Okay. All right. We're ready to go. For our next session, we have Neurocrine Biosciences, and we're lucky enough to have Matt Abernethy, who's the CFO, and Todd Tushla, who's the IR. Thank you very much for joining us, guys. Matt, I'll let you make a quick comment before we jump into Q&A.
Yeah, so we're going to make forward-looking comments, as you can imagine, and appreciate in this environment with directly to our SEC filings. Mark, it sounded like you said, before you said Neurocrine.
No, I didn't.
I took a little bit of offense to that.
I didn't.
You're one of my favorite stocks. Give me a break.
Yeah, I mean, we were talking earlier about how fortunate it is to have a mega blockbuster like Ingrezza this year alone, $2.5-$2.6 billion in sales. I know there's a lot of questions around where's that growth going to in the future, you know, how are we defending competition, you know, how are we thinking about the payer environment. I'm sure that we're going to get into those questions today. The big aspect with Ingrezza and Todd Tushla, I'll say this about him. He has a little speech that he says, "How do you drive shareholder value?" And it's, "Help more patients." For us, the name of the game is to help more patients with tardive dyskinesia. We really believe that there's a tremendous market opportunity left to help more patients. The second piece that I'm sure we'll get into is Chronicity.
We got an early Christmas gift. Middle of December, we got approval for Crinecerfont. It's the first drug or medicine in over 70 years for these patients. And there's around 20,000 patients with congenital adrenal hyperplasia. Just the blessing to be able to have a product to go alongside Ingrezza in this market environment that I think gives us a strong footing. We also have a pipeline. Believe it or not, nobody asked us questions recently about that, but we have 11 mid to late stage programs. The lead programs are number one, an AMPA potentiator called Osavampator, and that's being studied in major depressive disorder. We're starting our phase three trials as we speak and would expect data sometime in 2026. We also have.
'27.
Oh, yeah.
'27.
Thank you for that clarification. 2027. We also have a phase three trial that we've initiated with our M4 agonist program in schizophrenia. We have a tremendous cash position, close to $2 billion in cash. We're generating profits. We're investing heavily in the pipeline to ensure that we can be a leader in neuroscience. The last thing I'll say, there has been a lot of noise around the fourth quarter, or sorry, around the first quarter dynamics. I would just say you can see that sell side is starting to bring down the numbers in terms of expectations. Q1 is always noisy. Patients go through a reauthorization process. You also have gross to net that you're dealing with. This year, one thing that's unique is that you have one less order week that's going to impact revenue. Revenue is going to be noisy.
I think the most important aspects that investors can ask and think about, and the most important things I'm looking at are number one, did patients stay on therapy throughout, or did they stay on therapy through the reauthorization process? Then second, NRX helping more new patients is the lifeblood of Ingrezza. I think how is that trending relative to what we saw in the second half of last year is really going to tell the tale of how we're set up and how we're performing for the rest of the year. You know, hopefully that gives you a brief background on Neurocrine. Mark, we spent, you know, probably two hours plus, two hours last night at a dinner and a whole lot of good discussion and really appreciated it. What were your, you know, main takeaways from the dinner last night?
How do you think we should flow the conversation from here?
I would say first, the Ingrezza conversation is kind of twofold. It's the, why is the market a little bit slower this year than we would have expected in general? That's your company plus Teva guidance that you both provided. It just seems lighter than we would have expected, you know, say three months ago. Second of all, the more micro issue of what happened with respect to your company losing momentum and gaining some of these new patient starts relative to Teva and market share and what you're going to do to kind of get that back. I would say, you know, I feel relatively comfortable that you've got the right strategy. I mean, this is probably a good forum to kind of talk about both of those things a little bit.
I like hearing that you think we have the right strategy because, you know, I think that's what we're trying to do. In terms of share of voice, last year, our competitor won the share of voice battle. I think that's what caused the trajectory in the market to be so strong last year is our competitor had three major initiatives late 2023, early 2024 that drove momentum for them as well as the market. The first one is they went from a two times per day dosing to a one time per day dosing. They also expanded their sales force significantly for their LAI risperidone drug, which allowed them to increase overall call frequency. Lastly, they went back on air after a long time off for a direct-to-consumer advertising campaign. They stoked a whole lot of demand, and they drove some momentum.
