Good day everyone, welcome to the Neurocrine Biosciences reports first quarter results. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask questions at any time by pressing the star one on your touch-tone phone. You may withdraw yourself from the queue by pressing the pound key. Please note this call may be recorded. I will be standing by should you need any assistance. It is now my pleasure to turn the call over to Todd Tushla, Vice President of Investor Relations. Please go ahead.
Thank you operator. Good morning everyone. Welcome to Neurocrine's first quarter 2023 earnings call. This morning I'm joined by Kevin Gorman, our Chief Executive Officer, Matt Abernethy, our Chief Financial Officer, Eiry Roberts, our Chief Medical Officer, Eric Benevich, our Chief Commercial Officer, and Kyle Gano, our Chief Business Development and Strategy Officer. I'll remind everyone that during today's call we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After our prepared remarks, we will once again do our best to address all of your questions. Now I'll hand the call over to Kevin Gorman.
Thank you, Todd. Good morning. Well, INGREZZA has had yet another very good quarter of sales. I say this from a dollar perspective, but more importantly, the fundamentals of bringing INGREZZA to patients is even stronger with more new prescriptions than ever. Remarkably to me, this occurred in Q1, typically our toughest quarter because of insurance reauthorizations. As you know, we call it a tale of two quarters. The first several weeks working through the reauthorizations process, and the second half going back to a singular focus on patient diagnosis and treatment. What I also find additionally impressive for Q1 is that persistence and adherence remain as strong as ever. Patients and prescribers recognize the impact that INGREZZA has on their patients' tardive dyskinesia and on their lives.
We're entering Q2 with momentum and with fundamentals like this in Q1, it bodes very well for a very strong year. Matt will make some cautionary statements for Q2 that are very valid, but take those in the context that 2023 is setting up to be quite strong. One of the aspects in Neurocrine that I am most proud is our ability to make difficult decisions with the ultimate goal to utilize our resources wisely to be able to bring as many life-changing medicines to patients as we are capable. That requires making tough fiscal decisions to deploy our cash and our talent to grow our business. We announced this morning that we will be returning the commercialization rights of ONGENTYS to BIAL.
Make no mistake, ONGENTYS is a very good drug, as evidenced by the positive feedback we have received over the past two-plus years. Unfortunately, from the time we licensed this medicine to the launch in 2020, the Parkinson's adjunctive therapeutic category went through fundamental changes which posed significant commercial challenges. Despite our best efforts, we have been unable to surmount those challenges. We are not the only company experiencing these challenges in this therapeutic category. Going forward, both our and BIAL's primary focus is to ensure new and existing patients do not experience any interruption in receiving ONGENTYS as we transfer commercial activities.
Now finally, as Eiry will discuss on this call, we continue to make very good progress on our clinical portfolio and are on track for a number of phase II and phase III readouts later this year and the August PDUFA of valbenazine for the treatment of chorea in Huntington's disease. As you know, enrollment was impacted in a number of our programs by several macro factors, but the teams have worked diligently and have kept all these programs on time, on budget while retaining the highest level of quality. With that, I will turn the call over to Matt.
Thank you, Kevin. Good morning. INGREZZA performance in Q1 was strong with record NRx and sales coming in at $410 million. The team did an excellent job navigating the seasonal payer dynamics and driving new patients, setting us up for a great year. We did see a small benefit from timing of customer orders at the end of Q1, driving a several-day increase in days on hand channel inventory. We expect this to net out during the second quarter. Timing of customer orders can lead to lumpiness in quarterly sales and expect this to be a headwind in Q2. Underlying demand from both new and existing patients both appear very strong so far this year. Given we're only one quarter into 2023, we are reiterating sales guidance and will reevaluate after the second quarter.
Needless to say, INGREZZA is set up for a great year. On the financials, we are maintaining our SG&A and R&D expense guidance with exception of IPR&D for the Voyager collaboration. Similar to prior years, SG&A had an increase in spending for Q1 and expect it to step down the remainder of the year. With that, I look forward to your questions and now hand the call over to Eric. Eric?
Thanks, Matt. Q1 2023 was another good quarter for us, as Kevin said, the fundamentals were strong. As usual, we spent a good portion of the quarter managing through seasonal payer dynamics. Despite these challenges, we achieved 36% year-over-year sales growth with a record number of new patient starts and continued strong compliance to treatment.
We estimate around a third of patients have now been diagnosed with tardive dyskinesia. However, the fact remains only about half the time are diagnosed patients even offered treatment with a VMAT2 inhibitor. The American Psychiatric Association recommended first-line standard of care. Therefore, our ongoing educational efforts continue to be focused on recognition and diagnosis of TD and encouraging treatment of appropriate patients with INGREZZA. We feel very good about our Q1 performance, carry our growth momentum into Q2, and reiterate our guidance for 2023. For several years now, our Q1 earnings call coincidentally occurs the 1st week of May, which is designated as Tardive Dyskinesia Awareness Week. Furthermore, May is also designated as Mental Health Awareness Month.
Looking back, while we are proud of the progress we've made with INGREZZA over the last six years since launch, we still strive to improve the diagnosis and treatment rates for TD, and we'll do so over the next decade and more to come. With that, I'll turn the call over to my colleague, Dr. Eiry Roberts, our Chief Medical Officer.
