Following disappointing third-quarter earnings, Neurocrine Biosciences, Inc. (NBIX, Financial) shareholders were looking for a shred of good news that could boost the price of the San-Diego-based biopharma, which is trading near its 52-week low.
They got their wish, sort of. The company announced Monday that it has in-licensed a group of experimental medicines it plans to develop to treat schizophrenia, dementia and other neuropsychiatric disorders, reported BioPharma Dive. The medications were shipped over from Neurocrine’s partner Sosei Heptares, a company formed through Sosei Group Corporation’s (SOLTF, Financial) $400 million acquisition of Heptares Therapeutics in 2015.
The announcement barely moved the needle on Neucrine’s stock for a couple of reasons. First, the drugs obtained in the deal aren’t even in human testing yet. The treatment furthest along, a potential drug for schizophrenia, is forecast to begin a mid-stage clinical trial in 2022. The companies will jointly research and develop Sosei's drugs through phase 1 testing, with Neurocrine underwriting the work.
The other big issue is the failure of any pharmaceutical company, including some of the world’s biggest, to develop drugs for the brain in the past 10 years. Even such well-known names as AstraZeneca (AZN, Financial), Bristol-Myers Squibb Co. (BMY, Financial), GlaxoSmithKline plc (GSK, Financial), Pfizer Inc. (PFE, Financial) and Amgen Inc. (AMGN, Financial) stopped devoting substantial resources to neuroscience, while Eli Lilly and Co. (LLY, Financial), Sanofi (SNY, Financial) and Merck & Co. Inc. (MRK, Financial) have dialed back their investments. It's simply too difficult and costly to conduct research in this field.
But neuroscience may be on the verge of a renaissance, driven by new treatments for epilepsy, mood disorders and genetic diseases of the central nervous system. Among the believers is Steven Paul, former Eli Lilly executive and current CEO of Karuna Therapeutics, Inc. (KRTX). BioPharma Dive reported that Paul predicted pharma is on the cusp of another golden era of neuroscience products, with breakthroughs coming in a soon as five years and as long as 10.
Even more bullish is Jeremy Levin, head of neurology-focused Ovid Therapeutics Inc. (OVID), who thinks “radical” new therapies may appear in the next three years.
With the Sosei drugs, Neurocrine is taking the same approach as treatments being developed by Karuna and the Pfizer spinoff Cerevel Therapeutics Holdings, Inc. (CERE). Sosei claims its targeted drugs will offer benefits without harmful side effects seen with other medications.
Besides the Sosei drugs, Neurocrine said it will meet its goal of starting several phase 2 and phase 3 trials for the company's own pipeline medications. While waiting for results from these tests, the company will continue to rely heavily on its biggest-selling drug, Ingrezza, for treating tardive dyskinesia, a neurological disorder characterized by involuntary movements. Tardive dyskinesia affects an estimated 500,000 persons in the United States, with about 60% to 70% of cases being mild and about 3% being extremely severe, according to Psychiatric Times.
As expected, Ingrezza will continue to garner most of the company’s investment dollars; Neurocrine will spend $100 million to expand its salesforce and continue its direct-to-consumer campaign next year, chief financial officer Matthew C. Abernethy told analysts during the third-quarter earnings call.
During the quarter, Neurocrine barely topped Zacks’s estimate with sales of $296 million, a gain of some 15% from the same period a year earlier. The earnings picture was another story, as the company posted a figure of $0.23 per share, missing the Zacks Consensus Estimate of $0.51 per share. This compares to a loss of $0.62 per share a year ago.
Of 13 analysts polled by Yahoo Finance, all rate Neurocrine shares a buy or strong buy, assigning it an average target price of $119, a high of $150 and a low of $76. The stock closed at $87.08 Tuesday.
