MannKind Corporation (NASDAQ:MNKD) experienced a steep share decline of 37% on Wednesday following an announcement by its partner, United Therapeutics, introducing a soft-mist inhaler that will compete with dry powder inhalation therapies.
The two companies are tied by a license and collaboration agreement focused on developing dry powder inhalation treatments for lung diseases. That arrangement has allowed MannKind to collect royalties on United Therapeutics' Tyvaso DPI product.
On an earnings call, United Therapeutics characterized the new device as a "category killer product" and cited clinical study results indicating the soft-mist inhaler can lower coughing - the principal side effect associated with dry powder inhalers - by as much as 90% based on studies conducted so far. During the call an executive was quoted saying, "Few will want to continue inhaling a dry powder when instead they can breathe a soft mist."
United Therapeutics said it plans to submit an application for regulatory approval of the soft-mist inhaler later this year and aims for a commercial launch next year. Those timing goals, as stated on the call, suggest a relatively near-term transition in the company's inhalation product strategy.
The announcement presents a substantial challenge for MannKind. The company derives a significant portion of its top line from United Therapeutics: Bloomberg data indicate roughly 71% of MannKind's revenue comes from that partner. Given the royalty relationship tied to Tyvaso DPI, a successful shift by United Therapeutics to a soft-mist platform could materially affect MannKind's revenue stream.
Investors reacted swiftly to the news, driving the 37% drop in MannKind shares recorded on Wednesday. The market move reflects concern over the competitive threat to dry powder inhaler royalties and the concentration of MannKind's revenue exposure to a single partner and product.
Summary
United Therapeutics introduced a soft-mist inhaler said to cut coughing by up to 90% versus dry powder inhalers and plans to seek approval this year with commercial availability next year. The device directly competes with the dry powder format tied to MannKind's royalty income, prompting a 37% fall in MannKind stock.
Key points
- MannKind shares declined 37% following United Therapeutics' product announcement - impact on the healthcare and equity markets.
- Companies maintain a license and collaboration agreement to develop dry powder inhalation therapies for lung diseases - relevant to pharmaceutical partnerships and medical-device strategy.
- About 71% of MannKind's revenue is attributed to United Therapeutics, highlighting concentrated partner dependence - material to corporate cash flows and investor risk assessments.
Risks and uncertainties
- Competitive displacement risk - a successful soft-mist inhaler could reduce demand for dry powder formats and pressure MannKind's royalty income, affecting the healthcare sector.
- Execution and timing uncertainty - United Therapeutics intends to file for approval this year and launch next year; those plans introduce regulatory and commercialization timing risks relevant to market outcomes.
- Revenue concentration - with roughly 71% of revenue tied to a single partner, MannKind faces elevated balance-sheet and cash-flow vulnerability if the partner shifts product strategy.