MannKind Corporation (MNKD) Q4 2021 Earnings Call Transcript

MannKind Corporation (MNKD -1.68%)
Q4 2021 Earnings Call
Feb 24, 2022, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon and welcome to the MannKind Corporation's fourth quarter and year end 2021 earnings call. As a reminder, this call is being recorded on February 24, 2022, and will be available for playback on the MannKind Corporation's website shortly after the conclusion of this call until March 10, 2022. This call will contain forward-looking statements. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ materially from those -- from the stated expectations.

For further information on the company's risk factors, please see their 10-K report filed with the S -- the Securities and Exchange Commission this afternoon, the earnings release, and the slides prepared for this presentation. Joining us today for MannKind are chief executive officer, Michael Castagna; and chief financial officer, Steven Binder. I would now like to turn the conference over to Mr. Michael.

Please go ahead.

Michael Castagna -- Chief Executive Officer

Thank you. Thank you, everyone, for joining us this afternoon and sorry about the news this morning. I want to talk about three things as we look back on 2021. Number one, we moved Tyvaso DPI from concept to an NDA filing and passing the inspection, ran a fully staffed and moving into ensuring commercial product is ready upon FDA approval.

Number two, we recapitalized a company early last year to put us on a sound path of success and ensure that we need to make dramatic changes to our operating model or our structure in our strategy, given the types of setbacks that we did experience over the last six months. That includes the sale leaseback, the convertible debt, and paying down the whole debt to make sure there's nothing major due in the near term. We continue to operate and focus on building out our strategic plans in growing our company on the pathway to success. And third, the pipeline.

We really did advance the pipeline forward by purchasing Qrum. The feedback we're getting for clofazimine, the data we're looking at is very positive. The advisors have been giving us great feedback. And we'll have our second advisory board in the month of March.

Additionally, we did three formulation deals. I think two of which were public, and we continue to look at other opportunities and exploring ways to use our Technosphere technology and other assets to help other companies with their products. As we look back on Q4 and 2022, we were able to grow total revenues over $75 million in Afrezza in double digits year over year. Q4, we had a record revenue of $11.3 million, which is really exciting compared to the headwinds we faced with COVID as we closed out Q4.

Focusing on the first pink box, orphan lung disease. Our UTHR collaboration is strong and going forward and we're extremely excited to help patients as they get through this main decision. As I talked about, we're focused on building inventory and helping UT prepare for launch. On the pipeline, we've completed our first cohort in our SAD study.

The second cohort is about the start, and we expect to get SAD results in Q2 and MAD results in late Q2 or early Q3. MNKD-201 is the first time you're seeing this product. It's called Nintedanib, which is open as a brand. I'll talk about that later in the discussion but we're now revealing program.

It's going to hopefully progress into Phase I in the near future. MNKD-501, I've talked about in the fifth set, and that's the TGF basis program, and both of these are in development and progressing into development milestones. We actually discontinued the development of Imatinib, AKA MannKind-701, as one of these we tried to do this year come in and bring more focus and get rid of distracting things that weren't going to move forward in the way that we expected. And that also led us into Afrezza.

We looked at Afrezza and where we're heading this year. One of the big strategic decisions we had to make, unfortunately, was to reduce our 30 FTEs to reinvest some of the money to keep Afrezza going in the right direction and drive impact in 2022. While we saw positive script growth in 2021, it wasn't what we wanted to do. We thought we could do better, but COVID did hold us back a little bit.

However, we did launch a campaign in Q4 called Seeing is Believing, where we provided free CGMs to doctors who didn't write Afrezza consistently. And in that pilot, we saw about 45% of the target actually opt into the program, and that group grew three times national average versus what we saw in Q4. We also lost a primary care pilot in Q4, where we're focused on the sub part of the country with 25 additional reps focused on helping drive success in primary care, where there is very low awareness of Afrezza adoption or trial. We also just recently filed at clinicaltrials.gov, our ABC trial, Afrezza Basal Combination, which was also previously referred to as the pump-switch trial.

This trial will provide meaningful data in the pilot study looking at keeping people on their pump, adding Afrezza to a pump, or switching patients off their pump, which receive Afrezza. We're really excited about this study. It will be the first time we're running this type of study ever in the history of the brand. On the liquidity side, Steve and the team has done a great job making sure we have cash and investments of over $260 million at the end of the year, and we completed the Danbury facility non-dilutive sale leaseback, which hasn't changed our operating model, but did provide us excess capital to continue to execute our plan.

