Examining Neurocrine (NBIX) can show investors if drugmakers can make money.

To explain, Neurocrine Biosciences Inc. (NASDAQ: NBIX) develops drugs to treat neurological conditions such as Parkinson’s Disease. Interestingly, Neurocrine has only two drugs approved the United States. Yet, Mr. Market paid $97.86 for its stock on 8 March 2023. Moreover, Neurocrine’s share price rose from $87.95 on 7 March 2023.

So what is Neurocrine and is it worth $97.86 a share? Neurocrine is trying to develop treatments for Epilepsy, movement disorders, Congenital Adrenal Hyperplasia (CAH), Huntington’s Disease, Dyskinetic Cerebral Palsy (DCP)Neuropsychiatric disorders such as schizophrenia, and other neurological conditions.

How Much Money can Neurocrine Make?

Neurocrine licensed the rights to another drug, ORILISSA® (elagolix tablets) to AbbVie in 2010. AbbVie launched an elagolix variant they call ORIAHNN® in 2020. Neurocrine earns royalties on both drugs.

Drugs in development include potential treatments for epilepsy, Congenital Adrenal Hyperplasia (CAH), Nueropsychiatric disorders, and what they call “women’s health.” There are markets for some of these treatments.

For example, Neurocrine estimates 65 million people worldwide suffer from epilepsy and neuropsychiatric disorders afflict over 792 million people globally. Thus, Neurocrine can make money if it can develop more drugs. However, there is no evidence Neurocrine can develop those drugs. They are conducting clinical studies of several Neurocrine drugs.

Does Neurocrine Make Money?

Theoretically, Neurocrine (NBIX) could make money because its ONGENTYS drug teats Parkinson’s Disease symptoms.

The National Institutes of Health (NIH) estimates physicians have diagnosed 500,000 Americans with Parkinson’s Disease. Furthermore, the NIH estimates the cost of treating US Parkinson’s patients at $14 billion a year. Notably, the number of Americans with Parkinson’s Disease will double by 2040, the NIH forecasts.

Neurocrine’s INGREZZA® (valbenazine) capsules treat uncontrolled movements in the face and other body parts. Including people taking medications for depression, bipolar disorder, and other mental health problems. Neurocrine claims 42 million Americans suffer from movement disorders.

How Much Money can Neurocrine Make?

Neurocrine licensed the rights to another drug, ORILISSA® (elagolix tablets) to AbbVie in 2010. AbbVie launched an elagolix variant they call ORIAHNN® in 2020. Neurocrine earns royalties on both drugs.

Drugs in development include potential treatments for epilepsy, Congenital Adrenal Hyperplasia (CAH), Nueropsychiatric disorders, and what they call “women’s health.” There are markets for some of these treatments.

For example, Neurocrine estimates 65 million people worldwide suffer from epilepsy and neuropsychiatric disorders afflict over 792 million people globally. Thus, Neurocrine can make money if it can develop more drugs. However, there is no evidence Neurocrine can develop those drugs. They are conducting clinical studies of several Neurocrine drugs.

Does Neurocrine Make Money?

Neurocrine Biosciences Inc. (NASDAQ: NBIX) makes a little money. It reported a $103.4 million quarterly operating income and a $404.30 million quarterly gross profit on 31 December 2022.

The quarterly income grew from -$36.30 million on 31 December 2021. In contrast, the quarterly gross profit grew from $307.90 million on 31 December 2021.

Neurocrine’s quarterly revenues grew from $312 million on 31 December 2021 to $412 million on 31 December 2022. Stockrow estimates Neurocrine’s revenues grew by 32.05% in the quarter ending on 31 December 2022. In 2022, Neurocrine reported four straight quarters of over 30% revenue growth.

Neurocrine is a Growing Company

For example, Neurocrine’s quarterly operating cash flow grew from $4.2 million on 31 December 2021 to $143 million on 31 December 2022.

In contrast, the quarterly ending cash flow grew from $29.70 million on 31 December 2021 to $50.70 million on 31 December 2022. The quarterly ending cash flow grew to $278 million on 31 March 2022.

However, Neurocrine (NBIX) borrows some money. It reported a quarterly financing cash flow of $24.60 million on 31 December 2022. The quarterly financing cash flow rose from $1.80 million on 31 December 2021.

In contrast, Neurocrine’s total debt fell from $352.10 million on 31 December 2021 to $284 million on 30 September 2022. Neurocrine did not report total debts on 31 December 2022.

Meanwhile, Neurocrine’s cash and short-term investments grew from $711.30 million on 31 December 2021 to $989.30 million on 31 December 2022. Thus, Neurocrine is a growing company with less debt and more cash.

What Value does Neurocrine offer?

I consider Neurocrine an overvalued stock because it had just $2.369 billion in Total Assets on 31 December 2022. I think $100 is too expensive for a company with $2.369 billion in total assets.

My advice is for investors to avoid Neurocrine (NBIX) because it only has two products for sale and one product under license. Thus, I think Neurocrine lacks the resources to become a profitable drug maker. Moreover, Neurocrine could collapse fast if another drug appears or if its drugs get recalled.

I think smart investors need to avoid NBIX because it lacks the resources to survive.