Neurocrine Biosciences Exceeds Expectations With Ingrezza Launch

The performance of the tardive dyskinesia drug Ingrezza had sell-side analysts gushing over Neurocrine Biosciences, Inc. NBIX's third-quarter results.

Given the buoyancy surrounding Ingrezza, analysts scrambled to designate Neurocrine as their top mid-cap pick.

Ingrezza was approved for treating TD in April 2017, while a supplemental new drug application for an 80mg formulation was approved Oct. 5, 2017. TD is a disorder characterized by abnormal and uncontrollable body movements that can result from long-term use of antipsychotic medications. 

At last check, shares of Neurocrine were rallying 17.02 percent to $71.30.

Early Trajectory Supports Robust Ingrezza Demand

Leerink analyst Paul Matteis upped his sales projections and price target for Neurocrine, as the early trajectory of the Ingrezza launch supported robust demand in the TD market.

Of Neurocrine's third quarter revenue of $60.8 million, $45.8 million was contributed by Ingrezza sales, exceeding Matteis' expectation of $13.1 million. (See Matteis' track record here.) 

Leerink upwardly revised its fourth quarter revenue estimate from $13.9 million to $46 million, although the premise remains the same as the firm's earlier expectations for little sequential growth.

Teva Pharmaceutical Industries Ltd (ADR) TEVA‘s launch of Austedo in the TD market and a free trial offer being rolled out this quarter are factors to watch out for, according to Leerink. 

A physician survey underlines Leerink's view that Ingrezza is a best-in-class VMAT2, and is poised to become and remain the TD market leader, Matteis said. 

Leerink reiterated an Outperform on Neurocrine Biosciences and raised its price target from $72 to $83. 

Meaningfully Raising Estimates

Strong Ingrezza sales reflected end-user demand, Cowen analyst Phil Nadeau said in a Thursday note. Neurocrine Biosciences expects patients initiating therapy to increase with each month, Nadeau said. 

The strong numbers come despite expectations for Teva's launch and the introduction of an Ingrezza 80mg pill impacting fourth quarter numbers.

Cowen meaningfully revised its revenue estimates for Neurocrine, taking its fourth quarter estimate from $15 million to $65 million and raising the 2018 estimate from $100 million to $420 million. Cowen also raised its out-year estimates significantly.

Cowen maintained an Outperform on Neurocrine Biosciences and raised its price target from $65 to $90. 

Recalibrating Launch Assumptions for Ingrezza

It's time to recalibrate launch assumptions for Ingrezza as sales continue to exceed expectations, BMO Capital Markets analyst Ian Somaiya said in a Wednesday note. 

The TD drug will support profitability for Neurocrine Biosciences in 2018, accoding to BMO projections.

The biopharma firm's momentum is expected to continue into the new year amid expectations for positive data from Phase 3 trials of elagolix in uterine fibroids, expected by the close of 2017, and the second-quarter launch in endometriosis, Somaiya said. 

"This dynamic, combined with increased pipeline visibility in 2018, makes NBIX our top smid-cap pick," the analyst said. 

BMO Capital Markets reiterated its Outperform on Neurocrine Biosciences and lifted its price target for the shares from $83 to $109.

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