Neurocrine Biosciences Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 3, 2023

There are 22 speakers on the call.

Operator

Good day, everyone, and 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. It is now my pleasure to turn the call over to Todd Tuschla, Vice President of Investor Relations, please go ahead.

Speaker 1

Thank you, operator, and good morning, everyone. Welcome to Neurocrine's 1st Quarter 2023 Earnings Call. This morning, I'm joined by Kevin Gorman, our Chief Executive Officer Matt Abernathy, our Chief Financial Officer Eiry Roberts, our Chief Medical Officer Eric Benovich, 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.

Speaker 1

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.

Speaker 2

Thank you, Todd, and good morning. Well, INGREZZA has had yet another very good quarter of sales. And I say this from a dollar perspective, but more importantly, the fundamentals of bringing Reza to patients is even stronger With more new prescriptions than ever and remarkably to me, this occurred in Q1, typically our toughest quarter because of insurance reauthorizations. As you know, we call it a tale of 2 quarters, the 1st several weeks working through the reauthorization 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.

Speaker 2

Patients and prescribers recognize the impact that INGREZZA has So we're entering Q2 with momentum and with fundamentals Like this in Q1, it bodes very well for a very strong year. Now 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 patience as we are capable. That requires making tough fiscal decisions to deploy our cash and our talent to grow our business. To that end, we announced this morning that we will be returning the commercialization rights of Ongenesis to BIAL.

Speaker 2

Make no mistake, Ongenesis is a very good drug as evidenced by the positive feedback we have received over the past 2 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 pose 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 Auer and Vial's primary focus is to ensure new and existing patients do not experience Any interruption in receiving Congentis as we transfer commercial activities.

Speaker 2

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 2 and Phase 3 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 So with that, I will turn the call over to Matt.

Speaker 3

Thank you, Kevin. Good morning. INGREZZA performance in Q1 was strong with record NRx and sales coming in at $410,000,000 The team did an excellent job navigating 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 Q2.

Speaker 3

Timing of customer orders can lead to lumpiness in quarterly sales and expect this to be a headwind in Q2, but underlying demand from both new and existing patients both appear very strong so far this year. Given we're only 1 quarter into 2023, we are reiterating sales guidance and we'll reevaluate after the Q2. Needless to say, INGREZZA is set up for a great year. On the financials, we are maintaining our SG and A and R and D expense guidance With the exception of IPR and D for the Voyager collaboration. Similar to prior years, SG and A had an increase in spending for Q1 and expect it to step down the remainder of the year.

Speaker 3

With that, I look forward to your questions and now hand the call over to Eric.

Speaker 4

Aaron? Thanks, Matt. Q1 2023 was another good quarter for us. And as Kevin said, the fundamentals were strong. As usual, we spent a good portion of the quarter managing through seasonal payer dynamics.

Speaker 4

And 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 our diagnosed patients even offered treatment with the 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.

Speaker 4

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 over the last 6 years since launch, we still strive to improve the diagnosis and treatment rates for TD and will do so over the next decade and more to come. With that, I'll turn the call over to my colleague, Doctor.

Speaker 4

Eiry Roberts, our Chief Medical Officer.

Speaker 5

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 Q1. Looking ahead, we remain firmly on track to report top line results For both the adult and pediatric registrational studies of connesipon for the treatment of congenital adrenal hyperplasia As well as for 2 Phase 2 proof of concept studies, namely NBI-three fifty two In adult focal onset epilepsy and NBI-eight forty six for the treatment of anhedonia associated with major depressive In addition, we are looking forward to the August 20 PDUFA date for valbenazine as a potential treatment option For patients with chorea associated with Huntington disease, we are ready and eager to engage further with the HD community in service patients living with HDKorea 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 I'm pleased to say that our first molecule, NBI-five sixty eight, Currently under evaluation in a Phase 2 dose finding study in schizophrenia continues to make excellent progress with enrollment. In addition to NBI-five sixty eight, we plan to take NBI-five seventy, a dual M1M4 agonist into Phase 1 clinical development this year, potentially followed by other differentially selective M1, M4 agonists over time.

Speaker 5

Overall, I'm very pleased with the performance of our teams in executing to our portfolio goals this past I look forward to sharing further updates with you as the year progresses. At this point, I'll turn things back to Kevin. Kevin?

