MannKind Corporation (NASDAQ: MNKD) focuses on the development and commercialization of inhaled therapeutic products for patients with diseases such as diabetes and pulmonary arterial hypertension. MannKind is currently commercializing Afrezza® (insulin human) Inhalation Powder, the Company’s first FDA-approved product and the only inhaled rapid-acting mealtime insulin in the United States, where it is available by prescription from pharmacies nationwide.
On September 4th, United Therapeutics Corporation (Nasdaq: UTHR) and MannKind announced that they have entered into a worldwide exclusive licensing and collaboration agreement for the development and commercialization of a dry powder formulation of treprostinil, an investigational product currently being evaluated in clinical trials for the treatment of pulmonary arterial hypertension.
As per management, this new opportunity demonstrates the value of their drug and device combination platform for delivering therapeutic products. The management believes that this collaboration will have the potential to significantly improve the lives of people living with pulmonary arterial hypertension.
Liquidity aspects of the deal: The deal provides much-needed liquidity and financial flexibility that MannKind was looking for. Under the terms of the agreement:
- MannKind Corporation will receive an upfront payment of $45 million and potential milestone payments of up to $50 million, dependent upon the achievement of specific development targets.
- The parties also entered into a research agreement for the conduct of research by MannKind on behalf of United Therapeutics for products outside the scope of the licensing and collaboration agreement. MannKind will receive an immediate payment of $10 million in consideration for its performance under the research agreement.
- With the fresh inflow, the company would be comfortably complying with the Deerfield covenant, which was a cause of concern earlier.
Before this, on Aug 2nd, 2018, the company reported financial results for the second quarter of 2018. In 2Q 2018, the company experienced its highest Afrezza sales ever due to increased physician trial and adoption. MNKD doubled its market share over the past year as a result of its commercialization efforts and are excited about its new Afrezza clinical data being released throughout 2018. Additionally, Treprostinil Technosphere (TreT) continues to progress towards Phase 3 and may address an important unmet need for those living with pulmonary arterial hypertension.
Key highlights of 2Q earnings call:
Upcoming Catalysts/possible stock drivers:
- Filing relating to the initiation of a phase 3 trial on Tre-T
- Any milestone payment on Tre-T
- International expansion including potential applications for Mexico and Canada.
Analysts tracking the stock believes that the company has made incredible progress in the recent past and the second half of 2018 holds great potential for the company. In fact, the recent announcements, including the deal with UTHR has served as a significant milestone and one that is driving the sentiments and price up. Furthermore, this could drive further upside including re-rating of the stock.
As per www.marketbeat.com, The average twelve-month price target is $2.59, suggesting that the stock has a possible upside of 18.26%, with a high price target for MNKD is $4.00
Below are the excerpts of recent analyst rating on the scrip:
About the company: MannKind Corp. is a biopharmaceutical company. It focuses on the discovery, development, and commercialization of therapeutic products for diseases, such as diabetes and cancer. The company was founded by Alfred E. Mann on February 14, 1991, and is headquartered in Westlake Village, CA.
Second Quarter 2018 Results:
In thousands (except per share amount)
- Revenues: For the second quarter of 2018, Afrezza net revenue was $3.8 million, an increase of 142% compared to $1.5 million for the second quarter of 2017 resulting from increased volume, price, and favorable cartridge mix. On January 1, 2018, the company adopted ASC 606, the new revenue recognition standard, under which it recognizes revenue as it sells the product to wholesale distributors; revenue for prior periods is recognized on the basis of a model that estimates the sale of Afrezza to patients.
- Net Loss: The net loss for the six months ended June 30, 2018, was $53.1 million, or $0.41 per share, compared to a $51.7 million for the six months ended June 30, 2017, or $0.53 per share.
Key risk factors and potential stock drivers:
- Successful completion of the upcoming milestones would lead future direction for the company. Any adversities related to these forthcoming milestones might adversely impact the overall investor sentiments.
- Notwithstanding the recent inflows in the company, the cash situation at MannKind has been mostly critical in the past. Therefore, the company’ ability to prudently manage its liquidity would continue to remain a critical stock sensitivity factor.
- MNKD is still an early stage entity and significantly dependent on Afrezza. Less than expected sales numbers in Q3’18 from Afrezza could upset the investor’s sentiments.
- Moreover, Afrezza is yet to be proven as a commercially viable product; therefore, the uncertainty will continue to constrain the overall business risk profile of the company.
- MNKD has a history of operating losses. Therefore, any time or cost overrun in its ongoing R&D activities and its impact on business & financial profile will remain a key business sensitivity factor.
- On Friday, September 7th, MNKD, closed at $1.78, on volume of 13.1 million shares exchanging hands. Market capitalization is $273.6 million. The current RSI is at 61.56
- In the past 52 weeks, shares of MNKD have traded as low as $0.98 and as high as $6.96
- At $1.78, shares of MNKD are trading above its 50-day moving average (MA) at $1.47 and below its 200-day moving average (MA) at $2.15
- The present support and resistance levels for the stock are at $1.90 & $3.33 respectively.
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