Thank you very much for the post-lunch session. We made it such that we have a very exciting company with us to make sure you stay awake during the post-lunch session here.
Oh.
We have Neurocrine management with us. We have Matt Abernethy, the CFO of the company, Eric Benevich, the Chief Commercial Officer of the company, and Todd Tushla, who is Head of IR at the company. Thank you very much, team Neurocrine, for joining us today.
Well, happy to be here and happy to be called an exciting company. I think that we are an exciting company, and we were talking beforehand. We are treated a little bit like a value company at the moment, but we are a growth company. We have a lot of great things going on right now and really do feel quite fortunate to be in the spot where we have multiple products. We had $1 billion in revenue this past quarter, and a lot of data readouts coming over the next 12-24 months, as you know. As CFO, financial flexibility
Right
to continue to invest into the future. We do feel quite fortunate to have Ingrezza, which this man launched nine years ago. $2.85 billion expected at the midpoint of the range, growing 13% year-over-year, and that is nine years into launch. IP protection, that takes us out to 2038. That is really the foundation of what has allowed us to invest and build the company to where we are at today. We have CRENESSITY, that was approved in December of 2024. That was for congenital adrenal hyperplasia, the first-ever medicine that has been approved for patients in over 70 years, and we have been able to help 15% of patients at this point in the launch. So a run rate of $750 million coming out of last quarter, with tremendous growth opportunity ahead.
Last, on the commercial product side, we have VYKAT XR, which came to us from the Soleno acquisition. That is going well, helping patients who have a very sick It's a very difficult disease. Soleno had done a great job helping many patients with PWS. We take it into our hands now, and we are going through the integration and feel like there are many more patients that have PWS that are going to benefit from a medicine like VYKAT XR. We had $94 million in sales this past quarter, and the aim right now is to get through the integration and to be able to put some magic touches on it that Eric and team will be able to deploy, and then grow sequentially exiting the year. On the pipeline front, we have major data catalysts coming in over the next 12- 24 months.
The two that I would highlight in particular, the first one is osavampator. That is in major depression. That is an AMPA potentiator, so in the ketamine pathway. So it is a validated mechanism. We had excellent phase II data. We are running the trial to ensure that we limit the placebo effect, and we are looking forward to having data from our three trials in 2027. The second major program in phase III is directhedine, and that is our muscarinic agonist. That is being studied in schizophrenia. That has a differentiated product profile that I think will lend itself to safe, tolerable, ease of use delivery. That will have data in 2027 and 2028. Mohit, when you think about the transformation we have gone through just the last several years-
Right
to now $1 billion per quarter, we have meaningful data catalysts coming up and tremendous financial flexibility, zero debt, half a billion in cash and growing, coming off of the Soleno acquisition. We have a lot to look forward to as a company. So appreciate Wells Fargo being here. I also remember I did not say the forward-looking statements. We will be making forward-looking statements, so check out our SEC filings. Mohit, with that, I will hand it back to you. A lot of great things going on.
Awesome. The clear sign is, out of 12 questions, I only had three of them for Ingrezza, nine for everything else.
Yeah.
That's a sign of things. I have to start with Ingrezza. I think there has always been this patient volume price dynamic with Ingrezza, and you seem to have turned a leaf there by all the investments that you have done in sales team there. Talk a little bit about how sensitive this market is to commercialization and marketing aspect of things, and then also, how much growth is left in this market? Because you seem to be growing really rapidly still. Not just you and competitor both.
Yeah, I guess I'll take the second question first. I think the headline is that there's a lot of growth potential left in the VMAT2 category in tardive dyskinesia. If you think about Ingrezza, it's an unusual brand, it's an unusua l medicine in the sense that it's been on the market now for about nine and a half years and still growing at a double-digit clip. I think that that is both a testament to the product profile of Ingrezza, very effective, very safe, and well-tolerated, and certainly we've seen strong receptivity and adoption over the years. Also, I think it's due to the fact that the tardive dyskinesia category was so underdeveloped, so to speak, at the time that we launched in 2017.
