Good news follows bad rumour for Exubera

Last month, Nektar's share price plummeted 40 per cent on the back of rumours that European regulators were gearing up to reject its application to market the drug for the treatment of diabetes.

But on Tuesday shares in the company closed 6 per cent higher after a study showed that Exubera did not result in any significant loss of lung function over a two-year period. The shares had been up 13 per cent in midday trading.

The results were presented at the Annual Meeting of the European Association for the Study of Diabetes (EASD) in Munich, Germany.

The two-year European study indicated that Exubera was well-tolerated and effective in controlling blood sugar levels in adults suffering from type 2 diabetes, the most common type of the disease.

The study also showed that after two years of use, patients did not show any significant loss of lung function compared to a control group.

The study had initially observed small pulmonary function differences between the two groups early on after treatment initiation, but this did not progress with two years of continued inhaled insulin treatment.

Nektar, Pfizer and Aventis filed for European regulatory approval of Exubera in February. The companies have not indicated when they plan to file for US regulatory approval.

According to the American Diabetes Association, there are an estimated 18.2 million diabetics in the US. And as diabetes is often triggered by obesity, the fear is that the disease will become increasingly common.

Meanwhile, another inhaled insulin drug from Alkermes and Eli Lilly has just started Phase III testing, while other players in the sector include Novo Nordisk and Aradigm (Phase III) and MannKind (Phase II). Analysts have predicted that the first inhaled insulin product to reach the market could achieve sales upwards of $1.5 billion (€1.2bn) a year.