Neurocrine Biosciences Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 1, 2024

There are 14 speakers on the call.

Operator

Good day, everyone, and welcome to 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 conference over to Todd Tuschla, Vice President of Investor Relations.

Operator

Please go ahead.

Speaker 1

Good morning, everyone, and welcome to Neurocrine Biosciences' Q1 2024 Earnings call. With me are Kevin Gorman, Chief Executive Officer Matt Abernathy, Chief Financial Officer Eiry Roberts, Chief Medical Officer Eric Benevich, Chief Commercial Officer and Kyle Gano, Chief Business Development and Strategy Officer. We're also joined today by Doctor. Jaz Singh, Neurocrine's Vice President of Psychiatry Clinical Development, which includes serving as the program lead for MBI-eight forty five, our ampa potentiator, which recently read out positive Phase 2 top line results in adults with major depressive disorder. Jas has been at Neurocrine since 2020.

Speaker 1

Prior to joining Neurocrine, Jas spent 14 years at Johnson and Johnson where among other things, he led the clinical efforts for the esketamine program through approval. I'm sure you'll have a few questions not only for Jaz, but for also Eiry and Kyle today on the 845 program. With introductions complete, I'll remind you that 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

At this point, I'll turn the call over to Kevin.

Speaker 2

Thank you, Todd. Good morning, everyone. We've had a remarkable week and it's only Wednesday morning. We've submitted 2 NDAs on creneciapont and received an FDA approval for a new offering of INGREZZA. I'm thinking about giving the company the rest of the week off.

Speaker 2

Neurocrine has never had the opportunity to positively impact so many lives as it has today. As you will hear in greater detail from Matt, Eric and Eiry, we are making progress in every aspect of our business focused on bringing life changing medicines forward. We have never treated as many TD and HD patients as we are treating today. We have never had as deep a mid and late stage clinical pipeline. And now we have a good line of sight into a number of potentially new medicines coming into the clinic from our research group in the next 2 years, several of them with the promise of disease modification.

Speaker 2

Now we're constantly prioritizing the funding of our programs based on data. We're in the enviable position to be able to support our current and future pipeline. Now a recent example of a program that will be increased we'll be seeing increased funding is our AMPA modulating molecule 845 as a treatment for major depression. The efficacy and tolerability seen in this trial is very compelling and we will be meeting with FDA to further define the registration program. Now in our press release this morning and in Eiry's comments upcoming, we share more information on this trial.

Speaker 2

However, we will limit our comments on this data set as we file additional intellectual property and protect future publication opportunities. So with those brief remarks, I'd like to turn it over to my colleagues starting with Matt.

Speaker 3

Thanks, Kevin. What is start to 2024? With continued INGREZZA growth, our ongoing activities with cremasterplot and last week's announcement of positive Phase 2 results in major depressive disorder. The foundation to build Neurocrine into a leading neuroscience company has never been stronger. INGREZZA's sales finished the quarter at $506,000,000 reflecting over 20% year over year growth and our 3rd consecutive year of Q4 to Q1 sequential growth.

Speaker 3

The seasonal pair dynamics associated pair dynamics associated with reauthorization and plan changes always poses challenges impacting refill rate for patients, but the team has managed through these dynamics well once again. Consistent with our approach in previous years, we are reaffirming sales guidance and we'll reevaluate after the Q2. As you review our financials, you can see significant year over year operating leverage on a non GAAP basis of over 1,000 basis points when excluding IP R and D investments made in the prior year. The team is doing a great job generating SG and A leverage reflecting the strength of our INGREZZA franchise. These results drove significant cash flow as we ended Q1 with over $1,900,000,000 in cash.

Speaker 3

We routinely evaluate what we believe will drive shareholder value and our capital allocation strategy remains intact. 1st, prioritizing INGREZZA growth 2nd, preparing for Krinesipron commercialization 3rd, internally advancing on our pipeline and 4th, assessing external opportunities. As we have excess capital, opportunistically return capital to shareholders by managing dilution and you've seen us accomplish this over the past few years reducing our convertible debt from approximately $518,000,000 to $170,000,000 In a few weeks, we'll further manage dilution by retiring our May 2024 convertible notes with cash, not shares. The convertible notes have a face value of $170,000,000 and fair value as of March 31 of around $310,000,000 In our Q1 GAAP P and L, we recorded an $89,000,000 charge representing a portion of the cost to fully settle the convertible notes and upon final settlement in May, we will record the remaining cost to fully settle the convertible notes in excess of face value. With that, I will now hand the call over to Eric Benevich, our Chief Commercial Officer.

Speaker 3

Eric?

Speaker 4

Thanks, Matt. Today, May 1, marks the 7 year anniversary since the commercial launch of INGREZZA in 2017. After 7 years, INGREZZA is the number one prescribed VMAT2 inhibitor for the treatment of tardive dyskinesia or TD. INGREZZA is the only treatment proven to reduce TD symptoms with simple dosing, always one capsule once a day and no complex titration. We're very proud of the progress we've made with INGREZZA over these past 7 years.

Speaker 4

We're even more excited about the many thousands of people living with TD or Huntington's Korea that we'll be able to help in the coming years. In addition to today being the 7 year anniversary of our launch, we're less than a week away from TD Awareness Week. Each year, TD Awareness Week occurs in early May, which is designated as Mental Health Awareness Month. This year, TD Awareness Week occurs from May 5 through 11. So please join Neurocrine, the Movement Disorders Policy Coalition, various mental health advocacy organizations, healthcare providers and policymakers across all 50 states and Washington DC in our efforts to spread the word and reduce the stigma of TD.

