Neurocrine's Phase 2 Disappointment: Why The Company's Down, But Not Out

Neurocrine Biosciences, Inc. NBIX shares fell sharply Wednesday following a disappointing phase 2 study of Ingrezza (valbenazine), a pediatric Tourette's syndrome drug.

The company announced after Tuesday's close that Ingrezza didn't show a statistically significant difference on the primary endpoint, the Yale Global Tic Severity Scale, in its phase 2 study.

Down, But Not Out

Analysts at Leerink believe the program isn't dead, however, and see the mechanistic rationale for Ingrezza remains strong. Neurocrine Biosciences management believes the dosage in the study was too low.

“Nonetheless, we were optimistic that a pediatric trial had a better odds of success than a prior, mixed phase II study in adults, and we think there was about $3-$4 for pediatrics priced into the stock,” said Leerink analyst Paul Matteis.

Leerink maintains a 30 percent odds of success for valbenazine in Tourette's, but did lower its potential approval assumption by two years to 2022.

Leerink maintains a Outperform rating on the stock, but lowered its price target to $66 from $68.

Shares were down nearly 10 percent Wednesday at $48.66.

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