Thank you operator. Good morning, and thanks for joining us on our fourth quarter and full year 2021 earnings call. Joining me today are 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. I'd like to remind everyone that 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 our prepared remarks, we will open the call for your questions. With that, I'll hand the call over to Kevin Gorman.
Thank you, Todd. Good morning. Today, we want to look back at a challenging 2021 and the lessons we've learned and the progress we've made. We will also be looking forward to 2022, a year that we believe will set us up for tremendous growth for the next several years. 2021 was bracketed in Q1 and Q4 by rising infections, office closures, and significant staffing shortages that constrained our efforts. However, we did make progress identifying many new healthcare professional customers and how to effectively work with them in a very challenging and changing environment. Eric will go into this in more detail in a moment. Turning our attention to the future, the guidance that we released this morning is founded on the lower end by a continuing unpredictable epidemic that ebbs and flows.
The upper end is less constrained by COVID, anticipates reopening of clinics with sufficient staff, and the impact in the second half of the year of an expanded sales force, more focused on specific points of care than previously. We believe these internal and external events will allow us to bring the rest of the many more patients who are needlessly suffering with TD and will lead to significant growth both this year and beyond. We have made a good start in addressing this market, and we will now re-accelerate growth. Concurrent with our commercial efforts, we have developed a neuroscience portfolio second to none. We have 12 phase II, phase III programs addressing diseases and disorders in neurology, neuropsychiatry, and neuroendocrinology.
We acknowledge the historical challenges in developing medicines for these diseases, and we have designed this pipeline with multiple compounds, each addressing a different mechanism to treat a specific disease, such as the way we are approaching schizophrenia and the way we're approaching major depression. The flip side of this, we're developing other compounds where each one of these can address multiple diseases. By attacking diseases from these two fronts, we believe we will be successful in addressing otherwise intractable diseases and disorders. Over the next 18 months, this pipeline will have a number of significant readouts, and Eiry will go into these in more detail. At this time, I'd like to turn it over to Matt Abernethy.
Thanks, Kevin, and good morning. Since we pre-announced Q4 INGREZZA sales in early January, I'm going to focus my remarks on our 2022 sales and operating expense guidance. 2022 INGREZZA net sales guidance range is $1.25 billion-$1.35 billion, reflecting our latest thinking considering current trends, environmental factors, and our ongoing business initiatives. This is our first time providing annual sales guidance, and we aim to be as transparent as possible about our assumptions. Our assumptions fall into a few primary categories. The first relates to the external environment. COVID's impact on our business is clear. As COVID cases go up, psychiatric patient visits decline with a higher mix of visits going virtual. This combination directly impacts TD diagnosis and ultimately treatment rates.
The good news is that COVID cases are starting to decline, and we expect psych patient visits to increase throughout 2022, leading to a tailwind for INGREZZA in the second half of the year. Admittedly, it is difficult to predict how the impact of COVID will transpire. The second bucket relates to the benefits we expect from our commercial initiative, specifically our direct-to-consumer advertising campaign and sales force expansion, which is on track to be fully in place next month. We anticipate these initiatives will help accelerate diagnosis and treatment rates. On the payer front, access and net revenue per script are expected to remain consistent with 2021. We assume sales seasonality to be very similar to previous years, with Q1 having the most disruption due to the typical growth to net dynamics and the impact on refill rates due to the reauthorization process.
Now to our operating expense investment. Our 2022 GAAP operating expense guidance range is $1.1 billion-$1.15 billion, with investments focused on accelerating INGREZZA growth and advancing our many R&D programs. Our SG&A investments primarily reflect a $100 million increased spend in the sales force expansion and DTC. In addition, our R&D operating expense reflects advancing 12 mid- to late-stage programs in the clinic and also our recently completed in-licensing of an M4 agonist from Sosei Heptares. Our strong balance sheet, durable cash flow, and P&L profile allow us the flexibility to execute our capital allocation priority, investing in growing INGREZZA and advancing our important clinical programs to discover new, innovative therapies for people who deserve better. Now, over to Eric Benevich.
Thank you, Matt. Before I begin, I want to acknowledge our commercial and medical affairs teams. Throughout last year's challenging external environment, your unwavering dedication and commitment made a meaningful difference to many thousands of patients who otherwise would have continued to needlessly suffer from TD. INGREZZA's Q4 performance marked our third straight quarter of sequential growth during the pandemic era. Total prescriptions grew 8% sequentially and grew 32% versus the prior year. While it was good to see that kind of growth, as Kevin said, we strive to improve while managing through several issues, both in and out of our control. First, in Q4, changes to our distribution network were implemented. As anticipated, we saw modest shifts in scripts going from some of our specialty pharmacies to CVS and Walgreens retail outlets.
Recall, we expanded the distribution network in order to provide even greater ease of access to INGREZZA for patients and their healthcare providers. The transferring of prescriptions back and forth across our pharmacy network likely led to delayed prescription fills for some of those patients. Second, while difficult to ascribe how much of an impact first the Delta variant and then the Omicron variant had on TRX and NRX volume, we know the rise in cases significantly impacted our customers and interfered with patient care. Staff shortages and turnover at offices, clinics, and pharmacies likely contributed to an uptick in cycle time from prescription referral to prescription fill. Our persistence and compliance remained strong, consistent with prior quarters, helping us to maintain momentum going into the new year.
