Neurocine Biosciences (NBIX) stock dropped about 14% Wednesday after news that its clinical trial for Ingrezza T-Force GOLD, for the treatment of Tourrette syndrome, did not meet its primary endpoint. The company still has to complete a full review of the data, but management has indicated it does not see how the treatment could move forward.
Nevertheless, Cowen analyst Phil Nadeau continues to believe NBIX is undervalued for the potential of Ingrezza in tardive dyskinesia and Orilissa. He reiterates an Outperform rating for the stock with a price target of $115, which implies nearly 60% upside from current levels. (To watch Nadeau’s track record, click here)
“There were no issues with the study design or execution (i.e. no significant differences in baseline characteristics between the treatment and placebo groups, no/ limited patient dropouts), and the placebo effect was as anticipated. While recognizing that there is a substantial amount of data to sift through in the weeks ahead, management was transparent in stating the company’s initial interpretation of the data: that Ingrezza did not show a large effect, despite the company pushing the dose “as high as we could,” and that Tourette’s should be removed from analysts’ models,” the analyst explains.
There is supposed to be a third trial called T-Force PLATINUM) for pediatric patients with Tourette’s, but management actually rates the probability of success as “low.” Additionally, the company explained that even if that trial went well, there would be more hoops to jump through – as it wouldn’t be sufficient for an sNDA and would thus need another randomized, placebo-controlled trial. The company says they cannot envision a better way to execute it.
“We are disappointed that T-Force GOLD didn’t produce the level of tic reduction necessary to drive both a statistically significant outcome in the trial and clinically meaningful improvements for Tourette’s patients. Our consultants had been hopeful that Ingrezza would be successfully developed for Tourette syndrome. Though we believe there was some investor skepticism leading into the read-out, many had included Tourette’s in their models–and considered the Tourette’s opportunity important for Ingrezza’s long-term. Based on management’s commentary, we believe there is little to no reason to believe that Ingrezza could move forward in this indication,” the analyst said.
Despite the fact the stock dropped and NBIX says it has a low chance for success with Ingrezza, TipRanks finds analysts are mostly positive, with 13 bullish analysts and only 1 sidelined. The consensus rating of Strong Buy is matched by a consensus price target of $114.29, which shows a potential upside of around 54%. (See NBIX’s price targets and analyst ratings on TipRanks)