Biopharmaceutical company Neurocrine Biosciences (NBIX) develops and commercializes products for treating neurological, endocrine, and psychiatric-based diseases and disorders in the U.S. Its recent Q2 results, with revenue beating estimates and bottom line lower than expected, were a mixed bag.
Let’s take a look at the financial performance of the company and what has changed in its key risk factors that investors should be aware of.
While Neurocrine’s product sales remained essentially flat year-over-year, its collaboration revenue dropped by about $12.7 million to $22.1 million. This resulted in the total revenue of the company dropping 4.5% year-over-year to $288.9 million. It was, however, ahead of the Street’s estimates by $15 million.
The CEO of Neurocrine, Kevin Gorman, Ph.D., said, “We remain committed to advancing our R&D pipeline and are making steady progress towards initiating 9 mid-to-late-stage clinical trials this year. With significant long-term commercial growth opportunities and a diverse and growing pipeline, we are well-positioned to become a leading neuroscience-focused biopharmaceutical company.”
During the second quarter, Neurocrine incurred higher R&D expenses to support its expanded pipeline programs. Additionally, higher investment in commercial initiatives, including advertising campaign for INGREZZA resulted in earnings per share of the company decreasing to $0.63 versus $1.42 a year ago, missing consensus by $0.13.
Looking ahead, Neurocrine reaffirmed its full-year expense guidance. It expects R&D and SG&A expenses to be in the range of $720 million to $770 million. (See Neurocrine stock chart on TipRanks)
On August 4, Mizuho Securities analyst Vamil Divan reiterated a Hold rating on the stock and increased the price target to $99 from $98.
Divan said, “We believe the bottom-line miss will likely be less of a focus for investors, and we expect the stock to react positively to the strong Ingrezza sales after several soft quarters due primarily to the COVID-19 pandemic.” INGREZZA sales stood at $265 million in the second quarter.
Based on 10 Buys and 3 Holds, consensus on the Street is a Strong Buy. The average Neurocrine price target of $120.18 implies 29.7% upside potential. Shares have dropped 20.1% over the past year.
Now, let’s look at what has changed in the company’s key risk factors.
According to the new Tipranks’ Risk Factors tool, Neurocrine’s main risk category is Legal & Regulatory, which accounts for 32% of the total 47 risks identified. Since June, the company has added two key risk factors.
Under the Finance & Corporate category, the company highlights that if the conditional conversion feature of its 2024 Notes is triggered, holders of these notes will be entitled to covert them at any time during specified periods at their option. In such an event, if Neurocrine does not satisfy the obligation by delivering its common shares then it may have to settle the obligation in cash, which may adversely impact Neurocrine’s results and its financial condition.
Under the Legal & Regulatory category, Neurocrine notes that it is currently engaged in intellectual property litigation matters against potential competitors related to INGREZZA. Disputes, claims, and lawsuits can be costly as well as time-consuming and could materially affect the results and liquidity of the company.
The Legal & Regulatory risk factor’s sector average is at 24%, compared to Neurocrine’s 32%.
Related News:
Jamieson Wellness Q2 Profit Up 22%, Dividend Rises
TMX Group’s Q2 Profit Beats Estimates; Shares Rise 6%
Quebecor’s Q2 Profit Down 29%; Shares Fall 5%
