Neurocrine Biosciences: Takeover target in the biotech sector.

Last Updated: 8. Februar 2024By

Biotech stocks have been underperforming the market for years, making the industry ripe for a recovery. In addition, there are opportunities for acquisitions. Today, I would like to introduce an interesting candidate: Neurocrine Biosciences.

Brief profile The US biotech company, based in San Diego, California, was founded in 1992 by two well-known neurologists. As the specialty of the two founders suggests, Neurocrine Biosciences focuses on researching medications for the treatment of neurological, endocrine, and psychiatric diseases and disorders.

Success drug Ingrezza Neurocrine Biosciences has already brought several drugs to market, with Ingrezza accounting for over 90% of total revenue. Ingrezza was developed to treat tardive dyskinesia, a movement disorder that can be caused by long-term use and subsequent withdrawal of antipsychotics or neuroleptics.

Since August 2023, Ingrezza has also been approved for the treatment of Huntington’s chorea, an inherited disease that begins with involuntary, sporadic movements and ultimately leads to mental decline and death. Other treatment options, such as for schizophrenia, are currently being researched.

Steady growth In recent years, Neurocrine Biosciences has consistently increased its revenue and profit, with revenue doubling to $2 billion within four years.

In the coming years, revenue growth is expected to settle around 10%. Even more encouraging is the company’s profit development: Neurocrine Biosciences is expected to become significantly more profitable in the next few years. Analysts expect a four-fold increase in profit from 2022 to 2025.

Well-stocked research pipeline A well-stocked research pipeline is crucial for the future of biotech companies, as it guarantees future growth. In this regard, Neurocrine Biosciences stands out significantly above average compared to other mid-sized biotech companies.

The company has a number of drug candidates in mid- to late-stage clinical trials that have good prospects for approval in the coming years. Five clinical trials are currently in the third (and final) phase of testing, with an additional eight in the second phase.

Neurocrine Biosciences focuses on its specialties of neurological and psychiatric disorders. The more advanced projects include drugs for the treatment of depression, epilepsy, seizures, kidney disorders, and several potential medications for schizophrenia.

Possible acquisition as an additional opportunity With a market value of $13 billion, Neurocrine Biosciences is also a potential acquisition target for a pharmaceutical or biotech company. Of course, a significant premium would have to be paid on the current stock price. But in return, the buyer would gain direct access to over $2 billion in annual revenue with a growing product and a well-stocked research pipeline.

This may also explain the interest of institutional investors in the stock: in the fourth quarter, major fund companies significantly increased their holdings in Neurocrine Biosciences. The two industry giants Blackrock and Vanguard Group now together hold almost a quarter of all shares.