All in all, despite a worsening external environment brought on by the surging Omicron variant, particularly in the second half of Q4, we estimate TD diagnosis rates have now grown to around 25% of the TD population. With over 56,000 total prescriptions in Q4, a record level, INGREZZA continues to be the number one most prescribed treatment for tardive dyskinesia. Shifting to this year, we've provided the 2022 guidance range for INGREZZA and are now over a month into the year. What have we seen? The external environment is slowly improving, but no one is out of the woods yet. We've been encouraged with early signals and are cautiously optimistic that access to our key customers will trend positively as the external environment continues to improve. Internally, the onboarding effort of our sales force expansion is well underway.
The newly expanded 350+ strong sales force with dedicated teams across psychiatry, neurology, and long-term care will be fully deployed at the end of this quarter. In addition, we plan to run our ongoing TD Spotlight branded direct-to-consumer campaign throughout 2022. With improving market fundamentals and strong conviction in the commercial investments we are making for INGREZZA, the stage is set for accelerated growth in 2022 and for years to come. On ONGENTYS, while we continue to receive positive feedback from patients and neurologists, you should not expect a great acceleration in 2022 sales as ONGENTYS remains a non-formulary medication on most Medicare Part D plans. I should reiterate, ONGENTYS opens doors to neurology practices and gives our team more time with prescribers to highlight both ONGENTYS and INGREZZA.
Furthermore, we strongly believe that having a dedicated neurology team will benefit both products, especially with movement disorder specialists. With that, I'll turn the call over now to my colleague, Dr. Eiry Roberts, for an update on our pipeline.
Thank you, Eric, and good morning to everyone on the call. Over the last 12 months, we have made tremendous progress across all of research and development. We have advanced a novel and diverse pipeline of 12 mid- to late-stage clinical programs, each of which has the potential to be a first-in-class or best-in-class medicine. 2021 was in many ways a foundational year for Neurocrine R&D, with the stage now set for a year of unprecedented investment and execution to advance this pipeline. With the goal of submitting the Supplemental New Drug Application for valbenazine in Huntington's disease, initiating a phase II study in schizophrenia for NBI-1117568, the selective M4 orthosteric agonist recently acquired through our partnership with Takeda, and delivering a significant number of registrational and phase II data readouts over the next 24 months.
I'll spend the balance of my prepared remarks on brief status updates across these pipeline programs, beginning with valbenazine. In the second half of 2022, we plan to submit the sNDA to the FDA for the treatment of chorea associated with Huntington's disease. We were extremely pleased with the safety and efficacy results achieved in the KINECT-HD study. These data, together with six-month follow-up data from the KINECT-HD2 study, form the basis of our sNDA submission. Continuing with valbenazine, we recently initiated registration studies for the adjunctive treatment of schizophrenia and for dyskinetic cerebral palsy. We anticipate top-line data from these recently initiated studies in 2023. Moving to NBI-104, the selective T-type calcium channel antagonist in license from Idorsia.
We expect top-line data from two phase II studies for NBI-827104 this year. Somewhere around mid-year, we anticipate delivering proof of concept data in essential tremor. Following that, in the second half of the year, we anticipate completing our ongoing trial in epilepsy with continuous spike in wave during sleep. Based on the review of these data generated for NBI-827104, we will determine potential next steps for each of these indications. Turning now to NBI-921352, the selective NaV1.6 sodium channel inhibitor in license from Xenon. We have two phase II studies ongoing. The first in SCN8A, a rare pediatric epileptic encephalopathy, and the second in focal onset seizure in adults, from which we anticipate delivering top line data in 2023. Shifting gears now to the psychiatry portfolio of assets in license from Takeda Pharmaceuticals.
We have initiated phase II studies with all three lead programs, including luvadaxistat in cognitive impairment associated with schizophrenia, NBI-1065845 for inadequate response in major depressive disorder, and NBI-1065846 in anhedonia in major depressive disorder. Top-line data for NBI-1065845 and NBI-1065846 are anticipated in 2023. Staying within psychiatry and the lead muscarinic agonist in our collaboration with Sosei Heptares, NBI-1117568. This molecule is a highly selective allosteric agonist of M4 with the potential to be a best in class molecule against this target. We plan to initiate a phase II study of NBI-1117568 in North America for the treatment of schizophrenia this year. Finally, with respect to our neuroendocrinology portfolio, we remain on track to read out top-line data for the registrational studies of crinecerfont in both the adult and pediatric patient populations in 2023.
To close, we have built a strong R&D pipeline that has the potential to dramatically change lives for patients. Our focus now is on the effective delivery of this pipeline while also continuing to add innovative candidates via internal drug discovery and strategic business development, where we believe those efforts can serve the needs of our patients. I want to thank everyone at Neurocrine, our external partners, clinicians and patients who support us in our ultimate mission to bring medicines to patients who need better treatment options. I'll now hand the call back to Kevin. Thank you, Kevin.
Thank you, Eiry. That concludes our prepared remarks, and we are ready to open it up for questions.
At this time if you wish to ask a question please press the star and one on your touchtone phone. You may withdraw your question at any time by pressing pound key. We'll move first to Phil Nadeau with Cowen. Please go ahead.
Good morning. Thanks for taking our question. A question on essential tremor. Can you give us some sense of what would be proof of concept for you and what would warrant further development? Thank you.
