MannKind inks royalty purchase agreement for up to $200M
Westlake Village-based MannKind Corporation saw shares climb 8% on Jan. 2 after the company announced entering into a royalty purchase agreement of up to $200 million.
MannKind, a biotechnology company that develops treatments for diabetes and pulmonary arterial hypertension, sold a 1% royalty in net sales of Tyvaso DPI to Sagard Healthcare on Dec. 27.
The deal includes a $150 million upfront payment with an additional $50 million available as a potential milestone payment, the company said in a Jan. 2 press release.
Morgan Stanley & Co. LLC acted as the 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.
Tyvaso DPI is an inhalation powdered treatment aimed at treating pulmonary arterial hypertension and pulmonary hypertension associated with interstitial lung disease.
It was developed jointly with United Therapeutics.
United 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 approval from the U.S. Food and Drug Administration.
According to details of their agreement, MannKind owns a 10% royalty on net sales of Tyvaso DPI, subject to certain reductions, the company said in a press release.
Under terms of the new agreement, Sagard will receive royalty payments equal to 1% of the net sales of Tyvaso DPI that occur between Oct. 1, 2023 and Dec. 31, 2042, with MannKind retaining a 9% royalty.
MannKind received a $150 million purchase payment for the 1% royalty and is entitled to receive a milestone payment as follows:
- $50 million in the event that the trailing 12-month net sales of Tyvaso DPI equals or exceeds $1.9 billion by Dec. 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 Sept. 30, 2027.
If neither sales milestone is achieved, then MannKind will not receive a milestone payment and 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 $3.5 billion in any calendar year.
MannKind shares closed at $3.92 on Jan. 2, up 7.7%.