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Item 1A. Risk Factors

2022-08-09 compared with 2022-05-05 · 193 added, 138 removed, 796 unchanged (29% of the section changed)

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RISKS RELATED TO OUR BUSINESS

Afrezza may only achieve a limited degree of commercial success.

The continued commercialization and development of Afrezza will require substantial capital that we may not be able to obtain.

If we fail as an effective manufacturing organization, we may be unable to support commercialization of Afrezza or Tyvaso DPI.

The products that we are commercializing may only achieve a limited degree of commercial success.

In addition, the required post-marketing studies of Afrezza will require substantial capital that we may not be able to obtain.

Manufacturing risks may adversely affect our ability to manufacture our products and could reduce our gross margin and our profitability.

If our suppliers fail to deliver materials and services needed for commercial manufacturing in a timely and sufficient manner or fail to comply with applicable regulations, and if we fail to timely identify and qualify alternative suppliers, our business, financial condition and results of operations would be harmed and the market price of our common stock and other securities could decline.

If Afrezza or any other product that we develop does not become widely accepted by physicians, patients, third-party payers and the healthcare community, we may be unable to generate significant revenue, if any.

If third-party payers do not cover Afrezza or any of our product candidates for which we receive regulatory approval, Afrezza or such product candidates might not be prescribed, used or purchased, which would adversely affect our revenues.

If our products do not become widely accepted by physicians, patients, third-party payers and the healthcare community, we may be unable to generate significant revenue, if any.

If third-party payers do not cover our approved products, such products might not be prescribed, used or purchased, which would adversely affect our revenues.

We may need to raise additional capital to fund our operations.

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Our business, product sales, results of operations and ability to access capital could be adversely affected by the effects of health pandemics or epidemics, including the ongoing COVID-19 pandemic, in regions where we or third parties distribute our products or where we or third parties on which we rely have significant manufacturing facilities, concentrations of clinical trial sites or other business operations.

If we do not obtain regulatory approval of Afrezza in foreign jurisdictions, we will not be able to market Afrezza in such jurisdictions, which could limit our commercial revenues.

We may not be able to establish additional regional partnerships or other arrangements with third parties for the commercialization of Afrezza outside of the United States.

We may not be successful in our efforts to develop and commercialize our product candidates.

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If we do not achieve our projected development goals in the timeframes we expect, our business, financial condition and results of operations will be harmed and the market price of our common stock and other securities could decline.

Afrezza or our product candidates may be rendered obsolete by rapid technological change.

Continued testing of Afrezza or our product candidates may not yield successful results, and even if it does, we may still be unable to successfully commercialize our product candidates.

Our products and product candidates may be rendered obsolete by rapid technological change.

Continued testing of our products and product candidates may not yield successful results, and even if it does, we may still be unable to successfully commercialize our product candidates.

The safety and efficacy of V-Go is not supported by long-term clinical data, which could limit sales and could lead to unforeseen negative effects.

We may undertake internal restructuring activities in the future that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition.

If our information technology systems or data, or those of third parties upon which we rely, are or were compromised, we could experience adverse consequences resulting from such compromise, including but not limited to regulatory

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and other adverse consequences.

We may undertake internal restructuring activities in the future that could result in disruptions to our business or otherwise materially harm our results of operations or financial condition.

RISKS RELATED TO GOVERNMENT REGULATION

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Future sales of shares of our common stock in the public market, or the perception that such sales may occur, may depress our stock price and adversely impact the market price of our common stock and other securities.

Unstable market, economic and geo-political conditions may have serious adverse consequences on our business, financial condition and stock price.

Unstable market, economic and geopolitical conditions may have serious adverse consequences on our business, financial condition and stock price.

You should consider carefully the following information about the risks described below, together with the other information contained in this Quarterly Report on Form 10-Q before you decide to buy or maintain an investment in our common stock.

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RISKS RELATED TO OUR BUSINESS

Afrezza may only achieve a limited degree of commercial success.

The continued commercialization and development of Afrezza will require substantial capital that we may not be able to obtain.

We have expended significant time, money and effort in the commercialization and development of Afrezza, which has been on the market since February 2015.

To date, Afrezza sales have been modest by comparison to other mealtime insulins.

If we remain on the existing growth curve, we may never generate significant revenues from Afrezza in the United States.

Successful commercialization of Afrezza is subject to many risks, including some that are outside our control.

There are numerous examples of failures to fully exploit the market potential of drug products, including by pharmaceutical companies with more experience and resources than us.

We ultimately may be unable to gain widespread market acceptance of Afrezza for a variety of reasons, including the treatment and dosage regimen, potential adverse effects, pricing and availability relative to alternative p roducts and lack of coverage or adequate reimbursement by payers .

We may need to enhance our commercialization capabilities in order to successfully commercialize Afrezza in the United States, and we may not have sufficient resources to do so.

The products that we are commercializing may only achieve a limited degree of commercial success.

In addition, the required post-marketing studies of Afrezza will require substantial capital that we may not be able to obtain.*

Successful commercialization of therapeutic products is subject to many risks, including some that are outside our control.

There are numerous examples of failures to fully exploit the market potential of therapeutic products, including by pharmaceutical and device companies with more experience and resources than us.

We ultimately may be unable to gain widespread market acceptance of our products for a variety of reasons, including the treatment and dosage regimen, potential adverse effects, pricing and availability relative to alternative products and failure by patients to use them as directed, which could limit their effectiveness and could have an adverse impact on repeat use.

If we are unable to maintain payer coverage of, and adequate reimbursement for, our products, physicians may limit how much or under what circumstances they will prescribe or administer them.

As a result, patients may decline to purchase our products, which would have an adverse effect on our ability to generate revenues.

We may need to enhance our commercialization capabilities in order to successfully commercialize our products in the United States, and we may not have sufficient resources to do so.

The market for skilled commercial personnel is highly competitive, and we may not be able to hire all of the personnel we need on a timely basis or retain them for a sufficient period.

If we are unable to effectively train our sales force and equip them with effective medical and sales materials to help them inform and educate potential customers about the benefits of our products and their proper administration, our efforts to successfully commercialize our products could be put in jeopardy, which would negatively impact our ability to generate product revenues.

In addition, Afrezza is a novel insulin therapy with a distinct time-action profile and non-injectable administration, and we are therefore required to expend significant time and resources to train our sales force to be credible, persuasive and compliant with applicable laws in marketing Afrezza to physicians and to ensure that a consistent and appropriate message about Afrezza is being delivered to our potential customers.

If we are unable to effectively train our sales force and equip them with effective medical and sales materials to help them inform and educate potential customers about the benefits of Afrezza and its proper administration, our efforts to successfully commercialize Afrezza could be put in jeopardy, which would negatively impact our ability to generate product revenues.

If we are unable to maintain payer coverage of, and adequate reimbursement for, Afrezza, physicians may limit how much or under what circumstances they will prescribe or administer Afrezza.

As a result, patients may decline to purchase Afrezza, which would have an adverse effect on our ability to generate revenues.

We are responsible for the NDA for Afrezza and its maintenance.

We may fail to comply with maintenance requirements, including timely submitting required reports.

Furthermore, as part of the approval of Afrezza, the FDA required us to conduct certain additional clinical studies of Afrezza.

Further, as part of the approval of Afrezza, the FDA required us to conduct certain additional clinical studies of Afrezza.