As we look at Q4 performance on Afrezza, you can see our scripts continue to grow year over year and quarter over quarter. On the right side here, I want to point to is patient demand that's not visible to the public because we did move from a free goods program in 2020 -- in 2021 -- sorry, ending 2020 into 2021. And that was in our Afrezza Assist, our new hub. So you can see the volume growing in Afrezza Assist from 221 patients when we first pilot it.

In Q4, all of the 989 patients coming in Q4 '21. This is our first step into removing friction in the reimbursement model and making sure that patients starting Afrezza and doctors prescribing Afrezza can have a great experience. This starts the reimbursement process, sometimes they roll into free goods, which is FG/paid prescriptions on cash program, and you can see we're almost up to 1,000 patients in that 1,000 scripts, I guess, for the quarter in that free goods/cash program. So we continue to see exponential growth in the cash payments every month.

These are not meaningful contributors to our Afrezza sales trajectory but they are a bolus of patients that we continue to attract in that [Inaudible]. As we look at 2022, we've optimized our Afrezza footprint to make sure all of our sales territories are viable and they have positive growth potential. We are expanding the Seeing is Believing campaign to all of our sales rep territories based on our Q4 pilot that we'll be launching in March to give everyone opportunity to expand that free CGM to really show what Afrezza can do when you use it in combination with CGM and [Inaudible]. The brand has the potential to be cash flow breakeven as we approach 2023, and that's one of the things that we had a lot of discussion around is how to make sure we continue on Afrezza and also make sure it's not a drain on the company that can be self-sustaining in the years ahead.

Our [Inaudible] trial is increasing enrollment every week. We've got invited to an MIDD modeling session with the FDA for Afrezza potential label change. We continue to see good progress -- clinical data get published on Afrezza as we look out. I want to bring you to the next most important topic of the day, Tyvaso DPI.

This is near due and dear to our heart and we want to get this to patients as soon as possible. Unfortunately, the FDA requested information from United Therapeutics related to a citizen's petition very recently. The response that UT provided was solid and really well-written and considered a major amendment, unfortunately, to the NDA. As a result, the FDA extended this to May 2022.

There's not much we can do other than continue to feel confident in everything we're doing, be prepared for this, UT's running a great study. They have lots of great data on FDKP and the safety of it. So we feel very good about our response to the FDA and helping UT get this product to finish line. What MannKind is focused on is ensuring commercial product is available upon FDA approval.

And we also are anticipating continued expansion of the plant as UT has been running two additional trials for market indications down the road. And we want to make sure that we get well ahead of that in terms of supply and demand. I want to thank everyone for all their help and support over the past year. I apologize about the news this morning.

Not ideal, not that would be expected. However, I think we feel very confident about the resolution and where this is going to head over the next 90 days, and it's a minor setback in the grand scheme of this year and the grand scheme of life of Tyvaso. We're super excited to bring this product to patients, and we'll get it there as soon as possible. Steve?

Steven Binder -- Chief Financial Officer

Thanks, Mike, and good afternoon. I'm pleased to review select fourth quarter full year 2021 financial results. Please supplement this call by reading the Consolidated Financial Statements and MD&A contained in our 10-K, which is filed with the SEC this afternoon. Let's start by looking at revenues for the fourth quarter of 2021.

Afrezza net revenue was $11.3 million versus $10.1 million in 2020, a growth rate of 13%. The components of growth include a more favorable gross to net reduction percentage of 35%, mainly related to a one time reversal of a reserve for product returns from a retail pharmacy where we entered into a consignment agreement in the fourth quarter, plus price, a volume increase supported by patient TRx demand growth of 8%, and a more favorable mix of cartridges sold. Full year growth of 21% was driven by a more favorable gross to net reduction percentage, price, volume increase supported by patient TRx demand growth of 10%, and a more favorable mix of cartridges. Looking ahead, we expect the gross-to-net percentage for Afrezza to be approximately 40% to 41% in 2022.

