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Mannkind finally lands partner for Afrezza: $925M potential from Sanofi

By Randy Osborne, Staff Writer

Let the “one giant leap” quips begin: Mannkind Corp.’s long road to an inhaled-insulin partnership has come to a whopping end with its disclosure of a deal under which Sanofi SA is paying $150 million up front and pledging potential milestone rewards of as much as $775 million as regulatory, development and sales targets are met.

The companies aim to launch Afrezza, a rapid-acting therapy for adults with type 1 and type 2 diabetes, in the U.S. in the first quarter of 2015. Under terms of the deal, Paris-based Sanofi takes on global commercial, regulatory and development. A supply agreement calls for Mannkind, of Valencia, Calif., to make the drug. The firms together will expand manufacturing capacity to meet global demand as necessary.

Sanofi and Mannkind will share profits and losses on a global basis, with Sanofi retaining 65 percent and Mannkind getting the rest. Sanofi has agreed to advance to Mannkind its share of the collaboration's expenses up to a limit of $175 million.

In late June, on its third try, Afrezza finally passed FDA muster to gain approval after eight years of attempts after Mannkind’s first-generation inhaled insulin, called Exubera, bombed in the marketplace. J.P. Morgan analyst Cory Kasimov called Sanofi “a best case ‘partner’ for Mannkind and a significant credibility enhancer,” estimating that Afrezza needs to generate about $3 billion in peak sales to justify Mannkind’s valuation currently, on a fully diluted basis.

Sanofi has a mealtime insulin called Apidra, but Kasimov noted in a research report that the firm “has never been able to gain traction for this product.” Sanofi could give Afrezza its “best chance” at success, but “far from guarantees a commercial hit,” in Kasimov’s view.

Mannkind's stock (NASDAQ:MNKD) was trading at $9.25 on the news, up $1.12, or 13 percent.