Neurocrine Biosciences, Inc. (NBIX)

How it makes money

Almost all revenue comes from US product sales recognized when specialty pharmacies dispense the drug, net of rebates to insurers and government programs. Prescription volume for INGREZZA keeps growing, but the average net price per prescription has been declining as the company invests in broader insurance formulary access; CRENESSITY and a small amount of collaboration and royalty income round out the rest. There is no meaningful ex-US commercial revenue yet.

Revenue by segment

INGREZZA is protected by patents and by years of trial data that a generic or rival could not shortcut, and it holds a strong position among VMAT2 inhibitors, the drug class used for tardive dyskinesia. The advantage is narrow rather than wide because Teva's Austedo competes directly in the same class, and INGREZZA's own patent protection is not indefinite.

Both products treat chronic conditions that require ongoing medication regardless of the economy, and prescriptions are largely covered by insurance rather than paid out of pocket. Growth depends more on how many eligible patients get diagnosed and started on treatment, and on payors' willingness to keep reimbursing at current prices, than on macroeconomic conditions.

Key risks

• Dependence on a single product — INGREZZA generates close to 88% of revenue. A safety issue, competitive setback or loss of patent protection affecting this one drug would affect nearly the entire company.
• Competition within the same drug class — Teva's Austedo is an approved rival VMAT2 inhibitor competing for the same tardive dyskinesia and Huntington's patients, and other companies are pursuing similar mechanisms.
• Pricing and reimbursement pressure — Medicare price negotiation and scrutiny from pharmacy benefit managers on specialty drugs are an ongoing pressure on net price, and INGREZZA's average price per prescription has already been declining.
• Patent exclusivity timeline — INGREZZA's patent protection will not last indefinitely, and the revenue and profitability that depend on it are expected to face generic competition once that protection lapses.

Neurocrine does not disclose revenue concentration by individual customer; the more relevant concentration is by product, with INGREZZA alone generating close to 88% of total revenue.