Staff Writer

The day after receiving its second approvable letter for insomnia drug indiplon, Neurocrine Biosciences Inc. restructured, laying off about half of its staff.

The San Diego-based company let go of approximately 130 employees, leaving 120 behind. The financial impact of the restructuring was not disclosed, and company spokespersons did not return calls seeking comment.

At the end of the third quarter, Neurocrine reported $124.8 million in cash, equivalents and marketable securities. Since then, it gained $20 million by licensing Japanese rights for indiplon to Dainippon Sumitomo Pharma Co. Ltd., and it signed a real estate deal worth another $61 million in cash. The company's operating expenses totaled $29.4 million in the third quarter, and Jefferies & Co. Inc. analyst Eun Yang projected it has sufficient cash to last 18 to 24 months.

Shares of Neurocrine (NASDAQ:NBIX) fell 49 percent on Thursday in the wake of the indiplon approvable letter. And although investors usually like to see belt-tightening, the shares continued to fall on Friday, dropping 36 cents, or 7 percent, to close at $4.89.

Indiplon's first approvable letter came in May 2006, requesting additional analyses relating to the 5-mg and 10-mg immediate-release capsules. At the same time, the 15-mg modified-release tablet formulation received a non-approvable letter requiring additional clinical trials. The setback shaved 62 percent from Neurocrine's market cap and prompted partner Pfizer Inc. to abandon the drug. (See BioWorld Today, May 17, 2006, and June 26, 2006.)

The second approvable letter, which came in response to Neurocrine's revised new drug application for the 5-mg and 10-mg immediate-release capsules, raised an entirely different set of concerns. The FDA requested a preclinical study of indiplon during the third trimester of pregnancy, a clinical trial of the 5-mg capsule dosed for 12 weeks in elderly patients, and a safety study comparing adverse event rates for indiplon with an unspecified marketed product. (See BioWorld Today, Dec. 14, 2007.)

Neurocrine is preparing a request for a formal meeting with the FDA to further discuss the terms of the second approvable letter.

In the interim, the company is moving forward with its small - molecule gonadotropin-releasing hormone (GnRH) receptor antagonist NBI-56418, which is in a Phase IIb trial for endometriosis, with data expected in mid-2008. Neurocrine President and CEO Gary Lyons said in an earlier conference call that the company is in "active partner negotiations" for the product and hopes to have a deal completed by early next year.

Also in Neurocrine's pipeline is 876008, a corticotropin-releasing factor receptor (CRF-R) antagonist in Phase II for social anxiety disorder and irritable bowel syndrome with partner GlaxoSmithKline plc. A second CRF-R antagonist is in Phase I for depression and anxiety. Additionally, Neurocrine has a urocortin-2-based congestive heart failure program in Phase II, a selective norepinephrine reuptake inhibitor (sNRI) program in Phase I for neuropathic pain, and several programs in preclinical development.