Neurocrine Biosciences - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 total revenue was $572.6M, a modest beat versus S&P Global consensus $561.0M*, driven by INGREZZA net product sales of $545.2M (+8% YoY) and initial CRENESSITY sales of $14.5M.
• Non-GAAP diluted EPS was $0.70 vs S&P Global consensus $1.09* (miss), reflecting higher R&D and SG&A as the company initiated multiple Phase 3 programs and funded launch investments; GAAP diluted EPS was $0.08.
• Full‑year 2025 guidance was reaffirmed: INGREZZA net product sales $2.5–$2.6B; GAAP R&D $960–$1,010M; Non‑GAAP R&D $890–$940M; GAAP SG&A $1,110–$1,130M; Non‑GAAP SG&A $955–$975M.
• Catalysts: record new patient starts for INGREZZA, expanded Medicare formulary coverage to ~two‑thirds of TD/HD beneficiaries, early CRENESSITY uptake with 413 enrollment forms and ~70% reimbursement; stock could react to near‑term acceleration in INGREZZA, CRENESSITY formulary decisions, and Phase 3 execution.

What Went Well and What Went Wrong

What Went Well

• Record new patient starts for INGREZZA in a seasonally challenging Q1, underpinning momentum into Q2 and H2 2025. “We delivered a record number of new patient starts… This strong performance gives us good momentum” — CEO Kyle Gano.
• Expanded Medicare Part D formulary coverage for INGREZZA to approximately two‑thirds of TD/HD beneficiaries, improving access despite near‑term gross‑to‑net pressure.
• CRENESSITY launch ahead of expectations: $14.5M net sales, 413 enrollment forms, ~70% of dispenses reimbursed; management sees strong trial across pediatric/adolescent segments and broad endocrinology adoption.

What Went Wrong

• Profitability compressed: GAAP diluted EPS fell to $0.08 (vs $0.42 in Q1’24) and Non‑GAAP diluted EPS declined to $0.70 (vs $1.20 in Q1’24), driven by higher R&D (milestones) and SG&A investments, and equity investment fair value losses.
• Gross‑to‑net headwinds and contracting lowered near‑term net revenue per script; management expects sequential gross‑to‑net slightly down Q1→Q2 before patient additions accrue over 2–4 quarters.
• Reauthorization challenges: prior authorization and reauthorization processes were “more challenging” in Q1, causing slightly higher drop‑offs and delayed refills vs prior years.

Transcript

Operator (participant)

Good day, everyone, and welcome to Neurocrine Biosciences' First Quarter 2025 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. Please note today's call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Todd Tushla, Vice President of Investor Relations. Please go ahead.

Todd Tushla (VP of Investor Relations)

Thank you, and happy Cinco de Mayo to everyone. Welcome to Neurocrine Biosciences' First Quarter 2025 Earnings Call. With me today are Kyle Gano, Chief Executive Officer, Matt Abernethy, Chief Financial Officer, Eric Benevich, Chief Commercial Officer, and, for one last time, as Chief Medical Officer, Eiry Roberts. 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. Following prepared remarks, we will strive to get to everyone's questions. Now, I will turn the call over to Kyle.

Kyle Gano (CEO)

Thanks, Todd. Good afternoon, everyone. Neurocrine has never been in a stronger position as we maintain an enterprise-wide focus on execution and evolution. Even with external factors continuing to create market volatility, we remain focused on controlling what we can, executing with discipline to meaningfully deliver for both patients and shareholders. The first quarter reflected strong execution across both of our brands, with record new patient starts for INGREZZA and encouraging early adoption of CRENESSITY. With reaffirmed guidance for INGREZZA and solid momentum heading into Q2, combined with an early but promising launch trajectory for CRENESSITY, we are well-positioned to drive both near and long-term revenue growth as we evolve from a single blockbuster to a multiple blockbuster neuroscience company. Amazing to see the efforts from our commercial and medical teams this quarter. Well done. On the R&D front, our portfolio continues to advance meaningfully.

We are encouraged by the progression of osavampator and NBI-568 into phase III registrational studies. The strong magnitude of effect demonstrated in both programs' phase II proof-of-concept studies gives us confidence in continued investment. We are on track for expanding our muscarinic portfolio into new phase II studies later this year. This includes NBI-568 into bipolar mania and NBI-570, our dual M1/M4 agonists, into schizophrenia. From a leadership perspective, we are thrilled to welcome Dr. Sanjay Keswani as our incoming Chief Medical Officer in June. Dr. Eiry Roberts, our current Chief Medical Officer, will transition into a strategic advisory role where her expertise will continue to shape key programs. In closing and reflecting on the quarter, I'm extremely proud of our team and progress.

Our growing, diversified revenue base, expanding pipeline, and strong balance sheet position us well to continue building on our momentum as a leading global neuroscience company. With that, I'll turn the call over to Matt.

Matt Abernethy (CFO)

Thank you, Kyle, and good afternoon. We made tremendous progress throughout the first quarter, both with the re-acceleration of new patient growth for INGREZZA and with the successful CRENESSITY launch. We are executing from a position of strength with these two growing commercial products, a robust clinical pipeline in CNS disorders, and a strong financial foundation that provides flexibility for continued investment to drive shareholder value. Starting with INGREZZA, we posted $545 million in first quarter product sales. As anticipated, first quarter sales were impacted by one less order week, patient reauthorization processes, and gross-to-net dynamics. Although noisy, I do want to make a few very specific comments about the quarter and INGREZZA. First, we had record new patient additions in the first quarter, which is a testament to the quality of our product, the dedication of our team, and the continued unmet medical need.

Second, effective April 1st, 2025, we expanded our formulary coverage in Medicare Part D, which significantly increases patient access, providing a foundation to expand our customer base in the years to come. Finally, as Kyle mentioned, we are reaffirming our 2025 sales guidance range of $2.5 billion-$2.6 billion, which factors in the expected acceleration of new patient additions offset by gross-to-net impact from contracting activities. Turning to CRENESSITY, where we just completed our first full quarter of launch, we achieved net revenue of $15 million, which includes 413 enrollment forms, with 70% of dispenses receiving reimbursement. Although we are still early in our launch efforts, we're encouraged by this initial success. A few financial comments. Our capital allocation priorities remain intact, with our number one priority being investments to drive revenue growth. Number two priority is investments to advance our R&D pipeline.

