Source: MannKind.

MannKind (NASDAQ:56400P706) just received a $50 million milestone payment from partner Sanofi (NASDAQ:SNY), but this is unlikely to be the biggest story for the U.S. biopharmaceutical company in 2015.

Delivering the goods
MannKind and Sanofi are poised this quarter to finally launch Afrezza, a highly anticipated, fast-acting oral insulin that is inhaled rather than delivered via injection.

Afrezza took a circuitous route to finally securing FDA approval last year, and its fits and starts over the past half decade caused a string of stock price pops and drops. However, investors hope their patience will be rewarded with blockbuster sales once the drug is launched.

Investors' hopes stem primarily from Afrezza's potential to reduce the need for insulin injections, which are primarily dosed via pen-like devices sold by insulin market leaders Novo Nordisk and Eli Lilly. Both compaies generate billions of dollars in sales every year from the sale of injection-based insulin products.

Source: MannKind.

Novo Nordisk's modern insulin and human insulin products, including NovoRapid and NovoMix, posted sales of $5.89 billion through the first nine months of 2014. Meanwhile, Eli Lilly's Humalog generates sales of roughly $700 million per quarter.

These numbers suggest that if Afrezza can wrestle away market share from these two companies then there could be a significant revenue opportunity ahead for MannKind and Sanofi. The two companies partnered on Afrezza following the drug's FDA approval last summer.

If they are successful, investors will be thrilled. Developing Afrezza, which first failed to win FDA approval in 2011, was breathtakingly expensive. MannKind exited the second quarter of 2014 with less than $41 million in cash and roughly $150 million short and long-term debt.

Lacking the financial flexibility to market Afrezza with the force necessary to dislodge Novo Nordisk and Eli Lilly, MannKind found a partner in Sanofi, the maker of the highly successful long-acting insulin Lantus, which is ranked second behind metformin for diabetes spending market share, according to Express Scripts.

In a bid to broaden its diabetes product lineup, Sanofi paid MannKind $150 million up front, agreed to up to an additional $775 million in milestone payments, and advanced MannKind $175 million in expenses, in exchange for 65% of Afrezza's potential profit. The $50 million milestone payment to MannKind is part of that $775 opportunity.

Sanofi will soon find out if this is money well spent as Afrezza is put on the market, leveraging the French company's existing relationships with doctors to win market share.

Looking ahead
The Sanofi partnership has significantly improved MannKind's financial position. The company was sitting on $172 million in cash exiting the third quarter; that's good news given that $99 million of its $150 million in debt is listed as short-term or current long-term debt. Overall, the balance sheet remains strained -- ManKind's current ratio, a measure of liquidity that shows how likely a company is to make good on its short term financial obligations if bill collectors come knocking, remains at 0.63. Sanofi's recent $50 million cash infusion should improve that measure, but the real story in 2015 will be less about milestone payments and more about Afrezza market share.