MANNKIND CORP

Previous wording

We are currently running two open-label randomized clinical studies of Afrezza. INHALE-3 is a Phase 4 clinical study evaluating the efficacy and safety of Afrezza combined with insulin degludec versus usual care in adults with type 1 diabetes. The results of the first meal dosing data for INHALE-3 were published in Diabetes Care in July 2024 and the 17-week randomized treatment phase top-line data was presented at the American Diabetes Association conference in June 2024. We plan to present additional data at the Association of Diabetes Care and Education Specialists conference in August 2024. INHALE-1 is a Phase 3 clinical study evaluating the efficacy and safety of Afrezza in combination with basal insulin versus multiple daily injections of insulin in children and adolescents aged 4-17 who are living with type 1 or type 2 diabetes. A primary endpoint analysis for INHALE-1 is expected in the fourth quarter of 2024, with full results expected in the first half of 2025 and a planned FDA submission for a label expansion in 2025.

Current wording

We are conducting a Phase 3 clinical study, known as INHALE-1, evaluating the efficacy and safety of Afrezza in combination with basal insulin versus multiple daily injections of insulin in children and adolescents aged 4-17 who are living with type 1 or type 2 diabetes. A primary endpoint analysis for INHALE-1 is expected in the fourth quarter of 2024, with full results expected in the first half of 2025 and a planned FDA submission for a label expansion in 2025.

Previous wording

The lead program in our pipeline of potential treatments for orphan lung diseases is MNKD-101, a nebulized formulation of clofazimine, for the treatment of severe chronic and recurrent pulmonary infections, including nontuberculous mycobacterial (NTM) lung disease. We believe an orally inhaled formulation of clofazimine could potentially provide several clinical advantages over the current solid oral dosage form, including directly targeting the site of the infection while lowering the systemic exposure of patients to the drug. The FDA has granted MNKD-101 status as an orphan drug and as a qualified infectious disease product for the treatment of pulmonary NTM infections. It has also granted Fast Track designation to our development program. In June 2024, we initiated a Phase 3 study that will investigate the potential of MNKD-101 to treat NTM lung disease. We expect enrollment to commence in the third quarter of 2024.

Current wording

The lead program in our pipeline of potential treatments for orphan lung diseases is MNKD-101, a nebulized formulation of clofazimine, for the treatment of severe chronic and recurrent pulmonary infections, including nontuberculous mycobacterial (NTM) lung disease. We believe an orally inhaled formulation of clofazimine could potentially provide several clinical advantages over the current solid oral dosage form, including directly targeting the site of the infection while lowering the systemic exposure of patients to the drug. The FDA has granted MNKD-101 status as an orphan drug and as a qualified infectious disease product for the treatment of pulmonary NTM infections. It has also granted Fast Track designation to our development program. In June 2024, we initiated a Phase 3 clinical study to investigate the potential of MNKD-101 to treat NTM lung disease. We began enrolling patients into this study in the third quarter of 2024.

Previous wording

The next most advanced program in our pipeline is MNKD-201, a dry-powder formulation of nintedanib, for the treatment of idiopathic pulmonary fibrosis (IPF). An oral dosage form of nintedanib was approved for IPF by the FDA in 2014. However, a fairly large oral dose is required in order to achieve sufficient drug levels in lung tissue. Our goal with an inhaled formulation is to deliver a therapeutic amount of nintedanib to the lungs while avoiding high levels of the drug in other tissues, where it is associated with undesirable side effects. In June 2024, we initiated a first-in-human Phase 1 study of MNKD-201 for pulmonary fibrotic diseases, including IPF. A data readout is expected in the fourth quarter of 2024.

