Neurocrine Is Seeing A Very Welcome Pick Up In Ingrezza, But Pipeline Catalysts Are Thin

Neurocrine Biosciences (NASDAQ:NBIX) is in a challenging spot for a biotech. Although the company has three approved drugs on the market, only one (Ingrezza) contributes meaningful revenue, and there has been considerable worry on the Street about whether the company had already plucked the low-hanging fruit with this drug, setting the stage for weaker sales growth. At the same time, the list of near-term clinical catalysts is relatively sparse, leaving the stock a little short on news to stoke investor enthusiasm.

The second quarter improvement in Ingrezza sales was certainly welcome, but the negative clinical update on NBI-827104 in essential tremor was disappointing (although not a big surprise), and there isn’t likely to be a lot of thesis-changing information from the company outside of Ingrezza sales for the next couple of quarters.

All of this complicates the investment case a bit. While I like Neurocrine, and I do see upside in the pipeline, the reality is that I think the valuation is pretty fair today on a risk-adjusted basis. Clinical read-outs in 2023 could drive some meaningful upside to my fair value, and that keeps me directionally positive on the shares, but I can’t say this is a superior bargain in the sector today.

 

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Neurocrine Is Seeing A Very Welcome Pick Up In Ingrezza, But Pipeline Catalysts Are Thin