Neurocrine Biosciences: A Biotech Bargain Amid Sector Volatility?

The recent selloff in biotech stocks has created an intriguing opportunity for investors in Neurocrine Biosciences (NASDAQ: NBIX), as highlighted by RBC Capital Markets’ April 2025 upgrade to “Outperform.” With shares down over 33% year-to-date, the brokerage argues that Neurocrine’s robust commercial engine, promising pipeline, and undervalued profile position it as a resilient play in a volatile sector.

The Ingrezza Engine: Driving Growth Amid Uncertainty

Neurocrine’s Ingrezza (valbenazine), approved for tardive dyskinesia (TD) and movement disorders in Huntington’s disease, remains the cornerstone of its success. The drug delivered 24.8% revenue growth over the trailing twelve months, fueled by strong demand and a 67.5% gross profit margin. Recent data from the KINECT 4 study further bolstered confidence: 59.2% of patients achieved TD symptom remission after 48 weeks of treatment, reinforcing Ingrezza’s clinical profile.

“This isn’t just a one-trick pony,” noted RBC analysts. The drug’s expanding label potential and long-term adherence rates suggest sustained revenue streams, even as competitors like Teva’s Austedro (deutetrabenazine) and Sunovion’s Valdoxan (viloxazine) vie for market share.

Pipeline Momentum: Osavampator’s Antidepressant Potential

Neurocrine’s pipeline adds significant upside, led by osavampator, an experimental treatment for major depressive disorder (MDD) that could address a $1.8 billion market if approved. Phase 2 data showed meaningful antidepressant effects without the weight gain or sexual dysfunction common in current therapies.

The compound’s differentiated profile could carve out a niche, though RBC cautions that data from Phase 3 trials—expected in 2026—are critical. Meanwhile, Crenessity (Nmnat1), targeting congenital adrenal hyperplasia (CAH), awaits pivotal trial results, with commercialization potentially boosting Neurocrine’s diversification beyond movement disorders.

Valuation: A PEG Ratio Below 1 Suggests Bargain Pricing

At under $100 per share, Neurocrine trades at a PEG ratio of 0.8, below its five-year average of 1.3 and well under peers like Sage Therapeutics (NASDAQ: SAGE) and Acadia Pharmaceuticals (NASDAQ: ACAD). RBC attributes this discount to sector-wide pessimism over macroeconomic pressures, including the Inflation Reduction Act’s potential impact on drug pricing.

“The market is pricing in worst-case scenarios,” said RBC. “But Neurocrine’s low regulatory risk profile—no significant FDA hurdles for Ingrezza and minimal tariff exposure—gives it a defensive edge.”

Risks on the Horizon: Earnings and Regulatory Uncertainty

Near-term volatility could test investors’ patience. First-quarter earnings, due in May 2025, will face scrutiny as analysts forecast a 5% sequential revenue dip. Additionally, the IRA’s impact on drug pricing remains uncertain, though Neurocrine’s focus on rare diseases may shield it from the most aggressive cost controls.

Longer term, the success of Crenessity hinges on physician adoption, as CAH treatments often face slow uptake due to disease complexity.

Consensus: A Bullish Wall Street Backs the Play

Analysts are overwhelmingly optimistic. The average price target of $160.32 (76% upside) and a consensus “Outperform” rating reflect confidence in Neurocrine’s trajectory. GuruFocus’ $191.92 one-year fair value estimate amplifies this narrative, suggesting the stock could nearly double from current levels.

Conclusion: A Biotech Gem in a Bear Market?

Neurocrine’s combination of a proven blockbuster, a high-potential pipeline, and a sub-1 PEG ratio makes it a compelling contrarian bet. While near-term headwinds like earnings and regulatory scrutiny loom, the company’s defensive profile and growth catalysts—most notably osavampator’s Phase 3 data—position it to rebound strongly.

Investors seeking resilience in biotech may find Neurocrine’s current valuation a rare opportunity. However, the path to $137—or beyond—will depend on execution, with Ingrezza’s sustained growth and osavampator’s success proving pivotal. For those willing to weather short-term turbulence, the reward appears well worth the risk.