Three, investments to enable business development. Lastly, consider return of capital to our shareholders. During the first quarter, we continued to reflect these priorities to drive revenue growth with investments in our expanded INGREZZA sales force and CRENESSITY launch. In addition, we continue to make investments advancing our pipeline in R&D with the initiation of two major phase III programs. Just a reminder, R&D expense for the first quarter of 2025 includes $45 million in milestone expense, primarily for the initiation of our osavampator phase III program in MDD, and we will recognize $15 million in milestone expense in the second quarter for the initiation of NBI-568 phase III program in schizophrenia.

In addition, we've been able to retire 3.6 million shares over the past two quarters and have retained a strong balance sheet with approximately $1.8 billion in cash to support our commercial and clinical development strategies for continued growth. With that, I will now hand the call over to Eric Benevich, our Chief Commercial Officer. Eric?

Eric Benevich (Chief Commercial Officer)

Thanks, Matt. We're celebrating two significant milestones for INGREZZA. First, a couple of weeks ago was the eighth anniversary of FDA approval. Remarkably, eight years into the launch, our commercial and medical teams achieved record new patient starts in the first quarter, despite a challenging payer environment. I want to take a moment and thank our teams for their exceptional dedication and performance. This second week of May also marks Tardive Dyskinesia Awareness Week. Currently, we estimate that just over 40% of patients with TD have been given a diagnosis to explain their abnormal movements, and less than 10% are currently receiving standard-of-care treatment with a VMAT2 inhibitor, such as INGREZZA. There remains a significant opportunity for growth of the VMAT2 class and INGREZZA as the VMAT2 class leader.

As part of our support for TD Awareness Week, Neurocrine continues to collaborate with the Movement Disorders Policy Coalition, mental health advocacy organizations, healthcare providers, and policymakers nationwide to increase awareness, reduce stigma, and drive diagnosis so that TD sufferers can access available treatment options. Matt provided a nice summary of INGREZZA and CRENESSITY performance in his opening remarks, and I'd like to provide additional color. First, we're pleased to have expanded formulary coverage from less than half to approximately two-thirds of Medicare, TD, and HD beneficiaries. While this affects our gross-to-net, access will be improved for our HCP customers and the patients they care for. We view these as important investments to ensure patient access today and into the future. Second, as noted in our last call, we believe the Inflation Reduction Act, or IRA, has notably influenced payer behavior and reimbursement dynamics, particularly for specialty medicines like INGREZZA.

In the second half of last year, we saw an impact on the prior authorization process for new patients. In Q1, we saw the impact on the reauthorization process for continuing patients, which was a bit more challenging versus prior years. Regardless, our field sales and field reimbursement teams were persistent in their efforts to help healthcare providers and patients manage through evolving payer requirements. Great job, teams. Third, we reaffirmed our 2025 INGREZZA guidance. Looking forward, our growth strategy encompasses our recently expanded sales force, investments in improved formulary access, and enhanced marketing initiatives that will strengthen INGREZZA's market-leading position as the only VMAT2 inhibitor that is highly effective, uniquely selective, with therapeutic dosing from day one, and proven across the widest range of patients.

With continued significant unmet need across the tardive dyskinesia and Huntington's chorea patient communities, we anticipate sales to accelerate in Q2 and through the second half of 2025. This momentum should position us well heading into 2026 and beyond. For CRENESSITY, while we're still in the very early stages, I'm pleased to say that the launch is exceeding our expectations. As Matt noted, in Q1, we received 413 treatment forms, which serve as a new prescription, and we reported $15 million in net sales. We're observing strong uptake across both pediatric and adult CAH patient populations, with slightly higher initial adoption rates in pediatric and adolescent segments. The prescriber response has been particularly encouraging, with good initial trial across all endocrinologist segments, including centers of excellence, pediatric endocrinologists, and community adult endocrinologists.

While it's too early to comment on longer-term outcomes, we're pleased with the warm reception of CRENESSITY from the medical and patient communities. On the payer front, we noted that 70% of the dispenses in the quarter were reimbursed. Coverage requirements have generally aligned with our approved labeling, including diagnosis of classic CAH, patient age of four years or older, and concurrent glucocorticoid therapy. As we move forward through the balance of the year, we expect more health plans to conduct formulary reviews and publish their coverage criteria. However, some plans may choose not to formally review CRENESSITY and continue to review prescription claims via their exceptions process. Overall, initial metrics are trending in the right direction across all key performance indicators. I do want to remind everyone that one quarter is too soon to define a trend for either adoption or reimbursement.

We're going to learn a lot over the coming quarters specific to persistency, compliance rates, and overall rate of adoption. If CRENESSITY ultimately delivers significant benefit in the real world, as it did in clinical trials, we fully believe it can become the new standard of care, together with cortisol replacement for CAH patients. Once more, I'd like to congratulate our commercial and medical teams for getting CRENESSITY off to such a great start. With that, I'll turn the call over to my colleague, Dr. Eiry Roberts, our Chief Medical Officer.

Eiry Roberts (Chief Medical Officer)

Thanks, Eric, and good afternoon to everyone. We continue to make substantial progress advancing Neurocrine's early to mid-stage clinical pipeline, particularly across our muscarinic portfolio, next-generation VMAT2 inhibitors, and epilepsy programs. Today, I'll focus specifically on our late-stage registrational assets and key 2025 data milestones. I'll start with osavampator, our AMPA positive allosteric modulator. I'm pleased to announce the initiation of all three randomized double-blind placebo-controlled studies evaluating its efficacy and safety as an adjunctive treatment for major depressive disorder. These studies will measure the change in total MADRS from baseline to day 56 as their primary endpoint, with top-line data expected throughout 2027. Turning to our selective M4 agonist, NBI-568, just last week, we announced the initiation of the first of three phase III registrational studies to evaluate the efficacy, safety, and tolerability of NBI-568 as a potential treatment for schizophrenia.

