Neurocrine Biosciences, Inc. (NBIX) on Q2 2023 Results - Earnings Call Transcript

Operator: Good day, everyone, and welcome to today's Neurocrine Biosciences Reports Second Quarter Results. [Operator Instructions] It is now my pleasure to turn today's program over to Todd Tushla, Vice President of Investor Relations. Todd Tushla: Good morning, and welcome to Neurocrine's second quarter 2023 earnings call. Today, I'm joined by Kevin Gorman, our Chief Executive Officer; Matt Abernethy, our Chief Financial Officer; Eiry Roberts, our Chief Medical Officer; Eric Benevich, our Chief Commercial Officer; and Kyle Gano, our Chief Business Development and Strategy Officer. During today's call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After prepared remarks, we will jump into Q&A. With that, I'll turn the call over to Kevin Gorman. Kevin Gorman: Thank you, Todd, and good morning, everyone. It's a pleasure to be here this morning. We've had a very strong first half of the year, as you can see from our press release this morning, we are raising our guidance. So what was previously the high end of the range is now the bottom of the range, very strong performance and very proud of our commercial team out there with INGREZZA. We're now set up for a really exciting second half of the year. We have multiple readouts coming from our pipeline, led by our PDUFA date for INGREZZA and the Chorea associated with Huntington. We have a Focal Onset Seizure and data coming out, Anhedonia - data coming out. And last but not least at all, is the CAH studies, both in the adult and in the pediatric population, and Eiry is going to have a lot more to say about that a little later, and we'll also be taking your questions on that. So quite a bit going on here. It's all been very nice thus far. So I'm really looking for the second half of the year. And right now, I'm going to turn it over to Matt. Matt Abernethy: Good morning. Neurocrine continues to execute with growing INGREZZA sales, improving profits and an advancing pipeline. During the second quarter, INGREZZA sales were $440 million with year-over-year growth of 26%, driven by record new patients. Our commercial and medical affair teams continue to do an excellent job educating prescribers and developing the TD market, helping many new patients receive treatment. With the solid first half of the year, we are increasing 2023 INGREZZA sales guidance from $1.77 billion to $1.82 billion, reflecting over 25% growth at the midpoint of the range. This compares to our previous INGREZZA sales guidance range of $1.67 billion to $1.77 billion. With growth in sales and reduced operating expenses, our profit profile improved during the quarter to over $120 million of non-GAAP net income. These profits generated strong cash flow and now have over $1.3 billion of cash on hand, providing plenty of financial flexibility to execute our strategy by allocating capital towards developing the TD market for INGREZZA, advancing our clinical pipeline and expanding our internal research efforts. We believe this strategy will create shareholder value in both the short and long term. I will now hand the call over to Eric Benevich, our Chief Commercial Officer. Eric Benevich: Thanks, Matt. I'm very pleased with INGREZZA's sales performance through the first half of the year. Year-over-year sales grew 26%, driven by strong prescription demand across new and existing patients. As previously noted, we anticipate a majority of growth in 2023 to be driven by the psychiatry and neurology business segments where most TD patients receive their care. In long-term care, we are gaining traction and expect to see good growth as we continue to develop that segment. With $850 million of INGREZZA sales in the first half of the year, as Matt said, we felt it prudent to raise the guidance range from $1.67 to $1.77 billion, up to now $1.77 billion to $1.82 billion. The low and high end of the updated range is driven primarily by the pace of new patient starts throughout the second half of the year. Outside of TD, our commercial and medical teams have been preparing for the anticipated FDA approval and subsequent launch of valbenazine to treat Chorea associated with Huntington disease. Despite the availability of improved treatment options, there remains a significant unmet need across this patient population. While we have not factored in any potential HD Chorea sales into our guidance, we are confident in the efficacy and safety data that we've generated with valbenazine in the clinical program, and we look forward to a potential approval in HD Chorea next month. We believe we can make a positive difference for patients suffering from HD Chorea. All in all, we are on track to deliver another year of record results for INGREZZA. Growth numbers like these are especially impressive for our product in its sixth year on the market. However, the fact remains that a majority of TD patients still have not received the diagnosis or even any explanation for their TD movements. We know we still have a tremendous opportunity to help more TD patients and hopefully, someday soon, HD Chorea patients as well. With that, I'll turn the call over to Dr. Eiry Roberts, our Chief Medical Officer. Eiry Roberts: Thank you, Eric, and good morning to everyone on the call. Our clinical programs continue to make steady progress, which will lead to several important milestones and data readouts throughout the rest of this year and in the years to come. Looking specifically to the second half of this year, we will soon be reaching inflection points for a number of mid- to late-stage programs, beginning with the August 20 PDUFA date for valbenazine for the treatment of Chorea associated with Huntington's disease. Eric highlighted the confidence we have in the strong efficacy and safe and data package generated to support approval. We've also had very good engagement with the FDA and look forward to the agency's feedback regarding the potential approval for an important second indication