These studies will require significant capital resources, some of which may not be available to us.

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To date, we have not commenced a long-term safety study or budgeted any amount for it, but such a study in its original design would be anticipated to require substantial capital resources that we may not be able to obtain.

If we fail to achieve better commercial success with Afrezza in the United States, our prospects for generating significant revenues from this product will be materially and adversely affected.

If we fail as an effective manufacturing organization, we may be unable to support commercialization of Afrezza or Tyvaso DPI.

Any factor that negatively impact sales of our products, or that result in sales of our products increasing at a lower rate than expected, would also negatively impact our prospects for generating significant revenues.

Manufacturing risks may adversely affect our ability to manufacture our products and could reduce our gross margin and our profitability.*

We use our Danbury, Connecticut facility to formulate both the Afrezza and Tyvaso DPI inhalation powders, fill plastic cartridges with the powders, and package the cartridges into secondary packaging.

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Furthermore, if we or a third-party manufacturer fail to deliver the required commercial quantities of the product or any raw material on a timely basis, and at commercially reasonable prices, sustainable compliance and acceptable quality, and we were unable to promptly find one or more replacement manufacturers capable of production at a substantially equivalent cost, in substantially equivalent volume and quality on a timely basis, we would likely be unable to meet demand for such drug products and we would lose potential revenues.

In addition, we rely on our contract manufacturers in Southern China to manufacture V-Go.

Our contract manufacturer uses MannKind-owned custom-designed, semi-automated manufacturing equipment and production lines to meet our quality requirements.

Separate contract manufacturers in China perform release testing, sterilization, inspection and packaging functions.

As a result, our business is subject to risks associated with doing business in China, including:

adverse political and economic conditions, particularly those potentially negatively affecting the trade relationship between the United States and China;

trade protection measures, such as tariff increases, and import and export licensing and control requirements;

potentially negative consequences from changes in tax laws;

difficulties associated with the Chinese legal system, including increased costs and uncertainties associated with enforcing contractual obligations in China;

historically lower protection of intellectual property rights;

unexpected or unfavorable changes in regulatory requirements;

changes and volatility in currency exchange rates;

possible patient or physician preferences for more established pharmaceutical products and medical devices manufactured in the United States;

difficulties in managing foreign relationships and operations generally.

These risks are likely to be exacerbated by our limited experience with V-Go and its manufacturing processes.

As demand increases, we will have to invest additional resources to purchase components, hire and train employees, and enhance our manufacturing processes.

If we fail to increase our production capacity efficiently, our sales may not increase in line with our forecasts and our operating margins could fluctuate or decline.

For the commercial manufacture of inhaled drug products, we need access to sufficient, reliable and affordable supplies of FDKP, the

inhaler, the related cartridges and other materials.

For the commercial manufacture of inhaled drug products, we need access to sufficient, reliable and affordable supplies of FDKP, the inhaler, the related cartridges and other materials.

For Afrezza, we also require a supply of insulin.

Currently, the only source of insulin that we have qualified for Afrezza is manufactured by Amphastar.

We must rely on all of our suppliers to comply with relevant regulatory and other legal requirements, including the production of insulin and FDKP in accordance with cGMP for drug products, and the production of the Afrezza/Tyvaso DPI inhaler and related cartridges in accordance with QSRs.

We must rely on all of our suppliers to comply with relevant regulatory and other legal requirements, including the production of insulin and FDKP in accordance with current good manufacturing practices (“cGMP”) for drug products, and the molding of the inhaler and cartridges components in accordance with quality system regulations (“QSRs”).

For V-Go, w e generally use a small number of suppliers for our product, some parts and components of which are purchased from single-source vendors.

Depending on a limited number of suppliers exposes us to risks, including limited control over pricing, availability, quality and delivery schedules.

In addition, w e do not have long-term supply agreements with most of our suppliers and, in many cases, we make our purchases on a purchase order basis.

Under many of our supply agreements, we have no obligation to buy any given quantity of components, and our suppliers have no obligation to manufacture for us or sell to us any given quantity of components.

Because we do not have long-standing relationships with our suppliers, we may not be able to convince them to continue to make components available to us unless there is demand for such components from their other customers.

If any one or more of our suppliers cease to provide us with sufficient quantities of components in a timely manner or on terms acceptable to us, we would have to seek alternative sources of supply.

Because of factors such as the proprietary nature of our product, our quality control standards and regulatory requirements, we cannot quickly engage additional or replacement suppliers for some of our critical components.

We may also have difficulty obtaining similar components from other suppliers that meet the requirements of the FDA or other regulatory agencies .

Although we conduct our own inspections and review and/or approve investigations of each supplier, there can be no assurance that the FDA, upon inspection, would find that the supplier substantially complies with the QSR or cGMP requirements, where applicable.

If a supplier fails to comply with these requirements or the comparable requirements in foreign countries, regulatory authorities may subject us to regulatory action, including criminal prosecutions, fines and suspension of the manufacture of our products.

If we are required to find a new or additional supplier, we will need to evaluate that supplier’s ability to provide material that meets regulatory requirements, including cGMP or QSR requirements, as well as our specifications and quality requirements, which would require significant time and expense and could delay the production of Afrezza or Tyvaso DPI.

As a result, our ability to purchase adequate quantities of the components for our products may be limited.

Additionally, our suppliers may encounter problems that limit their ability to manufacture components for us, including financial difficulties or damage to their manufacturing equipment or facilities.

In general, if any of our suppliers is unwilling or unable to meet its supply obligations or if we encounter delays or difficulties in our relationships with manufacturers or suppliers, and we are unable to secure an alternative supply source in a timely manner and on favorable terms, our business, financial condition, and results of operations may be harmed and the market price of our common stock and other securities may decline.

Afrezza, and other products that we may develop in the future, may not gain market acceptance among physicians, patients, third-party payers and the healthcare community.

If our products do not become widely accepted by physicians, patients, third-party payers and the healthcare community, we may be unable to generate significant revenue, if any.*

Our products, including products that we may develop in the future, may not gain market acceptance among physicians, patients, third-party payers and the healthcare community.

Failure to achieve market acceptance would limit our ability to generate revenue and would adversely affect our results of operations.

The degree of market acceptance of Afrezza and other products that we may develop in the future depends on many factors, including the following:

The degree of market acceptance of our products depends on many factors, including the following:

Approved labeling claims;

Effectiveness of efforts by us or any future marketing partner to support and educate physicians about the benefits and advantages of Afrezza or our other products, and the perceived advantages and disadvantages of competitive products;

Effectiveness of efforts by us or any future marketing partner to support and educate physicians about the benefits and advantages of our products, and the perceived advantages and disadvantages of competitive products;

Willingness of the healthcare community and patients to adopt new technologies;

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Marketing and distribution support.

Because of these and other factors, Afrezza and any other product that we develop may not gain market acceptance, which would materially harm our business, financial condition and results of operations.

Because of these and other factors, our products may not gain market acceptance, which would materially harm our business, financial condition and results of operations.

If third-party payers do not cover our approved products, such products might not be prescribed, used or purchased, which would adversely affect our revenues.*

In the United States and elsewhere, sales of prescription pharmaceuticals still depend in large part on the availability of coverage and adequate reimbursement to the consumer from third-party payers, such as government health administration authorities and private insurance plans.

Third-party payers are increasingly challenging the prices charged for medical products and services.

