Analysts at the bank. It's my pleasure to have with me our next presenting company, Neurocrine. Sitting up here on stage are a couple familiar faces, Matt Abernethy, who is, of course, Chief Financial Officer, as well as Todd Tushla. What's your job again, sir?
I'm the current Vice President of Investor Relations.
Okay. Just wanted to clarify.
He did-
Yeah.
He did tell me his new title from you this morning was his favorite person.
Oh.
Can you confirm that?
Yes, that is true. I did say that. I did in fact say that. We'll put that on your card.
Thank you.
Maybe, Matt, for the few people who aren't as familiar with the company, can you just give us a quick overview of Neurocrine, and then we can go into some of the more, recent updates that have been happening?
Sure. We are gonna be making forward-looking statements, as you can imagine. Check out the latest SEC filings. I'm sure you're excited about that update. I was reflecting coming out here, [Suzanne], eight and a half years ago, I joined Neurocrine. In our first conversation, I remember it 'cause you've got, you know, a good perspective on things. If I recall, the conversation was all around elagolix and a little bit around INGREZZA.
Yeah.
When you fast-forward, over the last 8.5 years now, we sit here in a tremendous position. For me personally, I feel like it's quite fortunate position to be in as a company. There's really three attributes that every company is striving for, especially when you're in mid-cap. How do you get from mid-cap to higher mid-cap to large cap? You're really looking at your commercial franchise first and foremost. Do you have durable revenue that's gonna continue to grow and deliver? We have INGREZZA that was actually approved when we first talked-
I think in 2017. It's been on the market for quite some time now. It's for an involuntary movement disorder caused by prolonged exposure to antipsychotics. Unfortunately, they get these hand movements, face movements, trunk movements, and up until 2017, there were no available treatment options, as you know. We continue to surprise to the upside. Guidance is-
Very recently.
Yeah.
That [crosstalk] .
Guidance this year is $2.7 billion-$2.8 billion. LOE is 2038, we still have a lot of opportunity left there. The second major product that we have is actually CRENESSITY, which was approved in December of 2024, that was for classic congenital adrenal hyperplasia. It was the first medicine in over 70 years approved for CAH patients, the launch has done great so far and continues, like you said, surprise to the upside. I think it's a reflection of just the great unmet need in the marketplace as well as a drug that is working and working well. We have a little bit over 10% of patients on therapy within the first 5 quarters.
Last in Q1, we had over $150 million in sales. The third product, which is going to be new for Neurocrine, is called VYKAT xr. We have an announced acquisition of Soleno Therapeutics. I'm not going to be able to speak much about it today because it is in its under-offer period. When you think about a medicine that was approved last April, it's a rare endocrine product similar to CRENESSITY, and they've had a great first four quarters of launch, $95 million of sales in Q1. When you aggregate all three of these products together, you get to over $900 million sales in Q1 alone. The scale of the company is growing, and we would expect it to continue to grow over the future.
On the pipeline side, we have close to 20 clinical-stage pipeline programs at this point. I know people always ask me to choose my favorite kid, I typically do choose my favorite kid. The two lead programs are the phase III programs. One is osavampator, a major depressive disorder that reads out in 2027. Also direclidine, which is a muscarinic agonist that's being studied in schizophrenia that will also read out in 2027 and 2028. Of those two, my favorite is osavampator for a variety of reasons, which we can get into if you'd like later. On the early stage, we actually just announced entering the clinic with NBIP-2118, our CRF2 agonist, that's being studied in obesity.
That data in healthy obese people will be read out in late 2027 as well. The last piece, the third piece, so you got your commercial, you got your pipeline, and then last piece is financial. We've been able to drive significant top-line revenue. Profitability is flowing quite well right now. We had $200 million of non-GAAP net income in the quarter, and we would continue to expect that to grow while at the same time prioritizing investment in R&D at a rate of 30%-35%. That's a mouthful for the company, but we have a lot going on, a lot to be proud of and, you know, as you said, Q1 was quite good.
Okay. Nobody can see us because we don't have video, but you've been smiling the whole time. I'm gonna take that as a sign that you're pleased with the way things are going so far this year. Let's just do one question on Soleno. I know you're limited on what you can say, but how does this sort of fit in, sort of with the other drug launches that you guys are doing? Obviously, you've demonstrated the ability to have outsized launches, and you're taking over someone else's launch here. What was it, I guess, that you thought would be particularly synergistic?