Moving to collaborations and services, revenue for the fourth quarter was $1.2 million versus $8.4 million for 2020. Revenue in the fourth quarter was mainly associated with the remaining deferred milestone recognition, as discussed in the third quarter earnings call. We expected to have a more significant amount of manufacturing revenue in the fourth quarter from our commercial supply agreement with UT but the accounting literature guides us to where we can only recognize revenue associated with the agreement when we sell products to UT, which was not significant in the fourth quarter. Revenue associated with the manufacturing activities for 2021 was deferred on the balance sheet in the amount of $13.6 million as of December 31, 2021, which I will discuss at greater length in a few minutes.

As we continue manufacturing activities in the first quarter of 2022 to support UT's launch of Tyvaso DPI, we do not expect to recognize revenue associated with our commercial supply agreement in the first quarter, as it will continue to be deferred until we start to release products to UT, which we expect to happen in the second quarter. From a cash standpoint, we're able to invoice and collect from United Therapeutics for this manufacturing activity. Our full year revenue for collaboration services rose 11% to $36.3 million and consists mainly of revenue from our collaboration with United Therapeutics in the amount of $34.4 million. The graph in our next slide shows the quarterly Afrezza gross margin trends.

Our gross margin increased each quarter during 2021 and closed the year at 62% for the fourth quarter, even though the fourth quarter included $2 million of inventory write-offs. Approximately $1.3 million for the write-off of Afrezza run of cartridges that did not pass quality inspection and approximately $0.7 million for inventory we purchased from a retail chain when we entered into the consignment agreement in the fourth quarter. We recorded an inventory reserve for product that is at retail stores, but is not likely to be sold before its expiration. This inventory was repurchased at the wholesale acquisition cost.

Additional details associated with the consignment agreement in the fourth quarter had no gross margin because we repurchased the inventory at WACC, which became its cost basis. This negatively impacted our fourth quarter gross profit by approximately $0.4 million. Looking back to prior quarters, you may recall that we reported $2 million amendment fee in the second quarter of 2021, which also negatively impacted our gross profit and margin for the year. Looking to 2022, we expect to continue our favorable gross margin trend as we grow Afrezza revenue and start to manufacture commercial-scale Tyvaso DPI on a 24/7 basis, which helps absorb overhead costs.

I realized that the accounting for collaboration revenues associated with United Therapeutics has become complicated and confusing, so let me take some time to walk you through the manufacturing service's performance obligation with UT, which is how we describe this in our 10-K. The first line in this slide represents the cost incurred by MannKind associated with this performance obligation, which are recorded in our P&L. United Therapeutics is funding its costs. We have been invoicing this cost since the second quarter and have been collecting from UT.

The manufacturing services course, as shown in the first line, identifies the cost in our P&L, increasing from $2 million in the second quarter to $6.5 million in the fourth quarter as we gear up our manufacturing and support operations to prepare for commercial-stage manufacturing. A total of $13.8 million in costs was incurred by MannKind associated with this performance obligation, which hit our P&L in 2021. We recognized only $0.3 million in the fourth quarter for the sale of mainly Tyvaso DPI inhalers to UT. The remaining $13.6 million should have revenue to offset it, but we can only recognize the revenue associated with this performance obligation when we sell products to UT.

Therefore, we deferred the revenue which we recognize in later periods. Entering 2022, we expect to defer most of the costs associated with this performance obligation in the first quarter of 2022 and start to recognize revenue in the second quarter as we sell product to UT to support Tyvaso DPI launch. Deferred revenue will be recognized within the Manufacturing Services Agreement life, which currently runs into 2031. Let me conclude with some final comments.

Today, we filed an updated F3 universal shell to replace an expiring shelf registration statement. We also filed the new prospectus linked to our ongoing ATM agreement with Cantor Fitzgerald. We do not have plans at this time to access the shelf or the ATM. We have done this as a matter of good governance and financial management.

We ended 2021 with approximately $260 million in cash and investments, which we plan to use to fund our growing pipeline, which Michael will update you on in a minute, and a target investments behind Afrezza while looking for business development opportunities that are complementary to our business. Thank you, and I'll turn it back over to Mike for some final comments.

Michael Castagna -- Chief Executive Officer

Thank you, Steve, and thank everyone for all the help this year. So when you look at the MannKind pipeline here, we've updated the slide and I think this will be reflected on our website shortly. One of the first things -- a little bit more clarity to MNKD-201, which is a new reveal here, which people don't have this product. The brand name is called [Inaudible] and it builds over $3 billion a year.

