Neurocrine Biosciences Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
August 1, 2023

There are 14 speakers on the call.

Operator

Good day, everyone, and welcome to today's Neurocrine Biosciences Reports Second Quarter Results. Please note this call may be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn today's program over to Todd Tuichla, Vice President of Investor Relations.

Speaker 1

Good morning, and welcome to Neurocrine's Q2 2023 earnings call. Today, I'm joined by Kevin Gorman, are 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. During today's call, we will be making forward looking statements. These statements are subject to certain risks and uncertainties And our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings.

Speaker 1

After prepared remarks, we will jump into Q and A. With that, I'll turn the call over to Kevin Barnum.

Speaker 2

Thank you, Todd, and good morning, everyone. It's a pleasure to be here this morning. We've had a very Strong first half of the year as you can see from our press release this morning. We are raising our guidance. So what was previously the are in the range, is now the bottom of the range, very strong performance and very proud of our are in the range of $1,000,000 commercial team out there with INGREZZA.

Speaker 2

We're now set up for a really exciting second half of the year. We have multiple readouts We have a focal onset seizure and data coming out, anhedonia data coming out. And last but not least at all The CAH studies, both in the adult and in the pediatric population. And Eiry is going to have a lot more to say about that a little later, and we'll also be taking your questions on that. So quite a bit going on here.

Speaker 2

It's all been very nice thus far. So I'm really looking for the second half of the year.

Speaker 3

Are ready to take questions. Good morning. Neurocrine continues to execute with growing INGREZZA sales, are in the range of 26% driven by record new patients. Our commercial and medical affairs teams continue to do an excellent job educating are in developing the TD market, helping many new patients receive treatment.

Speaker 4

Are ready for the solid first half of

Speaker 3

the year. We are increasing 2023 resi sales guidance of $1,770,000,000 to 1.8 $2,000,000,000 reflecting over 25% growth at the midpoint of the range. This compares to our previous INGREZZA sales with growth in sales and reduced operating expenses, our profit profile improved during the quarter to over $120,000,000 of non GAAP are in line with our expectations. These profits generated strong cash flow and now have over $1,300,000,000 of cash are on hand, providing plenty of financial flexibility to execute our strategy by allocating capital towards developing the TD market for INGREZZA, are participating in the process of advancing our clinical pipeline and expanding our internal research efforts. We believe this strategy will create shareholder value in both are in the short and long term.

Speaker 3

I will now hand the call over to Eric Fenovich, our Chief Commercial Officer.

Speaker 4

Are ready to begin. Thanks, Matt. I'm very pleased with INGREZZA's sales performance through the first half of the year. Year over year sales grew 26%, are in the range of 2nd quarter results. At this time, all participants are in the range of 3rd to be driven by the psychiatry and neurology business segments, where most TD patients receive their care.

Speaker 4

In Long Term Care, we are gaining traction and expect to see good growth as we continue to develop that segment. Are in the range of $850,000,000 of INGREZZA sales in the first half of the year. As Matt said, we felt it prudent to raise the guidance range from 1.67 below and high end of the updated range is driven primarily by the pace of new patient starts throughout the second half of the year. Outside of TD, our commercial and medical teams have been preparing for the anticipated FDA approval and subsequent launch of valbenazine to treat chorea Despite the availability of approved treatment options, there remains a significant unmet need across this patient population. While we have not factored in any potential HD Korea sales into our guidance, we are confident in the efficacy and safety data that we've generated with Almenizine in the clinical program and we look forward to a potential approval in HD Korea next month.

Speaker 4

We believe we can make a positive difference for patients suffering from HD Korea. All in all, we are on track to deliver another year of record results are in the range of $1,000,000 for INGREZZA. Growth numbers like these are especially impressive for our product in its 6th year on the market. However, the fact remain that a majority of TD patients still have not received the diagnosis or even any explanation for their TD movements. We know we still have a tremendous opportunity to help more TD patients and hopefully someday soon, HD Korea patients as well.

Speaker 4

With

Speaker 1

that, I'll

Speaker 4

turn the call over to Doctor. Ivory Roberts, our Chief Medical Officer.

Speaker 5

Thank you, Eric, and good morning to everyone on the call. Our clinical programs continue to make steady progress, which will lead to several important milestones and data readouts throughout the rest of this year and in the years to come. Looking specifically to the second half of this year, will be reaching inflection points for a number of mid to late stage programs, beginning with the August 20 PDUFA date are in a strong efficacy and safety data package generated to support approval. We've also had very good engagement with the FDA and look look forward to the agency's feedback regarding the potential approval for an important second indication for valbenazine. With respect to data readouts, we remain on track to report top line results from 4 studies in the Q4 of this year.

