MannKind (MNKD) Q4 2022 Earnings Call Transcript

MannKind (MNKD -0.24%)
Q4 2022 Earnings Call
Feb 23, 2023, 5:00 p.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to the MannKind Corporation 2022 fourth quarter and full year financial results earnings call. As a reminder, this call is being recorded on February 23, 2023, and will be available for playback on the MannKind Corporation website shortly after the conclusion of this call until March 9, 2023. 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 stated expectations.

For further information on the company's risk factors, please see their 10-K 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 call over to Mr. Castagna.

Please go ahead, sir. 

Michael Castagna -- Chief Executive Officer

Thank you, Lisa, and thank you, everyone, for joining us today. As we kick off, it was seven years ago this weekend that I decided to join MannKind, and unfortunately, seven years Alan passed away. It's been an amazing journey and one that was harder than anyone could have imagined. 2023 is special because it's the beginning of our new future growth plan.

We come closer to the goal that was thrown our way to play long against us. We are capitalized and prepared to enter our next phase of growth, and I want to personally thank all of our employees, our stock and debt holders [Inaudible] foundation trustees, and other stakeholders who support us through this journey. Our best years are in front of us, and I'm very excited to kick off our Q4 earnings call today. To remind people our mission is to give people control of their health and the freedom to live life, and we refer to this as Life More Humann.

This is never more true as we get right into [Inaudible] or the patient stories we hear from Tyvaso DPI's launch or the incredible feedback we get from V-Go, as well as the present. Every day, we are making people's lives more human and easier to live. 2022 was a revolutionary year for MannKind. If you look back at this time last year, we had one marketed product.

We're facing a delay in FDA approval for Tyvaso DPI, one compound in clinical trials, which is Afrezza for INHALE-1 that just started and a commercial revenue stream with just Afrezza. As we end the year, we have three marketed products, two we market and one that's marketed by United Therapeutics, two compounds in clinical trials with Afrezza INHALE-1 and halfway rolled out and kicking off to completing phase 1 and 4 commercial revenue streams. As we look, this is a revolutionary pipestone in the history of the company as we're approaching $100 million exiting 2022. Steve will talk about how that translates to the run rate as we go into 2023 and beyond.

When we take a step back, our collaboration royalties are up 20% versus last year. Our endocrine business was up 44% versus last year. These three new revenue sources are going to generate the capital required to continue to fund our growth and drive a difference for patients across the disease states that we're servicing. It's really exciting to look at Tyvaso DPI's early states with United Therapeutics.

When you look back a repeat quarter of last year, this has continued to be revolutionary as we go through these phases of launch. So, the first quarter or early 3Q, we're just getting some of the SKUs off the market, just getting this off the ground with United Therapeutics. And in Q4, you can see collaboration of services revenue is relatively flat, but the royalty revenue continues to grow. And the reason that's important is that the collaboration services revenue is relatively fixed as we continue to increase volume and productivity out of the factory for the world you should continue to grow.

So, that's something to keep in mind as we look -- it will fluctuate minor from quarter to quarter, but not dramatically different as we go forward. The EASD business and gross profit accelerated in 2022. When you look at our net revenue, it grew 44% and that dropped to the bottom line with almost 80% growth here from $22 million to $30 million in gross profit on the endocrine business unit. The reason this is important, we did this without any increase in COGS despite adding V-Go into our company and the cost associated with V-Go.

We've been able to keep COGS relatively flat and every incremental dollar starts to drop to the bottom line. We'll continue to look for efficiency as we look at combining this business and driving future revenue growth. Additionally, we had a small primary care pilot last year, which didn't go as planned and we exited that business and that money we [Inaudible] last year is being repurposed this year to drive future growth as NPL. Let me focus a little bit more on Q4 highlights.

When you look at DPI, we had strong agent demand, which is to bring our manufacturing revenue now into the future. Our royalty revenue grew 50% versus Q3. Our manufacturing capacity expansion has been in progress since just in Danbury last week, taking a tour. The pipeline is moving forward as we have one more FDA meeting here one on one, and we expect to move this asset into a phase 2/3 trial design in the second half of 2023, and we'll share more details sometime during Q2 and Q3.

We filed a pre-IND meeting request for MannKind 2.0, and we expect to see a feedback here shortly as we progress the team into a phase 1 study. As I look at our diabetes business, Afrezza grew 9% in versus '21 and 4% sequentially quarter to quarter. As I said, INHALE-1 will track. And you just saw yesterday, we announced the Afrezza Omega combination study showed favorable results in the first dose in office on a meal challenge test, and the full results of this will be presented later this year.