Idiopathic pulmonary fibrosis is a very difficult disease to treat, and we believe that this product [Inaudible] can show hopefully equal or better efficacy with less of a side effect profile than exists today. We're really excited about this program. It's continuing to progress and the tox studies [Inaudible] exactly this, and we will need to look forward to continuing this. The other one here we talked about in the past is 501, and you can see we've refocused our pipeline.

I think it's really critical to do a few things well. [Inaudible] is going very nicely. We had a great meeting this week on just preparing on how we get to Phase II, file the IND, and accelerate the timelines as best we can so we can ensure this products get to patients as fast as possible. There's nothing else on this side of the program, so I'm going to progress to next slide on 2022 milestone.

As you see, every year, we try to lay out some of the key milestones for our investors to look at quarter by quarter, and then we generally scorecard ourselves against these milestones. For the rest of this quarter, you can see we've got Tyvaso DPI manufacturing, initiate our Phase I, and Afrezza ABC is already approved, which is now going to be [Inaudible] for a moment. As we get ready for Q2, I just want to make sure we have continued manufacturing, inventory management for United Therapeutics, and we get MNKD-201 and 501 in the PKPD studies and really look at the other models. Do we see any benefit at early stage or any talks that we can expect? And then in Q3, we should have the readouts for clofazimine, which will be the filing for the IND there in Q4 to get this into Phase II as soon as possible.

We take a step back. Number one, our job is to be stewards of the capital that shareholders are providing us, and we need to sit here and look and say, how do we best maximize our investments behind our growth drivers that are going to drive shareholder value? When you take a look back from 2017 till now, we've been able to take the company from $11.7 million annual revenue all the way up to $75 million this year. And over the last 24 months, we grew despite massive setbacks on COVID on Afrezza, as well as continue to keep our manufacturing team in place, growing against all odds in terms of COVID in work environment, getting through a really tough environment of the FDA inspection, preparing for hopefully a launch here in 2022. As we look to the future on the right side, our future is really bright.

We're super excited. We really have a lot of opportunity to drive shareholder value. On the one, we continue to expect Afrezza to grow. Number two Afrezza pediatrics will be a pivotal point and we think that will be an inflection of future for Afrezza once we get this data.

We've done everything we can to be the first time in the last 12 years where we've done large Phase III trial head to head, and we think we're dosing the product right and we should get exceptional results as appropriate. The one challenge will be the kids. The kids are unpredictable, so we have to get the data to feel good. We designed this trial based on all the inputs that we've done in the last four years and mistakes we've made in the past.

We expect to continue Tyvaso royalty upon FDA approval, manufacturing revenue, as Steve already talked about. Additionally, investors have placed little value on our pipeline, and we think as these programs continue to progress, there'll be additional interest either for international partners in some of the markets or continued opportunity that shareholders will get some value in our share price as a result of the efforts we're making in the pipeline. And none of this includes any new collaborations or international opportunities we're pursuing as we speak. So we feel very good about our future diversification of revenue and continued levers to generate shareholder value from here on through the next decade.

I want to thank everyone for their time and I'll open up for questions.

Questions & Answers:

Operator

[Operator instructions] Our first question comes from Brandon Folkes with Cantor Fitzgerald. Your line is open.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Hi. Thanks for taking the questions and congratulations on all the progress. Granted all the progress you've made at the business over the last few years, very strong capital position. How do you think about business development and maybe bringing in some more commercial assets in the near to midterm? Obviously you've focused the pipeline, but just with sort of the United Therapeutics, Tyvaso remains a big opportunity.

But how do you think about bringing in some more commercial assets that would be wholly under your control? Thank you.

Michael Castagna -- Chief Executive Officer

Thank you, Brandon. Great question, and we find ourselves in a really good position despite the news today in terms of business development. We've had lots of inquiries around opportunities and continue to evaluate those, and we do know there's a lot of single product companies that are struggling that are burning a lot of cash, and that there are ways to harmonize those infrastructures with the infrastructure we have. We'll continue to look for those opportunities.

They have to make sense. They've got to fit our strategy and they have to be good for shareholders. So we are open to those ideas and continue to be open. But those things also take time and energy, and we want make sure they're not distracting us from driving core value that we're doing.

But we do know there's a lot of companies that will be running out of money and assets that are -- that really need help and that maybe MannKind can be a place for those. So we'll continue to evaluate those things as they come forward.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Great. Thank you very much.