Speaker 4

Now on to results. Our Q1 sales of $506,000,000 represented robust year over year sales growth of 23% despite the typical Q1 seasonal payer challenges caused by annual reauthorization requirements and health plan switches. We continue to make good progress growing our franchise across all three business segments of psychiatry, neurology and long term care. The majority of patients who could benefit from treatment with their of their TD remain as yet undiagnosed. So we continue to focus on driving awareness, diagnosis and treatment with INGREZZA.

Speaker 4

For the Korea associated with Huntington's disease indication, we're about 6 months into that launch. The early feedback from neurologists gaining experience with INGREZZA and HD Korea has been very positive and we're making good progress there. Overall, HD Korea is a much smaller patient population. So TD will always drive the lion's share of growth for INGREZZA. Just yesterday, the FDA approved the new sprinkle formulation of INGREZZA.

Speaker 4

This new formulation represents a valuable treatment option for TD or HD CREA patients with difficulty swallowing. All in all, INGREZZA is again off to a good start in 2024 and we carry that momentum forward into Q2. Now quickly on crenezervant for the potential treatment of congenital adrenal hyperplasia or CAH. We've been busy staffing up and many of our headquarters and field sales leaders for our endocrinology franchise are now in place. We've been able to attract new team members with excellent experience in rare disease categories.

Speaker 4

We expect to complete hiring of the field teams in the second half of this year. Our primary focus in 2024 is on educating the CEH community on important topics, including disease based pathophysiology, understanding the challenges with current steroid treatments and new areas of research in CAH. And to that end, we recently rolled out a new educational initiative called What the CAH, which aims to close the gap in CAH understanding and acknowledges the frustration and challenges experienced by members of the CAH community in managing this rare genetic endocrine condition. We're excited about a potential launch of predestrifant in 2025 and we're laying the foundation this year to ensure our success going forward. So with that, I'll turn the call over to my colleague, Doctor.

Speaker 4

Ivy Roberts, our Chief Medical Officer.

Speaker 5

Thank you, Eric. Good morning. Since our last earnings call, our clinical and regulatory teams have made tremendous progress with the pipeline. Just yesterday, we received approval from the FDA for INGREZZA sprinkle capsules and submitted to the FDA the new drug application of crenezepont for the treatment of pediatric and adult patients with classical congenital adrenal hyperplasia. Given the unmet need in CAH and the previously granted breakthrough designation for crenecipont, we believe this submission may merit priority review and look forward to hearing the FDA's decision on this.

Speaker 5

In the meantime, our teams are well prepared for all upcoming interactions with the agency. Throughout this quarter, additional details from the registrational studies of crenecapont will be presented at a number of medical conferences, including ENDO in June. We look forward to sharing the posters and summaries as soon as they're publicly available. We're also working on full publication of the data in a peer reviewed journal in the near future. Moving to the Phase 2 pipeline, I'll begin with the very encouraging positive study results of NBI-eight forty five in adults with major depressive disorder.

Speaker 5

Recall NBI-eight forty five was one of several Phase 2 ready programs in licensed as part of the Takeda collaboration. This molecule is a potent, highly selective potential first in class positive allosteric modulator of AMPA receptors designed to induce synaptic plasticity while maintaining a broad margin of safety relative to seizure activity. As a reminder, there have been significant advances in recent years in understanding the neurobiology of depression with converging lines of evidence suggesting that depression is associated with an impairment in synaptic plasticity. Amplakind enhanced synaptic plasticity via an increase in neurotrophic factors. For example, brain derived neurotrophic factor BDNS.

Speaker 5

In fact, activation of AMPA receptors is necessary for the antidepressant effect of ketamine. Last week, we announced the Savitri study meant the primary endpoint with statistically significant reduction in the Montgomery Asperg Depression Rating Scale total score at day 28. The study met key secondary endpoints as well, including statistically significant reduction in the MADRS total score at day 56. In addition, NBI-eight forty five demonstrated a strong effect size. Importantly for this mechanism of action, MBI-eight forty five was generally well tolerated in the study.

Speaker 5

The most common adverse event was headache of which a majority were transient and mild in severity. There were no seizures, no serious adverse events, no psychoptomimetic or dissociative events throughout. Based on these encouraging data, we plan to engage with FDA in the near future to define the path forward to registration and we'll be sure to update you as we progress forward. Many companies before Neurocrine have tried and failed to progress ampotentiators in the clinic due to issues of toxicity and therapeutic index. Our partners at Takeda deserve enormous credit for their years of research activity in this field, which led to the design of NBI forty five and the favorable profile that we've seen with this molecule to date.

Speaker 5

In addition, I want to give sincere thanks to the team working on the SOVITRI study for their diligence in delivering this high quality outcome. In addition to 845, we also delivered positive Phase 2 results for 2 separate studies of f MODI, the long acting glucocorticoid obtained through our acquisition of the UK based Diurnal. The Phase 2 study of SMODI in adults with adrenal insufficiency and the Phase 2 study of SMODI in adults and adolescents with classic CAH, both reported top line positive results. Additionally, both studies met their respective primary and key secondary endpoints. In each study, SMODI was well tolerated with a safety profile consistent with published SMODI clinical data.