Thank you, Eric, and good morning to everyone on the call. I'm pleased to report that the entire clinical portfolio made steady progress throughout the first quarter. Looking ahead, we remain firmly on track to report top-line results for both the adult and pediatric registrational studies of crinecerfont for the treatment of congenital adrenal hyperplasia, as well as two phase II proof of concept studies, namely NBI 352 in adult focal onset epilepsy and NBI 846 for the treatment of anhedonia associated with major depressive disorder. All four of these data readouts will occur in Q4 2023. In addition, we are looking forward to the August 20th PDUFA date for valbenazine as a potential treatment option for patients with chorea associated with Huntington's disease.
We are ready and eager to engage further with the HD community in service to patients living with HD chorea in the event of successful approval. In speaking with a number of investors, I know there is significant interest in the progress of our portfolio of muscarinic agonists with potential to address a broad range of neuropsychiatric and neurological disorders. I'm pleased to say that our first molecule, NBI-568, currently under evaluation in a phase II dose-finding study in schizophrenia, continues to make excellent progress with enrollment. In addition to NBI-568, we plan to take NBI-570, a dual M1/M4 agonist, into phase I clinical development this year, potentially followed by other differentially selective M1/M4 agonists over time. Overall, I'm very pleased with the performance of our teams in executing to our portfolio goals this past. Look forward to sharing further updates with you as the year progresses. At this point, I'll turn things back to Kevin. Kevin?
Thank you, Eiry, and we are now ready for your questions.
At this time, if you would like to ask a question, please press star and one on your touch-tone phone. You may withdraw your question at any time by pressing the pound key. Once again, to ask a question, please press star and one on your touch-tone phone. We'll take our first question from Phil Nadeau with Cowen & Company. Please go ahead. Your line is open.
Good morning. Congratulations on the progress, and thanks for taking our questions. Two related commercial questions from us. In terms of the INGREZZA number, it does seem like you solved the seasonality problem with growth quarter-over-quarter in Q1. Can you talk a bit more about what you've done to ensure that Q1 isn't the down quarter that it had been in the past? Second, Matt, on your stocking issue, I think you said a few days of inventory increased. By our math, that perhaps translates into about $20 million of stocking in the quarter. Is that a reasonable estimate? Thanks.
No, it's much less than $20 million. I'd just say it's around $10 million or so is what the inventory build was. You know, as it relates to the quarter, it's a really strong quarter. Over $100 million of year-over-year growth. We did, you know, of course benefit from a touch of inventory, but record numbers of new patients, ensuring patients stayed on medication and had really good persistency. We felt good with how the quarter shook out. Eric can talk a bit about what we've done to ensure that we kept patients on medicine through Q1 and through the reauthorization process. I'd say last year was the first year, that you saw sequential growth, for the brand Q4 to Q1. We've seen something very similar this year, Q4 to Q1.
Yeah. Phil, I would just say that, you know, as we have gone through, the first few years of the launch, with INGREZZA, we've attempted to learn every Q1, what works, how we can improve, and ultimately it involves a lot of teamwork on the part of our field teams, to identify what are the practices, where we can provide the most assistance, where are there more patients that are likely to require annual reauthorization for the refills. Each year, even though the base of patients gets bigger and the number of people that could potentially experience treatment interruptions grows, we get a little bit better from an execution standpoint, and that's really what's driving our success this year and frankly, last year.
Perfect. Thank you.
Take our next question from Tazeen Ahmad with Bank of America. Please go ahead.
Hi. Good morning, guys. Thanks for taking my question. I just wanted to follow up on what the current status is of neurologists, I guess, coming back to in-person. I know that during the height of COVID, that was a big challenge, and you guys found ways to navigate around that. Is it still the case that a lot of patients are being seen virtually, or is that something that's eased as the pandemic has come off of its highs? I have a follow-up. Thanks.
Hi, Tazeen. Neurology and psychiatry are quite different in that regard. You know, obviously during the pandemic, really all physician specialties went to a high degree of virtual patient care. But today we estimate it's less than 10% of patient visits in neurology are virtual. It's gone back pretty close to pre-pandemic levels. I think, you know, the feedback that we hear from neurologists is, to a great extent, they rely on a physical exam. And, you know, you can't do that remotely. There's a big, you know, delta between what we see in neurology and what we see in psychiatry, where there's still a high degree of telemedicine utilization.
Okay. What would be your split right now in scripts coming from neurologists versus psychs? 'Cause I know psychs was your more established area.
We still estimate it's in the, in the range of about 80/20 split, though, you know, obviously it changes a little bit from quarter- to- quarter.
Okay. Thank you.
We'll take our next question from Paul Matteis with Stifel. Please go ahead.
Hey, thanks so much. appreciate you taking the question. I wanted to ask a question around the crinecerfont studies. I know you've been reluctant to set the bar on steroid sparing. I wanted to talk more broadly just about secondary endpoints in the trial and side effects related to steroid sparing. What secondary endpoints or what steroid clinical consequences in these studies or in the open label extension do you think you have the best shot at showing a benefit on so as to corroborate the primary endpoint, both from a regulatory and commercial reimbursement perspective? Thank you.
Morning, Paul. On that question, just to remind the group, we have two phase III studies that we'll read out in the fourth quarter of this year, pediatric and the adult phase III studies in crinecerfont. As we look across those studies, we have a set of endpoints, all of which I think are important in understanding the overall benefit risk profile of crinecerfont. First and foremost, we're obviously interested in the ability of crinecerfont to control androgens, and we've already demonstrated really good efficacy in our phase II program around androgen control. The second thing, obviously, is the ability to reduce steroid dose in a controlled way for patients.
