Neurocrine Biosciences (NASDAQ:NBIX) has been around since 1992 and went public in 2003, though it still isn’t exactly on the tip of investors’ tongues. But that’s already starting to change.
In the past year, the stock was up more than 50% at one point, but then got hit with the market woes as well as the fact that one of its drugs in the pipeline for Tourette’s syndrome didn’t get the results it had hoped to achieve.
As with most biotech and pharma firms, a setback on a drug can set back the stock as well. And while NBIX has a market cap of more than $6 billion and has development agreements with major pharma companies, it’s going to get hit harder than bigger stocks simply because it has fewer drugs in the pipeline than other companies. The setback on one drug could make it harder to keep its burn rate — the amount of money the company is spending on developing and testing its drugs — manageable.
This news and the secular downturn has certainly laid NBIX stock low — it’s off 33% in the past three months and 9% for the past year. At this point, it’s a C-rated stock in my Portfolio Grader … but it’s one worth watching.
Why You Should Watch NBIX Stock
When a stock hits a C rating, it could be because it’s falling apart and trying to stay competitive and relevant. Or, it could be it’s been oversold in a tough market and has what it takes to make it back, but it may take a while.
For NBIX, the latter is closer to the truth.
Its TS study was bad news for its current drug Ingrezza, but Ingrezza is already doing better than expected in its current category. And the fact that Neurocrine simply pulled the drug from further TS studies shows that it’s not too proud to move that money along to other projects that have more promise.
Plus, its pipeline has other promising drugs in it and interested partners. The company’s focus on neurology and endocrinology drugs makes it attractive because it’s a niche that few are in. And its success in these sectors also makes it an attractive partner.
Most of its drugs on the market have competitors, NBIX generally has competitive advantages, either in pricing or in dosing. And being able to get these drugs to market with a strong partner like AbbVie (NYSE:ABBV) — partners on Orilissa, a drug for uterine fibroids — means that it can leave the heavy lifting on the marketing side to a powerful, experienced partner.
When you have big partners, it means you can negotiate better deals with pharmacy benefit management companies and you all get to access their field reps so you get your drug into the hands of more doctors.
But this market is still jumpy, so stock news is also dictated by market and sector news at this point. This is a long-term pick because it has drugs ready to roll out for the next couple of years and collectively they could spell big opportunities.
There’s also the possibility that a big pharma may want to snap up NBIX stock to add to its portfolio. It’s worth keeping an eye on.
Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.
