MannKind Corp says it is suspending discussions with potential partners for its experimental inhaled insulin product in the wake of Pfizer issuing a warning concerning possible cancer risks linked to its similar drug Exubera.

The move comes a day after Pfizer updated the label on its no-longer marketed treatment after a clinical data review found that six of 4,740 Exubera patients compared with one of 4,292 patients not using the inhaler developed lung cancer. Each of the patients affected had a history of cigarette smoking and Pfizer said there were too few cases to determine whether this observation was related to Exubera, but a warning has been added to the label.

The analysis forced Exubera co-developer Nektar Therapeutics to end talks with potential partners but, on the stock exchange at least, Mannkind was the biggest loser as its shares sank almost 60% as investors feared the worst for the firm’s own Technosphere Insulin programme.

Mannkind has become the sole flag-bearer for inhaled insulin after Eli Lilly ended its Phase III AIR inhaled insulin programme for type 1 and type 2 diabetes, which was being developed with Alkermes. Novo Nordisk also recently announced that it was halting development of its AERx inhaled insulin product.

Mannkind is adamant its product still has potential but has called off talks with prospective partners, “given the current market sentiment”, because “at this time, we believe that we will be unable to achieve an appropriate valuation for Technosphere Insulin until Phase III data are available that confirm our belief in the safety and efficacy" of the product.

The California-based group said that the safety profile of Technosphere Insulin has been examined in an extensive pre-clinical programme, including a two-year carcinogenicity study in rats. In the latter, it observed that the product was well tolerated after daily inhalations for 104 consecutive weeks and “there were no indications that our product or the carrier material alone had carcinogenic potential or caused cellular proliferation in the lungs”. A six-month carcinogenicity study in transgenic mice has drawn similar conclusions to date.

The firm added that the independent Data Safety Monitoring Board has consistently recommended that Technosphere Insulin trials continue without changes. The DSMB met again yesterday, following the news on Exubera and found that “on the basis of the current information”, the studies should carry on. “To date with our product”, Mannkind continued, “we have seen no adverse effects on the measures of pulmonary function that have been reported to occur with Exubera”.

Despite Mannkind’s confidence, analysts at Piper Jaffray have downgraded the stock from ‘buy’ to ‘neutral’ and slashed its price target from $19 to $1.50. They said that the developments of the last couple of days have dealt a major blow to the commercial prospects for Technosphere Insulin, as physicians are now much more likely to take a very risky stance on any inhaled insulin product.