The market for Afrezza and our product candidates for which we may receive regulatory approval will depend significantly on access to third-party payers’ drug formularies, which are the lists of medications for which third-party payers provide coverage and reimbursement.

The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical companies.

Also, third-party payers may refuse to include a particular branded drug in their formularies or otherwise restrict patient access to a branded drug when a less costly generic equivalent or other alternative is available.

Even if favorable coverage and reimbursement status is attained for Afrezza or our product candidates for which we or our collaborators receive regulatory approval, less favorable coverage policies and reimbursement rates may be implemented in the future.

The market for our approved products will depend significantly on access to third-party payers’ formularies, which are the lists of medications and devices for which third-party payers provide coverage and reimbursement.

The industry competition to be included in such formularies often leads to downward pricing pressures on pharmaceutical and device companies.

Also, third-party payers may refuse to include a particular branded product in their formularies or otherwise restrict patient access to a branded product when a less costly generic equivalent or other alternative is available.

Even if favorable coverage and reimbursement status is attained for our products, less favorable coverage policies and reimbursement rates may be implemented in the future.

In addition, because each third-party payer individually approves coverage and reimbursement levels, obtaining coverage and adequate reimbursement is a time-consuming and costly process.

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In addition, there may be importation of foreign products that compete with our own products, which could negatively impact our profitability.

If we or any future marketing partner is unable to obtain and maintain coverage of, and adequate payment levels reimbursement for, Afrezza or any of our other product candidates that receive marketing approval from third-party payers, physicians may limit how much or under what circumstances they will prescribe or administer them and patients may decline to purchase them.

This in turn could affect our and any future marketing partner’s ability to successfully commercialize Afrezza and our ability to successfully commercialize any of our other product candidates that receives regulatory approval and impact our profitability, results of operations, financial condition, and prospects.

If we or any marketing partner is unable to obtain and maintain coverage of, and adequate third-party reimbursement for, our approved products, physicians may limit how much or under what circumstances they will prescribe or administer them and patients may decline to purchase them.

This in turn could affect our or any marketing partner’s ability to successfully commercialize such products and would impact our profitability, results of operations, financial condition, and prospects.

Our future revenues and ability to generate positive cash flow from operations may be affected by the continuing efforts of government and other third-party payers to contain or reduce the costs of healthcare through various means.

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We may need to raise additional capital to fund our operations.*

As of March 31, 2022, we had cash and cash equivalents of $67.2 million, short-term investments of $95.2 million and long-term investments of $70.5 million, and we had $288.4 million principal amount of outstanding debt.

We may need to raise additional capital, whether through the sale of equity or debt securities, additional strategic business collaborations, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to support our ongoing activities, including the commercialization of Afrezza and the development of our product candidates .

As of June 30, 2022, we had cash, cash equivalents and short-term investments of $154.2 million and long-term investments of $32.6 million, and we had $278.8 million principal amount of outstanding debt.

We may need to raise additional capital, whether through the sale of equity or debt securities, additional strategic business collaborations, the establishment of other funding facilities, licensing arrangements, asset sales or other means, in order to support our ongoing activities, including the commercialization of our products and the development of our product candidates .

It may be difficult for us to raise additional funds on favorable terms, or at all.

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the degree to which we are able to generate revenue from our Technosphere drug delivery platform, including through our collaborations;

the costs of developing and commercializing Afrezza on our own in the United States, including the costs of expanding our commercialization capabilities;

the costs of developing and commercializing Afrezza and V-Go on our own in the United States, including the costs of expanding our commercialization capabilities;

the demand by any or all of the holders of our debt instruments to require us to repay or repurchase such debt securities if and when required;

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our success in establishing additional strategic business collaborations or other sales or licensing of assets, and the timing and amount of any payments we might receive from any such transactions;

actions taken by the FDA and other regulatory authorities affecting Afrezza, Tyvaso DPI and our product candidates and competitive products;

actions taken by the FDA and other regulatory authorities affecting Afrezza, V-Go, Tyvaso DPI and our product candidates and competitive products;

the emergence of competing technologies and products and other market developments;

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There can be no assurances, however, that we will be able to raise additional capital in the future on acceptable terms, or at all.

In addition, the ongoing COVID-19 pandemic continues to have the potential for disruption of global financial markets.

In addition, the ongoing

COVID-19 pandemic continues to have the potential for disruption of global financial markets.

Similarly, the current Russia-Ukraine conflict has created extreme volatility in the global capital markets as well as other global economic consequences, including disruptions of the global supply chain and energy markets.

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Our operating results have fluctuated in the past and are likely to do so in future periods.

Some of the factors that could cause our operating results to fluctuate from period to period include the factors that will affect our funding requirements described above under “Risk Factors — We may need to raise additional capital to fund our operations.” In addition, the current inflationary environment related to increased aggregate demand and supply chain constraints has the potential to adversely affect our operating expenses.

We believe that comparisons from period to period of our financial results are not necessarily meaningful and should not be relied upon as indications of our future performance.

We may not realize the benefit of our recent acquisition of V-Go or any future acquisition or strategic transaction;

we be unable to successfully integrate new products or businesses we may acquire.*

We periodically evaluate and pursue acquisition of therapeutic products.

We completed the acquisition of V-Go on May 31, 2022 and it is possible that we will encounter challenges with integrating the product into our business.

Moreover, the integration of any acquired business, product or other assets into our company may be complex and time-consuming and, if such businesses, products or assets are not successfully integrated, we may not achieve the anticipated benefits, cost-savings or growth opportunities.

Potential difficulties that may be encountered in the integration process include the following:

unanticipated liabilities related to acquired assets, companies or joint ventures;

integrating personnel, operations and systems, while maintaining focus on producing and delivering consistent, high quality products;

coordinating geographically dispersed organizations;

diversion of management time and focus from operating our business to management of strategic alliances or joint ventures or acquisition integration challenges ;

retention of key employees;

increases in our expenses and reductions in our cash available for operations and other uses;

retaining existing customers and attracting new customers;

managing inefficiencies associated with integrating the operations of our company;

possible write-offs or impairment charges relating to acquired assets, businesses or joint ventures .

Furthermore, these acquisitions and other arrangements, even if successfully integrated, may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products or geographic markets, and expose us to additional liabilities associated with an acquired business, product, technology or other asset or arrangement.

Any one of these challenges or risks could impair our ability to realize any benefit from our acquisitions or arrangements after we have expended resources on them.

Future acquisitions or dispositions could also result in potentially dilutive issuances of our equity securities, the incurrence of debt, contingent liabilities or amortization expenses or write-offs of goodwill, any of which could harm our financial condition.

Our business could be adversely affected by the effects of health pandemics or epidemics in regions where we have business operations, and we could experience significant disruptions in the operations of third-party manufacturers and distributors upon whom we rely.

In particular, the ongoing COVID-19 pandemic could materially affect our operations, including at our manufacturing facility in Connecticut and with respect to our sales force and their ability to interact with health care professionals, as well as the business or operations of our suppliers, distributors or other third parties with whom we conduct business.

In particular, the ongoing COVID-19 pandemic could materially affect our operations, including at our manufacturing facilities in Connecticut and Southern China and with respect to our sales force and their ability to interact with health care professionals, as well as the business or operations of our suppliers, distributors or other third parties with whom we conduct business.

The ongoing COVID-19 pandemic has resulted in a number of restrictions to reduce the spread of the disease, many of which have been eased or lifted in recent months.