Current wording

The next most advanced program in our pipeline is MNKD-201, a dry-powder formulation of nintedanib, for the treatment of idiopathic pulmonary fibrosis ("IPF"). An oral dosage form of nintedanib was approved for IPF by the FDA in 2014. However, a fairly large oral dose is required in order to achieve sufficient drug levels in lung tissue. Our goal with an inhaled formulation is to deliver a therapeutic amount of nintedanib to the lungs while avoiding high levels of the drug in other tissues, where it is associated with undesirable side effects. Earlier this year, we conducted a first-in-human Phase 1 study of MNKD-201 for pulmonary fibrotic diseases, including IPF. A data readout is expected in the fourth quarter of 2024.

Previous wording

As of June 30, 2024, we had an accumulated deficit of $3.2 billion and a stockholders’ deficit of $225.8 million. We had net loss of $2.0 million and net income of $8.6 million for the three and six months ended June 30, 2024, respectively. To date, we have funded our operations primarily through the sale of our equity and convertible debt securities, from the receipt of upfront and milestone payments from collaborations, from borrowings, from sales of Afrezza and V-Go, from royalties and manufacturing revenue from UT as well as from proceeds of the sale-leaseback of our manufacturing facility in Danbury, CT and from the sale of a portion of future royalties that we receive from UT.

Current wording

As of September 30, 2024, we had an accumulated deficit of $3.2 billion and a stockholders’ deficit of $209.9 million. We had net income of $11.6 million and $20.2 million for the three and nine months ended September 30, 2024, respectively. To date, we have funded our operations primarily through the sale of our equity and convertible debt securities, from the receipt of upfront and milestone payments from collaborations, from borrowings, from sales of Afrezza and V-Go, from royalties and manufacturing revenue from UT as well as from proceeds of the sale-leaseback of our manufacturing facility in Danbury, CT and from the sale of a portion of future royalties that we receive from UT.

Previous wording

The following table provides a comparison of the revenue categories for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following table provides a comparison of the revenue categories for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

Afrezza— Gross revenue from sales of Afrezza increased by $3.8 million, or 17%, for the three months ended June 30, 2024 compared to the same period in the prior year. The increase was driven primarily by price and higher demand. The gross-to-net adjustment was 37% of gross revenue, or $9.8 million, for the three months ended June 30, 2024 compared to 39% of gross revenue, or $8.7 million, for the same period in the prior year. The decrease in the gross-to-net percentage was primarily attributable to a decrease in rebates and anticipated product returns (as a percentage of gross sales). As a result, net revenue from sales of Afrezza increased by $2.8 million, or 20%, for the three months ended June 30, 2024 compared to the same period in the prior year.

Current wording

Afrezza— Gross revenue from sales of Afrezza increased by $1.7 million, or 8%, for the three months ended September 30, 2024 compared to the same period in the prior year. The increase was driven by higher demand. The gross-to-net adjustment was 36% of gross revenue, or $8.3 million, for the three months ended September 30, 2024 compared to 38% of gross revenue, or $8.1 million, for the same period in the prior year. The improved gross-to-net percentage was primarily attributable to a decrease in anticipated product returns (as a percentage of gross sales). As a result, net revenue from sales of Afrezza increased by $1.6 million, or 12%, for the three months ended September 30, 2024 compared to the same period in the prior year.

Previous wording

Gross revenue from sales of Afrezza increased by $4.7 million, or 11%, for the six months ended June 30, 2024 compared to the same period in the prior year. The increase was driven primarily by price and higher demand. The gross-to-net adjustment was 34% of gross revenue, or $16.1 million, for the six months ended June 30, 2024 compared to 38% of gross revenue, or $16.2 million, for the same period in the prior year. The decrease in the gross-to-net percentage was primarily attributable to a decrease in anticipated product returns (as a percentage of gross sales). As a result, net revenue from sales of Afrezza increased by $4.8 million, or 18%, for the six months ended June 30, 2024 compared to the same period in the prior year.

Current wording

Gross revenue from sales of Afrezza increased by $6.4 million, or 10%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase was driven by higher demand and price. The gross-to-net adjustment was 35% of gross revenue, or $24.4 million, for the nine months ended September 30, 2024 compared to 38% of gross revenue, or $24.3 million, for the same period in the prior year. The improved gross-to-net percentage was primarily attributable to a decrease in anticipated product returns (as a percentage of gross sales). As a result, net revenue from sales of Afrezza increased by $6.3 million, or 16%, for the nine months ended September 30, 2024 compared to the same period in the prior year.

