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Barry Cohen
Barry Cohen
Articles (195) 

Neurocrine Adds to Pipeline With $2 Billion Takeda Deal

Biotech gets 7 drugs in partnership, 3 of which are in phase 2 testing

During a May 6 earnings conference call, the head of business development and strategy for Neurocrine Biosciences Inc (NASDAQ:NBIX) said the company was looking for other partnerships, similar to those it had recently struck with Xenon Pharmaceuticals Inc. (NASDAQ:XENE) and Voyager Therapeutics Inc. (NASDAQ:VYGR).

It didn’t take long for Neurocrine to find what it was looking for, announcing on Tuesday it had inked a $2 billion pact to license seven drugs from Takeda Pharmaceutical Co. Ltd. (TAK). The deal bulks up the Neurocrine pipeline, which is dominated by treatments for movement disorders, women's health and genetic diseases.

Shares of the San Diego-based biotech have jumped more than $4.50 since the news broke to about $120, just $8 shy of its 52-week high and a 40% gain since as recently as mid-March. The 28-year-old company has a market cap of more than $11 billion.

Neurocrine’s deals are aimed at removing the company’s label as pretty much a one-drug company. That medication, Ingrezza, was approved in 2017 to treat a movement disorder often caused by long-term use of some psychiatric drugs. At $750 million, Ingrezza accounted for nearly all of Neurocrine’s sales last year. Wall Street analysts expect the medication to bring in more than $1 billion this year. If so, Ingrezza needs to pick up the pace given first-quarter sales, although up nearly 70% from a year earlier, came in at just over $230 million.

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Neurocrine picks up three drugs in phase 2 in the Takeda partnership: TAK-653, for treatment-resistant depression; TAK-041, for anhedonia; and TAK-831, for treating the negative symptoms of schizophrenia.

Stifel analyst Paul Matteis is far more enthusiastic about the potential for the three than he is about the treatments Neurocine got in the Xenon and Voyager transactions.

Biopharma Dive reported that in a note to clients, Matteis wrote that while his team knows less about TAK-041, the other two drugs are based on "promising scientific rationale.”

A word of caution here. The search for neuroscience drugs has left many casualties in its wake. Acadia Pharmaceuticals Inc. (ACAD), Sage Therapeutics Inc. (NASDAQ:SAGE) and Intra-Cellular Therapies Inc. (NASDAQ:ITCI) each had their psychiatric drugs fail in phase 3 testing within the last year.

Matteis acknowledged Takeda's drugs are "high risk," but thinks that if just one of the trio makes it to market, the deal is a winner.

Disclosure: The author holds a position in Takeda Pharmaceuticals.

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About the author:

Barry Cohen
Barry Cohen has nearly 40 years experience in communications and marketing, the majority in senior positions at large international health care companies, including Abbott Laboratories and Bayer Inc.

He has contributed to a number of financial websites, writing primarily about the stocks of health care companies.

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