Speaker 5

This includes data from both the pediatric and adult registrational studies of crenezepont for the treatment of congenital adrenal hyperplasia. Separately, enrollment is now complete in 2 Phase 2 studies, both of which remain on track to read out in Q4. This includes NBI-three fifty two for the treatment of focal onset seizure in adults and NBI-eight forty six for the treatment of anhedonia associated with major depressive disorder. Turning now to our muscarinic portfolio, We're making very good progress with enrollment in the Phase 2 study of NBI-five sixty eight for the treatment of schizophrenia. In addition, this year, are advancing into Phase 1, our second muscarinic molecule, NBI-five seventy, are in a dual M1, M4 agonist.

Speaker 5

These first two assets represent just the first wave of muscarinic compounds we expect to progress into the clinic over time and explore across a number of neuropsychiatric conditions. Overall, I continue to be very pleased with the progress our teams are making with the most broad and diverse pipeline Neurocrine has ever had. And with that, I'll hand the call back to Kevin. Kevin?

Speaker 2

Thank you very much, Eiry, and we're ready to take questions

Operator

And we will take our first question from Paul Matteis with Stifel. Your line is open.

Speaker 6

Hey, thanks so much for taking

Speaker 4

the question and congrats on the quarter. Hope you don't mind if I ask kind of a pipeline BD question. You've talked Historically about how there's really not a lot of high quality neuroscience assets that could kind of fit your budget, and make a kind of near to mid term impact are on the top line. In the context of that, I guess, how do you think about Kineservant and what that could do to Neurocrine's scope? If are participating.

Speaker 4

Can Neurocrine start to go into the direction of either endocrine, rare disease and really not just be

Speaker 2

Thanks for the question, Paul. Good morning. And Kyle can add to what I would say is, but we do look in the endocrine space quite a bit. As you know from discussions that you've had with Kyle and him speaking at several of your conferences. He and his team look broad and are in the range of 2nd quarter results.

Speaker 2

So it is not an area that we've ignored at all that we are poised to go into if we see assets that really meet all of our criteria. Kyle, you want to add to that?

Speaker 7

Yes. Just to add to Kevin's remarks, I think what would be interesting with positive data with Kinesipon, it does open the door to looking at things that are later stage commercial on the endo side, which we haven't done historically. So We know what those opportunities look like and we await our transfer pond data.

Operator

Will take our next question from Tazeen Ahmad with Bank of America. Your line is

Speaker 8

Okay. I think that's me. Hi, guys. Thanks for taking my question. Maybe just for giving us a sense of what to expect for VOCAL Onset features.

Speaker 8

The top line data that you expect in 4Q, are in the queue. What should we expect and what should we really be comparing that to in terms of standard of care to get a sense of whether or not your products could have improvements are currently joining. Thanks.

Speaker 5

Tazeen, it's Ira here. Thanks for that. I think I got all the questions. You were breaking up a little bit. But So we are very much looking forward to reading out the data from our Phase 2 proof of concept.

Speaker 5

It's a dose finding are in the range of proof of concept study initial Phase 2 in focal onset seizures. Three things we're predominantly interested in the context of this study, first of all, obviously, the initial tolerability and safety of 352 in this are in the same period of time. The second is to understand the pharmacokinetic profile, which will help us with understanding exposure response position us well for future dose selection in other trials if we're successful. And the third is obviously, the measures of seizure frequency. Will be looking at seizure frequency, comparing from baseline to the primary endpoint.

Speaker 5

And essentially, we look at a normalized seizure frequency over an 8 week period of monitoring. And so obviously, the absolute change from baseline compared between the treatment and placebo. Also, we'll be interested in the number Patients achieving a 50% reduction in seizures and from the small study also looking at whether any Patients are able to become seizure free. Looking at the totality of that information, then obviously that will give us an indication of the strength of any signal that we're seeing and that will position us well are in the future discussion. And is

Speaker 8

there any kind of minimum amount that you're looking for in terms of improvement in seizure rate that would determine a go no go?

Speaker 5

And obviously, there have been a fair number of new trials in this area in the recent past that have are rolling information to understand the next steps.

Operator

We will take our next question from Chris Shibutani with Goldman Sachs. Your line is open.

Speaker 6

Hi, good morning team. Thanks for taking our question. This is Steven on for Chris. I think historically, your team has been helpful in framing what the guidance range means in terms of some macroeconomic factors and just overall are trying to see if they're business. So I was wondering if you could frame this $1,770,000,000 to $1,820,000,000 range, in that context.