Speaker 5

On top of crenezepont's NDA submission and a total of 3 positive Phase II data readouts, we've also initiated a number of new clinical studies, which include initiation of a Phase 2 study of NBI-seven seventy, the oral NMDA NR2B negative allosteric modulator for major depressive disorder, initiation of a Phase 1 study of NBI-eight ninety, our next generation VMAT2 inhibitor and last but not least, initiation of a Phase 1 study of NBI-nine eighty six, an M4 antagonist targeted for development in movement disorders. We look forward to providing more information on these programs together with our other Phase 1 muscarinic agonist programs over the coming months as they each progress through the clinic. Looking ahead to our upcoming Phase 2 data readouts, I'm pleased to say that we're currently on track to deliver data from MBI-five sixty eight, our orthoceric selective muscarinic M4 agonist study as a potential treatment for schizophrenia and for lubidaxastat as a potential treatment for cognitive impairment associated with schizophrenia. We now anticipate top line data from both these studies in Q3 2024. In summary, I'm very proud of the progress we continue to make with the clinical portfolio of Neurocrine in order to deliver on behalf of the patients that we serve.

Speaker 5

With that, I'll hand things back to Kevin. Kevin?

Speaker 2

Thank you very much. Eiry and Nikki, we're ready for questions now.

Operator

We'll take our first question from Tazeen Ahmad with Bank of America. Please go ahead.

Speaker 6

Hey, thanks, operator. Good morning, guys. Thanks for taking my questions. The first one for me is on 845. Congrats on the data that you press released.

Speaker 6

We did get a few questions about dosing and dose response. And you said that you can talk about dose response. Is there any reason mechanistically, we're not seeing a dose response still encourages positive results ultimately and moving forward in Phase 3? And then second question on the Sprinkle formulation for INGREZZA. Can you just remind us what percent of patients have trouble swallowing and what kind of impact you expect that to have on sales now that you have this new formulation?

Speaker 6

Thanks.

Speaker 5

Yes. Let me take the first one, Celine. Thanks for that. We haven't said anything about the doses other than one of the doses reached statistical significance. And as you saw from what we released, there was improvement actually in eladirip in both doses.

Speaker 5

And so as Kevin said, we really are in a position that we're talking about intellectual property and other issues here that we want to work through before we say anything further. What I can say is we're very encouraged by the robustness of the data, both in terms of the impact on the primary and key secondary endpoints and overall as the tolerability as well. As we said, there were no serious adverse events, there were no seizures, no psychotic mimetic or dissociative events throughout and the most common adverse event was headache, the majority of which were transient and mild and severity. And with both doses looking like placebo in terms of their safety profile. And obviously, that's really important given the history in this class of medications.

Speaker 4

Yes, I'll tackle the second question. Hi, Tazeen. So the Sprinkle formulation, we estimate that 5% to 10% of people living with tardive dyskinesia or Huntington's Korea experience difficulty swallowing. So this represents, we think, a nice alternative for them to be able to get treated with INGREZZA. And in terms of the impact on the forecast, it's already integrated into our guidance.

Speaker 4

So we expected to get approval and we issued guidance at our last earnings call in the range of $2,100,000,000 to $2,200,000,000 So it's already baked in. Thanks.

Speaker 6

Okay. Thanks.

Operator

Thank you. Our next question comes from Phil Nadeau with TD Cowen. Please go ahead.

Speaker 1

Hi, good morning. Congrats on the progress. Thanks for taking our question. With the 568 data now expected next quarter, we're curious to get your most updated thoughts on what you need to see to advance that program into additional development, particularly given the competitive landscape. Give us some idea of what efficacy results you'd like to see and what safety data and tolerability data would give you confidence that 568 could compete?

Speaker 5

Yes. Thanks, Phil. We're really happy with the progress we've made with 568 and happy to be able to share that in the Q3, we'll be coming forward with data. Just to remind you, this is a study of around about 200 patients. It's a dose finding study and it's done in an adaptive fashion in order to enable us to explore the full dose response here.

Speaker 5

And in terms of the outcome, obviously, the primary impact of the study is the reduction in the PANSS score relative to placebo. And I think there's pretty clear precedent there in terms of what our expectations would be. We've seen a good effect size from other drugs in this class and we'd be looking for something in that kind of area in terms of the impact on the primary endpoint. However, I will say that if you think about medication for diseases like schizophrenia, it's really the therapeutic index that's important here. And so we'll be looking at the totality of the data, including the tolerability and safety profile, which I think is critical here.

Speaker 5

Our approach of choosing a selective M4 agonist and a direct agonist rather than a allosteric modulator, we believe has the opportunity to potentially differentiate, but it's all going to be about the data. And so we'll be looking at both the benefits that we see in terms of the PROMs improvement, the tolerability profile and taking that into consideration as we make the decision to move forward.

Speaker 3

One last comment, just a big shout out to the Muscarenic team. This is an example at Neurocrine, a very important program. We're able to really push forward the timing of when we'd expect top line data, I think by a couple of quarters. So excellent job by Samir and the whole muscarinic team in the effort and including Jazz as well.

Speaker 1

Perfect. Thank you.

Operator

Our next question comes from Paul Matteis with Stifel. Please go ahead.

Speaker 7

Hi, there. This is Julian on for Paul. Thanks so much for taking our question. Just on 845, I know you're not disclosing anything on the doses, but any additional color on what you can provide for the placebo response that you saw just thinking about moving into Phase 3, what that could potentially look like? And then on safety, saw there's no seizures reported, but the modality historically does carry an additional risk for that.

Speaker 7

So what do you think about potential seizure risk broadly moving forward and the overall safety profile? And then lastly, one quick one on the muscarinic. How much power do you expect to have for the individual dose arms that are at the higher receptor occupancy or in the expected active range? Thanks so much.