We anticipate initiating the two additional studies in the coming months. All three studies will be double-blind placebo-controlled trials comparing the 20 mg dose of NBI-568 versus placebo, with reduction from baseline in the Positive and Negative Syndrome Scale, or PANSS, at week five as the primary endpoint. We expect top-line data from these studies in the 2027-2028 timeframe. This year, we will report top-line data from two phase III studies of valbenazine, the first in adjunctive treatment of schizophrenia, which serves as a proof-of-concept study for VMAT2 inhibition in this disease state. While these results will guide the development of our next-generation VMAT2 inhibitors, including NBI-890 and 675, we do not plan to expand the valbenazine label for this indication. The second readout, expected later this year, will evaluate valbenazine's efficacy in treating dyskinetic cerebral palsy.

With no currently approved treatments for the 75,000-100,000 patients in the U.S. living with DCP, successful results could lead to a label expansion for this indication. For NBI-770, our NMDA NR2B subreceptor negative allosteric modulator, the phase II dose-finding study in major depressive disorder remains on track for top-line data in the second half of 2025. This study's primary outcome measure focuses on the MADRS change from baseline to day five, potentially demonstrating more rapid onset compared to osavampator's phase III day 56 endpoint. As this marks my final earnings call as Neurocrine Biosciences' Chief Medical Officer, I'd like to share some closing observations. Neurocrine Biosciences stands stronger than ever, making this an optimal time for the transition. Our industry-leading pipeline continues to grow, fueled by Jude Onyia's excellent progress establishing a sustainable internal innovation engine.

My seven-plus years at Neurocrine have been marked by remarkable evolution, and I'm confident in Sanjay Keswani's capability to lead as the next Chief Medical Officer. I look forward to maintaining an active advisory role, supporting both Sanjay and our late-stage program teams. Finally, I extend my gratitude to the board, Kevin, Kyle, my Neurocrine colleagues, and all our external partners, including the investment community. Neurocrine is well-positioned to help countless future patients, and I'm proud to have contributed to this journey. With that, I'll hand the call back to Kyle. Kyle?

Kyle Gano (CEO)

Thanks, Eiry. Just to pause here a moment before we move into questions, I do want to take a moment to recognize Eiry for many contributions over the years. Eiry has played a vital role in shaping Neurocrine into what it is today and really helped many thousands of patients along the way. If I think about the future here with Eiry, she will continually be a player and help us along the way. As she mentioned just a moment ago, this will be her final earnings call as an executive of the company. Eiry, once again, thank you for your dedication, your leadership, and your support over the years. With that, let's open it up to questions.

Operator (participant)

At this time, if you would like to ask a question, please press the star and one on your telephone keypad. You may withdraw yourself from the queue at any time by pressing star two. Again, that is star and one. We'll move first to Paul Matteis with Stifel. Your line is open.

Paul Matteis (Managing Director and Head of Therapeutics Research)

Hey, thanks for taking my questions. Eiry, congrats. Always good to work with you. Two quick ones. As it relates to INGREZZA, it sounds like the quarter was not as challenging as some feared. I was wondering if you could comment on what you're seeing into Q2 and if you feel like getting back to the prior growth rate at some point is attainable. Just on CRENESSITY, congrats on the progress. Should we be looking at this 400 number as a bolus and then it could attenuate from here, or do you feel like it's just the beginning? Thank you.

Kyle Gano (CEO)

Paul, this is Kyle. Maybe I'll start here, and then I'll ask Eric and Matt to chime in. On INGREZZA, I think when we look at Q1, you've probably heard us talking about the challenges of the quarter over the past couple of months. I think it played out exactly as we expected it. We had that low momentum coming into the year, the difficulties of reauthorization, the one less selling week, the hits on gross-to-net. All those were factors that came into play. Just to round out the quarter, we saw that one element that gives us great confidence going into the remainder of the year, and that is the momentum that you get from having that growth and new patient starts.

I think it goes without saying that the growth and new patient starts was the record that we've seen of all time in terms of a quarter, and it came in the most challenging quarter. I think there's a lot to be said there from momentum going into Q2, the remainder of the year, and really just an amazing job by the team out there in the field. I think that we have that momentum going into the remainder of the year. We have a number of elements that we put in place late last year that will play a factor for us positively this year. We mentioned the sales force expansion, the expanded access that we have now, and other marketing initiatives that will be kicking off here very shortly.

All these things will help us to continue the recovery of growth in Q2 and then acceleration the second half of the year. In terms of CRENESSITY, maybe I'll let Eric speak to that, and we can go from there.

Eric Benevich (Chief Commercial Officer)

Yeah. No, Paul, I think your question is in terms of should we expect this number of treatment forms or new patient NRx referrals going forward. As I mentioned in my prepared remarks, we only have one quarter of experience with this launch. Obviously, we're really pleased with the adoption that we're seeing. Ultimately, we need a little bit more time to understand what that pattern is going to look like. As we go forward, we'll continue to share what the treatment form or referral rate is and obviously provide additional metrics like we did in this particular quarter. I think it's too soon to tell, but I will reiterate we're off to a great start and certainly to succeed at our expectations at this phase.

Paul Matteis (Managing Director and Head of Therapeutics Research)

Thanks, guys.

Operator (participant)

We'll take our next question from Akash Tewari with Jefferies. Your line is open.

Hi, this is [audio distortion] on for Akash. Thank you for taking our question. Similarly to what was just asked, could you provide any color on CRENESSITY's sort of paradigm moving forward? 70% is higher than we had anticipated, so just wondering how you expect it to move forward from here. Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah. Just like with the adoption, the reimbursement, I think, exceeded our expectations as well. As I mentioned earlier, 70% of the fills in the quarter were reimbursed. Certainly, that's very favorable for one quarter in, but I would like to caution everyone and remind them that this is still a product that, for the most part, hasn't gone through formulary reviews. For the most part, we're talking about reimbursement via the exceptions process. As we move through the year, we do expect that some of the plans, maybe most of the plans, will be doing formal reviews of CRENESSITY and determining what their coverage criteria look like. At this stage, it's still formulary exceptions, and we're off to a great start in terms of securing reimbursement.