But the results we've seen in the analysis we've seen so far, have given us the confidence to want to kick off a larger phase 4 study as we really think about how do we capitalize and win on the investments we've already made historically in Afrezza, but really position us to be a leader to type 1 diabetes. V-Go had Q4 net revenue of $5.4 million. I will show you shortly, we stabilized that business and looking forward to it. We had $173 million in cash and cash equivalents at the end of last year.

With the purchase of V-Go and as the competition continues to stead way, MannKind is really the field time solutions company. Several other insulins that tried to launch over the last seven years, and they failed to capitalize on their innovation and drive meaningful patient differences. Insulin pump companies have continued to try to drive innovation. And what really happens is patients go from one to another pump to a pod, but they're also struggling with mealtime control.

At some point, we believe this product will fail on the market long enough as test and time on fee and the new day we have coming out over the 12 months, we believe sets this in terms of Afrezza's ability to help and solve the mealtime solution challenge that we have, and V-Go will really allow us help those type 2 patients that much better, and that has also demonstrated improvement and they want to see and quality of life. Some of the highlights we have for last year is number one, we bolted up our scientific understanding of the Afrezza. The results of these really came out last year or put into last year's work which they really be built over the last five years. And so, the dosing that we're using in INHALE-1 around the 2x round down was put into our pediatric trial, and we believe that's paying off dividends as we look at the first dose ABC results that were just released yesterday, but really showed you in the first two hours when you really care about [Inaudible] control, Afrezza does something amazing versus injectables.

And we think that hope it will translate out to dosing over route for each meal as you look at three to six to 12 months. The ABC trial will come out. Hopefully, we've submitted additional analysis of future conferences, and we've already published the DAS study, which was doubling our package insert dose. Our pediatric study remains on progress, and we'll continue to show you, hopefully, data showing how people can safely switch from an insulin pump to Afrezza.

And we've also shown that adding Afrezza to a pump is great, but there's no additional benefit despite people who are adding it will help improve mealtime control. On Afrezza, we've enhanced our agent support services. We continue to find ways to efficiency for patient reimbursement support, including that gap on prior authorization friction that happens in the [Inaudible]. We're several years with TS and [Inaudible] holders to ensure that inhalants was included in the Inflation Protection Act, and I'm probably one of the few drug company executives who were supportive of the fact because it really did help patients around insulin and Medicare coverage.

We also improved our product dating, which people may not realize the 36 months from 24 months. And the reason that's important is a good percentage of our gross to nets are related to product returns, and we believe over time, as demand picks up and dating makes sense have allowed the returns come to tell. That will happen over time. On V-Go, we purchased this asset in the second quarter.

We may just focus the team at Keppra for 2022 as we integrated it into MannKind. And finally, within Q1 of this year, we prepared for that integration, and this is now being launched through our entire Afrezza sales force. One of our key focuses last year was driving market share of new prescriptions. And you can see our NRx growth quarter over quarter continued to grow from Q1 through Q4, where we exited with 17% growth year over year on NRxs.

As I look at just Q1 to date, [Inaudible] our for 24% growth over the first six weeks Q1 versus Q1 of this year. We continue to see positive momentum on [Inaudible] which translates to TRxs over time, but this is our leading indicator of how we expect our business to perform. As we look at V-Go, again, back to NRxs, you can look V-Go has been on a really long decline. We purchased this asset in Q2, got it ready in Q3, and stabilizing Q4 on NRx, and we look to expect NRxs to grow here in Q1.

But most importantly, that will now translate to TRx stabilizing and ultimately growing as we look forward to the rest of this year. [Inaudible] segment in these two products is critical to our success. We've really positioned Afrezza for type 1 younger population, commercial insurance. Even though we now have Medicare, that's great because 20% of our sales are Medicare, 40% market is Medicare.

But at the end of the day, we want to make sure we continue to win and lead on type 1 diabetes. Additionally, we continue to find ways to improve our gross to net by shifting our sales to specialty pharmacies through direct purchase agreements and making sure that patients have a better service when they receive our product. On the V-Go side, it's definitely a type 2 product, older population, which is about 60% Medicare in the case of V-Go. And in 2023, we've now put this in a future position for Afrezza and its potential V-Go territory selling this asset.

As we look over the next 12 to 15 months, there are several key mantras coming out. Number one, we have the kickoff of InHealth really has occurred with AATD. We have a BluHale launch, which is really integrating CGM into a technology platform that attach to the Afrezza device and that will start to read CGM along with Dupi and be our first kind of platform as we start to think about how to incorporate AI into our future predictive dosing. This is a 1.0 version, which will continue to grow as we invest in technology behind that diabetes care.

We expect simply to read out a phase 2 trial, which we're calling INHALE-2 type 2 diabetes. And then assuming BluHale, the limited launch goes well. We just started with a full month here in the second half of the year. We expect the INHALE-1 pediatric study to be enrolled by the end of this year and INHALE-3 deploying sometime in the end of the year and early next year, but the readout should follow about three months later.