Previous wording

V-Go — Gross revenue from sales of V-Go decreased by $1.3 million, or 12%, for the three months ended June 30, 2024 compared to the same period in the prior year and was primarily a result of lower demand partially offset by increased price. The gross-to-net adjustment was 53% of gross revenue, or $5.1 million, for the three months ended June 30, 2024 compared to 56% of gross revenue, or $6.2 million, for the same period in the prior year. As a result, net revenue from sales of V-Go decreased by $0.3 million, or 7%, for the three months ended June 30, 2024 compared to the same period in the prior year.

Current wording

V-Go — Gross revenue from sales of V-Go decreased by $1.6 million, or 15%, for the three months ended September 30, 2024 compared to the same period in the prior year and was primarily a result of lower demand partially offset by increased price. The gross-to-net adjustment was 47% of gross revenue, or $4.2 million, for the three months ended September 30, 2024 compared to 58% of gross revenue, or $6.1 million, for the same period in the prior year. The improved gross-to-net percentage was primarily attributable to a decrease in rebates. As a result, net revenue from sales of V-Go increased by $0.2 million, or 5%, for the three months ended September 30, 2024 compared to the same period in the prior year.

Previous wording

Gross revenue from sales of V-Go decreased by $2.6 million, or 12%, for the six months ended June 30, 2024 compared to the same period in the prior year and was primarily a result of lower demand partially offset by increased price. The gross-to-net adjustment was 53% of gross revenue, or $10.1 million, for the six months ended June 30, 2024 compared to 54% of gross revenue, or $11.5 million, for the same period in the prior year. As a result, net revenue from sales of V-Go decreased by $1.1 million, or 11%, for the six months ended June 30, 2024 compared to the same period in the prior year.

Current wording

Gross revenue from sales of V-Go decreased by $4.2 million, or 13%, for the nine months ended September 30, 2024 compared to the same period in the prior year and was primarily a result of lower demand partially offset by increased price. The gross-to-net adjustment was 51% of gross revenue, or $14.3 million, for the nine months ended September 30, 2024 compared to 55% of gross revenue, or $17.6 million, for the same period in the prior year. The improved gross-to-net percentage was primarily attributable to a decrease in rebates. As a result, net revenue from sales of V-Go decreased by $0.9 million, or 6%, for the nine months ended September 30, 2024 compared to the same period in the prior year.

Previous wording

Collaborations and Services — Net revenue from collaborations and services increased by $14.8 million, or 132%, for the three months ended June 30, 2024 compared to the same period in the prior year. The increase in revenue was primarily attributable to increased manufacturing volume and related production activity for product sold to UT. Royalty revenue from UT increased by $6.5 million, or 34%, for the three months ended June 30, 2024 due to UT's increase in net revenue from sales of Tyvaso DPI. See Note 9 –Collaboration, Licensing and Other Arrangements.

Current wording

Collaborations and Services — Net revenue from collaborations and services increased by $10.2 million, or 78%, for the three months ended September 30, 2024 compared to the same period in the prior year. The increase in revenue was primarily attributable to increased manufacturing volume for product sold to UT. Royalty revenue from UT increased by $6.9 million, or 34%, for the three months ended September 30, 2024 due to UT's increase in net revenue from sales of Tyvaso DPI. See Note 10 –Collaboration, Licensing and Other Arrangements.

Previous wording

Net revenue from collaborations and services increased by $28.3 million, or 125%, for the six months ended June 30, 2024 compared to the same period in the prior year. The increase in revenue was primarily attributable to increased manufacturing volume and related production activity for product sold to UT. Royalty revenue from UT increased by $17.5 million, or 57%, for the six months ended

Current wording

Net revenue from collaborations and services increased by $38.4 million, or 108%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase in revenue was primarily attributable to increased manufacturing volume for product sold to UT. Royalty revenue from UT increased by $24.4 million, or 48%, for the nine months ended September 30, 2024 due to UT's increase in net revenue from sales of Tyvaso DPI. See Note 10 –Collaboration, Licensing and Other Arrangements.

