Pfizer to Pay Neurocrine to Co-Develop Insomnia Drug

Pfizer Inc., the world’s largest drug firm, agreed Thursday to pay San Diego-based Neurocrine Biosciences Inc. up to $400 million for rights to co-develop and co-market the biotech firm’s experimental insomnia drug.

New York-based Pfizer will have exclusive rights to sell the medicine, called indiplon, abroad in exchange for royalties to Neurocrine. The two firms will jointly market it in the United States.

The agreement reflects a continuing effort by big pharmaceutical makers to expand their pipeline by investing in smaller biotech firms and by strengthening their presence in leading centers of biomedical research, such as the San Diego area.

This year, Pfizer said it would build a major biomedical research campus in La Jolla, where more than 1,000 scientists would work on drug discovery. The La Jolla campus is being built on the current facilities of Agouron Pharmaceuticals, which Pfizer acquired in June 2000.

Under the pact announced Thursday, Neurocrine will receive an upfront payment of $100 million and up to $300 million in milestone payments. Neurocrine, which had 2001 revenue of $41.2 million, also is conducting early-stage trials of treatments for prostate cancer and anxiety. The company has no drugs on the market.

“It’s a dream for Neurocrine and also a terrific deal for Pfizer since it may emerge with the best sleeping pill on the market,” said analyst Matt Geller of CIBC World Markets Corp.

Pfizer said it would support the creation of a 200-member Neurocrine sales force to sell indiplon. The team also would help sell Pfizer’s popular antidepressant Zoloft to U.S. psychiatrists after Neurocrine seeks U.S. approval for the sleeping aid, possibly by the end of 2003, the firms said.

Banc of America Securities analyst Michael King said indiplon could reach annual sales of $2 billion if it wins government approval.

He said indiplon is unique in that one formulation of the drug puts patients to sleep and keeps them asleep without making them groggy when they wake up. Another formulation helps patients who wake up in the middle of the night.

Pfizer aims next year to buy Pharmacia Corp., a firm well-versed in the insomnia business. Pharmacia helped make Ambien a $1-billion-a-year seller, but the Peapack, N.J.-based firm recently returned rights to the insomnia drug to French drug maker Sanofi-Synthelabo under a previous agreement.

Neurocrine shares closed up 31 cents at $42.86 on Nasdaq. Pfizer slipped 18 cents to $30.10 on the New York Stock Exchange.