Pfizer Drops Sluggish Exubera

Updated from 9:27 a.m. EDT

Pfizer (PFE Quote) has decided to abandon the disappointing inhaled insulin product Exubera, requiring it to take a massive charge that sent its third-quarter earnings down sharply from a year ago.

Net income plunged 77% to $761 million in the quarter, down from $3.36 billion a year earlier. The primary culprit was a pretax charge of $2.8 billion to end its involvement with Exubera, a diabetes treatment it created with Nektar Therapeutics (NKTR Quote).

"Despite our best efforts, Exubera has failed to gain the acceptance of patients and physicians," Pfizer said in a press release. "We have therefore concluded that further investment in this product is unwarranted."

The news hit Nektar hard, and its shares fell nearly 16% to $6.81. Pfizer was up 11 cents to $24.66 Thursday.

Had the charge not been a factor, Pfizer's adjusted income for the quarter would have increased 1% to $4 billion.

Earnings per share, after all items were counted, declined to 11 cents from 46 cents a year ago. Excluding items, Pfizer would have earned 58 cents in the most recent quarter. On that basis, it beat estimates by 6 cents.

Looking ahead, Pfizer slightly raised the low end of its 2007 estimates and affirmed its projections for 2008. This year, Pfizer expects to earn $2.10 to $2.15 a share on revenue of $47.5 billion to $48 billion. Previously, it was planning on a profit of $2.08 to $2.15 and a top line of $47 billion to $48 billion.