Thanks very much, Phil. Yes, certainly. As you know, we have a proof of concept study ongoing, which is a 28 patient crossover study. We have several endpoints in that study. The primary endpoint actually looks at tremor amplitude and is measured by accelerometer. We also have the TETRAS measures in that patient population of moderate to severely impacted tremor patients. I think we'll be looking at the data in totality. Obviously, we'll be interested in seeing a statistically significant difference in the crossover design. Beyond that, we'll be looking at the data in totality, including a CGI assessment as well. With those data in hand, sometime around the middle of this year, we'll be considering our next steps if we're successful in that regard.
Perfect. Thank you.
We'll move next to Paul Matteis with Stifel. Please go ahead.
Great. Thanks so much for taking the question. On your INGREZZA guidance, I was wondering if you could kind of frame for us at the low midpoint and high end how demand growth in those different scenarios compares to what you were seeing before the COVID pandemic. Thanks so much.
Yeah. Thanks, Paul. As you look back before the pandemic, you know, we had a nice growth trajectory of, you know, call it $200 million a year. When you think about a 20% midpoint growth, you know, it pretty much puts you back on track with how we were growing prior to the pandemic. I think the two biggest items that I'd point to as it relates to the guidance range is, one, the environment. As the environment cooperates, patients going back into the office and access to customers is greater, you would expect us to fall higher on the range. If the pandemic continues to have significant pressure, you know, that would of course put you closer to the bottom of the range and impacting overall demand.
The second piece is then on the business initiative side. We're well underway on our sales force expansion that we expect to complete by the end of this quarter, which will benefit us in the second half of the year. We're optimistic with what we've been seeing recently and with the case counts going down and
What we're seeing internally. We're looking forward to a nice year, another nice growth year for INGREZZA.
Thank you.
We'll move next to Tazeen Ahmad from Bank of America. Please go ahead.
Hi, good morning, and thank you for taking my questions. Just a point of clarification. Is your guidance with or without impact from inventory stocking for INGREZZA? How much of your upper end of guidance is based on the potential for psychiatrists to, you know, continue to be reimbursed for their televisits at the same level as in-person, let's say, for the rest of the year? If there is a place for upside, would it be that particular variable, or is there something else? Thanks.
Hey, good morning, Tazeen. I'll take the second part of your question first, and that is that within our full range of guidance, we anticipate that there will be no changes to telehealth throughout the entire year. Matt, you wanna talk about?
Yeah. That's on the reimbursement front. We, of course, would expect, you know, as the clinics open up from the COVID shutdowns, that there would be a higher mix of patient visits in person. From a reimbursement perspective, our current sense is policy is likely not gonna be changed this year. On the inventory front, you know, my strong desire is to get rid of talking about the inventory fluctuations quarter to quarter. You know, usually within a year, it nets out. You know, I would say that our guide really reflects underlying demand for INGREZZA sales. We'll of course be continuing to update our guide at the end of each quarter, which would, you know, take into account any learnings or thinking around inventory.
The only other thing I would add to that is that, you know, reiterate what Matt said, over a year's period of time, any inventory fluctuations net out. As we've seen now over multiple quarters, the amount of inventory that's carried on INGREZZA is actually very small compared to the sales.
Okay. Thank you.
We'll take our next question from Brian Abrahams with RBC Capital Markets. Please go ahead.
Hey, good morning, guys. Thanks for taking my question. Congrats on all the progress in an otherwise challenging year. A question on commercial investment. It sounds like your investments are gonna start to pull through from the expanded sales force as the year progresses. I guess I'm curious in medium term, as we exit the year, what's the right way to think about the returns that you're hoping to get there? How do the incremental dollars put towards these additional segments you're gonna pursue, like long-term care, translate to revenue compared to the current areas you're in? I'm also curious how much intrinsic growth is left in your current target areas as well beyond just the reopening benefits. Thanks.
Good morning. So, you know, I think the way to think about it is that, you know, with the expansion and the reorganization of our field sales team, essentially, we're going deeper into existing segments. You know, for example, the build-out of a dedicated neurology team allows us to reach more neurologists and to see them more frequently than we've been able to do thus far, in the commercial realm. With the build-out of an LTC team, essentially, it's going into a care segment that, you know, we were always interested in from the get-go, but didn't really have the wherewithal to really, you know, put a dedicated focus against. You know, one way to think about LTC is it's essentially adjacent to the psychiatry space.
You know, there are providers that practice in both psychiatry clinics as well as going into residential care facilities. You know, essentially this is a logical next step for us. You know, this is obviously an expansion of our field sales team, you know, that's allowing us to tackle and reach more providers. At the same time, it's allowing us to go deeper within the existing base of providers. I think it's really a function of where we are in the commercial ramp for INGREZZA, about five years now. There's certainly more prescribers than what we had in the early phase of the launch, and there's certainly more high-value potential prescribers that we've identified.
The other thing I would note is, this allows us to put a little bit more focus on, you know, what's been an emerging high priority segment of prescribers, which is advanced practice providers, meaning nurse practitioners and physician assistants that go across all of those sites of care. You know, the way to think about it is, you know, we're going deeper into the existing segments and, you know, we're tapping into a new opportunity in long-term care. We'll be providing, you know, more insight as we move through the year and get into 2023.
Thanks so much.
We'll move next to Anupam Rama with J.P. Morgan. Please go ahead.
Hey, guys. Thanks so much for taking the question. I was wondering if we could dig in a little bit into 1Q dynamics specifically. I think at the conference you talked about 5,300 per script, which is in line with 4Q. Is there any other color you'd wanna provide?