We currently estimate over 800,000 people in the U.S. living with tardive dyskinesia, and yet only about 10% of people are currently being treated with either of the two VMAT2 inhibitors. So there's still a lot of room for organic growth. As Matt said, we saw very strong and continued strong growth even in year nine of this launch. Q2 of this year we posted record number of new patient starts for Ingrezza, which is, once again, unusual for a product nine years in, and a record number of total prescriptions. It's a testament to the medicine, but it's also a testament to the fact that this is a market that still has a lot of growth potential in terms of getting people treated, diagnosed and treated. We expect that momentum to carry us forward into 2027 and beyond.
The other part of your question was really related to how promotionally sensitive is this. What we've found is that, especially in a category that's so underdeveloped and underdiagnosed, very promotionally sensitive. What we've done over the years is to make what we think are smart investments where we think it makes sense. For example, we recently, and recently is about a quarter and a half ago, completed a salesforce expansion. The basis for this salesforce expansion, the rationale was really twofold. One was, we continue to see the base of VMAT2 writers grow. At the time that we announced our intention to expand our salesforce, which would've been late last year, we shared that the size of the VMAT2 prescriber universe had grown by 30% in just the last two years.
In some ways, as we've expanded our team over time, it's been to keep up with the growth of the market and to make sure that we can call on, especially in psychiatry and long-term care, those providers that are caring for these patients that either have already been diagnosed or are exhibiting the symptoms of TD and haven't yet gotten a formal diagnosis. That's another example of how promotionally sensitive this category is the fact that we have, for the last, I want to say four years or so, been running branded DTC on TV. Some of you may have seen our ads running. But essentially, reaching out to people that are on antipsychotics, that may or may not have been given a diagnosis to explain their abnormal movements, encouraging them to speak to their doctor and ask for Ingrezza, specifically.
Every time that we've looked at the ROI of our investment in DTC, it's come out very positive. We've continued to invest there. I think that the salesforce expansion, the continued investment in DTC are a testamen t to the growth potential, and the opportunity that lays ahead. Nine years in, we've made great progress, but we've got a long way to go still in terms of fully capturing this market opportunity.
Just think 13% year-over-year growth is what we anticipate. That is inclusive of 4% price-
Right
headwind in 2026. This year, nine years in, all the effort of the team, still growing 17% underlying volumes. It's an incredible year for the team and also the many patients that is being benefited from that. We made an investment last year in access- to expand our access and coverage to 70%. I think the fruits of that labor, or investment in rebating, is paying off. As we t hink about the future, in 2027 and particular in 2028, ensuring that we maintain that access is a critical aspect to our strategy. I think one of the most common questions we are getting coming out of the quarter is, "Okay, you guys are having a great 2026. What about-
'27. That was my next question.
Yeah. What about 2027? There are two pricing headwinds.
The first one is statutory. Because we had the small biotech exemption-
we were not paying the full 20% catastrophic coverage rebate for Medicare Part D patients. That is moving from a 2% rebate to a 5% rebate, and that's off of the WAC. That's going to be a known headwind.
The second aspect is, as we've been negotia ting with plans to preserve our access, because our competitor has an MFP where they'll be required to be covered on formulary, we have had to give some modest rebates to be able to maintain that access. But we expect to more than offset any of the price headwinds with the volume that we're going to be able to generate next year in 2027. We do anticipate being a strong grower-
next year in 2027, and we'll give more specific color as we get later in this year or early next year.
The 3% extra impact, that is on WAC. But on net price, it could be more than 3%. Is that fair?
Yeah. It could be more than the 3% impact. But you also only have a segment of about 65% or so of patients are actually Med D patients.
Got it.
It is not on the whole base, but you are right. In terms of Med D, the 3% is closer to 4.5%.