Speaker 6

Thank you.

Speaker 3

Yes, I'd say the guidance range is primarily going to be driven by new patient demand. We had strong new mentioned demand in the first half of the year and depending on the outcomes for the second half of the year, that's really going to be what the driver of that range is. It's are in the range of $50,000,000 It's going to show a nice sequential step up in growth for the rest of the year. And I would just say the team is doing an excellent job. So from a macro perspective, you always have a bit of room for some disruption.

Speaker 3

I'd say based upon how our business is operating, it really comes down to get the continuance of new patient additions and we feel Confident with the market and how it's operating to provide the guidance we provided today.

Speaker 6

Awesome. Thank you. Are

Operator

ready. And we will take our next question from Anupam Rama with JPMorgan. Your line is open.

Speaker 3

Hey guys, thanks so much for taking the question. With the Huntington's PDUFA later this month, how are you thinking about the launch curve for INGREZZA in that indication? How do the properties of INGREZZA might shift the market dynamics there? Thanks so much.

Speaker 4

Good morning, Anupam. So, yes, we're obviously, we're excited about the opportunity and look forward to the are in the FDA decision coming up in August. The way that we're looking at it, the HD CRE opportunity, there's still significant unmet need For that patient population, we estimate around 25,000 or so patients in the U. S. With Korea associated with Huntington's disease.

Speaker 4

And only 2 out of 10 are currently treated with the only approved Medicines, which are VMAT2 inhibitors, the tetrabenazine. And so there's still significant unmet need and opportunity there. We're looking forward to getting the labeling and certainly being able to get off the ground this year. From a financial perspective, it's not tucked into our guidance, and are in the range of 2023 numbers would be modest, but there's still significant opportunity in that patient are looking forward to being able to help more patients with valbenazine in the not too distant future. So stay tuned.

Operator

Will take our next question from Phil Nadeau with TD Cowen. Your line is open.

Speaker 6

Good Morning. Thanks for taking our question. As we look forward to the CAH pivotal data in early Q4, we're curious to get your thoughts on the adult trial in particular. What is the protocol for reducing steroids in that trial? And What would you consider a clinically meaningful reduction that's likely to support approval and drive use?

Speaker 6

Thanks.

Speaker 5

In that trial. What I will say is that in the adult Phase III trial, there is a protocol though that guides clinicians And that was important, because of the steroid reduction being the primary endpoint of the study And the need to control that rather than have it be a more real world setting, which is what we believe will be used once the drug is successful and if approved. With respect to the clinically meaningful reduction in steroid dosing level, I would say that for as we've said are participating consistently from the start of this Phase 3 program. In our interactions and discussions with many stakeholders, including are in the range of 2nd quarter results. And so any reduction in steroids is meaningful for individuals.

Speaker 5

In the context of the clinical trial, We obviously are trying to reduce the steroids in a productized way and we will get the opportunity very soon when we read out the data to understand What degree of steroid reduction is possible in the face of crenequefont treatment?

Speaker 6

Can you remind me, have you disclosed the powering of the study?

Speaker 5

We have not disclosed the powering of the study against that primary endpoint. We do believe that the Number of patients within the trial is predominantly driven by the safety database that's needed to support the registration and that was in conversations with the agency and regulators and that the trial is are very adequately powered to address the endpoints.

Speaker 6

Perfect. Thank you.

Operator

We will take our next question from Jay Olson with Oppenheimer. Your line is

Speaker 3

Hey, congrats on the quarter and thanks for taking the question. Can you talk about the geographic are in the scope of Neurocrine and how Kineservant could potentially globalize your business, especially if you can leverage the diurnal infrastructure to

Speaker 2

Thanks, Jay. Yes, Kroneserfant could globalize Nurofen. So we ran this as a worldwide study mainly based in the United States, Europe. And so with diurnal as part of Neurocrine now and with this indication being one that is are in the range of $1,000,000,000 in the range of $1,000,000,000 in

Speaker 7

the range of $1,000,000,000 in

Speaker 2

the range of $1,000,000,000 in the range of $1,000,000,000 in the range of $1,000,000,000 in the range of $1,000,000,000 in the range are participating to our commercial operations in Europe. So we'll be we look to do a worldwide filing are on this and commercialize both in U. S. And Europe. Great.

Speaker 2

Thank you very much.

Operator

Will take our next question from Carter Gould with Barclays. Your line is open.

Speaker 3

Hi, congrats on the quarter. This is Leon Wang on Carter, a question on BD. So given Doctor. Roberts is going to retire in 2025 and the successor hasn't been announced yet. Would you look to fill that position or have better color on that position before doing any additional BD?