On 1Q specifically, I think previously you've, you know, given a little bit more color and guidance on 1Q, just kind of worried about numbers going all over the place.
Yeah. Thanks, Anupam. As you said, Q1 always has some dynamics. The growth in that discount, you have patients going through a reauthorization process that ultimately delays their first fill and results in a lower refill rate per patient during the first quarter. Yeah, it is always a bit noisy from a seasonality perspective. Typically, you see Q4 to Q1 a bit of a pullback in Q1 because of the net revenue per script going down and then also the slight impact on the refill rate per patient. Then you see a nice recovery in Q2 and throughout the year. Since we're providing an annual guide, you know, we're gonna get out of some of the specificity that we've historically provided within a quarter.
Of course, as we exit Q1, we'll be, you know, taking into account our performance in Q1, what we're seeing and we'll modify our guide accordingly. You know, as we've historically said, Q1 is Q1. You know, the goal in Q1 is to ensure that patients stay on medication, and that ultimately sets us up for a strong rest of the year.
Okay.
Yeah, Anupam, I'll chime in here and just add that, you know, obviously, with the surge in the Omicron variant in late Q4 and early Q1, you know, that presented additional challenges for us to deal with. You know, certainly that affected our customers with a lot of clinics having staff shortages, providers, you know, falling ill and so on. It affected a good chunk of our sales team as well with a number of our team members needing to quarantine. The good news is that things appear to be getting better. You know, we're cautiously optimistic, you know, that we're seeing an improving external environment. And, you know, certainly that benefits our business.
The only thing I would add to that, Anupam, is that the commercial team put a lot of pre-positioned effort in place, starting actually in Q4 in order to help with what we said was looking like it was going to be a very challenging Q1. I think those efforts are going to come to fruition. Like Eric said, I think the best way to put it is we're cautiously optimistic. An improving environment can only help.
Thanks so much for taking our question.
We'll move next to Carter Gould with Barclays. Please go ahead.
Great. Good morning. Taking the questions. Maybe one for Eiry. Just as we think about coming back to 104, think about read-through from the essential tremor study to the epilepsy data later in the year, are there specific data that would come out of the ET study that might have some positive read-through or de-risk the ET study? And then you guys have always talked about more broadly the potential for additional indications. Are there specific signals from that ET study that might be insightful as you think about future indications? Thank you.
Yeah. Thanks very much. We know that the calcium channels, the T-type calcium channels that are impacted by 104 patients are represented within that tremor network and that tremor network also links very directly to epilepsy from a mechanistic perspective. Actually, in terms of information that we're able to generate from the ET study, I think it is helpful in understanding the pharmacodynamic effect of medication and some of the dose-related issues in using 104 patients. In addition, obviously, we will get initial tolerability information in a patient population from the ET study that is in some way relevant to our CSWS study, but obviously it's a very different population.
If you think about CSWS, it's a, you know, rare pediatric epileptic encephalopathy, and the patients in that study will be aged two upwards. It is different from the ET population, which is a significantly older adult population. I think in general, we'll be looking in at the totality of both the efficacy data from the ET program and the initial safety and tolerability. We won't have to wait very long to understand the actual signal in the CSWS space anyway, since we will be reading out the data from that 24-patient phase II study in CSWS in the latter part of the year as well.
And...
Clearly, we don't.
Move next to Neena Bitritto-Garg with Citi. Please go ahead.
Hey, guys. Thanks for taking my question. Just going back to INGREZZA's guidance. I'm just wondering if you can give us a sense of how you're thinking about the proportion of in-person patient visits versus telehealth at the low midpoint and high end of the range, and whether the CMS decision that you've talked about previously on having patients seeing psychiatrists having their first visit in person and then every year after that, whether that'll be a 2022 or more likely 2023 event. Thanks.
Yeah. The way that we're thinking about telehealth is that, you know, certainly it impacts different portions of our business differently. You know, ultimately it's utilized quite a bit and continues to be utilized at a high rate within psychiatry. You know, the latest data that we've seen is that it's still about half of all patient visits are virtual in psychiatry, whereas in neurology it's less than 10%. Frankly, it's returned to pretty close to what it was pre-COVID. Telehealth is utilized to a much lesser degree in LTC, for example. You know, our expectation is that, you know, even after the public health emergency is lifted, that there's gonna be significant utilization of telehealth in psychiatry.
You know, we've baked that into our planning and our assumptions. The second part of your question was really around some of the guardrails that are being proposed, such as having a first visit requirement be in person and at least once a year in-person visits for subsequent telehealth visits to be reimbursed. You know, we're certainly supportive of making sure that patients have the opportunity to see their providers in person. We recognize the value that telehealth provides in certain circumstances, but wanna make sure that there are guardrails in place going forward. We'll see how things shake out. You know, for the duration of 2022, our expectation is status quo.
Got it. Thank you.
We'll move next to Brian Skorney with Baird. Please go ahead.
Hi, this is Lou [Kerner] for Brian. Thanks for taking our question. Could you just discuss a bit your expectations for how an approval in chorea and Huntington's disease could impact INGREZZA's growth rate? Do you expect the sequencing of uptake in that indication to be more front-loaded or occur at a gradual pace? Thanks.