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The effects of the restrictions related to the COVID-19 pandemic and our related policies addressing the pandemic, including the evolving nature of such policies, may negatively impact productivity, disrupt our business and delay our development programs, regulatory and commercialization timelines.

We may also face challenges or disruptions as employees return back to the workplace, including re-integration challenges by our employees and distractions to management related to such transition.

We may also face challenges or distractions as we navigate the balance between a productive workplace and the need to accommodate a certain amount of remote work by some employees at least some of the time.

These and similar, and perhaps more severe, disruptions in our operations due to the COVID-19 pandemic could negatively impact our business, operating results and financial condition.

Quarantines, shelter-in-place and similar government orders, or the perception that such orders, shutdowns or other restrictions on the conduct of business operations could occur, related to COVID-19 or other infectious diseases could impact personnel at third-party manufacturing facilities in the United States and other countries, or the availability or cost of materials, which would disrupt our supply chain.

In particular, our contract manufacturers in China could be impacted by that country’s zero-tolerance coronavirus policy, which has led to strict lockdowns that continue to be in place in many regions of China.

Although we believe we have sufficient quantities of raw materials for planned manufacturing operations in 2022, a prolonged supply interruption of certain components could adversely affect our ability to conduct commercialization activities and planned clinical trials.

In addition, we believe that the severity of the COVID-19 pandemic in Brazil has the potential to continue to negatively impact the distribution of Afrezza by our partner in that country.

Sales and demand for Afrezza have been adversely affected by the COVID-19 pandemic, and we expect this trend to continue for at least the near term.

In addition, we believe that the COVID-19 pandemic will continue to negatively impact the distribution of Afrezza by our partner in Brazil.

Sales and demand for our products have been adversely affected at times during the COVID-19 pandemic, and we expect this risk to continue for at least the near term.

Although our sales representatives are conducting in-person sales calls to the extent permitted by state and local public health authorities and by the policies of individual healthcare providers that they interact with, they have not fully returned to conducting in-person office visits with healthcare providers, which impacts their productivity.

Disruptions in the prescription volume of Afrezza could also occur:

Disruptions in the prescription volume of our products could also occur:

if patients are physically quarantined or are unable or unwilling to visit healthcare providers,

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as a result of general disruptions in the operations of payers, distributors, logistics providers and other third parties that are necessary for Afrezza to be prescribed and reimbursed.

In addition, our ongoing or planned clinical trials of Afrezza or those conducted by Cipla or our other regional partners may be affected by the COVID-19 pandemic.

In addition, our ongoing or planned clinical trials of our products or those conducted by Cipla or our other regional partners may be affected by the COVID-19 pandemic.

Clinical site initiation and patient enrollment may be delayed due to prioritization of hospital resources toward the COVID-19 pandemic.

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We will continue to monitor the COVID-19 situation closely.

If we do not obtain regulatory approval of Afrezza in foreign jurisdictions, we will not be able to market Afrezza in such jurisdictions, which could limit our commercial revenues.

We may not be able to establish additional regional partnerships or other arrangements with third parties for the commercialization of Afrezza outside of the United States.

If we do not obtain regulatory approval of our products in foreign jurisdictions, we will not be able to market in such jurisdictions, which could limit our commercial revenues.

We may not be able to establish additional regional partnerships or other arrangements with third parties for the commercialization of our products outside of the United States.*

Although Afrezza has been approved in the United States by the FDA and in Brazil by ANVISA, we have not yet obtained approval in any other jurisdiction.

In order to market Afrezza in a foreign jurisdiction, we must obtain regulatory approval in each such foreign jurisdiction, and we may never be able to obtain such approvals.

The research, testing, manufacturing, labeling, sale, import, export, marketing, and distribution of pharmaceutical products outside the United States are subject to extensive regulation by foreign regulatory authorities, whose regulations differ from country to country.

We will be required to comply with the different regulations and policies of the jurisdictions where we seek approval for Afrezza, and we have not yet identified all of the requirements that we will need to satisfy to submit Afrezza for approval for other jurisdictions.

This will require additional time, expertise and expense, including the potential need to conduct additional studies or development work for other jurisdictions beyond the work that we have conducted to support the approval of Afrezza in the United States.

Our current strategy for the future commercialization of Afrezza outside of the United States, subject to receipt of the necessary regulatory approvals, is to seek, establish and maintain regional partnerships in foreign jurisdictions where there are commercial opportunities.

It may be difficult to find or maintain collaboration partners that are able and willing to devote the time and resources necessary to successfully commercialize Afrezza.

Collaborations with third parties may require us to relinquish material rights, including revenue from commercialization, agree to unfavorable terms or assume material ongoing development obligations that we

would have to fund.

Similarly, V-Go has received 510(k) clearance from the FDA, but has not received a comparable approval in any other country.

In order to market our products in a foreign jurisdiction, we must obtain regulatory approval in each such foreign jurisdiction, and we may never be able to obtain such approvals.

The research, testing, manufacturing, labeling, sale, import, export, marketing, and distribution of therapeutic products outside the United States are subject to extensive regulation by foreign regulatory authorities, whose regulations differ from country to country.

We will be required to comply with the different regulations and policies of the jurisdictions where we seek approval for our products, and we have not yet identified all of the requirements that we will need to satisfy to submit our products for approval for other jurisdictions.

Our current strategy for the future commercialization of our products outside of the United States, subject to receipt of the necessary regulatory approvals, is to seek, establish and maintain regional partnerships in foreign jurisdictions where there are commercial opportunities.

It may be difficult to find or maintain collaboration partners that are able and willing to devote the time and resources necessary to successfully commercialize our products.

These collaboration arrangements are complex and time-consuming to negotiate, and if we are unable to reach agreements with third-party collaborators, we may fail to meet our business objectives and our financial condition may be adversely affected.

We may also face significant competition in seeking collaboration partners, and may not be able to find a suitable collaboration partner in a timely manner on acceptable terms, or at all.

Any of these factors could cause delay or prevent the successful commercialization of Afrezza in foreign jurisdictions and could have a material and adverse impact on our business, financial condition and results of operations and the market price of our common stock and other securities could decline.

Any of these factors could cause delay or prevent the successful commercialization of our products in foreign jurisdictions and could have a material and adverse impact on our business, financial condition and results of operations and the market price of our common stock and other securities could decline.

We may not be successful in our efforts to develop and commercialize our product candidates.*

Other than Tyvaso DPI, which we licensed to UT, we have sought to develop our product candidates through our internal research programs.

All of our product candidates will require additional research and development and, in some cases, significant preclinical, clinical and other testing prior to seeking regulatory approval to market them.

We have generally sought to develop inhaled therapeutic product candidates through our internal research programs.

All such product candidates will require additional research and development and, in some cases, significant preclinical, clinical and other testing prior to seeking regulatory approval to market them.

Accordingly, these product candidates will not be commercially available for a number of years, if at all.

Further research and development on these programs will require significant financial resources.

Given our limited financial resources, our need to support the launch preparations of Tyvaso DPI and our ongoing attention on the development and commercialization of Afrezza, we may not be able to advance these programs into clinical development unless we are able to obtain specific funding for these programs or enter into collaborations with third parties.

Given our limited financial resources, we may not be able to advance these programs into clinical development unless we are able to obtain specific funding for these programs or enter into collaborations with third parties.

