Thanks so much. Good afternoon, everyone. Day two of our Jefferies Healthcare Conference in New York, beautiful Times Square. Joining me today—for those who don't know me, my name's Akash Tewari. I cover pharma and biotech companies at Jefferies. And I have the pleasure of hosting the Neurocrine management team. And first and foremost, I wanna hand it off to Kevin, who has decided to abandon us and retire. But Kevin, I think this is actually the first time you're talking since the announcement. You know, I'll hand it off to you to give some prepared remarks, and then we'll take it into the broader Q&A.
Thank you, Akash, and, I also wanna thank Jefferies for the opportunity to meet here. I just wanna make clear, you all see me, right? Because since the announcement, they all just walk up to Kyle. Sorry about that. And it's like I'm not even there. 32 years, you know, hey, thanks, bye. Move on. Also, I wanna start out with that we're gonna be making forward-looking statements, Hawaii, Fiji, Tahiti. But those are my forward-looking statements. But the... So I would like to direct you to our most recent SEC filings. You know, I've been an employee of Neurocrine since the beginning, going on 32 years now. I was a venture capitalist before and formed Neurocrine, and it took about two years to pull it together prior to those 32.
have been CEO for 17 years, and the most fun ride you could ever imagine. Obviously, Neurocrine has had nothing but a straight line success since the day we went public back in 1996. I chuckle at that. But it has been a real pleasure, and for those of you in the audience that I've known for a number of years, and you've been investors in Neurocrine, I sincerely wanna thank you from the bottom of my heart. The other thing I would like to do is assure you that the team to my left here and the entire senior management team at Neurocrine, leaving it in just great, great hands.
As many of you know, it is the rare opportunity that a CEO in this industry, A, gets to last as long as I have, and, B, that you get to go out on your own terms, which is just fantastic. But, I'm not leaving. I remain a member of the board of directors, and the transition is gonna be one that is really smooth. A, Kyle has been with the company for 23 years, and we've been working together really closely in forming all the strategies for Neurocrine. So, last that you'll probably see of me at these conferences, but certainly not the last that the company will be seeing me. So again, thank you very much, and you are in terrific hands with these guys.
Okay, now let's start getting mean. Well, I think, Kevin, the question that I think most people are thinking, and these are people who are... I think you are, what I would describe, a crowded long for a lot of investors right now. Given you've gone from a one-product story to legitimately this could become a four-product story, over the next couple of years, why was now maybe the right time, especially going into your muscarinic card flip, to announce the step-down? Why not wait until after that readout?
If I did it after the readout, you would say, with the approval of crinecerfont imminently happening.
Yeah
W hy would you go down now and not when it's approved? Or if I did it at approval of crinecerfont-
That, that's fair.
... it would have been, "Why aren't you waiting to see, you know, announce those first couple of quarters of sales?" If I did that, then it would be that, you know, "Your 854 phase III data's gonna be reading, why..." It would just go on and on.
Right.
No, honestly, there's never a perfect time to leave. This was as good as could be found. This has been in the works, a discussion between myself and the board. Heck, when we were in a succession planning meeting with the board six years ago, talking about doing this, giving a, like, approximately three years notice, no, no, no firm date, but, "Hey, guys, it'll be at least three years, but I do have an expiration date stamped on my forehead." But then a little thing like COVID got in the way of those things and it stretched out a little bit longer. But as we were discussing it more recently, you know, and it was really recent.
They'd gone through the entire process for picking a successor, looking outside quite a bit, as well as in, that I started to have to think of what is the right date to announce and what is a real good transition period so Kyle gets to go out and do a walkabout for three or four months in order to talk to all of the people within Neurocrine. We have about 800 in San Diego, about 700 in the field, and he's gonna go out and talk to everybody, do a listening tour for the next several months, while continuing with his day job. But it makes it a lot easier to do it while I'm still sitting here taking up space.
Understood. Maybe, for Kyle also, like, look, let's go to next year, 2025, J.P. Morgan. I think you're getting to a point with your company where this is not a one-product story. You could argue, even on Ingrezza alone, you'd be able to generate up to $10 billion in EBITDA by the end of this decade. I mean, you're in a pretty enviable financial position, too. The question that sometimes I get from long-onlys is, is there appetite on Neurocrine's side to maybe give a five-year long-term guidance, right? Like, you know, put a line in the sand and say, "Hey, you've sold Ingrezza out to 2038. You have, you know, data points on a lot of your phase II products, and you'll have that, by the way, from muscarinic, and then on top of that, crinecerfont's about to launch.