You know, first of all, wanna emphasize that we need to finish the open label study and get the sNDA submitted. Assuming that we're successful and we get a label expansion in 2023, you know, we're very excited about the opportunity to bring INGREZZA to a new patient population, those patients with Huntington's that are experiencing chorea. The way to think about it is that it's all incremental to our business. You know, we're not getting any, essentially any, of those Huntington patients now. The health plans, you know, because this is a specialty product and there's a prior authorization process, you know, they're approving INGREZZA for TD, but essentially not for other uses.
You know, we're looking forward to the opportunity to expand the label. The second part of your question was really around, you know, would this be front-loaded or, you know, would this be a more gradual ramp? You know, we can provide a little bit more color, when we get further down the road and we have a sense of what the labeling is gonna look like. Ultimately, I will say that, you know, we view the patient opportunity within Huntington's chorea as a group of patients that have unmet medical needs. Only about 20% of the patients with Huntington's chorea are currently treated with a VMAT2 inhibitor. Certainly there's an opportunity for a differentiated product like INGREZZA to come in, and, you know, to potentially benefit many thousands more patients with Huntington's chorea.
Stay tuned for more as we make progress in pursuing that label expansion.
The only thing I would add to that is that, obviously having a dedicated neurology sales force now with INGREZZA, will help with that uptake. They can at the time of approval start focusing their efforts on treating these TD patients.
HD.
HD patients. Thank you.
We'll move next to Myles Minter with William Blair. Please go ahead.
Hey, just back on the channel inventory for INGREZZA. What's the new sort of steady state that you'd be expecting moving forward with your growth projections? I think I've heard sort of around the $10 million number be thrown around previously, but that seems to have been creeping over time. Just wondering what the new set point is there for inventory. Thanks.
Hi. Myles, could you clarify, you're asking about what typical inventory stocking levels would be for-
Yeah. Your projections moving forward with your anticipated growth rates, is that going to change over time? Thanks.
Yeah, no. I think from a days on hand perspective, which would take into account any of our volume growth. You would typically in our channel see two to three weeks of inventory on hand. As you mentioned, it had grown from call it two weeks to about three weeks and we're somewhere in between there right now. You know, our goal is, you know, we don't influence channel stocking. You know, we really are somewhat hands-off with our distributors of product for a variety of reasons. I think a two to three -week days on hand is what you should expect. It's become, as Kevin said earlier, a less meaningful number quarter to quarter.
You know, of course, if there's some major fluctuation, we'll be transparent as always. You know, as you think about annual guide, you know, it should net out for the most part throughout the year from a days on hand perspective.
Cool. Thanks.
We'll move next to Josh Schimmer with Evercore. Please go ahead.
Great. Thanks for taking the questions. Are you planning additional biz dev activities this year, and what is your appetite for larger deals? Matt, you just indicated you're hands-off with distributors with respect to inventory for a variety of reasons. Can you share what some of those reasons are? Thanks.
Yeah. One of the reasons is just for purposes of causing undue volatility in our sales projections. Or sorry, our sales performance. I think there are some practices that really incentivize stocking, whether giving incremental discounts or whatnot to hit a target number. We just don't wanna be in a place where we're you know overly influencing you know our sales results. We try to talk more towards underlying demand, which is why we've always provided TRx, and I would just say that's the one of the primary reasons. You know, discourage speculative buying.
As far as business development, I'll turn that over to Kyle Gano, our Chief of Business Development.
Hi, Josh. Good morning. On the BD side of things, just to recap kind of our order of priorities here at Neurocrine. Obviously, we are investing heavily in INGREZZA and valbenazine and broad VMAT2 franchise. Second to that is the pipeline and business development. We are still looking and active out there looking to bring things into the pipeline if it makes sense. I think from our mid to long-term objectives, we continuously assess all types of opportunities ranging from, you know, traditional licensing deals and collaborations to things that are more strategic. If we can find things that make sense and work for us, we'll look at bringing those in.
I think that you've seen that done over the past few years looking at the pipeline currently with the assets that we have in mid- to late-stage development.
Yep. We do not constrain ourselves.
Thank you.
We'll take our next question from David Amsellem with Piper Sandler. Please go ahead.
Thanks. Regarding the long-term care opportunity, you talked about this being a newer opportunity, and I may have missed this. Can you just talk about what portion of the TD market is long-term care based and how we should think about, you know, underlying not just volume potential here, but you know, even sales potential to the extent that you can quantify that? Thank you.
Yeah. We haven't given any guidance specifically around, you know, what the sales expectations are for long-term care. The way to think about it is that the way that we think about long-term care is it really represents a few different types of residential care facilities that treat residents or patients with the antipsychotics and dopamine blocking drugs that cause TD. That would include, you know, geriatric nursing homes. That might include facilities that treat patients with intellectual or developmental disorders. That would include residential care facilities or assisted living facilities for those with behavioral health conditions.
Ultimately, you know, if you look at that roll-up, you know, that represents several million people across the U.S. that are in those facilities. At any given time, you could expect somewhere between 15%-30% of those individuals to be on antipsychotics and, you know, obviously a subset of them having TD. You know, where it shakes out in terms of the size of the addressable patient population with TD in LTC versus the overall TD prevalent population remains to be seen. You know, we certainly feel like and believe based on the early experience that we have in that space, that it's a significant incremental opportunity and it's a segment that we are interested in going into early in the launch.
Like I said earlier, we didn't have the resources and the capacity to focus on it. I think you'll be getting a lot more color and perspective as we make progress. I will say that we're just getting our team hired and trained. They'll be deployed as we exit Q1. Really for the next couple of quarters, we'll be doing a lot to really better characterize that opportunity and set ourselves up for success as we exit 2022 and get into 2023.
