Nektar criticizes Pfizer's exit of Exubera pact

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Pfizer took a $2.8-billion charge for dropping diabetes drug Exubera, but its conduct in exiting the biotech partnership could cost the firm far more.

During a third-quarter earnings call last week, Pfizer CEO Jeff Kindler notified the public of his decision to cease marketing the inhalable diabetes drug due to poor earnings. Biotech partner Nektar Therapeutics was taken by surprise.

“We first learned…of Pfizer's decision to walk away from Exubera from their press release,” said Howard Robin, president and CEO of Nektar, in a statement.

Pfizer cited SEC rules in explaining why it didn't notify the company ahead of time. Some analysts, nevertheless, criticized Pfizer's conduct.

“We were taken aback by the manner in which [Pfizer] management handled the situation,” Morgan Stanley analyst Jami Rubin wrote in a research note.

By others' reckoning, though, Nektar could have seen it coming. WR Hambrecht's Andrew Forman called the Nektar-Pfizer pact “a bad marriage with all the baggage of disappointing expectations.”

Pfizer acknowledged that it “underestimated” all the barriers to getting patients started on insulin in an inhalable form, not just the size of the device.

And now Nektar is left with a 100% stake in a drug Pfizer couldn't sell, Forman wrote, wondering whether Exubera could fare better in the hands of a more specialty-focused pharma company committed to diabetes.

Robin said that his firm is “evaluating all of our options” with respect to Pfizer's decision “to protect the interests of Nektar.” It remains to be seen what recourse, if any, the San Carlos, CA, company will take.

Might that include a lawsuit? “That's one of the speculations,” a Nektar representative told MM&M.

But not parting ways gracefully with a partner could cost Pfizer far more in the court of corporate reputation. The company is set to lose $8 billion from the patent expiration of Lipitor as early as 2010 and needs to replace that largely by striking in-licensing deals with others, as well as from the firm's own pipeline.

As Pfizer's business-development executives continue to seek opportunities to bring in programs and products from outside of Pfizer labs, they could find themselves fielding a lot of questions about what went wrong with the Nektar relationship.

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