The payment for the first half of the deal -- the compounds going to Tolero -- was specified, but it's not very useful to MannKind's investors. The biotech is due $130 million for upfront and milestone payments linked to development, approval, and commercialization of the drugs in the program, but there were no details about how that might break down.
It's pretty standard for biotechs to not lay out exactly when they'll get milestone payments. About all you can hope for is that the company will separate development and regulatory milestones from sales milestones that are years away and harder to obtain. Endocyte
But biotechs usually break out how much they're getting upfront; Endocyte and Exelixis both did. And that would seem to be doubly important for a company that had just $3.2 million in cash and equivalents at the end of the year. MannKind raised about $80 million in February, so it's not in dire straits, but cash is still a big part of the story here. In the fourth quarter, MannKind burned through $20 million, and that'll increase as it completes enrollment in the additional trials the FDA wants before approving its inhaled insulin treatment Afrezza.
My guess is the upfront payment is fairly small, which is why MannKind didn't bother disclosing it. Still, superficially the deal looks like a good move to get the program off the expense sheet -- perhaps temporarily -- while it focuses on Afrezza, which has the biggest near-term potential. It just would be nice to have a bit more information to evaluate the deal.
Looking for more high-tech stock ideas? Check out the Fool's free report, "3 Hidden Winners of the iPhone, iPad, and Android Revolution," where you'll find three companies quietly cashing in on the booming smartphone and tablet PC markets. Get your free copy.
Fool contributor Brian Orelli holds no position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Exelixis. Motley Fool newsletter services have recommended buying shares of Exelixis. The Motley Fool has a disclosure policy. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.
More from The Motley Fool
Here's Why MannKind Corporation Remained Stuck in Reverse and Lost 24% in February
MannKind's reverse stock split gave investors the blues.
Why MannKind Corporation Stock Is Sinking Today
The biopharma's reverse split isn't a hit with investors.
3 Stocks to Avoid in Biotech
Biotech stocks are known for their high growth, but they can also be toxic for your portfolio if you don't invest wisely.