Got it.
type of an impact since it is on-
Then you divide, then you multiply by 65% on net probably 3%.
Yeah. Probably similar-
Got it.
ZIP code. Yeah.
Got it. Very, very helpful. Do you see it look like Austedo? Because we have seen this with some of these players when they cut the WAC price, they see some kind of net benefit and maybe volume gro wth as well, because there are some plans who benefit from the lower list price. Do you see any such thing with Austedo having a lower WAC price versus you having a higher WAC? Is there anything? I will make a more specific comment and then maybe a general comment. The general comment is, I think the jury is out in terms of whether MFP negotiated products actually see any increase in access as a result.
I think it depends on the brand.
in terms of what their pre MFP formulary coverage looked like, and to the extent that that brand or that category was managed by the plans. In this case, the VMAT2 category, we have two medications, Ingrezza and reformulated tetrabenazine. Our competitor has historically had been fairly aggressive in terms of their contracting activity, and as a r esult, has had formulary access greater than 90% of Medicare lives most years. Going into 2027, I think there probably will be an increase in coverage to get up to 100%, but it's sort of marginal.
Right.
Whereas we are at around 70% formulary coverage this year, and our expectation for next year is it'll be similar to what it is now. Regardless of what percentage of lives are covered on formulary, it doesn't take away the fact that these are specialty medicines that require prior authorization. Any claims that are approved have to meet the criteria for the pl an. We'll see how things play out in terms of increased access. Ultimately, our goal is to make sure that we have parity or near parity coverage. When we have parity coverage, we find that we do quite well based on the merits of the product profile.
Got it.
We have a great product and a great market that is still promotionally sensitive, as we were talking about before. Our focus is to make sure that all the sand is out of the gears as much as possible, allowing choice for the prescriber, choice for the patients. I think over the last 18 months, we feel like we are winning. Gaining more share and obviously contributing to the overall top line of Neurocrine.
Awesome. Thank you f or that. Maybe moving to the second product, CRENNESITY. You are done really well. I think you are probably exceeding the peak sales estimate three years ago, what they were for this product probably already. Second time in a row. Thank you.
I have not thought about that, but I think you are right. When we received approval, we had been saying blockbuster, but I think the street was $500 million-$700 million.
Yeah.
Our run rate right now is like I said earlier, $750.
Right.
Yeah.
It happened with Ingrezza as well. I mean, I remember the time the peak sales was $500 million at some point.
Yeah. It feels like after the last couple quarters of sales that the investment community is starting to believe that this is indeed a blockbuster.
Right. There is a company which also acquired another company, so they are talking-
Right.
-big numbers as well, right? We'll get to that.
Okay.
So I think for last few quarters, every quarter you would post a good quarter for CRENESSITY, but people would still worry about Because your comments were a little bit guarded at that point, that we don't know what the steady state new patient add is. So we were always thinking that there was probably a bolus, it'll go away. This quarter you sound a little bit more comfortable around the patient add numbers. So talk a little bit about what gives you confidence that you are getting to more of a steady state patient adds here. And what are you seeing in the marketplace that gives you comfort that you could continue-
Yeah.
-to grow here?
Yeah. I'll start off by saying that we've been really pleased and maybe delighted with the launch of CRENESSITY. And as you noted, externally, I think the expectations were more modest.
In terms of what the potential was for this medication. We've always believed it can be a blockbuster and we said that up front at the beginning of the launch. Now we're on a trajectory to deliver on that. There's three things that have been really favorable with this launch. One is the rate of adoption. As we saw, there was sort of a bolus of patients that got on treatment in the first couple quarters. We call that last spring with CRENESSITY. Ever since then, the rate of new patient adds has been very steady and consistent from week to month to month, and now quarter to quarter. We see this as a very, I don't want to say predictable, but reliable trend in terms of new patient starts. The other thing that's been really favorable has been the persistency.