for valbenazine. With respect to data readouts, we remain on track to report top line results from 4 studies in the fourth quarter of this year. This includes data from both the pediatric and adult registrational studies of Crinecerfont for the treatment of Congenital Adrenal Hyperplasia. Separately, enrollment is now complete in 2 Phase II studies, both of which remain on track to readout in Q4. This includes NBI-352 for the treatment of focal onset seizure in adults and NBI-846 for the treatment of anhedonia associated with major depressive disorder. Turning now to our muscarinic portfolio. We are making very good progress with enrollment in the Phase II study of NBI-568 for the treatment of schizophrenia. In addition, this year, we're advancing into Phase I, our second muscarinic molecule, NBI-570, a dual M1 M4 agonist. These first 2 assets represent just the first wave of muscarinic compounds, we expect to progress into the clinic over time and explore across a number of neuropsychiatric conditions. Overall, I continue to be very pleased with the progress our teams are making with the most broad and diverse pipeline Neurocrine has ever had. And with that, I'll hand the call back to Kevin. Kevin? Kevin Gorman: Thank you very much, Eiry. And we're ready to take questions now. Operator: [Operator Instructions] And we will take our first question from Paul Matteis with Stifel. Your line is open. Paul Matteis: Hey. Thanks so much for taking the question and congrats on the quarter. Hope you don't mind if I ask kind of a pipeline BD question. You've talked historically about how there's really not a lot of high-quality neuroscience assets that could kind of fit your budget and make it kind of near to midterm impact on the top line. In the context of that, I guess, how do you think about crinecerfont and what that could do to Neurocrine scope. If crinecerfont works as well as you hoped, could Neurocrine start to go into the direction of either endocrine, rare disease and really not just be in neuroscience for the foreseeable future? Thanks so much. Kevin Gorman: Thanks for the question, Paul. Good morning. Kyle can add to what I would say is, but we do look in the endocrine space quite a bit. As you know from discussions that you've had with Kyle and him speaking at several of your conferences, he and his team look broad and deeply into both neuro endocrine - into neuroendocrinology, neuroscience and also neuropsychiatry. So it is not an area that we've ignored at all that we are poised to go into if we see assets that really meet all of our criteria. Kyle, do you want to add to that? Kyle Gano: Yes. Just to add to Kevin's remarks, I think what would be interesting is with positive data with crinecerfont, it does open the door to looking at things that are later stage commercial on the endo side, which we haven't done historically. So we know what those opportunities look like, and we await our crinecerfont data. Operator: We will take our next question from Tazeen Ahmad with Bank of America. Your line is open. Tazeen Ahmad: Okay. Hi, guys. Thanks for taking my question. Maybe just for giving us a sense of what to expect for focal onset seizure. The top line data that you expect in 4Q, what should we expect? And what should we really be comparing that to in terms of standard of care to get a sense of whether or not your product could have improvements but currently given... Eiry Roberts: Tazeen, it's Eiry here. Thanks for that. I think I got all the questions you were breaking up a little bit. But - so we are very much looking forward to reading out the data from our Phase II proof of concept. It's a dose-finding proof-of-concept study, initial Phase II in focal onset seizures. Three things we're predominantly interested in the context of this study. First of all, obviously, the initial tolerability and safety of 352 in this patient population in adults. The second is to understand the pharmacokinetic profile, which will help us with understanding exposure response and position us well for future dose selection in other trials, if we're successful. And the third is obviously the measures of seizure frequency. And we will be looking at seizure frequency comparing from baseline to the primary end point. And essentially, we look at the normalized seizure frequency over an 8-week period of monitoring. And so obviously, the absolute change from baseline compared between the treatment and placebo. Also, we'll be interested in the number of patients achieving a 50% reduction in seizures. And from the small study also looking at whether any patients are able to become seizure-free. Looking at the totality of that information, then obviously, that will give us an indication of the strength of any signal that we're seeing and that will position us well for future discussions. Tazeen Ahmad: And is there any kind of minimum amount that you're looking for in terms of improvement in seizure rate that would determine a go, no go? Eiry Roberts: And obviously, there have been a fair number of new trials in this area in the recent past that have demonstrated efficacy for new molecules in this space. We'll be interested in understanding that data. But in reality, we'll be focused on the context of our own information to understand the next steps. Operator: We will take our next question from Chris Shibutani with Goldman Sachs. Your line is open. Unidentified Analyst: Hi. Good morning, team. Thanks for taking our question. This is Steven on for Chris. I think historically, your team has been helpful in framing what the guidance range means in terms of some macroeconomic factors and just overall trends you see with your business. So I was wondering if you could frame this $1.77 billion to $1.82 billion range in that context? Thank you. Kevin Gorman: Yes, I'd say the guidance range is primarily going to be driven by new patient demand. We had strong new patient demand in the first half of the year. And depending on the outcomes for the second half of the year, that's