DCP's third-phase study did not meet expectations. Deutsche Bank reiterated its "hold" rating on Neurocrine Biosciences, Inc. (NBIX.US).

After Neurocrine Biosciences, Inc. (NBIX.US) announced disappointing results from the KINECT-DCP Phase III study of valbenazine (Ingrezza) for the treatment of dyskinetic cerebral palsy (DCP), Deutsche Bank reiterated its "hold" rating and maintained a target price of $152. The bank believes that investors had low expectations for the clinical results and expects the impact on the stock price to be minimal. The failure of the KINECT-DCP trial eliminates the opportunity for Ingrezza to expand its indications beyond tardive dyskinesia (TD) and Huntington's disease (HD) chorea. Since DCP was not included in Deutsche Bank's valuation model for Ingrezza, the failure in this indication will not change the company's valuation. A successful study could have supported a supplemental new drug application submission, expanded indication labels, and brought incremental revenue to Ingrezza. The market opportunity for DCP is comparable to or slightly larger than HD chorea. For reference, Deutsche Bank estimates peak sales of Ingrezza to be around $2.821 billion (compared to consensus expectations of around $2.998 billion), including approximately $2.585 billion in TD sales and approximately $0.236 billion in HD chorea sales. In the absence of label extensions, Deutsche Bank expects management to focus on increasing Ingrezza prescription volume, supported by expanded sales teams, with the TD market expected to grow but currently has a low penetration rate.