Neurocrine Biosciences (NBIX) is one of a handful of young biotechs that is just turning the corner from development stage into commercial stage, with the prospect of huge earnings growth ahead, asserts Mike Cintolo, a leading growth stock expert and editor of Cabot Top Ten Trader.
The company focuses on neurological-, psychiatric- and endocrine-related disorders, and its first product — Ingrezza, which hit the market in May 2017 and is the first U.S.-approved medication that treats a side effect of certain antipsychotic medications, with an estimated market size of 500,000 people — is growing nicely.
In Q2, Ingrezza saw 16,700 prescriptions and $96.7 million of revenues, both up around 35% or so from the prior quarter. Ingrezza should continue to grow both through market penetration and label expansion.
And now there’s also excitement about Orillissa, which was licensed to AbbVie (ABBV) and was just approved by the FDA for a uterus growth abnormality that can cause extreme pain; Neurocrine will get a $40 million milestone payment for the approval and big royalties (looks like north of 20%) after AbbVie starts selling the product in August.
Some see Orillissa as a billion dollar drug within a few years, especially if it’s also approved for use combating uterine fibroids, where Phase III data has been very encouraging.
There’s plenty more in the pipeline, too. Analysts see revenues of $439 million this year and that figure rising another 48% in 2019, and, importantly, the bottom line leaping into the black next year. The market cap is big ($10.5 billion), but big investors aren’t afraid (617 mutual funds own shares).
NBIX broke out from a two-year base in October 2017 around $58 and ran up sharply, finding its way to $92 in February. Then came a three-and-a-half month consolation, from which the stock broke out of in May.
The upside after that was muted, though, with NBIX even slicing through its 50-day line during the recent growth stock selloff. But the stock popped right back after earnings and held those gains. We’re OK buying a little on dips with a stop near the century mark.