The third is a broad range of clinical outcome measures that will be measured both in the randomized part of the trial and also the extensive open label data set that we will have at the time of submission, if successful. Across those endpoints, obviously, if you think about the things that are most impactful for crinecerfont patients in terms of clinical outcomes, we're very interested in metabolic endpoints, and we're interested in bone-related endpoints and in the pediatric setting, growth and other developmental milestones for those patients. We will be looking at the totality of that data in terms of understanding the potential benefit risk of crinecerfont. I think that's probably what I would say at this point in time in terms of our looking at that.
We will take our next question from Josh Schimmer with Evercore. Please go ahead.
Thanks, very much. Just a couple of quick ones. What was the INGREZZA script number for the quarter? Matt, I think in the first quarter, the vast majority of biopharma products saw inventory drawdowns. What happened, do you think, that led to an inventory build for INGREZZA? Thank you.
You know, Josh, I would say on the inventory front, it really just came down to a timing of an order at the end of a quarter. It, it wasn't an intentional stock gain by our channel. We don't operate the channel that way with a big bolus of buying in Q4 that leads simply down in Q1. It, it really was just had to do with the timing of orders at the end of the quarter. Any reminder on the first part of the question?
INGREZZA script.
Oh, QRex.
Yep.
Yeah. We're at a point now on QRex that we've reached scale, that we're not gonna be providing QRex publicly anymore. We're gonna be providing commentary around net sales, how we're doing on NRx, and commentary around what our net prices is doing. There is, of course, third-party syndicated data that's available. It's, directionally correct, I'd say, but of course, it doesn't capture the full data set of what we see internally for INGREZZA. At this time, given it's the beginning of the year, given we've made the shift in our distribution model, we feel like it's prudent to no longer provide TRx publicly.
We will take our next question from Neena Bitritto-Garg with Citi. Please go ahead.
Hey, guys. Thanks for taking my question. Just on that point, just on net price, I was just wondering if you could comment on the net price per script that you saw for INGREZZA in Q1 and whether you still anticipate about $5,600 per script on average for the full year. Then also just wondering if you could comment on, you know, where the strength and where the growth in new starts is primarily coming from and whether, you know, you think that's coming from some of the efforts last year to expand the sales force and target different physician targets. Thanks.
I'll take the first part of that question, and then Eric will take the second part of the question. As it relates to net revenue per TRx, we still expect it to be around $5,600 per script this year on average for the year of 2023. We did see a touch of seasonal headwind, as you would expect, in our gross net in Q1. It's around 2% or so. I'm not gonna give the exact net revenue per script here for Q1, but gonna talk about it more in terms of what we expect for the full year. Overall, expect really a net price increase for the year of around 2%-3%.
Hi, Neena. This may not be a super satisfying answer, but we're seeing growth coming from everywhere. What I mean by that is that, you know, post the expansion and the reorganization of our field teams last year, we now have dedicated sales forces in psychiatry, neurology, and LTC. All three of those segments are growing nicely, as evidenced by the, you know, Q1 results and the, especially the record number of new patient starts that we saw this past quarter. You know, the second part of your question was really related to, is this being driven by the sales force expansion? You know, our belief is that the sales force expansion is already paying dividends.
Got it. Thank you.
We'll move next with Chris Shibutani with Goldman Sachs. Please go ahead.
Thank you very much. With the announcement of the strategic decision on ONGENTYS, obviously, I expect that you've also done some broader portfolio reviews as you think out to the balance of the decade. Can you comment about sort of the international plans, in particular for crinecerfont? You did the deal over in the UK in 2022. Remind us what the regulatory status is there. This morning across the broader pharma landscape, obviously, we have another positive data point on the Alzheimer's front. I believe that, you know, neurology, within that scope, Alzheimer's has not necessarily been a focus, but does this at all change your point of view in terms of how the commercial opportunities could play out in that realm for you guys? Thanks.
Thanks, Chris. With respect to being able to internationalize INGREZZA, you're absolutely right. We made the crinecerfont. Sorry. I have INGREZZA on the mind this morning, as you could understand. With crinecerfont is that the purchase of Diurnal was a way of setting us up for an entry into Europe, initially with crinecerfont, knock on wood, with good data and an approval there. We wanted to be able to begin to have an infrastructure there, to begin to have a on-the-ground presence. We do a lot of clinical trials over in the U.K. and Europe. From a development standpoint, we're leveraging the Diurnal folk, and I should say the Neurocrine folk now that are over there in a big way already.
They also have MSLs in addition to the clinical and the CRAs that they have over there. That is turning out well for us right now. Commercially, it will be much easier now to be able to build into that. The EU would be following FDA in our strategy to file. US would be the first filing with crinecerfont when we have good data, and then it'll be followed by the EU. When it comes to a broader portfolio, I really think what you see here is that Neurocrine and the portfolio we currently have and what we have been doing is being a neuroscience company, we have had an exquisite focus on orally active small molecules.
Of course, because many of them, whether you're talking about neuropsychiatric and neurological diseases, they needed to cross the blood-brain barrier. What you do see with us is with the investment that we've been making more recently, what we're going into is more, large molecules, biologics. You're seeing us step into antibodies. Well, you may not be seeing it, but I can tell you that we're developing in preclinically and in research, antibodies, peptides, proteins, gene therapies now in order to broaden our reach and get to actual disease-modifying and curative therapies within the neuroendocrine and neurological diseases. I think that psychiatry will still be dominated by orally active small molecules, which has, of course, been a traditional strength of ours, and we will continue with that going forward.
You're seeing Neurocrine right now in the midst of a transformation from the type of drugs we are going to be introducing into the clinic starting in 2025 and moving forward throughout the decade and years to come.
Great. Thanks for the perspective.
