Neurocrine Biosciences Inc. said on Tuesday a version of an experimental sleep drug it is developing with Pfizer Inc. was rejected by U.S. regulators, sending its shares plummeting 55 percent.
San Diego-based Neurocrine, the biggest percentage loser on Nasdaq, said the U.S. Food and Drug Administration deemed the drug called indiplon as "approvable" in its 5 milligram and 10 milligram doses and rejected the 15 milligram XR version of the tablets.
"The rejected dose is the dose that matters," said Ira Loss, an analyst at Washington Analysis who follows the FDA closely for investors.
"The (lower) doses put you to sleep, but do not necessarily keep you there for 8 hours. That was the rationale for having the 15 milligram dose."
The drug would compete in the growing market for sleep drugs, estimated between $2 billion and $3 billion, which includes market leader Sanofi-Aventis SA's Ambien. Pfizer, the world's biggest drugmaker, plans to use its marketing might with a direct-to-consumer campaign to sell the drug, according to analysts.
Merrill Lynch analyst Eric Ende downgraded Neurocrine to "sell" from "neutral," noting the rejection of the preferred dose meant the drugs would likely have tepid sales, of no more than $100 million to $200 million. Earlier, some analysts had forecast sales could top $1 billion.
"The FDA action renders indiplon a noncompetitive drug," Ende wrote in a note.
Source: Reuters Health
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