Matt Abernethy (CFO)

Yeah, this is Matt. Just a big shout-out to the market access team. Kudos to them for educating all the payers in terms of the disease burden and also the benefits that CRENESSITY could potentially provide. This is a high-value medicine helping a lot of patients, and it has been fairly seamless between prescription written and ultimately getting filled. I do want to give that kudos to the team that has been working hard on that.

Operator (participant)

We'll move next to Tazeen Ahmad with Bank of America. Your line is open.

Tazeen Ahmad (Managing Director of US Equity Research)

Hi, good afternoon. Thanks for taking my questions. First, Eiry, great job on everything, and good luck in your next chapter. I did want to ask about the share split between what you're seeing now on INGREZZA versus Teva for new-to-treatment TD patients. I don't know if you could share any color on that. On CRENESSITY, can you give us a split of what % of patients—and I'm sorry if I missed it—are peds versus adults in the early innings of usage? Thanks.

Eric Benevich (Chief Commercial Officer)

Yeah. We have not provided historically share split exactly because if you look at the syndicated prescription data, it underreports INGREZZA. We have always cautioned to not look at the numbers as exact measures. Overall, what we have said is that we have had the majority of prescriptions in TD, and we continue to have the majority of prescriptions. That is for both TRx and for NRx. We will leave it at that. The other thing that you were asking about in terms of the split or the demographics of the patient population, very early on, what we were seeing was sort of an equal distribution of pediatric and adult patients and pretty equal distribution of females versus males.

As we've gotten more treatment forms in and the launch continues to mature, we have seen that it's starting to trend in the direction that we expected prior to the approval, which is more pediatric and adolescent patients than adults and more female versus male. Once again, we've got a long way to go in terms of understanding the launch dynamics, and one quarter does not make a trend. Ultimately, it is essentially trending in the direction that we expected it to prior to the launch.

Operator (participant)

We'll take our next question from Phil Nadeau with TD Cowen. Your line is open.

Phil Nadeau (Managing Director and Head of Healthcare Equity Research)

Good afternoon. Thanks for taking our questions, and let us add our congratulations to Eiry on a great career at Neurocrine. Two from us as well. First, on INGREZZA trends. INGREZZA grew 15% from Q1 to Q2 in 2024. Can you give us some sense of what's likely to happen in Q2 of 2025? It seems like with one additional Tuesday, at least 8% growth is reasonable. How are some of the factors that impacted Q1 transitioning into Q2, and what should that do to sales? Second, just a brief follow-up question on CRENESSITY. You mentioned that CRENESSITY was relatively seamless from script to fill. Can you give us some sense of the time, the average time it takes from prescription being written or an enrollment start being received to when the patient actually gets drug in hand? Thanks.

Kyle Gano (CEO)

Thanks, Phil, for the questions as always. Yeah, from a Q1 to Q2 dynamic, you would expect a nice step up. You do gain back one order week in the quarter. That does provide a sequential benefit. You also have the record numbers and new patients that we mentioned earlier, and then the natural recovery of refill rate per patient. The one aspect that you will want to contemplate that's different than previous years, as mentioned, we did enter into some contracting during the quarter. As a result of that, we will have a sequential hit in gross-to-net. I'd call it slightly down from Q1 to Q2. That will push down the growth profile just a little bit. Overall, you would expect a nice step up for Q2 and a position as well for the second half of the year.

As it relates to time, I would just say that it's time to ultimately get a fill or get the reimbursement for CRENESSITY. It's still too early in the cycle to give any specific number. As you have heard us say before, patients, once they have an enrollment form written, it's typically a five- to seven-day process where the pharmacy is trying to get reimbursement. Whether the patient has had reimbursement granted or not, a patient will ultimately get a fill. As we alluded to in the percentages we provided, 30% did get free goods during the quarter. Overall, team performed very well. I think the feedback on our pharmacy channel has gone great so far.

Phil Nadeau (Managing Director and Head of Healthcare Equity Research)

That's very helpful. Thank you.

Operator (participant)

We'll move next to Brian Abrahams with RBC Capital Markets. Your line is open.

Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)

Hey, guys. Thanks very much for taking my questions. Congrats to Eiry on a great career at Neurocrine and congrats on the strong CRENESSITY start. Maybe just two quick ones from me on CRENESSITY. Can you provide any more specifics on the proportions of patients being treated at centers of excellence versus community centers and how these doctors are managing the glucocorticoid down titration, whether that differs at all? On INGREZZA, as you continue to invest in formulary access, can you give us any more specifics on how to think about contracting Cadence going forward and what the pricing trends might look like beyond second quarter of this year? Thanks.

Eric Benevich (Chief Commercial Officer)

Yeah. Let me take a crack at the second question first, and then we'll tackle the CRENESSITY question. Eiry might want to chime in as well. Contracting Cadence. We've always said that our priority is to maximize access for patients. Historically, we have contracted, but we've been fairly prudent in terms of selecting where we want to contract and where we think it can make a difference in terms of improving access. In the prepared remarks, we talked about increasing coverage in the Medicare segment for the TD market and the HD market from less than half to approximately two-thirds with the most recent rebate agreement. We're going to continue to monitor the environment. I don't think there's anything immediate that could happen, certainly nothing that we're anticipating in terms of additional rebate agreements.

If anything does happen, if we enter into any additional rebate agreements, we would flag that going forward. Ultimately, the benefit of improving access certainly accrues starting this year but carries into 2026 as well. I think it sets us up well for the future. With regards to your question about, I'll call it sources of business, volume of treatment forms coming in from centers of excellence versus the community, right now, what we're seeing is that it's really across the board. We have seen adoption and referrals coming in from those centers of excellence. Keep in mind, there's not very many of them. There's only nine accredited centers of excellence accredited by the CARES Foundation and a similar number that have most of those services, but they're not accredited.