Speaker 2

Thank you, Eiry. And we are now ready for your questions.

Operator

We'll take our first question from Phil Nadeau with Cowen and Company, please go ahead. Your line is open.

Speaker 1

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've solved the seasonality problem with growth quarter over 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? And second, Matt, on your stocking issue, I think you said a few days of inventory increased.

Speaker 1

But by our math, that

Speaker 3

No, it's much less than $20,000,000 I'd just say it's around $10,000,000 or so Is what the inventory build was. As it relates to the quarter, it's a really strong quarter over $100,000,000 of year over year growth. And we did, of course, benefit from a touch of inventory, but record numbers of new patients, ensuring patients stayed on medication And had a really, 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.

Speaker 3

But I'd say Last year was the 1st year that you saw sequential growth for the brand Q4 to Q1 and we've seen something very

Speaker 4

Yes, Phil. I would just say that 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? And each year, even though the base of patients It's bigger and the number of people that could potentially experience treatment interruptions grows.

Speaker 4

We get a little bit better

Speaker 6

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. But 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 and then I have a follow-up. Thanks.

Speaker 4

Hi, Tazeen. So neurology and psychiatry are quite different in that regard. Obviously, during the pandemic, the really all physician specialties went to a high degree of virtual patient care. But today, we estimated less than 10% of patient visits in neurology are virtual. So it's gone back Pretty close to pre pandemic levels.

Speaker 4

And I think the feedback that we hear from neurologists is, to a great extent, they rely on a physical exam. And you can't do that remotely. So there's a big delta between what we see in neurology and what we see in Hi, Tru, where there's still a high degree of telemedicine utilization.

Speaker 6

Okay. So what would be your split right now in scripts Coming from neurologists versus Sykes because I know Sykes was your more established area.

Speaker 4

Yes. We still estimate it's in the range of about 80%, 20% split, Obviously, it changes a little bit from quarter to quarter.

Operator

Okay. Thank you. We'll take our next question from Paul Matteis with Stifel. Please go ahead.

Speaker 7

Hey, thanks so much. I appreciate taking the question. I wanted to ask a question around the creneserphont studies. I know you've been Reluctant to set the bar on steroid sparing, but I wanted to talk more broadly just about secondary endpoints in the trial and side effects related to Sarah, it's Barring. 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

Speaker 5

On that question, so just to remind the group, we have 2 Phase 3 studies that we'll read out in the Q4 of this year, pediatric and the adult Phase 3 studies in crenequepont. And 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 crenezefont. 1st and foremost, we're obviously interested in the ability of creneispod to control androgens and we've already demonstrated Really good efficacy in our Phase 2 program around androgen control. The second thing obviously is the ability to reduce And 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 crenequefont 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 We will be looking at the totality of that data in terms of understanding the potential benefit risk of crenezefon.

Speaker 5

And so, I think that's probably what I would say at this point in time in terms of our looking at that.

Operator

We will take our next question from Josh Schimmer with Evercore. Please go ahead.

Speaker 2

Thanks very much. Just a couple of quick ones. What was the INGREZZA script And then Matt, I think in the Q1, the vast majority of biopharma products saw inventory drawdowns. What happened do you think that led to an inventory build for INGREZZA? Thank

Speaker 3

Josh, I would say on the inventory front, it really just came down to a timing of an order at the end of the quarter. It wasn't an intentional stocking by Our channel, we don't operate the channel that way with the big bolus of buying in Q4 that leads simply down in Q1. It really It was just had to do with the timing of orders at the end of the quarter. And a reminder on the first part of the question? Yes.

Speaker 3

So where to point now on TRx That we've reached scale that we're not going to be providing Terex publicly anymore. We're going to be providing commentary around net sales, How we're doing on Enerax 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, so at this time, given it's the beginning of the year, given we've made the shifts in our distribution model, we feel like it's

Operator

And we will take our next Question from Nina Pitrego Garg with Citi. Please go ahead.

Speaker 6

Hey guys. Thanks for taking my questions. So 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. And then also just wondering if you could comment on where the Strength and where the growth in new starts is primarily coming from and whether you think that's coming from some of the Efforts last year to expand sales force and target different physician targets. Thanks.