We saw in the second half of last year in particular, some of our new patient starts started to wane. I think that was a dynamic that led to slower momentum coming out of this year. You fast forward to what does the market growth look like in 2025? Last year was a record, as you mentioned. Teva now has to grow off that base of those new initiatives that they went on. We obviously had a lower trajectory heading into the year. The last variable, which, you know, I know came out even in an analyst note today, you know, we did see a bit of payer utilization management in terms of new patients getting on therapy. It seemed as if it was a more difficult process for them to go through to get onto Ingrezza and more than likely Austedo as well.
As a result of that, that did slow down a bit of the market development. What are we doing about it? You know, number one, the highest correlated activity that Neurocrine has ever seen in terms of leading to new patient starts is call frequency. Call frequency matters significantly in this TD market because patients with tardive dyskinesia are going into a psychiatrist's office. Rightfully so, a psychiatrist is thinking about the mental health condition of the underlying patient. They're not thinking about whether the patient has tardive dyskinesia or not.
What our sales reps do is put tardive dyskinesia on the radar for the clinicians, make sure that they're comfortable making the diagnosis, and also are there if a script is being, you know, if a script is being challenged through the reimbursement process, they're also there to be able to, you know, help alleviate that stress. We have at this point right now, we have never had as much call frequency in the span of the last eight years. In terms of leading indicators, call frequency matters in a significant way. The second aspect that we're focused on, what are we doing about it, is making sure that clinicians understand the differentiation in terms of, you know, how highly effective Ingrezza is from an efficacy perspective. It's selectivity.
Ultimately, on the 40 milligram dose from dose one, you're at a place where you can have it's an efficacious dose. Differentiation is sort of the second stool of activity. The third is in the area on the payer utilization front, engaging at the pharmacy level, ensuring we understand why scripts are maybe not getting through the entire process, and engaging with payers to see if that can alleviate the valve.
Can you talk a little bit more about that? What happened? What are they doing? What are the payers doing to make it more difficult? Because it's interesting, your first guess is always, you know, price, volume, and you said that pricing would be relatively the same, right? The average selling price. It's interesting that payers are doing something that would, you know, hurt you on volume without impacting price.
It's interesting. Our formulary position in 2024 is the same, or our formulary position in 2025 is the same as what it is in 2024. No major change in formulary status. Whether you're on formulary or off formulary, we saw incremental pressure in the second half of that last year. We've been very successful since the beginning with Ingrezza. We've always selectively contracted. Where we thought it made sense, where it helped get new patients through the process at a reasonable rate, we would contract. That leaves a large portion that we weren't contracted. What we see in this environment is when a new script gets written by the psychiatrist's office, it's sent to the pharmacy. The pharmacy is then filing for the claim so they can fill the script. There seems to be incremental information required that's never been required before.
Our sense is that it's just payers adding a bit more complexity to the process to slow things down a bit. Ultimately, because you're dealing with a psychiatry office that's not used to handling, you know, prior authorizations at great volume and scale, what we're finding is it's not necessarily the Ingrezza patient getting switched to Austedo. What we're finding is that it's an abandoned script through the process because it's become a bit more difficult. A lot of our activities and insight right now is trying to figure out how can we ensure that these scripts and the claims that are being worked on them, you know, they're not just set to the side and ultimately abandoned. That is a strategy that we don't have 100% figured out. We have some elements that we're working on right now.
The most important thing for us is if a script is written for Ingrezza, that a patient ultimately gets on Ingrezza.
Is there anything that they're doing that's not workable? You know, for instance, if they're asking a couple of extra questions in a different way and it's a little bit longer, these are still solvable.
That's what it is. It's tactical things to gum up the system and slow down when a new patient gets drug or if it's abandoned.
You need to get tactical.
We have reimbursement experts that are on top of it, but it's just something we saw pick up in the second half of last year and continue into 2025. I don't think it's a coincidence with the IRA in place now that the payers are responding this way.
Yeah. How are you feeling about maybe getting more aggressive with contracting given what's going on? Do you think that makes sense?
It might. It might make sense in the right, you know, zip code from a cost perspective. You know, I think it's the easiest lever people think is you can just contract and everything goes through smoothly. I don't think that's the silver bullet here. I think there's, you know, a lot that we can do even outside of contracting to help get through this process. If we thought that it ultimately made economic sense to contract, I think we will. Our main focus right now, Mark, is between now and 2029, which is our IPAY moment with the government.
