Billionaire investor Carl Icahn blasted the Amylin (AMLN) board in an open letter sent Wednesday for rejecting a reported offer by Bristol-Myers Squibb (BMY) and urged the company to seriously consider an immediate sale.

Icahn, an activist shareholder who owns 10% of the drug company, said the board should extend the deadline for shareholders to nominate new directors to the board by another 10 days. He threatened legal action if the board failed to make a decision by 5 p.m. ET on Thursday.

Icahn said shareholders were made aware of Amylin’s reported rejection of a $22 a share takeover offer from Bristol-Myers after the deadline already passed. He said any decision not to pursue a sale of the company is a “huge mistake.”

The company, which widened its loss in 2011 to $543.4 from $152.3 million in 2010, faces high risks if it continues operating as a standalone company, he said.

“I and many industry analysts believe that the board of directors should pursue a sale of the company now,” Icahn said, noting there are more than a few potential suitors that would be willing to pay a substantial premium and “significant synergies” that could emerge.

The investor also chastised the company for its March 8 offering of 13 million shares at a price of $15.62 each for being far below the Bristol offer. The company granted options at $16.02 a share, which is 27% below Bristol’s bid.

“These actions make absolutely no sense to me,” Icahn said in the letter.

Meanwhile, Amylin said it strongly believes Icahn's allegations are without merit.

“Amylin’s board is fully aware of its fiduciary duties, and is committed to always acting in the best interests of all stockholders,” an Amylin spokesperson said. “The board continually considers all options available and is relentlessly focused on creating the greatest value for our stockholders.”

Icahn has been a loud voice against Amylin’s board for several years. In 2009, he called the board dysfunctional and had two of his nominees replace chairman Joseph Cook and lead independent director James Wilson.

“I believe these nominees have been a positive force for change, but apparently their influence has not been enough to keep this Board from mishandling a Bristol-Myers proposal,” he said.

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