really going to be what the driver of that range is. It's $50 million. It's going to show a nice sequential step-up in growth for the rest of the year. And I would just say the team is doing an excellent job. So from a macro perspective, you always have a bit of room for some disruption. But I'd say based upon how our business is operating, it really comes down to get the continuance of new patient additions, and we feel confident with the market and how it's operating to provide the guidance we provided today. Unidentified Analyst: Awesome. Thank you. Operator: And we will take our next question from Anupam Rama with JPMorgan. Your line is open. Anupam Rama: Hey, guys. Thanks so much for taking the question. With the Huntington's PDUFA later this month, how are you thinking about the launch curve for INGREZZA in that indication? How do the properties of INGREZZA might shift the market dynamics there? Thanks so much. Kevin Gorman: Good morning, Anupam. So yes, we're - obviously, we're excited about the opportunity and look forward to the FDA decision coming up in August. The way that we're looking at it, the HD Chorea opportunity, there's still significant unmet need for that patient population. We estimate around 25,000 or so patients in the U.S. with Chorea associated with Huntington's disease. And only 2 out of 10 are currently treated with the only approved medicines, which are VMAT2 inhibitors, the tetrabenazine’s. And so there's still significant unmet need and opportunity there. We're looking forward to getting the labeling and certainly being able to get off the ground this year. From a financial perspective, it's not tucked into our guidance, and 2023 numbers would be modest. But there's still significant opportunity in that patient category, and we're looking forward to being able to help more patients with valbenazine in the not-too-distant future. So stay tuned. Operator: We will take our next question from Phil Nadeau with TD Cowen. Your line is open. Phil Nadeau: Morning. Thanks for taking our question. As we look forward to the CAH pivotal data in early Q4, we're curious to get your thoughts on the adult trial in particular. What is the protocol for reducing steroids in that trial? And what would you consider a clinically meaningful reduction that's likely to support approval and drive use? Thanks. Eiry Roberts: Morning, Phil. We've not actually talked about the specifics of the protocol for steroid reduction in that trial. What I will say is that in the adult Phase III trial, there is a protocol though, that guides clinicians on how to reduce the steroids in the face of the degree of androgen control that each individual patient is experiencing. And that was important because of the steroid reduction being the primary endpoint of the study and the need to control that rather than have it be more real-world setting, which is what we believe will be used once the drug is successful and if approved. With respect to the clinically meaningful reduction in steroid dosing level, I would say that for - as we've said consistently from the start of this Phase III program in our interactions and discussions with many stakeholders, including payers and clinicians and patients, the fact that these patients take a higher than physiologically needed doses of steroids for the duration of their life results in significant problems of comorbidities, metabolic disorder, bone issues, growth issues, et cetera. And so any reduction in steroids is meaningful for individuals. In the context of the clinical trial, we obviously are trying to reduce the steroids in a protocolized way, and we will get the opportunity very soon when we read out the data to understand what degree of steroid reduction is possible in the face of crinecerfont treatment. Phil Nadeau: Can you remind me, have you disclosed the powering of the study? Eiry Roberts: We have not disclosed the powering of the study against that primary endpoint. We do believe that the number of patients within the trial is predominantly driven by the safety database that's needed to support the registration, and that was in conversations with the agency and regulators and that the trial is very adequately powered to address the endpoint. Phil Nadeau: Perfect. Thank you. Operator: We will take our next question from Jay Olson with Oppenheimer. Your line is open. Jay Olson: Hey. Congrats on the quarter. And thanks for taking the question. Can you talk about the geographic scope of Neurocrine and how crinecerfont could potentially globalize your business, especially if you can leverage the Diurnal infrastructure to other assets in your pipeline beyond crinecerfont? Thank you. Kevin Gorman: Thanks, Jay. Yes, crinecerfont could globalize, Neurocrine. So we ran this as a worldwide study mainly based in the United States, Europe. And so with Diurnal as part of Neurocrine now. And with this indication being one that is basically driven by centers of excellence throughout the United States, which obviously we would commercialize here. It's also driven by centers of excellence throughout Europe. So we would see this as a good entree to our commercial operations in Europe. So we'll be - we look to do a worldwide filing on this and commercialize both in U.S. and Europe. Jay Olson: Great. Thank you very much. Operator: We will take our next question from Carter Gould with Barclays. Your line is open. Leon Wang: Hi. Congrats on the quarter. This is Leon Wang on for Carter. A question on BD. So given Dr. Robert is going to retire in 2025 and the successor hasn't been announced yet, would you look to fill that position or have better color on that position before doing any additional BD? And given kind of the extended time line, can you give any additional details on where you are in that process? Thanks. Kevin Gorman: Thanks, Leon. What I'd like to say is that when I rejoined Neurocrine approximately 6 years ago, we had 2 clinical programs going on at Neurocrine. We now have well over a dozen programs going on