But the FDA said it was not comfortable with Intermezzo's safety profile, particularly the risk that people might suffer lingering effects from the drug after they woke up. In particular, regulators want Transcept to show that Intermezzo has no negative effect on next-day driving ability, the company said.
Transcept said it may have to conduct one or more additional safety studies to provide FDA with the data it needs to approve Intermezzo.
Transcept shares closed Wednesday at $11.47 but appear to be trading sharply lower in pre-market trading Thursday.
-- Reported by Adam Feuerstein in Boston