Sanofi forgives MannKind's boatload of debt over failed Afrezza deal

Afrezza

It looks like Sanofi will go the "forgive and forget" route with jilted partner MannKind and its inhalable insulin Afrezza. It will forgive a boatload of debt tied to their original deal and forget it ever got into the relationship in the first place.

In fact, when all is said and done, the separation agreement looks like it will cost Sanofi more than $100 million.

The two announced terms Wednesday, saying they have terminated a promissory note and that Sanofi will forgive the full outstanding balance of $71.56 million. Valencia, CA-based MannKind is also off the hook to pay $500,000 in some other costs that it owed.

On top of that, Sanofi will purchase $10.2 million worth of insulin from MannKind in early December as part of their earlier supply deal. The French drugmaker will pay MannKind another $30.6 million by Jan. 9, 2017 for more insulin that MannKind will have no responsibility to even deliver.

With that, the two said, “All issues arising out of the license and collaboration agreement, the supply agreement, the promissory note, the security agreement and the transition agreement are resolved.”

Afrezza was approved in 2014 and shortly after the two companies announced a collaboration. Sanofi's research had indicated that many patients with diabetes avoid taking their insulin because they don't want to do injections and the inhaled mealtime insulin Afrezza seemed like a good bet. Sanofi would take on the upfront costs and the two would split profits as they started to roll in. They just never rolled in.

In January, Sanofi said it was bailing on the deal but would help MannKind with an orderly transition. MannKind is now moving forward on its own. Mannkind has taken over all of the commercial manufacturing responsibilities at its manufacturing facility in Danbury, CT, that had been producing product for Sanofi.  

In its earnings release Wednesday, Mankind reported net income of $126.5 million in Q3 but that was all tied up with the deal with Sanofi. It said it started shipping Afrezza in late July and sold $600,000 worth in the quarter and then recorded another $2 million in deferred revenue from products it has shipped but which had yet to be sold by wholesalers.

Looking for other revenue sources, MannKind in September indicated it might take its needle-free technology into the epinephrine market in the wake of the price controversy swirling around Mylan’s EpiPen.