Speaker 3

And given kind of the extended timeline, can you give any additional details on where you

Speaker 7

are in that process? Thanks.

Speaker 2

Thanks, Leon. What I'd like to say is that when I rejoined their current approximately 6 years ago, we had 2 clinical programs going on at Neurocrine. We now have well over a dozen Several of them are late stage Phase 3 programs, are in the range of 2nd quarter. Eiry has built an excellent organization here and she's built an organization that What Eiry has given us, which is 2 full years of notice here. So she's highly involved are in our efforts to look for her replacement if such a thing exists.

Speaker 2

And we'll be here for a really good period of are in order to make the transition as efficient as possible. So again, the entire organization. Thanks, Eiry, for that.

Operator

Will take our next question from Mark Goodman with Leerink. Your line is open.

Speaker 7

Yes. Good morning. Ivy, in the past, you've talked about how you've got the M1, you've got the M4, you've got an M1, M4 and you're are going to be moving all 3 of them forward. I was just curious kind of the strategy there. Obviously, in the press release, it talks about are initiating Phase 1 for the M1M4, but I was curious about kind of the package in the whole franchise that you're looking at And if you're going to run a blood pressure study with each one of these or have you yet?

Speaker 7

Thank you.

Speaker 5

Mark, thanks. There's a lot of questions in there. Let me start just at the top. I mean, I think one of the things that really attracted us to the opportunity to partner with Socea are encouraged was the fact that they had a portfolio of really very selective different are participating in the clinic. And I think it is very important given the importance that I think is going to from this muscarinic set of pharmacology for us to have the opportunity to explore the differential pharmacology across these different selective molecules.

Speaker 5

With all of that said, our primary focus right now is on delivery of data for 568, which is our M4 selective agonist that is currently in the Schizophrenia treatment of acute psychosis trial because obviously that is the first opportunity we have in hand. I'm really pleased are going very well in that trial in the United States and we continue to make really good progress. The molecule that I referred to earlier 5 70 is the 2nd of the candidates that we have in hand and are progressing and that is an M4M1 are not yet there, but as we move into Phase 1 and understand the profile of that molecule, we'll be able to say more about that. And then in the preclinical setting, we obviously do have other molecules behind that that we will intend to bring into the clinic in due course. With respect to cardiovascular profile for each of these, I think we need to see in the clinic first.

Speaker 5

So I can't make a comment about whether or not Blood pressure monitoring will be required. All blood pressure studies will be required until we really see more we get to look at in the clinic.

Speaker 2

Thanks.

Operator

We will take our next question from Brian Abrahams with RBC Capital Markets. Your line is open.

Speaker 4

Hey, guys. Good morning. Thanks for taking my question. So you reported another good growth another good quarter of growth for INGREZZA. Can you talk about the inventory dynamics embedded in that?

Speaker 4

And then also, I guess, what you're seeing on the ground with regards to market share versus overall market growth With your and others' efforts to identify and diagnose TD patients and I guess where you see that going in the rest of this year and next? Thanks.

Speaker 3

So the bleed did occur as anticipated, but I'd say our results were largely driven by are in the Q1 and Q2, and it's a real testament to the team, Both medical and the commercial team and how they're engaging with our customers and then also reflective of the strong market that we have here with the developing TV market. So I'm going to hand it to Eric to provide a few more comments.

Speaker 4

Yes. We're really happy with the growth that we've seen in the first half of the year. And obviously, our raised guidance reflects our optimism for the second half. Are in the range of $1,000,000,000. Our commercial team is firing on all cylinders right now and the market is growing nicely, but I'd say that INGREZZA is growing even more nicely.

Speaker 4

We've actually gained share over the past few quarters, and we continue to be very optimistic about continued growth. The vast majority of patients with TD remain as yet undiagnosed and untreated, and we're very focused on bringing this important medicine to those patients. Thanks so much and congrats on the quarter.

Operator

We will take our next question from Brian Sworkey with Baird. Your line is open.

Speaker 6

Hey, good morning guys. Thanks for taking the question. Just really want to ask about any sort of seasonality to consider going into 3Q. I know 2Q is historically a big quarter for INGREZZA and then there tends to be a little less sequential growth in 3Q and then a bigger sequential jump in 4Q. So just looking for any guidance as we kind of think about the remainder of the year with that historical context and how we sort of model out the are in any channel dynamics to consider price changes, etcetera?

