The future of a sleep disorder drug being developed by US company Neurocrine Biosciences and due to be sold by Pfizer has been thrown into doubt, playing havoc with Neurocrine’s shares ahead of the weekend.

The US Food and Drug Administration (FDA) said last month that it wanted more information on the drug – indiplon – before it could approve it, and on Friday Neurocrine suggested it would have to conduct a clinical trial to meet those requirements. The news panicked investors who feared such a trial would be costly and significantly delay the product’s arrival on the market.

Whilst saying 5mg and 10mg doses of indiplon were ‘approvable’, the FDA rejected an application to market a higher 15mg dose outright. Clinical data generated for indiplon suggest that while all three doses are effective at getting patients to fall asleep, only the 15mg dose actually maintains sleep.

Shares in Neurocrine fell around 20% to end the day at $15.18, bottoming out even lower than the level seen after the FDA issued its verdict on the applications in May. Analysts suggested that the future of the 15mg dose of indiplon, and indeed Neurocrine’s partnership with Pfizer, was now in doubt.

If additional trials are required, Pfizer would be liable to fund them under the terms of its agreement with Neurocrine over the drug.

Indiplon has been expected to become a blockbuster if it makes it to market. It belongs to the same class of drug as Sanofi-Aventis' key player Ambien (zolpidem), which achieved sales of more than 1.5 billion euros in 2005, 1.3 billion of which came from the USA alone.

But with Ambien due to lose patent protection late this year, Pfizer and Neurocrine hoped indiplon would be able to capture a slice of the premium end of the sleep disorder market.

That said, sales of these medicines have taken a hit over the last few months, after reports in the US of alleged sleep-walking and sleep-binge eating put potential users off, and the delay to the programme will allow generic zolpidem to become entrenched in the US market, potentially making it harder for indiplon to capture market share.

Meanwhile, competition in the sector has hearted up with the launch of Sepracor’s Lunesta (eszopiclone), which claims a superior profile to its rival, particularly in terms of sleep quality through the night. And Sanofi-Aventis is also working to defend its franchise, launching a long-acting version of its product – Ambien CR – last year.

Neurocrine said it expects to adjust its financial guidance when it reports second-quarter results.