Is the Street finally waking up on Exubera?
According to a report from DataMonitor sales of Exubera, the inhaled insulin from Pfizer (NYSE:PFE) will fall well short of previous estimates and stabilize at $207 million by 2015. It appears that the Street is finally waking up to what Diabetic Investor has been saying for years, Exubera is no more than a niche product and will not reach the blockbuster sales estimates of many analysts. At one point in the Exubera saga, analysts were projection sales of over $3 billion per year for Exubera.
According to the report, the core issue is that, although the new formulation of the drug would remove the need for injections, patients would still have to put up with the usual disadvantages of insulin therapy, including weight gain and the need to adhere to a restrictive meal-dependent administration routine. The report also cited the effectiveness of other types of diabetic treatments in the pipeline as a big challenge to universal uptake of inhalable insulins. If this sounds familiar it should as Diabetic Investor has said it over and over.
The fact of the matter is Pfizer seriously misjudged the market. They bet the ranch on the fact that patients and physicians would use Exubera just because it was inhaled. Making matters worse for Pfizer is how their own sales force feels about the product. Diabetic Investor had pointed out that it would difficult for sales reps used to selling Celebrex to make the transition to selling a product which required a high level of patient and physician education. Add in the fact that Exubera’s delivery device is cumbersome and difficult to use and it’s easy to understand why the product is failing so badly.
This report should serve as a wake-up call to Novo Nordisk (NYSE:NVO), Lilly (NYSE:LLY), KOS Pharmaceuticals (NASDAQ:KOSP), MannKind (NASDAQ:MNKD) and Alkermes (NASDAQ:ALKS) all of whom are involved with various inhaled projects. The hardest hit of this group could be MannKind as unlike the others mentioned here their entire future rests on the prospects of inhaled insulin. While Diabetic Investor believes MannKind may be the best project in the category, the category itself is the problem.
Already suffering are shareholders in Nektar (NASDAQ:NKTR) Pfizer’s partner with Exubera. Nektar shares have fallen by almost 35% over the past six months.
Diabetic Investor doubts this report will change the minds of the many analysts who see any form of inhaled insulin as a blockbuster product. Always looking for the bright side they are sure to say that while Exubera failed badly, others have a better mouse trap. As sure as night follows day investors will plunk down their hard earned capital in this area.
The failure of Exubera should also serve as reminder of the complex nature of the diabetes market. Too often investors believe the hype and fail to look at the realities of the market. There is no one who would dispute that diabetes and pre-diabetes are growing at epidemic rates. There is also no dispute that given the choice of injecting insulin or inhaling insulin, most patients would prefer inhaled provided all other factors are equal. As Exubera tells us all other factors aren’t equal.
The truth is patients aren’t afraid of injections they are afraid of insulin. The truth is primary care physicians who treat nearly 80% of the diabetic population lack the time and infrastructure to properly educate patients on insulin therapy. The truth is physicians have a wide range of options for treating type 2 diabetes, the target market for inhaled insulin, that do not require them to provide a high level of patient education.
Investors and analysts will continue to believe the hype no matter what the facts really are. If there’s one thing about the future of inhaled insulin the truth really doesn’t seem to matter.