We'll take our next question from Brian Abrahams with RBC Capital Markets. Please go ahead.
Thanks so much. Congrats on all the progress, and thanks for taking my question. With regards to crinecerfont, so our market research has suggested that patients are very excited about a new treatment option, but there's some equilibrium that some may have struck on their steroid use, which may make them reticent to disrupt things. I guess I'm wondering how you plan to address this. You obviously have a lot of expertise building markets. Do you think it's just a matter of having strong totality of data and that being convincing enough? Are there certain subpopulations you may think about targeting initially who might be optimal candidates or educational campaigns you might envision? How might this impact how we should be thinking about potential uptake curves for this drug?
Maybe just a real quick housekeeping question. The $10 million that you mentioned, does that refer to both inventory and shipping time, shipment timing impact, or was that just inventory and shipment timing is something else? Thanks.
Brian, thanks. We believe there is significant unmet need for patients living with CAH, and that that unmet need, if we're successful with our phase II program for crinecerfont, can be met by crinecerfont. The reason why I think you hear some kind of ambivalence about willingness to switch from steroid is that these patients have had nothing but steroid. In fact, there's been no new approved medications for over 50 years in this space. I think people have had to settle for less than optimal care.
To your point, I think our ability to demonstrate a broad range of robust data in support of the benefit risk of crinecerfont will allow us to address that unmet need, and that will need to be supported by a significant amount of education and other approaches in a similar fashion to what we have done with INGREZZA and TD.
Yeah. I'll just add that, you know, it's early days yet. We haven't completed our registrational trials. As a company, we haven't really started our formal efforts to reach and educate, you know, the various patient and care partner communities within CAH. Crinecerfont does represent, you know, I think a pretty meaningful paradigm shift. You know, part of what we'll be doing on the other side of data and then leading up to approval and, you know, knock on wood, launch, is to educate on the value of treatment with crinecerfont, and what that means to patients, what they can expect. You noted that, you know, we've demonstrated success in TD in building a new market from scratch, and I think, you know, we can apply some of our learnings towards the opportunity in CAH.
From a, Brian, from a revenue recognition perspective, you recognize revenue once the bottles are shipped and delivered to a to the distribution, your distributor. What I would say in terms of your question, yes, it was shipped, delivered, and it really just had to do with the timing of when those specialty distributors, pharmacies placed the order at the end of the quarter. It was just a bit out of cadence and higher than what would normally be held at that distributor.
Thanks so much, everyone.
We'll take our next question from Anupam Rama with JP Morgan. Please go ahead.
Hey, guys. Thanks so much for taking the question. Just wanted to maybe dig in a little bit more on the long-term care facilities. I know you've stressed this as an area of growth for INGREZZA and made some brief comments earlier in the call, what are you seeing in terms of trends in this segment specifically?
Yeah. Hi, Anupam. I would say that, you know, we're a few quarters in, but it's still early days yet. This is a brand new segment for us, long-term care and some site of care that we had looked at at the very beginning of the launch and decided that we didn't have the capacity to take that on. Obviously last year we, you know, we made the commitment, we built a dedicated team, and they've been out there and doing all the things necessary for long-term success in long-term care. Ultimately, you know, it's still an area that's just getting off the ground, relative to psychiatry and neurology that are more a little bit further along in terms of market development. Very pleased with the progress that we're seeing, and, you know, certainly, look forward to providing more detail as we get a little bit further down the road.
Thanks so much for taking our question.
Take our next question from Carter Gould with Barclays. Please go ahead.
Great. Good morning. Thanks for taking the questions. Maybe, Eiry, coming to NBI-352, I don't believe you guys have disclosed the doses you're looking at in the FOS study, but maybe just clarify that if you have. I guess more broadly, how you're thinking about sort of target exposure, you know, sort of a steady-state AUC or, you know, a trough level. Any color on that and if the phase I TMS data may be informative on that front. Thank you.
Got it. The 352 study is a dose-finding study. It's a 4-arm parallel randomized study, three different dose levels of 352 in that study with a 12-week endpoint that is focused on understanding seizure frequency and reduction in seizure frequency from baseline for individual patients. In terms of the doses that we chose there, the phase I data and all of the preclinical data from the different animal models of epilepsy, which as you know, translate reasonably well into the clinic, were used in order to define the doses that we took into that study. We are confident that we are covering the target with that dose range and that this is a well-controlled signal-seeking study, in terms of the efficacy and benefit risk for 352.
We will take our next question from Myles Minter with William Blair. Please go ahead.
Hi, thanks for taking the questions. Just on the decision to not provide updates on the prescription growth rate for INGREZZA moving forward, maybe you can comment on the accuracy of the scripts that we can see through IQVIA and IMS. I know previously you've cautioned against that, but maybe you can comment whether that is getting better as a way to track INGREZZA. Secondly, I just wanted your thoughts on how much you need to build the Huntington's disease career market. You know, is it similar to tardive dyskinesia, or is it more about just taking share from the VMAT inhibitors that are already in that space? Thanks.
Hi, Myles. For the TRx, what I'd say about the third-party syndicated data will give you directional view into how we're performing. It's a bit more stable than it has been in the past. We of course, won't affirm that it's 100% accurate, but I would say it's more directionally correct than it had been historically. With that, I'm gonna hand the second part of the question over to Eric specific to HD.
Yeah. Hi. So, you know, with regards to the HD chorea market opportunity, you know, obviously we're excited about the plans that we have for introducing valbenazine to that patient population. You know, as we've said before, you know, we see that there's still significant unmet need in this in this group of patients that are living with Huntington's disease and experiencing chorea. Only about 20% of people with HD chorea are actually treated with VMAT2 inhibitors, which are the only agents that are actually indicated for chorea and HD. Obviously, we're excited about the clinical profile that emerged from our development program.
