Updated from 1:34 p.m. EDT
lost more than a quarter of their value Monday after the maker of drug-delivery systems said
Johnson & Johnson
had ended further joint development of a longer-lasting version of one of Johnson & Johnson's drugs.
The two companies had been developing a longer-lasting injectable form of Johnson & Johnson's erythropoietin, an anemia drug which helps spur red blood cell growth. The new formulation was planned to allow users, who now require daily doses of the drug, to go several weeks on a single injection using Alkermes' ProLease drug-delivery technology.
Cambridge, Mass.-based Alkermes and a Johnson & Johnson unit,
R.W. Johnson Pharmaceutical Research Institute
, began their collaboration on developing the product in January 1998. Under the original pact, Johnson & Johnson would pay Alkermes around $30 million to develop the drug formulation, and would retain all marketing and licensing rights.
Alkermes finished Monday regular trading down 15 3/4, or 29%, to close at 38 1/2. (Alkermes closed down 15 3/4, or 29%, at 38 1/2.) Meanwhile, Johnson & Johnson's closed down 1 5/16, or 2%, at 84 13/16, reflecting general weakness in the market. (Johnson & Johnson finished down 1 5/16, or 2%, at 84 13/16.)
Richard F. Pops, chief executive of Alkermes, in a statement said that Alkermes was disappointed with New Brunswick, N.J.-based Johnson & Johnson's decision. But, he added, "We have multiple collaborations in place for our sustained-release drug-delivery systems." Officials at Johnson & Johnson were not available for comment.
Analysts said that the decline in Alkermes was likely an overreaction by investors because of the high-profile nature of the deal with Johnson & Johnson. Alkermes has other partnerships with Johnson & Johnson, as well as other drug companies such as
Alkermes develops products that provide controlled, sustained release of injectable drugs lasting several days to several weeks.