We are seeing adoption and referrals also from community pediatric endocrinologists as well as pediatric adult endocrinologists. It kind of ties back to the comments that we made earlier about really seeing that CRENESSITY is being embraced by the broader endocrinology community. Anything to add, Eiry?

Eiry Roberts (Chief Medical Officer)

No, just about the steroid reduction piece of the question as well. The first thing, just to build on what Eric was saying, we've been incredibly impressed by the engagement of the endocrine community around CRENESSITY and the level of interest in gaining additional education on how to use the medicine effectively and safely. I think in general, as our medical team has engaged, there's a few things that we're learning. First of all, I think there is a real enthusiasm about the safety and tolerability profile that we saw with CRENESSITY in the registration studies. That creates a foundation for a good opportunity to start the medicine in a patient. The second thing is the label that we achieved for the medicine, which is broad in its description and does not require very specific or guided information on steroid reduction.

What that allows us to do is engage with clinicians as they ask questions of the medical team to provide guidance where appropriate while still ensuring that on an individualized basis, the clinician and the patient can decide what's the right regimen for the patient and how to reduce the steroids effectively.

Eric Benevich (Chief Commercial Officer)

Yeah. All in all, many of these patients are just getting started on CRENESSITY and just getting started on that journey. I think we'll learn more in the coming quarters.

Brian Abrahams (Managing Director and Global Sector Head of Healthcare Research)

Thanks very much.

Operator (participant)

We'll take our next question from David Amsellem with Piper Sandler. Your line is open.

David Amsellem (Managing Director and Senior Research Analyst)

Thanks. Just staying with CRENESSITY, can you talk about the mix between starts in adults versus pediatric and adolescent patients, bearing in mind that these are early days? Can you talk to which of these patient groups, if any, you're gaining more early traction in? Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah, David. I think I mentioned earlier that at the very beginning of the launch, in other words, the beginning of Q1, we were seeing it was about even split between adults and the pediatric patient population. As we went through the quarter, we saw that we're getting more treatment form referrals for those pediatric and adolescent patients. We are starting to see a trend towards greater uptake in the younger population, which is what we expected to see. We'll have to see how things shake out over the next several quarters. As I said before, when you've got very little data to work with, things can swing in one direction or another. As we get more utilization, more adoption from the community, I think we'll have a better sense of how the launch is going.

Operator (participant)

We'll move next to Anupam Rama with JP Morgan. Your line is open.

Anupam Rama (Senior Analyst)

Hey, guys. Thanks so much for taking the question. Best of luck, Eiry, on everything you pursue going forward. On the INGREZZA and the record number of patient starts, what should we attribute this to in terms of thinking about your share of voice gain relative to AUSTEDO XR? I know you pointed to that as a headwind coming into the year. How do we think about, have you stabilized your share of voice, or were there other factors like TD market expansion or other factors we should be considering? Thanks so much.

Eric Benevich (Chief Commercial Officer)

Yeah. I mean, obviously, we made an investment last year to expand our sales force, and we targeted that investment towards the areas that we thought would yield the best results, specifically into psychiatry and into long-term care. We are starting to see the tangible benefit of that. We had cautioned that when you expand a sales team in the near term, it can be disruptive and can negatively impact your productivity. As the newer representatives become more productive and they start to level up to the level of their colleagues that have been in the field for some period of time, you start to see the tangible benefits. I think that is really what we are seeing as it manifests in terms of new patient starts. We are certainly pleased to see a record number of new patient starts in Q1.

We've also mentioned that we've implemented some newer marketing initiatives. Really, the idea is to be better at helping our customers to appreciate the meaningful differences between INGREZZA and the tetrabenazine products that are out there. Between having more people in the field calling on the right accounts and doing a better job of differentiating INGREZZA, I think really those are the two elements that probably have the biggest impact in terms of driving those new patient starts.

Anupam Rama (Senior Analyst)

Thanks so much for taking our questions.

Operator (participant)

We'll move next to Josh Schimmer with Cantor. Your line is open.

Josh Schimmer (Managing Director)

Great. Thanks so much for taking the questions. A couple of quick ones. Has your contracting for INGREZZA contemplated the IRA price negotiation implementation, or will you have to renegotiate as you get closer to that kicking in in 2027? Just in terms of the record number of starts, just trying to align that with your comments, I guess, around last year and early into this year that you did not really expect your redeployed sales force to start to contribute meaningfully until later this year. Has that contribution occurred earlier than you expected, or are you still waiting for a significant inflection from their contributions? Thank you.

Kyle Gano (CEO)

Maybe I'll, Josh's guy, I'll take on the first question on the contracting piece. I think if you look at our history on contracting in the past, it has been really the North Star here is to maximize patient access. And that's always been how we've viewed contracting. We've done that in years in the past. We've also walked away from contracting at certain time points when that was not the case. I think when we look at the strategy overarching is to have a parity type of situation with other products in this space to make sure patients have as many options as possible. The thing that's different moving forward is IRA does bring a complication into the story about how we view contracting and maximizing patient access. This is a variable now that's part of the equation that's growing in magnitude of its significance.

That is something that we have an eye on, in particular for our competitors, IPAY moment in 2027. Obviously, contracting that we do now is really with an eye on 2026. In some cases, you can pull it forward into the same year. We do look at that as something that's important for us to continue looking at. As things change and evolve over the coming months and year, we will certainly keep the external community up to date in case any changes in our contracting approaches change. Right now, we're happy where we landed with the expanded access here starting this quarter and moving into the remainder of the year. Eric, you have anything to add to that?

