Forget about Exubera and lung cancer. Alfred Mann, the 82-year-old Los Angeles billionaire and philanthropist who has bet nearly half of his estimated $2.2 billion fortune that he can develop an inhaled version of insulin for the nation’s 5 million diabetics, isn’t giving up. Long shot or no, he remains committed to developing a similar device called Technosphere, writes The Los Angeles Times.

He remains convinced that his product, which he hopes to market by 2010, will be a success. The 60 percent drop in Mannkind shares following the news that the Pfizer device was linked to lung cancer isn’t deterring him.

“By no means am I unsure of the scientific and clinical benefits of Technosphere. I have no reason to believe there is any safety issue with our drug,” Mann tells the Times. “I admit the business environment has a lot of negativity around the sector right now, but that’s just something we are going to have to reverse. I still very much believe in it,” Mann said. “This is a drug that will help many, many people.”

UPDATE: Just the same, Mannkind can’t disregard reality. The Exubera debacle is forcing partnership talks to be suspended, because “we believe that we will be unable to achieve an appropriate valuation for Technosphere” until Phase III data is available, according to a statement issued this morning. Mannkind maintains, however, that no “indications of carcinogenicity in animals” treated with its product.

Despite questions about whether inhaled insulin caused lung problems after prolonged use, the FDA approved Pfizer’s version of inhalable insulin in early 2006. Pfizer yanked Exubera last fall after the device, which was criticized as cumbersome and derided for resembling a bong, proved to an unprecedented flop. Since then, Lilly and Novo Nordisk ended their own projects, leaving Mannkind as a holdout.

Some skeptics have asked whether Mann, a former aerospace entrepreneur who made a fortune setting up and selling medical companies, is too blindly backing an idea whose day may never come, the Times writes. He has invested $566 million in the company, in which he is the controlling shareholder, and has agreed to lend it hundreds of millions more, raising his total stake to $916 million.

But Mannkind has also fought legal challenges. In late 2007, it settled a lawsuit by Wendell Cheatham, its former chief medical officer, who accused the company of making false statements to the FDA and improperly changing the drug’s formulation in a rush to get its Phase 3 clinical trials underway, the Times writes. The company denied wrongdoing and the case was settled, but details weren’t disclosed

Aileen Salares, a biotech analyst at Boston-based healthcare investment bank Leerink Swann, said that although MannKind has enough cash to continue at least through 2009, the company’s long-term survival may be in doubt. “They had many challenges before this news and now they have even more,” Salares tells the Times. “It’s very hard for me to see how they do this.”

Glenn Braunstein, an endocrinologist at Cedars- Sinai Medical Center, says it is too early to know whether the entire class of drugs might be dangerous, but that Pfizer’s study was a signal that more research was needed. He doesn’t expect to prescribe the drugs to patients until such questions are resolved and more patients indicate they want the medications. “The simple fact is that we have a pretty easy and proven way of treating diabetes with insulin now,” Braunstein tells the paper.

Mann said Pfizer’s data proved little, because the rate of lung cancer found in the study population was nearly the same as the rate found in the general population. Company research hasn’t found any evidence that its drug is dangerous, he said.