West Coast Editor

Troubled Pfizer Inc.'s jettison of low-selling Exubera put a dent in shares of partner Nektar Therapeutics Inc., but it's too early to tell whether the market failure bodes poorly for that product or for other inhaled insulins in development.

Shares of San Carlos, Calif.-based Nektar (NASDAQ:NKTR) fell $1.41, 17.5 percent, to close Thursday at $6.67.

Approved in early 2006, Exubera had been hailed as a probable blockbuster, but shortly met with manufacturing problems and then with difficulty winning patient acceptance, despite a direct-to-consumer ad campaign that might have come too late in the game. Second-quarter 2007 sales totaled only $4 million for Exubera, and New York-based Pfizer is dropping it - news that came to Nektar by way of a press release.

Exubera is a rapid-acting, dry powder human insulin that is inhaled into the lungs before eating by way a handheld, four-ounce inhaler. In its chamber, the Exubera device makes a cloud of insulin powder designed to reach the bloodstream quickly.

"Inhalers could still work, it's just that size and convenience matter," said Stephen Dunn, analyst with Dawson James, noting that patients often are self-conscious and must excuse themselves to a rest room where they can deal with the administration gizmo unobserved. "Remember, most of these people still have to use a syringe at night so they are used to it," and therefore have less incentive to manipulate an inhaler, he said. "It may be that the industry focused on solving the drug delivery issues and not enough time on the consumer aspect. There will be second-generation devices, but I would recommend consumer focus groups before designing [them]."

Tim Warner, vice president of investor relations and corporate affairs for Nektar, saw the matter differently. "The core, fundamental problem is Pfizer," he said. "Exubera is a very good product, and the patients who use it, love it."

Warner declined to comment further, referring questions to a Nektar press release in which Howard Robin, the firm's president and CEO, noted that Pfizer "has publicly acknowledged its organizational difficulties and resulting poor performance in launching Exubera," and said Nektar is "evaluating all of our options with respect to Pfizer's Exubera announcement."

Pfizer's move to get rid of the product might have had as much to do with increased pressure from generics as anything else. The pipeline-thin pharma giant lately has lost patent protection for such revenue generators as Norvasc for high blood pressure; the popular, fewer-dose antibiotic Zithromax; and the antidepressant Zoloft. Near the start of the year, Pfizer circled the wagons, reducing its work force by about 10 percent.

Next, the firm will lose market shelter for the allergy drug Zyrtec. Facing similar trouble in the next few years is Pfizer's important anticholesterol therapy Lipitor (atorvastatin), the largest-selling drug in the world. Lipitor sold $3.2 billion in the third quarter, a 5 percent drop - growing outside the U.S., but suffering here because of generic Zocor (simvastatin, Merck & Co.).

Pfizer, which Thursday disclosed a 77 percent drop in profits for the third quarter, has been making deals in an effort to stoke its pipeline, including a potential $1 billion-plus pact with Research Triangle Park, N.C.-based Icagen Inc. to develop sodium ion channel modulators, and another with Bristol-Myers Squibb Co., of New York, for DGAT-1 inhibitors in metabolic disorders. (See BioWorld Today, Aug. 15, 2007.)

As for Nektar, the firm has "already moved on" from the Exubera debacle, according to Ian Sanderson, analyst with Cowen and Co., who has turned his interest to the company's internal pipeline (with two Phase II candidates) and royalty stream from its pegylation platform.

Nektar in May announced a restructuring plan that would reduce annual spending by $65 million per year, with a $27 million reduction expected this year. In August, the firm got $50 million up front and retained co-promotion rights in its deal with Bayer HealthCare AG, of Leverkusen, Germany, for the Phase II inhaled-amikacin product, NKTR-061, undergoing tests for Gram-negative pneumonias. Amikacin is an aminoglycoside antibiotic. (See BioWorld Today, Aug. 7, 2007.)

In the first-ever co-development and commercialization collaboration for Nektar - whose delivery technologies already are used in nine approved products - the firm stands to gain $125 million more in milestone payments, along with almost half of any profits from sales in the U.S.

Another pharma player unveiling third-quarter earnings Thursday was Indianapolis-based Eli Lilly and Co., which enjoyed a 20 percent profit hike to $996.4 million, and is proceeding with its Phase III-ready inhaled insulin. Bagsvaerd, Denmark-based Novo Nordisk A/S has Phase III trials under way with AERx iDMS, another inhaled version, with royalties due Aradigm Corp., of Hayward, Calif., if the product is approved.

Lilly reported that its Humalog insulin "pen" sales jumped 12 percent, to $362.5 million. Sales in the U.S. increased 9 percent to $216.1 million, driven by increased prices and higher demand. Sales outside the U.S. increased 19 percent to $146.4 million.

Earlier this month, Amylin Pharmaceuticals Inc., of San Diego, won FDA clearance for the SymlinPen 120 injection, pre-filled pen-injector devices that feature fixed dosing to improve mealtime glucose control, but the agency issued a non-approvable letter for Symlin use with basal insulin in patients with Type II diabetes. Symlin (pramlintide acetate), an amylin mimetic, is approved for Type I and Type II diabetes patients who use mealtime insulin.

"A surprising number of people don't like the pens," Dunn said. They can be more convenient, but also cost more, he added, calling injectable insulin a "mature market."