Neurocrine stock price plunges 60 percent
FDA's mixed review of sleeping pill Indiplon could threaten Pfizer-Neurocrine partnership: analysts.
By Aaron Smith, staff writer

NEW YORK ( - Neurocrine Biosciences' stock price plunged nearly 60 percent after the FDA gave mixed approval to Indiplon, a sleeping pill that the biotech developed with Pfizer, and analysts believe the partnership is at risk.

The Food and Drug Administration approved 5 mg and 10 mg immediate release pills for Indiplon, but did not approve 15 mg extended release pills.

Pfizer (down $0.06 to $24.83, Research) spokeswoman Betsy Raymond said her company was informed Monday night of the FDA decision by Neurocrine.

Neurocrine (down $32.99 to $21.64, Research) released this statement from chief executive officer Gary Lyons: "While we are disappointed in the FDA action, we will move forward expeditiously to address the FDA's outstanding questions regarding the applications."

Barbara Ryan, analyst for Deutsche Bank North America, said Pfizer will probably cut its partnership with Neurocrine, because the FDA's decision to not approve the larger-dose Indiplon - the dose that allows insomniacs to sleep through the night - has "no appeal whatsoever for Pfizer."

"In light of today's developments, we expect that Pfizer will terminate its collaboration with Neurocrine for Indiplon," said Ryan in a published note.

Al Rauch, analyst for A.G. Edwards & Sons, also said the Pfizer-Neurocrine partnership could be at risk.

"We believe that if the XR tablet does not make it to the market, Pfizer's incentive to remain in the relationship with Neurocrine on Indiplon is greatly diminished; we are therefore removing Indiplon from our estimates," said Rauch, in an analyst note.

Rauch said the impact on Pfizer was "negligible."

Miller Tabak analyst Les Funtleyder said the FDA might have gotten scared over the fallout surrounding another sleeping pill: Ambien from the drugmaker Sanofi-Aventis (up $1.90 to $49.11, Research). Researchers from the University of Minnesota Medical School and the Mayo Clinic recently found that Ambien causes some people to gorge on food while sleeping in the middle of the night. There have also been reports of sleep-driving and sleep-sex, with no memory of it afterwards.

"It appears the FDA watches television news and did not like the idea of approving another drug that might make people run off the road," said Funtleyder, in a note published this morning.

Pfizer, based in New York City, is the biggest drug maker in the world, with $51.3 billion in 2005 sales. San Diego-based Neurocrine reported $123 million in 2005 sales.

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