The folks at Neurocrine Biosciences Inc. should have slept well last night after potentially earning more than $400 million from the license of a late-stage compound to treat insomnia.

The San Diego-based firm entered a global agreement with Pfizer Inc. for the exclusive worldwide development and commercialization rights to indiplon, currently in Phase III studies. At the same time, Pfizer will create a sales force at Neurocrine that eventually will sell indiplon and Pfizer's antidepressant drug Zoloft.

"I've held Pfizer in admiration as the preeminent pharmaceutical company in the world," Neurocrine President and CEO Gary Lyons said Thursday during a conference call. "And I believe indiplon should be a Pfizer product."

Such an endorsement brings with it a $100 million up-front payment to Neurocrine, followed by milestone payments worth up to $300 million, as well as undisclosed royalties on worldwide sales and co-promotion fees in the U.S.

"We think the market potential for this is not only in the U.S., but [also has] very big Japanese as well as European opportunities," Lyons said. "Our objective was to share in a significant way in the eventual success of the product, and I think if we look at the value of royalties and co-promotion fees, then our objective has clearly been met."

He added that milestones are more back-end loaded and would be based on clinical trial successes, as well as filings and approvals in the U.S. and other markets such as Europe and Japan.

The companies will collaborate on further clinical progress of indiplon, though New York-based Pfizer will fund its ongoing development. Pfizer will hold an exclusive license to develop and market indiplon abroad.

"I think indiplon, in its two versions, will be a very important addition to medicines available to those with sleep disorders," Pfizer Chairman and CEO Hank McKinnell said during the conference call.

Indiplon, licensed from Fort Lee, N.J.-based DOV Pharmaceuticals Inc. more than four years ago, is a non-benzodiazepine that acts on a specific site of the GABA-A receptor. It is being studied in both immediate-release and modified-release formulations to address problems with falling asleep as well as middle-of-the-night awakenings. (See BioWorld Today, July 10, 1998.)

Data have shown that indiplon is both efficacious and well tolerated in achieving rapid sleep induction without next-day residual effects. Last month Neurocrine reported the conclusion of the first of eight Phase III trials, and the immediate-release formulation demonstrated a statistically significant improvement in its primary endpoint of latency to persistent sleep at dose levels of 10 mg and 20 mg relative to placebo (p<0.0001). (See BioWorld Today, Nov. 15, 2002.)

"There are many key differentiators, such as duration of treatment, sleep maintenance, in-the-middle-of-the-night dosing, the flexibility of two dosing forms," Lyons said. "Any and all of those will enable a very successful marketing campaign."

Neurocrine's marketing efforts also will benefit more directly as a result of the agreement, which calls for Pfizer to support the development of a sales force at Neurocrine. The 200-member sales team's first task will be to detail Zoloft to U.S. psychiatrists, after Neurocrine submits to the FDA a new drug application for the insomnia drug.

"We can build the sales force, have it in place and hopefully contribute to Zoloft's success, and then use that sales force to launch indiplon, and in the future use the sales force to build a psychiatry presence hopefully with other internal or partnered products," Lyons said.

The companies said the NDA filing could come as early as the end of next year.

"The key to this obviously is to launch as soon as possible," McKinnell said.

Following the U.S. launch of indiplon, Pfizer will grant Neurocrine a staged $175 million secured short-term credit facility.

It was a busy week for Pfizer, which a day earlier made a similarly large play in the deal-making arena after inking a $750 million agreement with New York-based Eyetech Pharmaceuticals Inc. for the latter's Macugen drug candidate for age-related macular degeneration and diabetic macular edema. (See BioWorld Today, Dec. 19, 2002.)

Drug development continues at Neurocrine, which features six clinical trial programs behind indiplon. Phase II programs continue in malignant glioma, multiple sclerosis and Type I diabetes, while Phase I programs are under way to study a CRF-R antagonist in anxiety and depression, a fusion toxin in kidney and lung cancers and a GnRH antagonist in endometriosis and prostate cancer.

As of Neurocrine's Sept. 30 quarterly filing, the company reported cash, cash equivalents and short-term investments of $275 million. It also reported 30.5 million shares outstanding.

Neurocrine's stock (NASDAQ:NBIX) rose 31 cents Thursday to close at $42.86.