It probably should have come as no surprise that French nanotech pioneer Flamel (NASDAQ:FLML), a Motley Fool Hidden Gems recommendation, lost its deal with TAP Pharmaceuticals to create a controlled-release formulation of its heartburn medicine Prevacid.

It was only last week that TAP, a joint venture between Takeda Pharmaceuticals and Abbott Labs (NYSE:ABT), announced it was initiating phase 3 studies for a modified release formula licensed from Takeda. And it really should have been a matter of when, not if, TAP would notify Flamel that it would cancel the agreement.

Said TAP agreement had been used by Flamel's prior management to soften the blow of losing yet another deal with Bristol-Myers Squibb (NYSE:BMY) last September. It was this series of lost deals and failure to ink new ones that led to a shareholder revolt against the entrenched management, a revolt in which Hidden Gems subscribers played an active role. Some 80% of all shareholders voted to install a new slate of directors, which led to the resignation of Founder and CEO Gerard Soula.

This blown deal really can't be laid at the feet of new management -- they've only been on the job a few months -- but it certainly turns up the pressure on them to find new partners for their drug-delivery technologies, MicroPump and Medusa. Both have now suffered the ignominy of losing partners, and it creates doubt as to the value of the technologies.

Certainly on the surface, both the MicroPump and the Medusa formulation appear to be promising. MicroPump provides a controlled release of small-molecule drugs, and Medusa permits the controlled release of proteins that would otherwise degrade in the body. The potential for simplifying med regimens to just once a day is as great as the technologies' abilities to extend the life of medicines set to lose their patent protection.

Yet both possibilities have not been enough to cause the major pharmaceutical companies to line up at Flamel's door. While Medusa has suffered more setbacks than the MicroPump -- both Bristol-Myers and Novo Nordisk (NYSE:NVO) backed out of deals using the Medusa platform with a long-acting insulin treatment for diabetes -- the MicroPump has not exactly been setting the world aflame, either. Biovail (NYSE:BVF) ditched it for a herpes treatment. It was believed that much of the failure to sign new licensing agreements was due to CEO Soula's insistence on crafting the "perfect" deal. With Soula out of the picture now, however, it remains to be seen whether it was management's ineptitude or just not enough impetus behind the technology that was to blame for the failure to get deals going.

For investors, this is something of a bitter pill to swallow. As I said before, the cancelled deal should not have come as too much of a surprise, but that's little solace for those of us who invested in the company, believing not only in the technology but also in the abilities of new management. Whether this failed deal causes the stock to plummet more -- as of this writing, Flamel is off 35% from Tom Gardner's original recommendation, and 13% below his re-recommendation -- is still uncertain.

And it's that uncertainty that should give investors pause before sinking any more money into this company. Yes, when a good stock falls, it can often be viewed as a buying opportunity, but a cheap stock can also be cheap for a very good reason.

It's my belief that there's just too much fog facing this company for investors to see clearly ahead. Before I would even begin to consider Flamel for an investment at this time, I'd want to see a few more deals signed. That would probably mean you wouldn't be getting in at the exact bottom, but a few deals in the "done" basket would also minimize some of the risks inherent with investing in biotechs -- let alone in nanotechs like Flamel.

Again, I don't see this failed deal as the fault of the new management or as an indictment of the technology. But that doesn't mean I'd be chasing this stock down any more -- rather, I'd prefer to see management first fulfilling its promise to forge the deals necessary to make Flamel a world-class player.

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Fool contributor Rich Duprey owns shares in Flamel but does not own any of the other stocks mentioned in this article. The Motley Fool has an ironclad disclosure policy.