out of operating cash flow. We continue to tightly manage our cash flows and had a reduction in cash and investments of only $2 million in the third quarter as we expect to progress toward achieving positive operating cash flow in the near future.Thank you. And I'll turn it back over to Mike.

[Michael Castagna, executive]

Thank you, Steve. It's never been a better time for MannKind employees, shareholders and partners. We're in the strongest position we've been and we're well diversified as we look out whether it's our inline brand opportunities, our pipeline opportunities or Tyvaso DPI growth in addition to any other business development things that come our way. We're super excited at the orphan lung business as we look at IPF and specifically nintedanib and the TGF-beta programs. These are programs that have moved up in the priority list in terms of treatments coming down the pipeline in IPF as we've had so many failures, which is not good for patients, but unfortunately good for MannKind as we are now closer than ever to help more people in IPF.We feel very strongly that MNKD-201 can provide a differentiated product for those people on a drug that's already approved on the market, but lowering the dose and deliver directly into the lung we think will provide a huge benefit around the GI side effects and hopefully efficacy as people can dose higher. There's been over $400 million in the last year just in funding an ALK-5 inhibitor as well as other inhaled therapeutics around the nintedanib or [indiscernible]. As we look at the next 3 quarters, I want to share with you the endocrine updates here as well as orphan lung. Our 2024 milestones will be shared on the next call, but for now today as we look out this year, we've completed everything we've said we are and we're on track to wrap up the year strong. Andy is on track to file the regulatory submission there for [ India ], which will be an approval if all goes well in 2024.INHALE-1 will be fully randomized and hopefully reading out sometime next year and INHALE-3 will be read out hopefully by March-April time frame. On the orphan lung, 101 is on track for submission and we expect to initiate that trial in Q2 and 201 IND submission is on track and we'll be doing that study in Phase I healthy volunteers early next year. We've been near death and we take seriously our fiduciary responsibility to shareholders. As we think about our future expense management, capital allocation is the #1 most critical thing we have to do, which is really about deleveraging the company, investing in our growth drivers and improving shareholder value. Here are many shots on goal to think about as we close up today's call and get ready for Q&A.Number one, pipeline is 101, nintedanib is a real unmet need and just to put some context here, for every 1,000 patients we get, it's approximately $100 million in revenue. MNKD-201 has huge upside. Until we get this through Phase I, I don't want to guess how big this could be, but it could be a nice huge inflection for our company and our patients. Tyvaso DPI, we can't always guess where that will be, but as you know, UT has a goal for 25,000 patients in '25 and shareholders can guess it's at 10,000, 20,000, what that means for Tyvaso. What it does mean is $250 million to $300 million in revenue for every 10,000 covered patients. We're super excited and anxious to await the UT Teton study readouts for IPF. And as we get really excited now about our pediatric INHALE-1, continued V-Go stabilization and hopefully growth and our pump sparing trial on INHALE-3 as well as an opportunity to bring Afrezza to patients around the world.Thank you again for your patience. It's been a long quarter and apologize about our stock price. Not anything we can see that will cause a decline in the next day or so, but we'll continue to progress on everything we can to make this a great company and a great investment for shareholders. Thank you. We'll now take Q&A.

[Operator]

[Operator instructions] Our first question comes from Gregory Renza of RBC Capital Markets.

[Gregory Renza, analyst]

Congrats on the progress to-date. As you certainly have that commitment to the manufacturing on DPI and kind of get that in the right place.I just wanted to ask a little bit on Afrezza and while you're guiding to sort of the INHALE series of trials, just curious if you can articulate just a little bit about how you see that actually shaping the trajectory of Afrezza. And depending on the outcomes of 1 and 3, how will that kind of shape your commitment to the endocrine business and to Afrezza itself?