We believe that, some of the reasons that INGREZZA is the most prescribed agent in TD would apply equally here, in HD chorea. You know, we need to get, we need to get approval. We're looking forward to that. Obviously we're doing all the things that you need to do in advance to prepare for that eventual expansion of the label.
We'll take our next question from Jeffrey Hung with Morgan Stanley. Please go ahead.
Hi, this is Mike Riad on for Jeff Hung. Thanks for taking our question. We also had a question on the three-five-two phase II study in FOS. The patients are required to be on background therapy. Are there any concerns for drug-drug interactions, or does this limit the ability to measure three-five-two's pharmacodynamics? What extent could those be mitigated during run-in? Thank you.
Mike. The trial design does, given the patient population that we are interested in serving here is one that have incomplete or inadequate response to previously used, anti-seizure medication, that is why we allow up to four other medications in the context of the patient population coming into the trial. Obviously, we understand the pharmacokinetics and disposition of NBI-352 well from the phase I and preclinical data. As you see from the inclusion/exclusion criteria in ClinicalTrials.gov, the number of exclusions required is low, and that reflects the lack of drug-drug interaction that we've seen in the context of our previous data.
In terms of the pharmacodynamic effect of the medication, I think as you've seen for other useful adjunctive treatments in epilepsy, there is still an ability to demonstrate additional benefits since these patients are not experiencing the seizure suppression that they need in order to be well controlled. We don't have a concern around the ability to demonstrate that if NBI-352 is an effective medication.
Perfect. Thank you.
We'll take our next question from Marc Goodman with SVB Securities. Please go ahead.
Matt, it seems like there's a lot going on in R&D behind the scenes. I guess we should expect R&D spending to kinda continue to increase over the next few years. Can you just give us a sense of how the company will be managing that process and how we should be thinking of modeling R&D? As a % of sales as we go up, will we gain leverage? Is this just we're gonna continue to increase and... Give us a sense of how you're thinking about that because obviously the numbers could get big.
Yeah, thanks, Marc. I'm just gonna start out just from the high level and just saying that we're taking advantage right now of the real amazing changes that have taken place in the science in order to address really serious neurological and neuroendocrine diseases. That's why you're seeing us invest heavily in our research and preclinical development especially. You're going to see, you've seen a big bolus of investment here early on. I'm very impressed in over the last couple of years or so, just the progress that we've made in being able to move ourselves from just a small molecule company to a real biologics company from the research standpoint. Matt can talk a little bit more about how that's going to stack up against sales and the financials.
Yeah. How we think about it from a capital allocation perspective is that somewhere around 30% of sales would be some level that we'd want to invest in R&D. We feel like that would allow us to build a pipeline and a portfolio that would cause us to be a sustaining company. When you look at where we're at from a P&L perspective today, if you think about the CAH trials that we have ongoing, the muscarinic programs, FOS, you know, a dozen other programs now in the clinic. We have a lot of momentum right now. I think all of us around the table are really looking forward to start seeing the cards turn over from all the efforts that we've undertook the last several years.
I think that, you know, is really teed up for the second half of this year. As we flagged, expect the CAH data to be available early in Q4. From a capital allocation perspective, I think it's fair to assume 30% or so, but it's obviously dependent upon value-creating programs. We're not just going for quantity. We really wanna find the quality that will drive value for patients and for shareholders.
Thanks. If I could just ask a quick question on the anhedonia work, Eiry, can you just talk about the work that you've done to support the dosing and how you're thinking about dosing and what's been done? I mean, oral once a week, how we've gotten there?
For our anhedonia program, the dosing schedule that we're using in that phase II study was defined based on our preclinical and phase I clinical data and an understanding of the biology associated with this target. From that perspective, in a similar fashion to some of the other medications, such as ketamine, esketamine, used in the major depressive disorders, that's what enabled us to come up with the dosing schedule that we're testing there. Obviously, this is a proof of concept study. There is very little work that has been done historically in anhedonia, as you know. There are no medications approved for the treatment of anhedonia, which is a really difficult symptom within the major depressive disorder spectrum. At the end of this year and in Q4, we look forward to understanding whether we're able to demonstrate a signal in anhedonia in this study.
Thanks.
We'll take our next question from Brian Skorney with Baird. Please go ahead.
Hey, good morning, everyone. Thanks for taking my question. My question as well is just on crinecerfont. I was hoping maybe, Ire, you can just kind of set us up to understand sort of the differences in these studies between sort of the statistical significance hurdle and what would sort of be deemed clinically significant. I mean, you know, these are fairly sized studies, so it seems like you could hit statistically. I'm wondering, is, you know, hitting on a T-value, is that enough to kind of commercially justify? Like, what would we be really looking for in sort of the totality of data to think you'd see a very significant demand for this product?
Well, Brian, obviously hitting statistical significance is important as a first step in the context of understanding the benefit risk of crinecerfont. The way we've designed these programs, we believe that the primary endpoints that we've chosen, namely, androgen levels at week four in the pediatric study and the ability to reduce steroid dose in the adult study, those are important endpoints for patients in and of themselves. Having said that, obviously the study looks at a lot of very different parameters beyond that. The parameters across the two studies are very similar. You're correct that the totality of the data will be important in terms of understanding the overall value of crinecerfont, potentially for patients with CAH.