I want you to do that, you know, knowing full well we don't have any idea how IRA will actually work out, let alone for the first 10 products.
Okay.
If Trump becomes elected, most favored nation, but go for it.
Yeah, go for it.
Yeah. So, yeah, is there appetite to maybe give long-term guidance here?
You know, I think that, I think for all the reasons Kevin just outlined, and on top of that, we, you know, within a five-year period, we could have other products that could come online, 845 , 568. We haven't talked about luvadaxistat. So how do those all fit into the equation? On top of, you know, we've also not had the opportunity to discuss, you know, crinecerfont and CAH. There's a first-in-class medicine in a disease state that hasn't had a medicine in over 70 years. How is that gonna play out? So I think right now, you know, we'll certainly take your interest, but I think it'd be really challenging, even if we wanted to do it, to put out anything that would have any, any, any basis for being a likely outcome and scenario down the road.
Understood. Makes sense. So I wanted to start off with your muscarinic franchise. And look, you know, pharma, at the end of last year, spent $22 billion on Karuna and Cerevel, betting that this class is gonna be bigger than what investors realize. I think we've done a lot of work internally. I think we share that view. The question that I get a lot from investors is on 568, you have a lot of muscarinics in the portfolio. On 568, I don't think there's a lot of public data that has been disclosed about that compound.
I'd like, you know, if you can qualitatively describe us, A, what would be ideal for an M4 direct agonist, whether it comes to selectivity, PK/PD, QD, dosing, and whether five eight six kind of met your internal hurdles to move forward into, A, that phase II study, but B, potentially moving into a phase III re-registrational trial. What are the attributes of your compound that make you feel confident?
Appreciate the question, and it's one that we've faced over time, and maybe I'll just start by saying on a little bit of our history. We've been on this target, this class of antipsychotics, if you will, the muscarinics, since about 2012. Many of the challenges that we faced when we started this program many years ago were the same ones faced by others, and that is developing assays that allow you to pick out compounds that are selective on the subtypes of the muscarinic system that you're interested in and avoid the ones that you're not. And our approach is always to build in the selectivity of the molecule that we ultimately want to develop.
We didn't get there ourselves, but Nxera did that with some of their platform technology, which involved, at the time, X-ray crystallography to get a crystal structure of the GPCR of interest or the G protein-coupled receptor. So what's been most important for us, at least initially, was: Can we develop a molecule that's selective? And five six eight is selective for M4. In fact, if you look at the other four subtypes, we're at least 100-fold selective on the other subtypes, and that's just something that we haven't seen by anyone else. And even the competitors in this space, whether you're talking about KarXT or with emraclidine, those are molecules that either have to have an add back to block off-target effects, or they've used a different approach that is a positive allosteric modulator.
So we like the selectivity piece that we have here. No one's tested an M4 selective agonist in schizophrenia, so that's the risk that we a re trying to take on and provide data here in phase II to answer the question. But we have that selectivity that we're leaning on. We also have a very clean tox profile. Preclinically, we finished all the long-term tox, which has also been a burden, a hurdle for many companies working in this space to get good margins to test molecules in the clinic. That's what we have in NBI-1117568. We're real excited to get to data. We, too, want to be part of this class. We think it's been paved quite nicely by KarXT and emraclidine by Karuna and Cerevel. It's up to us now to contribute our own data set in phase II and Q3.
Okay, understood. So, you've also talked about, hey, there are some known on-target toxicities with hitting M4, and I think you've kind of talked about like, you know, "Those toxicities won't be so different from our molecule, but we feel comfortable with kind of the therapeutic profile." In terms of known, AEs that you see with this class that investors should be expecting, can you just kind of outline, A, what we should be seeing with M4s, and then, B, why you feel comfortable that your compound, 586, has an acceptable therapeutic window?
Well, I think if you look at M2 and M3, muscarinic M2 and M3, what you worry about there are GI types of side effects, diarrhea, things of that sort. We haven't seen that, any of that in our, phase I, trials that we've done in healthy volunteers or in the setting of the phase II study that we've had now. So that leads us to support that hypothesis that we do have a very selective molecule.