Well, these are both products between VYKAT xr and CRENESSITY are both rare endocrine products.
As we look in our portfolio and pipeline over the future, we would expect to have a full business around this segment. There's a lot of valuable synergies from the sales side, not necessarily focus on the cost side right now. To be able to go into these clinicians and be able to share about CRENESSITY and also then have another sales force being able to hear about VYKAT XR, it was something that, you know, was a great strategic fit for us. The team is quite motivated. They care a lot about the Prader-Willi syndrome patients. A lot of talented people. We're looking forward to getting this closed, and we'll be able to provide more color once we get that behind us.
It is gonna be a durable, a durable asset for us that goes into the 2040. From an IP perspective, then, it's a great strategic step.
It's not because Eric doesn't have enough to do.
Eric is very good at developing, markets and rare disease.
He would say that the number one most difficult market he's ever seen or underdeveloped market is actually tardive dyskinesia. 'Cause when you think about nobody being diagnosed in that marketplace, it's something that, you know, has taken a lot of effort to get from diagnosis all the way to a prescription being written. The good thing about the Prader-Willi syndrome is that there's a specific ICD code that allows you to know who the patients are, where they're at.
That differs from CRENESSITY in that there isn't a specific classic CAH code. I think there's some good things that come from a medicine like this for VYKAT. Both VYKAT, [PD], and CRENESSITY, there's no approved other medications for these patients prior to the launch of these three medicines. It's gonna be quite special on our hands.
Okay, great. On the topic of INGREZZA, what quarter of the launch is it now?
We're nine years in.
Nine years in.
Nine years in.
At nine years in, you still manage to beat expectations on one key sale. Can you talk to us about where you think the, you know, unmet demand is and how we should generally think about what to expect on uptake, not just for the rest of the year, but for the next couple years?
Yeah. I would just give another kudos to our sales team and our medical team to be able to get record numbers of new patients in the first quarter when the first quarter is typically challenged with seasonality.
Yeah
is a testament to the work that they did. It's also a reflection of how many people with tardive dyskinesia continue to need help. It's debilitating to take an antipsychotic for your mental health, get your mental health in check, ultimately develop a movement. That movement, even if you re-remove the antipsychotic, it still stays there. The big basic blocking and tackling that we have underway, it's gonna sound boring, because it's the exact same things we've been doing for quite some period of time. It's really ensuring the HCP is aware and thinking about tardive dyskinesia. These prescribers are primarily psychiatrists. They're thinking about the underlying mental health condition of the patient, not necessarily thinking about tardive dyskinesia.
We see the more the call frequency is or the higher the call frequency, the more likely a clinician is to see the TD and to prescribe INGREZZA, and that's what we're seeing so far. The second is the direct-to-consumer advertising in that we know patients have these movements. They may not know what they're from, and they're definitely not thinking about talking to their psychiatrist about a movement disorder. That'd be like asking a dentist to look at your ankle. That just doesn't happen. We have direct-to-consumer advertising campaigns that are putting a name to this movement and encouraging them to talk to their doctor about whether INGREZZA could help them. A lot of room left to go. Around 50% of the market has been diagnosed at this point.
Only one in 10 patients with tardive dyskinesia are currently on a VMAT2 inhibitor. Still a lot of room for growth ahead.
There was a lot of discussion towards the second half of last year on a couple of items. First, you know, the competitor gaining share, secondly, what type of negotiation you'd have to make with payers in order to have coverage. When do we start to hear, I guess, on the second point about how your discussions for 2027 are going?
Yeah. Once we get closer to 2027, we of course expect our product to have strong access still.
It's a great product and a great market, I think from a pricing perspective, we're competitively priced relative to AUSTEDO XR. You know, I would expect access to be strong. The specifics around it, we'll be able to give more color as we get later in the year. To the previous question about Teva or AUSTEDO gaining share, if you rewind back to 2024, we hit a period in the second half of that year where new patient additions were slowing. At that point, Teva were accelerating, not just in prescriptions, also in revenue dollars because of their titration schedule. Last year, we also had a sales force expansion. We had record numbers of new patients in Q2, Q3, and then flattish in Q4.