In addition to the short-term data, we're interested in the longer-term open label study data that we'll generate in support of crinecerfont as well. I think it's not really possible to say right now what pattern might emerge from that overall data set that would be most encouraging. I think we are measuring everything that is relevant to these patients in the context of these trials, and we look forward to being able to turn over the cards on that data in the fourth quarter of this year.
Great. Thank you.
We'll take our next question from Danielle Brill with Raymond James. Please go ahead.
Hi, guys. Good morning. Thanks so much. I have a question on CAH as well. I'm curious about the potential for functional unblinding and measures taken to mitigate that risk. Then quickly on INGREZZA, I'm curious if you've encountered any headwinds or you expect any disruption from Teva's new once-daily AUSTEDO XR. Thank you.
I think as Kevin alluded to earlier, the quality of our clinical trial data is paramount to us in terms of the trial design and our ability to protect the blinding of subjects and obviously the safety and integrity of subjects throughout the trial. We have many measures in place in order to address that, including central discussion of endpoint, central discussion of overview of the actual data itself. I think in the context of that, and in terms of the variability for these patients of the hormone levels and other things that they experience throughout the course of their lives, I think we are not worried about the issue of functional unblinding at this time.
Yeah. With regards to your question about deutetrabenazine XR, you know, that product hasn't been rolled out yet, but what I will say is that, you know, we've had a chance to take a look at the data and the profile, and it remains a complicated treatment from an administrative perspective. Most of the maintenance regimens require 2 pills of different strengths, and it still requires mandatory titration for up to 7 weeks. You know, we've prepared for this. Our teams have been trained. We're very confident that INGREZZA will remain the most preferred, most prescribed TD treatment. And it's the only one with 1 pill once a day dosing and no mandatory titration. We feel good about our momentum in the market. We're gonna continue to do the things that we've been doing to develop the TD market and to be the market leader.
Thank you.
We'll take our next question from Jay Olson with Oppenheimer. Please go ahead.
Hey, congrats on the quarter, and thanks for the update. Recognizing that you've got a large deal on the books already this year, just curious about your appetite for additional business development, what your thoughts are on potential areas of interest and priorities for capital allocation for the remainder of the year. Thank you.
Thanks, Jay. This is Kyle. Appreciate the question. Obviously, we remain quite active on the BD side of things. That's part of what we do here at Neurocrine. I think that we work with a spirit of urgency, but we don't feel like we need to do anything without looking at a program and seeing our technology fits the right type of program to bring into the company. As our interests that we've outlined previously, we're currently looking at things in neurology, psychiatry, endocrinology, and immunology, with a lens on neurology across those broad categories. Our priorities are pillars, of course, INGREZZA and valbenazine and in the pipeline of business development.
We've talked a lot about the areas that are of interest to us and where we find ourselves migrating towards. It's programs and technology that bring in innovative science, platform technologies, and differentiating modalities. You know, overarching the theme here is that we could potentially bring in a medicine that changes the standard of care. When you look at those types of opportunities, it comes along with strong IP as well. We're open to later stage in commercial opportunities. We've also mentioned that in previous meetings as well. Given the diversity of deals that we've done over time, you can see that we're also agnostic in terms of deal structure. Remain active. We'll continue to look at bringing in new programs to the company and having more news on that over time. Maybe I'll stop there.
Great. Thank you, Kyle.
Our next question from Laura Chico with Wedbush Securities. Please go ahead.
Hello. Good morning. Thank you very much for taking the question. I wanted to pivot back towards schizophrenia and wondering if you could remind us on the strategy with respect to the muscarinic agents. You mentioned you're advancing a dual M1 M4 later this year. I guess bigger picture, though, would you consider ultimately advancing multiple agents such as an M4 selective and an M1 M4? I guess maybe any commentary there on how you see the evolution proceeding. Thank you. Thanks. That was one of the attractions of the deal that we were able to do with Sosei Heptares, was the ability to gain access to not just one molecule in the muscarinic agonist space, but to a range of a portfolio of molecules with differential selectivity.
there's a huge opportunity, we believe, for this set of targets to serve patients broadly with both neuropsychiatric disorders and neurological disorders. We're starting obviously with the M4 selective agonist in the treatment of acute psychosis. And as Matt mentioned earlier as well, I think we're doing extremely well with the enrollment in that phase II study, and we look forward to reading out the data there. We are progressing an M1/M4 dual agonist into the clinic this year, and we will be considering both additional or similar neuropsychiatric disorders, but also potentially neurological disorders for that molecule.
When we think about M1 selective molecules, which we also have within the portfolio of assets that we gain access to, there obviously are broad range of different opportunities there, ranging from cognition to other neurological disorders. We're very excited about that portfolio and we believe that this set of mechanisms can be, potentially very beneficial for patients across a broad range of indications.
We'll take our next question from Sumant Kulkarni with Canaccord. Please go ahead.
Morning. Thanks for taking my question. Assuming crinecerfont is approved, could you give us your latest thoughts on potential pricing? Clearly, you know, tardive dyskinesia and CAH are very different disease states, but if you could give us a frame of reference for crinecerfont, at least relative to annual INGREZZA pricing, that would be very helpful. Another reason I'm asking this is because if I remember right, INGREZZA price at launch far exceeded investor expectations at the time.
Sumant, I do think it's very premature to talk about pricing at this point for a number of reasons, not the least of which we do not have any of the phase III data in. Pricing is one that very much hinges on what is the ultimate benefit that you bring to this patient population. We see that crinecerfont can be highly beneficial to this patient population, but one needs to develop the dataset, go and have discussions with the FDA, ultimately come out with the label. A lot of work goes on, actually, has already started, but in the very beginnings of developing the entire wealth of data that we go through before we settle on a range of prices. Thank you for the question, but too premature.