Previous wording

The following table provides a comparison of the commercial product gross profit categories for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following table provides a comparison of the commercial product gross profit categories for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

Commercial product gross profit increased by $2.1 million, or 16%, for the three months ended June 30, 2024 compared to the same period in the prior year and $5.0 million, or 20%, for the six months ended June 30, 2024 compared to the same period in the prior year. The increase in gross profit and gross margin was primarily attributable to an increase in Afrezza net revenue.

Current wording

Commercial product gross profit increased by $2.6 million, or 19%, for the three months ended September 30, 2024 compared to the same period in the prior year and $7.6 million, or 19%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase in gross profit and gross margin was primarily attributable to an increase in Afrezza net revenue and improved gross-to-net adjustments related to V-Go rebates.

Previous wording

The following table provides a comparison of the expense categories for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following table provides a comparison of the expense categories for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

Cost of revenue – collaborations and services increased by $5.8 million, or 64%, for the three months ended June 30, 2024 compared to the same period in the prior year and $9.9 million, or 50%, for the six months ended June 30, 2024 compared to the same period in the prior year. The increases were primarily attributable to increased manufacturing volume and activities for Tyvaso DPI. Higher manufacturing volumes resulted in efficiencies which contributed to a lower effective cost per unit.

Current wording

Cost of revenue – collaborations and services increased by $4.6 million, or 45%, for the three months ended September 30, 2024 compared to the same period in the prior year and $14.4 million, or 48%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increases were primarily attributable to increased manufacturing volume for Tyvaso DPI.

Previous wording

R&D expenses increased by $5.4 million, or 83%, for the three months ended June 30, 2024 compared to the same period in the prior year. The increase was primarily attributable to increased costs for development activities for clofazimine inhaled suspension (MNKD-101), an Afrezza Pediatric clinical study (INHALE-1), and initiation of a Phase 1 study of dry-powder formulation of nintedanib (MNKD-201) for treatment of pulmonary fibrotic diseases, partially offset by lower costs for an Afrezza post-marketing clinical study (INHALE-3).

Current wording

R&D expenses increased by $2.9 million, or 29%, for the three months ended September 30, 2024 and $12.7 million, or 58%, for the nine months ended September 30, 2024 compared to the same periods in the prior year. The increases were primarily attributable to increased expenditures for development activities and a Phase 3 clinical study of clofazimine inhaled suspension (MNKD-101), a Phase 1 clinical study of a dry-powder formulation of nintedanib (MNKD-201) for treatment of pulmonary fibrotic diseases, and personnel costs due to increased headcount as a result of the Pulmatrix Transaction.

Previous wording

Selling expenses decreased by $4.2 million, or 15%, for the six months ended June 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to reduced personnel and travel expenses related to sales force restructuring activities completed during the first quarter of 2024.

Current wording

Selling expenses decreased by $0.3 million, or 3%, for the three months ended September 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to reduced personnel related to sales force restructuring activities completed during the first quarter of 2024, partially offset by an increase in promotional activities.

Previous wording

Selling expenses decreased by $2.5 million, or 18%, for the three months ended June 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to reduced personnel related to sales force restructuring activities completed during the first quarter of 2024.

Current wording

Selling expenses decreased by $4.6 million, or 11%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The decrease was primarily attributable to reduced personnel expenses related to sales force restructuring activities completed during the first quarter of 2024.

Previous wording

General and administrative expenses increased by $0.7 million, or 6% for the three months ended June 30, 2024 compared to the same period in the prior year. The increase was primarily attributable to increases in estimated returns associated with sales of V-Go that pre-date our acquisition of the product and personnel costs.