[Michael Castagna, executive]

Gregory, great questions. I think the data is going to drive some of these decisions, right? The good news of MannKind, we have the capital to place bets if we see opportunities to grow faster. Our goal is to run the business to profitability. But if we can see a way to cause a major inflection into that growth curve after all this time, I think we'd be more than excited to place that bet to show shareholders what can really happen with Afrezza. The INHALE-3 trial is a groundbreaking trial in our mind. It's one of the largest switch trials done and it's got the new dosing regimen and I didn't talk about that. But one of the things we got the FDA to agree to is we could basically double the dose upfront and we're testing the first dose in the office to ensure patient safety and comfort. And we're hopefully able to see and we've already run those presentations that we are crushing the first 2 hours of postprandial control.Now if that carries out through a trial over 12 to 14 weeks or 6 months, that should provide opportunity for improved time and range, lower hypoglycemia as well as hopefully better overall efficacy and tolerability and sustainability on the product. So the trial results are going to drive a big part of that outcome, but we've done everything we can after all these years. These are the pivotal trials I would have loved to do years ago. But it's a stepwise way to work with the FDA to get the dosing right, to get the thought leaders right and these are U.S. trials. When you think about it, we have 60 trials, top centers in the U.S., many academic centers. These people have never had real exposure with inhaled insulin. So it's a real opportunity to change our future and I think we need good data to support that. But I think we've done everything we can to make sure the data is the best outcome we can possibly hope for and we'll be ready to cause that inflection if we get good supporting data behind it.

[Gregory Renza, analyst]

Got it. And maybe just 1 more maybe even for Steve, perhaps. But just remind us on the economics on DPI just for our own modeling purposes so we kind of get that right. To what extent are the royalties fixed, dynamic and just how that flows through? Congrats on the progress.

[Michael Castagna, executive]

Greg, I'll turn it over to Steven.

[Steven Binder, executive]

We have 2 pieces to our contract with United Therapeutics that show up in our P&L. The first under collaboration and services revenue is the revenue associated with the manufacturing of the Tyvaso DPI product. That is on a cost-plus basis. If you look in the P&L, you'll see revenues and the costs associated and you'll see a margin a little over 20% for collaboration services this quarter. That fluctuates up and down depending upon our revenue recognition with United Therapeutics and some other areas outside of the actual manufacturing of the product. And the other is royalties. Our royalty rate is 10% on net sales and that's the net sales for United Therapeutics of Tyvaso DPI to their customers.

[Michael Castagna, executive]

And does not vary by sales threshold.

[Operator]

And our next question comes from Ron Feiner of Oppenheimer.

[Ron Feiner, analyst]

This is Ron on for Steve. Congrats on the quarter. I just wanted to ask about gross margin, it was really strong again this quarter. Maybe you guys can give us a little bit about your outlook for margins sequentially and into '24.

[Steven Binder, executive]

The margin this quarter for our commercial products was 78%. That was up sequentially from previous quarters mainly around 2 things happening. One is we're getting a better handle on our margin for the V-Go product. And the second is we're getting increased efficiencies in Afrezza as the factory is producing both Afrezza and Tyvaso DPI. So we don't give forward-looking statements, but I think that the 78% feels in the right territory for right now. So I think it's a good number if you're thinking about modeling going forward.

[Ron Feiner, analyst]

And then maybe 1 more. Are you guys modeling in any impact from GLP-1s on your diabetes business and now and for the future, are you seeing any impact? And maybe on any of the products in the pipeline, are you thinking about something like that?

[Michael Castagna, executive]

So when you look at Afrezza, about 55% of our business is type 2 and 45% is type 1. That fluctuates from time to time. But in general, our focus since last year has been growing the type 1 market and our clinical trial is around type 1. The reason that's important is GLPs are not going to change a type 1 patient's need for insulin in a meaningful way. And so as you think about the type 2 market, eventually most patients are still going to need mealtime control. So even if they go on GLPs, we already knew there was a 7 to 10-year delay from the time somebody needs mealtime control to when they get it and my guess is GLPs are just going to push that off 1 year or 2.But as you can see, the insulin market and the diabetes market is continuing to grow. It's a pandemic in this country and I don't see a need for insulin going away. Will the growth slow because of GLPs? Absolutely. But will that impact Afrezza? Absolutely not. I don't see that as a major impact given that we have less than 1% of the share where we target doctors in 0.2% of the whole country. So we've been able to increase our market share significantly where we put reps versus where we don't. But the GLPs are used much earlier and our population is much sicker. So we just have a very different segmentation of where Afrezza plays and we don't expect much impact there.

