Neurocrine Biosciences, Inc.

NBIX Details

Neurocrine Biosciences, Inc. (NASDAQ: NBIX) is a neuroscience-focused biopharmaceutical business dedicated to discovering and developing new medicines for patients suffering from severe neurological, endocrine, and psychiatric disorders. INGREZZA (for the treatment of tardive dyskinesia), ONGENTYS (for Parkinson's disease), ORILISSA (for severe pain associated with endometriosis), and ORIAHNN (for uterine fibroids) are among the company's commercial products. As of November 03, 2021, NBIX's market capitalization stood at USD 9.05 billion.

Latest News:

• Presents new information:  On November 01, 2021, NBIX revealed that long-term usage of INGREZZA (valbenazine) resulted in substantial improvements in tardive dyskinesia (TD) patients aged 65 and up, according to a new pooled analysis of data from the KINECT clinical trial program. Further, NBIX also announced on October 16, 2021, that a fresh analysis indicated that a large number of research participants had "off" time before sleep, had an awake period in an "off" condition at night after falling asleep, or awakened in an "off" state in the morning before the beginning of therapy. These findings help to clarify the impact of wearing "off" time on sleep and the necessity of managing nocturnal "off" periods in persons with Parkinson's disease.

9MFY21Results:

• Slight increase in Revenues: NBIX witnessed a minor increase of 2.94% in its total revenues to USD 821.5 million during 9MFY21 (ended September 30, 2021) compared to USD 798.0 million during 9MFY20, primarily driven by higher customer demand and increased commercial activities.
• Increase in Net Income: The company recorded a net income of USD 96.9 million during 9MFY21 vs. USD 59.4 million during 9MFY20.
• Healthy Balance Sheet: As of September 30, 2021, the company had cash and cash equivalents (including debt security investments) of USD 765.9 million and total debt of USD 330.7 million.

Key Risks:

• Customer Concentration Risk: In 9MFY21, NBIX's two largest clients accounted for over 85% of its revenue and most of its accounts receivable balances. As a result, excessive reliance on a small number of clients for income might be detrimental to the company's long-term financial stability.
• Product Concentration Risk: Product sales make up a large amount of INGREZZA's top-line and profitability, which puts the company at risk of product concentration.
  

Outlook:

• FY21 GAAP Estimates: NBIX reported on November 01, 2021, that its total GAAP R&D and SG&A costs for FY21 are expected to be about USD 895-915 million.
• FY21 Non-GAAP Estimates: It also expects combined non-GAAP R&D and SG&A costs to be between USD 760-780 million.

Valuation Methodology: EV / Sales Multiple Based Relative Valuation

(Analysis by Kalkine Group)

* % Premium/(Discount) is based on our assessment of the company's NTM trading multiple after considering its key growth drivers, economic moat, stock's historical trading multiples versus peer average/median, and investment risks.

NBIX Daily Technical Chart (Source: REFINITIV)

Stock Recommendation:

NBIX's stock price has fallen just 2.53% in the past twelve months and is currently trading around the lower band of its 52-week range of USD 84.77 to USD 120.27. The stock is currently trading below its 50 and 200 DMA levels, and its RSI Index is at 34.44. We have valued the stock using the EV/Sales-based relative valuation methodology and arrived at a target price of USD 105.41.

Considering the company's growth prospects, solid track record, newly released data points, and associated risks, we recommend a "Hold" rating on the stock at the closing price of USD 93.44, down 2.24% as of November 03, 2021.

* The reference data in this report has been partly sourced from REFINITIV.

* All forecasted figures and industry information have been taken from REFINITIV.