Speaker 3

So I'll take the first part of that question and then Eric will take That's the second part of the question. As it relates to net revenue per TRx, So 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 to net in Q1. It's around 2% or so. I'm not going to give the exact net revenue per script here for Q1, but going to talk about it more in terms of what we For the full year, so overall, expect really a net price increase for the year of around 2% to 3%.

Speaker 4

Hi, Nina. So this may not be a super satisfying answer, but we're seeing growth coming from everywhere. And what I mean by that is that post the expansion and the reorganization of our Our field teams last year now have dedicated sales forces in psychiatry, neurology and LTC. And all three of those Segments are growing nicely as evidenced by the Q1 results and especially the record number of new patient starts that we saw This past quarter. And the second part of your question was really related to is this being driven by the sales force And our belief is that the sales force expansion is already paying dividends.

Speaker 8

Got it. Thank you.

Operator

We'll move next with Chris Shibutani with Goldman Sachs. Please go ahead.

Speaker 9

Thank you very much. With the announcement of the strategic decision on Alendentis, 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 Kinester Farms? You did the deal over in the U. In 2022, remind us what the regulatory status is there.

Speaker 9

And then this morning across the broader pharma landscape, obviously, we have And another positive data point on the Alzheimer's front. I believe that 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.

Speaker 2

Thanks, Chris. The with respect to being able to internationalize, Ingeza, you're absolutely right. We made the Kineser Font, sorry, I have Ingeza on the mind this morning, as you could understand. With Kineserv Font is that the purchase of Dierenal was a way of setting us up For an entry into Europe initially with Kineser Font, knock on wood, with good data and an approval there. So we wanted to be able to begin to have an infrastructure there, begin to have on the ground presence.

Speaker 2

We do a lot of clinical trials Over in the U. K. And Europe, so from a development standpoint, we're leveraging the diurnal folk and I should say The Neurocrine folks 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. So that is turning out well for us right now. Commercially, it will be much easier now to be able to build into that.

Speaker 2

The EU would be following FDA, in our strategy to file, So U. S. Would be the 1st filing with crenesafont when we have good data and then it will 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 nurse, psychiatric and neurological diseases, they needed to cross The blood brain barrier. But 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.

Speaker 2

You're seeing us step into antibodies. Well, you may not 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 Sure. 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.

Speaker 2

But 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.

Speaker 9

Great. Thanks for the perspectives.

Operator

And we will take our next question from Brian Abrahams with RBC Capital Markets. Please go ahead.

Speaker 10

Congrats on all the progress and thanks for taking my question. With regards to creneserfant, 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. And I guess I'm wondering how you plan to address this. You obviously have a lot of expertise building markets. Is this do you think it's just a matter of Having strong totality of data and that being convincing enough, are there certain cell populations you may think about targeting initially who might be optimal candidates Or educational campaigns you might envision and how might this impact how we should be thinking about potential uptake curves for this drug?

Speaker 10

And then maybe just a real quick housekeeping question. The $10,000,000 that you mentioned, does that refer to both inventory and shipping time shipment timing impact? Or was that just inventory and shipment timing or something else? Thanks.

Speaker 5

Brian, thanks. We believe there is significant unmet need for patients living with CAH. And that unmet need, if we're successful with our Phase 2 program for crenequefont can be met by crenequefont. 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. And in fact, there's been No new approved medications for over 50 years in this space.

Speaker 5

And so I think people have had to settle And so to your point, I think our ability to demonstrate a broad range of robust Data in support of the benefit risk of crenecifant will allow us to address that unmet need and that will need to be supported

Speaker 4

Yes. And I'll just add that, it's early days yet. We haven't completed our registrational trials. And as a company, we haven't really started our formal efforts To reach and educate the various patient and care partner communities within CAH, Kineservant does represent, I think a pretty meaningful paradigm shift. And part of what we'll be doing On the other side of data and leading up to approval and knock on wood launch is to Educate on the value of treatment with creneserfon and what that means to patients, what they can expect.

Speaker 4

You noted that We've demonstrated success in TD in building a new market from scratch, and I think we can apply some of our learnings towards the opportunity in CAH.

Speaker 3

So from a Brian, from a revenue recognition perspective, you recognize revenue once The bottles are shipped and delivered to the distribution, Your distributor. So, 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 place the order at the end of the quarter. It's just A bit out of cadence and higher than what would normally be held at that distributor.

