Clinical trials for competing products haven't gone on long enough to assure that these drugs won't affect the lungs. Analysts say the Exubera experience has sensitized the FDA to lung safety. Among competitors, analysts appear to be the most impressed with the scientific progress of MannKind's Technosphere insulin. But MannKind hasn't found a partner to help absorb the research and development costs. Back in August, MannKind executives told analysts that collaboration discussions were going slower than expected partly because potential partners were worried that Technosphere might get the same insurer rebuff as Exubera. Late-stage clinical trial results are expected in mid-2008, and MannKind might file an application with the FDA late next year. The Exubera decision "is very bad" for MannKind because Technosphere represents almost all of its market valuation, says LeCroy. He has a sell rating on MannKind, a buy rating on Nektar and a hold rating on Pfizer. "We do not think MannKind will be able to partner Technosphere and that the Exubera withdrawal was the final straw," he says. The Exubera fiasco will have a "very limited impact" on Alkermes, which is developing AIR insulin with Lilly, says LeCroy, who has hold ratings on both companies. He says inhaled insulin only accounts for 5% to 10% of Alkermes' market capitalization, adding that the Lilly deal limits Alkermes' risk until the product reaches the market. He forecasts a 2010 launch. Like Exubera, the AIR and Technosphere products use a powdered form of insulin. Denmark's Novo Nordisk is developing a liquid form of inhaled insulin called AERx. The company may issue results of a crucial test in late 2008, says the Danish investment banking firm SEB Enskilda. The firm says the Lilly-Alkermes team should issue late-stage clinical trial results next year. Meanwhile, Nektar hasn't decided on its next move. It can't afford to act on its own, but how many other companies will step in where Pfizer failed? At one point, there was another Exubera partner, but Pfizer paid $1.3 billion in January 2006 to buy out Sanofi-Aventis' ( SNY) interest, making the French drugmaker the only winner thus far in the inhaled insulin sweepstakes.