at Neurocrine. Several of them are late-stage Phase III programs, nearly a dozen or mid-stage programs. Eiry has built an excellent organization here, and she's built an organization that allows for scale as these programs move forward and others are added over time. You rarely get what Eiry has given us, which is 2 full years of notice here. So she is highly involved in our efforts to look for her replacement if such a thing exists, and we'll be here for a really good period of time in order to make the transition as efficient as possible. So again, the entire organization. Thanks, Eiry, for that. Operator: We will take our next question from Marc Goodman with Leerink. Your line is open. Marc Goodman: Yes. Good morning. Eiry, in the past, you've talked about how you've got the M1, you've got the M4, you've got an M1 M4 and you're going to be moving all 3 of them forward. I was just curious kind of the strategy there, obviously, in the press release that talks about initiating Phase I for the M1 and 4. But I was curious about kind of the package and the whole franchise that you're looking at. And if you're going to run a blood pressure study with each one of these or have you yet? Thank you. Eiry Roberts: Marc, thanks. There's a lot of questions in there. Let me start just at the top. I mean, I think one of the things that really attracted us to the opportunity to partner with Sosei Heptares was the fact that they had a portfolio of really very selective different candidates that we could consider bringing into the clinic. And I think it is very important, given the importance that I think is going to be from this muscarinic set of pharmacology for us to have the opportunity to explore the differential pharmacology across these different selective molecules. With all of that said, our primary focus right now is on delivery of data for 568, which is our M4 selective agonist that is currently in the schizophrenia treatment of acute psychosis trial because obviously, that is the first opportunity we have in hand. I'm really pleased to say that our enrollment is going very well in that trial in the United States and we continue to make really good progress. The molecule that I referred to earlier, 570 is the second of the candidates that we have in hand and are progressing. And that is an M4/M1 dual agonist. And I think that opens up the opportunity for us to look a little more broadly across different indications. We haven't finalized our indication selection yet there. But as we move into Phase I and understand the profile of that molecule, we'll be able to say more about that. And then in the preclinical setting, we obviously do have other molecules behind that, that we will intend to bring into the clinic in due course. With respect to cardiovascular profile for each of these, I think we need to see in the clinic first. So I can't make a comment about whether or not blood pressure monitoring will be required or blood pressure studies will be required until we've really seen what we get to look at in the clinic. Marc Goodman: Okay. Operator: We will take our next question from Brian Abrahams with RBC Capital Markets. Your line is open. Brian Abrahams: Hey, guys. Good morning. Thanks for taking my question. So you reported another good growth - another good quarter of growth for INGREZZA. Can you talk about the inventory dynamics embedded in that? And then also, I guess, what you're seeing on the ground with regards to market share versus overall market growth with your and others' efforts to identify and diagnose TD patients? And I guess, where do you see that going in the rest of this year into next? Thanks. Kevin Gorman: So the bleed did occur as anticipated, but I'd say our results were largely driven by new patient additions that we saw both in the first quarter and the second quarter. And it's a real testament to the team, both medical and the commercial team and how they're engaging with our customers and then also reflective of the strong market that we have here with the developing TD market. So I'm going to hand it to Eric to provide a few more comments. Eric Benevich: Yes. We're really happy with the growth that we've seen in the first half of the year. And obviously, our raised guidance reflects our optimism for the second half. Our commercial team is firing on all cylinders right now and the market is growing nicely, but I'd say that INGREZZA is growing even more nicely. We've actually gained share over the past few quarters. And we continue to be very optimistic about continued growth. The vast majority of patients with TD remain as yet undiagnosed and untreated. And we're very focused on bringing this important medicine to those patients. Brian Abrahams: Thanks so much and congrats on the quarter. Operator: We will take our next question from Brian Skorney with Baird. Your line is open. Brian Skorney: Hey. Good morning, guys. Thanks for taking my question. I just really want to ask about any sort of seasonality to consider going into 3Q. I know 2Q is historically a big quarter for INGREZZA and then there tends to be a little less sequential growth in 3Q and then a bigger sequential jump in 4Q. So just looking for any guidance as we kind of think about the remainder of the year with that historical context and how we sort of model out the next few quarters? Are there any channel dynamics to consider price changes, et cetera? Matt Abernethy: Yes, Brian, I'll try to address the questions here. So the first half of the year had tremendous growth. The second half of the year, we expect similar growth. I think if you look at the range, it's $920 million to $970 million type INGREZZA performance here in the second half of the year, and we do expect continued sequential growth, largely driven by new patients. Q3 is - has had a touch of seasonality in the past, but it's always difficult to predict. So nothing that we're going to call out specifically here on this call. And then also from a price perspective, as I've said previously, we