Current wording

General and administrative expenses increased by $0.3 million, or 3%, for the three months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily attributable to increases in personnel costs, partially offset by reduced consulting fees.

Previous wording

General and administrative expenses increased by $0.9 million, or 4%, for the six months ended June 30, 2024 compared to the same period in the prior year. The increase was primarily attributable to a loss of $1.4 million for estimated returns associated with sales of V-Go that pre-date our acquisition of the product, partially offset by reduced personnel costs.

Current wording

General and administrative expenses increased by $1.1 million, or 3%, for the nine months ended September 30, 2024 compared to the same period in the prior year. The increase was primarily attributable to a loss of $1.4 million for estimated returns associated with sales of V-Go that pre-date our acquisition of the product and increases in personnel costs, partially offset by reduced consulting fees.

Previous wording

Under the Insulin Supply Agreement, payment obligations are denominated in Euros. We are required to record the foreign currency transaction impact of the U.S. dollar to Euro exchange rate associated with the recognized gain or loss on purchase commitments. The foreign currency transaction gain was $0.5 million for the three months ended June 30, 2024 compared to a loss of $0.3 million for the same period in the prior year and a gain of $1.9 million for the six months ended June 30, 2024 compared to a loss of $1.2 million for the same period in the prior year due to the conversion of Euro to U.S. dollar exchange rates.

Current wording

Under the Insulin Supply Agreement, payment obligations are denominated in Euros. We are required to record the foreign currency transaction impact of the U.S. dollar to Euro exchange rate associated with the recognized gain or loss on purchase commitments. The foreign currency transaction loss was $2.5 million for the three months ended September 30, 2024 compared to a gain of $2.1 million for the same period in the prior year and a loss of $0.5 million for the nine months ended September 30, 2024 compared to a gain of $0.9 million for the same period in the prior year due to the conversion of Euro to U.S. dollar exchange rates.

Previous wording

The following table provides a comparison of the other income (expense) categories for the three and six months ended June 30, 2024 and 2023 (dollars in thousands):

Current wording

The following table provides a comparison of the other income (expense) categories for the three and nine months ended September 30, 2024 and 2023 (dollars in thousands):

Previous wording

Interest income, net, consisting of interest and accretion on investments net of amortization, increased by $1.6 million for the three months ended June 30, 2024 and $3.8 million for the six months ended June 30, 2024 compared to the same periods in the prior year primarily due to higher yields on our securities portfolio and an increase in the underlying investments from the proceeds of the sale of 1% of our Tyvaso DPI royalties in December 2023.

Current wording

Interest income, net, consisting of interest and accretion on investments net of amortization, increased by $1.6 million for the three months ended September 30, 2024 and $5.4 million for the nine months ended September 30, 2024 compared to the same periods in the prior year primarily due to an increase in the underlying investments from the proceeds of the sale of 1% of our Tyvaso DPI royalties in December 2023 and higher yields on our securities portfolio.

Previous wording

Interest expense on liability for sale of future royalties was $4.4 million and $8.6 million for the three and six months ended June 30, 2024, respectively, and was attributable to imputed interest and amortization of debt issuance costs on the liability recorded in connection with the sale of 1% of our Tyvaso DPI royalties in December 2023. See Note 14 –Commitments and Contingencies.

Current wording

Interest expense on liability for sale of future royalties was $4.1 million and $12.7 million for the three and nine months ended September 30, 2024, respectively, and was attributable to imputed interest and amortization of debt issuance costs on the liability recorded in connection with the sale of 1% of our Tyvaso DPI royalties in December 2023. See Note 15 –Commitments and Contingencies.

Previous wording

Interest expense on financing liability was $2.4 million for each of the three months ended June 30, 2024 and 2023 and $4.9 million for each of the six months ended June 30, 2024 and 2023 and represented interest incurred on the sale lease-back transaction for our manufacturing facility in Danbury, CT.