Speaker 3

Yes, Brian. I'll try to address the questions here. So the first half of the year had tremendous growth. The second half of the year, we expect similar growth. I think if you look at The range is $920,000,000 to $970,000,000 type INGREZZA performance here in the second half year, and we do expect continued Sequential growth, largely driven by new patients.

Speaker 3

Q3 is has had a touch of seasonality in the past, but It's always difficult to predict, so nothing that we're going to call out specifically here on this call. And then also from a price perspective, As I've said previously, we do anticipate our net revenue per script to be around $5,600 which is a couple percent increase If you compare it to 2022, so all feel stable from a net price perspective. So it really comes down to executing are in driving new patients and I think what you can hear from myself, Eric, Kevin, we feel very good with how the market is evolving, how our team is performing and look

Operator

We'll take our next question from Akesh Tarrani with Jefferies. Your line is open.

Speaker 9

Good morning. This is Ivy on for Akesh. So he's struggling on M and A. I think you've comment that the high end of the range you've considered was around RMB 4,000,000,000. But over the next few years, we think INGREZZA will generate more than enough free cash flow to go beyond that point.

Speaker 9

So what's the gating I guess like the gating factor for doing M and A beyond that $4,000,000,000 landmark? Would there be any appetite on our teams and to pursue a merger of another commercial stage C and S company? Thank you.

Speaker 2

So what I would say right now is that we have a very good growing franchise within INGREZZA and we're going to be adding another indication to it. And at the same time, we have an outstanding pipeline, which we're going to have multiple readouts are going on in the rest of this year and into early next year. So is Neurocrine driven to doing a large acquisition? No, But we look at everything pretty frequently. But we have a great opportunity for are very pleased with the progress we made in the quarter.

Speaker 2

Okay. Thank you.

Operator

Will take our next question from Jeff Hung with Morgan Stanley. Your line is open.

Speaker 4

Thanks for taking my question. Can you

Speaker 10

talk about the are in the

Speaker 4

range of potential advantages of INGREZZA as adjunctive treatment in schizophrenia over others approved for the indication? Thanks.

Speaker 5

Thanks, Jeff. First of all, I think I don't believe there are currently any adjunctive treatments actually approved are in the space of schizophrenia. And so obviously, this would be an opportunity to have a first approved medication. And we are very excited about the 2 pivotal Phase 3 studies that we have ongoing that evaluate valbenazine as a are in the range of potential adjunct in patients with schizophrenia who fail to get adequate response from currently available treatments. I think it's very important To emphasize the unmet need that exists there, the majority of patients do not get full patients relapse and suffer from acute psychotic episodes later on in their disease.

Speaker 5

So with respect to valbenazine, what made us are encouraged about valbenazine and interested in going into this program as a combination of 3 different pieces of background. The first was obviously in the context of our tardive dyskinesia program and now with the use of INGREZZA in the marketplace in treatment of tardive dyskinesia, we have a huge database information for patients who have received antipsychotics and valbenazine ingressa treatment together, and we're very Confident in the safety and tolerability of that. In addition, we have preclinical data that was generated that shows the addition of valbenazine to antipsychotic background treatment in animal models results in a synergistic effect. We obviously do not have Phase 2 data for the combination in the clinic, but Because of the challenges in psychiatry trials with failed trials and inappropriate readouts, we elected to go directly are in the range of 2,500,000,000,000 in the quarter. And as a result, that's what we're currently implementing.

Speaker 5

And we look forward to

Operator

will take our next question from Myles Mentor with William Blair. Your line is open.

Speaker 4

Hi. Just on the CTA for 5 Stephanie, the M1M4 dual agonist here. Are you running that Phase 1 with any sort of anticholinergic components to mask, nausea and vomiting that's are being seen with that mechanism, just obviously referring to the zenomelane experience at Eli Lilly. So just curious as to whether there's an additive

Speaker 5

Yes. I mean, I don't want to comment too much on the specifics of the design of the Phase 1 program, but Just by background, the reasoning for the zanomaline requirement of addition of anticholinergics, at least as I understand it, is because of the peripheral side effect profile seems normal in which is thought to be predominantly due to M2, M3, And the anticholinergic then knocks out that peripheral effect. We have highly selective centrally penetrant agonists. And as such, we are developing them in that fashion. So I think I'll probably just leave it at that.

Operator

Will take our next question from Danielle Brill with Raymond James. Your line is open.

Speaker 11

Hi, good morning. Thanks for the question. I'm curious, I believe your competitor is also developing their CRF-one antagonist

Speaker 2

Actually, not at this time. We're following their data, but at this point that's PCOS is not an indication that we're following up on.

Operator

We will take our next question from Evan Singerman with BMO. Your line is open.

