It's been an awful time to hold the stock of a small company called Neurocrine. They've been developing an insomnia therapy (Indiplon), and things seemed to be going along reasonably well. It's a crowded field. The compound is in the same GABA mechanistic class as the existing drug Ambien (which makes it in the same class as Lunesta, naturally, since that's one of those "Sepracor special" follow-on compounds). But Neurocrine signed up with Pfizer, who weren't getting any of the insomnia market and were willing to give several formulations of the compound their well-known marketing push, including a long-acting one that might have provided an advantage over the competition.
Then a few weeks ago, they got the dread "approvable" letter for the lower doses, and a flat-out "not approvable" for the long-acting formulation. Neurocrine's shares really took a beating as investors wondered if this was an approvable letter of the "new clinical trials needed" variety, and since then, it's become clear that that's exactly what it was. Late last week, Pfizer announced that it had had enough and pulled out of the deal. Neurocrine's stock has, in the space of a bit more than a month, gone from the mid-50s to single digits.
Neurocrine's putting a brave face up, saying that they're going to go ahead and develop Inidiplon themselves (and presumably look for another partner as they do so). It's going to be tough, but they may feel as if they have no choice but to try to get the drug through to the market. They have a few things in Phase II, but Inidiplon was going to be what paid the bills. Another partner will be essential, because they're going to have to come up with a lot of cash to get the drug through to a point where it could be approved, and to then try to market the drug themselves might be suicidal. By that time, they'd be up against generic Ambien, among other things. I don't see them doing that on their own.
No, I think that their choice is this: either ditch Inidiplon completely, contract back to a smaller development company with some stuff in the clinic, and hope for the best - or - cut back on all those other projects and put all the money on Inidiplon, trying to clean it up enough to attract another partner. The problem is, the ideal partner would be someone with a big pile of cash, a need for something to fill their pipeline, and a powerful marketing arm to deal with the competition. Someone, in other words, like Pfizer. Who's just told them that they want no part of it.