The company that brought us the infamous Exubera inhaled insulin device - you know, the one we’re always comparing to a bong - has convinced Bayer that it has what it takes to develop an inhaled antibiotic. The deal “is a natural fit,” says a breathy Ulrich Kostlin, a Bayer Schering Pharma board member.

For the privilege, Bayer will pay $50 million up front, and then as much as $125 million more as milestones are met. If the device is approved, Bayer and Nektar will jointly promote the gizmo in the US and share profits. Nektar’s product is in Phase II clinical trials to treat serious, hospital-acquired pneumonia. Known as gram-negative pneumonias, these often appear in patients whose immune systems are depressed, in the elderly or patients undergoing major surgery.

“Utilizing Nektar’s proprietary pulmonary technology to address life-threatening infections, we are building on our joint development experience in the area of pulmonary therapies,” says Howard Robin, Nektar’s ceo and president. There was no mention, however, of the recent cutbacks due to Exubera’s failure.

And of course, Pfizer may have a different view of “joint development experience.” Exubera racked up just $4 million in sales in the second quarter and the drugmaker is now using direct-to-consumer advertising in hopes of salvaging the product. As Jim Reddoch, an analyst with Friedman Billings Ramsey, wrote this morning in an investor note: “Pfizer will likely throw in the towel on Exubera by year-end if scripts do not pick up substantially.”