Now I'm going to turn it over to Steve who's been a phenomenal partner with me over the last six years. Thank you, Steve. 

Steve Binder -- Chief Financial Officer

Thanks, Mike, and good afternoon. Pleased to review the select fourth quarter and full year 2022 financial results. Please supplement this call by reading the consolidated financial statements, MD&A contained in our 10-K, which was filed with the SEC this afternoon. We're very proud of hitting the $100 million mark in total revenues for 2022.

I just showed our transition as a company with one source of commercial revenue to a company with multiple sources of commercial revenue. Let's start with the fourth quarter [Inaudible] table, and then we'll come back to the full year results. Net revenue was $12 million versus $11.3 million in 2021, a growth rate of 6%. The growth was mainly driven by higher patient demand with underlying TRx growth of 9% year over year.

In previous quarters, I have been discussing the adverse impact of the lowering of post-sale inventory levels, which impacted our revenues for the first three quarters of 2022. We can now confirm that we saw the bottom out of this in the third quarter as expected. Year to date, Afrezza growth came in at 11%, which was mainly due to favorable price, higher product demand, and a more favorable cartridge mix. Our gross to net held steady at 39% year over year.

This is [Inaudible] V-Go where we had $5.4 million of net revenue for the fourth quarter and $12.9 million for year to date, which represents seven months of June through December. We continue to see V-Go net revenue tracking at the high end of our forecast range of $18 million to $22 million for the 12 months post-acquisition. Moving to collaboration services. Revenue in the fourth quarter was $9.5 million versus $1.2 million for 2021.

The main driver for the fourth quarter 2022 collaboration revenue is associated with the manufacturing of United Therapeutics while this 2021 revenue was impacted by the end of the amortization of DCI R&D milestones and delaying the FDA approval for the drug, which meant that we had to defer revenue until we can manufacture commercial products and sell to UT. The full year revenue of $27.9 million largely reflects manufacturing revenue recognition that began in the second quarter and is lower in 2022 versus '21 because of the prior-year UT milestone amortization and the first half 2022 deferral of revenue associated with the delay in the start of commercial manufacturing. In addition to UT-related revenue recognized in 2022, we had $37.9 million of deferred revenue on the year-end balance sheet associated with TRx activities, which will be recognized to income through 2031, which is the remainder of the universal supply agreement with UT. I will review this in further detail in a few minutes.

Lastly, we recorded book fees on net sales of Tyvaso DPI by United Therapeutics to their customers. The $9.1 million royalty recognized for the quarter is almost 50% higher than the third quarter and demonstrates strong demand for the product. We have recognized $15.6 million in revenues for product launched by UT in June. The next slide shows 2022 growth on a quarter-to-quarter basis.

This graphic really shows the change in our company this past year, growing total 20% from first quarter to fourth quarter. The second quarter of 2022 marked a change to multiple sources of commercial revenue when we began to benefit from commercial production of Tyvaso DPI, the launch Tyvaso DPI by UT for which we are in low double-digit royalties, and the purchase of V-Go. As we exited 2022 and lean forward to 2023, our fourth quarter run rate of $36 million is almost halfway to $200 million in total revenues. Now let's look at the profitability of our endocrine products, Afrezza and V-Go.

Afrezza gross margin increased from 62% in the fourth quarter of '21 to 92% in the fourth quarter of 2022 and the gross profit associated with Afrezza increased to $11.1 million in the quarter. The increase in the fourth quarter gross margin versus 2021 was due to a decrease in cost of goods sold, mainly from lower inventory write-offs, lower cost per unit, lower excess manufacturing capacity costs and a high level of manufacturing activity in the fourth quarter of 2022, which capitalized a higher amount of cost of inventory, plus an increase in Afrezza net revenue. When looking at the profitability for the full year of 2022, Afrezza had a gross margin of 80% and gross profit of $34.6 million, which were both markedly improved in 2021. The main drivers of the improvement were lower cost of goods sold, meaning from a decrease in excess manufacturing capacity costs which is a benefit from Tyvaso DPI production absorption, lower cost per unit, a $2 million fee incurred for an amendment of our insulin supply agreement in the second quarter of 2021 and lower inventory write-offs plus increased net revenue.

Please note that there will always be some variability in Afrezza gross margin between quarters due to the timing of manufacturing spend and activities as we are not yet at maximum production capacity. The far right table shows V-Go year-to-date gross margin of 43%, which has remained consistent quarter to quarter since we acquired the product. 2022 was the year focused on the commercial manufacture of Tyvaso DPI at our facility in Denver and Connecticut, but we were also focused on increasing the efficiency of our current manufacturing lines, as well as building out increased manufacturing capacity. These activities led to both Tyvaso DPI revenue being recognized, as well as being deferred in 2022.

