MannKind Corp. (NASDAQ: MNKD) was supposed to be in the news for its earnings report. Instead, we got news of its strategy on how to get its Afrezza inhalable insulin to the market. The company has signed an exclusive global licensing pact with Sanofi (NYSE: SNY) for development and commercialization of Afrezza for adults with type 1 and type 2 diabetes. The companies plan to launch Afrezza in the United States in the first quarter of 2015.

This means that a major deal has been struck. It also means that we will not see any major revenues until 2015 as it stands now.

Sanofi will be responsible for the commercial, regulatory and development activities. MannKind will manufacture Afrezza at its manufacturing facility in Danbury, Connecticut, but the agreement also indicates the two companies will collaborate to expand the manufacturing capacity to meet the global demand for Afrezza as necessary.

The biggest question was whether or not MannKind would be able to ramp up Afrezza into a blockbuster drug shortly after its launch. Insulin is such a large market that it was widely assumed this could be a blockbuster drug.

The terms of the agreement show that MannKind will receive an upfront payment of $150 million, and it is also possible for the company to receive milestone payments of up to $775 million. Those milestone payments are dependent upon specific regulatory and development targets, and then they are dependent upon sales thresholds.

On top of the milestone payments, Sanofi and MannKind will share profits and losses on a global basis — Sanofi will retain 65% and MannKind will receive 35%. The agreement also shows that Sanofi agreed to advance to MannKind its share of the collaboration’s expenses with a maximum limit of $175 million.

Shortly after the FDA approved Afrezza, our own reader poll of almost 2,000 responses suggested that MannKind shares would rise much further. The shares had sold off up until this news, but the poll suggested that MannKind shares would rise to above $15 in 2015, or at least be above $12.

MannKind shares have surged on the news. After closing at $8.13 on Friday, the shares Monday morning were indicated up about 23% to around $10.05.

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