It's one thing to see what the persistency looks like in clinical trials. It's another thing in the real world. In clinical trials, what we saw in the open-label extension was, first of all, in the double blind studies, over 95% of patients completed, and rolled over into the open label study. Even at a year, it was about 90% that were still on treatment. We just recently rolled out two-year data, and once again, about 90% of those people were still on drug at the end of the second year. The real-world persistency isn't quite as high as what we saw in the clinical trials, but not that far off.
Right.
We feel really good this is an outlier to the upside.
Right
with CRENESSITY. That's been favorable. The third thing which I think is an important contributor here is the reimbursement.
This is a rare disease drug. It is non-formulary on most plans. It is mostly a commercial and Medicaid population. We have not had any real challenges in terms of getting claims approved. In fact, not only have we had a really high claims approval rate, but it has been faster than what we had expected. As a result, there has been a lower than expected utilization of our free trial program.
Ultimately, we are seeing steady adoption. The claims are getting approved, and they are getting approved pretty quickly. Then once patients get on treatment, they are able to see their androgens come down and/or start to taper down their glucocorticoids. We are seeing really strong persistency as a result. There is still a lot of headroom in this particular therapeutic area. During the last earnings call, we disclosed that about 15% of the prevalent population was now on treatment.
That means the majority of people are yet untreated. We feel good about the progress we have made so far, but we recognize that there is a lot of work to be done
to continue to build our CRENESSITY franchise.
Well, I will tell you, I am not surprised that Eric and team could deliver on this.
Thank you.
They have done a great job and I think when you take a step back and you say, "Why is this successful and why is it going to continue to be successful?" It is a market that the only option for these patients was to take high-dose steroids for 70 years.
There is significant need. The second piece, as Eric said, you can see a dramatic reduction in androgens right after you start taking therapy within the first month. You can see the efficacy, you can see the stabilization.
Then third is the safety aspect. This is primarily a medicine that is prescribed, or the majority right now, a little over 50%, are pediatrics.
And safety is absolutely critical to getting them to try the medicine and then ultimately to stay on the medicine. So those attributes lend itself for us to believe we're going to continue to chug away and drive meaningful revenue growth over the next several years.
And you had asked about whether we were a little bit more guarded early on. I think it helps to have more data.
Right.
Right? And certainly, like we saw with Ingrezza and TD, this is what I call a learning launch. We're building a new category from scratch. And we have certain assumptions that you have going into a launch like this. Many of the assumptions we were on target, and we made good choices, but you learn as you go. And the more runway we have, the more confidence we have in terms of the direction that things are going to continue to go with this franchise. So I feel very bullish about it.
Under-promising and over-delivering makes Darsh's life easier.
I'm just trying to manage upwards, mostly.
That takes a lot of work. For sure. In terms of paint the picture of the market for me a little bit, in terms of the sales force and all. This is not an undiagnosed patient population for the most part as well. Or is it? Or is there a promotional effort that let's say six months down the line you would realize that you need more resources or something like that? Is ther e anything like that here?
Yeah. I'll caveat it by saying we just completed a small sales force expansion.
Okay.
Small meaning you can count them on two hands kind of number of FTEs. But ultimately, I wouldn't characterize it as an undiagnosed condition or an underdiagnosed condition. I would characterize it as an under-coded or miscoded-
Okay
population. The reason I say that is classic CAH is the more severe form, versus non-classic CAH. For every classic patient, there is four or five non-classic patients. Unfortunately, there is no modifier to th e ICD-10 code, so there is a general code for CAH. If we just focused our patient finding efforts on those practices that have CAH, one or more of those patients in their practice, most of the time, we would be encountering non-classic patients. As Matt said, we try and be smart and efficient in terms of where we focus our efforts. In addition to having a small sales team, and when I say small, it is only about 50 or so people.
