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Pfizer "Chokes" on Inhaled Diabetic Insulin

Exubera
Exubera

Just months after launching what was hailed as a revolutionary new product, Pfizer is taking it off the market. And it has nothing to do with safety. It has everything to do with sales--or the lack, thereof. The world's biggest drug company only recently started direct-to-consumer advertising for Exubera, but it apparently didn't work. "Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians," Pfizer says in the earnings press release.

"Told you so!!!!!," (the five exclamation points are his emphasis) is what David Kliff, "Diabetic Investor" newsletter editor writes in a note to subscribers this morning. When Pfizer and most analysts were forecasting Exubera would eventually become a billion-dollar blockbuster, Kliff, an injectable insulin-dependent diabetic, was like a voice in the wilderness.

He was predicting from the get-go that it wouldn't fly in large part because the device was so big--he compared it to the size of a "bong" (his word, not mine.). "Pfizer wasted billions trying to convince people that patients would use Exubera just because they did not have to inject insulin," Kiff writes. In fact, Pfizer says it'll spend $2.8 billion to get out from under Exubera.

On the bombshell newsshares of Nektar TherapeuticsPfizer's Exubera partner, are trading at a new low this morning. Novo Nordisk, Eli Lilly, Alkermes and Mannkind are all working on inhalable insulin products as well. So, what does this mean for them? Kliff says, "While many will see this as (the) end of inhaled delivery of insulin, Diabetic Investor doesn't see it that way. With the epidemic growth rate of diabetes and the increasing usage of insulin with type 2 patients, there is a market for an inhaled form of insulin. Hopefully the companies that have inhaled systems under development will learn from Pfizer's many mistakes with Exubera."

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Goldman Sachs pharma analyst James Kelly in a research note to clients this morning calls PFE's decision "prudent" and thinks it will likely be well-received by investors. In early trading, at least, that appears to be the case. But after it spends the nearly $3 billion dollars to get out of the inhalable insulin business, Pfizer will be under even more pressure to put its remaining, but still huge amount of cash to work buying new products and/or companies.

Goldman Sachs has done investment banking for PFE and wants to do more. A GS Director also sits on the PFE Board. And the firm makes a market in PFE shares.

Questions? Comments? Pharma@cnbc.com