[Operator]

And our next question comes from Oren Livnat from H.C. Wainwright.

[Oren Livnat, analyst]

I have a few questions. It is an exciting time indeed for someone who's covered the name after the tough times. First, just to clarify quickly on the discussion around the transitional period, this break even period you talked about sort of fluctuating back and forth. Is that for non-GAAP as well or is that just a GAAP number and is that just a function of R&D investment timing or is potentially even just gross profit going to be lumpy around here?

[Steven Binder, executive]

So Oren, without getting really specific, it's probably going to be for GAAP and non-GAAP. You can see there's not tremendous amounts that go between the 2 and we've got this foreign exchange gain or loss depending upon the U.S. dollar-euro exchange rate because our purchase commitment for insulin is done in euros. So that can swing in 1 direction or another over a quarter by $2 million or $3 million or $4 million. So I think just over the next few quarters, we're going to jump back and forth. We're going to be spending a little bit more in R&D as you would expect based on what Mike presented on the pipeline. But we're going to have revenues that are growing at the same time in particular or expect revenues to grow at the same time for Tyvaso DPI royalties in particular as well as our endocrine business. And I think some of the timing of the FDA feedback and when those R&D expenses kick in, some of that will be a GAAP issue, some will be a cash flow issue. But in general, we got enough cash to fund those things. But until we get some of that data clarity and the INDs filed and approved, that's just going to give us a little bit of fluctuation.

[Oren Livnat, analyst]

Got you. Talking about INHALE, I guess the pump switch study in particular, I think we talked about this last quarter. But can you remind me what do you think is the biggest -- assuming the data is compelling and what you hope to see, what do you think the biggest immediate impact from that is? Is it the education and awareness hopefully dramatically increasing among physicians and type 1 patients as a result or is perhaps the bigger lever here the pharmacoeconomic argument you may be able to make with payers hopefully or would be able to make with payers with regards to relative costs of expensive pumps and whether that might get you a significantly better access over time? And I do have 1 more follow-up.

[Michael Castagna, executive]

I think there's a couple of things, Oren. You hit on a couple of them. The first is lung safety. So getting into the kids and showing expected lung outcomes that we would expect and inhale-free. Some of our latest data on FEV1 changes has shown that the control arm is worse than the Afrezza and so I think really showing new lung data and the reversibility of that is going to be really important. And we feel like we've now measured this in a certain way to make it consistent in each trial and timing that reversibility. So that's going to be an important endpoint combined with having good pediatric outcome for FDA review and approval. Those couple of things will give us a huge halo effect. Next year will be 10 years since FDA approval of Afrezza and that will give us hopefully the length of time on the market, the lack of any safety and surveillance plus these new trial readouts; I think are all going to be really critical.Then there's 2 other things I would add or 3 other things. Number one is education. We have now really world renowned thought leaders in academic centers running these trials who can now be on podiums, who can now be on publications, who can now do CME that we just didn't have before and I think that's going to be critical in conjunction with marketing and sales training. We're really putting a lot of investment in our sales force right now on training, skill sets, clinical knowledge and really teaching them how a patient lives with type 1, understanding the insulin pumps and what that's going to mean to a patient and how they position Afrezza in that market. And then as we think about Europe, I do think the INHALE-3 trial will be really important to think about the pharmacoeconomic because in Europe, they do care about the total cost of care being hypoglycemia, medical as well as pharmacy.And I do think if we can show pretty good outcomes with a pump or without a pump, it doesn't have to be better, it just has to be as good as. There's a significant cost to consumers as well as society for these insulin pumps and pods and that's going to be something important. As we look at Germany, Italy, U.K., they're paying more and more for diabetes technology. And we think now is the time to bring new innovation to Europe as well. But having this data set and the pediatric data set will be important for the global market not just the U.S. market, but it will help us in the U.S. I can tell you I just talked to some of the payers this past week and we expect continued Medicare coverage. In fact we got Medicare to update their website last week around inhaled insulin being covered for 2024 because of the IRA impact.We know that the price of insulin is coming down. We don't expect any negative formulary position against us. And I think as we go into 2025, we'll look at how to use V-Go and Afrezza to open up access together. '24 is going to be a transition year for everybody given the IRA impact on society and drug companies and discounts and PBMs, a lot of confusion happening for '24 getting ready for '25. So that dust will settle. But we expect Afrezza to continue to have a good formulary coverage as well as V-Go as we go forward.

