Lilly drops inhaled-insulin project

Eli Lilly and Co. confirmed this evening that it will abandon its inhaled insulin program, citing increased uncertainties about its commercial potential and the regulatory environment.

The decision will cost Lilly $90 million to $120 million, or from 5 to 7 cents per share. The Indianapolis-based drugmaker now expects to per-share profit of $3.73 to $3.90 this year.

Lilly’s partner on inhaled insulin, Massachusetts-based Alkermes Inc., announced this morning that it expected Lilly to cancel the program next week.

Lilly will halt its worldwide Phase 3 clinical trial of inhaled insulin, which included patients with type 1 and type 2 diabetes. Patients will be switched to other insulin therapies. Lilly will pay for those therapies for all U.S. patients, and is considering similar support for non-U.S. patients.

“This decision, though difficult, is the right one to make at this time,” said John Lechleiter, Lilly’s president and chief operating officer, in a written statement. He said the company conducted a “thorough review” of its inhaled insulin program over the last few months.

Lilly was one of three major drugmakers that tried to develop inhaled insulin as a more attractive alternative to standard injected insulin. Diabetic patients already spend $7 billion a year on insulin, and the worldwide prevalence of diabetes is expected to double by 2030.

But the first inhaled insulin product on the market, Pfizer Inc.’s Exubera, failed miserably. Sales never took off, as patients and doctors complained about Exubera’s bulky delivery device. In October, New York-based Pfizer gave its rights to Exubera back to its development partner, Nektar Therapeutics, and took a $2.8 billion charge. It also put 600 workers at its Exubera factory in Terre Haute on paid leave.

In January, Denmark-based Novo Nordisk A/S discontinued its inhaled insulin program, a partnership with Aradigm Corp.

As recently as January, Lilly officials said they planned to submit their inhaled insulin product for regulatory approval in 2009.

One small company, California-based MannKind Corp., is still trying to develop inhaled insulin. But it has no larger company lined up to help it sell the product to doctors, if it receives regulatory approval.

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