MannKind and Sagard Healthcare Enter Into Royalty Purchase Agreement for Up to $200 Million
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Insights
The transaction between MannKind Corporation and Sagard Healthcare is a significant financial event that warrants close scrutiny. The upfront payment of $150 million for a 1% royalty stake in Tyvaso DPI® sales represents a substantial liquidity boost for MannKind. This inflow of cash could be utilized for further R&D, debt reduction, or other strategic initiatives. The additional milestone payment of up to $50 million is contingent on reaching ambitious sales targets, which introduces a performance-based element to the deal. Investors should closely monitor Tyvaso DPI®'s sales performance, as reaching the $1.9 billion or $2.3 billion thresholds would not only trigger the milestone payment but also indicate the drug's market success and potential for future revenue streams.
It is also worth noting the long-term nature of the royalty agreement, which extends until the end of 2042. This provides a clear vision of MannKind's revenue prospects from Tyvaso DPI® for nearly two decades. However, investors should also consider the inherent risks in such long-term forecasts, including market competition, drug efficacy and potential shifts in healthcare policies. The royalty cap at net sales exceeding $3.5 billion is an interesting clause that could limit Sagard Healthcare's financial exposure while also implying confidence in the product's market potential.
In the biotech industry, royalty purchase agreements like the one between MannKind and Sagard Healthcare are strategic tools for monetizing intellectual property. The agreement leverages Tyvaso DPI®'s FDA approval for pulmonary arterial hypertension and interstitial lung disease, diseases with high unmet medical needs, which can lead to a strong market demand. The fact that United Therapeutics licensed the drug from MannKind in 2018 and has been marketing it since June 2022 suggests a positive reception and a potentially growing user base.
The structure of the deal, with MannKind retaining a 9% royalty, ensures that the company remains significantly invested in the drug's commercial success. From an industry perspective, this deal underscores the value of innovative drug delivery systems like inhalation powders, which can offer improved patient compliance and outcomes. As a biotech analyst, observing the sales trajectory of Tyvaso DPI® will provide insights into the market dynamics of specialized treatments and the viability of royalty monetization as a revenue strategy for biotech firms.
From a legal standpoint, the involvement of top-tier law firms such as Cooley LLP and Sidley Austin LLP indicates the complexity and significance of the transaction. The royalty purchase agreement's terms, including the milestone payments and the royalty cap, likely required meticulous negotiation to balance the interests of both parties. The legal framework set forth in the agreement provides a mechanism for future adjustments based on sales performance, which is a prudent measure to accommodate the unpredictable nature of drug sales over time.
The filing of a Current Report on Form 8-K with the U.S. Securities and Exchange Commission provides transparency and ensures regulatory compliance. Investors and stakeholders should review this document for a deeper understanding of the terms and conditions of the agreement, as well as any potential implications for MannKind's financial and operational strategies. The legal intricacies of such agreements can have far-reaching effects on a company's financial health and its ability to capitalize on its intellectual property.
- Sagard Healthcare purchased a
1% royalty in Tyvaso DPI® net sales - Purchase price of
$150 million ; additional potential milestone payment of up to$50 million
WESTLAKE VILLAGE, Calif., Jan. 02, 2024 (GLOBE NEWSWIRE) -- MannKind Corporation (Nasdaq: MNKD) announced that on December 27, 2023 it sold a
United Therapeutics Corporation licensed Tyvaso DPI from MannKind in 2018 and began marketing it in June 2022 for the treatment of pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease following U.S. FDA approval. Pursuant to a license agreement with United Therapeutics, MannKind is entitled to a
Under the terms of the royalty purchase agreement, Sagard Healthcare will receive royalty payments equal to
$50 million in the event that the trailing 12-month net sales of Tyvaso DPI equals or exceeds$1.9 billion by December 31, 2026; or- if the preceding milestone is not achieved,
$45 million in the event that the trailing 12-month net sales of Tyvaso DPI equals or exceeds$2.3 billion by September 30, 2027.
If neither sales milestone is achieved, then (i) MannKind will not receive a milestone payment and (ii) Sagard Healthcare will not be entitled to any portion of the royalties payable to MannKind in respect of net sales of Tyvaso DPI that exceed
Additional information regarding the royalty purchase agreement is provided in a Current Report on Form 8-K filed by MannKind with the U.S. Securities and Exchange Commission.
Morgan Stanley & Co. LLC acted as sole structuring agent on the transaction. MannKind was represented in the transaction by Cooley LLP. Sagard was represented in the transaction by Sidley Austin LLP.
Conference Call
MannKind will host a conference call and presentation webcast to discuss this transaction January 3, 2024 at 9:00 a.m. Eastern Time. Those interested in listening to the conference call live via the Internet may do so by visiting the Company’s website at mannkindcorp.com under Events & Presentations. A replay will be available on MannKind's website for 14 days.
About MannKind
MannKind Corporation (Nasdaq: MNKD) focuses on the development and commercialization of innovative therapeutic products and devices to address serious unmet medical needs for those living with endocrine and orphan lung diseases.
We are committed to using our formulation capabilities and device engineering prowess to lessen the burden of diseases such as diabetes, pulmonary arterial hypertension (PAH) and nontuberculous mycobacterial (NTM) lung disease. Our signature technologies – dry-powder formulations and inhalation devices – offer rapid and convenient delivery of medicines to the deep lung where they can exert an effect locally or enter the systemic circulation.
With a passionate team of Mannitarians collaborating nationwide, we are on a mission to give people control of their health and the freedom to live life.
Please visit mannkindcorp.com to learn more, and follow us on LinkedIn, Facebook, Twitter or Instagram.
About Sagard
Sagard is a multi-strategy alternative asset management firm with over US
For more information, visit www.sagard.com or follow us on LinkedIn @Sagard
TYVASO DPI is a registered trademark of United Therapeutics Corporation.
FAQ
What did MannKind Corporation sell to Sagard Healthcare and for how much?
What is the purpose of Tyvaso DPI®?
When will MannKind Corporation receive the potential milestone payment?
Who is marketing Tyvaso DPI®?