Even if our research programs identify product candidates that initially show promise, these candidates may fail to progress through clinical development for any number of reasons, including discovery upon further research that these candidates have adverse effects or other characteristics that indicate they are unlikely to be effective.

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We are not currently profitable and have rarely generated positive net cash flow from operations.

As of March 31, 2022, we had an accumulated deficit of $3.2 billion.

As of June 30 , 2022, we had an accumulated deficit of $3.2 billion.

The accumulated deficit has resulted principally from costs incurred in our research and development programs, the write-off of assets (including goodwill, inventory and property, plant and equipment) and general operating expenses.

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In addition, under our Insulin Supply Agreement with Amphastar, we agreed to purchase certain annual minimum quantities of insulin through 2027.

As of March 31, 2022, there was $79.3 million remaining in aggregate purchase commitments under this agreement.

As of June 30, 2022, there was approximately $ 73.4 million remaining in aggregate purchase commitments under this agreement.

We may not have the necessary capital resources to service this contractual commitment.

Our losses have had, and are expected to continue to have, an adverse impact on our working capital, total assets and stockholders’ equity.

Our ability to achieve and sustain positive cash flow from operations and profitability depends heavily upon successfully commercializing Afrezza, and we cannot be sure when, if ever, we will generate positive cash flow from operations or become profitable.

Our ability to achieve and sustain positive cash flow from operations and profitability depends heavily upon successfully commercializing our products, and we cannot be sure when, if ever, we will generate positive cash flow from operations or become profitable.

We have a substantial amount of debt, and we may be unable to make required payments of interest and principal as they become due.*

The notes to our condensed consolidated financial statements in this Quarterly Report on Form 10-Q provide details about our various debt obligations.

As of March 31, 2022, we had $288.4 million principal amount of outstanding debt, consisting of:

As of June 30, 2022, we had $278.8 million principal amount of outstanding debt, consisting of:

$230.0 million aggregate principal amount of Senior convertible notes bearing interest at 2.50% payable semi-annually in arrears on March 1 and September 1 of each year, beginning on September 1, 2021 and will mature on March 1, 2026, unless earlier converted, redeemed or repurchased.

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Furthermore, we cannot predict or quantify the time, effort and cost required to transition to the use of new benchmark rates, including with respect to negotiating and implementing any necessary changes to existing contractual agreements, and implementing changes to our systems and processes.

Additionally, if interest rates continue to increase, as they have been throughout 2022, we would be obligated to make higher interest payments to our lenders under the MidCap credit facility.

We cannot provide assurance that future interest rate changes will not have a material negative impact on our business, financial position, or operating results.

Under the MidCap credit facility, we must comply with a minimum cash covenant of $10.0 million at all times prior to the approval by the FDA of Tyvaso DPI and we may be required to comply with additional covenants in the future under certain circumstances.

The MidCap credit facility requires us, and any debt arrangements we may enter into in the future may require us, to comply with various covenants that limit our ability to, among other things:

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engage in transactions with our affiliates.

We may be required to comply with additional covenants in the future under certain circumstances.

The restrictive covenants in the MidCap credit facility could prevent us from pursuing business opportunities that we or our stockholders may consider beneficial.

If our unrestricted cash and short-term investments balance falls below $90.0 million, we will be subject to a covenant relating to trailing twelve-month minimum Afrezza net revenue, tested on a monthly basis, which is set forth in the MidCap credit facility Agreement, as amended.

I f we fail to meet this covenant or the minimum cash covenant, any outstanding borrowings, together with accrued interest, under the MidCap credit facility could be declared immediately due and payable.

I f we fail to meet this covenant, any outstanding borrowings, together with accrued interest, under the MidCap credit facility could be declared immediately due and payable.

A breach of any of these covenants could result in an event of default under the MidCap credit facility.

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While we have been able to timely make our required interest payments to date, we cannot guarantee that we will be able to do so in the future.

securities or loans, and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time.

If we fail to pay interest on, or repay, our outstanding term loan under the MidCap credit facility or borrowings under the Mann Group promissory notes when required, we will be in default under the instrument for such debt securities or loans, and may also suffer an event of default under the terms of other borrowing arrangements that we may enter into from time to time.

Any of these events could have a material adverse effect on our business, results of operations and financial condition, up to and including the note holders initiating bankruptcy proceedings or causing us to cease operations altogether.

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If we fail to commence or complete, or experience delays in or are forced to curtail, our proposed clinical programs or otherwise fail to adhere to our projected development goals in the timeframes we expect (or within the timeframes expected by analysts or investors), our business, financial condition and results of operations will be harmed and the market price of our common stock and other securities may decline.

Afrezza or our product candidates may be rendered obsolete by rapid technological change.

The rapid rate of scientific discoveries and technological changes could result in Afrezza or one or more of our product candidates becoming obsolete or noncompetitive.

Our competitors may develop or introduce new products that render our technology or Afrezza less competitive, uneconomical or obsolete.

Our future success may depend not only on our ability to develop our product candidates, but also our ability to improve them and to improve Afrezza in order to keep pace with emerging industry developments.

Our products and product candidates may be rendered obsolete by rapid technological change.*

The rapid rate of scientific discoveries and technological changes could result in our approved products or one or more of our product candidates becoming obsolete or noncompetitive.

Our competitors may develop or introduce new products that render our technology or products less competitive, uneconomical or obsolete.

Our future success may depend not only on our ability to develop our product candidates, but also our ability to improve them in order to keep pace with emerging industry developments.

We cannot assure you that we will be able to do so.

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These institutions are becoming increasingly aware of the commercial value of their findings and are more active in seeking patent and other proprietary rights as well as licensing revenues.

Continued testing of Afrezza or our product candidates may not yield successful results, and even if it does, we may still be unable to successfully commercialize our product candidates.

Continued testing of our products and product candidates may not yield successful results, and even if it does, we may still be unable to successfully commercialize our product candidates.*

Forecasts about the effects of the use of drugs, including Afrezza, over terms longer than the clinical studies or in much larger populations may not be consistent with the earlier clinical results.

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Any suspension or termination of our clinical studies or marketing activities may harm our business, financial condition and results of operations and the market price of our common stock and other securities may decline.

The safety and efficacy of V-Go is not supported by long-term clinical data, which could limit sales and could lead to unforeseen negative effects.*

V-Go has received pre-market clearance under Section 510(k) of the U.S.

Federal Food, Drug, and Cosmetic Act, or FDCA.

This process typically requires the submission of less supporting documentation than other FDA approval processes and does not always require long-term clinical studies.

As a result, we currently lack significant published long-term clinical data supporting the safety and efficacy of V-Go and the benefits it offers that might have been generated in connection with other approval processes.

For these reasons, adults who require insulin and their healthcare providers may be slower to adopt or recommend V-Go, we may not have

comparative data that our competitors have or are generating , and third-party payors may not be willing to provide coverage or reimbursement for V-Go .

Further, future studies or clinical experience may indicate that treatment with V-Go is not superior to treatment with competitive products.

Such results could slow the adoption of V-Go and significantly reduce our sales, which could prevent us from achieving our forecasted sales targets or achieving or sustaining profitability.

Moreover, if future results and experience indicate that V-Go cause s unexpected or serious complications or other unforeseen negative effects, we could be subject to mandatory product recalls, suspension or withdrawal of FDA clearance or approval, significant legal liability or harm to our business reputation.