Current wording

Interest expense on financing liability was $2.5 million for each of the three months ended September 30, 2024 and 2023, and $7.4 million and $7.3 million for the nine months ended September 30, 2024 and 2023, respectively, and represented interest incurred on the sale lease-back transaction for our manufacturing facility in Danbury, CT.

Previous wording

Interest expense decreased by $0.8 million for the three months ended June 30, 2024 and $1.0 million for the six months ended June 30, 2024 compared to the same periods in the prior year. The decrease was primarily due to repayment of the MidCap credit facility and Mann Group convertible note in April 2024. See Note 8 –Borrowingsand Note 14 –Commitments and Contingencies.

Current wording

Interest expense decreased by $1.0 million for the three months ended September 30, 2024 and $2.1 million for the nine months ended September 30, 2024 compared to the same periods in the prior year. The decrease was primarily due to repayment of the MidCap credit facility and Mann Group convertible note in April 2024. See Note 9 –Borrowings.

Previous wording

Other expense for the three and six months ended June 30, 2023 consisted primarily of losses associated with foreign currency hedging transactions which were entered into to mitigate our exposure to foreign currency exchange risks associated with our insulin purchase obligation under the Insulin Supply Agreement.

Current wording

Other income for the three and nine months ended September 30, 2023 consisted primarily of gains associated with foreign currency hedging transactions which were entered into to mitigate our exposure to foreign currency exchange risks associated with our insulin purchase obligation under the Insulin Supply Agreement.

Previous wording

Loss on extinguishment of debt of $7.1 million for the three and six months ended June 30, 2024 was incurred in connection with the repayment of the MidCap credit facility and Mann Group convertible note in April 2024. See Note 8 –Borrowings.

Current wording

Loss on extinguishment of debt of $7.1 million for the nine months ended September 30, 2024 was incurred in connection with the repayment of the MidCap credit facility and Mann Group convertible note in April 2024. See Note 9 –Borrowings.

Previous wording

Loss on available-for-sale securities for the three and six months ended June 30, 2024 was $1.6 million as a result of modification of the Thirona investment. The gain on available-for-sale securities for the three and six months ended June 30, 2023 was $0.9 million as a result of the change in fair value of the investment that related to credit risk. See Note 2 –Investments.

Current wording

Loss on available-for-sale securities for the nine months ended September 30, 2024 was $1.6 million as a result of modification of the Thirona investment. The gain on available-for-sale securities for the nine months ended September 30, 2023 was $0.9 million as a result of the change in fair value of the investment. See Note 3 –Investments.

Previous wording

Represents the non-cash portion of the 1% royalty on net sales of Tyvaso DPI earned during the three and six months ended June 30, 2024 which is remitted to the royalty purchaser by UT and recognized as royalties – collaboration in our condensed consolidated statements of operations. Our royalties – collaboration during the three and six months ended June 30, 2024 totaled $25.6 million and $48.2 million, respectively, of which $2.6 million and $4.8 million, respectively, was non-cash revenue attributed to the royalty purchaser.

Current wording

Represents the non-cash portion of the 1% royalty on net sales of Tyvaso DPI earned during the three and nine months ended September 30, 2024 which is remitted to the royalty purchaser by UT and recognized as royalties – collaboration in our condensed consolidated statements of operations. Our royalties – collaboration during the three and nine months ended September 30, 2024 totaled $27.1 million and $75.3 million, respectively, of which $2.7 million and $7.5 million, respectively, was non-cash revenue attributed to the royalty purchaser.

Previous wording

To date, we have funded our operations primarily through the sale of equity and convertible debt securities, from the receipt of upfront and milestone payments from collaborations, from borrowings, from sales of Afrezza and V-Go, from royalties and manufacturing revenue from UT, from proceeds from the sale of certain assets and the sale of a portion of our future royalties that we receive from UT.