Speaker 3

Gabriel? Sorry, really quick one housekeeping item. We're going to stick to answering one question per analyst, so we can get through all the analyst questions at this time. So Eiry, if you want to comment on the AMPA program?

Speaker 5

Yes, I'll answer the next one very quickly and then that's the last time we'll do the more than 1. This is an adaptive Phase II trial. It's powered as such and it has sufficient powering to enable us to understand the dose response. So we're confident in that. On the AMPA, I'll just start and I will then see if Jaz has additional things he wants to say.

Speaker 5

We were very encouraged by the tolerability profile. And as I mentioned in my prepared comments, I think Takeda deserves a lot of credit for years of work that they did in navigating the therapeutic index issue that's been a problem for amplifying in the past. And the overall tolerability, both doses look like placebo in terms of the tolerability profile. So from that perspective, I think we obviously need more data in Phase 3. And as we progress, we'll learn more about the overall safety profile.

Speaker 5

Giles, I don't think we'll say any further.

Speaker 8

No. I think there were really no risk of seizure. We had a committee of adjudicating every event and it was very clear there were no seizures.

Operator

Goodbye. Okay. We have our speakers back in conference. We will take our next question from Chris Shibutani with Goldman Sachs. Please go ahead.

Speaker 2

Thank you very much. Good morning. On crenessar font, saw the press release NDA has been filed. Can you speak to the likelihood of a priority review and any potential timelines for that approval and launch? Thanks.

Speaker 5

Yes, I can speak to that. And so I think as I in light of the fact that there's significant unmet need here, the granting of the breakthrough designation and the robustness of the Phase 3 data package in both adults and pediatrics that we actually just submitted yesterday, we would hope that the FDA would consider this a priority review. Obviously, that's their final decision and we will obviously communicate

Speaker 2

So as soon as we get back on, you need to say something. I mean, people are wondering what the hell is going on.

Operator

And for the interruption, we have our speakers in conference.

Speaker 3

Hey, everybody. I apologize for the technical difficulties that we're having here, we've moved to the new campus in our new room. And I know many of you visited here recently. So I apologize for that. We'll be better next time.

Speaker 3

So let's jump back to Chris' question around likelihood of priority review.

Speaker 5

Yes. I'm not sure if you heard any of the response, Chris. So obviously, with the breakthrough designation in place and the robustness of the data that we were able to submit yesterday in both pediatrics and adults, we're very hopeful that a priority review will be granted by the FDA, but ultimately that's the agency's decision. And as soon as we know anything further in our interactions with them, we'll be sure to communicate that.

Speaker 2

Thank you.

Operator

And your next question comes from Akash Tewari. Please go ahead.

Speaker 2

Hey, sorry about that. So for 586 or sorry, 568, can you talk about the benefits of having an adaptive trial design? What are they when you think about getting information from your Phase 2 study and potentially designing your Phase 3? And then generally speaking, where does your team stand with muscaragenics when it comes to titration protocols, right? Cerevel doesn't have them, KORuna does.

Speaker 2

Do you think a titration protocol is ideal for 568 when it comes to minimizing safety and maximizing efficacy? Thanks so much.

Speaker 5

Yes. I'll answer the third part the second part first. I think we don't know until we see the data what the optimal dosing will be for 5, 6 days. And actually, the second question links a little bit to the first. Adaptive trials are very often done in Phase II as a means to explore a broader range of doses as possible in the most limited number of patients.

Speaker 5

And so we're very confident in that design and it's been used many times before. It will allow us to have studied a broad range of doses within the study and that will allow us to understand from a benefit risk perspective, which is the most optimal regimen to take forward into a Phase 3 if we're successful at the end of the Phase 2.

Operator

Thank you. Our next question comes from Jay Olson with Oppenheimer. Please go ahead.

Speaker 3

Hey, congrats on all the progress and thank you for taking our question. Yesterday, the company that acquired Prevail's GBA1 gene therapy program announced a decision to discontinue their study in Gaucher disease type 2. Could you comment on the advantages of your Voyager GBA1 gene therapy program and the novel capsid which enables a single systemic injection to address both neurological and peripheral manifestations versus PREVEIL's program, which requires a transcranial injection? Thank you.

Speaker 5

Yes. Yes, Jay, thanks for that. Yes, you're right. And I think we're really pleased with the progress that we've made clinically with our collaboration with Voyager. And as I think we mentioned earlier, we intend to take 2 of these new sort of gene therapies with the new capsids from Voyager into the clinic next year, all of the preclinical work goes successfully over the next year also.

Speaker 5

I think the as you alluded to, the fact that the technology employed by Voyager gives us the opportunity to have a blood brain barrier penetrant capsid allows us the opportunity with an intravenous injection to treat not only the CNS effects of diseases such as Gaucher or Parkinson's disease, but also peripheral effects that you might see with a disease such as Gaucher. The Voyager technology has focused on detargeting DRGs and other areas of the potentially associated with toxicity with these approaches in the past, while allowing for transduction in areas that are important in the context of the disease. So we're not totally surprised by yesterday's decision. Gauche 2 has central as well as peripheral effects. And so the fact that the ICN administration may not allow that to be addressed with a single administration of gene therapy.

Speaker 5

It's not surprising to us. And that's what gives us confidence with our single intravenous administration with the blood brain barrier penetrant capsid. Obviously, we're going to need clinical data and our preclinical data to understand that more, and we'll be generating that over the coming months.

Operator

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

Speaker 9

Great. Thank you very much for taking my question. I just wanted to probe a little bit on 845. How do you think about positioning this in the depression market? Where do you think it fits in?

