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Neurocrine Biosciences (NBIX) Pipeline Will Drive Upside In 2012, Initiated As 'Buy': Deutsche Bank

 March 17, 2012 02:08 PM
 


Deutsche Bank (DB) initiated coverage of Neurocrine Biosciences Inc. (NASDAQ:NBIX), a developer of drugs to treat neurological and endocrine-related diseases, with a "Buy" rating and price target of $15.

The banks believes upside this year will be driven by increased investor confidence in the company's VMAT2 and Elagolix products in uterine fibroids. Currently shares reflect only value to Elagolix in endometriosis & zero to pipeline, DB said.

Elagolix has been shown effective in reducing pain and bleeding in 3 endometriosis phase 2 studies. DB models greater that $1 billion in worldwide sales. "Assigning a 75 percent probability of success in phase 3, we get to an NPV for Elagolix in endometriosis of $7," the bank wrote.

[Related -Sector Detector: Bulls Sucking Wind In Late Push To Close Year Positive]

"We do not see much risk to owning NBIX in 2012 as the Elagolix ph3 in endometriosis trial reads out in 2014. The phase 3 trial for Elagolix in endo must show statistical significance on pain & bleeding for approval," DB wrote.

The bank is of the view that investors are assigning no value to NBI-98854, a wholly-owned VMAT2 inhibitor for tardive dyskinesia (TD), despite approval AHEAD of Elagolix. "Six-week Phase 2 placebo controlled data in YE12 will likely increase investor confidence. We see a high likelihood of success as another VMAT2 inhibitor, TBZ, has shown to be effective & have a durable response in TD," the bank said.

The stock ended Friday's regular trading at $8.51. Over the past year, shares have been trading between $5.42 and $9.98.

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