CRENESSITY And INGREZZA Will Expand Secular Neurological Markets

Key Takeaways

• CRENESSITY and INGREZZA provide strong long-term growth potential through expanded market reach, diversified revenues, and favorable healthcare trends supporting premium pricing.
  
• An advancing clinical pipeline and industry-tailwinds in neuroscience R&D position the company for accelerated innovation, pipeline progression, and reduced single-product dependency.
  
• Heavy reliance on a single product, slow new launch uptake, rising R&D costs, and external industry headwinds threaten growth, pricing power, and long-term profitability.

Catalysts

Neurocrine Biosciences, Inc. discovers, develops, and markets pharmaceuticals for neurological, neuroendocrine, and neuropsychiatric disorders in the United States and internationally.

• The launch and ramp-up of CRENESSITY, a first-in-class therapy for classic congenital adrenal hyperplasia and the first new treatment option in over 70 years, is positioned to unlock significant new revenue streams and diversify the company’s earnings, with early uptake and positive feedback suggesting a strong long-term growth trajectory as reimbursement broadens and disease awareness increases.
  
• INGREZZA’s continued low penetration rates—only about 10 percent of the 800,000 tardive dyskinesia patients treated in the U.S.—combined with expanded sales force and education efforts, position Neurocrine to meaningfully expand its addressable market and drive sustained double-digit revenue growth in the coming years, benefitting from both increasing diagnosis rates and persistent unmet patient need as the population ages.
  
• Neurocrine’s rapidly advancing and expanding clinical pipeline, including late-stage programs such as osavampator for major depressive disorder and NBI-568 for schizophrenia, creates a succession of potential blockbuster opportunities that can fuel revenue growth and earnings leverage, with the company targeting to launch a new commercial asset roughly every 2 years to diversify its revenue base and reduce reliance on single products.
  
• The company’s ability to capitalize on structural trends in healthcare—such as increased prioritization of innovative, disease-modifying, and personalized treatments—supports premium pricing and market access for differentiated therapies like INGREZZA and CRENESSITY, which is likely to maintain or even expand overall net margins despite rising competition and payer complexity.
  
• Industry-wide advances in neuroscience drug development, AI-driven R&D productivity improvements, and favorable regulatory pathways for CNS and rare disease drugs are accelerating Neurocrine’s pipeline progression and time-to-market, enabling both faster returns on R&D investment and increasing the underlying intrinsic value of the company as it evolves into a fully integrated, innovation-led biopharma leader.

Neurocrine Biosciences Future Earnings and Revenue Growth

Assumptions

• This narrative explores a more optimistic perspective on Neurocrine Biosciences compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Neurocrine Biosciences's revenue will grow by 18.0% annually over the next 3 years.
• The bullish analysts assume that profit margins will increase from 14.5% today to 33.7% in 3 years time.
• The bullish analysts expect earnings to reach $1.3 billion (and earnings per share of $12.07) by about April 2028, up from $341.3 million today. The analysts are largely in agreement about this estimate.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 17.0x on those 2028 earnings, down from 29.7x today. This future PE is lower than the current PE for the US Biotechs industry at 19.6x.
• Analysts expect the number of shares outstanding to decline by 0.93% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.45%, as per the Simply Wall St company report.

Neurocrine Biosciences Future Earnings Per Share Growth

Risks

• The company’s revenue remains highly dependent on INGREZZA, and while its growth is expected to continue, management highlights increased competitive pressure and utilization management by payers which, if these trends persist or intensify, could result in reduced sales growth, lower net revenues, and compressed earnings.
  
• Neurocrine's guidance reflects a moderated growth rate for INGREZZA relative to previous years, citing payer complexities, competitive dynamics including a major competitor’s rollout of an extended-release formulation, and contracting with incremental rebates that largely offset price increases, all of which together may erode pricing power and net margins over time.
  
• The early launch of CRENESSITY is described as “measured” with slow commercial uptake expected due to delayed reimbursement, lengthy formulary exception processes, and initial reliance on free or nonreimbursed prescriptions, introducing considerable risk that CRENESSITY’s sales contributions to revenue and profitability may be slower and less robust than anticipated.
  
• The ambition to establish a “sustainable internal R&D engine” comes with significant expense, including increased R&D investments, milestone payments, and intensified late-stage pipeline development in psychiatric and neurological disorders; if clinical trials fail or launches underperform, this could lead to elevated R&D expenses relative to revenue, pressuring operating income and net margins.
  
• Broader industry pressures, such as tightening regulatory scrutiny of mental health and neuroscience therapeutics, and increasing payer and pricing headwinds amplified by governmental drug pricing reform, may further slow product approvals, increase commercialization costs, and constrain long-term earnings growth and profitability.

Valuation

• The assumed bullish price target for Neurocrine Biosciences is $192.0, which is the highest price target estimate amongst analysts. This valuation is based on what can be assumed as the expectations of Neurocrine Biosciences's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $192.0, and the most bearish reporting a price target of just $96.0.
• In order for you to agree with the bullish analysts, you'd need to believe that by 2028, revenues will be $3.9 billion, earnings will come to $1.3 billion, and it would be trading on a PE ratio of 17.0x, assuming you use a discount rate of 6.4%.
• Given the current share price of $101.74, the bullish analyst price target of $192.0 is 47.0% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.