Thank you.
Take our next question from Jay Olson with Oppenheimer. Please go ahead.
Oh, hey, congrats on all the progress, and thank you for this update. Since the total addressable TD market in the U.S. is now 600,000 patients, could you comment on how fast that population is growing? With the 25% of patients diagnosed, can you talk about your goal for the ultimate level of TD diagnosis as you continue your education and awareness initiatives? Thank you.
Yeah. So, you know, our estimate is around 600,000 people in the U.S. with tardive dyskinesia. That's you know, based on a meta-analysis of the literature as well as looking at claims data, et cetera. We periodically reassess this. This is a growing population, and it's really a function of the rapid growth of the use of antipsychotics, especially in non-psychotic conditions. If you think about it, antipsychotics are widely used to treat, they're adjunctive treatments in schizophrenia. They're used in bipolar. They're used to treat anxiety. There's a number of off-label uses of antipsychotics. You know, we have seen that over time as the use of antipsychotics expands, unfortunately, so does the population with TD.
You know, we'll continue to reassess the size of the population and, importantly, the progress that we're making in helping those patients get diagnosed. At the beginning of our launch, back in 2017, we estimated a low single-digit % of those individuals had yet to be given a diagnosis. Today, we estimate about a quarter of them have been diagnosed. Importantly, only about half of patients that get a diagnosis today are even offered a VMAT2 inhibitor. There's a long way to go in terms of making progress with bridging the gap between the diagnosed population and the prevalent population, as well as making sure that, you know, everyone that gets a diagnosis is offered effective treatment.
The last thing I'll say here is, you know, you asked about what's the goal. Well, the goal would be 100%, but realistically, we know that not everyone that, you know, gets a disease is gonna get diagnosed. We certainly can get a lot higher in the coming years in terms of making sure that TD is routinely screened and diagnosed regardless of care setting. We're leveraging the APA guidelines to really reinforce that that is the expectation and that is the standard of care for especially these patients with psychiatric conditions being treated with antipsychotic medicine.
Great. Thank you very much.
We'll move next to Vamil Divan with Mizuho Securities. Please go ahead.
Great. Thanks for taking my question. Maybe one just quick follow-up on the last question. I think you said it's a growing population. I don't know if maybe you could quantify that a little bit for us, just kinda how you see the overall TD market growth. My question is actually on opicapone. I know there's a lot of synergies for that product and having your reps selling that along with INGREZZA, but I'm just curious if you can give us a little more better sense when you think you may be able to get better commercial access and when you think it actually might on its own sort of be delivering more sales. I mean, I'm looking at consensus numbers. It does look like people are assuming $200 million in sales for that product alone, you know, out several years from now.
I'm just trying to get a sense if you think that's realistic or should we think of that as a smaller opportunity that's more the synergies again, what we should see the value? Thank you.
Yeah. Let me address your clarifying question about the growing population in TD, and then I'll tackle your question about ONGENTYS. The reason I said that it's a growing population is that the use of antipsychotics continues to expand. There's been 70 million prescriptions of antipsychotics over the past year. You know, that continues to expand as the uses for antipsychotics expand, and especially in this pandemic environment, where you know, more and more people are being treated for mental health disorders.
Even though second-generation antipsychotics tend to have a lower incidence of TD, the greatly expanded use of antipsychotics is what's leading to a growing TD patient population over time. That, once again, is something that we, you know, continue to monitor and we update our estimates. You know, you might recall that five years ago, our estimate was around 500,000 people with TD, and today we estimate it's closer to 600,000 people.
If you correlate TD prevalence with you know how quickly the antipsychotic use is going, you have the antipsychotic market is growing 3%-5%. You know it's growing faster than the normal general population, but it's hard to give you an exact number on you know what the exact percentage of patients that have TD, but it is a growing you know segment.
The other part of your question was related to ONGENTYS and coverage. I made a point in my prepared remarks that we shouldn't expect a great acceleration with the sales of ONGENTYS in 2022, primarily because for the majority of Medicare Part D plans, it remains a non-formulary product. I will clarify that that is a dynamic that's seen really across all branded anti-Parkinson's medicines, especially within the Medicare plans that tend to treat branded medicines as non-formulary products. You know, we'll continue to help our customers to get access through the formulary exceptions process. The other thing I'll say is that we do believe that having a dedicated neurology sales team will benefit ONGENTYS.
As I mentioned earlier, allows us to reach more neurologists and to see our highest value customers more frequently. That would benefit both ONGENTYS and, of course, INGREZZA in tardive dyskinesia.
Okay. Thank you.
We'll move next to Marc Goodman with SVB Leerink. Please go ahead.
Thanks. Eiry, can you talk about why you like the selective M4 agonist? You know, just in the context we have different companies pursuing, you know, M1 or M1M4. Just curious, you know, why you like this one. Matt, maybe could you just clarify the comments in the press release just about taxes and just so we understand what will be the, you know, the tax on the income statement versus the actual cash taxes and when these NOLs are gonna run off and just how we should think about tax rate going forward. Thank you.
Yeah, certainly. We're very excited about the opportunity that we have through our in-licensing from Sosei Heptares for the selective M4 agonist. You're correct, there are two molecules in this space that have at least in part validated clinically the M4 mechanism in the treatment of psychosis and schizophrenia. The reason we like the molecule that we were able to acquire here is that it is a selective direct agonist of M4, and that gives us a benefit in several ways. First of all, because it doesn't, it's not an allosteric modulator, which is what one of the competitor molecules in the space mechanism is. It doesn't require the substrate acetylcholine to be effective in the brain in treating patients.
