A French pharmaceutical company has agreed to pay up to $925 million for the right to market Afrezza, the recently approved inhaled insulin treatment for
Sanofi, based in Paris, said it would pay $150 million upfront to MannKind, the biotech firm owned by entrepreneur-physicist Alfred Mann. After that, MannKind will be paid as much as $775 million more if the drug meets certain sales and regulatory milestones.
Sanofi said it plans to start selling the diabetes treatment early next year.
The French firm will also share 35% of the profits — or losses — from Afrezza with MannKind.
MannKind shares gained 40 cents, or 5%, to close Monday at $8.53.
The collaboration marked a significant milestone for MannKind, which spent more than a decade and nearly $2 billion developing the drug.
MannKind will manufacture the drug and rely on Sanofi's global network of sales and marketing professionals to sell it. Mann has said he expects demand for the drug to be substantial.
Diabetes affects 29.1 million people in the United States, according to the
Matthew Pfeffer, MannKind's chief financial officer, said in a conference call with analysts that Sanofi is an ideal partner. The Paris company is already a leading worldwide provider of diabetes drugs.
"There's nobody in the world that can do a better job marketing this and making it the huge success it can be," Pfeffer said.
Pierre Chancel, a senior vice president of Sanofi's diabetes unit, said he does not expect Afrezza to compete with its existing products. Instead, it will be marketed to those patients who are struggling to start insulin because they don't like injections, he said.
"It's going to be a nice complement and upgrade to our portfolio," Chancel told analysts in a conference call.
Analysts cheered the collaboration.
"By partnering with Sanofi, MannKind has engaged a proven marketer in the global diabetes arena and one that can leverage the very attractive combination of Afrezza and a long-acting basal insulin," said Keith Markey, an analyst with Griffin Securities. He estimates MannKind's stock will be trading at $16.25 in one year, nearly twice its Monday closing price.
Afrezza is scheduled to come to market about eight years after Pfizer Inc. yanked the first inhaled insulin product, Exubera, because of poor sales.
Mann said Afrezza is a vastly superior product. It can be used with a device about the size of a small whistle, as opposed to the large Exubera inhaler that some said resembled a marijuana bong. Afrezza also acts much faster than injected insulin, giving it an additional benefit to its convenience, Mann said.
There are additional hurdles for MannKind. The FDA required the company to pay for a long-term study to determine if Afrezza causes any lung issues for users. The drug also must carry a warning that it should not be used by people with asthma or chronic lung disease.