Good segue. Let's go.
That we have the maximum number of patients on therapy as possible. With the IRA, we have the small biotech exemption. The small biotech exemption puts us at a place where the earliest we could be selected for negotiation is 2027, and the price would ultimately take effect in 2029. That negotiated price is based upon this really obscure measure. It is basically your 2021, call it your net sales price, increased for inflation, you know, for five or six years. That is your basis of negotiation with the government. That discount that we will be negotiated down is, thankfully, and thanks to, you know, our good government affairs team, there is a cap in terms of how much we can actually be taken down from that 2021 non-FAMP is what it is called. That is a discount of between 25% and 34%.
We know what the range is of potential discounting from the IRA. For us, we're incentivized to get as many patients on medicine as possible between now and then. If you give up a little price along the way, it won't impact, you know, the floor to where you ultimately go down. That's our current strategy in terms of how does that play into contracting. This is such a, you know, a dynamic environment right now. I'll just say we've been an adaptable company since the launch of Ingrezza and we're going to continue to adapt and, you know, feel like there's going to be, you know, a long, durable stream of cash flows coming behind Ingrezza for the next 13 years.
What happens with Ingrezza when Austedo actually is IRA'd earlier? Like how does that play? Talk about that, you know, dynamic.
First of all, it's hard to say with 100% assurance, Mark, that you know exactly how it's going to play out. A couple of interesting pieces is once they're, I guess, IRA'ed, we'll call it, once they're IRA'ed in 2027, you know, they're on all formularies, their rebates to those plans go away. There's an incentive economic dynamic there that they're at a low net price and, you know, the plans are no longer getting rebates. They may prefer having a rebated drug or a medicine like Ingrezza on the formulary as well. The second piece is I really, truly believe that in this class of medicine, having two medicines matters significantly. I think clinicians want choice. I think that it's not going to be the case where Ingrezza gets written and it's, you know, not available.
Medicare has done a good job for patients where a clinician wants the patient to be on a specific medicine. There is a very defined process called the coverage determination form process, and patients can ultimately get access to the medicine. That is something we have been dealing with over the last seven to nine years, whether we have been on or off formulary. That, you know, gives us a bit of confidence that we believe that is going to continue to be the case. The last comment that I would make on this regard is just a reminder. This is 100% specific to new patients. We have seen historically with formulary changes, existing patients on Ingrezza or existing patients on Austedo are largely left alone. Changing therapy for this patient population is something that has not been seen.
You know, that's one other aspect that gives me confidence in the durability of the Ingrezza revenue.
Let's talk about the first quarter. I guess you started to bring up the one last week. Obviously, there's the normal, you know, messiness of the first quarter. What about just more broadly new patient starts, you know, the claims data that you were referring to last year? What does that claims data show for January, February, if you've seen it? Is there any other comment you want to make about the first quarter?
Like I said earlier, it's going to be a noisy revenue quarter. That revenue nets itself out through the rest of the year. It's just basically order patterns. I do think the NRX piece is going to be an important aspect for us to comment, maybe in a bit more granularity than we have in the past, Mark, because of the slowing NRX in the second half of last year. I think giving some insight to what we're seeing in NRX in the quarter, you know, really will paint the picture of are you starting to see the benefit of the Salesforce expansion? Is that same recipe of call frequency still working in this market? The second aspect just has to do too with the payers. How are they managing in this environment? I think we'll learn a lot through the first quarter.
You know, I would say all of what we're talking about is, you know, in terms of the first quarter dynamics are included in our, you know, annual guidance. It's just something we're just trying to make sure is not a surprising aspect if revenue dollars are noisy in Q1.
I mean, one week is a great deal of revenue given how big the drug is. So it's, you know, flipping one week from one quarter to the next is a big deal.
It's just the one order. It's, you know, 8% of revenue for a quarter. Yeah. You also have the gross to net dynamics that I threw out was about 3% headwinds sequentially. You stack on top of that a little less momentum going from Q4 to Q1. You know, it's going to be a bit of a noisy quarter, but, you know, we're up for the challenge as a company. I really believe the commercial team is doing a great job in, like I said, engaging with more customers than they ever had before. If the recipe stays like it has been, you know, we should start seeing the early fruits of that Salesforce expansion. It was started in October. You should start seeing some benefit in Q1, more benefit in Q3 or Q2, and then accelerating growth in the second half of the year.
