By Ransdell Pierson

NEW YORK (Reuters) - MannKind Corp (MNKD.O: Quote, Profile, Research) said on Thursday it was suspending talks with potential partners for its experimental form of inhaled insulin due to negative market sentiment about such products, given possible cancer risks of Pfizer Inc's (PFE.N: Quote, Profile, Research) Exubera product.

MannKind's experimental form of inhaled insulin, Technosphere Insulin, is begin tested in a broad group of patients with diabetes, but data from late-stage trials of the medicine have not yet been obtained.

"At this time, we believe that we will be unable to achieve an appropriate valuation for Technosphere Insulin until Phase 3 data are available that confirm our belief in the safety and efficacy" of the product, MannKind said in a release.

Shares of MannKind plunged 60 percent to $2.35 on Wednesday after Pfizer and its former partner, Nektar Therapeutics (NKTR.O: Quote, Profile, Research), said six of the 4,740 patients given Exubera in clinical trials developed lung cancer. That compared with one of the 4,292 patients in the same trials who did not receive Exubera.

Among people tested with Technosphere Insulin in ongoing trials, MannKind said it had not seen a higher incidence of lung cancer than that expected in the general population.

Moreover, it said it has studied the drug's potential to cause cancer in a two-year trial of rats and a six-month trial involving mice prone to cancer, but no potential cancer connection was seen.

MannKind said it was not aware of any studies of Exubera that evaluated its potential to cause cancer. But it stressed that each of the Exubera-treated patients who developed lung cancer had a history of smoking, a major risk factor for the disease.

Slight deteriorations in lung function that have been seen with Exubera have not been detected among trials of Technosphere Insulin, MannKind said.