Second Quarter 2019 Results Call. Please note this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn today's conference over to Kevin Gorman, CEO. Please go ahead.
Thank you very much and thank you everyone for taking the time to join us on our Q2 earnings call. On this call, I'm joined by Kyle Gano, our Chief Strategy and does Elvin Officer, Eiry Roberts, our Chief Medical Officer, Matt Abernethy, Chief Financial Officer and Eric Benovich, Chief Commercial Officer. Now during this call, we will all be making forward looking statements. So, Jane, could you please read our Safe Harbor statement?
Yes, good afternoon. Certain statements made in the course of this conference call that are not historical statements may be forward looking statements, which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward looking statements is contained in the company's NCC filing, including, but not limited to, the company's second quarter 2019 Form 10 Q filed today and in today's press release. Copies may be obtained by visiting the Investor Relations page on the company's website. Any forward looking statements are made only as of today's date, and we disclaim any obligation to update these forward looking statements Kevin?
Thank you very much. I trust everyone has had a chance to at least briefly look over the press release that we made available just prior to this call. More than pleased with the efforts of our commercial and medical teams here at American, they've continued their educational efforts with healthcare professionals, patients and their family members on increasing the ability to recognize and diagnose TD and clearly the value of treating this important disorder. As you can see, we had a very good quarter in sales. As we said after Q1, the second half of that quarter set us up nicely for this quarter and for the rest of the year.
Now, Matt and Eric are going to be addressing this quarter in more detail in just a bit and through your and through your questions, which we'll get to. We expect that the trends that we have seen in the 1st 2 years of our launch will persist. That is increased uptake of INGREZZA quarter over quarter year over year. But as always, as we have stressed, there is seasonality. With Q2 and Q4 being stronger quarters in Q1 and Q3 being relatively slower quarters, but nevertheless, growth quarter to quarter.
Now in addition to INGREZZA, which we will go into detail on, the quarter since our last conversation, we've seen very good progress to work with the rest of our business. We've submitted and the FDA accepted the filing for opicapone. We have started the pediatric CAH Phase II study as with our adult study, this is an adaptive design. And we have been preparing for discussions with FDA on both our adult CH program and our collaborative AADC program with Voyager. So each aspect of the business is moving forward quite nice and 2 plan.
So what I'd like to do is I'd like to get over to Matt and to Eiry for some prepared remarks so that we have plenty of time for your quest So, Matt, I'll turn it over to you.
Thank you, Kevin. Good afternoon, and thank you for joining our second quarter 2019 earnings conference call. To begin, I'd like to acknowledge year. In addition, our commercial team did an excellent job delivering a strong second quarter for INGREZZA. During the second quarter of 2019, INGREZZA prescription volume increased to approximately 31,600 scripts resulting in $180,500,000 in net product sales.
This compares to 16,700 scripts and $96,900,000 in net product sales for the second quarter of 2018. For the first half of twenty nineteen, and Resolute product sales were $317,000,000 compared to $168,000,000 for the first half of twenty eighteen, with over 80% year over year growth. During the second quarter, our strong sequential 7400 TRx increase was primarily driven by a record These results reflect the success of our expanded commercial organization, the patient focused talk about TD disease state awareness campaign, and continued healthcare provider educational initiative. In addition, channel inventory increased during the quarter leading to a slight increase in days on hand inventory resulting in a $4,000,000 benefit Simmately 600 GRX. During the second quarter of 2019, net revenue per script increased from $5600 in Q1 2019 to $5700 in Q2 2019 primarily as a result of the lower impact due to the Medicare Part D Donut Hole.
Moving now to our financial results for the second quarter of 2019. During the quarter, we recognized the profit of $51,300,000 or $0.54 diluted earnings per share. Our net income includes a noncash gain of $21,000,000 associated with the appreciation of the Voyager Therapeutics Equity investment. Our R and D and SG and A operating expenses, excluding the Voya drive PR and D, were $142,500,000 during the second quarter of 2019. The increase in R and D as compared to Q1 2019 reflects a $10,000,000 milestone to be out related to the FDA's acceptance of the opicapone NDA filing and full quarter impact on the ongoing expenses related to the Voyager collaboration.
Regarding cash and investments, we ended the 2nd quarter with $766,000,000 in cash and investment, reflecting a $66,000,000 increase from last quarter. As you saw in our earnings release, we are updating our SG and A and R and D expense guidance range for 2019. We expect SG and A, R and D and IP R and D expenses to be $658,000,000 to $688,000,000.
