Left standing alone at the drug development altar, Emisphere Technologies Inc. saw its stock tumble about 40 percent Wednesday after disclosing that it lost a potential partnership for its oral insulin product.

The Tarrytown, N.Y.-based company said talks with two large pharmaceutical companies had advanced for nearly 18 months - to the point that Emisphere had drafted a press release to announce a deal. But the arrangement unraveled late Tuesday.

"Unfortunately, yesterday evening we received a letter from one of the companies that they would no longer pursue a partnership on oral insulin," Emisphere Chairman and CEO Michael Goldberg said during a conference call, "because of a combination of high resource requirements in a limited resource environment, and the partner's perception of the expected development time and probability of success."

Emisphere's stock (NASDAQ:EMIS) fell $2.10 Wednesday, or 41.1 percent, to close at $3.

Goldberg added that the unnamed company is cutting costs, particularly in research and development. Goldberg said Emisphere would move forward with other potential suitors.

"Emisphere has continued to advance the oral insulin program on both the clinical and formulation side," he said. "We plan to reinitiate discussions with a limited number of companies that had previously shown interest in the oral insulin product. We were able to contact a couple who have indicated that they are prepared to re-establish their internal teams to reconsider the opportunity."

He said at the outset, Emisphere had been in discussions with what he termed, "all of the top-10 pharmaceutical companies."

In September 2001, Emisphere reported data from three Phase I studies demonstrating absorption from the gastrointestinal tract with oral formulations of insulin, as well as reductions in blood glucose levels.

"We believe that there are other companies that are still comfortable in making these bets," Goldberg said. "The potential value for Emisphere from this product remains enormous, especially relative to our current valuation."

He added that the news would not adversely affect Emisphere's other programs aimed at developing oral delivery for otherwise injectable or inhaled drugs through the application of its eligen oral drug delivery technology. Other formulations have advanced into clinical trials being conducted by Emisphere and its partners, which include Basel, Switzerland-based Novartis Pharma AG and Indianapolis-based Eli Lilly and Co. In the former collaboration, Emisphere last week reported favorable results of a multicenter European Phase IIa study. In the latter, Emisphere has completed Phase I studies of an oral formulation of recombinant human growth hormone, though it has yet to release data.

"Today's announcement provides additional data while also saying, Stay tuned a little longer,'" Goldberg said. "The program is partnerable, only not at this moment."