Speaker 9

And do you have any thought on targeting AMPA potential versus previous approaches of NMDA antagonist? I mean, is there a key difference there that we should be aware about when you think about the mechanisms?

Speaker 5

Did I just ask you to repeat the last part of the question? I think, were you asking about where this fits relative to other approaches like NR2B NAM and other NMDA approaches?

Speaker 9

Yes. No, I mean, in terms of mechanistically, how AMPA potential is expected to differentiate from M and D are entire that are out there? Thank you.

Speaker 5

I'm going to add, Jan, do you want

Speaker 8

to add commentary there? Sure. So the amaton mechanism is central to plasticity. The NMDA mechanism acts before it. So if the molecule is acting, you have to go down NMDA first and then downstream, you have AMPA effect.

Speaker 8

By bypassing the NMDA going straight to AMPA, your one of the key potential benefit is that you are not having any of the adverse events that are associated with NMDA. So as you've seen, the NMDA antagonist that's approved SPRAVATO associated with REMS and that has significant adverse events, which is what the REMS is addressing for. By going directly to AMPA, you're really eliminating most of those adverse events with the potential of then getting the similar efficacy without any of those adverse events and consequential ramps to address it.

Speaker 5

Got it.

Operator

And your next question comes from Brian Skorney with Baird. Please go ahead.

Speaker 4

Hey, good morning team. Thanks for taking the question. I guess maybe to also ask a little bit more on 845, obviously the placebo adjusted response trumps all. But I was hoping you could at least speak to how to think about the performance of the placebo cohort relative to baseline. I think looking at other Phase 2 MDD studies, one we might expect like a 12 point reduction at 1 month.

Speaker 4

Just wondering is that in the ballpark for what you guys saw? Or is there anything to think about from trial design that would make placebo perform substantially different from other studies?

Speaker 5

Yes. I mean, we shared the placebo adjusted data. I would say that this is a very well conducted study. And just a comment and Jasmine want to comment about the importance of this. A lot of our efforts here at Neurocrine in the recent past are focused on understanding how to engage with sites and how to run these psychiatry studies in a way that allows us to have the appropriate level of oversight, and we think that's really important.

Speaker 5

And so I'm not going to comment on specific numbers, but I will say we were highly encouraged by the robustness of the data and the quality of the study in terms of how it was performed.

Speaker 8

I agree. I think we put in a lot of efforts to really make sure that we've got the highest quality of data that the data is robust, it's externally, internally validated and that we could actually be able to replicate it in the future. So we feel very confident in the data.

Speaker 5

Thank

Operator

you. Our next question comes from Brian Abrahams with RBC Capital Markets. Please go ahead.

Speaker 7

Hey, good morning guys. Thanks for taking my question and congrats on the commercial and developmental progress. Another question on 845. I realize you can't say too much in terms of details on the data, but maybe just bigger picture based on the profile you're seeing, how are you thinking about a go forward plan for the drug? Is the goal to move this directly into pivotal studies?

Speaker 7

Do you think it's best suited for chronic or finite treatment? And might you explore monotherapy or adjunctive treatment? Thanks.

Speaker 5

Kind of all of this up, I think, actually, to be honest. I mean, we were very encouraged by the robustness of the data. And obviously, we need to engage with regulators first in the U. S. Our intent and goal would be to get into a registrational program in the most efficient way possible.

Speaker 5

And I'll ask Jazz to comment on where this would fit, but just to make one comment first. I mean, I think we saw a large effect size, as we saw in our presentation today, in terms of the antidepressant effect at day 28, that's early. It's not within a day like esketamine, but it's still very early relative to other antidepressants. And that was maintained and actually continuing to improve our Phase 56. So that's encouraging from the perspective of our chronic therapy.

Speaker 5

And the tolerability profile to date, if you include both our preclinical data, our Phase I data and the data from this study, actually allows us to consider that very readily. Jan, what's everything you might want to add there?

Speaker 8

Thanks so much. I agree with everything. I think the only question that I think can't add a lot of color to it is that we had different subgroups, the question you were asking, but we still have to really go through them and see how those indications will play out. So that will come in the near future. We're not going to be ready to talk about it yet today.

Speaker 5

So to clarify that, that means the monotherapy question, we did have some patients on monotherapy in this study. So that will be something

Speaker 8

we can sustain as we go forward. Yes.

Speaker 7

Thanks. Larry, thanks, Jonas.

Operator

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

Speaker 10

Good morning. Thanks for taking the question. Maybe just change it up a little bit. I wanted to ask around just sort of when you think about the company's sort of capacity to be able to run potentially a large number of Phase 3 studies around neuropsych. I mean, you've already got the Phase 3 going on with valbenazine potentially staring down sort of AMPA moving into Phase 3, certainly the maturation of Muscareg portfolio and then the sort of the optionality around Louidaxi here.

Speaker 10

Is the company have that capacity to run potentially half dozen plus sort of Phase 3s and the willingness to invest certainly that doesn't seem contemplated in consensus today? Any color there would be helpful.

Speaker 2

Yes, Carter, thanks for the question. And it's a good one. As I said in my opening remarks, what we are constantly doing is prioritizing our programs and then keeping a close eye on our spend. It's one thing to say that we have the financial resources to do it all, which we do. However, you can't do everything.

Speaker 2

So we are currently in the midst of putting down our thoughts on what the go forward looks like for this program. And then with the other Phase 2s that are going to be reading out this year that we have coming up, the muscarinic and such, which is if positive, there's a well clinical investigation that we have there. So we're going to continue to dig down into this, prioritize things and make sure that we keep a good eye on what our spend looks like going forward.