Ongoing SG and A and R
and D, excluding IP R and D, are expected to be $540,000,000 to $570,000,000. Which compares to our previous guidance range of $550,000,000 to $600,000,000. Flexa decision to discontinue the T Force Platinum study, slightly offset by expanded investment in INGREZZA. I'd like to take a moment to upon FDA acceptance of AbbVie's anticipated elagolix NDA submission for uterine fibroids, we will recognize revenue for a $20,000,000 event based milestone, part of our collaboration agreement with AbbVie. As it relates to INGREZZA, With 2 years of commercial experience now in hand, we do believe that as a specialty tier neuropsychiatric drug, andGREZZa does experience a level of seasonality during the year.
We believe this seasonality leads to slower sequential growth quarters in Q1 and Q3 with faster sequential growth quarters in Q2 and Q4. For the 3rd quarter, we do expect continued incremental new patient demand and an increase in overall prescription volume, but anticipated our growth to be tempered by seasonal dynamics impacting TRX per patient and potential channel inventory softening. Overall, we remain very encouraged by the progress that our team continues to make with healthcare providers and patients. And with that, I will now hand the call over to our Chief Medical Officer, Eiry Roberts.
Thank you, Matt, and good afternoon to everyone on the call. I'm happy to provide an update on our clinical efforts this quarter for tardive dyskinesia Parkinson's disease, congenital adrenal hyperplasia and our Phase I program. Educating healthcare professionals and key stakeholders about Tardive dyskinesia and its impact on people's lives is a key focus for the medical group here at Neurocrine Biosciences. As part of this effort, in Q2, we were pleased to share additional quality of life data from the ongoing REIT Connect study, the largest real world screening study of patients with clinician confirmed possible tardive dyskinesia. These data demonstrate that involuntary movements have a significant negative impact on a patient's health related quality of life.
With nearly 30% of patients reporting moderate to extreme difficulties, performing usual activities in their family work and social life. Also, almost half of patients in the Reconnect study experienced moderate to stream symptoms of anxiety or depression in association with their normal involuntary movements. It was noteworthy in this study that while patients were very consistent in evaluating both the severity and impact of their involuntary movements, clinician assessments tended to be less severe and not well correlated with those of the patients. This would speak to the potential value of including more patient related assessments in the diagnosis and management of TD in the doctor's office. I would also like to highlight that during mental health months we were proud to work with advocacy partners legislators and governors across 28 states in order to declare the 1st full week of May as part of dyskinesia awareness week.
These efforts placed a spotlight on this important movement disorder and the debilitating effect that it can have on the physical, social and emotional well-being of patients. Moving forward, TD awareness week will continue to be an important step towards broadening awareness of this often isolating condition in support of patients living with tardive dyskinesia. In April, we submitted a new drug application or NDA for opicapone, a novel once a day COMT inhibitor, for the treatment of motor fluctuations in patients with Parkinson's disease. We received FDA acceptance of the NDA earlier this month and the FDA has set a standard 12 month review process for opicapone. With a prescription drug user fee act or PDUFA target action date of April 26, 2020.
The submission of this NDA was a huge amount of work for the teams at Neurocrine B. Al given the robust database that exists for opicapone. The MDA contains 38 clinical studies and includes an extensive assessment of efficacy and tolerability generated predominantly from 2 large Phase III study by Part 1 and by Part 2. More than 1000 subjects with most fluctuations due to Parkinson's disease were included in the clinical development program for this medicine. I would like to thank our staff across the two companies for their collaboration and hard work on the program to date.
I'm proud of the quality of the dossier that we submitted to the FDA and we look forward to continuing to work with the agency to bring this new treatment option to patients in the U S, coping with this debilitating disorder. Turning now to our congenital adrenal hyperplasia program in adults and pediatric patients. The adaptive Phase II proof of concept study examining the pharmacokinetics, pharmacodynamics, and tolerability of NBI-seven forty seven eighty eight in adults patients with congenital adrenal hyperplasia continues to progress well. We are currently using the positive initial data generated from this study to support discussions with the FDA around of our NDA enabling studies for adult patients with congenital adrenal hyperplasia. We also advanced the program in pediatric patients with the initiation of a Phase 2 proof of concept study that is also adaptive in nature and will examine the pharmacokinetics, pharmacodynamics and tolerability of NBI-seven thousand four hundred and seventy eight eight administered for 14 days.
Initial subjects enrolled in this study will be 14 to 17 years of age. Later this year, after our first several fourteen to seventeen year olds have been treated, we will adapt the study to include younger subjects. Throughout Q2, we continue to work closely with our colleagues at Voyager to progress the phase 2 VY AADC gene therapy program for the treatment of motor fluctuations in Parkinson's disease. And to bring forward subsequent programs, including a program targeting Friedreich's ataxia. I'd like to now give an update on our Phase I program.
