Neurocrine Biosciences Up 7.5% Despite Q4 Miss

Neurocrine Biosciences (NASDAQ: NBIX) reported weaker-than-expected Q4 results, missing both earnings and revenue estimates due to higher expenses.

Despite the miss, shares of the biopharmaceutical company gained 7.5% on February 11 to close at $85.53.

The quarterly miss was attributed to higher research and development (R&D) expense related to portfolio expansion, $100 million upfront fee paid to partner Sosei Heptares to expand clinical psychiatry pipeline, coupled with higher selling, general and administrative (SG&A) expense related to the launch of INGREZZA.

Q4 Numbers

Revenues jumped 25.8% year-over-year to $303.5 million but fell modestly short of consensus estimates of $320 million. The increase in revenues reflected a 25% surge in INGREZZA net sales to $301 million driven by a record number of patients on therapy exiting 2021.

However, adjusted earnings of $0.04 per share significantly lagged analysts’ expectations of $0.58 per share. Further, the EPS was much lower than the adjusted earnings of $0.89 per share reported for the prior-year period.

FY2022 INGREZZA Sales Outlook & Expected Future Milestones

Based on recent trends as well as expected benefits from previously announced sales force expansion during the second half of 2022, the company provided net product sales guidance for INGREZZA for FY2022.

The company forecasts INGREZZA net product sales in the range of $1.25 billion to $1.35 billion. This implies a growth rate of approximately 20% year-over-year.

Importantly, the company projects its expanded pipeline to deliver multiple registrations and phase 2 study data readouts over the next two years.

CEO Comments

Neurocrine Biosciences CEO, Kevin Gorman, Ph.D., stated, “As we exited last year with restored growth for INGREZZA, investments we are making this year will further accelerate our ability to help many more patients with tardive dyskinesia who remain undiagnosed and untreated. Additionally, we now have 12 clinical programs in mid-to-late-stage studies, many of which will generate important data readouts over the next two years.”

He further concluded, “With a blockbuster product in INGREZZA, a novel and diverse pipeline, and a strong balance sheet, Neurocrine Biosciences is uniquely positioned to be a leading neuroscience-focused company.”

Wall Street’s Take

Following the Q4 results, Raymond James analyst Danielle Brill reiterated a Buy rating on Neurocrine Biosciences with a price target of $125 (46.2% upside potential).

Brill believes that Neurocrine Biosciences is well-positioned with an encouraging business outlook, especially for INGREZZA amid post-pandemic recovery.

He stated, “Though R&D continues to increase, many investors feel NBIX’s pipeline needs revamping and BD strategy continues to be a key topic of focus. Furthermore, while the ~$100M+ increase in SG&A for new sales hires/ongoing DTC will set the stage for accelerated revenue growth in 2022, margins need to improve in the future for our DCF analysis to continue to work.”

The rest of the Wall Street community is cautiously optimistic about the stock, with a Moderate Buy consensus rating based on 11 Buys, 5 Holds and 1 Sell. At the time of writing, the average Neurocrine stock forecast was $116.29, which implies 35.96% upside potential to current levels.

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