Speaker 4

Hi, guys. Thank you so much for taking my question. I'd love to hear a little more about the expansion of INGREZZA The long term care market, we didn't hear much about it. I know that's a unique setting. So maybe just some more on that

Speaker 2

have a very strong

Speaker 4

opportunity to help more patients in long term care. This is a segment that we were attracted to at the time of launch are in the range of $1,000,000 with INGREZZA back in 2017, but we didn't have the capacity to take that on top of Outpatient psychiatry, community mental health and outpatient neurology. And so last year, actually just a little over a year ago, We launched our efforts into long term care with a dedicated team. What we've seen so far is a lot of really good progress and strong growth. We estimate that are in the range of 10% to 15% of the total TD population resides in various residential care facilities.

Speaker 4

And so it's early days yet in terms of that business segment. Our neurology and our psychiatry Segments are more established than LTC, but all signs are positive and we continue to be are very optimistic about the opportunity there going forward.

Operator

Will take our next question from Laura Chienko with Wedbush Securities. Your line is open.

Speaker 11

Good morning. Thanks very much for taking the question. Back to INGREZZA, a commercial question. I'm wondering if you can offer any comments on the duration of treatment that people are experiencing with INGREZZA, how long they're staying on board and just curious how that has been impacting, For example, the increase in guidance here, has there been any improvements or increases in the duration of treatment? And I'll just put one in.

Speaker 11

Have you actually quantified the

Speaker 4

We haven't disclosed the number of patients on therapy, though I will say that it continues to grow every quarter. And we've seen strong ads in terms of new patient starts even ever since we came out of COVID lockdown environment. In terms of persistency, that's been really strong ever since the early days of the launch, and we've looked at this serially Going back to 2017, 2018, 2019 and so on, what we've seen is that patients are staying on treatment And certainly longer than what we had expected prior to the launch and longer than what we're seeing with persistency with our underlying psychiatric meds. The majority of these patients are on either antipsychotics, antidepressants or both. And I think we haven't though we haven't given out specific numbers for a duration of average duration of treatment for a patient.

Speaker 4

What we're seeing is that the persistency compares very favorably to those psychiatric meds that these patients are taking.

Speaker 11

Thanks very much.

Operator

We'll take our next question from Sumit will be with Canaccord. Your line is open.

Speaker 10

Good morning. Thanks for taking our question. Could you remind us as to the nuance Patients with glucocorticoid being a secondary endpoint at week 28. And what could this difference mean in terms of your ability to drive successful related discussions with pediatric endovial patients?

Speaker 3

Hey, Sumant, you came in pretty muffled. Do you mind repeating that?

Speaker 10

Sorry about that. I hope this is better. So, could you remind us as to the nuance that drives the primary endpoint being glucocorticoid reduction at week 24 for adult patients, While it's serum A 4 in pediatric patients with glucocorticoid being a secondary endpoint at week 28 and what could this difference mean in terms of your ability to drive

Speaker 5

Thank you, Samantha. So both measures are important in the management of congenital adrenal hyperplasia in the pediatric and adult population. The function of choice of primary versus secondary endpoint really reflects The ability in a clinical trial setting and the kind of heterogeneity of the population in terms of The ability to demonstrate that outcome. And let me expand on that a little bit more. So from an adult perspective, Obviously, androgen control is extremely important and that is the primary mechanism of action of crenesiphon is to act on the HPA axis and reduce androgen levels.

Speaker 5

And as such, the 1st 4 weeks of that adult trial actually do look at androgen levels with clinesipant treatment on a background of stable steroid dosing. In adults, however, because you don't have The physiologic changes that are happening to the same extent in pediatric population growth, development and things of that sort. It was possible to protocolize the steroid reduction and look at steroid dose as a primary endpoint. And that is important in the management of these patients. And we Look forward very much to seeing the information there and understanding the impact of crenezefont on that endpoint.

Speaker 5

In the pediatric setting, obviously, the primary endpoint is the 4 week androgen control, and that is extremely important as a measure in these patients, since obviously they are growing, developing and Changing rapidly over time. In addition, however, we do have a real world assessment of a more real world assessment of steroid reduction, which is are measured out to 28 weeks. And so as we look at the data, we'll be able to look across the populations at the consistency of the information we have. And as I mentioned initially, I think both endpoints become important in the conversation around how this medicine could be used in patients out in the field.

Speaker 10

Thanks.

Operator

We will take our next question from Mohit Bansal with Wells Fargo. Your line is open. Mohit, your line is open. Sorry. This is Serena on for Mohit and thanks for taking our question.