Through that period of time, we actually gained two share points back. We feel quite good on a [TRx], on a market basis, but we're in a sort of gain share mode right now.
That's quite attractive. When you think about how is the market doing right now, 'cause their results are a little bit difficult because of their inventory fluctuations and also their pricing schema. I think we would both agree that the market right now from a [TRx] perspective is growing in the low to mid-teens, and that's quite strong nine years into launch.
I had brought up the question about 2027 because last year you said that you had started negotiations a little bit earlier.
Yeah
than you normally would for 2026. I think people remember that, and they'll be thinking about when you start talking about it.
Yeah, I think there was an element of that we brought it up because the plans were asking for us to have an incremental discount in the current year that we were.
Yeah.
which was unusual. The trade-off was worth it to go from 45% covered Medicare Part D lives to 70% and just seeing that flow through with the new patient starts. We would not expect to add any other lives on form.
In terms of our coverage status for 2026. We like where we're at. We're around 70%, and we'd expect similar levels as we look ahead.
Okay. Maybe let's move on to CRENESSITY. That's also had an outsized launch and can you just talk about the dynamics there? Obviously, a much newer launch than INGREZZA. It's also a more, I guess, technically smaller opportunity for disease. What are the differences in how the commercial team is looking into gaining share there versus what needed to be done for INGREZZA?
Yeah. there's really three things that it takes to have a successful drug launch. One is there has to be a high unmet need.
The second is the drug actually has to work. The third, there has to be a level of tolerability that allows them to stay on therapy, and we're checking the box on all three. There's never been an improved medicine outside of high dose hydrocortisone for these patients with classic CAH until CRENESSITY was approved. I think what we can see, both in our clinical data as well as our open label extension data that we continue to put out, the benefit is significant to these patients. The second piece is I think anecdotally, we hear feedback that the medicine is working at least as good as what was in the clinical trials, if not, if not better.
My anecdotal experience with my own son on CRENESSITY is it's much better than what was shown in the clinical trials. It's been quite a benefit for him and my family. The third piece is that the tolerability side of the equation. It seems as if patients are staying on therapy. Right now, from a persistency and compliance perspective, it mirrors or looks very similar to what we saw in the open label extension study, which is, you know, over 80%. Yeah.
We had done a survey before the quarter, and it indicated everything that you just mentioned. You had indicated, you've now moved away from providing, let's say, script numbers. Intra quarter, how reliable, though, do you think it is to be looking at the vendors that provide scripts?
Well, first of all, I would caution.
When you have very low numbers, it can be skewed a lot. I think many weeks where I would see those numbers being coded externally, it wouldn't align with what we were seeing internally. I don't know much about the data sources. I also had people talking about patients not being reauthorized on therapy and getting insurance claim data. We've not seen anything like that. I would caution you on over-reliance on some of the third-party data. Maybe at some point it will get more accurate, but right now it just wouldn't be something that I would recommend.
As it relates to Q1 performance, you know, last year as we went from Q2 to Q3 to Q4, you had this steady step down of number of enrollments, which were quite significant, but they were a trend down from 600 to 500 to 400.
I think there is the concern that we've tapped out the market. You know, everybody who wanted it at the KOL, you know, got it, and now it's gonna be quite low. What we saw from Q4 to Q1 is very consistent enrollment forms from what we saw in Q4. You know, I think as those new patients continue to roll on medicine, and by and large, many of the patients are staying on therapy, there's a compounding benefit that, you know, we would expect to continue.
Just as a reminder, there isn't the same seasonality for CRENESSITY as there is for INGREZZA, right? For 1 Q?
That's right. There is on the gross to net side an element where the commercial patients have their co-pays reset, and then we cover that. In terms of reauthorization, because 70% of these patients are commercial, they go through their reauthorization that's more mirrored to, you know, how long their plan had approved them to be able to continue to get CRENESSITY. Typically, we see it as six -month initial cycle, and then it's a 12-month approval thereafter. We've not seen, you know, anything that would lend itself to thinking that reimbursement would become more challenging.
That's been one of the upsides in the early stages of launch, is that we've had over 80% of our [TRXs] are actually reimbursed [TRX]. It's a testament to, you know, our specialty pharmacy, PANTHER. They do a great job with this. Also our field payer team. I think there's also an awareness of the impact of CAH and high-dose steroids on patients that cause the plan to want to cover it.
