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MannKind strikes deal for inhalable hypertension treatment, sending stock soaring

MannKind strikes deal for inhalable hypertension treatment, sending stock soaring
In this 2015 photo, Cynthia Goldstein of Los Angeles demonstrates MannKind Corp.'s inhalable insulin drug, Afrezza. The company has struck a deal to develop and commercialize a drug for pulmonary hypertension using similar inhalable technology. (Marcus Yam / Los Angeles Times)

With a new deal to collaborate on an inhalable hypertension drug, the executives at Southern California drugmaker MannKind Corp. can breathe a little easier about the company’s finances.

The agreement with biotechnology firm United Therapeutics Corp. could provide MannKind — founded by Los Angeles entrepreneur and philanthropist Alfred E. Mann — with as much as $105 million.

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The money from the deal and other initiatives will give the Westlake Village company positive cash flow and help advance the marketing of its signature drug, Afrezza, an inhalable insulin powder for diabetics, said Chief Executive Michael Castagna.

“We’re very excited about our future and where things are going,” he said in an interview.

Castagna left his job as a vice president at Amgen Inc. to become CEO of MannKind in May 2017. He brought in a new management team that he said has sought to reduce debt and help the company break even.

Tuesday’s announcement sent MannKind’s struggling stock soaring. It jumped 89% to close at $2.08. Shares of United Therapeutics, based in Silver Spring, Md., were down about 3%.

The agreement provides MannKind with an upfront payment of $45 million and the potential for $50 million more if the company meets certain milestones in the development of an inhalable form of treprostinil, which is used to treat pulmonary arterial hypertension, the two companies said.

The dry powder drug, which uses similar technology to Afrezza, is being evaluated in clinical trials.

MannKind also will receive “low double-digit royalties” on net sales of the hypertension drug, the firms said.

And MannKind will receive an immediate payment of $10 million to help develop another drug, which Castagna declined to detail, using the company’s inhalable technology.

“We are pleased with this new opportunity to demonstrate the value of our drug and device combination platform for delivering therapeutic products,” Castagna said in a news release announcing the deal.

MannKind was founded in 2001 by Mann, who pumped $1 billion of his own money into the company to help develop Afrezza before his death in 2016 at age 90.

Afrezza, which uses a technology based on a carrier molecule that delivers drugs normally taken by injection into the bloodstream through the lungs, was approved by the Food and Drug Administration in 2014. But the drug has not met early expectations that it would be a blockbuster treatment for diabetes, amid lingering concerns over its effects on lung function and advances in pump technology.

Despite Tuesday’s gains, shares of MannKind still are down about 10% so far this year.

Castagna said the stock price has been hurt by the company’s negative cash flow. He said that Afrezza sales have improved each quarter since the start of 2017 and that the United Therapeutics deal will help MannKind expand TV advertising for the diabetes treatment.

“The more we invest in Afrezza, the faster it grows. … Ninety-nine percent of people with diabetes don’t know inhalable is an option for them,” he said.

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Ahmed A. Enany, president of the Southern California Biomedical Council, a regional trade group that includes MannKind, said the company has had problems getting “market traction” for Afrezza.

Tuesday’s deal will be a boost for MannKind and the region’s biotech industry, he said.

“It shows the viability of the platform and the ability to do different things with it,” Enany said of MannKind’s technology.

Under the deal, United Therapeutics will be responsible for global development, commercialization and regulatory approvals for the inhalable version of treprostinil and receive exclusive worldwide licensing rights.

There is an inhalable version of treprostinil now, but it requires use of an electronic nebulizer that must be plugged in. MannKind’s version is delivered through a portable inhaler that can be used anywhere.

MannKind will manufacture the supplies of the drug for clinical trials and initial commercialization at its Danbury, Conn., facility. United Therapeutics will manufacture the long-term commercial supplies.

United Therapeutics also has the option to expand the exclusive licensing deal to other MannKind treatments for pulmonary hypertension.

MannKind is competing with another company, Liquidia Technologies in North Carolina, to develop an inhalable and portable dry-powder version of treprostinil. Liquidia raised $50 million in an initial public stock offering in July.

3:30 p.m.: This article was updated with comments from Ahmed A. Enany, president of the Southern California Biomedical Council.

2:25 p.m.: This article was updated with comments from MannKind Chief Executive Michael Castagna and additional details.

This article originally was published at 9:35 a.m.

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