Why Neurocrine Biosciences May See Higher Losses in 2016



Losses in 2016

Neurocrine Biosciences (NBIX) has submitted a new drug application (or NDA) to the U.S. Food and Drug Administration (or FDA) seeking approval for investigational therapy Valbenazine for tardive dyskinesia (or TD). This coupled with other late-stage research programs has resulted in an increase in research and development (or R&D) and general administrative expenses for the company in 2016. Expenses are being incurred due to ongoing clinical trials for TD such as the open-label Kinect-4 study. Additionally, the company is also focused on its Tourette syndrome (or TS) and essential tremor research programs, further adding to the company’s overall expenses.

In 2015, Neurocrine Biosciences also witnessed one-time share-based compensation expenses due to the vesting of certain performance-related restricted stock units (or RSU). Positive top-line results from the Kinect-3 study triggered this development.

If Neurocrine Biosciences manages to report lower losses than predicted in 2016, it may have a positive impact on the share price of the company as well as that of the First Trust NYSE Arca Biotechnology Index Fund (FBT). Neurocrine Biosciences makes up about 3.2% of FBT’s total portfolio holdings.

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Marketing expenses

For the past 1–1.5 years, Neurocrine Biosciences has been involved in actively transforming itself from an R&D-focused company to a commercial organization. This involves market research, promotional activities, and digital public relations. The company is also focusing on efforts to ensure market access for its future launches by interacting with the payer community. Neurocrine Biosciences has also deployed commercial analytics to boost its revenues in future years. These efforts involve significant expenses, which may affect the company’s net income in the short run.

In the next article, we’ll analyze market opportunity for Valbenazine in the TD space.


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