If product liability claims are brought against us, we may incur significant liabilities and suffer damage to our reputation.*

The testing, manufacturing, marketing and sales of Afrezza and any clinical testing of our product candidates expose us to potential product liability claims.

The testing, manufacturing, marketing and sales of our products and any clinical testing of our product candidates expose us to potential product liability claims.

A product liability claim may result in substantial judgments as well as consume significant financial and management resources and result in adverse publicity, decreased demand for a product, injury to our reputation, withdrawal of clinical studies volunteers and loss of revenues.

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The design of any system of controls is based in part on certain assumptions about the likelihood of future events, and we cannot assure you that any design will succeed in achieving its stated goals under all potential future conditions.

Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Over time, controls may become inadequate because of changes in conditions or

deterioration in the degree of compliance with policies or procedures.

Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

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The annual limitation is cumulative and therefore, if not fully utilized in a year, can be utilized in future years in addition to the Section 382 limitation for those years.

We have completed a Section 382 analysis beginning from the date of our initial public offering through December 31, 2021, to determine

whether additional limitations may be placed on our net operating loss carryforwards and other tax attributes, and no additional changes in ownership that met the Section 382 ownership change threshold were identified through December 31, 202 1 .

We have completed a Section 382 analysis beginning from the date of our initial public offering through December 31, 2021, to determine whether additional limitations may be placed on our net operating loss carryforwards and other tax attributes, and no additional changes in ownership that met the Section 382 ownership change threshold were identified through December 31, 2021.

There is a risk that changes in ownership may occur in tax years after December 31, 2021.

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For example, the U.S.

Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development.

Internal Revenue Service or another tax authority could challenge our allocation of income by tax jurisdiction and the amounts

paid between our affiliated companies pursuant to our intercompany arrangements and transfer pricing policies, including amounts paid with respect to our intellectual property development.

Similarly, a tax authority could assert that we are subject to tax in a jurisdiction where we believe we have not established a taxable nexus, often referred to as a “permanent establishment” under international tax treaties, and such an assertion, if successful, could increase our expected tax liability in one or more jurisdictions.

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At least for the foreseeable future, we expect that our manufacturing facility in Connecticut will be the sole location for the manufacturing of Afrezza and Tyvaso DPI.

This facility and the manufacturing equipment we use would be costly to replace and could require substantial lead-time to repair or replace.

We depend on our facilities and on collaborators, contractors and vendors for the continued operation of our business, some of whom are located in other countries.

Similarly, our contract manufacturer in Southern China is the only location for the assembly of V-Go.

Additional contract manufacturers in China perform release testing, sterilization, inspection and packaging functions.

These facilities and the specialized manufacturing equipment we use at them would be costly to replace and could require substantial lead-time to repair or replace.

We depend on our facilities and on collaborators, contractors and vendors for the continued operation of our business.

Natural disasters or other catastrophic events, including interruptions in the supply of natural resources, political and governmental changes, severe weather conditions, public health pandemics or epidemics (including, for example, the ongoing COVID-19 pandemic), wars, conflicts (including the current Russia-Ukraine conflict), wildfires and other fires, explosions, actions of animal rights activists, terrorist attacks, volcanic eruptions, earthquakes and wars could disrupt our operations or those of our collaborators, contractors and vendors.

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Any natural disaster or catastrophic event could have a significant negative impact on our operations and financial results.

Moreover, any such event could delay our research and development programs or cause interruptions in our commercialization of Afrezza.

Moreover, any such event could delay our research and development programs or cause interruptions in our commercialization of our products.

We deal with hazardous materials and must comply with environmental laws and regulations, which can be expensive and restrict how we do business.

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Moreover, the risk of accidental contamination or injury from hazardous materials cannot be completely eliminated, and in the event of an accident, we could be held liable for any damages that may result, and any liability could fall outside the coverage or exceed the limits of our insurance.

Currently, our general liability policy provides coverage

up to $1.0 million per occurrence and $2.0 million in the aggregate and is supplemented by an umbrella policy that provides a further $20.0 million of coverage;

Currently, our general liability policy provides coverage up to $1.0 million per occurrence and $2.0 million in the aggregate and is supplemented by an umbrella policy that provides a further $20.0 million of coverage;

however, our insurance policy excludes pollution liability coverage and we do not carry a separate hazardous materials policy.

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If we are unable to collect these future costs and expenses, if any, from the responsible party, our business, financial condition and results of operations may be harmed.

When we sold a portion of the property upon which our facility is located to the entity that is now our landlord, we became an additional responsible party for any environmental investigation and remediation on that portion of the property, including with respect to investigation or remediation that may be required as a result of our activities since 2001.

When we sold a portion of the property

upon which our facility is located to the entity that is now our landlord, we became an additional responsible party for any environmental investigation and remediation on that portion of the property, including with respect to investigation or remediation that may be required as a result of our activities since 2001.

To date, we have not identified any material environmental investigation or remediation activities that we are required to perform.

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Similarly, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties and infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised or that they do not contain exploitable defects or bugs that could result in a breach of or disruption to our information technology systems (including our products) or the third-party information technology systems that support us and our services.

The COVID-19 pandemic and our workforce which works remotely at least part of the time pose increased risks to our information technology systems and data, as our employees work from home, utilizing network connections outside our premises.

The COVID-19 pandemic and our workforce that works remotely at least part of the time pose increased risks to our information technology systems and data, as our employees work from home, utilizing network connections outside our premises.

Future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.

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While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.

We have not always been able in the past and may be unable

in the future to detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred.

We have not always been able in the past and may be unable in the future to detect vulnerabilities in our information technology systems because such threats and techniques change frequently, are often sophisticated in nature, and may not be detected until after a security incident has occurred.

For example, like many companies, we use SolarWinds to help manage our information technology systems.

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A trade and cooperation agreement, or the Trade and Cooperation Agreement, that outlines the future trading relationship between the United Kingdom and the European Union was agreed in December 2020.

Since a significant proportion of the regulatory framework in the United Kingdom applicable to our business and our product candidates is derived from EU directives and regulations, Brexit has had, and may continue to have, a material impact upon the regulatory regime with respect to the development, manufacture, importation, approval and commercialization of our product

candidates in the United Kingdom or the European Union.

For example, Great Britain is no longer covered by the centralized procedures for obtaining EU-wide marketing authorization from the EMA and, and a separate marketing authorization will be required to market our product candidates in Great Britain.

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We could therefore, both now and in the future, face significant additional expenses (when compared to the position prior to the end of the Transition Period) to operate our business, which could significantly and materially harm or delay our ability to generate revenues or achieve profitability of our business.

Any further changes in international trade, tariff and import/export regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us.

Any further changes in international trade, tariff and import/export

regulations as a result of Brexit or otherwise may impose unexpected duty costs or other non-tariff barriers on us.

These developments, or the perception that any of them could occur, may significantly reduce global trade and , in particular, trade between the impacted nations and the UK It is also possible that Brexit may negatively affect our ability to attract and retain employees, particularly those from the EU These developments, or the perception that any of them could occur, may significantly reduce global trade and, in particular, trade between the impacted nations and the United Kingdom.

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We may also be required to undertake post-marketing studies.

In addition, if we or other parties identify adverse effects after any of our products are on the market, or if manufacturing problems occur, regulatory approval may be withdrawn and a reformulation of our products, additional clinical studies, changes in labeling of, or indications of use for, our products and/or additional marketing applications may be required.

or indications of use for, our products and/or additional marketing applications may be required.