That makes sense. Let's switch gears to Chronicity, obviously very excited to have a second drug, very unique when companies get to finally launch their second drug. You know, it kind of changes the whole dynamic. Talk about how the year is going to progress with Chronicity, how we should expect it. Talk about the adult population, the peds population, how you expect, you know, kind of the ramp to occur.
Yeah, first, Chronicity is our brand new drug to treat congenital adrenal hyperplasia. There has not been a new therapy for this patient base in 70 years. The current treatment is with high-dose steroids, which everybody understands is bad over the life of treatment. As Matt mentioned at the outset, we got approved in December. This has all the hallmarks of a blockbuster product, and we believe it's going to be the standard of care treatment for these patients. We do think it's going to be a measured launch at the beginning for a number of reasons. One is just the normal patient flow of when a pediatric or an adult patient comes in to see their endocrinologist. It's typically somewhere between one, two, three times a year. There's the flow issue to deal with.
There's reimbursement dynamics that we're working through, which are not unique to any orphan drug. What we have is a quick start program. A patient can be prescribed Chronicity, and our reimbursement experts and our pharmacy that supports us, Panther Rx, has a reimbursement expert that works through the adjudication claim over the course of a month. If it's not figured out by then, there's another month's worth of free drug while the reimbursement gets worked out. This is the same playbook we used for Ingrezza. What we saw with Ingrezza back then was it took about six to eight weeks before you got reimbursement all lined up.
What that will mean is in the back half of the year, you'll start to see new patient starts, which is what we're going to provide on the Q1 call, line up a little bit more closely with revenue. We also have the third point, which is we have an open label extension that is continuing on. There is no bolus of patients that are going to flip to commercial. For the first couple quarters, you're going to have this measured approach. We think you'll start to see the momentum pick up in the second half of the year and into 2026. All the feedback that we're getting internally, all the feedback that you and your other sell-side peers are collecting from doc checks, the receptivity of this product has been very positive across endocrinologists, the payer community, the patient advocacy groups.
To quote Eric Benevich when asked last week how the launch is doing, he said, "So far, so great." It is early days, but we're enthusiastic that this, like Ingrezza, is going to change the standard of care.
Help to quantify the population and then the differences in how you think the adults will get treated versus the kids.
We have, there's around 20,000-30,000 patients with CAH, with classic CAH in the United States. You know, how they're treated right now, you have around 15% of those going to centers of excellence. There's about 20 centers of excellence across the country. You know, essentially these kids primarily are flying in and making sure they're getting treatment. The most motivated patient population for a medicine like Chronicity, no parent likes putting their kid on high-dose steroids and giving them those steroids every single day. In terms of motivation to ultimately get treated, a parent is going to be talking to their clinician about whether Chronicity could help them control their androgens and then, as a result of that, reduce the steroids.
The pediatric population is about a third of the market, but I would expect it will be, you know, closer to half the sales or more. I think that that's the most motivated to treat patient segment. The second would be females, females, especially if they're interested in being able to have their own child. You know, I think that that's something that, you know, this is going to be of very high interest and let alone just controlling the male hormones that are being produced in their bodies. I think that females are going to be the second highest motivated group. Lastly, us stubborn old men, you know, we feel like we're not going to get any better. I do believe that there's significant benefit in being able to control androgens and bring down steroids. It's sort of like smoking.
You know, there is benefit to stop smoking even if you've smoked for 40 years of your life. I do think that there's going to be different segments. All of them can benefit from it. I think Dr. Auchus, a leading thought leader, said based upon the clinical data and what he's seen, his expectation is that 80% of the population would benefit from a medicine like this.
What's the plan for Europe?
We're still thinking through Europe right now. We've been very focused on the U.S. in terms of launch. The patients over there are in the open label extension study. We want to find a way to be able to expand access outside of Europe, but some of the complexities of that market, plus, you know, just the primary focus being in the U.S. for now, it's focused in the U.S. and we'll keep everybody apprised in Europe.
