Neurocrine Biosciences is Tuesday's IBD Stock Of The Day. After unveiling promising results for a drug that could treat an inherited disease, NBIX stock is approaching a buy point.
The biotech company currently sells two drugs — Ingrezza, a treatment for movement disorders, and Ongentys, which treats symptoms of Parkinson's disease. But Neurocrine is feverishly testing new drugs for neurological, endocrine and psychiatric diseases.
Recently, the company said its experimental treatment allowed adults with congenital adrenal hyperplasia to reduce their daily steroid treatments. The results sent NBIX stock almost 7% higher on Sept. 12.
But investors are awaiting more information from Neurocrine's treatment in children. In this disease, the body makes too much testosterone. Left unchecked, that can lead to rapid growth and early puberty. Last week, Neurocrine said adolescents taking its drug showed reductions in key hormones.
NBIX Stock: Big CAH Opportunity
The opportunity in congenital adrenal hyperplasia, or CAH, could be big for Neurocrine. Wedbush analyst Laura Chico estimates worldwide revenue of $660 million in fiscal year 2030 for Neurocrine's treatment, dubbed crinecerfont. And that's just for the adult population.
Crinecerfont carries the promise of allowing patients to lower their use of glucocorticoids, a type of steroid treatment. In adults with CAH, patients who took crinecerfont lowered their glucocorticoid doses but kept their androgen levels in check. Androgen is a male sex hormone.
"The data are highly encouraging in our view, particularly when considering the adverse events of chronic (glucocorticoids) use, which can include gastric ulcer formulation, (gastrointestinal) bleeding, skin and bone thinning and atrophy, hair loss, impaired wound healing, (a skin disorder called) perioral dermatitis and others," William Blair analyst Myles Minter said in a note to clients.
Therefore, the fact that 63% of adults taking crinecerfont could lower their glucocorticoid doses is "likely to be clinically meaningful," he said. Minter kept his outperform rating on NBIX stock.
Last week, Neurocrine unveiled an analysis of adolescents who took crinecerfont to control their disease. The analysis suggests patients with elevated hormone levels before treatment could experience a greater response to crinecerfont. They could also have lower androgen levels.
In an earlier report, Neurocrine said two weeks of crinecerfont treatment led to meaningful reductions in two key hormones among teens age 14 to 16 with CAH.
Pediatric Results Will Be Key
The results thus far are enough to allow Neurocrine to ask for crinecerfont approval in adults in the U.S. and Europe, Leerink Partners analyst Marc Goodman said in his note to clients. Neurocrine expects to take that step in 2024 with potential approval in 2025.
Goodman has an outperform rating on NBIX stock.
"We are still waiting for the pediatric data to read out in early fourth quarter 2023," he said. "We remain positive on the CAH opportunity."
Still, broadly analysts aren't yet including crinecerfont in their Neurocrine projections. Wall Street expects Ingrezza to continue dominating Neurocrine's balance sheet for years to come. This year, NBIX stock analysts expect Ingrezza sales to jump almost 26% to $1.81 billion, according to FactSet.
Neurocrine is also expected to be solidly profitable, continuing a long-standing trend. Adjusted earnings are expected to come in at $3.73 per share, up 7.5%.
NBIX Stock Approaches Buy Point
Shares are currently approaching a buy point at 119.29 out of a cup-with-handle base, MarketSmith.com analysis shows. The stock was up fractionally Tuesday to close at 114.66.
Notably, NBIX stock has an IBD Digital Composite Rating of 93 out of a best-possible 99. This means Neurocrine stock ranks in the top 7% of all stocks when it comes to fundamental and technical measures. Shares also have an improving Relative Strength Rating, a measure of 12-month price performance. The stock's RS Rating is now 82, up from 27 just three months ago.
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