While the official release issued jointly by the two companies yesterday appeared amicable enough, detailing a $135m one-off payment to Nektar and Pfizer's willingness to transfer remaining rights and economic benefits concerning Exubera and a next generation inhaler should a new partner be found, looking further into Nektar's company documents reveals a perhaps less united front than the official statement suggests. Initial concerns Pfizer's October 18 announcement that it planned to pull out of the inhaled insulin market and drop Exubera came as a bolt from the blue to its partners, who learnt of the decision through Pfizer's publicly available press release issued that day. Nektar's CEO Howard Robin did not mince his words in responding to the news, clearly unimpressed by the pharma giant's lack of consideration for its partners and generally disappointed by the company's Exubera marketing efforts. However, beyond the initial reactions to the news, the company had much more serious concerns regarding its future following the Pfizer decision. Nektar's documents filed with its third quarter results late last week, before the Pfizer agreement had been finalised, are punctuated by concerns regarding the company's future and just how it can handle having Exubera back on its books. Particular anxiety surrounded the fact that the company is completely unable to continue development of Exubera and the next generation inhaler currently in Phase I without an external partner. Not only this, but Nektar also aired concerns that future development could necessarily involve Pfizer to a certain extent - an involvement that could by no means be guaranteed: "We anticipate any commercialisation partner would require substantial time and incur substantial costs to commercialise Exubera successfully and a certain level of cooperation by Pfizer would likely be required and Pfizer has no obligation to do so under our agreements," company documents read. "Although the regulatory approval process could be shorter if Pfizer assisted us in obtaining transfer of regulatory approvals, such assistance is not required under termination provisions of our agreements with Pfizer." On top of its somewhat underperforming sales and marketing activities, Pfizer was also responsible for manufacturing and delivering bulk insulin for powder processing, filling the insulin powder into blister packs to be used with the inhaler device, and all packaging for the final Exubera product. With no in-house facilities to take on these activities, no new partner to fulfil the role previously played by Pfizer essentially means no Exubera. Nektar is therefore feeling the pressure to identify and lure in a new partner before it completely misses the inhaled insulin boat. "If we are unable to secure a partner over the next few months, we would be required to exit or put on hold the Exubera product and may be required to cease development activities with respect to the next-generation inhaled insulin programme." Such a decision could impact the entire company, incurring costs and charges and potentially requiring "reduction of personnel and infrastructure," according to Nektar documents. Leaving aside future Exubera plans, the loss of the Pfizer partnership alone is likely to cause some problems over at Nektar. Since the inception of the company, Nektar has historically relied heavily on revenue from Pfizer related to the Exubera collaboration. The Pfizer agreements alone were responsible for a massive 69 per cent of total revenues over the first nine months of this year. Competition While Exubera was the very first inhaled insulin product on the market, the second wave of players are edging ever closer, in an attempt to bring more successful products to market. Nektar is well aware of these circling vultures, the cause of yet more anxiety as to whether the company will be able to make it to market with an improved second generation device in time to compete. The firm names Novo Nordisk, Alkermes and Eli Lilly, MannKind and Kos Pharmaceuticals as direct competitors, all working on various inhaled insulin products in liquid or powder form, some of which are as far as Phase III development. On top of this there are those working on other oral forms of insulin delivery, such as Biocon, Emisphere, Coremed and Generex Biotechnology. What the press release didn't say While the joint statement issued by Nektar and Pfizer yesterday spoke of a "strengthened" relationship between the two companies, and an agreement that "allows Nektar to pursue additional commercial opportunities for the Exubera and [next generation inhaler] insulin franchises," the reality of the deal is not so straightforward. The publicised aspects of the agreement focus on a $135m one-off payment to Nektar due by the end of this week, and the fact that should a new partner be selected, Pfizer will transfer its remaining rights and all economic benefits for Exubera and the next generation device. However, Nektar company documents suggest that Pfizer perhaps isn't quite so keen to wash its hands of Exubera after all. While the firm has indeed agreed to transfer its rights on the allocation of a new development partner, what has not been so widely publicised is the fact that Pfizer will in fact still have influence over who that new partner will be. Along with an interesting 'non-disparagement' clause, the terms of the agreement signed last Friday state: "If a new marketing and development partner for Exubera and/or [next generation inhaled insulin] is selected and acceptable to Pfizer (after consultation with Nektar) then Pfizer will transfer all or substantially all of Pfizer's rights to Exubera and [next generation inhaled insulin] to the Successor Partner…" (emphasis added) Pfizer representatives were unable to comment on what criteria would need to be fulfilled in order for the company to approve a potential new partner prior to going to press. To have such conditions in the agreement could perhaps be seen as little risky on Nektar's part, with the upshot being that despite ostensibly dropping Exubera altogether, Pfizer will in fact still be able to influence future decisions and reduce the level of control Nektar has over its product. However, the inclusion of this caveat could have been a result of a pay-off Nektar weighed up in order to try and secure Pfizer's cooperation with a future partner. Addressing the concerns Nektar had voiced regarding Pfizer's lack of obligation to cooperate with future Exubera collaborators, the company has managed to negotiate agreements from Pfizer that form a 'Transition Assistance' programme in the event that a new partner comes on board. In addition to dedicating "reasonable efforts to consummate the new partnership agreement," Nektar has pinned Pfizer down to agree to play nicely with its successor, and fulfil a number of requirements such as technology and asset transfers and certain manufacturing activities if a partner is identified. In addition, during the period while a contract is being drawn up with a new partner, Pfizer has also agreed to undertake certain Exubera and next generation inhaled insulin 'maintenance activities.' Under this clause, should a new agreement be substantially advanced by mid-January 2008 (at which time Pfizer is due to remove Exubera from the market), Pfizer has agreed to resume a 'reasonable level' of wholesaler/mail order distribution to patients and continue certain clinical studies. During the weeks between Pfizer's original Exubera decision and the signing of the agreement, Nektar could conceivably have been battling out the details of these assurances with Pfizer, and been forced to give a little in terms of future partner choice in order to secure Pfizer's future cooperation. So while all may appear rosy on the outside, Nektar will still have work to do, with now only a matter of months to identify and convince a new partner to come on board and take on the high profile flop that was Exubera. The company will also soon have its own creditors banging on the door, with contract manufacturer and fellow Exubera victim Consort Medical (formerly Bespak) looking to Nektar to recover costs associated with the closure of its Exubera inhaler device manufacturing plant. The UK firm's initial estimates put charges and cost related to the closure at around £16m ($33m), a "significant proportion" of which the company expects to get back from Nektar. While fellow Exubera contract manufacturer Tech Group has yet to comment, it looks like Nektar will have to work fast to make the $135m Pfizer pay out and the few months it has on its side really count.