The left-hand side of the table shows our revenue recognized for the year. Revenues mainly associated with the manufacturing of Tyvaso DPI and activities for the next-gen R&D services totaled $27 million while royalties accumulated $16 million in revenue for a total of $43 million in Tyvaso DPI-related revenues for 2022. Moving to the right side of the table. We started the year with a deferred revenue balance of $19 million and added another $19 million in revenue deferrals, mainly associated with the Tyvaso DPI facility expansion, manufacturing process improvements and pre-commercial activities.

We expect additional revenue deferrals in 2023 while conducting activities paid for by UT related to the facility expansion and further manufacturing process improvements. Please note that UT is paying MannKind promptly for all activities where the revenue was recognized or deferred, so cash flow is not adversely impacted by any of these activities. Let me conclude with some final comments around the liquidity. We ended the fourth quarter with $173 million in cash, cash equivalents, and investments, a decrease of $5 million from September 30.

We achieved this low level of cash burn because of the fourth quarter collection of monies owed to us from UT New Zealand that were outstanding at September 30. Looking ahead to 2023, we expect to reduce our cash burn as we benefit from the impact of increased cash flows from our collaboration with UT and reduced cash burn associated with our endocrine commercial business unit as we move that unit toward profitability. But also note that we'll be increasing indention behind the development of our product pipeline which is quickly becoming our next lever of shareholder value. Thank you, and I'll turn it back over to Mike.

Michael Castagna -- Chief Executive Officer

Thank you, Steve. So, as we look at MannKind's products and pipeline, you continue to see this get bolstered year after year. Afrezza is now on track to hopefully get forward to IND filing this year, pediatric wrap-up, and V-Go's launch. On the pipeline, what people don't appreciate is how much time it takes in the early stages of the pre-IND formulation and getting the dosing right and a tox data right in order to progress these into phase 1, 2, and 3.

Rest assured 201, 301 and 501 had a lot of work behind them that we will start to see the fruits of that labor over the coming couple of years. Right now, 101 has been full speed ahead, 201 is right behind it, and hope to share continued updates with you on 301 and 501 as we go forward. This pipeline momentum over the next 24 months, whether it's the endocrine business or the orphan, you can see we have two major pillars of continued momentum that will drive shareholder value over the coming quarters. I won't go through each one of these, but you can really start to see how 101 and 201 in the pipeline really start to march ahead and MannKind build out the scientific agenda.

I won't spend a lot of time on V-Go, but a lot of people ask me when you bought it, what else are you planning to do. We continue to drive innovation and ideas around how do we create other opportunities for this device to biosimilars, buy and build, or just clinical improvement with slow infusion. As one of our thought leaders behind V-Go said, if you were to go lawn and put a big hole is in one spot, you get bud. When you spread that out over the lawn lot, you get green grass.

I think that's one of the reasons you continue to see V-Go improve people's A1C and you're spreading that bolus in that base over a long period of time and continue to spread that water over a larger space. I think that's important, and we think there's other ideas that we can generate as we continue to allocate time, energy, and money to this product. A lot of people ask me, have I missed the run-up with a company where is MannKind going? I think as we step away and look out, we see three key value drivers: Afrezza growth and V-Go growth, number one; number two, Tyvaso continues to grow in new patients, conversion, and improved coverage through Medicare, as that donut hole closes in '24 and '25. Additionally, there's a large upside to that TETON study readout positive by United Therapeutics.

And then you have the pipeline progress which is 101, 201 and any other additional BD opportunities that we've come our way, we anticipate any other partnerships that we could put on the platform. So, that's fourth pillar growth. But at the end of the day, we really look and see there's lots of upside from where we go. When you look out over the last five years of history, every year, we've continued to end on a higher note than when we started.

And I think that's critical to our future success and believing in our shareholders and what we're doing to continue to allocate capital and do a great job for everyone who is a key stakeholder of MannKind.  And I want to say thank you again for all the work everyone is doing, Steve, for your partnership, but it really feels great to be through that transition of capital balance sheet challenges, product innovation, and business development. We are now a self-sustaining, fully integrated, midsized pharmaceutical company, and it feels really good to kind of close out '22 and kick off '23 being in that position. So, thank you, and we'll open up for questions, Lisa. 

Questions & Answers:

Operator

Thank you. [Operator instructions] First question I have is coming from Brandon Folkes of Cantor. Your line is open. 

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Hi. Thanks for taking my questions and congratulations on all the progress this year and the last seven years. Maybe just two for me. Just any update on the Tyvaso manufacturing inventory scale? Just given comments from UT about sort of how they view that product longer term.