Speaker 10

Thanks so much, everyone.

Operator

We'll take our next question from Anupam Rama with JPMorgan. Please go ahead.

Speaker 10

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 Trust this as an area of growth for INGREZZA and made some brief comments earlier in the call. But what are you seeing in terms of trends in this segment specifically?

Speaker 4

Yes. Hi, Anupam. So I would say that 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, we decided that we didn't have the capacity to take that on. And so obviously, last year, we made the commitment.

Speaker 4

We built team, and they've been out there and doing all the things necessary for long term success in long term care. But ultimately, 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, but very pleased with the progress that we're seeing And certainly, I look forward to providing more detail as we get a little bit further down the road.

Speaker 11

Thanks so much for taking our question.

Operator

Our next question from Carter Gould with Barclays. Please go ahead.

Speaker 7

Great. Good morning. Thanks for taking the questions. Maybe, I agree, coming to 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. And I guess more broadly, how you're thinking about sort of target exposure, So the steady state AUC or a trough levels, any color on that and if the Phase 1 TMS data may be informative on that front?

Speaker 7

Thank you.

Speaker 5

Ata, so the 352 study is a dose finding study. It's a 4 arm parallel 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. And so 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.

Speaker 12

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 that we can see through our Q4 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? And then secondly, I just wanted your thoughts on how much you need to build the Huntington's disease career market. Is it similar to a type of dyskinesia or is it more about just taking share from the VMAT Inhibitors that are already in that space. Thanks.

Speaker 3

Hi, Myles. So for the TRx, what I'd say about the 3rd party syndicated data, it will give you 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. So with that, I'm going to hand the second part of the question over to Eric, specific to HD.

Speaker 4

Yes. Hi. So with regards to the HD Korea market opportunity, Obviously, we're excited about the plans that we have for introducing valbenazine to that patient population. And As we've said before, we see that there's still significant unmet need in this Group of patients that are living with Huntington's disease and experiencing Korea, only about 20% People with HcCRE are actually treated with BMAT2 inhibitors, which are the only agents that are actually indicated For Korea in HD, obviously, we're excited about the clinical profile that emerged From our development program, and we believe that some of the reasons that Tingreza is the most Prescribed agent in TD would apply equally here in HD Korea, but We need to get approval. We're looking forward to that.

Speaker 4

And obviously, we're doing all the things that you need

Operator

We'll take our next question from Jeffrey Hung with Morgan Stanley. Please go

Speaker 13

ahead. Hi. This is Mike Riad on for Jeff Hung. Thanks for taking our question. We also had a question on the 352 Phase 2 So the patients are required to be on background therapy.

Speaker 13

Are there any concerns for drug drug interactions? Or does

Speaker 5

Mike, so the trial design does, given the patient population that we are That is why we allow up to 4 other medications in the context of the patient population coming into the trial. Obviously, We understand the pharmacokinetics and disposition of VK352 well from the Phase 1 and preclinical data. And so as you see from the inclusion Exclusion criteria in clinicaltrials dot gov, the number of exclusions required is low and that reflects the lack of drug drug interactions 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. And so we don't have a concern around the ability to demonstrate that if 352 is an effective medication.

Speaker 13

Perfect. Thank you.

Operator

We'll take our next Question from Mark Goodman with SVB Securities. Please go ahead.

Speaker 14

Matt, it seems like there's a lot going on in R and D behind the scenes. And I I guess we should expect R and D spending to kind of 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 and D? I mean, as a percent of sales as we go up, will we gain leverage? I mean, or is this just we're going to continue to increase?

Speaker 14

And Just give us a sense of how you're thinking about that because obviously the numbers could get big.

Speaker 2

Yes. Thanks, Mark. So I'm just going to 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. And so that's why you're seeing us invest heavily in our research and preclinical development especially. And so you're going to see, I think we've you've seen a big bolus of investment here early on.

Speaker 2

And I think not I think, 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. And Matt can talk a little bit more about that's going to stack up against sales in the financials?