We continue to progress the phase 1 clinical program for our internally discovered the Diculin monoamine transporter 2 being MAT2 inhibitor with potential use in the treatment of a range of neuroscience disorders. We will provide further updates as this molecule moves forward in the clinic. In Q2, we also made the decision to discontinue the development of a novel molecule to address neurological diseases. This molecule was the 1st in a series under evaluation in our research labs against this target. While the lead molecule was well tolerated in healthy participants in the initial Phase 1 study, its pharmacokinetic profile was less than favorable and therefore, we plan to advance the backup compound into the clinic in the near future to address this novel target for neurological diseases.
I'm very pleased by the progress made this quarter across our clinical development efforts and we'll now hand the call back to Kevin for closing remarks.
Thank you very much, Irene. So, in order to get to your questions, let's start taking them now. Operator, if you could queue everyone up now, please.
You.
And we will take our first question from Brian Skorney with Baird.
Hey, good afternoon guys. Great quarter. So we saw a really big step up in terms of the number of TRx this quarter, as you mentioned, the 7400 increase over last quarter. You'd spoken about the reauthorization seasonality impacting first quarter in sort of in qualitative terms before, but as we think of the increase Can you kind of give us any color on what portion of the 7400 is related to the reauthorization headwind versus kind of the underlying demand from new patients. And if we kind of look at the average increase over the launch, it's somewhere in the 35,000 to 4000 range.
Do you think that's what we're seeing here with the 1Q seasonality providing most of the increase over this base number or is this kind of like a normal from the sales force expansion that we should be thinking of now?
Hi, Brian. This is Matt. Good to hear from you. So as you reflect on what we talked about in our last order call, we had acknowledged that we had a slowdown in overall TRx per patient as a reason salt of the, payer related seasonal dynamics that did impact the rate of refill But importantly, what we saw in the first quarter is our team work through those headwinds that got put in place at the beginning of the quarter and how we exited We saw a good trajectory, from an existing patient perspective. We did not see a change in discontinued inflation rates But importantly, we also saw a record number of new patients in the first quarter.
So those factors by those factors combined definitely provided a lift to us in the second quarter. But I would say that as we've said, we know that there's going to be ebbs and flows, throughout this quarter or throughout our launch based on different seasonal dynamics. The most important metric that we looked at within this quarter is another record of new patient, addition that really positions us well. Now and going forward. Eric, anything to add?
Yes. And just to piggyback on what Matt said, I do think that we're starting to see the benefit of our expanded field sales team as well as some of the other initiatives, that we implemented last year and in the first half this year, including our talk about TD unbranded disease awareness initiative. So it's really, I think, a cumulative effect
of our total promotional effort.
And, we see the benefit of that more so than just sort of a lower jumping off point from Q1.
Great. And then maybe if I
could just ask a quick follow-up on COGS, are we still seeing previously expensed product being sold or are we looking at what the real gross margins on INGREZZA are here?
I think this is a good representation what our gross margins are on EGREZZA Prime.
Our next question will come from Tazeen Ahmed with Bank of America. Please go ahead.
Hi, good afternoon guys. Thanks for taking my questions. Maybe Matt just to continue about the quarter. I think on the 1Q call, you had provided some color saying that 70% to 80% of scripts that have been written have been able to be been thus far. Can you comment on whether or not that trend has stayed stable or if at all it has changed?
Secondly, can you talk about persistence rates as it relates to, I would say, last quarter or maybe even since launch? And then lastly, you talked about a $4,000,000 impact coming from an inventory build in the quarter. Would you expect any kind of stocking impact as well in the third quarter?
Yes. Hi, Tazeen, thanks for the question. Eric will talk through what we saw from a fusion and access. And then I'll close off with comments on the inventory build that we saw in the quarter.
Yes. So the short answer is that we didn't see any meaningful drop off or change in terms of, patients being persistent over the course of Q2 versus Q1. So that's been very steady. And also in terms of the what I call the fill rate, meaning the percent of written scripts that are ultimately filled. And it still remains very high above 70% looking across the 3 payer segments.
And so we feel really good about the coverage that we've had with INGREZZA from a payer perspective. And the proportion of patients that are able to get on medication that you want to handle the last part?
Yes. So as it relates to channel inventory, as you know, from a revenue recognition, perspective, we recognize revenue on a sell in basis, which is basically what we shift to our distribution network. And in the quarter, we did see a slight increase in our overall days on hand. There's different dynamics that can cause that But overall, we're still under 2 weeks of channel inventory, but did see a slight increase that we felt important to call out so that you can get a representation of what our underlying performance was in jumping off point. That couldn't be caused due to the 4th July week coming right after the end of the quarter.