Eric Benevich (Chief Commercial Officer)

Yeah. Just in general, especially in the Medicare space, you go year to year with your contracts. Several of the agreements that we have in place, however, carry us through 2025 and the entirety of 2026. That does provide some stability from a planning perspective and right up to the doorstep of that iPay moment, as Kyle described. The second piece was really around the contribution of the expanded sales force. Was it earlier than what we expected? I would say no. It was pretty much in line with our expectations. I recall that the expanded sales team hit the field in Q4. We had said that we need a few quarters for the team to kind of hit their stride. We saw that really manifest with the record new patient starts, especially as we move through Q1.

Keep in mind that Q1 is a quarter every year that we have to go through somewhat of a rite of passage because of the many, many patients that need reauthorization. Kind of working our way through that with our customers, with the HCPs and the pharmacies does consume a lot of our effort in Q1 every year. We are able to do that in tandem with driving new patient starts. I really do think it is the tangible benefit of the expanded team, not just more people, but also the new hires becoming more proficient in driving diagnosis and treatment with INGREZZA. I would say right on schedule, feeling really good about the expanded team. As we said earlier, we do expect to see accelerated growth for the balance of the year, as we have reiterated with our guidance.

Kyle Gano (CEO)

Maybe just to add to that real quickly, eight years into launch, and to think we just had our greatest quarter in terms of new patient starts is phenomenal. I do attribute that to the team and their ability to catch up quickly and work through a very challenging Q1.

Thank you.

Operator (participant)

We'll take our next question from Jay Olson with Oppenheimer. Your line is open.

Jay Olson (Managing Director and Senior Analyst of Biotechnology)

Oh, hey. Congrats to Eiry for all the amazing achievements that she's accomplished on behalf of patients. We have a question about the Journey study of valbenazine for adjunctive treatment of schizophrenia. Clinicaltrials.gov shows a March 2025 completion date. Should we expect those results any day now? As a follow-up, can you talk about the learnings you expect to leverage from the Journey study? How will you apply those learnings to your next-gen VMAT2 inhibitors? What, if any, are the implications from the recent failure of COBENFY in ATS? Thank you.

Eiry Roberts (Chief Medical Officer)

Yeah. Thanks very much, Josh. Thanks for the kind words as well. I really appreciate that. I think in terms of the Journey study, yeah, it's a very important study for us in terms of learning for the VMAT platform. Obviously, this is a must-win area for us, this biology. We're really interested in understanding what we'll learn from that trial. We will be reading out the study in the near future. I mean, we said somewhere around the middle of the year, and I think we're still on track from that, as you saw from clinicaltrials.gov as well. I think we're going to be interested in understanding the potential efficacy as it's measured by reduction in the PANSS total score.

We also have a lot of other functional endpoints and other subgroup analyses within that study, which are going to allow us to understand more about what type of patient within that population might respond best to the biology that's represented within VMAT2 inhibition. I also think just one brief comment on the recent COBENFY study. As you know, there are no medications approved for the adjunctive treatment of schizophrenia currently. I think that study showed us, again, the difficulty in performing clinical research in this area. I mean, our take on that was it was a well-run study for a medication that has already been proven to be effective in the treatment of acute psychosis in COBENFY.

The inability to show an additional improvement in that setting, I think, reflects more on the nature of the clinical trials that are performed in this area and also some of the challenges there in this patient population. Just one thing to add in that regard, because we have been asked—I know you did not ask this, but we are asked—does that have any implication for us with respect to our 568 program? It does not in any way dampen our interest and belief in the phase three program that we have for 568 in acute psychosis. I think we are very confident in the phase two data that we generated for the 20 milligram dose and very pleased to have just started the phase three program in that setting. I think I said your name wrong, Jay. I am terribly sorry about that.

Yeah, thanks again for the question.

Jay Olson (Managing Director and Senior Analyst of Biotechnology)

No worries. Thank you, Eiry.

Operator (participant)

We'll move next to Cory Kasimov with Evercore. Your line is open.

Cory Kasimov (Senior Managing Director)

Great. Good afternoon, guys. Let me add my congrats to Eiry on a great run at Neurocrine. Two questions on CRENESSITY for me. One really quick one. Was there any amount of—was there a material amount of inventory stocking in the first quarter? A second question. When could we expect to see longer-term CRENESSITY data from your ongoing phase three open label extension? What endpoints do you believe could be positively impacted by longer-term androgen control? Thank you.

Kyle Gano (CEO)

Hey, Cory. I'd love inventory questions. There was very little stocking in the quarter from an inventory perspective. I'll let Eiry comment on planned upcoming data.

Eiry Roberts (Chief Medical Officer)

Yeah. Just to remind everybody, more than 90% of the patients in the randomized trials of CRENESSITY rolled over into the open label extensions, both on the pediatric and the adult side. The vast majority of the patients have remained in the study ever since then, over 90%. We are in the process of actually shutting down the U.S. portion of the adult open label extension study. Those individuals will be rolling onto commercial product over the next few months. The pediatric study, we are keeping going because it's generating additional very important data for us. Obviously, we are continuing the studies outside the United States.

With respect to the data from those studies, we will be releasing one-year data on both androgen control, glucocorticoid levels, and clinical endpoints such as metabolic endpoints and other reproductive hormone-related endpoints over the coming months at the endo meeting in July. In the nearest future, it is this month at PES.

Cory Kasimov (Senior Managing Director)

That's very helpful. Thank you.

Operator (participant)

We'll take our next question from Brian Skorney with Baird. Your line is open.

Brian Skorney (Senior Research Analyst)

Hey, good afternoon, everyone. Thank you for taking my question. Eiry, congratulations on your pending retirement. I would also love to ask you a question just from your comments on the 568 phase three plans. It sounds like you would not necessarily write off an opportunity for 568 in an adjunctive therapy setting. I am just wondering, it would obviously give you a commercial leg up if you had a successful phase three study in that setting with COBENFY failing. Is there a study design that you see that would be worth pursuing for 568? Not sure if you think the risperidone subgroup analysis is a real effect or if there is some other unique design you would think about pursuing.

