Termination of a Material Definitive Agreement, Results of Operations and Financial
Item 1.02 Termination of a Material Definitive Agreement. On January 4, 2016, MannKind Corporation (the "Company") received written notice from sanofi-aventis U.S. LLC ("Sanofi") of Sanofi's election to terminate in its entirety the License and Collaboration Agreement, dated August 11, 2014, by and among the Company, Technosphere International C.V., MannKind Netherlands B.V. and Sanofi (the "License Agreement"). Sanofi's notice indicated that the termination was pursuant to Sanofi's right to terminate the License Agreement upon Sanofi's good faith determination that the commercialization of AFREZZA is no longer economically viable in the United States, in which case the effective date of termination will be April 3, 2016. In the alternative, Sanofi indicated that the termination was also pursuant to its right to terminate the License Agreement for any reason, in which case the effective date of termination will be July 4, 2016. The applicable effective date of termination is referred to herein as the "Termination Date."
The description of the material terms of the License Agreement set forth under Item 5 of the Company's Quarterly Report on Form 10-Q for the quarter ended June 30, 2014, filed with the Securities and Exchange Commission ("SEC") on August 11, 2014, is incorporated by reference herein.
Pursuant to the terms of the License Agreement, the Company and Sanofi are required to use diligent efforts to facilitate the smooth and orderly transition of relevant obligations and rights to the Company with respect to development and commercialization activities related to AFREZZA, and are also required to negotiate in good faith a written transition agreement for this purpose. As a result of the foregoing termination, effective on the Termination Date and thereafter during any period which Sanofi is required to perform any wind-down activities pursuant to the terms of the License Agreement, the rights granted to Sanofi under the License Agreement to develop and commercialize AFREZZA will become non-exclusive and the Company will have the right to engage one or more other distributors and/or licensees of AFREZZA. Sanofi and its affiliates will also be required to cease all commercialization activities related to AFREZZA if requested by the Company after the Termination Date. All profits and losses from AFREZZA product sales by Sanofi or its affiliates after the Termination Date, if any, will continue to be shared 65% by Sanofi and 35% by the Company pursuant to the terms of the License Agreement.
The Company and Sanofi are also parties to a Supply Agreement, dated August 11, 2014 (the "Supply Agreement"), pursuant to which the Company is required to supply Sanofi or its affiliates or its sublicensees such quantities of AFREZZA as requested by Sanofi to cover its commercial requirements. As a result of the termination of the License Agreement, the Supply Agreement will terminate by its terms on the Termination Date.
In addition to the License Agreement and Supply Agreement, the Company and Aventisub LLC, an affiliate of Sanofi, are parties to a Senior Secured Revolving Promissory Note, dated September 23, 2014 (the "Loan Facility") and a Guaranty and Security Agreement (the "Security Agreement"). Both the Loan Facility and the Security Agreement remain in effect. The original maturity date of September 23, 2024 for repayment of the outstanding principal amount of the loans under the Loan Facility will not be affected by the termination of the License Agreement.
The foregoing descriptions of the License Agreement and Supply Agreement, are not complete and are qualified in their entirety by reference to such agreements, copies of which were filed as Exhibits 10.1 and 10.2, respectively, to the Company's Quarterly Report on Form 10-Q for the quarter ended September 30, 2014, filed with the SEC on November 10, 2014.
Item 2.02 Results of Operations and Financial Condition. On January 5, 2016, the Company held a conference call to discuss, among other things, the notice of termination reported under Item 1.02 above. During the conference call, the Company's Chief Financial Officer disclosed the expected cash position of the Company as of December 31, 2015. The figure disclosed during the conference call was intended to capture both cash and cash equivalents. This projected financial result is preliminary and unaudited, and may differ from what will be reflected in the Company's consolidated financial statements for the year ended December 31, 2015. An excerpt of the conference call transcript relating to this financial result is attached as Exhibit 99.1 to this report and is incorporated by reference herein.
-------------------- Buy Low. Sell High. Posts: 10748 | From: The Land Of The Giants | Registered: Feb 2005
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MannKind (MNKD) Stock: Is It Time To Buy? Jan 8, 2016
MannKind has been dealing with quite a bit of trouble in the market over the past year. Even though the company produced a product that is likely to revolutionize the way we treat diabetes, the stock has been plummeting. Nevertheless, at its current price, I view MNKD as a steal! Today, we'll talk about why MannKind has had such a rough time, a big recent change that's likely to lead to growth, and what we can expect to see from the stock moving forward.
Why MNKD Has Had Such A Hard Time As Of Late
As mentioned above, MannKind has been plummeting in the market for quite some time. The declines revolve around Afrezza, the company's innovative treatment for diabetes. Afrezza is an inhaled insulin that takes away the need for injections. Naturally, investors believed that once the treatment was approved, it would fly off of the shelves, leading to strong revenue and gains in the value of MNKD. Unfortunately, that didn't exactly happen.
In late 2014, MannKind partnered with Sanofi for the commercialization of Afrezza. Since then, Sanofi has delayed the commercialization, leading to poor sales volume and massive declines in the value of MNKD. The overwhelming opinion among MNKD investors is that Sanofi did this on purpose because Afrezza represents a conflict of interest. As a result, we have recently launched a petition to help MannKind investors recuperate their losses associated with this partnership.
A Big Change That Puts The Ball Back In Play
Earlier this month, we learned that the partnership between MannKind and Sanofi was coming to an end. While this caused MNKD to crash in the market, I don't necessarily view this as a bad thing. As mentioned above, Sanofi's botched launch of Afrezza is the reason that MNKD is struggling at the moment. So, keeping them on board is simply a bad move for the company and its investors.
The reality is that for MannKind to see stronger Afrezza sales volume, it really wouldn't take much work. After all, during the Direct to Consumer phase, the only thing Sanofi did was launch online and magazine ads. This literally falls below the bare minimum of what we would expect to see from a company that's in charge of marketing a newly approved treatment. The truth is that launching a simple television ad would likely send Afrezza sales climbing! Now that MannKind isn't at the mercy of Sanofi, this could be done relatively easily, sending MNKD sales and stock prices soaring.
What We Can Expect From MNKD Moving Forward
Moving forward, I have a very bullish opinion of what we can expect to see from MNKD. The reality is that after the massive declines we've seen on the stock, MannKind is trading at an incredible discount. Now that they are not tied to the ball and chain that is Sanofi, the company will soon be free to market Afrezza however they would like. Currently, they are looking for another partner to help with the commercialization of Afrezza. If the company chooses correctly, Afrezza may finally fly off of the shelves as investors expected to see in the first place. All in all, while we are likely to see a continuance of short term volatility, I'm expecting to see long run gains!
What Do You Think?
Where do you think MNKD is headed moving forward? Let us know your opinion in the comments below!
MannKind Corporation to Present at the J.P. Morgan 2016 Healthcare Conference
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VALENCIA, Calif., Dec. 29, 2015 (GLOBE NEWSWIRE) -- MannKind Corporation (Nasdaq:MNKD) (TASE:MNKD), focused on the discovery and development of therapeutic products for diabetes, announced today that it will present at the 34th Annual J.P. Morgan Healthcare Conference on Wednesday, January 13, 2016 at 3:30 PM (PST) at Westin St. Francis Hotel in San Francisco, California.
Presenting from the Company will be its Chief Executive Officer, Duane DeSisto and Chief Financial Officer, Matthew Pfeffer.