Pfizer, Sanofi End Exubera Pact

Pfizer has agreed to pay $1.3 billion to Sanofi-Aventis (SNY) for the French company's share of their partnership in Exubera, the inhaled insulin now under review by U.S. and European regulators.

The agreement, announced by the companies Thursday night, isn't a surprise. Pfizer and Sanofi-Aventis have been fighting about their partnership for more than a year.

The deal doesn't affect the third member of the Exubera development team, Nektar Therapeutics . The San Carlos, Calif., company developed the dry, powdered form of insulin and the inhaler for Exubera.

If approved, Exubera would be the first inhaled insulin. The Food and Drug Administration is expected to make its decision later this month. The makers of Exubera, as well as developers of competing inhaled-insulin products, say these drugs will improve convenience for diabetics who must inject insulin.

Exubera has undergone a lengthy review process. In September, an FDA advisory panel voted 7-2 in favor of Exubera. Although the agency isn't bound by its advisers' recommendations, it usually follows their suggestions. The FDA was supposed to act in late October, but it said it needed an extra 90 days for its review. A key issue is whether inhaled insulin causes lung problems after prolonged use.

Pfizer and Nektar are seeking approval for Exubera for both Type 1 and Type 2 diabetes. Type 1 diabetes is characterized by the body's inability to produce insulin, the protein hormone that helps the body convert sugar into fuel for the body's cells.

Without insulin, sugar builds up in the blood, leading to dangerous complications including heart disease, kidney failure, nerve damage, limb amputation or blindness.

In Type 2 diabetes, which is the most common form of the disease, the body doesn't produce enough insulin or doesn't effectively use it.