What happened

Shares of Neurocrine Biosciences (NASDAQ:NBIX) jumped over 14% today -- pushing the company's market cap over $10 billion for the first time -- after the company reported second-quarter 2018 results. While there were a handful of updates from the pipeline, the real news is the amazing start of the portfolio's first commercialized drug product, sold under the brand name Ingrezza.

In May 2017, the drug became the first approved treatment for a condition called tardive dyskinesia, which is characterized by repetitive and involuntary movements (such as facial tics or eye blinking) and caused by long-term use of psychiatric drugs. Ingrezza generated $96.9 million in net product sales in the second quarter of 2018 and $168 million in net product sales in the first half of the year. 

As of 12:48 p.m. EDT, the stock had settled to a 12.4% gain.

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Image source: Getty Images.

So what

Thanks to the strong sales from Ingrezza, Neurocrine Biosciences reduced its net loss for the second quarter of 2018 to just $5.9 million, compared to a loss of nearly $60 million in the year-ago period. The drug continues to blow past Wall Street's expectations. The fast start may be only the beginning. Some analysts expect peak sales of $1.3 billion by 2022, although it may be on pace to reach that total even sooner. 

Ingrezza also provides confidence in the overall portfolio's approach to similar nervous system ailments, which includes drug candidates being evaluated to treat Tourette's syndrome. Additionally, in late July Neurocrine Biosciences announced that Orilissa, developed with AbbVie to treat pain associated with endometriosis, received marketing approval in the United States. The drug will hit the market in August, providing another source of revenue for the newly commercial-stage company.

Now what

Neurocrine Biosciences is what most investors hope for when investing in early-stage biopharma stocks. The company's approach to drug development has now earned two drug approvals from the U.S. Food and Drug Administration, including a fast-growing product in Ingrezza. The stock is up 46% in 2018 so far, and has delivered gains of 708% in the last five years. While it may take time to grow into that market valuation, it was well-earned. The question facing investors now is: Can the stock keep going higher, or will future returns be hard to come by? Unfortunately, the answer may be closer to the latter.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis -- even one of our own -- helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.