If we encounter any of the foregoing problems, our business, financial condition and results of operations will be harmed and the market price of our common stock and other securities may decline.

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We and any third-party manufacturers or suppliers must continually adhere to federal regulations setting forth cGMP (for drugs) and QSR (for medical devices), and their foreign equivalents, which are enforced by the FDA and other national regulatory bodies through their facilities inspection programs.

In complying with cGMP and foreign regulatory requirements, we and any of our potential third-party manufacturers or suppliers will be obligated to expend time, money and effort in production, record-keeping and quality control to ensure that our products meet applicable specifications and other requirements.

In complying with cGMP and foreign regulatory requirements, we and any of our third-party manufacturers or suppliers will be obligated to expend time, money and effort in production, record-keeping and quality control to ensure that our products meet applicable specifications and other requirements.

QSR requirements also impose extensive testing, control and documentation requirements.

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Any such actions would have a material adverse effect on our business, financial condition and results of operations.

FDA and comparable foreign regulatory authorities subject Afrezza and any approved drug product to extensive and ongoing regulatory requirements concerning the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping.

FDA and comparable foreign regulatory authorities subject any approved therapeutic product to extensive and ongoing regulatory requirements concerning the manufacturing processes, labeling, packaging, distribution, adverse event reporting, storage, advertising, promotion, import, export and recordkeeping.

These requirements include submissions of safety and other post-marketing information and reports, registration, as well as continued compliance with cGMPs and GCP requirements for any clinical trials that we conduct post-approval.

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For example, in July 2021, a third party submitted a citizen petition to the FDA requesting that the FDA refuse to approve Tyvaso DPI, and/or impose additional requirements in order to approve the product.

This has prompted the FDA to request additional information concerning Tyvaso DPI and to delay the review deadline for the Tyvaso DPI NDA from February 2022 to May 2022.

This prompted the FDA to request additional information concerning Tyvaso DPI prior to granting approval in May 2022.

If successful, a citizen petition can significantly delay, or even prevent, the approval of a drug product.

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For example, it is possible that additional governmental action will be taken in response to the COVID-19 pandemic.

Such reforms may limit our ability to generate revenues from sales of Afrezza or other products that we may develop in the future and achieve profitability.

Further, to the extent that such reforms have a material adverse effect on the business, financial condition and profitability of any future marketing partner for Afrezza, and companies that are prospective collaborators for our product candidates, our ability to commercialize Afrezza and our product candidates under development may be adversely affected.

Such reforms may limit our ability to generate revenues from sales of our products and achieve profitability.

Further, to the extent that such reforms have a material adverse effect on our ability to commercialize our products and product candidates under development, our business, financial condition and profitability may be adversely affected.

We expect that PPACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for any approved product, and could seriously harm our future revenues.

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Federal civil and criminal false claims laws, including without limitation the False Claims Act, and civil monetary penalties laws, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid, or other federal healthcare programs that are false or fraudulent, and knowingly making, or causing to be made, a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government, and under PPACA, the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal false claims laws;

The federal Physician Payments Sunshine Act under PPACA, which requires certain manufacturers of drugs, devices, biologics, and medical supplies to report annually to CMS information related to payments and other transfers of value to physicians (defined to include defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and ownership and investment interests held by physicians and other healthcare providers and their immediate family members.

The federal Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created new federal criminal statutes that prohibit, among other things, knowingly and willfully executing a scheme to defraud any healthcare benefit program or falsifying, concealing, or covering up a material fact in connection with the delivery of or payment for health care benefits.

HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009 (“HITECH”), and their respective implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information on entities subject to the law, such as certain healthcare providers, health plans, and healthcare clearinghouses and their respective business associates that perform services for them that involve the creation, use, maintenance or disclosure of, individually identifiable health information as well as their covered subcontractors.

Other state and foreign law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payer, including commercial insurers, and state and foreign laws governing the privacy and security and other processing of personal data (including health information) in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts;

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In the ordinary course of business, we collect, receive, store, process, generate, use, transfer, disclose, make accessible, protect, secure, dispose of, transmit, and share personal data and other sensitive information, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and sensitive third-party data.

Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations, guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.

Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, regulations,

guidance, industry standards, external and internal privacy and security policies, contracts, and other obligations that govern the processing of personal data by us and on our behalf.

In the United States, federal, state, and local governments have enacted numerous data privacy and security laws, including data breach notification laws, personal data privacy laws, and consumer protection laws.

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In some cases, such as with the Medicaid Drug Rebate Program, the rebates are based on pricing that we report on a monthly and quarterly basis to the government agencies that administer the programs.

Pricing requirements and rebate/discount calculations are complex, vary among products and programs, and are often subject to interpretation by governmental or regulatory agencies and the courts.

Pricing requirements

and rebate/discount calculations are complex, vary among products and programs, and are often subject to interpretation by governmental or regulatory agencies and the courts.

The requirements of these programs, including, by way of example, their respective terms and scope, change frequently.

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In addition, in the event that the CMS were to terminate our rebate agreement, no federal payments would be available under Medicaid or Medicare for our covered outpatient drugs.

Reports of side effects or safety concerns in related technology fields or in other companies’ clinical studies could delay or prevent us from obtaining regulatory approval for our product candidates or negatively impact public perception of Afrezza or any other products we may develop.

If other pharmaceutical companies announce that they observed frequent adverse events in their studies involving insulin therapies, we may be subject to class warnings in the label for Afrezza.

In addition, the public perception of Afrezza might be adversely affected, which could harm our business, financial condition and results of operations and cause the market price of our common stock and other securities to decline, even if the concern relates to another company’s products or product candidates.

There are also a number of clinical studies being conducted by other pharmaceutical companies involving compounds similar to, or potentially competitive with, our product candidates.

Adverse results reported by these other companies in their clinical studies could delay or prevent us from obtaining regulatory approval or negatively impact public perception of our product candidates, which could harm our business, financial condition and results of operations and cause the market price of our common stock and other securities to decline.

There are a number of clinical studies being conducted by other pharmaceutical companies involving compounds similar to, or potentially competitive with, our product candidates.

Adverse results reported by these other companies in their clinical studies could delay or prevent us from obtaining regulatory approval, may subject our products to class warnings in their labels or negatively impact public perception of our product candidates, which could harm our business, financial condition and results of operations and cause the market price of our common stock and other securities to decline.

Our portfolio of investment securities may require us to register with the SEC as an “investment company” in accordance with the Investment Company Act of 1940 (“‘40 Act”).*

The rules and interpretations of the SEC and the courts relating to the definition of "investment company" are very complex.

Although we are a biopharmaceutical company and we do not hold ourselves out as an investment company, based on our investment securities as of the most recent balance sheet date set forth in this report, the value of our investment securities relative to our total assets (exclusive of government securities and cash items) exceeds safe harbor limits prescribed in the ’40 Act.

We can provide no assurance that the SEC would not take the position that we would be required to register under the ‘40 Act and comply with the ‘40 Act’s registration and reporting requirements, capital structure requirements, affiliate transaction restrictions, conflict of interest rules, requirements for disinterested directors, and other substantive provisions.

If we were required to register as an “investment company” and be subject to the restrictions of the ‘40 Act, those restrictions likely would require significant changes in the way we do business and add significant administrative costs and burdens to our operations.