It could have caused a little bit of increased stocking within some of our channel to deal with the, with those dynamics. A bit overall, one is to flag that to you as investors make sure you got a clean read on the quarter, but then also as you think through setting expectations for the first quarter.
Our next question will come from Paul Matteis with Stifel. Please go ahead.
Great. So much for taking the questions. And let me add my congrats on the quarter. I wanted to try to get at one more time the seasonality component. And Matt, I was wondering if you'd be willing speak to fluctuations you saw this quarter and last quarter and your expectation going forward for average script per patient?
And within that, are you seeing pretty consistent underlying and timing of refills that you're having most of the year around seasonality. And then secondarily, irate, I was wondering if you just speak to CAH And, ahead of your FDA meeting, what you're proposing for a potential registrational path is it a steroid sparing endpoint or is it something else? Thanks so much.
In the question around seasonality and the dynamics. And what I would say is what seasonality does for the INGREZZA business is really have a more pronounced impact on our existing patient population and what the overall rate of refill is within each quarter. As we mentioned last quarter, Q1 would be your lowest rate. Q2 steps back up to what we would deem a more normal rate Q3 soften a bit from a refill rate perspective for a dynamics that may be tied to vacations and or, you know, patients being more transient. And then in Q4, we see a step back up in the overall refill or TRx per patient.
So that's how we look at the cadence As, our patient pool grows, these seasonal dynamics cause a bit more volatility in our overall sequential TRX performance as you saw both in Q1 and then in, in, in Q2. If we were a more mature product, you would likely look at a year on year metric, but obviously we're still 2 years in only 2 years into the launch was significant year on year growth. That's harder to, the, the tease out. But that's how we, see, seasonality. There is some dynamic on new patients.
Some of that is basically how a new patient is distributed within a quarter, we do see seasonality there, but I would call out the more meaningful impact being on existing patients in their overall refill rate per quarter.
Thanks, Paul. On the CAH question, we continue to be very encouraged by the data that we're seeing from the ongoing adult. POC study that we released. You know, we see a very meaningful reduction in ACTH17 hydroxygesterone@ammine levels. From the initial data from that study.
We submitted those data with our package to the agency and with looking forward to the dialogue with them this quarter around the plans for the next steps in development. Our position on endpoints and design of the red situation program really remain unchanged. We believe the steroid hormone levels are critical to the management of patients in an ongoing fashion with this disorder. We also believe strongly that the CRF1 antagonist approach could allow us to have a significant impact on those steroid hormones without the need for supraphysiological glucocorticoids and we look forward to engaging with the FDA around that. As we finalize our plans moving forward and obviously as we start the next phase, the clinical development study will be articulated on clinicaltrials dotgov.
All right, great. Thank you both very much.
Our next question will come from Biren Amin with Jefferies. Please go ahead.
Hi guys. Thanks for taking my questions. Can you just maybe talk about script prescriber? How much of the NRx growth was driven by new prescribers versus prior Scribers?
Hi, Biren, it's Eric. So, the way I would describe it is that we're starting to see a greater proportion of NRxs and TRxs driven by repeat prescribers. And, as Matt mentioned earlier, we are little over 2 years into our launch now. Certainly a big focus of the sales force expansion was to be able to go a little deeper with existing customers as well as to be able to access individuals that we hadn't been able to reach previously. But overall, I think the trend is that we're seeing more and more of our business coming from our existing prescribing base.
Got it. And then I guess just a follow-up question on the paradynamics. And given the Express Scripts decision earlier this year, Have you had, have you conducted any payer outreach and has there been any sentiment changes on expectations for a rebate?
Yes. So let me start off by saying that patient access is one of the highest priorities that we have. And what we found thus far in this market is a little bit unusual that being on or off formulary, it doesn't really have, hasn't had a meaningful impact on the likelihood of securing reimbursement for a particular patient's claim. Our goal is to have open access meaning that we want to leave the choice in the hands of the patients and their providers, to choose the right drug for them. And so when we choose to contract with a plan, we're not trying to secure exclusive position on a formulary, and we think it's best to allow the patient and the provider they have therapeutic options.
So, in terms of what the dynamics have been, certainly We weren't contracting early in our launch. More recently, we've started to engage selectively, with payers And when we do that, we do it with the understanding that we're making an investment in patient access and we're doing it on a selective basis where we think the patient's going to benefit. Overall, we haven't seen any, significant shifts in terms of payer dynamics in terms of likelihood of scripts getting approved by the plan. And certainly, we're going to continue to monitor the payer situation very carefully. But like I had mentioned earlier, we're very pleased with the, the access that we have for our patients with over 70% of written prescriptions getting filled.