Speaker 3

But to be clear, I mean with the great data that we saw in this program and hopefully more good data to come on the future Phase 2. It is going to require a step up in investment. But as Kevin said, it's not going to be 100% incremental. We're going to be going through the process of continuing to prioritize where we invest. From the end, it is very fortunate to have the quality of data that Ira and Jazz are speaking to on the plate like 845 and we'll see how the muscarinic and the CIS trial read out here in the Q3.

Speaker 1

Thank you.

Operator

Our next question comes from Anupam Rama with JPMorgan. Please go ahead.

Speaker 8

Hey, guys. Thanks so much for taking the question. Quick question on the OpEx guidance, maybe just a little bit of color on what's driving the R and D uptick and

Speaker 2

the decrease in SG and A spend? Thanks so much.

Speaker 3

Yes. On the R and D front, it's a positive aspect. With all the progress that we've made with our partner programs like the musarenics, the Syspirida collaboration, we have a mile stone thing that we have to make because we did certain thresholds. So for example, in the Q1, we had $6,000,000 expense that's in the R and D line that's associated with some of those milestones and I guess I forgot Voyager as well. And then we also have more milestone payments that we triggered here in the Q2.

Speaker 3

So from an accounting perspective and also from a guidance perspective, we don't include that in our R and D guidance or in our P and L until those are A spending SG and A spending that we also took down for the quarter, which is basically our review of our cost base and continuing to prioritize where we put our investments. So the increase isn't directly, I think, I had a question from somebody isn't directly related to the AMPA program. Those increases will likely more translate in 2025. But for 2024, generally speaking, operating expense guidance remains intact outside of the milestone payments to our partners.

Operator

And your next question comes from Mark Goodman with Meringue. Please go ahead.

Speaker 7

Hi, Irene. Can you talk about the additional data we're going to see for cremessephone at ENDO in June? And then maybe we could just talk about Europe, what's the plans for Europe for crenezefan and when are we going to file and what the plans are for staffing up? Thanks.

Speaker 5

Yes. Let me take the second part, Chris. We are now working and moving to working on the marketing authorization application for Europe. And so the team will be diligent in working through that. And I think once we kind of know our timing, we'll be able to communicate that in terms of when we think that will be going in.

Speaker 5

I mean, in general, the data that we'll see more information around the demographics, the baseline characteristics, the primary and secondary endpoints and the tolerability. I mean, we wanted to share top line information already, but the largest amount of information will become available in the context of our full data publication, And we anticipate having a full publication for both pediatric study and the adult study separately in the near future.

Speaker 2

And Mark, I'd like to take this opportunity just to add something on here in that. You're asking about filing in different regions of the world. Obviously, the most important region of the world for us with this program is the United States. I can't express enough thanks and gratitude to the CAH team from top to bottom in filing 2 NDAs in the time that it would normally take the company to file 1 NDA. I think that a lot of changes that we've made here at Neurocrine for the better exemplified by the excellence this team brought to that.

Speaker 2

That team immediately switched over into while doing that in labor negotiations that they did for the Ingressive Sprinkle. That team then immediately has switched over to getting ready now. We don't know whether we're going to have an advisory committee, but we have to assume that we will for CAH. And those very same members are getting here early this morning in order to continue the preparations for doing that. So while we have a lot of highly talented employees here, we understand that PredestarFund is an extremely valuable asset to us and will bring an amazing change to CH patients' lives.

Speaker 2

So we're throwing everything we can at that. And we're focused right now on the U. S. Market.

Operator

Thank you. Our next question comes from Myles Minter with William Blair. Please go ahead.

Speaker 4

Hey, guys. Congrats on the quarter. Just a quick question on if you've tested any of your cholinergic assets across the board in rabbits for preclinical tox studies, just given one of your peer molecules got put on hold for seeing that signal? Thanks.

Speaker 5

Yes. No, I think all I can say there is that we are highly confident in the preclinical packages for each of the macroinerg agonists that we've taken into the clinic. And obviously, those have been scrutinized by regulators to enable the clinical testing to start, and we have not experienced that issue.

Speaker 3

Yes, maybe Miles, this is Kyle just to add to that. We've completed our long term FOX 4, 5, 6, 8. So the molecule looks pretty good. So we're excited to move that program forward.

Speaker 4

To be clear, did you use RAPIDS?

Speaker 5

I mean, in our understanding, rabbits are usually used in the repro tox setting and not in the broader toxicity. So the species selection for our tox program are chosen on the basis of the molecules themselves and what is generally used in that in toxicity testing. And we have full preclinical packages enabling first in humans for all of the molecules that have gone into the clinic. And as Kyle alluded to, that includes the longer term term chronic tox. We have not done unnecessary program beyond that what is necessary to determine the safety profile to enter the clinic.

Speaker 8

Thanks for the question.

Operator

Our next question comes from Jeff Hung with Morgan Stanley. Please go ahead.

Speaker 10

Thanks for taking my question. For the upcoming levodac stat data, what do you need to see to advance into Phase 3? And what kind of improvement in cognitive impairment would be clinically meaningful? Thanks.

Speaker 5

I'm sorry, I wonder if you could repeat that. I didn't catch the very beginning of the question.

Speaker 10

Yes, sure. So this is for lubodaxitab.