What does consensus sales peak, you know, on PAN?
It's growing every quarter.
Yeah.
Uh-
Yeah. It's probably now 1.3, 1.4.
Yeah.
Million ZIP code.
How does that kind of compare to the market data research that you guys have done?
We've clearly said that this could be a blockbuster.
Yeah.
medicine. I think that, you know, it tees itself up given the price point. If you do get to the range of rare disease launches, if you look at what could peak penetration be for a medicine that's chronic medicine that's treating more or less the symptoms or controlling the underlying disease itself, you see a range of 30%-50% overall adoption within the marketplace. I think if we ever get into that level of ZIP code of 30%-50%, I think that you can see your way to some fairly large numbers that you're referring to. I think that it's really up to us and the clinician community to continue to help as many CAH patients as possible.
Well, you tack on that the patent goes into the 2040s as well.
You're looking at the commercial base of business that we have or we'll soon have is that this has got a durable commercial revenue stream.
Yeah. I think our first peak sales number for INGREZZA might've been like $1 billion, and some people thought that was too high. It is a bit of a tradition that people up their numbers on.
INGREZZA's still trying to find its peak.
Yeah. On the point of, like, having a long runway, how do you see the competitive landscape evolving in the next several years?
Well, I do think going back to the runway piece, the path to peak is much quicker in a rare disease medicine like this as compared to we're still nine years in for INGREZZA. I think it's about a five-year period of time.
You think about the progress that we can make between the time we launch to that five-year mark relative to competition, I think we're gonna have a very dominant position in the marketplace. As we look at, any competition's gonna have to cross a very high bar, to get patients to switch therapy, let alone, disrupt the standard of care. We'll be, of course, keep an eye on competition. When you have a medicine that's working, a medicine that's safe, and data that supports your claims that are gonna be multiple years, multiple patient lives ahead of competition, We like that position.
It's setting a high bar. It's not just for competition, but also for our own internally.
developed molecules that we're trying to take the next generation, like, fourteen thirty-five is the name of the product. CRENESSITY across efficacy, safety, and tolerability has given us something to gun for, but it's not gonna be easy to beat it.
Okay. Let's talk about other aspects of the pipeline. 2027 is going to be a big year for pipelines for Neurocrine.
It's going to be the first of many data-rich years for the company, the way the pipeline is set up.
Yeah. Maybe, let's start with direclidine. How are you thinking about well, remind us when that phase III is set.
Yeah. This is the selective M4 agonist that differs from COBENFY, which Bristol has, which is a combination of a pan-muscarinic agonist and a peripheral antagonist, and different than emraclidine, which is a positive allosteric modulator, and requires endogenous acetylcholine to work. This is a first-in-class, best-in-class approach. The phase III studies for schizophrenia are enrolling. I was just texting Samir. He's at a site visit making sure that we're conducting well-run trials.
There's two main studies in schizophrenia. The first one is set out to read out in 2027, the second one in 2028. We also have a program in bipolar mania for the same drug in phase II.
The two phase III studies, the first one that's gonna read out next year, how much of a read-through would it be for the one in 2028?
For schizophrenia, the way the trials are typically designed, you need to win on one out of two. We'll see.
Okay.
Yeah. In psych, it's always difficult to predict the outcome. That's why companies like ourselves, even if the regulatory guidance says.
Yeah
that you only need one positive, which, you know, here I think combined with the phase II and all the safety data we have with direclidine, I think one would be sufficient. You would still, as a company, wanna run two, because there are so many dynamics at play in terms of trial quality and clinical site quality. So we'll see. We like the setup. We like what we think that the muscarinic can bring to the class of medicine for psychiatry. You know, one that's safe, tolerable, easy to use. That's gonna be one that we're gonna look forward to launching.
One question about FDA interactions. It does look like there's going to continue to be some staffing changes there. Does that impact any of the conversations that you're having?
No. I think, actually the FDA has been, you know, quite positive and productive on all of our programs and even had some recent correspondence as of last week on our Friedreich's ataxia program that was quite positive. You know, I wouldn't foresee there to be much disruption, but, you know, of course, instability brings opportunity or moments of crisis. I think that's something that all of us in the industry are getting used to at this point. It's always disappointing to see change. I think we're resilient, and we'll be able to manage through it.