Patients being able to afford INGREZZA with the majority paying less than $10 per month and over 90% of patients, being covered for INGREZZA. So it's a very favorable position to be in. We want to maintain it.
Our next question will come from Phil Nadeau with Cowen. Please go ahead.
Good afternoon. Let me add my congratulations on the quarter. Just a couple of follow-up questions. First on the insurance coverage with the proposed changes to health care in Washington are trying to figure out Part D exposure. Have you ever disclosed or would you be willing to disclose either INGREZZA's Part D exposure or you've done any analysis on what the, the post end finance change could impact revenue, we'd be curious.
Hi, Phil. No, we haven't disclosed what our payments is nor our exposure to Part D. As far as the discussion that's going around on health care reform, that's important. And it's obviously important debate, about affordability access and long term sustainability for the industry. We're staying very close to those, to those discussions and negotiations, not only through the trade associations, bio and pharma, but also through our internal and our external government relation teams at Neurocrine.
So we like you, remain very interested in this will add our voice at the appropriate time to, in the appropriate way.
Got it. And then just
one follow-up question, Matt. I think during some of your remarks, you mentioned that Q2 was the highest new patient start number, the Neurocrine. I just want to confirm that I heard that correctly and you weren't referring to your prior comments on how Q1 ended?
Yes, Q1 was our old record in Q2 is now another record. And as Eric mentioned, really a cumulative effect of of the expanded commercial organization, you talk about TD disease state awareness campaign and all the educational, initiatives. We know we're going to have seasonal dynamics that either are headwinds or tailwinds. And the number one focus of this launch continues to be, aiding in the diagnosis of patients struggling with tardot disc in Asia and then ultimately getting them on on INGREZZA and getting them help. So we're quite pleased with the progress and the efforts of our team.
They've done an incredible job to help a lot of patients and Q2 was once again another record quarter for us.
That's helpful. Thanks for taking my questions and congratulations again.
Thanks, Michelle.
Our next question will come from Anupam Rama with JP Morgan. Please go ahead. Hey
guys, thanks for taking the question and congrats on the quarter. Maybe you quick one on Pickupone. With the PDUFA now set, can you just remind us how your sales infrastructure might change upon approval and what type of pre commercial activities you're ongoing for a Pickup tone? Thanks so much.
Hi, Anupam. It's Eric. So, I think the short answer is that we're prepared, from a commercial infrastructure perspective. When we did our expansion in Q4 of last year, it was really to accomplish two goals. One was to optimize our sales team, for the Tardive Dyskinesha opportunity with INGREZZA.
Secondly, to make sure that we had, adequate reach into neurology to prepare for the eventual launch of opicapone in Parkinson's disease. So, we're well prepared in terms of our sales force structure and our overall commercial setup. And then, in terms of really, preparing the market, so to speak, for a pickup phone, We're going to be launching a, unbranded drivers about, comp inhibitors and the role of the comp enzyme in terms of patients that are diagnosed with Parkinson's disease and being treated with levodopa and carbidopa. And so, certainly we think there's an opportunity to elevate the importance of comp, prior to the approval and launch of opicapone And so far, at least in the early work that we've done, in that campaign and that educational content has been very well received. With our consultants in the neurology community.
So we're looking forward to rolling it out later in the year.
I would just build on that well. I think that we have mobilized our medical affairs organization, including our MSL group, to be working with key opinion leaders and other neurologists in the field to ensure that we are educating around the already published data on opicapone, we've also been preparing our own publications and starting to release that on the medicine and preparation. I mean, obviously, this is an area where there is still significant unmet need for patients with Parkinson's disease and most of fluctuations. And we're really hopeful that opicapone will provide a very useful additional opportunity for treatment in this space for patients. And just to remind you of some of the reasons we're really looking forward to that is obviously this is a simple once a day treatment which has been very well tolerated and demonstrates significant impact on time without troublesome kinesia in patients with most fluctuation.
Also, it doesn't suffer from some of the challenges of pre discount inhibition including a better profile from the perspective of GI tolerability and in not causing caloration of, oral bodily fluids that they're seeing with as a constant dividend. And so We're very excited about the opportunity and we're making sure that we have our own medical affairs staff and the external community ready for this medicine.
Thanks for taking our question.
Our next question will come from Jay Olson with Oppenheimer.
