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Upfront payment of $150 million.

Sanofi to partner on inhaled insulin.

Shares of MannKind up 25% in pre-market.

Shareholders of MannKind (NASDAQ:MNKD) are certainly smiling this morning, with the equity up over 25% on the announcement of a global deal to commercialize its recently approved Afrezza inhaled insulin. MannKind and Sanofi made the announcement this morning.

The $925 million deal includes $125 million in upfront payments and $775 million in potential milestone payments attached to regulatory, development and sales targets. Interestingly, both MannKind and Sanofi will share in profits and losses, with MannKind getting 35% and Sanofi 65%. With the announcement today came the news that the companies intend to launch Afrezza in the United States in Q1 of 2015 (6 to 9 months from now). Also announced was the fact that Sanofi has "advanced" $175 million to MannKind, essentially giving the company a loan against future revenues. Terms of the advance were not made public.

MannKind had a long and arduous road to approval in the United States. The company's inhaled insulin is a novel approach to maintaining control of insulin levels. However, the drug's labeling, which some analysts feel is restrictive, makes it clear that it is not a replacement for long-acting insulin. It is thought that it will be well-accepted by consumers because it is not delivered by injection.

In terms of the stock, I anticipate that the cash infusion that came with this deal will be seen as a referendum of sorts to some longs that took the MannKind roller-coaster ride over the last few years. Even with the impressive gain this morning, MannKind is still not at the $11.48 that represented a 52-week high. Investors that think that the roller-coaster ride is over should think twice. With 6 to 9 months before the drug hits the market, there will be a lot of jockeying for position, and I anticipate that the short side will still apply a great deal of pressure to the equity. There are times to take profits and wait for the landscape to find an equilibrium. I suspect that this may be one of those occasions. That is not to say that this drug will not be a success. I am simply looking at the near-term action on this equity between now and the launch. This deal is a big step in the right direction, but is also the beginning of a new phase in the MannKind journey. Stay Tuned!

Disclosure: The author has no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. The author wrote this article themselves, and it expresses their own opinions. The author is not receiving compensation for it (other than from Seeking Alpha). The author has no business relationship with any company whose stock is mentioned in this article.