Okay. Let's maybe talk about osavampator since, Matt, you mentioned that's one of your favorites. Why are you excited about that one?
First of all, I think the efficacy in phase II was significant. Osavampator, for those who aren't familiar, it's an AMPA potentiator. It is a mechanism that many people have tried to explore in the past, but nobody has been able to drug it without causing some untoward side effects. Thankfully, our partner, Takeda, developed this medicine tremendously well. We're testing this in adjunctive therapy for major depressive disorder. This is a significant unmet need, needs new mechanisms beyond D2, and I think that this has an opportunity to do that. Number one, on the efficacy front, we had two doses. Both doses worked, one milligram and three milligram.
1 mg worked a little bit better than the three and so we, from a risk reward perspective, chose the lower dose. We've taken that lower dose into, we have three active phase III trials. We have one randomized withdrawal study, and then we also have an open label extension study. A lot going on behind osavampator. Why am I excited beyond the efficacy? Financially, it gets you to a major market quickly. I think this major market, if you have a new mechanism and people are and it's safe, I think it's something that people will be trying quite quickly and with the goal of being second-line.
Our team is up for the challenge to get this enrolled and to get quality data, we'll see where we take it from there. It could be quite transformative in a quick period of time for the company within our psych franchise. You have your rare endocrine franchise that we talked about, [LILBDR], INGREZZA psych franchise, and that's how the company is developing right now.
You also have obesity.
Mm-hmm. Yeah.
Your focus on that seems to have evolved. I think initially you started talking about metabolic disorders.
Yeah. We had a coming out party in December at R&D Day.
Yeah. It went to obesity adjacent, and now we're full on obesity. Why does it make sense? I guess similar questions to what we had been talking about with CRENESSITY. How do you see the competitive landscape evolving there? Because it does seem like there's gonna be a lot of options for folks.
I think there's gonna be a lot of options in terms of mechanism, in terms of administration, in terms of, you know, the frequency of how often you take it. There's gonna be a lot of opportunities for others to play in this space. There is a new mechanism that we're, you know, exploring, CRF2 agonist. This is, you know, obviously using the heritage that we have on the CRF pathway, from when we were, when we were, I guess, born by Kevin Gorman. We were talking about Kevin earlier today. I do think that this is a natural evolution to be able to look at the other side of CRF. We also hired an expert team.
Jude Onyia, our Chief Scientific Officer, led large molecules at Lilly, and we also have a handful of others who are experts in some of the other obesity assets. I think that it makes sense because of our core capability. Also the market, there are pockets of need, and this is likely something that will be combined with our own proprietary triple G over time that will give it even more potency. Our view is, let's explore it.
Financially, it's not a big investment to get to phase I data. Actually, in phase I data, it can inform what your phase II or phase III data might end up looking like, as compared to psych is much more risky.
Right.
You really don't know until you get through phase III. Obesity, you can get a quick read within your phase I trials for a little amount of money, and then you can figure out strategically where you take it from there. I'm proud of the team and what they've been able to develop. I'm still personally getting up to speed on the obesity space 'cause there's so much going on.
It could be a full-time job.
Yeah
to keep up on everything. We do like the exploration of this pathway, and I personally like to know we're gonna have data next year that will tell us if there's a there there.
Okay. The last question, I think people were waiting for years and years for you guys to decide what you were gonna buy, and so now you've bought Soleno. We're buying Soleno. What is your thought about business development in the nearer term now that this is gonna be integrated?
Well, this is one that we can handle financially, with our cash on hand.
It is also EBITDA accretive immediately and non-GAAP EPS accretive immediately. From a financial position, you could practically still do some M&A. For us, our focus is gonna be on integrating that-
Yeah.
Integrating it very well, reestablishing our cash position. If the right acquisition is out there, we'll of course, look carefully at it. When you think about INGREZZA, CRENESSITY, VYKAT, osavampator, direclidine, obesity, we have a lot on our plate right now.
Yeah.
It's not a necessity that we do anything. I'm personally so thankful we were able to come to agreement with Soleno. Provides a great foundation combined with INGREZZA and CRENESSITY for us to grow off of for many years ahead.
Okay. With that, we're out of time. Thanks, guys.
Thank you.
From Minnesota, from San Diego. Thanks everybody for joining.
Thank you.