Got it. Thanks.
We'll move next with David Amsellem with Piper Sandler. Please go ahead.
Hey, thanks. Just on the psychiatry pipeline on the M1, M4, I know it's early, but any thoughts on how you would think about differentiation, whether it's efficacy, safety in schizophrenia, versus the late-stage product, KarXT, that's in development? That's number one. I just wanna ask a second question on in psychiatry pipeline in general. Over time, I wanted to make sure I didn't misinterpret your remarks, Kevin, but is it fair to say that you may take your foot off the gas in terms of small molecule development in psychiatry, and just philosophically, how do you think about that? Thank you.
I'll take the first part very quickly. No, there is no taking the foot off the gas. We're dedicated to psychiatry. What I was saying is that for the foreseeable future, we do not see a role for biologics in psychiatry, so therefore, our small molecule efforts in psychiatry will stay as robust as ever. Actually, the small molecule efforts against neurological targets and neuroendocrine targets will stay robust. What we're able to do now is taking advantage of some of the real exciting science that has been developed over the 10 or 15 years in biologics, apply it to neurological diseases, neuroendocrine diseases. What that will allow Neurocrine to do, what it allows us to do right now, is let's choose the right target for the right disease and then be able to hit it with the right therapeutic modality. We are not constrained any longer by just small molecules. We have all of the therapeutic modalities at our fingertips. Eiry?
Yeah. On the question of differentiation, it really is too early to be able to talk about that. I think the power and the value that we have with this portfolio of highly differentiated muscarinic agonist is the ability to conduct the preclinical and clinical experiments that will allow us to understand that differentiation. As I mentioned, I don't believe that for a dual M1 M4 that we are constrained to schizophrenia as a single indication in that setting either. I do believe there's a lot of opportunity both in the neurological and psychiatry space for this portfolio.
Yeah. I'll. This is Kyle. I'll just add and close on that. I think where my starting point, our starting point is on this is that there's no other company that has a M1 M4 dual agonist that is out there in development that we're aware of that doesn't require an add back of some sort to mitigate some of the peripheral effects of off-target muscarinic activity. I think we're very excited with the one that we have. Taking that forward, as Eiry mentioned, we don't have clinical data to differentiate. Certainly being in the position that we have right now as a starting position, we have a lot of excitement around this program across the dual and other molecules that we have.
Take our next question from Akash Tewari with Jefferies. Please go ahead.
Hey, thanks so much. We've seen that crinecerfont has shown greater than 5% neutropenia when it's been studied in other CNS indications, discontinuations were 12.5% in the highest dose group, mainly due to neutropenia. What are your expectations for neutropenia going into your CAH data, and what level of dropouts have you baked in in your powering for the trial? Thank you.
Thanks for that. As you rightly said, the study in which a sporadic laboratory measures of low white count was seen was in major depressive disorder. crinecerfont was studied in a phase II study of major depressive disorder prior to us actually having our hands on the molecule. In that setting, there were no adverse events associated with the laboratory measures, and neutropenia was also seen in the control arm, which was escitalopram in that study. We have seen no evidence of low white counts or neutropenia in the context of the work that we've done in CAH, nor is there a signal in the preclinical setting. We now have over 1,000 patients treated with crinecerfont. Obviously, as you can imagine, patient safety is paramount for us in the context of this program, and we don't worry about neutropenia in the context of this molecule.
That's really helpful. Thank you.
We will take our next question from Evan Seigerman. Please go ahead with BMO Capital Markets.
Hey, guys. This is Keith on for Evan. Thanks for taking our questions. I guess on the anhedonia readout, I know we're a ways out, but could you give us a sense of what good data would look like? Maybe more specifically, what improvements on the DARS scale could translate to in the clinic or, you know, on a functional level? Could you draw a line from anhedonia to broader set of negative symptomology across mental illness? How do you think of this as a distinct symptom? Thanks.
As you know, there are no drugs approved for the treatment of anhedonia and major depressive disorder. In fact, there've been very few clinical trials done. This is a proof of concept phase II study. We have measures embedded within the study looking at both the anhedonic scales and also the major depressive scales themselves. It's impossible at this point in time, prior to the readout of that data, to be able to kinda draw any conclusions or lines to any other symptoms. We're very excited about the mechanism here, and obviously this is a huge unmet need for patients with major depressive disorder. You know, that trial is progressing extremely well. There's a lot of interest and we look forward to seeing the data at the end of the year.
Our next question comes from Mohit Bansal with Wells Fargo. Please go ahead.
Hi, this is Serena on for Mohit Bansal. Thanks so much for taking our question. I want to ask 2 questions. First, on the cadence of SG&A spend, just given that significant growth in Q1, what comes off in the rest of the year? Two, wanted to understand the CAH market a little better, and if you have any info on, like, what proportion of patients are found in centers of excellence versus treated by general endo-endocrinologists or elsewhere. If you see patients, needing to be on this drug chronically, or would they only be treated during times of poor control? Thank you.
Hi. I'll answer both of those questions. On the SG&A spending, there was a bolus of spending in Q1. You should expect that to step down in Q2. The way that I'd look at it is we expect to hit our expense guidance range. I'd take the remainder of the SG&A spending and divide it by 3. It's going to be pretty consistent, I believe, Q2 through Q4. On the CAH front, yeah, there is. It's nice. There is some centers of excellence that help treat many patients with CAH. I think that the KOLs there will be the thought leaders to help inform what the local endocrinologists do to help support patients with CAH.