Current wording

Historically, we have funded our operations primarily through the sale of equity and convertible debt securities, from the receipt of upfront and milestone payments from collaborations, from borrowings, from proceeds from the sale of certain assets and the sale of a portion of our future royalties that we receive from UT. More recently, sales of Afrezza and V-Go, and royalties and manufacturing revenue from UT, have become a more significant source of funding for our operations, In combination with our cash, cash equivalents and investments on hand, we believe that these sources of revenue, as well as the potential financing sources currently available to us, will allow us to meet our liquidity needs over the next twelve months and in the longer term.

Previous wording

As of June 30, 2024, we had $60.2 million in insulin purchase commitments and $230.0 million principal amount of outstanding Senior convertible notes bearing interest at 2.50% and maturing on March 1, 2026, unless earlier converted, redeemed or repurchased by us. The Senior convertible notes are convertible at an initial conversion price of approximately $5.21 per share of common stock. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture.

Current wording

As of September 30, 2024, we had $62.6 million in insulin purchase commitments and $230.0 million principal amount of outstanding Senior convertible notes bearing interest at 2.50% and maturing on March 1, 2026, unless earlier converted, redeemed or repurchased by us. The Senior convertible notes are convertible at an initial conversion price of approximately $5.21 per share of common stock. The conversion rate is subject to adjustment under certain circumstances in accordance with the terms of the Indenture. With the repayment of the MidCap credit facility and the Mann Group convertible note in April 2024, our Senior convertible notes are our only remaining notes outstanding.

Previous wording

In July 2013, we issued the Milestone Rights pursuant to the Milestone Rights Agreement to the Original Milestone Purchasers. The Milestone Rights were subsequently assigned the Milestone Purchasers. The Milestone Rights provide the Milestone Purchasers certain rights to receive payments of up to $90.0 million upon the occurrence of specified strategic and sales milestones, $55.0 million of which remain payable as of June 30, 2024. See Note 14 –Commitments and Contingencies for further information related to the Milestone Rights.

Current wording

In July 2013, we issued the Milestone Rights pursuant to the Milestone Rights Agreement to the Original Milestone Purchasers. The Milestone Rights were subsequently assigned the Milestone Purchasers. The Milestone Rights provide the Milestone Purchasers certain rights to receive payments of up to $90.0 million upon the occurrence of specified strategic and sales milestones, $50.0 million of which remain payable as of September 30, 2024. See Note 15 –Commitments and Contingencies for further information related to the Milestone Rights.

Previous wording

During the six months ended June 30, 2024, we generated $10.5 million of cash from our operating activities, which consisted primarily of $121.2 million in cash receipts from customers (net of $12.1 million of non-cash revenue that was previously deferred and $4.8 million of non-cash revenue for the 1% sold portion of our royalties), partially offset by $39.0 million of cost of goods sold, $28.0 million of selling expenses, $22.7 million of costs for research and development, $20.2 million of general and administrative expenses, and $2.3 million of net cash paid for interest.

Current wording

During the nine months ended September 30, 2024, we generated $19.9 million of cash from our operating activities, which consisted primarily of $189.3 million in cash receipts from customers (net primarily of $11.5 million of non-cash revenue that was previously deferred and $7.5 million of non-cash revenue for the 1% sold portion of our royalties), partially offset by $59.8 million of cost of goods sold, $35.5 million of selling expenses, $34.3 million of costs for research and development, $29.4 million of general and administrative expenses, and $9.0 million of net cash paid for interest.

Previous wording

During the six months ended June 30, 2023, we generated $3.8 million of cash from our operating activities, which consisted primarily of $98.6 million of revenue, partially offset by $39.5 million of cost of goods sold, $25.0 million of selling expenses, $14.2 million of general and administrative expenses, $13.1 million of R&D costs and $4.3 million of cash paid for interest.

Current wording

During the nine months ended September 30, 2023, we generated $12.4 million of cash from our operating activities, which consisted primarily of $167.3 million of revenue, partially offset by $60.4 million of cost of goods sold, $35.7 million of selling expenses, $25.4 million of general and administrative expenses, $20.8 million of R&D costs and $13.0 million of cash paid for interest.