Congrats on the quarter and thanks for taking the questions. Now that you've put together 2 consecutive quarters of record new patient starts, Is that a sustainable trend or is that something that could be subject to the seasonality headwinds that you mentioned in the 3Q?
Yes. I think, as I mentioned, and as we've said in previous quarters, when you're developing a market like this, there's a huge gap between the prevalent population and the diagnosed population, we estimate maybe at this time around 10% have actually been diagnosed with part of dyskinesia. And not all of those are on, VMAT2. Our focus is going to remain on new patient additions and getting patients access to drug. The initiatives that we've laid out, the commercial team expansion to talk about TD disease state awareness campaign has definitely lifted, lifted our trajectory from a new patient start perspective But where does it go from here?
You know, our focus is going to continue to be quarter to quarter and continuing continually expanding this market from a, from a diagnosis perspective. So how I describe it We did we have seen a big step up the last two quarters. Will it continue on that level of a trajectory? Our expectations are we're going to continue to call the same frequency with providers that we are today. And remain focused on new patient additions.
Great. That's very helpful. And then maybe sorry, go ahead.
No, and Jerry, the
only thing that I was going to add to that is, again, just the statement, that we've only been through one real Q3 as of yet. And that was in 2018. And as you know, expectations for Q3 or being able to draw conclusions from that Q3 are a little bit muddled because we were going through the sales force expansion, right, in the middle there. This is going to be the 1st Q3 that we're going through. So we can actually kind of see exactly what is the seasonal dynamic 2 in Q3.
And at the end of that, I think we'll be able, we'll be better prepared than to tie and to talk to you a little bit more about seasonal dynamics So we're still learning along the way.
And the other aspect as we've and we've talked before, you know, as our patient pull growth, when you have natural discontinuation that fall out the bottom of the funnel, we know as an organization, we need to continue to add more and more as an increased phase on the top. Of that funnel that keeps up the growth trajectory that we've had. So we're mindful of that and just would remind you, that when you're thinking about building back to Asia.
Okay. Thanks for that color. Maybe if I could ask a capital allocation question, based on the strength of your balance sheet and the cash flow you're generating, are there any updates you could share with us with regards to your thoughts on deployment of capital and particularly with regards to potential business development?
Hi, this is Kyle. Good question. I think the onset of that, I think It's important to mention that we're very excited about our internal pipeline that we share with you today as well as a bit of our collaborations. It was provide a balance of best in class, a 1st in class medicine, CRT nerve burn, as well as potential to provide cures, for patients. Our first goal is to make sure we execute on what we have in hand, 1st and foremost, and there's a lot going on here at Neurocrine, as you can see from our earnings release.
That being said, our internal research and pre clinical teams as well as business development will continue to work in concert to add programs to the pipeline And I can say in business development, we'll continue to be
a significant part of our
strategy, both now and moving forward. So you can see that we are living up to that with our Voyager collaboration early this year. We also had the Zana collaboration that we reported on towards the end of 2018, we look to continue to build the pipeline by adding projects over time.
Great. Thanks again for taking the questions.
Our next question will come from Charles Duncan with Cantor Fitzgerald. Please go ahead.
Thank you. Hi, Kevin and team. Very nice quarter. Congrats on the nice top line beat. Lots of good questions asked.
Had one additional one on INGREZZA though in terms of the prescriber base, are you getting more traction with Sykes or neurologists? And are neurologists playing a bigger role in terms of new patient adds? And would you anticipate with the assuming approval of opicapone that that could be further in, I guess, enhanced?
Yes. Hi, Jess. It's Eric. So I would say that our results from a neurology versus psychiatry perspective remain in line with the promotional effort that we're allocating across those 2 physician specialties. Essentially about 80% of our call activity is directed towards, specialists in psychiatry.
And then the balance is towards neurology. In terms of how that plays out with new patient adds, I don't think that, there's any differential growth from a new patient perspective. Keep in mind that most of the undiagnosed patients with TD are really in the psychiatry area. Patients that get treated by neurologists have been referred. Most commonly from a general neurologist or even a primary care physician.
So, or in instances where a patient self refers to that neurologist. So certainly the neurologists are, very conversant in making the diagnosis and certainly very comfortable with treating TDE with INGREZZA. But I'd say the majority of our acceleration of TRx and NRx is coming from psychiatry, which is where we have the majority of our promotional effort. And I think it's really a testament to the high performance of our team, as Kevin mentioned earlier.
That makes sense to me. One quick question for Eiry regarding VMAT2 inhibition. You just mentioned this towards the end, of your prepared remarks. And I know it's not really the focus this year, but I would like to hear when you might be able to designate a second candidate and a second targeted indication. Sense that could be this year or is it maybe next year?
