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Key Financial Metrics
Fealty’s Foundational Reasons
Market Leadership: Neurocrine's lead product, INGREZZA, dominates the tardive dyskinesia market, generating $1.8 billion in sales in 2023 alone, showing strong growth and market demand.
Expanding Pipeline: The company has a robust and diverse clinical pipeline, focusing on neuroscience, with several mid- to late-stage development programs across multiple therapeutic areas.
Collaborative Strength: Strategic partnerships with major firms like Mitsubishi Tanabe and AbbVie enhance global market reach, maximizing revenue streams through royalties and product co-development.
Innovation and Growth: With a focus on innovative treatments for neurological, neuropsychiatric, and neuroendocrine disorders, Neurocrine continues to invest heavily in R&D, positioning itself for long-term growth and market leadership.
Margin of Safety: Based off of our calculation of Neurocine Bioscience’s intrinsic value of $186.30, the current price of $115.22, leaves a healthy margin of safety.
Neurocrine Bioscience’s Origins and Revenue Streams
Neurocrine Biosciences, founded in 1992, has built a reputation as a neuroscience-focused biopharmaceutical company dedicated to discovering, developing, and commercializing innovative therapies. The company's primary mission is to relieve the suffering of patients with neurological, neuroendocrine, and neuropsychiatric disorders, particularly those who have few treatment options available. Over the years, it has leveraged its expertise in neuroscience to create treatments that address a broad range of unmet medical needs.
The company operates on a well-defined business model centered on two key components: the commercialization of its flagship product, INGREZZA, and a diverse and expanding drug pipeline. INGREZZA, approved by the FDA in 2017, is the first treatment for tardive dyskinesia in the U.S., and it was recently expanded for use in treating chorea associated with Huntington's disease. This product alone accounted for nearly $1.8 billion in sales in 2023, representing around 99% of total net product sales. Neurocrine relies on a strategic mix of in-house research and external partnerships to drive its pipeline, focusing on both mid- and late-stage clinical development programs aimed at treating neurological and neuroendocrine disorders.
The company employs an outsourcing strategy for its manufacturing needs, allowing it to concentrate financial resources on product development and commercialization while relying on third-party manufacturers for INGREZZA and other product candidates. Neurocrine also continues to collaborate with leading pharmaceutical companies, including Mitsubishi Tanabe and AbbVie, to expand its market reach across Asia and Europe.
With a proven track record in drug development, market leadership in tardive dyskinesia treatment, and a strong focus on neuroscience-based therapies, Neurocrine Biosciences remains a pivotal player in the biopharmaceutical industry. Its ongoing investment in research, partnerships, and product development positions it well for continued growth.
Neurocrine Bioscience reports its revenue in two distinct segments: net product sales, and collaboration revenues.
Net Product Sales - 99%
This segment is driven predominantly by sales of INGREZZA, a drug used to treat tardive dyskinesia and chorea associated with Huntington’s disease.
Collaboration Revenues - 1%
This segment consists of royalties and milestone payments from collaborations with pharmaceutical companies like AbbVie and Mitsubishi Tanabe.
Why is Neurocrine Bioscience’s a Buy Now?
Neurocrine’s flagship drug, INGREZZA, has become a dominant player in treating tardive dyskinesia and recently expanded into chorea associated with Huntington's disease. With $1.8 billion in net sales in 2023, this product accounts for nearly 99% of their total net product sales, underscoring its market dominance and substantial contribution to the company’s financial health.
The company’s broad and diverse pipeline, including late-stage development programs like crinecerfont for congenital adrenal hyperplasia (CAH) and gene therapy collaborations, reflects Neurocrine’s potential to develop groundbreaking treatments that target large, unmet medical needs. These new developments signal strong opportunities for future revenue growth.
Neurocrine’s partnerships with established pharmaceutical companies, such as AbbVie and Mitsubishi Tanabe, provide additional revenue streams through royalties and global market access. These alliances help the company expand beyond the U.S. and diversify its revenue base, which contributes to long-term stability.
With cash reserves exceeding $293 million and a strong equity position, Neurocrine’s financials indicate its ability to sustain growth, invest in R&D, and maintain operations without heavy reliance on external financing. This fiscal discipline has allowed the company to consistently generate profits while supporting its expansion plans.
These elements make Neurocrine Biosciences a highly attractive investment in the biopharmaceutical sector, with both short-term gains from its commercialized products and long-term potential through its development pipeline.
Neurocrine Bioscience’s Potential Pitfalls
Dependence on INGREZZA: With approximately 99% of its revenue generated from a single product, INGREZZA, the company is highly vulnerable to any market or regulatory issues affecting this drug.
Intense Competition: Neurocrine faces significant competition from both established pharmaceutical companies and new market entrants, which could impact its market share and revenue growth.
Manufacturing Limitations: The company relies heavily on third-party manufacturers for the production of its products, and any disruptions or quality issues from these manufacturers could hinder its operations.
Regulatory and Pricing Pressures: Ongoing healthcare reforms and drug pricing legislation, such as the Inflation Reduction Act of 2022, may negatively affect the company's pricing strategies and profit margins.
Pipeline Development Risks: With its product candidates in early-stage trials, there is a substantial risk that these new drugs may not succeed in clinical trials, which could delay or prevent regulatory approval and commercialization.
The Ideal Investor
If you value a high-growth biotechnology company with a dominant market position and are comfortable navigating the inherent risks associated with drug development and regulatory approvals, you may be the ideal investor for Neurocrine Biosciences.
Who Might Look Elsewhere
If you are seeking a low-risk investment, or are wary of the inherent volatility, you may want to look elsewhere from Neurocrine Biosciences.