Previous wording

Cash used in investing activities of $103.6 million for the six months ended June 30, 2024 was primarily due to the purchase of $187.4 million of debt securities and $5.4 million of property and equipment, partially offset by the maturity of $88.8 million of debt securities.

Current wording

Cash used in investing activities of $144.9 million for the nine months ended September 30, 2024 was primarily due to the purchase of $273.8 million of debt securities and $6.8 million of property and equipment, partially offset by the maturity of $135.3 million of debt securities.

Previous wording

Cash provided by investing activities of $17.5 million for the six months ended June 30, 2023 was primarily due to $69.1 million of proceeds received from the maturities of debt securities, partially offset by the purchase of debt securities of $26.4 million and by $25.2 million for the purchase of property and equipment.

Current wording

Cash provided by investing activities of $5.9 million for the nine months ended September 30, 2023 was primarily due to $92.6 million of proceeds received from the sales of debt securities, partially offset by the purchase of debt securities of $50.5 million and by $36.6 million for the purchase of property and equipment which was substantially paid for by UT as part of our facility expansion project to increase manufacturing capacity.

Previous wording

Cash used in financing activities of $48.0 million for the six months ended June 30, 2024 was primarily due to principal and early extinguishment payments on the MidCap credit facility of $36.6 million and Mann Group convertible note of $8.9 million, and $4.7 million of payments to taxing authorities from equity withheld upon vesting of RSUs and stock options, partially offset by $2.3 million in proceeds from the market price stock purchase plan and employee stock purchase plan.

Current wording

Cash used in financing activities of $50.4 million for the nine months ended September 30, 2024 was primarily due to principal and early extinguishment payments on the MidCap credit facility of $36.6 million and Mann Group convertible note of $8.9 million, and $6.2 million of payments to taxing authorities from equity withheld upon vesting of RSUs and stock options, partially offset by $2.3 million in proceeds from the MPSPP and ESPP.

Previous wording

Cash used in financing activities of $4.8 million for the six months ended June 30, 2023 was primarily due to $8.5 million of payments to taxing authorities from equity withheld upon vesting of RSUs and stock options, partially offset by $3.7 million in proceeds from at-the-market offerings.

Current wording

Cash used in financing activities of $5.1 million for the nine months ended September 30, 2023 was primarily due to $10.2 million of payments to taxing authorities from equity withheld upon vesting of RSUs and stock options, and payments of $1.7 million on MidCap credit facility, partially offset by $6.9 million in proceeds from at-the-market offerings and $1.1 million in proceeds from market price and ESPP.

Previous wording

Although we have not generated net income or cash flows from operating activities on a consistent basis, we believe we will be able to meet our near-term liquidity needs based on our cash, cash equivalents and investments on hand, sales of Afrezza and V-Go, and royalties and manufacturing revenue from the production and sale of Tyvaso DPI as well as through debt or equity financing, if necessary, for our long-term liquidity needs. We expect to continue to incur expenditures for the foreseeable future in support of our manufacturing operations, sales and marketing costs for our products and development costs for other product candidates in our pipeline. As of June 30, 2024, we had capital resources comprised of $96.6 million in cash and cash equivalents, $151.1 million in short-term investments and $13.4 million in long-term investments, and total principal amount of outstanding borrowings of $230.0 million.

Current wording

Although we have not generated net income or cash flows from operating activities on a consistent basis, we believe we will be able to meet our near-term liquidity needs based on our cash, cash equivalents and investments on hand, sales of Afrezza and V-Go, and royalties and manufacturing revenue from the production and sale of Tyvaso DPI as well as through debt or equity financing, if necessary, for our long-term liquidity needs. We expect to continue to incur expenditures for the foreseeable future in support of our manufacturing operations, sales and marketing costs for our products and development costs for other product candidates in our pipeline. As of September 30, 2024, we had capital resources comprised of cash, cash equivalents, short-term investments and long-term investments totaling $268.4 million, and total principal amount of outstanding borrowings of $230.0 million.