Staff Writer

A week after reporting that additional trials likely would be necessary for approval of its sleep drug, indiplon, Neurocrine Biosciences Inc. suffered another blow with the loss of its commercialization partner, Pfizer Inc.

The New York-based pharma firm pulled out of the 2002 development and co-promotion deal, deciding not to wait until the companies' follow-up meeting with the FDA, anticipated later this summer.

"The reason stated to me was that it was a portfolio decision," said Gary Lyons, president and CEO of Neurocrine. Pfizer was doing its "semi-annual portfolio reviews and, based on that" opted to terminate the collaboration on indiplon.

Pfizer's withdrawal didn't sit well with investors. Neurocrine's stock (NASDAQ:NBIX) tumbled $3.96 Friday, or 28.7 percent, to close at $9.85.

Overall, it's been a disappointing couple of months for San Diego-based Neurocrine, starting with the receipt in mid-May of two FDA action letters: one, an approvable letter for its 5-mg and 10-mg immediate-release indiplon capsules, and two, a non-approvable letter for a 15-mg modified-release tablet formulation. That news dropped Neurocrine's stock by more than half, from $54.63 to $20.76. (See BioWorld Today, May 17, 2006.)

Shares fell to $15.18 earlier this month when the company acknowledged that additional trials likely would be needed, at least with the modified-release version of indiplon, which is expected by investors to garner the larger share of the insomnia market. (See BioWorld Today, June 19, 2006.)

Under the collaboration agreement, the responsibility for funding any additional trials would have fallen to Pfizer. With the exit of its partner, Neurocrine regains worldwide rights to indiplon and plans to continue on alone through regulatory approval, Lyons said.

"What we are anxious to do now is to take over development and be able to interface with the regulatory agencies ourselves and understand the development path to get this product resubmitted and approved," he told BioWorld Today.

The first step is to meet with the FDA to "gain more clarity on what, if any, additional work is necessary," Lyons said, "and what timeline we expect to be on for resubmission."

Though still waiting to hear the specifics from the FDA, Neurocrine estimated that the costs of any further development work could run anywhere from $10 million to $30 million.

As of March 1, the company had a cash position of $264 million, which should "be sufficient for the foreseeable future," Lyons said. And, as work progresses, the company "will entertain offers" for other commercial partnership opportunities.

Under the termination provisions, Pfizer will continue working with Neurocrine throughout a 180-day transition period and wrap up any ongoing financial obligations. Pfizer, which paid an up-front fee of $100 million upon the signing of the deal in December 2002, originally agreed to fund development costs, pay milestones of up to $300 million and undisclosed royalties and co-promotion fees. (See BioWorld Today, Dec. 20, 2002.)

Lyons estimated that, to date, Pfizer had sunk about $400 million into the collaboration.

Part of the agreement also called for Pfizer to create an indiplon sales force at Neurocrine that also would sell the pharma firm's antidepressant Zoloft. The status of that will be included in discussions between the companies over the next six months, Lyons said, though he added that Neurocrine is committed to maintaining the sales force.

"The sales force is still in place and is still being funded," he said. "Our discussions with Pfizer will be to negotiate some understanding where the funding continues, and in parallel, we're looking at in-licensing or co-promoting other products to help offset costs to keep it in place."

Indiplon is a non-benzodiazepine agent designed to bind to the specific subtype of the GABA-A receptors within the brain believed to promote sleep. If approved, its chief competitor would be Marlborough, Mass.-based Sepracor Inc.'s Lunesta (eszopiclone), which gained approval in December 2004.

Sepracor's stock (NASDAQ:SEPR) gained $3.84 Friday to close at $60.26.

Behind indiplon, Neurocrine has several programs in development, the most advanced being NBI-56418, its gonadotropin-releasing hormone (GnRH) receptor antagonist in Phase II endometriosis studies. The company recently reported positive three-month data, and expects to move into an expanded six-month Phase IIb study later this year.

Though it's too early to tell whether the loss of Pfizer's support for indiplon will affect the timeline for Neurocrine's other drugs, Lyons said it "may lead us to partner some things earlier that we might have held longer, but we haven't made any decisions yet."

Neurocrine also is in Phase II with its Type I diabetes drug, NBI-75043, and its urocortin 2 drug in congestive heart failure. A corticotrophin-releasing factor antagonist is getting ready to start Phase II in anxiety and depression. That product is partnered with London-based GlaxoSmithKline plc.