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MannKind Stock Up on Licensing Deal With United Therapeutics

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MannKind Corp. announced that it has signed an exclusive licensing and collaboration agreement with United Therapeutics (UTHR - Free Report) for developing a dry powder formulation of treprostinil to treat pulmonary arterial hypertension (PAH).

Treprostinil is an active drug among United Therapeutics’ marketed products, namely Remodulin for subcutaneous and intravenous,Orenitram for oral and Tyvaso for inhalation use. Treprostinil is a vasodilator approved for the treatment of PAH.

Shares of MannKind soared 89.1% following the news on Tuesday. However, the stock has lost 10.4% year to date, wider than the industry’s decrease of 1.7%.

Upon the agreed terms, MannKind will be responsible for manufacturing clinical and initial commercial supplies of treprostinil while United Therapeutics will look after the global development, regulatory and commercial activities plus the long-term commercial provisions. The dry powder formulation is already in clinical studies at MannKind.

Per the terms of the agreement, MannKind will receive an upfront payment of $45 million from United Therapeutics on the formulation’s approval apart from getting potential milestone payments of up to $50 million and low double-digit royalties on net sales of the same. Moreover, United Therapeutics has an option to in-license other active ingredients for PAH treatment, thus expanding the deal for additional payments.

The licensing and collaboration contract is subject to customary closing conditions and a pending clearance under the Hart-Scott-Rodino Antitrust Improvements Act.

Both companies also entered into a research agreement for products outside the scope of this collaboration deal. MannKind is eligible to receive an immediate payment of $10 million on the basis of its performance under the said pact.

Zacks Rank & Stock to Consider

MannKind currently carries Zacks Rank #3 (Hold). Two better-ranked stocks in the healthcare sector are Gilead Sciences, Inc. (GILD - Free Report) and Illumina, Inc. (ILMN - Free Report) , both sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Gilead Sciences’ earnings estimates have moved 7.7% north for 2018 and 1.9% for 2019 over the past 60 days. The stock has gained 3.7% year to date.

Illumina’s earnings estimates have been revised 12.1% upward for 2018 and 10% for 2019 over the past 60 days. The stock has soared 61.5% so far this year.

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