In a market that is fiercely devaluing companies and following a deflating non-approvable letter from the FDA for Risperdal, Alkermes Inc. said after the markets closed it and Reliant Pharmaceuticals LLC are nixing their planned merger that was valued at $934 million when it was announced in March.

Citing market conditions, Alkermes CEO Richard Pops said in a conference call: "The merger agreement was scheduled to expire at the end of August, so we just decided to end it two weeks ahead of time. We did it primarily so that both companies can resume regular business activities."

The acquisition of Reliant by Cambridge, Mass.-based Alkermes was originally structured as a tax-free exchange of equity in which non-Alkermes equity holders of Reliant would receive about 31.1 million shares of Alkermes stock and thus about 31 percent of the outstanding shares of the merged entity. Alkermes' stock price at the time gave the deal its $934 million price tag. Alkermes' stock (NASDAQ:ALKS) closed Wednesday at $8.35, meaning the merger in today's sagging market would have been valued at $259.7 million. (See BioWorld Today, March 22, 2002.)

Alkermes, in a prepared statement, said there will be no payments triggered by the ended acquisition, and each company will bear its own legal fees.

At the announcement of the planned acquisition in March, Pops, who will remain on Reliant's board, said the deal retrospectively would be "viewed as the pivotal deal we've done in building Alkermes."

Late last year, Alkermes formed a partnership for privately held Reliant, of Liberty Corner, N.J., to market certain undisclosed Alkermes products to primary and specialty physicians. Alkermes made a $100 million investment in Reliant in the deal, acquiring 19 percent of the company. That deal is not affected by the abandoned merger, Pops said. (See BioWorld Today, Dec. 19, 2001.)

"The termination does not affect the strategic alliance with Reliant we announced in December," Pops said. "Our equity ownership in the company remains unchanged."

In early July, the FDA issued Alkermes partner Johnson & Johnson Pharmaceutical Research & Development LLC a non-approvable letter for Risperdal Consta, a twice-monthly injectable form of the antipsychotic drug Risperdal. The news sent Alkermes' stock spiraling down $10.86, or 67.8 percent on the day it was announced. The FDA, Alkermes said, had questions about preclinical data. (See BioWorld Today, July 2, 2002.)

Pops said in the call that he "expects a comprehensive response will be submitted [to the FDA]," but could give no clear guidance as to when that might occur, deferring to Johnson & Johnson.

"As soon as we have more clarity on this issue, we will tell you," he said.

This week Alkermes said Johnson & Johnson received approval to market Risperdal Consta in the UK, which followed the drug's recent approval in Germany. Alkermes said the product would be launched in both countries sometime before week's end.

"Our goal, with Reliant or without Reliant, is to continue building [the company]," Pops said in the call. "So in many ways, the business plan at Alkermes is completely unchanged. There is a fierce determination to keep going."

- Karen Young contributed to this article.

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