Right
that are out there calling on these practices in endocrinolo gy. We have put effort behind patient finding using different data sets, so claims data, EMR data, even lab data, to help us find people that look like individuals that are already on treatment.
That has been an important part of our launch success, a nd that patient finding capability gets better over time the more data that we sort of feed into it. Ultimately, we feel like this is a category that has a lot of upside potential to it. But it is still early days yet. If this was a child, I would say it is like a toddler.
Right? We are a year and a half into this launch. We are learning a lot as we go. I do not expect that we are going to have to make any. We just completed a sales force expansion. I do not see that in the cards anytime soo n. But what I do see is continued investment in our patient finding capability, and making us more efficient over time. The last thing I will say is that there is really three segments to our business right now, or three focus areas on the HCP side. So there is a small number of centers of excellence .
There is less than 20 in the U.S. These are clinics that are typically affiliated with teaching hospitals, some of which are accredited by the CARES Foundation, which is the patient advocacy group in CAH. Seco ndly, and importantly, so we think that the centers of excellence account for maybe 15% of the patient potential.
Another important segment for us is pediatric endocrinologists, and there is about 1,100 of them in the U.S. Typically, they have more experience managing these patients with classic CAH, they are more likely to have patients in their practice. So they are a really important segment for us. Pediatric population, we estimate at about a third of the overall classic CAH population, but we do expect it is going to account for a majority of our business, and it already is accounting for more than half. Then the third segment is the large st numerically, which is the adult outpatient endocrinologists. That is where things get a little thin in terms of patient count. Two-thirds of the patients are adults. But if they see an endocrinologist, that endocrinologist might only have one or two patients, if any.
Yeah.
Right? So ultimately, for us to be successful in the long run, we have to be able to reach, educate, and activate patients that are in the community, some of whom do not even have an endo crinolo gist. So, we will continue to evolve over time in terms of our approach. But so far, it has been very heartening to see the effect that CRENNESITY is having on these patients, and certainly, I think our business results speak volumes.
Got it. Very helpful. Thank you for the detailed answer there. One last question on CRENNESITY. So how do you think about the competition here? You talked about safety here. The co mpetito r is sitting upstream of CRENNESITY here a little bit. So you have first-mover advantage. They are coming with their drug. How do you think about the competitive landscape three, four years down the line?
Yeah. I will chime in, and then maybe you want to add.
Yeah.
I'll start off by saying I really like our position.
All right. We have a substantial head start, years in fact. I mentioned earlier that we just this spring and summer rolled out very impressive two-year long-term outcomes data. These data, I think, were ver y well received in the physician community because it's delivering on the promise of really what they want to see for a treatment for these classic CA H patients. If you think about the old treatment paradigm of using super physiologic glucocorticoids to suppress the overproduction of ACTH and then downstream androgens. You ended up being able to control androgen excess, but at the expense of exposure to high-dose steroids, which we understand has a lot of negative effects on the brain and the heart and the bones.
Now, you bring in CRENESSITY, which is a CRF1 antagonist, and really what it's doing is blocking the overproduction of ACTH, and therefore the downstream overproduction of 17-OHP and androstenedione and other precursors. Ultimately, what CRENESSITY does is to restore balance. It's allowing the dysregulation of that HPA Axis to get re-regulated, reduce the amount of ACTH, and then therefore the overproduction of the androgens. As a result, now we're seeing patients being able to bring down their high-dose steroids, r ight? You think about the mechanism of CRENESSITY, it's an upstream mechanism versus you're referring to altumanant, which is an investigational medicine that doesn't reduce the amount of ACTH, it blocks it at the adrenal gland. It's unknown, I think, what ultimately the clinical profile is going to look like for that investigational medicine. It's very early days yet.
