By Lisa Seachrist

Washington Editor

Neurocrine Biosciences Inc. raised $42 million in a private placement of common stock with five European institutional investors.

The San Diego-based company sold 2.3 million shares at the discounted price of $18 per share. Neurocrine's stock (NASDAQ:NBIX) closed Monday at $21.937, down 81.25 cents a share.

"This was a great Christmas present," said Gary Lyons, president and CEO of Neurocrine. "It gives us a tremendous number of options that we didn't have previously."

With the new infusion of cash, the company will enter the New Year with approximately $95 million and 21 million shares outstanding. The funds are earmarked for advancing Neurocrine's clinical programs. Lyons said the company's business strategy included retaining North American marketing rights for its products while finding marketing partners in Europe.

In late November, the company announced positive Phase II clinical data for its insomnia drug, NBI-34060, as a treatment for transient insomnia. The company plans to initiate a dose-response, randomized, placebo-controlled, multicenter Phase II study in over 550 subjects in the second quarter of 2000. These studies will be conducted in subjects with chronic insomnia and will include other subgroups. Neurocrine also is designing a large pivotal Phase III program in more than 1,500 subjects, scheduled to begin in late 2000.

"Having nearly $100 million in cash allows us to retain the rights to our products so we can bring on partners later in development under very reasonable terms," Lyons said. "With our insomnia drug, we would look to take it through Phase III studies and then bring on a co-promotion partner."

In addition to its insomnia drug, Neurocrine has NBI-3001 (IL-4 fusion toxin) as a treatment for glioblastoma in a Phase II clinical program, and has a Phase II clinical program in anxiety and depression with its CRF antagonist, R121919.