Mid cap Neurocrine Life Sciences (NASDAQ: NBIX) continued its upward trend on Thursday along with the market-wide broad rally.
The stock came within a cent of Tuesday’s all-time high of $125.99 before pulling back. Nevertheless, the San Diego-based biotech closed the session with a gain of $1.40, or 1.15%, at $123.22. Trading volume was below average.
The company develops and commercializes pharmaceutical treatments for neurological, endocrine and psychiatric disorders.
On November 1, it easily surpassed Wall Street’s expectations for the third quarter. Earnings came in at $1.08 per share, well ahead of the analyst consensus, which called for $0.81 per share. That represented an increase of 69% year-on-year.
Revenue increased 31% to $387.9 million, beating forecasts of $377 million. Over the past five quarters, sales grew between 15% and 31%, with the latter number being a steady growth rate over the past three.
A look at MarketBeat earnings data for Neurocrien reveals that the company has a mixed history when it comes to meeting, beating, or missing positions on the top and bottom lines.
A standout in the quarter was Ingrezza, Neurocrine’s product for the treatment of a movement disorder called tardive dyskinesia, which can occur as a side effect of antipsychotics. Those sales totaled $376 million, which made up nearly 97% of total sales.
Ingrezza’s sales were ahead of expectations and the company raised its expectations for the full year.
Commenting on the publication of the results, Kevin Gorman, CEO of Neurocrine, mentioned additional potential for Ingrezza, using the chemical name.
“With the submission of the sNDA of valbenazine for the treatment of chorea associated with Huntington’s disease, we have the potential to help even more patients with our valbenazine franchise,” he said.
He also discussed clinical programs for drugs in the pipeline, such as Crinecerfont, a treatment for congenital adrenal hyperplasia and for certain seizures. The first refers to genetic conditions that can affect the adrenal glands. Gorman also mentioned the company’s premier muscarinic program for treating schizophrenia.
While Ingrezza essentially accounts for all of the company’s revenues at this point, Gorman drew attention to other treatments in the pipeline, signaling to Wall Street that Neurocrine isn’t happy with it being a one-trick pony.
The stock climbed out of a flat base in early October and then moved above the 50-day moving average for the next four weeks. After the earnings report, the stock rose nearly 4% and formed a potentially bullish rising channel with higher highs and higher lows.
This stock has delivered strong performance not only against its competitors in the biotech and biomedical sectors, but also against the broader market. In this case, the best broad-market comparison is the S&P 400 Midcap Index, of which Neurocrine is a part.
That index, as maintained by the SPDR S&P MidCap 400 ETF (NYSEARCA: MDY)has achieved the following performance figures:
- 1 month: +5.10%
- 3 months: -4.40%
- Year to date: -15.28%
Meanwhile, here are Neurocrine’s results:
- 1 month: +15.33%
- 3 months: +15.39%
- Year to date: +44.68%
When it comes to peers, small caps Catalyst Pharmaceuticals (NASDAQ: CPRX) and Aveo Pharmaceuticals (NASDAQ: AVEO), and Immunocore (NASDAQ: IMCR) are among the best performing prices in recent months.
Bigger names including Amgen (NASDAQ: AMGN), Gilead Sciences (NASDAQ: GILD), Regeneron Pharmaceuticals (NASDAQ: REGN) and Vertex Pharmaceuticals (NASDAQ: VRTX) also outperform the broader market. In this case, the best comparison is the S&P 500.
With so many small and large stocks all outperforming their indices, it’s clear that biomedical and biotech stocks are a leading sector. When looking for new opportunities, it’s generally a good idea to focus on sectors with multiple top-performing stocks. That kind of latitude indicates strong demand in the sense of “rising tide lifts all boats”.
Neurocrine is currently out of buying range and if Thursday’s rally picks up steam in the coming weeks, it could move even further from a reasonable buy point. However, it is a good candidate to put on a watchlist and monitor it for a relapse to a key moving average.