Following the resignation of Alfred Mann as CEO and the announcement of a large payment from partner Sanofi, and ahead of the launch of a new diabetes medication, shares of biopharmaceutical company MannKind (Nasdaq: MNKD) rose 22% in January.
On one hand, there are catalysts that could push the stock even higher. Having plenty of cash in its coffers means investors can transition from worrying about MannKind’s cash burn and instead prepare to realize recurring revenue. Having Sanofi as a partner will certainly help as it has a pretty good track record when it comes to drug launches.
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On the flipside, MannKind is already richly valued considering that it’ll be getting just 31.5% of Afrezza’s total initial sales. It is also unclear how successful the inhaled diabetes medication will be immediately following its launch. On paper, the drug looks as if it makes sense in terms of convenience, but it remains to be seen whether physicians will prescribe it and consumers will pay for it.
Investors are anticipating the launch of Afrezza, which gives most diabetics a genuine choice over injections, and was also shown in clinical studies to work exceptionally fast and leave the body sooner than other options.
Mann announced he was retiring as CEO of the company in January and becoming executive chairman. Investors are believed to view this transition positively since Mann’s presence was associated with years of ongoing losses as CEO.
Early in the month, MannKind announced that it had received a $50 million payment for meeting manufacturing milestones as outlined in its licensing agreement with Sanofi. In addition to receiving $150 million in upfront payments, MannKind is eligible to receive up to $725 million more for hitting certain development, regulatory, and milestone targets.