Speaker 3

Yes. 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 and D and we feel like that would allow us to build a pipeline in a portfolio that would cause us to be a sustaining Company, when you look at where we're at from a P and L perspective today, if you think about the CAH trials that we have Ongoing the muscarinic programs, FOS, a dozen other programs now in the clinic. We have a lot of momentum right now. And I think all of us around the table are really looking forward to start seeing the cards turnover from all the efforts that we've undertook The last several years and I think that has really teed up for the second half of this year and as we flagged, expect the CAH So from a capital allocation perspective, I think it's fair to assume 30% or so, but it's obviously dependent upon value creating programs and we're not just going For quantity, we really want to find the quality that will drive value for patients and for shareholders.

Speaker 14

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, We've gotten there.

Speaker 5

Yes. So for our anhedonia program, the dosing schedule that we're using in that Phase 2 study was defined based on our preclinical and Phase 1 clinical data and an understanding of the biology associated with this target. And so 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.

Speaker 5

Also, 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

Operator

We'll take our next question from Brian Skorney with Baird. Please go ahead.

Speaker 7

Hey, good morning, everyone. Thanks for taking my question. My question as well is just on PerneserPharm. I was hoping maybe, Eiry, 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, these are fairly sized studies, so it seems like you can hit statistically.

Speaker 7

But I'm wondering is hitting on a key value, is that enough up to kind of commercially justify? And like what would we be really looking for in sort of the totality of data Good to thank you to a very significant demand for this product.

Speaker 5

Well, Brian, obviously hitting statistical significance is important as the first step in the context of understanding the benefit risk of crenequefan. And the way we've Designed these programs, we believe that the primary endpoints that we've chosen, namely androgen levels At week 4 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. It will be important in terms of understanding the overall value of crenezepant potentially for patients with CAH. And in addition to the short term data, we're interested in the longer term open label study data that will generate in So 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, but I think we are measuring everything that is relevant for these patients in the context of these And we look forward to being able to turn over the cards on that data in the Q4 of this year.

Speaker 7

Great. Thank

Operator

you. We'll take our next question from Danielle Brill with Raymond James. Please go ahead.

Speaker 6

Hi, guys. Good morning. Thanks so much. I have a question on CAH as well. I'm curious about the potential for functional unwinding and And then quickly on INGREZZA, I'm curious if you've encountered any headwinds or you

Speaker 5

I think as Kevin alluded to earlier, the quality of our And obviously, the safety and integrity of subjects throughout the trial. And 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. And so 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.

Speaker 4

Yes. With regards to your question about deutetramenazine XR, That product hasn't been rolled out yet. But what I will say is that 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. So, we've prepared for this.

Speaker 4

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. So we feel good about our momentum in the market. We're going to continue to do the things that we've been doing

Speaker 5

Thank you.

Operator

We'll take our next question from Jay Olson with Oppenheimer. Please go ahead.

Speaker 1

Hey, congrats on the quarter and thanks for the update. Recognizing that you've got a large Feel on the books already this year. Just curious about your appetite for additional business development, What are your thoughts on potential areas of interest and priorities for capital allocation for the remainder of the year? Thank you.

Speaker 15

Thanks, Jay. This is Kyle.

Speaker 3

I appreciate the

Speaker 15

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 the spirit of urgency, but we don't feel like we need to do anything Without looking at a program and seeing our technology, if it's the right type of program to bring into the company. As our interests that we've outlined in the previously, we're currently looking at things in neurology, psychiatry, endocrinology and immunology With the 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 its programs and technology that bring in innovative science, platform Technologies and differentiated modalities.

Speaker 15

But overarching the theme here is that we could potentially bring in a medicine that changes the standard of care. And when you look at those types of opportunities, it comes along with strong IP as well. But we're open to Later stage and commercial opportunities, we've also mentioned that in previous meetings as well. And given the diversity of deals that we've done Over time, you can see that we're also agnostic in terms of deal structure. So remain active.

Speaker 15

We'll continue to look at bringing in new programs to the company And having more news on that over time. So maybe I'll stop there.

Speaker 11

Great. Thank you, Kyle.

Operator

Our next question is from Laura Chico with Wedbush Securities. Please go

Speaker 5

ahead. 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 dual M1M4 Later this year, I guess bigger picture though, would you consider ultimately advancing multiple agents such as an M4 selective and an M1M4?