do anticipate our net revenue per script to be around $5,600, which is a couple of percent increase if you compare it to 2022. So all feels stable from a net price perspective. So it really comes down to executing and driving new patients. And I think what you can hear from myself, Eric, Kevin, we feel very good with how the market is evolving, how our team is performing and look forward to the second half of the year. Brian Skorney: Okay. Thanks, Matt. Operator: We will take our next question from Akash Tewari with Jefferies. Your line is open. Unidentified Analyst: Good morning. This is Avi on for Akash. So historically on M&A, I think you comment that the high end of the range you've considered was around $4 billion. But over the next few years, I think INGREZZA will generate more than enough free cash flow to go beyond that point. So what's the gating - I guess, like the gating factor for doing M&A beyond that $4 billion landmark? And would there be any appetite on our teams in to pursue a merger of another commercial stage CES [ph] company? Thank you. Kevin Gorman: So what I would say right now is that we have a very good growing franchise within INGREZZA and we're going to be adding another indication to it. And at the same time, we have an outstanding pipeline, which we're going to have multiple readouts going on in the rest of this year and into early next year. So is Neurocrine driven to doing a large acquisition? No, but we look at everything pretty frequently. But we have a great opportunity for substantial organic growth here at Neurocrine and that's our focus at this point in time. Operator: We will take our next question from Jeff Hung with Morgan Stanley. Your line is open. Jeff Hung: Thanks for taking my question. Can you talk about the potential advantages of INGREZZA as adjunctive treatment in schizophrenia over others approved for the indication? Thanks. Eiry Roberts: Thanks, Jeff. First of all, I think, I don't believe there are currently any adjunctive treatments actually approved in the space of schizophrenia. And so obviously, this would be an opportunity to have a first approved medication. And we are very excited about the 2 pivotal Phase III studies that we have ongoing to evaluate valbenazine as a potential adjunct in patients with schizophrenia who fail to get adequate response from currently available treatments. I think it's very important to emphasize the unmet need that exists there. The majority of patients do not get full effectiveness from currently available treatments. And if they do get an efficacy response initially, then many of those patients relapse and suffer from acute psychotic episodes later on in the disease. So with respect to valbenazine, what made us encouraged about valbenazine and interested in going into this program is a combination of three different pieces of background. The first was obviously in the context of our tardive dyskinesia program. And now with the use of INGREZZA in the marketplace in treatment of tardive dyskinesia, we have a huge database of information for patients who have received antipsychotics and valbenazine INGREZZA treatment together, and we're very confident in the safety and tolerability of that. In addition, we have preclinical data that was generated that shows the addition of valbenazine to antipsychotic background treatment in animal models results in a synergistic effect. We obviously do not have Phase II data for the combination in the clinic. But because of the challenges in psychiatry trials with failed trials and inappropriate readouts, we elected to go directly into fully powered pivotal trials. And as a result, that's what we're currently implementing, and we look forward to reading out data from the first of those studies at the end of next year. Jeff Hung: Thank you. Operator: We will take our next question from Myles Minter with William Blair. Your line is open. Myles Minter: Hi. Just on the CTA for 570 to M1/M4 dual agonist here. Are you running that Phase I with any sort of anticholinergic components to mask, nausea and vomiting that's been seen with that mechanism, just obviously referring to the Xanomeline [ph] experience at Eli Lilly. So just curious as to whether there's an additive compound in that CTA? Thanks. Eiry Roberts: Yes. I mean I don't want to comment too much on the specifics of the design of the Phase I program, but just by background, the reasoning for the Xanomeline requirement of additional anticholinergics, at least as I understand it, is because of the peripheral side effect profile seemless normally, which is thought to be predominantly due to M2, M3 and the anticholinergic then knock out that peripheral effect. We have highly selective centrally penetrant agonists. And as such, we are developing them in that fashion. So I think I'll probably just leave it at that. Operator: We'll take our next question from Danielle Brill with Raymond James. Your line is open. Danielle Brill: Hi, good morning. Thanks for the question. I'm curious, I believe your competitor is also developing their CRF1 antagonist for PCOS. Is this an indication of strategic interest for you and curious why or why not? Thanks so much. Kevin Gorman: Actually, not at this time. We're following their data. But at this point, that's - PCOS is not an indication that we're following upon. Operator: We will take our next question from Evan Seigerman with BMO. Your line is open. Evan Seigerman: Hi, guys. Thank you so much for taking my question. I'd love to hear a little more about the expansion of INGREZZA into the long-term care market. We didn't hear much about it. And I know that's a unique setting. So maybe just some more on that and how that could help support growth this year or next year? Thank you. Kevin Gorman: So we're excited about the opportunity to help more patients in long-term care. This is a segment that we were attracted to at the time of launch with INGREZZA back in 2017, but we didn't have the capacity to take that on, on top of outpatient