Nektar Therapeutics (NKTR)

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Inhaled Insulin Cleared in Europe
By Robert Steyer
TheStreet.com Staff Reporter
1/26/2006 7:08 PM EST

The European Union has given its approval to Exubera, an inhaled form of insulin developed by Nektar Therapeutics (NKTR:Nasdaq) and Pfizer (PFE:NYSE) .

The EU decision on Thursday came down just before the Food and Drug Administration is expected to make its own determination on Exubera's future in the U.S. Exubera, the first inhaled insulin approved for sale, will improve compliance among diabetics who now inject insulin to control blood sugar, the product's manufacturers say.

Shares of Nektar climbed $1.32, or 6.8%, to $20.62. Pfizer gained 22 cents, or 0.9%, to $25.05.

"Today's EU approval of Exubera is an important landmark in the treatment of diabetes, a disease that is growing at epidemic proportions," Dr. John Patton, co-founder and chief scientific officer of Nektar, said in a prepared statement.

Nektar developed the inhalation technology to administer a dry-powder form of insulin. Pfizer and Sanofi-Aventis (SNY:NYSE ADR) joined in the development and marketing partnership for Exubera, but Pfizer recently bought the French company's interest in the product for $1.3 billion.

Pfizer says it has invested more than $1 billion in the development of Exubera, including plants in Germany and Indiana. The European Union approved Exubera for both type 1 and type 2 forms of diabetes. Type 1 diabetes is caused by the body's inability to produce insulin, the protein hormone that helps turn sugar into fuel for the body's cells. Type 2 diabetes is caused by cells ignoring insulin or the body's failure to produce enough insulin.

The EU cleared the drug for treating people over age 18 whose type 2 diabetes isn't adequately controlled with other medications and who require insulin. Exubera also is approved for adults with type I diabetes, "in addition to long- or intermediate-acting injectable insulin, for whom the potential benefits of adding inhaled insulin outweigh the potential safety concerns," Pfizer says.

The concerns relate to the possibility of lung problems. "A small decrease in lung function may occur during Exubera treatment although symptoms might not be noticeable," Pfizer says. "This change occurs within the first months of treatment and should not worsen as treatment is continued."

Pfizer says patients should not take Exubera if they have "poorly controlled or unstable lung disease," if they smoke, or if they stopped smoking less than six months before taking the drug.

Before starting Exubera, patients must undergo a lung-function test. "This will help to find out if Exubera is the right treatment for individual patients," Pfizer says. Once a patient starts Exubera, Pfizer says a physician should recheck the patient's lung function after six months.

The safety requirements are "in line with our expectations," and there were "no unexpected surprises," says Andrew Forman of WR Hambrecht in a research note Thursday.

Forman says the news "bodes well for a formal FDA final approval." He doesn't follow Pfizer, but he has a buy rating on Nektar. " [The] label appears broad and positive." He doesn't own shares of the companies.

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