Speaker 5

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 Sose HepTaris was the ability to Again, access to not just one molecule in the muscarinic agonist space, but to a range of a portfolio of molecules with differential Both neuropsychiatric disorders and neurological disorders. We're starting obviously with the M4 selective We are progressing an M1, M4 Duo agonists into the clinic this year and we will be considering both additional or similar neuropsychiatric disorders, but also potentially neurological disorders for that molecule.

Speaker 5

And then when we think about M1 selective Molecules, which we also have within the portfolio of assets that we gained access to, there are obviously a broad range of Different opportunities there ranging from cognition to other neurological disorders. So we're very excited about that portfolio and we believe that this

Operator

question from Sumant Kulkarni with Canaccord. Please go ahead.

Speaker 11

Good morning. Thanks for taking my question. Assuming crenusafont is approved, could you give us your latest thoughts on potential pricing? Clearly, tardive dyskinesia and CCAH are very different disease states. If you could give us a frame of reference for Kinesafon, at least relative to annual INGREZZA pricing that would be very helpful.

Speaker 11

Another reason I'm asking this is because if I remember right INGREZZA price at launch

Speaker 2

Samant, 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 3 data in. Pricing is one that is very much hinges on what is the ultimate benefit that you bring to this patient We see that creneser font 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. So

Speaker 14

Thank you for

Speaker 2

the question, but too premature.

Speaker 14

Thanks.

Operator

We'll move next with David Amsellem with Piper Sandler. Please go ahead.

Speaker 16

Hey, thanks. So 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 RXT that's in development. That's number 1. And I just want to ask a second question 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?

Speaker 16

Thank you.

Speaker 2

So 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, we'll stay as robust as ever.

Speaker 2

And 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 Neuroendocrine 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.

Speaker 2

Eiry?

Speaker 5

Yes. 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 agonists is the ability to Conduct the preclinical and clinical experiments that will allow us to understand that differentiation. And as I mentioned, I don't believe that For a dual M1M4 that we are constrained to schizophrenia as a single indication in that setting either. And so I do believe there's a lot of Tunative, both in the neurological and psychiatry space for this portfolio.

Speaker 15

Yes. This is Kyle. I'll just add and close on that. I think 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 Off target muscarinic activity.

Speaker 15

So I think we're very excited with the one that we have and taking that forward. As Eiry mentioned, we don't have clinical data to differentiate, But certainly being the position that we have right now, the starting position, we have a lot of excitement around this program across the dual and other molecules that we have.

Operator

Take our next question from Akash

Speaker 2

And then discontinuations were 12.5% in the highest dose group mainly due to neutropenia. So what are your expectations for neutropenia going into your CH data? And what level of dropouts have you baked in, in your powering for the trial? Thank you.

Speaker 5

Thanks for that. So as you rightly said, the study in which sporadic Laboratory measures of low white count we've seen was in major depressive disorder. And, crenezepont was studied in a 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 pronesafont.

Speaker 5

And so, 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.

Speaker 2

That's really helpful. Thank you.

Operator

We will take our next question from Evan Sejerman, please go ahead with BMO Capital.

Speaker 17

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 could beta would look like?

Speaker 17

Maybe more specifically, what improvements on the DARS scale could translate to in the clinic or on a functional level? And Could you draw a line from anhedonia to broader set of negative symptomology across mental illness? Like how do you think of this as a distinct symptom? Thanks.

Speaker 5

As you know, there are no drugs approved for the treatment of anhedonia in major depressive disease. And in fact, there have been very few clinical trials done. This is a proof of concept Phase 2 study. We have measures embedded within the study looking at both the anodontic scales And also the major depressive scales themselves. And so it's impossible at this point in time prior to the readout of that data to be able We're very excited about the mechanism here.

Speaker 5

And obviously, this is a huge unmet need for patients with major

Operator

Our next question comes from Mohit Bansal with Wells Fargo. Please go ahead.

Speaker 18

Hi. This is Serena on for Mohit Bansal. Thanks so much for taking your question. I want to ask two questions. First on the cadence of SG and A spend, just given that significant growth in Q1, What comes off in the rest of the year?

Speaker 18

And then 2, 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 endocrinologists or elsewhere. And also if you see patients needing to be on this drug chronically or would they only be treated during times of poor control? Thank you.