Operator

Thank you. Our next question comes from Gregory Renza with RBC Capital Markets. Your line is open.

Gregory Renza -- RBC Capital Markets -- Analyst

Yes. Hey, Michael, thank you for the update, and thanks for taking my questions as well. I just wanted to follow up a little bit on as you explore fleshing out of the pipeline and maybe just layering in some of the COVID-19 impacts. I think, firstly, as we sort of exit from pandemic/endemic in some degree of stability or normalcy, how do you think about the landscape for pulmonary partnerships? To what extent has the pandemic provided some learnings or opportunities where your technologies can kind of fit in to that scheme as a potential benefit? And then maybe secondly, to that respect to COVID-19, I'm just curious if you could provide some color of how you're seeing exiting omicron and how Afrezza trajectory could potentially look sequentially throughout the year.

Thank you very much.

Michael Castagna -- Chief Executive Officer

Now, all up in the night questions, I'll do my best. Greg, thank you. I think the first thing I'm thankful that clofazimine is where it is in terms of development, because in our discussion with the advisors, the number of trials backed up that are in pulmonary infectious disease are really high right now and therefore us getting very in line -- we're in Phase II right now, for example, would not be ideal. We'd be paying a lot of money for not a lot of progress.

And we see several other companies stuck in that situation where they're burning cash against the pipeline without a lot of delivery of patient. So we are optimistic that by the time clofazimine goes into Phase II, a lot of that backlog will be cleared out. And we are anticipating no resurgence of COVID this year. I'm sure there could be some pockets, but that's not -- we're assuming a more normal path forward as we go and we'll watch that before we go ahead and launch our Phase II trial for clofazimine.

In terms of the opportunity and partnerships, you saw we did a small deal with [Inaudible] Pharmaceuticals. They have an opportunity for COVID treatments. We've got several other COVID formulations last year, maybe 2020, when it first started. And if COVID is going to become more of a chronic annual thing that we've got to treat, one, I think our technology can be used for partners, whether that's vaccine boosters, it's -- medicine -- self-administration.

That's a great opportunity. But on the flip side, unfortunately, there are millions of people who now have damaged lungs, and that's going to probably expand some the market opportunity as we look out whether it's IPF or our COPD [Inaudible] indications that UT is going after. We think this is, unfortunately, going to be a growing segment, given the number of people who have it. So I think net-net, unfortunately or fortunately, COVID is not good for society but I think it will set up MannKind for a multitude of opportunity in the future.

I think that answers the question on the platform and how we're think about it, as well as our own products in development. On COVID-19 and Afrezza, that was one of our challenges as we look over the last two years. We had hired about 20-some people, maybe almost 30 people between 21 in 2020 in anticipation of getting out and growing faster. And unfortunately, with the opening and closing multiple times over the last two years, we weren't able to make as much impact with all the extra expense.

And as we came into this year, we were in the middle of COVID and we just weren't feeling like, is this thing going to go away or come back or are we shut down again? So we made the tough choice to kind of reallocate some of our expenses to where there are things that we can control, things that we can shut on or off as COVID changes. And that's how we're managing the Afrezza business. So the more confidence we have that COVID is not resurging and our reps are going to be locked out of offices, the more confidence we'll have in terms of continue to build back up that sales force as we get a new team in place, get all new marketers, all new managers, really good focused team who are driving us forward on Afrezza. And I think our first sales meeting in three years will be in a few weeks, so I'm really looking forward to that.

And I think coming out of that, Brendan, is when we -- sorry, Greg, is when we can start to see that continued growth that we start seeing right now that we expect to see coming out of that meeting. So I hopefully that answers a lot in there, but that [Inaudible] grow despite COVID, mainly because a lot of our business is private practice. We still need to get academic centers on board, and they've been the last ones to open up and continue to be the last ones to open up. So a lot there, but hopefully it gives you a little bit of clarity how we're seeing 2022.

Gregory Renza -- RBC Capital Markets -- Analyst

You bet. That's very helpful. Thanks for taking my questions.

Operator

Our next question comes from Thomas Smith with SVB Leerink. Your line is open.

Thomas Smith -- SVB Leerink -- Analyst

Hey, guys. Good afternoon. Thanks for taking the questions and congrats on the progress. Just one on Tyvaso DPI.

