Neurocrine Biosciences is getting ready for some sleepless nights after its stock sank 49% on the news that US regulators have requested yet more data on its insomnia drug candidate indiplon.

The US Food and Drug Administration has issued a second approvable letter for indiplon 5mg and 10mg capsules and requested “additional clinical and preclinical data”. Specifically the San Diego-based firm needs to carry out an objective/subjective clinical trial in the elderly, a safety study assessing the rates of adverse events when compared to a marketed product and a preclinical study to evaluate indiplon administration during the third trimester of pregnancy.

The agency’s request comes six months after Neurocrine resubmitted its New Drug Application for indiplon, following the FDA’s first approvable letter in May 2006. The agency had requested additional information on the two lower doses of indiplon, and rejected outright the higher 15mg dose, which was believed to be the most commercially viable. A month after that first letter, Pfizer ended its partnership with the company.

Neurocrine chief executive Gary Lyons said that “while we are disappointed in the FDA action, we will accept the FDA's offer to discuss the applications via a meeting or telephone conference in order to clarify and determine the next steps required". However the effects of the agency’s lack of enthusiasm for indiplon are being keenly felt.

Neurocrine said that the setback for the sleep drug means that it will have to cut its staff levels by more than half. 130 employees at its San Diego campus will go, leaving 120, and Mr Lyons said that “we are greatly saddened to move in this direction”. However, “we have to refocus our resources as quickly as possible”, he added, saying that “we intend to continue to conservatively manage our cash resources and review collaborative alternatives to fund the advancement of our pipeline”.