Speaker 5

Okay. I'm going to get Jaz to answer that one because he can give a little bit of context about the first Phase 2 study that we did and obviously how we're thinking about

Speaker 8

that in the context of the repeat study. Sure. Thanks, Harry. So in the initial study that was done with lutetastat, keep in mind that the study was primarily done to address negative symptoms of schizophrenia. I know the cognition was secondary in it.

Speaker 8

We saw a meaningful effect size of 0.3 in the data in one of the doses there. But more importantly, it's also important improvement in function. That was a force that hadn't really been seen before. See, if we can replicate that information in the ongoing study, that would be a substantial advance over there's absolutely nothing approved over there. So I think even that's it's a substantial advancement and benefit to patients.

Speaker 3

Thank you.

Operator

Our next question comes from Laura Chico with Bush Securities. Please go ahead.

Speaker 11

Hi, Good morning. Thanks very much for taking the question. Just one quick follow-up. So with respect to the 845 program, what's your confidence that you've adequately explored dose ranging sufficiently to advance the program? I guess I'm trying to understand, as you said, coming out of these FDA regulatory discussions, do you anticipate needing additional dose ranging studies before entering a registrational program?

Speaker 11

Thank you.

Speaker 5

Yes. I'll make a couple of comments and then I'll ask Jaz to comment as well. I mean, I think if you look at the preclinical data and Phase I data, there was a broad range of doses that were tested. And one of the things that Takeda did extremely well in the translational medicine space was look at pharmacodynamic effect using craniomagnetic stimulation and also cognitive testing and other pharmacodynamic measures in the Phase I setting. And so we had a really good handle on pharmacodynamically effective doses going into the dose we selected for the Phase II study that we just read out.

Speaker 5

And also there were 2 doses in this study rather than just one, which is common in some Phase 2 settings. And so I think in our discussions with the agency, there's a lot of information to support the selected doses up to this point and how we might move forward. Jas, I don't

Speaker 8

know if you want to add anything. I'm sure.

Operator

Thank you. Our next question comes from Danielle Brill with Raymond James. Please go ahead.

Speaker 6

Good morning, guys. Thanks so much for the question. Just a quick one on INGREZZA. I was wondering if you could share the average revenue per patient in 1Q? Thank you.

Speaker 3

Yes. The average revenue per patient, if I heard you right, Q1 is always the most challenging quarter where patients go through reauthorization. And so as a result of that, the refill rate per patient typically goes down. And so I think that that's something that we've talked about historically, which has caused pressure on our sequential growth from Q4 to Q1. And this is the 3rd straight year where we've had sequential growth.

Speaker 3

So the team did a really great job ensuring that patients stayed on medicine and tried to close that gap for those for that reach over. Now on net revenue per script, if you're asking on the dollar front, as I said last call, we do expect our net revenue per script for the year for 2024 to be somewhere over $5,800 and that compares to 5,600 in 2023. And then the last piece is we typically have seasonal pressure on gross to net in Q1 as a result of the Medicare Part D Donut Home and commercial co pay resets. And so you would you do have a bit of a higher discount, a couple of points in Q1 that recovers in Q2 and beyond. So hopefully that gives you the components to answer your question.

Operator

Thank you. Our next question comes from Yatin Zuni with Guggenheim. Please go ahead.

Speaker 12

Good morning. This is Thelma for Yatin and thanks for taking our question. So you recently initiated a Phase 1 study with the next generation of VMAT2 inhibitor. I'm just curious what are the key differentiating properties of this agent versus INGREZZA? And what do you want to see from the Phase 1?

Speaker 12

Thank you.

Speaker 5

Yes. So I'm not quite sure if fully heard the question, breaking up a little bit. But It was about our next generation Bmax2 inhibitor. We're pretty excited about getting this molecule into bispecific. As you can imagine, INGREZZA valbenazine is an incredibly well performing molecule.

Speaker 5

So in terms of finding a next generation that can potentially be better, the bar is really, really high. And so but we're very happy with the molecule that we have in hand right now. We're just starting Phase 1. In that Phase 1 setting, obviously, we'll be interested in the tolerability PK profile and how that might differentiate from valbenazine. And that would include the potential for use in tardive dyskinesia as an indication, but obviously beyond that into other neuropsychiatric disorders.

Speaker 5

And as we get some of that information and we understand the potential areas of differentiation,

Speaker 8

we'll obviously speak more about that.

Operator

Thank you. Our next question comes from Sumant Kulkarni with Canaccord. Please go ahead.

Speaker 9

Good morning. Thanks for taking my question. On your Phase 1 studies for 567, 6970 muscarinic agonists, are there any differences in enrollment criteria by age? And are any of those being specifically run-in older adults?

Speaker 5

Yes. I mean, so the initial study for each of those that we're just starting out are in healthy subjects of the kind of normal age range, not including elderly subjects. However, each of those plans is designed in order to address specific questions relating to those molecules. And so we do understand that particularly for those molecules that impact both M4 and M1 that cognition can be an important part of the potential indication space moving forward. And so similarly to what was done for 568, we will be exploring those molecules in older subjects at some point during the plan to enable us to be ready for the Children's Phase 2 path forward.

Speaker 10

Thank you.

Operator

Your next question comes from Evan Seygurman with BMO. Please go ahead.

Speaker 4

Hi, guys. Thank you so much for taking the question. I haven't really heard much recently on your push for INGREZZA in the long term care market. Maybe highlight what you're doing in this space as this used to be a pretty big part of the narrative or at least where we were going to see INGREZZA growth? Thank you.

Speaker 4

Yes, thanks for the question. It's still an important part of the INGREZZA growth story. Frankly, we're seeing good progress across all three of our business segments in psychiatry, neurology and long term care. We've been in the long term care segment now for coming up on 2 years. I'm really pleased with the growth that we're seeing and the progress that the team is making.

