Nektar Can't Shake Tempered Exubera

If you think the stumbling start of inhaled-insulin treatment Exubera has hurt Pfizer(PFE), then look at what has happened to its partner, Nektar Therapeutics(NKTR).

Since the Food and Drug Administration approved Exubera in late-January 2006, Nektar, which developed the insulin-inhalation device and the powdered insulin used in the device, has seen its share price drop more than 40%.

But despite Exubera's terrible debut, and despite some analysts' fears of slow acceptance at least into 2008, Wall Street remains remarkably positive about Nektar. Thomson First Call counts nine buy recommendations and four neutral ratings. Most bulls have endorsed the stock for more than 12 months, and some have been cheering since 2004.

A cynic might say that if analysts liked Nektar in the low $20s, then they certainly will love it in the low teens. The stock closed Friday at $11.56.

Some endorse Nektar because they believe Exubera can't do any worse. "With Exubera expectations at a low, clinician sentiment beginning to turn and direct-to-consumer advertising ... coming in the third quarter, we believe Nektar shares can recover," says Ian Sanderson of Cowen & Co. in a May 10 analyst report. Sanderson, who has an outperform rating, doesn't own shares; his firm is a market maker.

"Nektar's top line is still driven by Exubera revenues, which make up more than half of Nektar's revenues," says Jim Reddoch, of Friedman, Billings, Ramsey, in a May 24 report. "Without Exubera, we value Nektar at around $8, as the [R&D] pipeline is still early," says Reddoch, who has a market perform rating. He doesn't own shares; his firm is a market maker.