psychiatry, community mental health and outpatient neurology. And so last year, actually, just a little over a year ago, we launched our efforts into long-term care with a dedicated team. What we've seen so far is a lot of really good progress and strong growth. We estimate that about 10% to 15% of the total TD population resides in various residential care facilities. And so it's early days yet in terms of that business segment. Our neurology and our psychiatry segments are more established than LTC. But all signs are positive, and we continue to be very optimistic about the opportunity there going forward. Operator: We will take our next question from Laura Chico with Wedbush Securities. Your line is open. Laura Chico: Good morning. Thanks very much for taking the question. Back to INGREZZA, a commercial question. I'm wondering if you can offer any comments on the duration of treatment that people are experiencing with INGREZZA, how long is staying on board. And just curious how that has been impacting, for example, the increase in guidance here? Has there been any improvements or increases in duration of treatment? And I'll just pick one. And have you actually quantified the number of patients that were on therapy? Thank you. Kevin Gorman: I'll take your last question first. No, we haven't disclosed the number of patients on therapy, though I will say that it continues to grow every quarter. And we've seen strong adds in terms of new patient starts, even ever since we came out of COVID lockdown environment. In terms of persistency, that's been really strong ever since the early days of the launch, and we've looked at this serially going back to 2017, 2018, 2019 and someone. And what we've seen is that patients are staying on treatment and certainly longer than what we had expected prior to the launch and longer than what we're seeing with persistency with our underlying psychiatric meds. The majority of these patients are on either antipsychotics, antidepressants or both. And I think we - though we haven't given out specific numbers for a duration of - average duration of treatment for a patient. What we're seeing is that the persistency compares very favorably to those psychiatric meds that these patients are taking. Laura Chico: Thanks very much. Operator: We'll take our next question from Sumant Kulkarni with Canaccord. Your line is open. Sumant Kulkarni: Good morning. Thanks for taking our question. Could you remind us as to the nuance that drives the primary endpoint being glucocorticoid reduction at week 24 for adult patients, while its serum A4 in pediatric patients with glucocorticoid being a secondary endpoint at week 28. And what could this difference mean in terms of your ability to drive successful regulated discussions with pediatric and adult patients? Kevin Gorman: So Sumant, you came in pretty mouthful. Do you mind repeating that? Sumant Kulkarni: Sorry about that. I hope this is better. So could you remind us as to the nuance that drives the primary endpoint being glucocarticoid reduction at week 24 for adult patients, while it's serum A4 in pediatric patients with gleucocarticoide being a secondary endpoint at week 28? And what could this difference mean in terms of your ability to drive successful regulated discussions in pediatric and adult patients? Eiry Roberts: Thank you, Sumant. So both measures are important in the management of congenital adrenal hyperplasia in the pediatric and adult population. The function of choice of primary versus secondary end point really reflects the ability in a clinical trial setting and the kind of heterogeneity of the population in terms of the ability to demonstrate that outcome. And let me expand on that a little bit more. So from an adult perspective, obviously, androgen control is extremely important, and that is the primary mechanism of action of crinecerfont is to act on the HPA axis and reduce androgen levels. And as such, the first 4 weeks of that adult trial actually do look at androgen levels with crinecerfont treatment on a background of stable steroid dosing. In adults, however, because you don't have the physiologic changes that are happening to the same extent in pediatric population growth, development and things of that sort. It was possible to protocolize the steroid reduction and look at steroid dose as a primary endpoint. And that is important in the management of these patients. And we look forward very much to seeing the information there and understanding the impact of crinecerfont on that endpoint. In the pediatric setting, obviously, the primary endpoint is the 4-week androgen control, and that is extremely important as a measure in these patients since obviously, they are growing, developing and changing rapidly over time. In addition, however, we do have a real-world assessment of - a more real-world assessment of steroid reduction, which is measured out to 28 weeks. And so as we look at the data, we'll be able to look across the populations at the consistency of the information we have. And as I mentioned initially, I think both endpoints become important in the conversation around how this medicine could be used in patients out in the field. Operator: We will take our next question from Mohit Bansal with Wells Fargo. Your line is open. Mohit, your line is open. Unidentified Analyst: Sorry. This is Serena on for Mohit. Thanks for taking our question. So I wanted to ask more about the expected launch in Huntington's Chorea. And if you can talk about any differences versus tardive dyskinesia that expectations for compliance rates or duration and if you expect to bolus the patients waiting for an autistic [ph] alternative or new patients to be switched from [indiscernible]? Thank you. Kevin Gorman: Yes, let me kind of start with the last part of your question and work forward. So obviously, we're excited about the opportunity. And we think that with the data that we've generated, we have potentially a differentiated product. We're eagerly anticipating the PDUFA date