The Food and Drug Administration's response wasn't exactly what investors in Amylin Pharmaceuticals (Nasdaq: AMLN), Eli Lilly (NYSE: LLY), and Alkermes (Nasdaq: ALKS) were looking for, but they'll take it. Amylin and Alkermes are both trading up more than 13% after the FDA rejected the once-weekly version of diabetes drug Byetta. The larger Eli Lilly, which isn't as dependent on one drug, was trading flat.

Why the positive response to the FDA saying that it wouldn't approve the drug at this time? Ten little words: "[T]here are no requests for new pre-clinical or clinical trials." Unlike being a little pregnant, it is possible to be a little rejected.

The companies highlighted just two issues that the FDA would like addressed. First, the Risk Evaluation and Mitigation Strategy (REMS) needs a little tweaking. Second, the FDA would like clarification about manufacturing of the drug, which will be called Bydureon if approved.

Amylin said it expects to respond to the FDA in a few weeks, and the only question now is whether the FDA will deem the response to be class 1 (with review likely finished in two months) or class 2 (review finished in six months). In the big picture, the difference of four months won't matter too much. But it would be nice to launch Bydureon sooner rather than later and not give Novo Nordisk's once-daily Victoza too much time to get established. Bydureon also has once-weekly competition behind it from Roche and another from GlaxoSmithKline (NYSE: GSK) and Human Genome Sciences (Nasdaq: HGSI).

Merck (NYSE: MRK), Bristol-Myers Squibb (NYSE: BMY), and the rest of the companies with oral diabetes medications better start revving up their promotional activities. Byetta with its twice-daily injections was never able to compete very well, but Byduereon's once-weekly formulation should be a formidable rival. From the looks of things, the competition should start by year's end, if not sooner.

Listen to the wrong people and you'd think it was stupid to buy these stocks.

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Fool contributor Brian Orelli, Ph.D., doesn't own shares of any company mentioned in this article. Novo Nordisk is a former Global Gains pick. The Fool owns shares of GlaxoSmithKline and has a disclosure policy.