The biotech won’t give up. Despite Lilly’s decision last week to abandon such a product, MannKind pledged to continue developing its insulin inhaler system even though its stock fell in reaction to Lilly’s announcement, The Los Angeles Times reports. But Hakan Edstrom, MannKind’s president, insists the stock, which has lost more than two-thirds of its value in the last year, will bounce back once investors realized its device is superior to the one Lilly had been pursuing.

“We’ve been affected by an ongoing flu in the inhaler market, but we’re confident that we’ll come out of this with flying colors,” he tells the Times. “People are looking at all the inhalers as one family without a clear understanding that we have a very different product.”

Last Friday, Lilly abandoned its insulin inhaler over what the drugmaker described as “increasing uncertainties of the regulatory environment” and “commercialization concerns.” In January, Novo Nordisk canceled plans to proceed with an inhaler. And last fall, Pfizer pulled the plug on Exubera, which was the only such device to ever reach the market, after problems with its design and anemic sales.

MannKind’s Technosphere insulin and Medtone inhaler are in the final phase of clinical trials, the Times writes. Unlike the system discontinued by Pfizer, Edstrom argues, MannKind’s delivers a higher quality of insulin and the inhaler itself is smaller and more convenient. And he tells the paper that MannKind’s system fell victim to the market’s general skepticism about inhaled insulin products, which some have viewed as threatened by the smaller, less-painful injectors that have come on the market in recent years.

Trials suggest that MannKind’s insulin can mimic the insulin response of a healthy individual within 15 minutes, without a high risk of hypoglycemia or the weight gain associated with insulin shots, Edstrom tells the Times, adding that other inhalers have a lag of 45 to 60 minutes.

Technosphere has “substantial opportunity” among many diabetics, Leerink Swann analyst Aileen Salares tells the paper. She predicts $1 billion in revenue by 2015 MannKind, which hopes to market Technosphere and Medtone by 2010. “The discontinuation of the other products doesn’t affect MannKind,” says Salares. ” “We still think this is a viable product.”

Salares adds that MannKind needed “to find a partner who shows their commitment to the product and is willing to put in the investment and promotion. When that doesn’t come, people will start selling off.”