Any additional color you can share on the regulatory update this morning? I know UT is responsible for the regulatory interactions here, but can you talk about your expectations for the label? Any change in your expectations relative to the October communication where I think you'd see communicated the latest version of the draft labeling was for both indications with no box warnings or contraindications.

Michael Castagna -- Chief Executive Officer

Yes. Tom, thank you so much for joining us today and appreciate your question here. I think on the labeling, the short answer is we don't know, right? The FDA didn't give us an updated label. They haven't comment on any changes that they've seen in the last few weeks to get through this journey here.

I think if you take a step back, a lot of the citizen's petition is focused around bronchospasm and FDKP. I think the good news is we've had over 20 years of experience with FDKP, running it in trials and people with asthma, COPD, placebo. We have a lot of data there and I think being able to -- we're prepared to respond when we had to with UT. And I think we took all the information and packaged that up for UT and take that in front of the FDA.

So I think the short answer is we believe in FDKP. We feel it's safe and effective excipients. We don't believe the accusations in the citizen's petition to be fully true and portrayed the right way. And that we have a lot of data that that is kind of misleading the way they've structured their campaign, and I think that's important.

Probably 100, almost 200 patients in some of our trials where we retrospective identified them as having lung disease, severe asthma, and they were find there was a bronchospasm concerns or scarce. So I think a lot of this is due process being in time to go through everything, and we feel very confident that in the end, we'll get to a good spot, UT and our partners. And that's the label, what could happen? Who knows? But I think this is a really big opportunity. It's going to help a lot of patients.

And whether there's a label change, a warning, a black box, I don't think it's going to fundamentally change the needle of opportunity here in front of us at UT to help patients. These patients have severe unmet need. They're stuck on the nebulizer all day and this is really going to change the opportunity for them to really use an easy-to-use product our competitors are doing today. And we saw on the British study.

There's no safety concerns raised on those patients who had already underlying lung condition and that was just amplified to construct [Inaudible] some of the concerns that we have [Inaudible]. So we responded, we feel good and we do have a lot of data in COPD so that we don't see some of the bronchospasm [Inaudible].

Thomas Smith -- SVB Leerink -- Analyst

OK. Got it. Appreciate the perspective, and then just on an entitlement program, can you talk about the strategic rationale here? Just thinking about Nintedanib and I guess why you think this is a particularly strong fit for the Technosphere platform and maybe kind of compare contrast versus -- I think there's at least one other inhaled Nintedanib effort that's out there. Why do you think this is a particularly strong candidate for your platform?

Michael Castagna -- Chief Executive Officer

Yeah. I think when it came to this class of molecules -- there's two molecules, there's [Inaudible] independent. We were actually developing both. We did not move [Inaudible] forward last year.

We killed it, mainly because we felt the dosing was too high and there was another [Inaudible] out there and we didn't see a huge benefit relative to that product to our platform. On Nintedanib, we do see a big opportunity because it's got very little bioavailability and being delivered, a single cartridge to the lungs on a very simple way. We think with IPF, if you read the label of these products, they don't improve, life expectancy. The Kaplan-Meier is going to continue to show [Inaudible] delay and they may stop progression of that if you want, but these patients are not getting better.

They're not stabilized as much as anybody wants. And I think that's where we believe, hopefully, our technology, getting it directly into the lungs maybe it will help improve everyone, helps their quality of life, and maybe extend their life. It's a really tough disease. There's not a lot out there for these patients.

The market is littered with failure and we think deploying our technology with this molecule in a way that gets directly into the lungs will help improve patients lives. And whether that's going to be just the quality of life for the new [Inaudible], with their safety profile, I think the data will drive that up there. And then on the other program that's out there, we're aware of it. We watched it.

There's not much to say about it. I think we're well funded to continue to move our products forward. And that's what differentiates us. We have an FDA-proven platform.

We have manufacturer scalability and formulation know-how, and we feel very good about our ability to move these molecules down the road. I think that's something that also sometimes takes for granted, but there's a lot of work that goes into scaling up these products and manufacturing them in a way that could get them at the inspections [Inaudible] combo. So while I think that is, if you guys are great example and difficult to get to where we are, but we have not had many issues when it comes to the drug device combo or passing FDA inspections, and many drug counter products do not have that same luxury first [Inaudible]. So we feel pretty good about using our technology [Inaudible].