Operator

So I wanted to ask more about the expected launch in Huntington's Chorea and if can talk about any differences versus cardiac dyskinesia, such as expectations for compliance rates or duration are ready to take questions.

Speaker 4

Yes, let me just kind of start with the last part of your question and work forward. So, obviously, we're excited about the opportunity and we think that with the data that we've generated, we have potentially a come with the FDA and what those labeling look like. But it's important to note that we haven't been out there talking about are in TD or excuse me, in HD with the HD community. So we'll really be introducing valbenazine is a new treatment option to the movement disorder neurologists and the general neurologists that treat the majority of these patients. And obviously, introducing valbenazine to the HD patient community and the families as well.

Speaker 4

So initially, I think that uptake will occur in those patients that are either newly diagnosed with their chorea We don't expect that there'll be a lot of switching in this market. And certainly, we haven't seen that in the TD market either. But ultimately, the product attributes that make INGREZZA so attractive in TD, The simplicity of true once daily dosing without complicated titration, the efficacy, The low rate of side effects, these are things that we think would translate well over to the HD Korea are in the range of opportunity and we look forward to making a new treatment option available because certainly one is needed.

Operator

Will take our next question from David Amsellem with Piper Sandler. Your line is open.

Speaker 12

Thanks. So regarding creneserfant, this is more of a commercial question to the extent that The product works. Do you think that ultimately new starts are going to be driven in the Pediatric setting given sort of the obvious pitfalls of a high steroid burden in peds as it relates to growth. Is that the right way to think about this market and uptake of the drug? Or do you see a real opportunity and results as well.

Speaker 12

Thank you.

Speaker 4

Yes, I'll start off by just caveating my comments by are saying, first, we need to see the data. And secondly, obviously, we need to get approved by the FDA. But with that, I see significant opportunity really across all patient segments. There's been no significant medical advances for the CAH opportunity for decades. Literally, the standard of care is and has been and remains And as Eiry was discussing, there are significant issues associated with high dose GC treatment.

Speaker 4

And so, if you look at the different patient segments and think about who might benefit from treatment with are in the ability both to improve day to day control over the androgens, The excess androgens as well as being able to lower the steroid burden for these patients. Certainly, younger patients would benefit as they're going through their growth years. And we've seen that there's great interest in treating these younger patients, But adults also, at various stages of their lives will benefit from, a new treatment approach. And so we think that there's going to be Significant opportunity across all of those patient segments. We're just looking forward to generating the data and being able to bring a new Totally different approach to treatment of CAH to that population, which definitely deserves one.

Operator

Will take our next question from Ash Verma with UBS. Your line is open.

Speaker 5

Thanks for taking my question. I wanted to ask about IRA implementation. So What are you assuming with respect to how commercial channel may respond to Medicare negotiating the price down? And do you have conviction that your commercial pricing is insulated in a post IRA implementation environment? Are

Speaker 2

ready. So I've said all along that, IRA is going to be a moving target, That are going to be listed for negotiation. I'd say for Neurocrine, while it impacts the entire industry. We get protected for quite a while here because of both of the provisions for small biotech companies. The first one, the specified small manufacturer phase in for the new Part D program.

Speaker 2

That's going to be a discount that is phased in for us over a 7 year period of time starting in 2025. That's a real nice advantage for us, actually because we're going to be if as written, we should be having lower are in the current Part D. We also expect to qualify for the small biotech exemption And that delays the potential for negotiation or the impact of negotiation into 2029 and are phased in over 2029 to 2,031. So while we're going to be following this quite closely, and as I've said before, I'm certain there will be changes, just don't can't predict exactly what the changes will be with IRA. We monitor it and we take it into consideration as we move our business

Operator

And we'll take our next question from Yatin Sueya with Guggenheim. Your line is open.

Speaker 2

Thank you. Just a quick question on the revenue per script. Could you maybe just comment on how it trended from Q1 to Q2? How should we think about Q3, Q4 and maybe where you expect to end? And then in terms of the guidance, the Korea is not included.

Speaker 2

At what time point you might start incorporating that in your guidance? Thanks.

Speaker 3

Yes. On the guidance for HD front, yes, it's not incorporated, but we don't expect it to be too material this year. So I would expect it to be incorporated as we think about 2024. From a net revenue per script perspective, as is typical, we had a are in a very positive position. And as you've seen historically, you see it fairly consistent from here.

Speaker 3

So Nothing that I'd flag other than that we do expect net revenue per script to be around $5,600 this year And access to remain very good. So I think always consistent there. One other comment that we've not been asked about is our profit profile during the quarter. We had strong profit, but do want to comment that we did have a non recurring non cash stock based compensation charge That impacted our GAAP earnings, but from a non GAAP perspective, we had very strong profit. And I figured when you continue to look into the financials, you can see that is showing up in the stock based compensation.