How should we think about manufacturing scale up there? And then secondly, on the ABC trial, can you just talk us through how we should think about the revenue pull-through from the readout obviously recently and then later this year? And then I have three anyway. Any very early feedback you got from the last two days since that press release? 

Michael Castagna -- Chief Executive Officer

Brandon, last question is any feedback? 

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Since you put out the press release on the -- 

Michael Castagna -- Chief Executive Officer

OK, sure. So, I'll take each one of those. I think on the manufacturing inventory listed by United Therapeutics yesterday, I think one of the things I heard was the order patterns had some impact, but also the pharmacy days on-hand inventory. And the demand has been very strong on Tyvaso, which is great, but it also puts a lot of stress and strain on our manufacturing.

We've been able to stay well ahead of the demand, but that has not allowed people to build as much inventory as they want as we continue to -- production goes right in. We can modify each week on which cartage strength we fill, which pack-size that we sent to the packager. But we haven't reached full capacity manufacturing yet as we continue to look over the last six months. There are definitely lots of things to work through in the equipment and scale up that have been worked through, and we consistently expect Q1 to show a much more consistent, I'll say, productivity impact in Q1 versus Q3 and Q4.

We don't anticipate any inventory issues. We continue to stay well ahead of demand. And I think you'll continue to see that productivity out of our plant and the efficiencies this year, so we're doing things to add additional production capacity just in case demand continues to go faster than we would anticipate. Remember when we built a factory and that we made Tyvaso DPI, we made it for PAH and ILD at a time when the new team was doing $400 million, $450 million revenue with ILD expected.

Obviously, that product is now well and away from $1 billion-plus this year. And we want to make sure we continue to stay well ahead of that ability to convert as much of that as you can do. So, we don't anticipate any issues and the factoring build-out itself. Again, we expect that to be completed later this year.

Part of it will require an FDA inspection and we'll just deal with that when that time comes. But we don't need that factory expansion to complete in order to keep ahead of supply. So, we're pretty good with that there. The factory expansion is really to handle IPS demand that could come in '24 and beyond.

And so, we're well ahead of that readout for that clinical trial. On the ABC trial, in terms of revenue pull through, the way to think about this is a pilot study that I've been wanting to do for many years, showing that you don't need insulin pumps that they're not adding as much control as people think. And every doctor you talk to believes top therapy is the best you could do and that there's nothing better. Even though there's very little head-to-head data showing pumps are better than multi daily injections.

In fact, I believe there's a data set, I don't know if it's public yet, but it should be this week at TTP that all the benefit of IDs is happening in the first day. And so, really, you get the bolus of improvement and then it kind of stops. And we think that the diabetes burden of wearing a pump wherein a CGM is really starting to wear out people as they live with this disease and pumps for 20, 30, 40 years. They're running out of real estate on their skin.

They're having scarring. There's a lot of issues because we do believe there's an opportunity that's going to be created over the next one or two years. When the data piece reads out, that's our pivotal phase 3, the next question we're going to get is what about insulin pumps. So, we're trying to get ahead of that question by running this larger PUP switch trial, which will switch patients off of MDI and pumps and run head-to-head at the end of the day.

So, we'll have more design on that phase 4. Now there's an advisory meeting this week at ATTD, and I'll give that feedback next week. But I would say the feedback so far, the data has not been presented until Saturday. But the feedback at the conference and the word about MannKind have actually been really nice, and we're hearing really good things from people we were asking about.

So, that's the only feedback I have so far. The data set has also not been presented yet.

Brandon Folkes -- Cantor Fitzgerald -- Analyst

All right. Thanks very much and congratulations again.

Operator

Thank you. One moment while we prepare for the next question. Our next question will be coming from Steven Lichtman of Oppenheimer. Your line is open. 

Unknown speaker

Hi, guys. This is Ron on for Steve. I was hoping you guys can -- I saw you're going to launch BluHale next month. Last time, you talked a little bit about the chip shortage, and I wonder if you could give us an update on how that was resolved and how you're looking forward.

How are you looking at that looking forward? And how are you preparing for the launch, considering that? And also, I can have a short follow-up, that would be great. 

Michael Castagna -- Chief Executive Officer

Sure. On BluHale, the chip shortage, I don't believe is an issue. I think there's other parts that became obsolete that we're updating and we work in the device a little bit. So, all that's working through.

But I think we have devices right now to kick off the pilot, and that pilot is really going to drive the human factors, and the insight feedback will drive the launch investment and/or plan in the second half. I think what's really like this is the first time where we're going to have dosing and Dexcom CGM integrated as we talk about going into type 1, we do think providing those insights to a patient and to a provider are really important, and that's something has pipe from type 2 to type 1 on Afrezza that this is going to be a critical device in the second half, assuming we get positive patient feedback. So, that's -- we don't anticipate any type of shortage in the next 1,000 devices to launch. We think that will be fine at this point what we can see.