Kyle Gano (CEO)

Brian, this is Kyle. Maybe I'll start this question, and Eiry and I can tag team a bit on this. I think what we've seen from the early COBENFY launch is that 70%-80% of patients are taking the therapy from a monotherapy perspective. Maybe there's some overlap there. Patients transition from one medicine to the next, and there's some overlap of two medicines. For the most part, it seems like it's used in a monotherapy type of setting. That'd be kind of point number one. Number two is, I think what we've seen for COBENFY from BMS and others that have worked in this space, we have our own data that we'll be having be available around the first half of this year. ATS trials are extremely difficult to run.

I think there's still a lot of learnings there that can be applied and thought about for the future. That's why we're excited about running the study and seeing the results for valbenazine in this space so we can get a feel for that. The learnings from that will be plowed back into our next-generation compounds. When it comes to the muscarinics themselves, we think that there is a significantly large opportunity standalone with the acute studies that we have planned for the registrational program and then moving into other indications, in particular later this year with 568 into bipolar mania. That's our current strategy.

Operator (participant)

We'll move next to Marc Goodman with Leerink Partners. Your line is open.

Marc Goodman (Senior Managing Director of Neuroscience)

Yeah. Matt, with INGREZZA, you've talked about $5,800 as the ASP that we should be thinking about for this year. Obviously, that number's changed. If you could give us a sense of what the new number is. Eiry, definitely, we'll all miss you. Maybe just a question for you. Excluding 568, can you talk about the rest of the muscarinic portfolio and where we are? Thanks.

Matt Abernethy (CFO)

Yeah, Marc, I think I've gotten away from getting into the nuances of the exact net revenue per script for a handful of quarters now. I guess the guidance that I would give you is you typically see an improvement in gross to net going from Q1 to Q2. I would expect that to be sequentially down just slightly. I think that's the color that I would provide on net revenue per script, Marc. Go ahead, Eiry.

Eiry Roberts (Chief Medical Officer)

Thanks. Thanks, Marc. On the remainder of the muscarinic portfolio, just to remind you, we have 570, which is a dual M1/M4 agonist; 569, which is an M4 preferring agonist; and 567, which is an M1 preferring agonist. Then our own internally discovered 986, which is an M4 antagonist as a potential treatment for dystonias and Parkinson's tremor. With respect to the agonists, and actually including the M4 antagonist as well, all of those medicines are progressing currently through phase one studies. For 570, we will be completing phase one in the very near future and starting a phase two study by the end of this year in acute psychosis. That will be the next phase two start for us from that platform.

As 569 and 567 complete their phase one studies, we'll be talking more about that and the potential next steps there, including any potential phase two starts in the foreseeable future.

Marc Goodman (Senior Managing Director of Neuroscience)

Thanks.

Operator (participant)

We'll take our next question from Sean Laaman with Morgan Stanley. Your line is open.

Mike Riad (Equity Research Associate)

Hey, this is Mike Riad on for Sean Laaman. Thank you for taking our questions. A big congrats to Eiry for all the impact you've made. Thinking about INGREZZA, Teva's AUSTEDO guidance suggests a good amount of patients can come to AUSTEDO this year. The data that was presented at AMCP show half of patients do not reach that therapeutic dose on AUSTEDO XR. Thinking about that, how do you see the AUSTEDO drop-off market evolving? Do you think that some proportion of those drop-offs can switch to INGREZZA and help the new patient starts? Thanks.

Eiry Roberts (Chief Medical Officer)

We were very encouraged by the information that we recently released and published regarding the therapeutic dosing. I just remind you that, obviously, with the 40 and 80 milligrams of INGREZZA, we start dosing at a therapeutic dose level and continue throughout the patient's period of time on the medicine. From that point of view, I think, as Eric alluded to in his prepared remarks as well, we have a very high confidence level in the value that INGREZZA can bring to patients. It's, as we said, highly effective, including in the data that we recently published on long-term data in more elderly population as well, uniquely selective in terms of its VMAT2 inhibition. We have the broader set of data that we believe in patient populations that can experience value. We are focused on that and continuing to educate around that.

Eric Benevich (Chief Commercial Officer)

Yeah. The only other thing that I would add, just to piggyback here, is that the majority of patients that we see starting on INGREZZA have been and continue to be newly diagnosed and newly treated. There is not a lot of switching that happens in the VMAT2 market. We have not seen that dynamic really change that much over time. We continue to make progress with diagnosis and motivating treatment. For the most part, the patients that are starting INGREZZA are getting started on VMAT2 for the first time.

Mike Riad (Equity Research Associate)

I appreciate that. Thanks.

Operator (participant)

We'll move next to Ash Verma with UBS. Your line is open.

Ash Verma (Executive Director of SMID Biotech and Biopharma)

Hi. Congrats from my side as well. Just on INGREZZA, maybe can you talk about any pull-through on these new contracting or the Medicare Part D formulary access that you mentioned? When does that happen? Did that benefit one Q, or is that more of a two Q or later in the year? Just secondly, what was the percentage increase in the sales force footprint, if you can remind us? When do you expect that benefit to start to accrue? Thanks.

Eric Benevich (Chief Commercial Officer)

Yeah. I got the first part of your question in terms of the pull-through effort. Can you repeat the second part?

Ash Verma (Executive Director of SMID Biotech and Biopharma)

Yeah. What was the percentage increase in the sales force footprint? When do you expect that benefit to start to accrue?

Eric Benevich (Chief Commercial Officer)

Okay. I'll take on the second part first. We didn't give exact headcount numbers when we did the expansion in Q4 of last year. It was a substantial increase of our psychiatry footprint. As I mentioned before, we do think that it is starting to see tangible benefits here in the market, primarily manifest as the record number of new patient starts we saw in Q1. With regards to pull-through, yes, certainly our plan of action has always been when we have a formulary win, we attempt to pull it through. The way that translates is certainly through personal and non-personal promotion. Our sales teams are aware of where there's been an add of INGREZZA onto a formulary. They're aware of the HCPs that are having more patients underneath that plan. They're sure to communicate those changes.

