MannKind Corporation’s Afrezza To Compliment Sanofi’s Lantus

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MannKind Corporation’s Afrezza To Compliment Sanofi’s Lantus
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MannKind Corporation (NASDAQ:MNKD) signed a $925 million worldwide licensing agreement with Sanofi SA (ADR) (NYSE:SNY) (EPA:SAN) on August 11. The French drugmaker already has five principal products in diabetes. However, its top-selling diabetes drug Lantus will lose patent protection next year. Lantus is sold in more than 120 countries, generating $7.6 billion in annual revenue.

MannKind increasing headcount at its Danbury plant

Brinson Patrick analyst Christopher James said in a research note that Sanofi will make a strong commercial effort to sell Afrezza. James said MannKind’s ultra-rapid insulin treatment compliments Lantus. The research firm forecasts the U.S.-only Afrezza sales to reach $3.65 billion by 2025. Sanofi’s dominant position in global diabetes market would give Afrezza a broader potential market. MannKind is expected to launch Afrezza in the U.S. in Q1, 2015.

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On July 31, MannKind signed an insulin supply agreement with Amphastar France Pharmaceuticals SAS. The Valencia-based biopharmaceutical company will purchase insulin in the minimum amount of €120.1 million per year from 2015 to 2019. Meanwhile, MannKind is increasing headcount at its Danbury site to prepare for commercial production. The company plans to triple the manufacturing capacity with two new lines.

MannKind released its second-quarter results on August 11. The company reported a net loss of 19 cents a share compared to Brinson Patrick’s forecast of 13 cents in Q2 losses. Operating expenses rose to $69.8 million, largely due to non-cash stock compensation of $30.5 million. MannKind spent $37.3 million on R&D activities. Brinson Patrick has now raised its full-year 2014 operating expense estimate from $174.4 million to $199.7 million.

Sanofi an ideal partner for MannKind

Christopher James has changed his model for MannKind after the company reached a deal with Sanofi. The French company will pay MannKind $150 million upfront, and the remaining $775 million will be paid in multiple milestones based on Afrezza sales between 2015 and 2025. Brinson Patrick has included the $150 million upfront payment to its Q4, 2014 revenue estimates. James said Sanofi is an ideal partner for MannKind given its reach into the global insulin markets.

Brinson Patrick has a Market Perform rating on the stock with $15 price target. MannKind shares surged 4.10% to $7.53 at 9:56 AM EDT on Tuesday.

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