Unknown speaker

OK. Thank you so much. And then you said you're -- this is going to be integrated with the Dexcom. Are there any plans to integrate with any other glucose monitors? Or are you going to stick with Dexcom on the whole?

Michael Castagna -- Chief Executive Officer

No. I think Dexcom is the easiest because they have open APIs, and we are able to work with them and get that agreement done. I think Libre is obviously the next big one, especially Libre 3. And also, Senseonics now that they're getting to the one-year sensor and starting to launch that.

That will be a nice opportunity to look at some Calix as well. So, we want to be platform agnostic at the end of the day from CGM, but we do believe CGM is something that's really important.

Unknown speaker

OK. Thank you. Congrats. Thanks, Steve.

Operator

Thank you. One moment while we prepare for the next question. Next question is coming from Anthony Petrone of Mizuho. Please go ahead.

Anthony Petrone -- Mizuho Securities -- Analyst

Thanks and congratulations to the team on the execution. Maybe one on BluHale, just when you think of sensor opportunity, you certainly have some synergies with Afrezza. Just want to confirm, is that going to be also used with Tyvaso? And when you think of the ability to monitor inhalation and usage, how do you think that plays out over time? If you're capturing that data, do you get better drug adherence, and ultimately, does that drive better consumption down the road? And then I'll have a few follow-ups. Thanks.

Michael Castagna -- Chief Executive Officer

Sure. I think BluHale has been a long time coming and had lots of headaches as you're driving innovation. These types of things take time. But I do think your one question/comment is critical, which is especially on Tyvaso and Afrezza, when you're using something for the first time as we continue to improve the number of new doctors prescribing, new educators utilizing and training, people sometimes, especially on like the lower dose cartridge, you don't feel any powder going into the lung.

You're like, "Did I get my dose?" And so, showing proper inhalation technique and registering that dose that was taken, I think, improves people's confidence, and that's one of the things we saw early on in our user trial with healthcare providers was it improves their confidence in training and ultimately their success with the patient dramatically. And so, I do think that's not just for the patient, but also for the provider for them to start to see that data, the compliance of that, looking at that overlaying with CGM in the case of diabetes, we think will be important. And long term, I just think -- I look at what One Drop has done with data, collecting data sets and predicting outcomes over time. I think this is where we want to go.

We think data in healthcare is going to be critical and starting to collect this data and build out the skill set capability. We're in volume 1.0. We have a long ways to go, but this is the beginning of this year to really start to think about -- no better modeling in sugars and data collecting on sugars and predicting what's going to happen with the dose you took. And so, we think there's a lot there that will continue to evolve as we start thinking about data scientists and other types of people that we don't have here yet.

On the UT side, I don't want to comment for them other than they are using the pro version, which is the healthcare provider edition to show proper inhalations technique, and that is launched. And I believe they will also continue to want biz for their -- what they're doing in their PAH. So, I don't want to speak to that, but I'll let them communicate that. 

Anthony Petrone -- Mizuho Securities -- Analyst

That's helpful. And then follow-ups would be on endocrine studies, you think of pediatric, but also the India trial at JPMorgan, you put some math around this. So, for every 10% market share impedes, it's $150 million revenue opportunity or TAM opportunity, let's call it. When you think about that in type 2, obviously, much larger patient pool.

So, is there an equivalent number of 10% in type 2s, which could be facilitated by India? How should we think about that number? And is the right way to look at it is share gains from GLPs? And I have one last one. Thanks. 

Michael Castagna -- Chief Executive Officer

Sure. So, on the PGS, I would say that's roughly a good estimate number, but every 10% share rapid act in kids alone in the U.S. will be about $150 million net revenue to MannKind. So, that's why when people say, why don't you invest in a trial now because we want to set [Inaudible] for success.

This year your transformation for terms of tightening up really put some profitability and moving the branding or strong positioning between the two assets. But next year, when all the stuff starts to read out, we start to prepare for launch, we think these are the right questions and the right answers have data around to ensure we could achieve 10%, 20%, 30% market share in kids. There's going to be a huge spillover effect as you're successful in kids into adults. And so, that number is just for kids.

You can also think about these kids turning 18, 20, 25 they're going to start to go over the old market, and that's going to have a compound effect back into the second half of the decade. So, we have a long-term view on this asset. We've taken a long time to get to where we, but we do believe we're finally at that point, we're assuming all the data read out as we expect, I think, to be very, very exciting on inhaled insulin going forward. On India, the way I think about India is it's going to be a very low-margin business, but there's 81 million people living with diabetes, and the long-controlled way at the beginning and expanding over time to free up the cost.