With regards to this most recent formulary win, that process has already started as of the beginning of April. We're going to continue to leverage when we do have increases in formulary coverage. The way to think about it is it really benefits new patient starts. Existing patients who are already on treatment under that plan, they're already covered. They have a certain number of authorized refills. It's the new patient starts where there's a little less headwinds because it's now on a formulary. Thanks.

Matt Abernethy (CFO)

Just to be clear on how the financials flow on this, we will take a more immediate hit to gross-to-net starting in Q2. The benefit from the new patient additions, as Eric mentioned too, will accrete over time. It typically takes two, three, four quarters to get to a place where you're ROI positive.

It is something that, as we mentioned and as Kyle mentioned, is strategically important for us to continue to be a major player in this market.

Ash Verma (Executive Director of SMID Biotech and Biopharma)

Thanks.

Operator (participant)

We'll take our next question from Mohit Bansal with Wells Fargo. Your line is open.

Hi. This is Serena on for Mohit. Congrats on the great quarter. First, I wanted to ask a clarification question on INGREZZA gross to net. I think previously you guys have said you would expect some tailwind from the lower phase end of rebate under Part D redesign. I was wondering if that was any bit of a factor this year. I wanted to ask on the phase three program for 568, how are you thinking about the number of sites, any ex-US sites, and any other changes in how the studies will be run versus the phase two beyond the selection of just one dose? Thanks.

Kyle Gano (CEO)

Yeah. From the Med D design change on the mandatory rebates, that was a slight benefit. I'd call it like 1%. That was a tailwind entering into this year. That will, of course, be more than absorbed by the incremental contracting, which really is what's going to drive continued growth and value for INGREZZA and for the company going forward. Eiry, do you want to comment on 568?

Eiry Roberts (Chief Medical Officer)

Yeah. We'll obviously provide more information as we get the remaining studies within the program up and running. Just a couple of comments. The first study is a U.S.-only study for the phase three. As you mentioned, it is a single dose level of 20 milligrams, one-to-one randomization with placebo. Very simple in design. We are taking all the learnings that we achieved from the phase two, which we can talk more about once the full program is up and running. The number of sites does not increase substantially, which I think is really important because if you remember, our phase two was a study that was run over a number of sites and a relatively complex adaptive trial design. We think the simplicity of the phase three program that we've designed and are implementing will be beneficial for us moving forward.

Operator (participant)

We'll move next to Myles Minter with William Blair. Your line is open.

Myles Minter (Research Analyst)

Thanks. Off of my congratulations to Eiry as well for a great career there at Neurocrine. Just on osavampator, the two phase three studies that are listed on clinicaltrials.gov, just wondering about the power and assumptions for those trials given that 200 patients seems on the smaller end from what we've seen from peer studies that have obviously had mixed results. Secondly, I think on slide six, it says you've initiated four phase three studies. What are the other two?

Eiry Roberts (Chief Medical Officer)

Yeah. Thanks, Myles. A couple of questions there. Let me get to the number of studies, first of all. Within the registration package for osavampator, there are three key studies: the two short-term randomized placebo control studies and one longer-term open label study, which is obviously essential to enable us to look at longer-term safety. With respect to the powering and the subject number, this could be quite a long conversation, but let me make it short. One of the things we worry most about in the context of major depressive disorder studies is placebo effect and obviously expectation bias. There is also a large body of research that suggests that the larger the study gets beyond a number of around about 20, the increased likelihood of placebo response and therefore the increased likelihood of potentially failed studies.

Whilst each of the phase three studies is adequately powered and appropriately powered to measure an effect size significantly smaller than that which we saw in phase two, we are highly confident in the size of the study. We have limited the size of the studies because of our take on an understanding of the research in this area about the balancing act between increased subject numbers driving increased placebo response and increased risk of failed study.

Kyle Gano (CEO)

Thanks for the questions.

Operator (participant)

We'll move next to Laura Chico with Wedbush. Your line is open.

Laura Chico (Managing Director of Equity Research)

Good afternoon. I just wanted to revisit real quick on the INGREZZA patient numbers and congrats on the record adds here. Not sure if you could also comment a little bit more about persistency and discontinuation rates. I think, Eric, you mentioned the reauthorization was challenging, but are there differences in the duration of treatment depending on the channel from which patients are originating, say, long-term care versus psych? Then separately, I'm just curious with the R&D day in the second half here, any highlights to share in terms of how we should be thinking about the potential focus of the event? Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah. With regards to the question around patient persistency, generally, it's been very steady from the early days of the launch through the most recent cut that we looked at. We haven't seen any real differences in persistency across the different channels, whether the patient's being treated by a psychiatrist, a neurologist, or more recently coming in through long-term care. I did comment that this was a challenging Q1, a little bit more challenging perhaps than we've seen in years past. Anecdotally, feedback from the customers was that the reauthorization process was a bit more challenging from their perspective, and we saw slightly higher drop-offs and delayed refills versus prior years. All of that was counterbalanced by the record number of new patient adds.

That is really what gives us the sort of the confidence and conviction and the acceleration of our growth given the uptake that we saw with new patients in Q1. Overall, no, we are not seeing any real differences in patient persistency by segment.

Operator (participant)

This does conclude the question and answer portion of our call. I would now like to turn it back to Kyle Gano for any additional or closing remarks.

Kyle Gano (CEO)

Thanks, everyone. I know we didn't get to all of your questions. For those of you that missed, we'll be following up with you individually. Thanks to everyone for joining this afternoon. As you can see, we've made meaningful progress across several critical priorities of the business when we think about INGREZZA reaccelerating new patient starts, improving access for healthcare providers and the patients they serve, successfully launching CRENESSITY and initiating multiple phase three studies. Neurocrine has never been in a stronger position, and we'll continue to remain focused on execution and evolution of the pipeline as we move through the remainder of the year. Looking forward to seeing all at the upcoming conferences or on your latest Zoom call. Looking forward to speaking with you soon. Thanks so much.

Operator (participant)

This does conclude today's program. Thank you for your participation. You may disconnect at any time and have a wonderful rest of your day.