So that's one thing that we would point to. The thing that's, I think, shared across this whole class is some sort of cardiovascular signal. You typically see an increase in blood pressure, at least initially, and then there's attenuation over time. I can say, and we've said this publicly, that that's a perspective that we also share as well, but we haven't seen the effects that would make us have any concerns around that, either in phase I or in the phase II trial that we have now. Related to that, we know that the FDA has asked Karuna and Cerevel to do ambulatory blood pressure monitoring studies for their programs. We anticipate we'll have to do that, although we haven't been asked.
Right
T o do that yet. So, stay tuned. We expect that we will, but we'll see.
Understood. Now, I'm sure, I wanted to get, kind of get this on the transcript. You get this question, I'm sure, a bunch. Well, why— You know, this asset used to be at the hands of AbbVie, Allergan. Why did they give it up if they were so excited about it? And then, of course, they did Cerevel. You know, and I think the color you give is really important. Can you just kind of give us the cadence of events that occurred there and how that asset actually got into your hands, and whether we should read into the fact that that compound was originally in the hands of Allergan here, when we think about the overall success of five eight six?
Sure. I think that, you know, we'll give you our perspective. Obviously, we don't know all the facts. We can just kinda line up the timing and dates and give you our thoughts. But ultimately, you know, we've had discussions with what was then Sosei Heptares, long before they were Nxera, back in the early teens, about potentially collaborating together, collapsing our programs, our muscarinic programs, and working as one. In the early teens, Neurocrine was not a company that could-- that was in a position to do that. So they went on, and they partnered some of their early assets, Sosei Heptares, with Heptares in the 2015 timeframe. And the lead molecules that they were looking to develop at that time were M1 agonists for Alzheimer's.
We all know that Big Pharma's experience and interest in CNS has been more focused on Alzheimer's, so that was an area that seemed like it would be a good investment for Sosei Heptares to start with on the Alzheimer's side. They had some interesting phase I data there that would've probably prompted a phase II trial, but the tox profile of those lead molecules weren't favorable, and the program was dropped in Alzheimer's. Their follow-on molecules were the ones that we picked up that were more M4 focused. So when Allergan ran into the phase I challenges that I just mentioned, that was the time that they were approached by AbbVie, and that acquisition took place. Subsequent to the closure of that deal, some phase I work had started with 568 at the time.
I don't know if AbbVie ever saw that data, but the results, or I'd say the programs, were returned to Sosei Heptares on or around late 2021.
Mm-hmm.
And, actually, the 2020 and at that particular time, Sosei Heptares took it upon themselves to repartner the asset. We knew the data. We all knew the data from KarXT at that time. However, there was still a question mark on whether or not M1 and M4 were important for efficacy in schizophrenia. We decided that was enough data for us to at least have those conversations with Sosei Heptares, and we started our negotiations. During the course of those is when we saw the Cerevel data on emraclidine, which suggested definitively, actually, that M4 and M4 alone was sufficient and necessary for benefits in psychosis like schizophrenia.
That made our negotiations more challenging at that time because there was other people that came in, but we were able to close the deal later that year and then start our phase II in 2022, and we've been off to the races since then.
Understood. Now, you know, it's funny, everyone likes playing setups into data, but then when you actually have to own the risk into a trial, it gets a little more complicated. And I think one of the questions I get a lot from investors is: "Oh, what is this adaptive design that Neurocrine talks to me about? You know, I don't, I don't know much about the preclinical profile of the drug right now, but then on top of that, I've got this adaptive design. Would that actually lead to the absolute PANSS benefit potentially being more modest?" So I'd love to hand it to you. Why do that adaptive design in your kind of phase 1, first-in-human, kind of symptomatic pool? And can you explain to us, maybe qualitatively, why we should not be scared?
Adaptive Design is not a dirty word here for investors who are looking to own your stock into that readout.
Well, I think, on the outset, this is our first trial that we've done in patients, so I think there's that piece. And the second one is that, there's the... When we started this trial, all the unknowns about cardiovascular questions that are around the muscarinics were also out there. So our approach to this phase II trial was, let's do a traditional dose range-finding phase II trial, and that is the heart of this study, four active arms versus placebo. But dosing information in terms of what dose to move up to is based on safety and tolerability. It seems like a very safe and real-world kind of way to look at a novel target with a novel approach, being your first time in patients.
But at the end of the day, it really is just looking at four doses, different doses of active versus a placebo, with a group that allows us to monitor in a blinded way, safety and tolerability for a subset of patients at each dose, and if it's clean, they move to the higher dose or the next subsequent dose.
Okay, understood. And maybe let's put it this way: Would you describe your trial design as an adaptive design? Do you like that term, or what do you think is a better way to maybe describe this study?