But the real benefit for us is on FDKP, which we've already, utilizing our factory capacity that's not right now for the U.S., any version of in that we've already purchased. So, these are things that ultimately, when you look at year over year, it's more profitable because of the fact that becomes more efficient with Tyvaso happening benefiting United as much as MannKind as we launch India production in the factory in 2024. So that's how I think about India's efficiency play, utilizing some cost and getting some of that recouping some of those investments we've already made. And then on the type 2 market, I think one thing that'll play out over the next year is here in the U.S.

is the GLPs have had tremendous success. The weight loss category is growing. And that's really insulin, either declining the market or pushing it later. And I think what people are going to see is that despite all the great success of GLPs, patients are still going to need mealtime control.

They're still going to need to get some extra help there. And I do believe that Afrezza's going to play a role in that. But at the side, as we look at our progress for the year, do we want to do a study using Afrezza on top of GOP where we have no data? Is that something either investigator does or something we want to do? That's kind of the next way we think about diabetes is. The other thing is as we get to in type 1 and become the brand of choice, we know those doctors will automatically use Afrezza in type 2 by default.

So, there's somewhat of a really, it's not as versus if I was to type 2, they don't think about type 1. But it does work in the first place.

Anthony Petrone -- Mizuho Securities -- Analyst

That's a pretty last quick one. Just Apple made some news this week about potentially hopping in here. You're collaborating with CGM providers. I don't know if you have any sense you can add on some of the news that came out of Apple.

Thanks again and congratulations. 

Michael Castagna -- Chief Executive Officer

Yeah. Thank you. Look, I think Apple, Amazon guys continue to get bumped in healthcare technology and healthcare data at the end of the day. And I think where we're going BluHale, back to your question, having that data, being able to have that data to predict where people are going to have to go and start to think about outcome contracts.

I mean everyone is looking at ways to drive better outcomes at a lower cost, you stated to help that. I think it's premature for us to think about where would Apple be in five years because I go back to my stage at Novartis, where we were going to have a contact lens that was measuring who goes with Google, if I recall, and that never came out, right? So, there's a lot of excitement, but it takes time for this innovation to happen. And healthcare is not easy feat to kind of enter into, but we'll keep watching it.

Anthony Petrone -- Mizuho Securities -- Analyst

Thank you.

Operator

Thank you. One minute while we prepare for the next question. The next question will be coming from Gregory Renza of RBC. Your line is open.

Gregory Renza -- RBC Capital Markets -- Analyst

Great. Hey, Mike and Steve, congrats on the year on the progress. Mike, just maybe a quick one. As you build on the success of Tyvaso DPI of course, what we all know about the potential option to license the platform for a second PAH product with UniTher.

And I know the pro levers of you and Steve are describing really while the pipeline launches over the next several years, I'm just curious how you think about some of the parameters or potential with a second license with UniTher and how that potentially factors into some of your goals about one indication or product per year over the next several years in your pipeline? Thanks so much. 

Michael Castagna -- Chief Executive Officer

Yeah, great question. And I think over time, we've -- Tyvaso is going to be so large as we talk about ideas with UniTher, yes, we want to make sure that, that gets off right book because whether that's assets $1 billion, $2 billion-plus, I think that's really UT's purview, we want to make sure we can make supply and be ready for it and not distract our collective teams on that one. I do believe that over time, we will find other ways to help our patients. I know Martin is dedicated to that focus, and we continue to assess opportunities that come to us through them or PAH and any other areas that they're focused on.

I would say, in general, MannKind, we've gone through a pretty deep assessment with our Board in the second half of last year around how much energy do we want to continue to put in the platform in terms of going out and seeking partnerships through large pharma, midsize pharma versus continue to innovate our own assets. And we decided that our real focus is bringing our assets forward as fast as possible a decade to double down on new ideas within our platform or other platforms that we see out there and less so on trying to drive more portions. So of course, everything is the next-door deal, but I think we've picked a lot of the key opportunities already to develop inhaled therapeutics that we think can make a difference. And now our focus is really on even earlier stage innovation as we get out there and think about 2030 and beyond, it's probably not a repurposed asset.

It's probably an NCE in some more time condition. And that's kind of -- people look and say, where are you in '23? These decisions we made three years ago, in '24 made three years ago. So, we're working on focus for 2030, 2028. We feel like the pipeline is enough to drive a lot of innovation forward in the next couple of years.

But that does not mean every -- like every day, the last couple of weeks, I've had an inbound business development whether it's can we work with you? Can we work? Do you want to sell something? But there's a lot of activity out there happening. There's a lot of companies out of money or refocusing their strategy and divesting noncore assets. And so, we'll keep looking, but we feel pretty good about where we stand and driving that future for value.