[Oren Livnat, analyst]

Okay. You anticipated my next question. Just regarding IRA, it sounds like for the endocrine business, it's a little bit uncertain pushes and pulls there. But for Tyvaso DPI, I know that UT has launched, but is your understanding that that is only a tailwind as far as to whatever extent it has any impact in 2024?

[Michael Castagna, executive]

I think I'll let UT comment obviously for their future Tyvaso. But what I would say is the Medicare Part D, which is Tyvaso was a Part B for nebulized and the Part D is what the inhaled version is covered for DPI. And so those patients right now have a huge out-of-pocket cost, which does prevent some of them from switching over. And so as you think about Tyvaso going into next year and the following year, that out-of-pocket cost should be capped at roughly around $3,000 next year and $2,000 the following year if I recall. And hopefully, that will help continue to provide incremental demand beyond our current trends for Tyvaso DPI. And so that's something we anticipate as we go forward. That should be a net benefit to patients as you cap those costs as well.

[Operator]

[Operator instructions] And our next question comes from Andreas Argyrides of Wedbush Securities.

[Andreas Argyrides, analyst]

Congrats on all the progress. Just 2 questions from us. The company's transformation to an orphan lung story is certainly exciting. Can you provide us with the next steps for submitting INDs for 101 in NTM and 201 in IPF and then also how you guys are thinking about the Phase II/III trial design, endpoints, treatment duration, et cetera?

[Michael Castagna, executive]

I want to make sure I heard your questions, a little fuzzy on my side so INDs and Phase II/III design. So on the INDs, we are the #1 long-haul the manufacturing stability. So everything else is pretty much on track to be ready in terms of study reports or filing for the IND. And remember we were trying to get that filed for Q4 so we were pretty well on our way for that. And so at this point it's really can we bridge some of the clinical supplies from Germany to the U.S. for the dating and for the inventory for the clinical trial. So that's for 101 and that's on track for an early Q1, mid-Q1 I'll say filing. But if we can find a way to get there faster based on our FDA meeting we have coming up, we will do that. On the 201, it's just making the clinical supplies which are in the process right now and getting those up on stability in terms of getting the 3-month data we need to file that IND. So both of those are on track. It's mainly around just making sure the manufacturing is up and running. Unfortunately, the team that's making 201 had to make 101 on top of everything else.And so they're stacked on top of each other, but they're working hard to get them both ready for IND filing. So those are the main things that are the last steps here. All the talks and everything else pretty much is ready to go. The Phase II/III design, we actually have an upcoming FDA meeting where I'll provide more clarity after that because we're going to the FDA to try to change a few things we previously were focused on looking at the new -- our case data just came out with their quality of life as well as some of the dosing. We think there's a way to continue to streamline these trials. As you may or may not know, we hired a new head of R&D, Dr. Burkhard, and he joined us back in May. So we've taken a fresh look at all the programs, the trials, the FDA feedback and there's few things we thought could be a little bit clear and ensure the trials go as smoothly as possible and as fast as possible. So we'll get that feedback in the next month and we'll share those updates hopefully at JPMorgan on the official trial design that we're comfortable with.

[Andreas Argyrides, analyst]

Okay, great. Appreciate the color and congrats on all the progress.

[Operator]

Thank you. I'm showing no further questions at this time. I would like to turn it back to Michael Castagna, CEO, for closing remarks.

[Michael Castagna, executive]

Thank you, everyone. I think you can see we've made a lot of progress. We continue to grow our revenue, we continue to help more patients, and we continue to move the pipeline forward and really our goal to improve our mission to give people control of their health and the freedom to live their life. As you look at each of our targets, these people are really suffering and in some cases, they have 3 to 5 years to live. And so every day counts to get these patients our treatments as soon as possible safely and effectively in the clinical trials to hopefully get them to the market. Thank you, everyone, for everything. We look forward to closing out the year strong and we'll provide continued updates as news comes in. Thank you again.

[Operator]

This concludes today's conference call. Thank you for participating and you may now disconnect.