We're actually continuing to work through phase 1 with this molecule and we're pleased with the progress in phase 1. We are working on our phase 2 program. And as soon as we have that the clinical trial available for that initial Phase 2 study, we will post that in clinicaltrials dotgov and obviously then be communicating around that. And as you mentioned, given this is a very important platform to us, we have continued research efforts going on back in discovery to identify potentially future candidates as well that we might bring into the clinic in due course.
I'm sorry if I missed it. Is it possible the second or the phase 2 could be by the end of this year that you might mention or post that in clinical trials or would it be next year?
We're still working through that and we'll update you as we that timing more firmly.
Our next question will come from David Amsellem with Piper Jaffray. Please go ahead.
Thanks. So 2 quick ones. So first, on business development, you have a large sales force now or an expanded sales force. That one ostensibly could look at as a leverageable asset. So in that vein, how do you think about the acquisition of commercial ready or, or even, what I guess would be called market ready assets either neuro or psych or are you mainly going to be focused on pipeline, and assets and the more novel end of the spectrum.
The second question is on VMAT2 inhibition. More generally, can you comment on where you think you're taking the next molecule, maybe the types of maybe I understand you're not going to comment fully, but as you think about movement disorders, psychiatric disorders, should we think about it being a rare indication or something more expansive, maybe help us understand your thinking there?
This is Kyle on the business development fees. I think there's a couple of variables that we think about we discussed the opportunity from a commercial asset or perspective. I think, overarching, when you think about those types of products, you typically are talking about public companies. We know the vast majority of those opportunities, concerns there are that the market runway or a patent is not, one that we would see as valuable as some of the things that we're talking about here today in terms of our own pipeline assets. The other piece is that we worry about, a product that might be launched and disrupt the good progress that we've made on INGREZZA and, on a pick up on In terms of needs, we'll have 2 products in the bag moving forward.
So we also consider that as well. And then, lastly, if it's a product tied to a company, you think about, is it an M and A type of opportunity? Is it a licensing opportunity? All these things go into our our thinking about an optimal product for, licensing. I think what we where we get to ultimately is looking at products that are new chemical entities that perhaps may not be a commercial product this year or next year, but maybe a couple of years down the road, that might be a good fit for us offering something that's a bit different than we have in the pipeline.
But still within neurology and psychiatry. So I think on in terms of your VMAT2 question, I'll let Eiry touch on that a bit.
So thanks for the question. We're very committed to the VMAT2 mechanism and believe the inhibition of VMAT2 can provide potentially value in a broad range of neurological and psychiatric disorders. And so as we bring forward novel modules to this, target, including the one that we now have in the clinic, will want to be examining the specific characteristics of each of those molecules in order to decide best where to position them and take them forward. So that's really what I could say at this point in time.
Okay. Thank you.
Our next question will come from Jeff Hung with Morgan Stanley. Please go ahead.
Thanks for taking the questions and congrats on the quarter. For INGREZZA, the net revenue per script was higher than the last couple of quarters. So besides the lower impact due to Medicare Part D, were there other factors in 2Q and see this higher net revenue per script as an ongoing trend or more specific to the quarter?
We'd really just point you to the impact from the Medicare Part Dona. Well, the impact is more pronounced in the first quarter as a result of the price our drug and the impact of the donut hole on us and really Q2 reflects having much less exposure. But that's really all that I would I would flag. You do deal to some extent with mix between the 40s and 80s and some slight mix within the payer universe. But We really, really would just flag the Medicare Part D Venable.
Okay. And then, I guess, on the discontinuation of the T Force can you talk about what led to the decision at the current time? And did you learn what you would hope to since the top line results for Q4's gold were announced?
Yes. We had announced when we first saw the negative data from people's goal that we would be taking into consideration all of the data that we could generate from T Force platinum and looking at the data to English whether or not there was a path forward for Valbenazine and Tourette's. I think we looked at the totality of those data important to say that the discontinuation of T Force platinum was not on the basis of any safety finding or any challenges on the safety and tolerability front. But all in all, we decided it was the appropriate Cypress take a step back, look at the data in totality and determine whether or not there were any steps forward for us in the future.
And we will take our next question from Mark Goodman with CVP, Leerink. Please go ahead.
Hi, we were just talking about ASPs a second ago. I was curious this is really the first time you've talked about contracting and whether we should expect ASPs to kind of come down as gross to nets start to adjust for this contracting. And to what extent you guys have done some contracts? You started to talk about it, but you didn't really get into too much detail on it. I'm curious about that.