Thomas Smith -- SVB Leerink -- Analyst

OK. Great. That's helpful. Thanks, Mike.

Appreciate you taking the questions.

Operator

Thank you. And our next question comes from Steven Lichtman with Oppenheimer. Your line is open.

Unknown speaker -- Oppenheimer and Company -- Analyst

Hey, guys. This is David on for Steve. Thanks for taking the question. Just maybe one question on a follow up on the COVID impact.

Have you known -- have you seen any disruptions to your supply chain from employee absenteeism that could potentially slow down the manufacturing grant ahead of Tyvaso DPI launch this year?

Michael Castagna -- Chief Executive Officer

No, I think the team is really good about getting ahead of any type of supply chain challenges that affect 2020 be overstock nature enough. And the biggest thing is our PPE, equipment, stuff like that that was running short around the country. We were always able to continue to protect our employees and continue manufacturing. The biggest risk was all manufacturing line going down during COVID and training and skill up.

And I think, we've been able to avoid a lot of that. So less on supply chain, much more about disruption in the workplace. And as only the first week of January back, I think we had a few people go down at one particular week. But otherwise, it's been relatively well managed and I don't expect any major COVID challenges from here on out on the supply chain the U.S.

has announced. And then the only areas that it did impact, but I don't think it's a major issue, it's very minor is the number of [Inaudible] that we can manufacture or launch. And so I think that's more related to the chip shortage than it is a COVID issue. So that's it.

Unknown speaker -- Oppenheimer and Company -- Analyst

OK. Great. And then just one follow up. Is there any early insights or feedback from the primary care pilot that you can share at this point?

Michael Castagna -- Chief Executive Officer

Not yet. I think it's too early. We do have some early script data, we have number of prescribers. The only thing I can say that that's encouraging is I think the last two weeks, they've been speaker programs and they've been seeing oversubscription to 30, 40, 50 attendees per week.

And I do think when it comes to the primary care pilot, we're at that awareness stage. And when we did the research before we kicked it off, very few doctors, I think one or two heard of Afrezza and all they heard was it's an inhaler. So their awareness was very, very low of anything related to the product. So I do think it's going to be -- it's been about two months now.

So we should be coming out of the awareness stage among our top 10, 20 targets and hopefully into the trial stage. And I think that's we'll start to see uptake in getting people to try it, prescribe it, and then adopt it. And then within that pilot, we did find we had to correct. We were targeting a $35 cash pay with no prior authorization for Walgreens, and we didn't find there were some hiccups about the front lines.

And so we're trying to address that. I think that's been addressed and will be addressed this week so that was the only thing that may have slowed down some sort of adoption early on. But otherwise, the only thing I'd add is 90% of the scripts that we saw so far come in were actually reimbursed, which is a lot higher than we would have expected because this is targeting earlier lines of insulin treatment. We're hypothetically [Inaudible] a little bit harder, so we'll wait to see more data.

It's very early, but that was the one statistic I saw that caught my eye. It's a little bit different than what we expected so we're following that. We'll keep watching it. Thank you for the question.

Unknown speaker -- Oppenheimer and Company -- Analyst

Great. Appreciate the color.

Operator

Thank you. Our next question comes from Bert Hazlett with BTIG. Your line is open.

Bert Hazlett -- BTIG -- Analyst

Thank you. My questions have been answered. Thank you very much.

Michael Castagna -- Chief Executive Officer

Come one, Bert. Nothing? All right, guys. Thank you, everyone. Thank you for the questions.

I think it's really got to show the next couple months how this all looks. Get through the May deadline here with the FDA, but we're full speed ahead. We are not changing any of our plans. There's very little impact with the decision of the FDA for the company this year.

So we continue to march on and we'll continue to hopefully drive performance and help people with diabetes, pulmonary hypertension, lung disease, as well as get them into NTM as we launch that trial forward. So thank you to everyone. Thank you to our team here at MannKind for all the work they did on their pretty stressful circumstances and looking forward to successful 2022.

Operator

[Operator signoff]

Duration: 40 minutes

Call participants:

Michael Castagna -- Chief Executive Officer

Steven Binder -- Chief Financial Officer

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Gregory Renza -- RBC Capital Markets -- Analyst

Thomas Smith -- SVB Leerink -- Analyst

Unknown speaker -- Oppenheimer and Company -- Analyst

Bert Hazlett -- BTIG -- Analyst

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