No, I think it's appropriate because if your external safety board does see something that does not allow you to move to the next dose, you're not gonna force that upon patients and, you know, having to live with the consequences, either with the patients or with having a profile that is not attractive to move forward.
Understood, and maybe just-
Yeah, one addition, just to be clear, the safety monitoring board is only looking at safety.
That's right.
So there's not a question in terms of, Are you guys pushing dose to see efficacy? It's purely just a read on safety. So as Kevin, or as Kyle said, at the onset of the trial, we wanted to be cautious before we increased to higher dosing, and that's really the reason for the design, was just on the safety side, right?
That's very helpful. Now, it's interesting, I don't know if it's clear whether you go with a fixed non-titration dose like we've seen with Cerevel, or you do a titration. Frankly, when you look at the Karuna data, when you talk to the team, one of the things they say, especially in the context of Alzheimer's psychosis, is Cmax, AEs, and PD effect are all kind of correlated.
Mm-hmm.
So if you're showing AEs, it's probably a sign you have adequate PD effect. So the ability to down titrate is really important because you can actually ensure patients get, stay on the trial, they don't drop out, and then, number two, they're getting adequate exposure. That actually kind of leaves this provocative question where, let's say, you titrate and you're also, you're an M4 selective, you don't have to deal with the M1-type AEs. So, is titration or no titration, how do you think about that decision for 586? But then number two, is there a possibility that as you get to higher doses and you're more selective, not only are you showing a differentiation on safety, but you might actually be able to show a differentiation on efficacy on, let's say, the PANSS score at higher exposures?
Right. You know, I think we're gonna learn a lot from the study that we have right now. You know, I, when it comes to dose and dosing regimen, these are all things that this particular study will inform us on, and I think that would be a good question to ask on the other side of that data. I think I will say what I will say is that on the subject of titrating and titration and dose frequency, et cetera, we know a lot about what would benefit psychiatrists through our experience with Ingrezza.
I recall Ingrezza is a medicine that doesn't require titration. It's once a day. These are all these things are in the back of our mind when we'll see the data set coming out in Q3 and help us plan for the right dose or dosing regimen in phase III.
Okay. Understood. And then maybe once we have that data in-house, I think you're gonna have a compound that could be theoretically viable for schizophrenia. I think Cerevel tells you, "Hey, M4 selective could work." But when I think about where you might be able to differentiate the most, Alzheimer's psychosis seems like an obvious second indication. You're not gonna be a PAM, you're not gonna have to deal with the issue of patients probably having to get dosed with Aricept in a Cerevel approach. And number two is, you're not hitting M1, so you may be able to avoid some of the urinary retention issues that come with trospium. When you think about how quickly you could move into Alzheimer's psychosis once you have your proof point in schizophrenia, can you lay out the development strategy and how quickly you'd be able to move there?
Well, I think, obviously, having some knowledge about the dose in phase II is gonna be important for moving into a different patient population. I think what we have to keep in mind on top of that is, you're gonna have to be extra careful and sure of your dose moving into the elderly. So I think that will be a topic of the team of whether or not we need to do some additional work in the elderly. Recall in our phase I study in healthy volunteers, it was about 120 subjects in that phase I. About 30 of them were on the elderly cohort.
So we do have some data there. I think it depends on the profile of the data that we get out from the ongoing trial in terms of efficacy, safety, tolerability, risk-benefit, on whether the team will recommend or think that we need to do additional work there.
If there's no work, you could conceive doing a study fairly soon, but I think it is also gonna be a balance for us because our main goal is gonna be standing up a registration program in schizophrenia as quickly as we possibly can. We know that that's where the competition is right now, where we need to play. It's kind of the table stakes for any medicine that you wanna have on this particular target. And once we get that up and going and see the line of sight to there, I think that's where we can talk about other indications.
Can you qualitatively give us some color? In your upcoming 586 study, what proportion of those patients would be elderly? And maybe you could use some of that PK/PD data to inform your Alzheimer's psychosis strategy.
I think we need to sit down, I know I've used this before. We need to sit down with the data set and see what it looks like. We haven't agreed as a team on what we're gonna disclose as of yet. I will say we appreciate what's been put out there by Cerevel and KarXT in terms of data sets. For those of you that are familiar with Neurocrine, and that's a lot more than we typically disclose.
