I never expected 2020 to be a strong year for Neurocrine Biosciences (NBIX), but the nearly 10% year-to-date decline is worse than expected, and it seems like the cursed year that is 2020 is starting to hit Neurocrine as well, with weaker than expected Ingrezza sales and some modest near-term setbacks in the pipeline.
The prospect of minimal Ingrezza growth through the second or third quarter of 2021 is definitely a headwind for the shares, as is the lack of strong near-term pipeline catalysts. I’ve said it before and I’m saying it again – the company’s lack of internal pipeline productivity is an issue, though one that has had an intermittent impact on valuation (it’s a handy go-to bear argument). Only about one-quarter of my valuation comes from the pipeline, though, and I still believe there’s more value here than the Street recognizes.
Unless Neurocine becomes a “vaccine stock” (a stock where sentiment is driven more by Street optimism that COVID-19 vaccines will quickly improve the situation in 2021), these shares could remain out of favor for a little while longer. Though I’m bullish on crinecerfont, that’s not a 2021 catalyst, and likewise with much of the pipeline. Still, with fair value in the $140s and Ingrezza issues that I believe are temporary, not fundamental, I believe these share are well worth consideration from patient investors.
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