To ensure we do not fall within the ‘40 Act, we may need to take various actions which we might otherwise not pursue.

These actions may include modifying our mixture of assets and income or a liquidation of certain of our assets.

RISKS RELATED TO INTELLECTUAL PROPERTY

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We own a number of domestic and international patents, have a number of domestic and international patent applications pending and have licenses to additional patents.

We cannot assure you that our patents and licenses will successfully preclude others from using our technologies, and we could incur substantial costs in seeking enforcement of our proprietary rights against infringement.

We cannot assure you that our patents and licenses will successfully preclude others from using our technologies, and we could incur substantial

costs in seeking enforcement of our proprietary rights against infringement.

Even if issued, the patents may not give us an advantage over competitors with alternative technologies.

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Moreover, the term of a patent is limited and, as a result, the patents protecting our products expire at various dates.

For example, various patents providing protection for the powder component of Afrezza have terms extending into 2026, 2028, 2029 or 2030.

In addition, patents providing protection for our inhaler and cartridges have terms extending into 2023, 2031 or 2032.

Our method of treatment claims extends into 2026, 2029, 2030 or 2031.

As and when these different patents expire, Afrezza could become subject to increased competition.

As and when these different patents expire, our products could become subject to increased competition.

As a consequence, we may not be able to recover our development costs.

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We may be forced to take other actions to satisfy our obligations or we may experience a financial failure.*

Our ability to make scheduled payments on our lease and debt obligations will depend on our financial and operating performance, which is subject to the commercial success of Afrezza and, if approved, Tyvaso DPI, the extent to which we are able to successfully develop and commercialize our Technosphere drug delivery platform and any other product candidates that we develop, prevailing economic and competitive conditions, and to certain financial, business and other factors beyond our control.

Our ability to make scheduled payments on our lease and debt obligations will depend on our financial and operating performance, which is subject to the commercial success of our products, the extent to which we are able to successfully develop and commercialize our Technosphere drug delivery platform and any other product candidates that we develop, prevailing economic and competitive conditions, and to certain financial, business and other factors beyond our control.

We cannot assure you that we will maintain a level of cash flows from operating activities sufficient to permit us to pay the principal, premium, if any, and interest on our indebtedness.

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Our business and the market price of our common stock may be influenced by a large variety of factors, including:

our ability to obtain marketing approval for Afrezza outside of the United States and to find collaboration partners for the commercialization of Afrezza in foreign jurisdictions;

future estimates of Afrezza sales, Tyvaso DPI royalties, prescriptions or other operating metrics;

our ability to successfully commercialize other products (in addition to Afrezza) based on our Technosphere drug delivery platform;

the progress of preclinical and clinical studies of our product candidates and of post-approval studies of Afrezza required by the FDA;

the results of preclinical and clinical studies of our product candidates;

our ability to obtain marketing approval for our products outside of the United States and to find collaboration partners for the commercialization of our products in foreign jurisdictions;

future estimates of product sales, Tyvaso DPI royalties, prescriptions or other operating metrics;

our ability to successfully commercialize other products based on our Technosphere drug delivery platform;

the progress and results of preclinical and clinical studies of our product candidates and of post-approval studies of approved products that are required by the FDA;

general economic, political or stock market conditions, especially for emerging growth and pharmaceutical market sectors;

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announcements by us, our collaborators, or our competitors concerning clinical study results, acquisitions, strategic alliances, technological innovations, newly approved commercial products, product discontinuations, or other developments;

the availability of critical materials used in developing and manufacturing Afrezza, Tyvaso DPI or other product candidates;

the availability of critical materials used in developing and manufacturing our products and product candidates;

developments or disputes concerning our relationship with any of our current or future collaborators or third party manufacturers;

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the status of any legal proceedings or regulatory matters against or involving us or any of our executive officers and directors;

discussion of Afrezza, Tyvaso DPI, our other product candidates, competitors’ products, or our stock price by the financial and scientific press, the healthcare community and online investor communities such as chat rooms.

In particular, it may be difficult to verify statements about us and our investigational products that appear on interactive websites that permit users to generate content anonymously or under a pseudonym.

discussion of our products, competitors’ products, or our stock price by the financial and scientific press, the healthcare community and online investor communities such as chat rooms.

In particular, it may be difficult to verify statements about us that appear on interactive websites that permit users to generate content anonymously or under a pseudonym.

Statements attributed to company officials may, in fact, have originated elsewhere.

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If we are unable to meet any of the Nasdaq listing requirements in the future, such as the corporate governance requirements, the minimum closing bid price requirement, or the minimum market value of listed securities requirement, Nasdaq could determine to delist our common stock.

A delisting of our common stock could adversely affect the market liquidity of our common stock, decrease the market

price of our common stock, adversely affect our ability to obtain financing for the continuation of our operations and result in the loss of confidence in our company.

A delisting of our common stock could adversely affect the market liquidity of our common stock, decrease the market price of our common stock, adversely affect our ability to obtain financing for the continuation of our operations and result in the loss of confidence in our company.

In 2016, we received a notice of non-compliance from the Listing Qualifications Department of the Nasdaq Stock Market with respect to the $1.00 minimum closing bid price requirement.

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The future sale of our common stock or the exchange or conversion of our convertible debt into common stock could negatively affect the market price of our common stock and other securities.*

As of April 29, 2022 , we had 252,565,400 shares of common stock outstanding.

As of Jul y 29, 2022 , we had 25 7 , 338,259 shares of common stock outstanding.

All of these shares are available for public sale, subject in some cases to volume and other limitations.

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This provision does not apply to suits brought to enforce a duty or liability created by the Exchange Act.

Furthermore, Section 22 of the Securities Act of 1933, as amended, or the Securities Act, creates concurrent jurisdiction for federal and state courts over all such

Securities Act actions.

Furthermore, Section 22 of the Securities Act of 1933, as amended, or the Securities Act, creates concurrent jurisdiction for federal and state courts over all such Securities Act actions.

Accordingly, both state and federal courts have jurisdiction to entertain such claims.

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Any adverse determination in litigation could also subject us to significant liabilities.

Unstable market, economic and geo-political conditions may have serious adverse consequences on our business, financial condition and stock price.*

Unstable market, economic and geopolitical conditions may have serious adverse consequences on our business, financial condition and stock price.*

The global credit and financial markets have experienced extreme volatility and disruptions in the past.

5 unchanged sentences

Failure to secure any necessary financing in a timely manner and on favorable terms could have a material adverse effect on our operations, growth strategy, financial performance and stock price and could require us to delay or abandon clinical development plans.

In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive an economic downturn or rising inflation, which could directly affect our ability to attain our operating goals on schedule and on budget.

Other international and geo-political events could also have a serious adverse impact on our business.

In addition, there is a risk that one or more of our current service providers, manufacturers and other partners may not survive

an economic downturn or rising inflation, which could directly affect our ability to attain our operating goals on schedule and on budget.

Other international and geopolitical events could also have a serious adverse impact on our business.

For instance, in February 2022, Russia initiated military action against Ukraine.

6 unchanged sentences

We currently do not report our environmental emissions, and lack of reporting or future reporting could result in certain investors from declining to invest in our common stock.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

DEFAULTS UPON SENIOR SECURITIES

MINE SAFETY DISCLOSURES

Not applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1A. Risk Factors