But let's see the data ultimately and what makes sense to share. I will add that we're on top of appreciating what's been out there by our competitors. We do know what a win will look like for us for this phase II trial. If you look at outpatient studies with antipsychotics, you see placebo-corrected benefits on PANSS that range from about 5-9. And for the muscarinics, for the two programs that have made it through phase II and phase III, KarXT and emraclidine, you see a placebo-corrected PANSS benefit of about 8.5-12.5. So for us, you know, you're getting above the 8 range, and you have a good safety tolerability profile with a completely different way to activate the M4 receptor. That's a win in our book.
Understood. Actually, maybe to that point, is that averaging all your doses or at your high exposures 8+?
We would be looking at a dose that provides that type of profile.
Okay, understood. Now, maybe just kind of stepping back here, and we're looking at, let's say, crinecerfont, right? And you had data that came out at ENDO. I think the question that a lot of investors had is like: "Hey, did Neurocrine have maybe a looser definition in terms of control of A4?" And then number two: "Hey, at week 28, some of the doses of steroids started to kind of bounce back." I wanted to give you an opportunity. Can you contextualize the data that showed at ENDO, and then really what your long-term confidence of your clinical profile is, not only as a standalone drug, but also as more competitors that are maybe a couple of years behind you, are gonna enter the market here?
Maybe I'll start on that. There's a couple questions you've got in there. I think, on the outset, it's worthwhile to mention that when we designed the phase III trials, it was really with the input of patients, physicians, and the regulatory authorities in both the U.S. and FDA. The endpoints that we use are not ones that we settled on. It's one that the agencies provided to us as something that we needed to see. They needed to see data on. So I think that's an important thing to keep in mind here. The other piece that was important to patients and physicians was that we designed, you know, real-world studies that would help physicians learn how to use a medicine like a CRF1 R1 antagonist.
I think that's what we were able to achieve here in both the adult study and the pediatric study. We're really able to show the dynamic range of using a CRF1 antagonist in this patient population. Whether you need to control and decrease androgens, or you need to decrease androgens and hold it at a level that allows you to then decrease glucocorticoids. These are all things that we tried to show in a phase III trial design, and we did that quite nicely. In the A4 side of the equation, at week 4, we saw a placebo-corrected range from the pediatric patient population of about 65%-85% reduction.
Then on the grand slam scenario of controlling androgens, plus achieving less than 11 mg per meter squared per day, we saw a placebo-corrected range from, again, adults to peds, going from about 45%-30%. In the pediatric patient population, the real surprising number there is in a study design where the kids are getting the best possible treatment of care, probably in their entire life, none of them, 0%, were able to achieve androgen control, plus getting below that 11-milligram threshold. That's just, that's just amazing. So I think for us, it was a home run outcome overall for both studies. We're very excited to offer patients a new medicine for their treatment after about 70 years of just using hydrocortisone, and we think this is gonna be a big opportunity for the company.
Okay, last question, if I can sneak it in. M&A, again, you have the kinda luxury where I think you can either take your time on M&A. I think that's probably where a lot of investors are, where I wanna see the readouts, more data on AMPA. I wanna see the readout on muscarinic before Neurocrine looks at BD. I know Kevin has always danced around this question as well, but I'll hand it over to you. Where does Neurocrine stand right now in terms of appetite for M&A, going into the muscarinic readout? Would you wanna wait for that readout, or if there's the right asset right now, you'd pull the trigger?
Yeah, just a couple of things on that. You know, I think business development, where it sits in at, at Neurocrine, is in the same variables that we talk about when we think about capital allocation. You know, for us right now, I would say we, we work with great urgency, and we've always done that at Neurocrine. We know the field inside and out. We know who's working on what. We know companies that will be coming out of stealth mode and what they're working on.
Where we are right now is that we tend to be working a lot with our CSO, Jude Onyia, to help him accelerate some of their discovery efforts to bring those to phase II as quickly as possible. But we do wanna see what our data cards look like when we turn those over this year. Just to keep in mind, with our positive 845 data, that's a big registration program next year for us. If one or more of the phase IIs turn out positive this year, there's one or two more registrational programs starting next year, and then we have a really, a, a lot of exciting things going from preclinical to clinical. There's a lot, lot of things that need to be funded, and we're in a good situation to be able to do that.
But before we think about any large business transaction, we'd like to see if we can do things on our own organically.
Understood. Thanks so much. And by the way, Kevin, before you go to an island, why not take over BIO? 'Cause someone needs to fight the IRA properly.
Because I was mainly thinking about where-