A Bear Stearns analyst downgraded shares of Neurocrine Biosciences Inc. Friday, saying new trials could postpone approval of its already delayed drug candidate indiplon IR into 2009.
The Food and Drug Administration postponed a ruling on the insomnia drug Thursday, asking Neurocrine to begin three new clinical trials of indiplon. Neurocrine is seeking FDA approval for 5-milligram and 10-milligram versions of the drug.
The FDA said it needs data about indiplon's effects on pregnant women and the elderly, along with a study comparing it to a drug already on the market, before it can approve it for sale.
The stock plunged almost 50 percent on the news, reaching an eight-year low of $5.01 and closing at $5.25 on Thursday.
Later in the day, Neurocrine said it will cut its work force in half, to about 120 employees.
Bear Stearns analyst Akhtar Samad said the safety study could take 18 months to complete, giving competitors more time to develop their own insomnia drugs. He downgraded the stock to "Underperform" from "Peer Perform."
"We continue to view IR form as having modest $100 million peak U.S. sales potential, which would decline in our view with a lengthy delay to approval given evolving competition," he said.
The FDA also requested more data on the drug in May 2006, and said it would not approve a 15-milligram version of indiplon. Neurocrine shares were worth more than $50 at the time. The company provided that data in June, but it did not persuade the agency to approve the drug.
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