- United Therapeutics has come to Mannkind Corp.'s rescue, handing the struggling maker of inhaled insulin therapy Afrezza a much-needed infusion of cash in exchange for rights to an experimental drug-device combination therapy.
- Per deal terms, United will pay Mannkind $45 million upfront — and potentially $50 million more in contingent payments — to gain an exclusive license to Mannkind's dry powder formulation of treprostinil, a lung drug already marketed by United in infusion, oral and inhaled forms.
- The agreement should help Mannkind stave off concerns about its ability to continue operations, for now at least. Sales of Afrezza, the company's only approved drug, remain tiny while debt obligations loom.
While Mannkind's leadership has spoken optimistically about the company's turnaround efforts, regulatory filings paint a less rosy picture.
A recent quarterly report noted that declining cash holdings raised "substantial doubt about [Mannkind's] ability to continue as a going concern" — financial-speak indicating whether a company has enough resources to stay afloat.
As of June 30, Mannkind listed just over $26 million in cash and equivalents on its balance sheet after posting a net loss of more than $53 million over the first six months of the year. That's dangerously close to the $20 million cash minimum that Mannkind needs to maintain at the end of each fiscal quarter in order to stay on the right side of its financial covenants with investment firm Deerfield.
While sales of Afrezza (insulin human) have grown of late, net revenues totaled only $7 million in the first half of 2018. The drug, approved in 2014 and still the only inhaled rapid-acting insulin, has so far failed to gain wider traction in the competitive diabetes market. The decision by Sanofi, Mannkind's original partner on Afrezza, to pull out of its collaboration deal in 2016 left the drug with diminished prospects.
Mannkind has pitched a turnaround, launching a new TV advertising campaign for Afrezza and securing greater breathing room on debt repayments. The $45 million upfront from United, though, puts some funding behind those plans.
Investors certainly seemed relieved, pushing up shares in the drugmaker nearly 60% Tuesday morning to over $1.70 per share.
For United, the deal gives it access to another formulation of treprostinil, the active ingredient in United's three approved drugs for pulmonary hypertension. Mannkind's experimental version uses a dry powder form of treprostinil, administered via an inhaler through one or two inhalations.
By contrast, United's inhaled form, marketed as Tyvaso, comes as a solution that's inhaled 4 times a day for 2 to 3 minutes each session.
Together, sales of United's treprostinil therapies totaled more than $300 million in the first six months of 2018 — about 80% of the company's overall sales.
That revenue looks in danger, though, as generic competitors to United's top-seller Remodulin (treprostinil) are expected this year. Tyvaso sales could also be at risk, with a decision on two of the drug's patents coming soon from the Patent Trial and Appeal Board, a special body within the U.S. Patent Trademark Office.