and a favorable outcome with the FDA and what those labeling look like. But it's important to note that we haven't been out there talking about valbenazine in TD - or excuse me, in HD with the HD community. So we'll really be introducing valbenazine as a new treatment option to the movement disorder neurologists and then general neurologists that treat the majority of these patients and obviously introducing valbenazine to the HD patient community and the families as well. So initially, I think that uptake will occur in those patients that are either newly diagnosed with their Chorea or they've had Chorea for some time, and they've been reluctant to be treated with existing treatment options. We don't expect that there'll be a lot of switching in this market. And certainly, we haven't seen that in the TD market either. But ultimately, the product attributes that make INGREZZA so attractive in TD, the simplicity of true once-daily dosing without complicated titration, the efficacy, the side of the low rate of side effects. These are things that we think would translate well over to the HD Chorea opportunity, and we look forward to making a new treatment option available because certainly, one is needed. Operator: We will take our next question from David Amsellem with Piper Sandler. Your line is open. David Amsellem: Thanks. So regarding crinecerfont, this is more of a commercial question to the extent that the product works, do you think that ultimately, new starts are going to be driven in the pediatric setting, given sort of the obvious pitfalls of a high steroid burden in peds as it relates to growth. Is that the right way to think about this market and uptake of the drug? Or do you see a real opportunity in adults as well? Thank you. Kevin Gorman: Yes. I'll start off by just caveating my comments by saying, first, we need to see the data. And secondly, obviously, we need to get approved by the FDA. But with that, I see a significant opportunity really across all patient segments. There's been no significant medical advances for the CAH opportunity for decades. Literally, the standard of care is and has been and remains glucocorticoids. And as Eiry was discussing, there are significant issues associated with high-dose GC treatment. And so if you look at the different patient segments and think about who might benefit from treatment with cronesterfont, the ability both to improve day-to-day control over the androgens, the excess androgens as well as being able to lower the steroid burden for these patients. Certainly, younger patients would benefit as they're going through their growth years. And we've seen that there's great interest in treating these younger patients. But adults also at various stages of their lives will benefit from a new treatment approach. And so we think that there's going to be significant opportunity across all of those patient segments. We're just looking forward to generating the data and being able to bring a new totally different approach to treatment of CAH to that population, which definitely deserves one. Operator: We will take our next question from Ash Verma with UBS. Your line is open. Ash Verma: Hi. Thanks for taking my question. I wanted to ask about IRA implementation. So what are you assuming with respect to how commercial channel may respond to Medicare negotiating the price down? And do you have conviction that your commercial pricing is insulated in a post-IRA implementation environment? Thanks. Kevin Gorman: So I've said all along that IRA is going to be a moving target, but we're going to carefully monitor what is happening, especially as this September starts with the first group of companies that are going to be listed for negotiation. I'd say for Neurocrine, while it impacts the entire industry, we get protected for quite a while here because of both of the provisions for small biotech companies. The first one, the specified small manufacturer phase-in for the new Part D program, that's going to be a discount that is phased in for us over a 7-year period of time starting in 2025. That's a real nice advantage for us actually because we're going to be - if as written, we should be having lower payments to Medicare than what we currently shoulder in the current Part D. We also expect to qualify for the small biotech exemption, and that delays the potential for negotiation or the impact of negotiation into 2029 and it's phased in over 2029 to 2031. So while we're going to be following this quite closely, and as I've said before, I'm certain there will be changes, just don't - can't predict exactly what the changes will be with IRA. We monitor it, and we take it into consideration as we move our business forward. Operator: And we will take our next question from Yatin Suneja with Guggenheim. Your line is open. Yatin Suneja: Thank you. Just a quick question on the revenue per script. Could you maybe just comment on how it trended from Q1 to Q2? How should we think about Q3, Q4 and maybe where you expect to end? And then in terms of the guidance, the Chorea is not included at what time point you might start incorporating that in the guidance? Thanks. Matt Abernethy: Yes. On the guidance for HD front, yes, it's not incorporated, but we don't expect it to be too material this year. So I would expect it to be incorporated as we think about 2024. From a net revenue per script perspective, as is typical, we had a few percentage improvement from Q1 to Q2. And as you've seen historically, you see it fairly consistent from here. So nothing that I'd flag other than that we do expect net revenue per script to be around $5,600 this year, and access to remain very good. So I think is always consistent there. One other comment that we've not been asked about is our profit profile during the quarter. We had strong profit, but I do want to comment that we did have a nonrecurring, noncash stock-based compensation charge that impacted our GAAP earnings. But from a non-GAAP perspective, we had very strong profit. And