Certainly in many indications that we might be interested in pursuing with our muscarinic portfolio, there is a deficit of acetylcholine in those patient populations. The likelihood of having an effective medication that requires the presence of that substrate is in question, I would say. With the direct agonist approach, we believe we have the potential to be a best-in-class opportunity against this target. Then we will be starting a clinical study in phase II in schizophrenia to understand that better later this year. Take that.
Yeah. On the tax front, you know, it's always noisy when you have low book income, and your permanent items will drive different volatility in your effective tax rate. I think the midterm guide that I've previously provided is around 24%. That would be the effective tax rate when everything normalizes. On a cash tax basis, our expectation is we'll burn through the remainder of the NOLs this year. A big portion of that is just a tax legislation change that causes you to have to capitalize your R&D. You know, that then gets taken as a deduction over time now. Hopefully, that legislation does change. I would just say that that's gonna cause us to burn through the remainder of our NOL this year.
That then puts us in a position where we're paying federal cash tax here later this year. It would be somewhat minimal. I would say for this year, I'd more guide you to a 4%-5% of income cash tax for state and a little bit on the federal side. Next year, we'll more than likely be a full cash taxpayer that would be somewhat equivalent to our effective tax rate.
Thanks.
We'll move next to Charles Duncan with Cantor Fitzgerald. Please go ahead.
Yeah. Good morning, Kevin and team. Congrats on effectively weathering the challenges of 2021. Thanks for the guide. I had two quick questions, one for Eric, one for Eiry. The Eric question is related to the new salesforce deployment you said in the field this month, but I guess, or by the end of the quarter. But I guess I'm wondering if you could give us a sense of the key metrics beyond revenue that you would look to gauge that investment. And then for Eiry, I'm wondering about 104, you know, essential tremor versus CSWS, very different patient populations. And I guess I'm wondering if you could provide us color on the endpoints that you're looking at for those proof of concept studies and which ones have perhaps more predictive value for clinical success over time.
Yeah. Good morning, Chaz. With regard to the new sales team members, you know, we are gonna be looking at, you know, what I'll call leading indicators as we get out of the gate and certainly looking to learn as we go and make adjustments, you know, going into the year. The kind of leading indicators that I'm talking about really are related to how quickly the new team members can become effective in their roles. You know, everyone that we're hiring has considerable experience either in psychiatry or neurology or long-term care. You know, average of about 15 years of sales experience. However, they haven't sold a TD medication before. They haven't sold INGREZZA.
There is a little bit of a learning curve. Some of the things that we look at include how able they are to get in front of their key customers, the ability to leverage resources like peer-to-peer programs, sampling, lunchtime in-service programs, things like that. Ultimately, you know, we will be tracking effectiveness in terms of generating new patient starts as a key component. There's been a lot of work that's been happening here as we've been hiring and training our new team members to help them get off to a new start, you know, warm handoffs of existing customer relationships, doing ride-alongs in the field, and so on.
You know, we're really excited about having an expanded field sales team, and we're very optimistic about the impact it's gonna have, especially in the second half of the year. Stay tuned for more, as we get further into it.
Okay. On 104, the first thing I would say is that these are both phase II trials, one in ET and one in CSWS. They're both adequately powered to be able to detect a signal against the primary endpoint for each trial. The primary endpoint in each of the trials, whether it's the tremor amplitude in the ET trial or the EEG endpoint in the CSWS, although they are not the clinical endpoint themselves, they are very helpful and informative with respect to the clinical impact that the medication could likely have. Also for both the ET trial and the CSWS trial, we do have the clinical endpoints themselves built into the trial, but obviously these are relatively short-term treatment trials.
While we'll get an indication from these initial phase II trials as to the clinical impact of the medication beyond the primary endpoint, I think it would obviously require us to go into larger scale registration trials to validate that.
Very good. Helpful. Thank you.
We'll move next to Chris Shibutani with Goldman Sachs. Please go ahead.
Great. Thank you. Two questions. Eiry, if I could press you a little bit further on 104 there. Maybe talk about what your expectations are for the placebo response in the essential tremor study. Others have observed very large placebo effects. Can you quantify what you think would be the bar to hit in terms of treatment response in terms of either perhaps percentage of patients responding or the percent decrease in tremor amplitude? Then a second question for Matt. Appreciate the first time annual guidance. If I think back to 2021, granted an unusual period, you were helping us with fairly specific guidance on the revenue from a quarterly basis.
As you have not provided commentary specifically beyond the general seasonality that this experienced group of analysts seems to have, should we interpret this to mean that you're comfortable with where consensus currently is in terms of thinking about INGREZZA revenues as we progress, in particular for the first quarter? Thank you.
Okay. Briefly for the 104 question. I mean, obviously there are two trials. In CSWS, that is an EEG endpoint in a very severely impacted patient population, where we would anticipate the placebo response from the EEG to be low. I think there haven't been studies done to any great extent in that population. For treatments that have looked at that EEG endpoint, such as steroid treatment, intermittent steroid treatment, I think the placebo response we anticipate there is low. In essential tremor, it's very variable, as you said. We have designed this study in order to try to mitigate against placebo response. It's a single site study. It's a crossover study, which allows us the power to look within a subject. I think we have done everything within our power to mitigate that response.
