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Why MannKind Corporation's Stock Is Up Today

By Brian Feroldi – Jan 26, 2016 at 12:35PM

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A few details emerge about the company's new licensing partner, putting the market in a good mood.

What: Share of MannKind (MNKD 1.81%) spiked today, gaining more than 12% as of 12:00 p.m. ET after the company provided investors with more details about its newly signed licensing agreement.

So what: MannKind posted a new investor FAQ on its website that shares additional details about its new agreement with Receptor Life Sciences. The increased clarity appears to have put the market in a good mood today.

Here is a quick summary of the new information:

  • Receptor Life Sciences is an independent company, not affiliated with MannKind or Alfred Mann in any way.
  • Receptor is "funded by an important investor group, supported by prominent business leaders in the Seattle area" who choose not to disclose their involvement.
  • This agreement only covers compounds used by Receptor and does not prevent MannKind from entering into other licensing agreements.
  • The up-front money is minimal.
  • MannKind could receive a material milestone this year if all goes well.
  • MannKind will provide Receptor with technical information about its Technosphere platform and will then provide additional support where needed.
  • Total milestone payments could exceed $100 million, but the company believes the real value of the deal comes from the potential to earn royalties on successful product introductions.

Now what: It's good to see that the company was willing to share a bit more information about the deal with investors, and the news about the potential for the company to earn a meaningful milestone payment this year is especially encouraging. MannKind is going to need all the capital it can get its hands on if it is going to have any chance at turning Afrezza into a commercial success after Sanofi (SNY 0.78%) returns the drug in a few months time.

Still, the big question that remains is: Can MannKind succeed where Sanofi failed and get the market to adopt Afrezza? MannKind gave investors a sneak peek at its plans to market Afrezza in a far more cost-effective manner than Sanofi did during its JP Morgan Healthcare presentation. We won't know if its new plan will work for at least several more quarters, but investors will have more data to look at next week when Sanofi releases its fourth-quarter sales results on Feb. 2.

Brian Feroldi has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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MannKind Corporation Stock Quote
MannKind Corporation
$4.51 (1.81%) $0.08
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