Speaker 3

Hi. I'll answer both of those questions. On the SG and A spending, there was a bolus Spending in Q1, you should expect that to step down in Q2. And the way that I look at it is we expect to hit Our expense guidance range, and so I'd take the remainder of the SG and A spending and divide it by 3. It's going to be pretty consistent, I believe Q2 through Q4.

Speaker 3

On the CAH front, yes, there is it's nice. There is Some centers of excellence help treat many patients with CAH. And 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. And we do believe this would be A chronic therapy that they take for potentially for their entire life, something that would allow them to Reduced their level of steroid exposure over a lifetime could pay significant benefit

Operator

We'll take our next question from Ash Verma with UBS, please go ahead.

Speaker 19

Hi. Thanks for taking my question. So for the transeptron pediatric study, Do you have 4 week primary endpoint data on baseline in full reduction in house already? If you can comment on that, please. And Are you waiting for the 28 week data on the second release to top line this?

Speaker 19

Thanks.

Speaker 5

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. And so as we signaled, the data will be in house in Q4 of this year.

Operator

Our next question comes from jatin Suneja with Guggenheim Partners. Please go ahead.

Speaker 20

Hey, guys. Thank you for squeezing me in. Just a quick question on 352, the FOS study. Can you maybe just give a little bit update on how the enrollment is and your confidence in 4Q I mean, we're seeing a little bit of a delay in enrollment from other competing studies, especially looking at FLF. And then the other question I have is, is this just outside U.

Speaker 20

S. Focused study? We don't see U. S. Sites.

Speaker 20

I'm just curious where the study is focused on. Thanks.

Speaker 5

The study is being performed outside the United States at this point in time. We believe that has helped a great deal with enrollment And enrollment is on track for us to have data in Q4 of this year.

Speaker 1

Nicky, we'll take the next question, please. Thank you.

Operator

Next question comes from Ui Iyer with Mizuho. Please go ahead.

Speaker 21

Hey guys, thanks for squeezing me in. Just a quick question. I think you guys mentioned growth for INGREZZA was coming from everywhere. Just wondering 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.

Speaker 4

Yes. To build on my earlier comments, We're seeing nice growth across all three of the segments, psychiatry, neurology and the newest segment, which is long term care. 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, so 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. So going back once again to that theme of growth coming from everywhere, These are different segments in terms of how developed they are, but ultimately, we're very pleased with the results

Speaker 3

Hey, Ui, we'll follow-up with you. We got

Speaker 1

to get one more question in. Thanks.

Speaker 21

Thanks.

Operator

And we will take our last question from Ami Fadia with Needham. Please go ahead.

Speaker 8

Great. Thanks for squeezing. With regards to your 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 have been can you comment on how you see that progressing? Yes. And at what point would you consider reevaluating your guidance there?

Speaker 8

And then secondly, with regards to Huntington's disease Korea, how quickly do you Given the awareness level in amongst physicians That do treat TD patients. Thank you.

Speaker 3

Yes. I think we're really Encouraged with what we saw in INGREZZA for this quarter. And as you mentioned, we do have a few moving parts as we think about Q2 Specifically around inventory, but our expectation is we'll reevaluate guidance here in the middle of the year And we'll see what underlying demand looks like. But 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, I think post approval, it is going to take a bit of time To educate, I wouldn't expect a massive ramp in sales, for example, in Q4.

Speaker 3

It's going to be something that will take time to bleed in. So 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.

Speaker 16

So I want

Speaker 2

to thank everyone 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 today, INGREZZA's performance today, really supports this. We are still at the very beginnings of Eric has said many times, he's never seen such an undeveloped market. We work hard at developing it.

Speaker 2

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. It traditionally is just a really good year that we look forward to. Yes, 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.

Speaker 2

And also why I said always judge Ingress on its full year performance and that has always been outstanding. And as I've 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 Now 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, and we are very much looking forward to the PDUFA date in August of this year with Huntington's. So once again, I'd like to thank you all this morning for your questions.

Speaker 2

I'm sorry that we couldn't get to absolutely everyone. There were times you're going to 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. So with that, I'll say, have a wonderful day and look forward to talking to you soon in the meetings throughout the year.

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Earnings Conference Call
Neurocrine Biosciences Q1 2023
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