We do believe this would be a chronic therapy that they'd take for potentially for their entire life, something that would allow them to reduce their level of steroid exposure over a lifetime could pay significant benefit to those patients. We'll see what the data look like, and we'll continue to help develop this adjunctive therapy in CAH.
We'll take our next question from Ash Verma with UBS. Please go ahead.
Hi. Thanks for taking my question. For the crinecerfont pediatric study, do you have 4-week primary endpoint data on baseline info reduction in-house already? If you can comment on that, please. Are you waiting for the 28-week data on the secondaries to top line this? Thanks.
Although the primary endpoint is the 4-week data, the study is blinded out to the 24-week steroid reduction part of that maintenance treatment. As we signaled, the data will be in-house, in the Q4 of this year.
Nikki, we'll take the next question.
Our next question comes from Yatin Suneja with Guggenheim Partners. Please go ahead.
Hey, guys. Thank you for squeezing me in. Just a quick question on NBI-352, the FOS study. Can you maybe just give a little bit update on how the enrollment is and your confidence in full Q guidance? I mean, we've seen, you know, a little bit of a delay in enrollment from other competing studies, especially looking at FOS. The other question I have is this just a outside U.S.-focused study? We don't see U.S. sites. Just curious what are the studies focused on. Thanks.
The study is being performed outside the United States. At this point in time, we believe that has helped a great deal with enrollment. Enrollment is on track for us to have data in Q4 of this year.
Nikki, we'll take the next question, please. Thank you.
Next question comes from Uy Ear with Mizuho. Please go ahead.
Hey, guys. Thanks for squeezing me in. Just a quick question. I think you guys mentioned, you know, growth for INGREZZA was coming from everywhere. Just wondering, you know, with the added sales force, are you seeing largely growth more from breadth or are you also seeing depth in terms of physicians prescribing more of the drugs to their patients? Thanks.
Yeah, to build on my earlier comments, you know, we're seeing nice growth across all three of the segments, psychiatry, neurology, and the newest segment, which is long-term care. You know, obviously, with the expansion of our sales team, we were able to reach more ACPs. ACPs that we hadn't been able to reach previously. We are seeing the addition of new prescribers as part of what's driving growth, and we're also seeing an increase in patient volume from the existing prescriber base. Going back once again to that theme of growth, coming from everywhere, you know, these are different segments in terms of how developed they are. Ultimately, we're very pleased with the results that we're seeing across all segments of our business.
If I can I squeeze in a question on crinecerfont?
Hey, hey, Uy, we'll follow up with you. We gotta get one more question in. Thanks.
Thanks.
We will take our last question from Ami Fadia with Needham. Please go ahead.
Great. Thanks for squeezing me in. With regards to the performance of INGREZZA in the quarter, it was pretty strong and, sort of leads me to think about the growth you see in the upcoming quarters and the growth that's baked into guidance. Can you comment on how you see that progressing, or, yeah, and, you know, at what point would you consider reevaluating your guidance there? Secondly, with regards to Huntington's disease chorea, how quickly do you... Given the awareness level in amongst physicians that do treat TD patients. Thank you.
Yeah. I think we're really encouraged with what we saw in INGREZZA for this quarter. As you mentioned, we do have a few moving parts as we think about Q2, specifically around inventory. Our expectation is we'll reevaluate guidance here in the middle of the year, and we'll see what underlying demand looks like. As we sit here today, as Kevin mentioned, as Eric mentioned, as I've mentioned, record numbers of new patients, things look good from an underlying demand perspective. On HD, you know, I think post-approval, it is gonna take a bit of time to educate. I wouldn't expect a massive ramp in sales, for example, in Q4. It's gonna be something that will take time to bleed in. I think that, as we get post-approval, and then we get towards 2024, we'll be able to provide more insight into our exact strategy and how that's evolving. Thank you.
I wanna thank,
Thank you.
Everyone today. I want to thank everyone today. Just a couple of closing comments. I know you probably think I sound like a broken record, but our performance to date, INGREZZA's performance to date really supports this. We are still at the very beginnings of this market. Eric has said many times he's never seen such an undeveloped market. We work hard at developing it. There's still the vast majority of patients are left undiagnosed, untreated, and we really look forward to changing that in the coming year and years, I should say. We have a huge runway with this drug in order to continue to invest in it as we have done and to then see how the growth of this drug is just going to continue in the future.
Specific to this year, as I said as I started, you start a year like we've started it traditionally is just a really good year that we look forward to. Yeah, there's some lumpiness. I think that's the word that Matt used, that we're going to experience, in quarter to quarter. Probably why giving quarter to quarter growth is not the best way to look at things. Also why I said always judge, INGREZZA on its full year performance, and that has always been outstanding. I, to reiterate, I think it's going to be outstanding again.
The other things that we are really focused on is that we've made commitments to ourselves, to our patients, to you, that we're going to have several data readouts in the second half of this year, and we're going to perform on those data readouts. We will have all of those in. We are very much looking forward to the PDUFA in August of this year with Huntington's. Once again, I'd like to thank you all this morning for your questions. I'm sorry that we couldn't get to absolutely everyone.
There were times you're gonna have to help us with not having multiple questions, please, in the future, so that we can give everyone a chance. We try to keep our opening remarks short and our closing remarks shorter. With that, I'll say, have a wonderful day and look forward to talking to you, soon in the meetings throughout the year.
This does conclude today's program. Thank you for your participation. You may disconnect at any time. Goodbye.