Neurocrine Biosciences is the IBD Stock Of The Day. The biotech stock is approaching two potential entries as the movement disorder space heats up.
Later this year, Neurocrine is expected to unveil midstage results for its experimental drug, dubbed NBI-827104, in patients with essential tremor. Essential tremor is a nervous system disorder that causes involuntary and rhythmic shaking.
There's a "significant" opportunity in essential tremor, SVB Securities analyst Marc Goodman said in a recent report. Essential tremor is one of the most common movement disorders with about 7 million patients in the U.S. Patients can take beta blockers — typically used for high cholesterol — to ease their tremors. But there's still a need for more effective medicines, he said.
"With clear-cut strong (effectiveness) and relatively clean safety, it's possible the stock is up more than 5%, especially given how much investors are looking for a second key growth driver for the company," Goodman said, previewing the upcoming data release. Alternatively, it's unlikely the biotech stock will fall more than 5% given NBI-827104 is an earlier-stage asset.
On the stock market today, Neurocrine stock rose 0.3% to 97.60.
Biotech Stock Eyes A New Catalyst
Essential tremor is an important catalyst for Neurocrine, says Needham analyst Ami Fadia.
She notes Neurocrine is behind Jazz Pharmaceuticals and Praxis Precision Medicine. But, at an estimated $13 billion, the market could be big enough for Neurocrine to grab share too, she said in a report.
In their most recent tests, about 20% of patients discontinued use of Jazz's and Praxis' potential essential tremor treatments. So, Neurocrine has some room to improve on safety, she said. In the company's Phase 1 test, about 10% of patients discontinued use of NBI-827104.
Strong data in essential tremor could spark the biotech stock by a single-digit percentage, she said. That's because it's still an early-stage effort and following two other companies.
Still, "We see this as a potential significant opportunity for Neurocrine since the total addressable market is $13 billion and no new drug has been approved in essential tremor in the last 40 years," she said.
Expanding Into New Disorders
Investors in the biotech stock also are looking for Neurocrine to expand its commercial reach.
Today, Neurocrine is tied to four commercial products. The most notable of those is a treatment for tardive dyskinesia called Ingrezza. Tardive dyskinesia is another involuntary movement disorder.
In the first quarter, Ingrezza brought in $305 million in sales. Analysts following the biotech stock expect second-quarter sales to be $323 million, up nearly 21% year over year, according to FactSet. Ingrezza accounts for 98% of Neurocrine's revenue.
Neurocrine also sells Ongentys. Ongentys treats Parkinson's patients whose regular medication is not working well. In these so-called off episodes, patients experience tremors and/or difficulty walking. But sales of that drug remain fairly low.
The company also collects collaboration and royalty revenue from two women's health products in partnership with AbbVie.
Wedbush analyst Laura Chico expects an in-line second quarter for Neurocrine. She has a 104 price target and an outperform rating on the biotech stock.
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Biotech Stock: Two Potential Entries
Neurocrine stock is currently staring down two potential buy points. Shares are forming a cup with handle and an entry at 100.10. But Wednesday's high at 99.41 could also operate as an early entry, according to MarketSmith.com.
The biotech stock has two notable high ratings, according to IBD Digital. Shares have a Composite Rating of 95 out of 99, which puts them among the leading 5% of all stocks in terms of fundamental and technical metrics. Neurocrine stock also has a Relative Strength Rating of 91 out of a best-possible 99. The RS Rating measures a stock's 12-month performance, putting Neurocrine among the top 9%.
Follow Allison Gatlin on Twitter at @IBD_AGatlin.