You fully expect you'll be in Europe and you fully expect that to be a real opportunity?
I would hope, but the reimbursement environment in Europe is also something that you have to fully think about in terms of making sure you have the right data to support an adequate price point. There might be a lag in terms of getting to Europe to make sure that you can get adequate reimbursement that would be fair for a specialty medicine like us. I think there's, you know, it's not unique to Crinecerfont in terms of, you know, it lagging the U.S. market. I fully expect Crinecerfont could be a blockbuster alone easily in the U.S. We will figure out where we go with Europe later.
Let's talk about the pipeline a little bit.
We do have one.
Yeah, yeah, yeah. I think the muscarinic portfolio is kind of probably the biggest focus for people. I guess the question is the strategy of having, you know, an M1, M1, M4, you know, having everything. Are they all going to just completely move forward if they're all positive? You know, just how you're thinking about titrating the spend on it all. The second part of the question is there's a lot of confusion around, like, was the quality of the efficacy of 5, 6, 8 good enough to really move forward? You know what I mean? It's kind of two questions there.
Let me take the efficacy side first. There was noise around dose response associated with our data readout. If you were to ask our medical colleagues, they would say all doses worked. They were all active. You could see, you know, it was engaging the target. You saw heart rate, you know, increases. I think that biomarker helps validate that it was actually working. We did get agreement with the FDA in terms of dose selection, which will be the lowest dose. In terms of how we pick the low dose to begin with, we wanted it to be an efficacious dose. Anytime you're putting an acute psychiatric patient into, you know, essentially an inpatient facility for, you know, many weeks, you want to make sure you're giving them a chance to have an efficacious dose.
It was not overly surprising that we had a dose that worked from the lowest. We will be going forward with that low dose. It will be a simple trial. My basketball coach used to run a play called KISS, Keep It Simple, Stupid. I think that is going to be the MO for the schizophrenia program. One-to-one randomization, strong site control, making sure that we understand exactly what is going on with the raters and the quality of the raters and get a good outcome. I think our competitor, you know, Cerevel and AbbVie, I think they had a lot of elements to their trial that, you know, led to it being, you know, a failed study, not a failed drug. I think for us, it gives us a place where we can be second to market. I think we are excited.
Having this smorgasbord of options is a good approach. I would just say for a few reasons. After you get through schizophrenia, where the money is going to be made off of any of these muscarinic programs is what other indications do you go to next? You could see, like we've announced, our lead program, our M4 agonist, is going into bipolar disorder later this year. As you think about the M1, M4 dual, which is the one we're most high on going through phase one, we're going to start that in schizophrenia, but you could see that go more towards areas of cognition into the future or even having attributes of being able to be developed into a long-acting injectable, which would be important in this type of patient population. There's an environment where you could have two commercial assets.
We're learning a lot here. It's still early days.
With different indications?
With different indications. We are learning a lot and we will see where the science takes us. If we have a positive study with the M4 agonist in schizophrenia, that is going to be a real foundation for the psych salesforce that we already have in place and going to be able to continue to leverage or strengthen the psych.
Is the M1, M4 through the Stadmed work yet or is it almost done? Will we see the data this year?
I would say we see it in real time as it's going through and what we've been seeing, we've liked. In terms of will the street see the data, historically we've not provided a tremendous amount of phase one data, but later this year we are contemplating hosting, having an R&D day. It hasn't been defined yet, but these are the types of things that we would likely highlight between more information on the osavampator MDD program, as well as some more incremental information on the phase two program for the M4 and some things in the clinic.
Excellent. Excellent. Any last minute comment or last second comment, I should say? We really do not have any more time, but.
I would just say it's obviously an environment where uncertainty is being punished right now, not just for us, but for every company. I understand some of the uncertainty associated with the tardive dyskinesia market is exaggerated in this type of a market environment. For us, our heads are down. We're adapting. We're going to make sure we get through this strong and to be able to have Chronicity alongside of that, absolutely a nice setup for us and the company. We're going to work hard to execute for our shareholders and appreciate the support along the way, Mark.
On a relative basis, I mean, even if the product only grows 10% and Chronicity grows on top of that, it's pretty good top-line growth.
Yeah, we'll be happy with that.
Relative to a lot of other companies. Thanks very much for joining us. We appreciate it. Good luck with everything.