Why Neurocrine Biosciences Shares Imploded

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What: Shares of Neurocrine Biosciences (NASDAQ: NBIX  ) , a biopharmaceutical company focused on developing neurological and endocrine-related therapies, dove as much as 32% after reporting disappointing mid-stage results for its VMAT2 inhibitor, NBI-98854, for the treatment of tardive dyskinesia, a disease characterized by abnormal and involuntary muscle movements.

So what: According to Neurocrine, its 50mg dose did not reach the statistical significance as outlined in the primary endpoint by week six while its higher dose of 100mg did show a statistically significant reduction in tardive dyskinesia symptoms as of week 2 based on the Abnormal Involuntary Movement Scale. The expectation from Neurocrine was that its 100mg dose would be a maximum-tolerated dosing of the drug, but discovered it was actually well-tolerated. Moving forward, Neurocrine plans to run an additional phase 2 study utilizing a 100mg dose and an even higher dosage.

Now what: Well, there's good news and there's bad news. The good news is that it appears the surprisingly high dose of NBI-98854 works in reducing tardive dyskinesia symptoms. The bad news is that Neurocrine has been thrown for a dosing loop, having expected the 50mg dose to outperform, and must now spend extra time and money to run another phase 2 trial to determine what the proper dosing should be. This isn't a crushing blow for Neurocrine, but it's a setback that shareholders clearly weren't willing to endure today.

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