Sanofi, MannKind reach licensing deal worth up to $925 million for inhaled insulin Afrezza

Sanofi entered a global licensing agreement valued as much as $925 million to market MannKind's rapid-acting inhaled insulin therapy Afrezza for adults with type 1 and type 2 diabetes, the companies announced Monday. The planned launch for the drug-device combination in the US is scheduled for the first quarter of 2015, the companies added. MannKind's shares jumped as much as 23 percent on the news.

Under the agreed terms, Sanofi will make an upfront payment of $150 million to MannKind, which is also eligible for potential milestones of up to $775 million depending on the achievement of certain regulatory, development and sales targets. Sanofi, which will be responsible for global commercial, regulatory and development activities, will retain 65 percent of the profits or losses related to Afrezza, with MannKind taking 35 percent. The French drugmaker also agreed to advance MannKind as much as $175 million in expenses. Meanwhile, under a separate supply deal, MannKind will manufacture Afrezza at its facility in Danbury, Connecticut, with the companies planning "to collaborate to expand manufacturing capacity to meet global demand as necessary."

Pierre Chancel, senior vice president of Sanofi's diabetes division, remarked that Afrezza "is not going to be in competition" with existing products, but that rather "it's going to be a nice complement and upgrade to our portfolio." He noted that the inhaled product will be marketed to patients "struggling to start insulin because of the injections."

Afrezza gained FDA approval in June to improve glycaemic control in adults with diabetes, with analysts projecting sales of about $1 billion by 2019. The US regulator had previously rejected Afrezza in 2010, and then again in 2011 after MannKind switched inhalers during the review process.

Commenting on the licensing agreement, Citigroup analyst Peter Verdult described the deal as "sensible," noting that "Sanofi has a global infrastructure in place and they clearly are trying to do a number of things to give confidence to the market that this is a sustainable, long-term growth platform." However, Verdult also predicted there would be "deep skepticism in the market given the history of inhaled insulin with Pfizer's Exubera and what a commercial failure it was." Prior to Pfizer discontinuing Exubera in 2007 due to lower-than-expected sales, the product was the only other inhaled insulin therapy to have received US approval. Verdult indicated that while Afrezza's Gen2 inhaler "is better" than the one used in Exubera, "you're always going to have the concerns around long-term use and long-term safety" with inhaled insulin. Afrezza was cleared with a boxed warning advising that acute bronchospasm has been observed in patients with asthma and chronic obstructive pulmonary disease.

Meanwhile, Helvea analyst Odile Rundquist suggested Afrezza would help Sanofi, whose diabetes therapy Lantus (insulin glargine) loses patent protection next year, compete with short-acting insulins marketed by Novo Nordisk and Eli Lilly.

Sanofi also recently signed a memorandum of understanding with Medtronic to form a global strategic alliance that will initially focus on developing drug-device combinations and care management services for patients with type 2 diabetes.

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