Speaker 4

Today, long term care is contributing approximately equal to neurology in terms of our overall business. And so we're going to continue to develop that segment. And the only other thing that I would add is that on a relative basis, it's earlier in the overall development phase, commercially speaking that is in the sense that we've been in psychiatry and neurology now for 7 years with INGREZZA and less than 2 years in long term care. So there's still a lot of HCPs that are learning about drug induced movement disorders and cardiac dyskinesia and becoming more familiar with INGREZZA as the most prescribed, most preferred VMAT2 inhibitor. So we'll continue to see good growth coming out

Speaker 3

of long term care going

Speaker 4

forward. Thank you.

Operator

Our next question comes from Oi Iyer with Mizuho. Please go ahead.

Speaker 7

Hi, good morning guys. This is Leo on for Oi. Thanks so much for taking our question. So we were under the impression that 845 could differentiate on cognition. Do you still believe this is the case?

Speaker 7

How else do you expect 845 to differentiate? Could it also differentiate on onset of action? Thanks.

Speaker 5

Yes. We're just going through all the information from the trial. We also shared this top line today. I mean, I think we'll be once we understand the full data sets and the totality of the data, we'll be able to comment more around where we think this can truly differentiate and will be designed well, JaaS will be designing the Phase III trial appropriately so that we can ensure that we always like to do here that we bring the best options to patients that we possibly can.

Operator

Thank you. Our next question comes from David Hoang with Citigroup. Please go ahead.

Speaker 9

Hi there. Thanks for fitting me in. So I just had a question on the 770 molecule. This is I think the NMDA NR2b allosteric modulator. What would be your expectations there around that mechanism and drug profile and how could that differentiate from what you're seeing with 845?

Speaker 9

Thanks so much.

Speaker 5

Alex, do you want to

Speaker 8

move on that? Sure. So the NR2V NAM mechanism is a validated mechanism for treatment of depression or potential efficacy even in treatment resistant depression. So the initial study we're looking at just understanding the dose and whether we can term an efficacy. Once we have some data from the Phase 1, Phase 2 studies, we'll be able to much better be able to profile where what the efficacy safety profile looks like and how best to position them forward further growth.

Operator

Thank you. We're both next with Ami Sadiya with Needham. Please go ahead.

Speaker 13

Hi, good morning. Thanks for squeezing me in. I had a quick question on 845. The trial design mentions that patients would have had to have failed the prior treatment. Was that just SSRI or SNRI or were there other modalities that patients were either already on as background therapy or had failed it?

Speaker 13

Thank you.

Speaker 8

Thank you again for the question. So the study required patients to have had non response to at least one antidepressant and that could be any that they've taken. We didn't have any specific restrictions as to which ones. So what was in the studies was a combination of SSRIs, SNRIs, use of adjunctive antipsychotics with propion. So it's a mix of what percent of care looks like.

Speaker 5

Thank you.

Operator

Your next question comes from David Amsellem with Piper Sandler. Please go ahead.

Speaker 7

Thanks. I have a CAH focused question. With CRYNETICS having its data coming up for its orally CTH antagonist. Just want to get your thoughts on how you're thinking about that agent and more broadly the potential for coexistence of multiple novel agents in the broader CAH space? Thank you.

Speaker 5

Well, I mean, a couple of things. First thing, I think it's really great to see so much focus on trying to bring new medicines to patients living with congenital adrenal hyperplasia, both pediatric and adult. It's been a long time coming, I mean, 70 years in the making before getting to the crinetopant data. So we kind of applaud Kinetics for playing in that space as well, and I think that's great. The second thing is we're very focused on crenequepar right now.

Speaker 5

We obviously are ahead. We have very robust Phase III data in both pediatric and adult patients. And as you heard, we just submitted our MDAs yesterday. And so we're waiting to see the kinetics information on the CR2 antagonist. And I think that patients with CAH have so few options that additional research in this area is always a good thing.

Speaker 5

And we're looking forward to our opportunity to surface patient population hopefully in the very near future.

Operator

Thank you. And I will now turn the call over to Kevin Gorman for closing remarks.

Speaker 2

Thank you very much. You know what I'm struck by from all of the questions this morning is, it reaffirms the perception that we all have here and what we're experiencing each day. I would say in over 32 years with the company, I've never seen us in a better position than we are today from every aspect of the company. We're talking about from commercial, all the way to late stage clinical trials and NDA submissions. And then clearly into our mid stage, which 845 has proven itself and then now into our Phase 1 programs and even several of the questions we're reaching back into what you will learn over the next 24 months is one heck of a robust research pipeline that's making its way into the clinic.

Speaker 2

The best days of Neurocrine are in front of us by far. I have no doubt about that. I want to remind you what we talked about at great length in our R and D base. And what we outlined is that we understand that in we're tackling difficult disease and these are psychiatric diseases that we're tackling that are very difficult. And one of the ways that we do that is we attack them with multiple mechanisms.

Speaker 2

And in addition, we choose mechanisms that can have multiple disease applications. Thus far, this is proving to working out for us. Is it going to guarantee 100% success? No. But will it ensure success?

Speaker 2

Absolutely. And so that's how we're conducting ourselves. And I really appreciate all the questions this morning. Look forward to talking to you about all of our pipeline projects and INGREZZA and INGREZZA Sprinkle going forward. And I thank you very much.

Operator

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

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Earnings Conference Call
Neurocrine Biosciences Q1 2024
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