Gregory Renza -- RBC Capital Markets -- Analyst

That's great, as always. Appreciate the color. Thank you.

Operator

Thank you. One moment while we prepare for the next question. And the next question will be coming from Tom Smith of SVB. Your line is open.

Unknown speaker

Hi, everyone. This is Mike on for Tom. Are there any gating factors remaining for the adaptive phase 2/3 study of clofazimine expected in the second half of this year? Can you briefly describe kind of the planned study design? And how quickly do you imagine we could start to see data from that study?

Michael Castagna -- Chief Executive Officer

How quickly? I'm sorry. 

Unknown speaker

Could we see data from that study?

Michael Castagna -- Chief Executive Officer

OK. I don't want to comment too early on some of the study details yet either for competitive reasons that we're still finalizing that. But what I would say is the gating factors are really twofold, one, open up the IMT; and two, just working with the international regulatory bodies to make sure we can import drugs and hope the trial sites activated. Those are the two biggest gating factors.

We are pretty close with the FDA in terms of some of the last-minute trial details we focused on. And in particular, there's a quality life metric that people want to know about NTM and then there's the assumption on sputum conversion. And so, you can expect the trial design will incorporate some of those features. And I can tell you it will not be established patients.

We're looking at earlier treatment patients who were on general background therapy, so we're not going after naive. We felt that would be too hard to enroll and too expensive relatively to the time it would take. And so, we're looking for earlier stage people not responding on GPT in a global way, so will be U.S., some places in Europe, Japan, South Korea, and Australia are the key areas. So, we're focused on quality of the patient consistency, the patient type and ones that aren't necessarily the Arikayce treatment that are the sickest that may not respond to anything, but really trying to get a little bit earlier in treatment.

No other gating factor is just getting the IND filed which requires us to get the manufacturing GMP batches [Inaudible] and break that document up to get that fitted, which the teams will feed ahead on should happen in late Q2, early Q3, hopefully. And once that's filed, that will be the last thing before we can investigate and keep this off. 

Unknown speaker

Understood. Thanks very much for the color. And then just one kind of follow-up. From a modeling standpoint, how should we be thinking about the trajectory of SG&A moving forward both throughout 2023 and over the next couple of years just based on the commitment to V-Go relative to the Afrezza sales force restructuring? 

Michael Castagna -- Chief Executive Officer

I'll let Steve take that.

Steve Binder -- Chief Financial Officer

Sure. I think SG&A, we don't talk too much about forward-looking financial information. We don't currently have large GAAP plans or plan scale-up. However, if we see opportunities, such as the trial readout that come around, we may put money behind our endocrine business.

And so, what I would say is TBD, but we'll see how it goes. 

Michael Castagna -- Chief Executive Officer

The thing I would add to that, Mike, is pediatric spec gets closer, we don't need to add a bunch of expenses. There's about 500 [Inaudible] in the country that make up the majority of the pediatric market. So, when you think about the investment for the future indications, it's not a huge infrastructure. We won't have the people, maybe we add another over 10.

But I think if Afrezza keeps going the direction it's going, there's an upside, but got low market share there that we can hire another 200 reps. We don't do that because we're trying to make it profitable. We see a real growth opportunity to expand our growth faster. We can do that.

And we've added three or four new territories this year alone in markets where we've never had a sales rep in. So, these are the opportunities we'll look forward to, but we're not -- we're looking to keep things relatively stable and a drop in revenue to the bottom line as we go forward.

Unknown speaker

Understood. Thanks very much.

Michael Castagna -- Chief Executive Officer

OK. Thank you.

Operator

Thank you. We'll now turn the call back over to Mike Castagna for closing remarks. Please go ahead, sir. 

Michael Castagna -- Chief Executive Officer

Thank you, again, everyone. Thank you for the questions. Thank you, Anthony, for joining us for the first time. It's good to hear some new analysts come in.

I think that's important as we think about the next phase of the company, a lot of the questions we're getting is new investors, is really around the pipeline, the future, and what's next. And so, we're excited as we anticipated that we think is there and attendance right behind it for us to start off the year strong. V-Go, we'll watch over the next six weeks as we just launched that in the sales force. But otherwise, super exciting before to hopefully wrap up Q1 in six weeks and share that with you in the next quarter here.

But otherwise, just thank you, everyone, for everything, and we're always here to answer your questions and hopefully keep creating value with helping patients. 

Operator

[Operator signoff]

Duration: 0 minutes

Call participants:

Michael Castagna -- Chief Executive Officer

Steve Binder -- Chief Financial Officer

Brandon Folkes -- Cantor Fitzgerald -- Analyst

Unknown speaker

Anthony Petrone -- Mizuho Securities -- Analyst

Gregory Renza -- RBC Capital Markets -- Analyst

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