There's not a lot of patients that have been treated with it. Certainly, we don't know what the consequences might be of sustained, elevated, and uncontrolled overproduction of ACTH, because that medicine doesn't reduce ACTH, it simply blocks it at the adrenal. I think data will tell the story. Certainly, we feel very good about the long-term safety data that we've generated, both in adults and in pediatric patients. Having a several-year head start ability to penetrate the patient population, to get people on effective treatment. We know from other categories that if patients are being well controlled on their current regimen, if they're tolerating it's really hard to move the m off and displace them.
Got it.
Like I said at the beginning, I feel really good about where we are. We'll continue to execute on our plan, and we'll see how things shake out in terms of data over time.
Yeah. I would just say people should be cautious in trying to compare small numbers of patients, different levels of baselines. There's nothing that we've seen in their data that would make us feel like CRENESSITY would be displaced.
Got it. Moving to VYKAT. Thank you for all that you did to show CRENESSITY. This deal has been a little bit controversial in terms of people are still trying to understand what is th e peak sales, how it could look like, and there are questions around persistency and all that. Can you tell us what people are missing, which you saw in this asset, and you think that this asset could be a great deal?
Yeah. From a strategic perspective, it fits in quite nicely with the rare endocrine franchise. It also adds a durable growth asset, and it allows us scale, and it is already a profitable product, even at a $400 million run rate.
For us, when we did the acquisition, we were eyes wide open in terms of some of the challenges that may come with it and some of the things that we could do to overall enhance the offering of VYKAT XR. A lot of what we are working on now or identifying or finding is very consistent with what we would have thought going through with the acquisiti on. We knew the most important aspect is there going to be steady new patients coming onto therapy? Is there a benefit? The good thing is the last two quarters there have been steady new patients coming onto therapy, and this is a devastating disease.
The second piece is you could see in the data, as we looked at discontinuation rates, you could see in the data from those who started early in launch, at about month six to nine, after month nine, you had about a 20%-25% discontinuation rate. That is something that we have indicated to the market that that should be the base level exp ectation on discontinuation. For us, as we think about executing and helping identify the right patients, executing and helping ensure there is appropriate monitoring through the titration process to ensure that as many patients with PWS who are appropriate to get treated ultimately get treated. We have had a couple straight quarters of flattening of sales. We had $94 million this past quarter.
We do know that we're working through the discontinuation from the bolus of patients, so there's a bit of a tail there. Once we're through that tail, we feel very confident that the com mercial initiatives that we have underway are going to lead to sequential growth the rest of this year. My comment is let focus on us executing, and our numbers are ultimately going to speak for themselves in terms of the deal and the value there. We see this as a tremendous need for these patients, fits strategically for Neurocrine, and we do have a lot of enthusiasm within this product group.
Thank you very much. Todd, what are we going to learn at the event you're hosting at the end of the year?
Yeah, su re. Thanks for the plug there. In early December, we will be hosting an R&D Day that will focus on our neurology and immunology strategies. Neurology, I think, is relatively well understood, some of the pipeline assets we have. Less so on the immunology front. We're looking forward to sharing some of that information with the investment community then.
Got it. Matt, the question for you is, based on all that, do you think you have enough pipeline to work through, or do you think there's still more, like you could deploy more cash there?
Well, first of all, I feel fortunate, like I said at the beginning, that we have three commercial products that are generating significant cash flows.
Right.
Those cash flows allow us to reinvest back into the pipeline at a rate of 30%-35%. That is where we believe that is the right level of reinvestment to lead to sort of a flywheel of future new products. We have been fortunate to have quality pipeline, and we have a lot that investors have not seen, which we will highlight at R&D Day, and so we do have a lot to invest in inter nally. So that is our second priority behind commercial and driving revenue growth. Then third, we do have a clean balance sheet. We do have capacity to do a business development transaction. But sitting here right now, we have got a lot on our hands
Right
in our hands right now to execute, help a lot of patients get to some phase III trial data. So we are always looking, but right now very much focused on executing what we have.
On that high note, thank you very much for joining us, and all the best.
Thank you.
Thank you.