MannKind Corp. shares dropped more than 13 percent on Tuesday, despite reporting positive clinical data for its experimental Technosphere inhaled insulin.

The Valencia biotech also announced that former rival Pfizer Inc. plans to switch users of its own discontinued Exubera to MannKind’s product.

Pfizer has been weaning patients off its Exubera, which the New York drug giant pulled it from the market last year after posting dismal sales. The company had been required to update its labeling for the drug to warn of increased risk of lung cancer.

Pfizer and Mannkind said Technosphere will be given to Exubera patients who find it difficult to control their diabetes with injected insulin. MannKind plans to submit Technosphere for U.S. Food and Drug Administration approval by the end of the year. Under the collaboration, Pfizer will reimburse some of MannKind's costs for the former Exubera patients, it said.

MannKind released late-stage clinical trial data showing that Technosphere had met its main goal of regulating blood sugar in patients with Type 1 diabetes, a lifelong disease that typically starts in childhood. The drug also is being studied for Type 2 diabetes, an adult version that often can be controlled by lifestyle changes and supplemental insulin. Results from two other late-stage studies are pending.

The latest study also found that after a year there was no deterioration in a patient’s lung function with Technosphere use, a side effect that had plagued Exubera.

Even so, investors continue to fear Technosphere still will face challenges proving to regulators, doctors and patients that its product is safer then Exubera. MannKind shares closed down 46 cents, or 13.6 percent to $2.92 on the Nasdaq.