2006 was not a nice year for drug developer Neurocrine Biosciences (NASDAQ:NBIX). First, it failed to receive regulatory approval to market its lead drug, the insomnia treatment indiplon, and then Pfizer (NYSE:PFE) bailed out of its development and marketing partnership with Neurocrine when the FDA issued a non-approvable decision on the drug's most commercially viable extended-release tablet form.

Despite all these negative developments, some Neurocrine investors have been sitting pretty, as the stock is up nearly 85% from its recent lows. This week, shares continued their climb after Neurocrine announced a shortened timeline for filing its response to the FDA's approvable letter it received on the indiplon capsules back in May last year.

Before submitting a response to the indiplon approvable letter, Neurocrine was originally planning on having to conduct another three-month safety and efficacy study even though the FDA did not request any more clinical trial work. This extra study was expected to delay a resubmission of the indiplon application until the summer of 2008. After further discussions with the FDA, though, Neurocrine announced yesterday that it is forgoing the extra clinical trial and will resubmit the application by the end of the second quarter. With an expected class 2 review, this puts possible approval of the lower-dose capsules by the end of the year.

It's still unclear how indiplon will be marketed and what value the drug has now that it will no longer have the marketing muscle of Pfizer behind it. This is not a minor issue, as indiplon faces stiff competition from Sepracor's (NASDAQ:SEPR) Lunesta and Sanofi-Aventis' (NYSE:SNY) Ambien CR.

Furthermore, Neurocrine recently spent $6 million to disband its sales force, so perhaps a modest partnership agreement is in the works if indiplon can get approved. Any marketing deal will undoubtedly be for much less than the $400 million deal ($100 million upfront) that Pfizer made to become Neurocrine's partner back in 2002, but even a back-loaded deal could bring in some much-needed cash to Neurocrine's coffers.

Neurocrine is still not one of my favorite biotech stocks, but whatever happens with indiplon, Neurocrine's management deserves kudos for keeping investors well informed on the status of the drug and where the company stands as far as timelines go.

Pfizer is an Inside Value recommendation.

Fool contributor Brian Lawler does not own shares of any company mentioned in this article.