Obviously mid-year as we get the data, we'll be able to take a look at that in the context of what we see.
Yeah. As I said earlier, Chris, on the annual guide, you know, we feel comfortable with the ranges that we've provided. I think, when you look back over time, you can see this normal seasonality of sales being in a low 20% type range for Q1, which really reflects somewhat of a pullback from Q4 to Q1. Then, like I said earlier, recovery into Q2. I would say the biggest dynamic outside of the environment really comes down to how effective we are at keeping patients on treatment and how quickly they get through that reauthorization process. As Kevin and Eric mentioned earlier, we were working very hard in Q4 to be on top of that and to improve in that regard.
I know there'd be a lot of desire for me to be more specific than what I am on Q1. But I think the dynamics are fairly clear. Hard to predict, I know. On the gross to net front, just a clarification, and I think Anupam had raised this. In Q1, you know, we would expect our net revenue per script to be around, call it $5,300, and then it will improve throughout the year as the gross to net discount wanes coming out of the donut hole. On average, we would expect our net revenue per script to be around $5,400, which is similar to 2021.
Thanks.
We'll move next to Evan Seigerman with BMO Capital Markets. Please go ahead.
Hi, guys. Thank you so much for taking my question. This is not the first time you've made the discrete investment in the commercial effort of the organization for INGREZZA. Can you remind us what the ROI was on the prior investment? And what do you hope to drive from this $100 million incremental investment? Are there any specific metrics you're looking at here? Thank you.
Yes. As you've noted, it's not the first investment. Frankly, it may not be the last, you know, as we move forward over the course of what's a very long life cycle for this product. As a reminder, we launched in 2017 with an initial sales force of about 140 territories. Quickly learned that we needed to expand the field sales force because of the rapid uptake that we were seeing, and frankly, that exceeded our early expectations. The team that we've had in place for the last several years has been a little over 200 territories covering both neurology and psychiatry.
As we, you know, had disclosed previously, in looking at where we were with the development of the market, the fact that we've made progress in raising the diagnosis rate, the fact that there are a much larger number of prescribers of INGREZZA now than there were early in the launch, and frankly, a large number of high potential prescribers, we decided to pull the trigger on reorganizing and expanding our field sales team. You know, we think that it's the right thing to do in terms of being able to accelerate growth for the brand, and it's the right thing to do in terms of being able to help people get diagnosed and effectively treated sooner.
Our aspiration is to not allow any patient to suffer needlessly with TD. Going forward, you know, we will be able to provide more color in terms of how things are going with this expansion. Certainly, you know, the psychiatry segment has and will remain the largest portion of our prescription volume. We feel like there's a significant opportunity to improve in neurology. It's only about 20% of our business comes from neurology, and we think that we can grow that with additional resource. As I mentioned earlier, LTC is essentially an untapped opportunity.
I don't know that we'll get down to providing ROI assessments, but certainly we'll provide some additional insight in terms of how our business is growing and where the sources of business are coming from, as we progress in this next phase of growth.
Great. Thank you.
We'll take our last question from Jeff Hung with Morgan Stanley. Please go ahead.
Thanks for taking the question and fitting me in. For Eiry, if I could ask a little bit more on NBI-827104. I know you said that you would look at the totality of the data in essential tremors, and you need to look beyond the primary endpoint, but what kind of change in amplitude at peak frequency of the postural tremor would be clinically meaningful in this patient population?
Yeah, I think, I'm not in a position to be able to answer that. I don't think there's been a direct correlation or enough work done. If you think about this field, there's nothing been approved for the treatment since 1970. Really now the only effective treatment is, you know, off-label medications that are used. You know, we're doing this study looking at what we believe is a very well controlled and appropriate endpoint to assess the tremor frequency. In addition to that, we'll obviously be looking at the TETRAS ratings, which are the more clinically relevant ratings in that study that include activities of daily living. You know, for this type of proof of concept study, I'm really interested in the totality of the data.
Not to forget the initial tolerability and safety that clearly is gonna be critical for a treatment that can be successful in the long run in TD.
Since you mentioned the TETRAS, are there specific changes in TETRAS or CGI-C that would be clinically meaningful?
I mean, this is a 28-patient crossover study with 2 weeks dosing for each element of the crossover. I would think we'll be very pleased if we see anything in that regard. Obviously that sets us up for further discussions and further interactions for registration program.
Thank you.
I would now like to turn the call back to Kevin Gorman for any closing remarks.
Thank you very much, and thank you everyone for your attention this morning. As you've seen and heard, today, we have quite a busy year ahead of us. What I'm looking forward to this year is returning to getting INGREZZA to return to pre-pandemic growth levels. I think that's very important, and I'm confident that we'll be able to do that. I also look at a very robust pipeline with 12 phase II and phase III programs, and they're gonna yield multiple milestones both this year and next year. When we look specifically at this year, we've talked about NBI-104 and yielding data in both essential tremor and CSWS. We're also looking forward to submitting the Huntington's disease sNDA.
Finally, we are committed to finishing enrollment both in the adult and in the pediatric CAH studies, and then getting the submission ready for those two NDAs. A busy year, and as I said, the following year is going to be jammed with even more milestones. Once again, I thank you very much for your attention today, and we're really looking forward to getting out and meeting with all of you in person throughout the year. Take care.
This does conclude today's program. Thank you for your participation.