Partners Eli Lilly and Alkermes, whose drug delivery technology makes Bydureon long-acting, could also hurt.
Neither Alkermes nor Reliant had any comment on the status of their prospective merger.
"We're always hunting for blockbusters, " Alkermes Chief Executive Richard Pops said in March.
Shares of Amylin and Alkermes were halted Friday in advance of the agency decision.
WSJ: FDA Approves Amylin's Bydureon Diabetes Drug After Delays
Like most companies, Alkermes has expert scientists, and it has several of its own drugs in development.
Now, Alkermes' bid to acquire Reliant Pharmaceuticals , a drug marketing company, could be in serious danger.
On the face of the FDA's "not approvable" letter alone, the punishment meted out to Alkermes' stock seems unfair.
But much of Alkermes' know-how is in refining and developing compounds and getting them through the clinic to pharmacy shelves.
Hazlett says that he had expected news of approval--or at least potential approval--to be a near-term boost for Alkermes' stock.
Reliant, with its large sales force and positive cash flow, was supposed to help Alkermes bring those drugs to market.
Another resurgent biotech, Alkermes (nasdaq: ALKS - news - people ), has seen its shares gain 30% this year.
"We're always hunting for blockbusters, " says Alkermes Chief Executive Richard Pops .
Another resurgent biotech, Alkermes, has seen its shares gain 30% this year.
And then the diabetes drug Bydureon, which Lilly was developing with Amylin and Alkermes, was rejected by the Food and Drug Administration.
Alkermes, teaming up with Lilly, is altering the shape of insulin particles, making them light and porous enough to float into the lungs.
Bydureon is the first once-weekly treatment for type 2 diabetes, the most common form of diabetes, Amylin and its partner Alkermes Inc.
WSJ: FDA Approves Amylin's Bydureon Diabetes Drug After Delays
On April 13, Cephalon won approval from the U.S. Food and Drug Administration for its Vivitrol drug, a once-monthly injection for alcohol dependence co-developed with Alkermes.
"In the next five to ten years, most major protein therapies should become available in noninjectable forms, " predicts David Edwards of Alkermes, Lilly's partner for inhaled insulin.
The resilient and charismatic leaders of Onyx, Alkermes and Alnylam, who steered their companies through countless ups-and-downs, while creating billions of dollars of shareholder value, were also recognized.
Alkermes, which specializes in developing technologies that deliver drug chemicals to the body, figured out a way to turn the Risperdal pill into a shot, branded Risperdal Consta.
Other firms, including Mannkind and the team of Eli Lilly and Alkermes are developing their own inhaled insulin devices, which may be easier to use but could be years away.
Alkermes is starting late-stage clinical trials of Vivitrex, an injectable form of naltroxene--an FDA-approved drug for the treatment of opiate and alcohol dependence, and it has several other drugs in development.
The most recent medical advance that may help alcoholics is Vivitrol, a once-a-month shot produced by Cephalon and Alkermes that reduced the rate of drinking by 25%, compared to placebo and counseling.
However, Gill does not think it wise to follow exactly in the footsteps of other drug-delivery companies that have tried to make this leap, like Alkermes (nasdaq: ALKS - news - people ) and Enzon , he says.
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