Speaker 3

We didn't increased GAAP operating expenses, but we actually did reduce our non GAAP operating expenses. So profit profile for the company remain very strong and we're seeing nice operating leverage in our business. So I wanted to chime in there since I've not been asked the financial are feeling a bit left out. So thank you.

Operator

We will take our next question from

Speaker 2

This is Yi Sun Lee on for Amy. Congrats on the quarter and thanks for taking our question. Last quarter you mentioned kind of a big delta in telemedicine utilization between Urology and psychiatry, how do you kind of think about this utilization evolving over the next year or 2 and the impact this could have on INGREZZA growth trend? Thank you.

Speaker 4

Yes. The dynamics with regards to telemedicine, I think, have been relatively stable Over the past year or 2, and there is a pretty significant difference between psychiatry and really all other specialties Within our healthcare system, early in the pandemic, we saw this significant jump in the use of telemedicine across both the neurology and the psychiatry segments, but as the environment improved and restrictions were lessened. Patients started to come back into the clinics and so on. We saw that neurology went back towards It's more historical levels of less than 10% of visits being billed as telemedicine visit. In psychiatry, however, Or in behavioral health, that's significantly higher.

Speaker 4

It's still hovering around half of all visits being billed as And so we think that it's here to stay, that it has some staying power in psychiatry, Even though COVID has diminished quite a bit. And the other dynamic I think that's important to note In psychiatry is really the expanded use are in the range of advanced practice providers in that segment. And so those two macro factors, I think, are important to understand what's happening In psychiatry in general, in our psychiatry business in particular, telemedicine, which creates a little bit of challenge for some providers With diagnosing TD though, I think that we've adapted nicely to it in terms of helping providers understand how to screen for how to diagnose TD remotely when they're evaluating a patient via telemedicine. And then the important work that we're doing to educate new providers coming into psychiatry, nurse practitioners, physician associates and so on. And so, we continue to evolve as the market evolves, The important thing is that the majority of patients still are undiagnosed and we're continuing to invest in driving diagnosis and treatment.

Speaker 4

The other element that I'll throw in there, like Matt just mentioned, the importance of Bringing in another factor, we continue to invest in DTC, and DTC is, one mechanism that we have are going to be able to reach patients and care partners directly to motivate them to bring up their TD symptoms and to drive diagnosis. And so all of these things, I think, are important, as you think about future growth for the franchise, but the ceiling is high and we're continuing to see strong growth, and think that our raised guidance reflects that.

Operator

We will take our next question from Oey Ihre with

Speaker 13

I might have missed it, but could you tell us what the volume growth rate is for INGREZZA in the quarter? And could you also speak to in the long term care, in terms of contributions to this quarter sales and growth rates. Thanks.

Speaker 3

So when you think about volume growth, it was incredibly strong. From a dollar perspective, you had about a 20

Speaker 2

are in the range of

Speaker 3

10% year over year growth, which was quite nice. And as I said earlier, we did have the bleed of inventory that's also reflective in the number that we've reported. So, we haven't provided the exact volume growth percentage, but It was quite strong during the quarter.

Operator

We have address all the questions in the queue. I would now like to turn the program back over to Kevin for any additional or closing remarks.

Speaker 2

Thank you very much and thank you for all your questions this morning.

Speaker 7

I'm just going to close with

Speaker 2

the fact that we've some of you may become, a bit too used to INGREZZA, just growing quarter after quarter. And while we see this growth continuing, we never take it for granted. This is a tremendous amount of hard work that goes in From our entire sales, marketing team, the medical team and all the other support teams that are out there in the field, We're able to continue to bring this medicine to more and more patients suffering with TD because of those hard efforts. And yet we see no slowdown in this. That is just incredible.

Speaker 2

And we are a very fortunate company are extremely important potential medicines in our pipeline. I'm not sure if there's any company out there that has the number of are in the range of Phase 2 and Phase 3 trial readouts coming in the next 6 months as we do. And if you extend it out into the first half of next year, It nearly doubles. So there's a tremendous amount of information that we're going to be generating in just the next few months. And we very much look forward to talking to you about all these.

Speaker 2

This company is actually hitting on all cylinders right now. We're always looking So with that, I'll sign off and look forward to talking to all of you in the near future.

Operator

This does conclude today's program. Thank you for your participation.

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Earnings Conference Call
Neurocrine Biosciences Q2 2023
00:00 / 00:00
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