Nektar Therapeutics (NKTR)

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Pfizer to Buy Inhaled-Insulin Rights
Drug Maker Agrees to Pay Partner Sanofi $1.3 Billion To Gain Control of Exubera
By SCOTT HENSLEY, Staff Reporter of THE WALL STREET JOURNAL, January 13, 2006

Pfizer Inc. has agreed to pay $1.3 billion to Sanofi-Aventis SA for the world-wide rights to Exubera, an inhaled form of insulin the companies had previously planned to develop and market together.

The pact hands Pfizer of New York control of a drug that could be a hit, following a dispute with its French partner.

The Food and Drug Administration is expected to decide within weeks whether Pfizer can begin selling Exubera. In September, a panel of advisers to the FDA recommended the agency approve the drug. Sales forecasts for Exubera, which would be the first form of insulin taken without piercing the skin, vary because its main virtue is convenience. Some analysts expect the drug to be a modest seller while others project it could reap a billion dollars annually within a few years.

The agreement, announced last night, settles the commercial status of the experimental drug in the wake of Sanofi Synthelabo SA's acquisition of Aventis SA in 2004, creating Sanofi-Aventis.

Pfizer had teamed with Aventis to develop Exubera, and asserted that the merger triggered a change-of-control clause in their contract that opened the door to renegotiation of the agreement. Sanofi disputed that interpretation. Pfizer pursued the matter in U.S. and German courts, leading to the new deal reached yesterday, a company spokesman said.

Besides world-wide development and marketing rights, Pfizer will gain control of the manufacturing facilities for Exubera in Frankfurt that it previously owned jointly with Sanofi. Pfizer expects the deal to close by the end of February.

The new arrangement doesn't affect Nektar Therapeutics, Pfizer's other partner in the development. Nektar, San Carlos, Calif., remains entitled to royalties based on net sales of Exubera. Nektar provided technology to produce powdered insulin that could be inhaled.

The FDA review of Exubera has been delayed for years over concerns that the drug could hurt breathing capacity with long-term use. Pfizer and its partners studied Exubera in more than 3,500 patients, some who took it for as long as seven years. The declines in lung function appeared to be small and were reversible when patients stopped using the drug, according to data presented by Pfizer to the FDA advisory panel in September. If Exubera is approved, Pfizer pledged to study it further.

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