MannKind Corporation (NASDAQ: MNKD) is having a great start to the trading session this morning, following up on the gains felt yesterday. Early yesterday, we covered the reason for the gains. Essentially, the company entered into an agreement with United Therapeutics that’s worth about $95 million. But, the stock is is trading at around double its value since the announcement of the agreement… what’s the big deal? Today, we’ll talk about:
- The agreement;
- why it’s such a big deal;
- what we’re seeing from MNKD today; and
- what we’ll be watching for ahead.
MNKD Enters Agreement With United Therapeutics
As mentioned above, MannKind corporation is flying in the market this morning, following up on the tremendous gains seen on the stock yesterday. We covered the news in great detail yesterday, so we’ll just cover the key points here. For more details, click the link above.
Yesterday, United Therapeutics (UTHR) announced that it has entered into a development, manufacture and commercialization agreement with MNKD. Under the terms of the agreement, the two companies will work together to work on a new treatment for pulmonary arterial hypertension.
In return for MannKind’s technosphere technology and the collaboration, the company will receive an upfront payment amounting to $45 million. Moving forward, MNKD will be eligible for potential payments up to $50 million surrounding the achievement of development, regulatory and commercial milestones. Once the product is approved and on the market, should it make it that far, the company will receive low double-digit royalties on net sales.
If all goes well with the first product, United may expand the license to include other active ingredients for the treatment of pulmonary hypertesion. If this is the case, MannKind will receive another payment of $40 million as well as an additional $10 million to assist in the cost of research.
Why This Is Such A Big Deal
There’s no secret that MannKind has struggled. The company developed a treatment known as Afrezza, which I have to say, even I thought would fly off of the shelves. Unfortunately however, Afrezza sales have been slow to say the least. Nonetheless, hardcore bulls have always preached about the potential of technosphere.
The technology allows treatments that are normally delivered via injection or other means to be inhaled by combining these treatments with the technosphere powder. This allows for rapid absorbtion of the treatment into the body. Another key benefit of technosphere is that an inhaler is far less invasive than a needle.
While Afrezza is still struggling to see strong sales growth, technosphere may be the goose that lays the golden eggs for MNKD and its investors. This is where the excitement comes in. Ultimately, this nearly $100 million agreement validates bullish investor opinions surrounding technosphere and the potential of this incredible technology.
What We’re Seeing From The Stock
One of the first lessons that we learn when we start to work in the market is that the news leads to moves. In the case of MannKind, the news was overwhelmingly positive. Not only did the company receive an immediate injection of funds, should all go well, there’s an additional $50 million up for grabs surrounding the first product and an additional $40 million up for grabs if the agreement is expanded. So, it comes as no surprise that excited invesotrs sent the stock soaring yesterday and that these gains are continuing today. Currently (9:50), MNKD is trading at $2.93 per share after a gain of $0.85 per share or 40.87% thus far today.
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What We’ll Be Watching For Ahead
Moving forward, the CNA Finance team will continue to keep a close eye on MNKD. In particular, we’re interested in following the story surrounding the company’s agreement with United as well as the company’s continued development of new products that take advantage of technosphere technology. Nonetheless, we’ll keep an eye on the news and bring it to you as it breaks!
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