I figured when you continue to look into the financials, you can see that is showing up in the stock-based compensation. We didn't increase GAAP operating expenses, but we actually did reduce our non-GAAP operating expenses. So profit profile for the company remains very strong, and we're seeing nice operating leverage in our business. So I wanted to chime in there since I've not been asked the financial question and was feeling a bit left out. So thank you. Operator: We will take our next question from Ami Fadia with Needham. Your line is open. Unidentified Analyst: Hi, good morning. This is Eason on for Ami. Congrats on the quarter and thanks for taking our question. Last quarter, you mentioned kind of a big delta in telemedicine utilization between neurology and psychiatry. How do you kind of think about this utilization evolving over the next year or two and the impact this could have on the INGREZZA growth trend? Thank you. Kevin Gorman: Yes. The dynamics with regards to telemedicine, I think, have been relatively stable over the past year or two, and there is a pretty significant difference between psychiatry and really all other specialties within our health care system. Early in the pandemic, we saw this significant jump in the use of telemedicine across both the neurology and the psychiatry segments. But as the environment improved and restrictions were lessened, patients started to come back into the clinics and so on. We saw that neurology went back towards its more historical levels of less than 10% of visits being billed as telemedicine visit. In psychiatry, however, or in behavioral health, that's significantly higher. It's still hovering around half of all visits being billed as telemedicine visits. And so we think that is here to stay, that it has some staying power in psychiatry, even though COVID has diminished quite a bit. And the other dynamic, I think, that's important to note in psychiatry is really the - expanded use of advanced practice providers in that segment. And so those two macro factors, I think, are important to understand what's happening in psychiatry in general in our psychiatry business, in particular, telemedicine, which creates a little bit of challenge for some providers with diagnosing TD though, I think that we've adapted nicely to it in terms of helping providers understand how to screen for how to diagnose TD remotely when they're evaluating a patient via telemedicine. And then the important work that we're doing to educate new providers coming into psychiatry, nurse practitioners, physician associates and so on. And so we continue to evolve as the market evolves, but the important thing is that the majority of patients still are undiagnosed, and we're continuing to invest in driving diagnosis and treatment. The other element that I'll throw in there, like Matt just mentioned the importance of bringing in another factor. We continue to invest in DTC and DTC is one mechanism that we have to reach patients and care partners directly to motivate them to bring up their TD symptoms and to drive diagnosis. And so all of these things, I think, are important as you think about future growth for the franchise. But the ceilings high and we're continuing to see strong growth, and I think that our raised guidance reflects that. Operator: We will take our next question from Uy Ear with Mizuho. Your line is open. Uy Ear: Hi, guys. Thanks for taking my question. I might have missed it, but could you tell us what the volume growth rate is for INGREZZA in the quarter? And could you also speak to the - provide some more color on the neuros, the neurology, the psychiatry and the long-term care in terms of contributions to this quarter's sales and growth rates? Thanks. Matt Abernethy: So when you think about volume growth, it was incredibly strong from a dollar perspective, you had about a 20% - 26% year-over-year growth, which was quite nice. And as I said earlier, we did have the bleed of inventory that's also reflected in the number that we've reported. So we haven't provided the exact volume growth percentage, but it was quite strong during the quarter. Operator: We have addressed all the questions in the queue. I would now like to turn the program back over to Kevin for any additional or closing remarks. Kevin Gorman: Thank you very much, and thank you for all your questions this morning. I'm just going to close with the fact that we've - some of you may become a bit too used to INGREZZA, just growing quarter after quarter. And while we see this growth continuing, we never take it for granted. This is a tremendous amount of hard work that goes in from our entire sales, marketing team, the medical team and all the other support teams that are out there in the field. We're able to continue to bring this medicine to more and more patients suffering with TD because of those hard efforts. And yet we see no slowdown in this. That is just incredible. And we are a very fortunate company to have a product like this. They do not come along very often. But what you do see for the rest of this year, there's a number of other extremely important potential medicines in our pipeline. I'm not sure that there's any company out there that has the number of Phase II and Phase III trial readouts coming in the next 6 months as we do. And if you extend it out into the first half of next year, it nearly doubles. So there's a tremendous amount of information that we're going to be generating in just the next few months, and we very much look forward to talking to you about all these. This company is actually hitting on all cylinders right now. We're always looking for a way to improve, and we continue to look for ways to improve our business, but I couldn't be more happy with the way the company is running at this point. So with that, I'll sign off and look forward to talking to all of you in the near future. Operator: This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful day.
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