Toray Industries Inc. (3402.TO) said Thursday it has developed a way for diabetics to take insulin through a nasal spray rather than a needle, triggering an investor rush that lifted the company's shares as much as 10%.

The innovation by Japan's biggest synthetic fiber company by sales, which would spare diabetes sufferers daily injections to lower blood sugar levels, comes as drug makers around the world step up clinical trials on insulin delivery treatments using nasal and oral sprays with a 50% increase in the global number of diabetics predicted by 2025.

A spokesman for Toray said that in association with Tokyo-based Hoshi University it has developed a compound which, mixed with a peptide comprising amino acid chains, successfully delivered insulin into the blood stream in animal testing.

The university is leading the development of the insulin delivery technology, he said, and will team up with a yet-to-be-determined pharmaceutical company to conduct clinical trials on the new compound. Clinical study plans aren't yet set, he added.

The news sent Toray shares racing on the Tokyo Stock Exchange as investors bet that the spray system, if successfully developed, could provide an easier and less invasive insulin delivery method that would appeal to diabetes sufferers.

Having risen over 10%, the stock settled to close 6% higher at Y568, valuing Toray at just under Y800 billion. The Nikkei 225 Stock Average meanwhile ended the day 0.8% higher.

An analyst at one Japanese brokerage, speaking on condition of anonymity, said a specific move to strengthen medical operations would be a positive factor even though it might be too early to predict how much of an impact an insulin spray system might have on Toray's earnings.

The analyst said that major synthetic fiber makers are seeking more stable and defensive sources of revenue than textiles; and that rival Teijin is already reaping the benefit of developing medical businesses.

The International Diabetes Federation expects the number of diabetics in the world to climb over 50% to 380 million by 2025 from the current 250 million, accounting for some 7% of the global adult population.

While that provides a huge and potentially lucrative business, the market for inhalable insulin is expected to become very competitive.

Some pharmaceutical makers are already conducting clinical trials on insulin delivery treatments using nasal and oral sprays.

MannKind Corp.'s (MNKD) pulmonary insulin delivery system has been approved by the U.S. Food and Drug Administration in May. Baxter Healthcare Corp., BioSante Pharmaceuticals Inc. (BPAX), Generex Biotechnology Corp. (GNBT) and CPEX Pharmaceuticals Inc. (CPEX) are also developing their spray delivery systems.

In 2006, Pfizer Inc. (PFE) became the first company to commercialize inhalable insulin, Exubera, but the company pulled it off the market the following year as its high cost and its difficult use resulted in poor sales.

Meanwhile Toray is extending its potential range of systems to deliver insulin treatment. It is also developing a capsule technology which can be used to deliver several days worth of medications in a single dose.

This technology will allow capsules to be digested slowly and can be applied to insulin delivery, the Toray company spokesman said Thursday. It is also at a preclinical stage and a development partner will be needed to start clinical studies, he said.

The move by Toray, which supplies everything from specialty fabrics for luxury goods makers to carbon fibers used in Boeing Co. (BA) jets, also comes as joints industry rival Teijin Ltd. (3401.TO) in seeking to boost medical operations as growth in the textiles business stalls.

Teijin is now developing compounds acquired from other companies in Japan and overseas for treatment of such diseases as osteoporosis and irregular heartbeat.

 
   -By Kazuhiro Shimamura, Dow Jones Newswires; 813-6895-7566; kazuhiro.shimamura@dowjones.com

(Juro Osawa contributed to this article)

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