And then second of all, the high end of the spending rage has come down. Obviously, we know that you stopped the study for Tourette's, but is that the only thing that changed? It just seemed like a big change in numbers. The Voyage, you're still going to be roughly year or so million, as you had mentioned before. And then just one quick last question.
DTC, you guys were on the TV before. Are you guys still there? Can you just give us the dates of of when you are? Thanks.
Yes. Hey, Mark. I'll click through your question. From the DTC front, we absolutely expect that to continue throughout rest of this year and have seen very great response from that program and are proud of what that's accomplishing from just an overall educational perspective, engaging patients in, in this process of understanding tard out of dyskinesia. The second piece as it relates to the guidance range, our initial guidance range was was $50,000,000 within that band.
You did have a component that has to do with Tourette and that program, obviously, getting taken out of the mix, takes out the top end of that range. And in addition to that, you do have some assumptions around your clinical programs and other progression and one of those investments being Voyager Therapeutics, collaboration. And previously given a guide that that would be between $40,000,000 $50,000,000. And I would say that that's where our expectation remains to be within that range. So other than that, Mark, I really wouldn't flag anything beyond on that.
As it relates to ASPs and contracting as We've said before, we've had great access to date, where a lot of our large majority of our prescriptions written ultimately get filled. And we've been pleased with that. We know over time as the class grows, We may have to engage in contracting. But as Eric mentioned, we look at this as an announcement to ensure that patient access continues and that remains to be are most important, a aspect is diagnosis and making sure they can ultimately get the drug So there's nothing material that we flag in the near term, from a contracting perspective. But if there were to be anything material, we would would give a lead time to the investment community if we thought it was going to be a really significant impact from a net revenue per script perspective.
And we
will take
our last
question from Evan Seagerman with Credit Suisse.
Hi, guys. Thanks.
Hi, all. Thanks for squeezing me in and congrats on the great quarter. So you had mentioned that, there is a natural number of patients who fall off therapy and stop taking therapy. Can you help us quantify what percent of patients these are? And are these patients, what is the average duration of therapy that these patients are on aggressive for?
We haven't given numbers from quarter to quarter. What we have said is that the the patient persistency that we've seen with INGREZZA has exceeded our expectations really since the very early days of the launch and going into it, prior to the launch of INGREZZA, what we were looking at from an analogue perspective was the other drugs that these patients take. Typically antipsychotics, antidepressants, etcetera. If you look at published data on persistency, you'll see that Over the course of a year, patients take their medicines in the range of 50% to 60% of the time. We have stated previously that the persistency has been better than that with INGREZZA since the early days of the launch And really through, and including up to the most recent quarter, we've seen a favorable persistency rate.
So we feel good about that as one of the drivers of our growth.
And then just a follow-up on contracting, it's been kind of a topic on this call. Does this have anything to do with the Express Scripts decision to exclude INGREZZA from the national preferred formulary? You been getting similar feedback from other payers in the United States?
So the short answer is no. We actually made the decision not to bid for the Express Scripts formulary simply because we didn't think that would have a significant impact on the upside for patient access. We've said previously that, commercial is the smaller segment for us. And the Express Scripts formulary represented less than 1% of our our patient volume. And so that didn't really have any meaningful impact on really our strategy.
As I said before, our strategy has been to make sure that patients have access to medication and preferably open access. Where we choose to engage with a payer is because we think that it's going to have an impact to the upside terms of their access and we do it as an investment for the future. So the Express Scripts situation didn't really impact strategy or our results. However, we have begun to engage with payers on a limited basis. And as Matt said, If there is any meaningful impact in our gross to net, certainly we'll disclose that.
All right. Thank you so much for taking the question.
And there are no further questions.
I will turn it over to Kevin Gorman for final remarks.
Thank you very much. I think as most of you have been following us, you understand that we've learned quite a bit in the 2 years since we launched INGREZZA, and we have a lot more to learn. We've only just begun to address the needs of these patients and the needs of the psychiatric community at large, we will be constantly adapting our efforts to bring this important treatment to patients So you will see us adding more initiatives over time. Because as you've heard over and over in this call, it's education, it's access, it's being able to service patients' needs. That's what we're dedicated to.
We will also continue to progress and expand our pipeline by investing in the internal groups here at Neurocrine. And partnering with exceptional science externally as Kyle and his team and the broader teams at Nerve and work together to do thus that. And finally, we've enjoyed the success that we've had by being disciplined and investing in good science. And you can count on us that we will continue to do so. So with that, I thank you very much for your attention and I look forward to talking to you in upcoming meetings.
This does conclude today's program. Thank you for your participation.