Neurocrine Biosciences - Q2 2024

Transcript

Operator (participant)

Good day, everyone, and welcome to today's Neurocrine Biosciences Reports Second 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. 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 Vice President of Investor Relations, Todd Tushla. Please go ahead.

Todd Tushla (VP of Investor Relations)

Thank you, Chloe. Welcome to Neurocrine Biosciences Second Quarter 2024 Earnings Call. With me are Kevin Gorman, our current Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eiry Roberts, Chief Medical Officer; Eric Benevich, Chief Commercial Officer; and Kyle Gano, Chief Business Development and Strategy Officer, who on October fourteenth, will become Neurocrine's next CEO. So yes, this will be Kevin's last earnings call, and he plans to share a few closing thoughts following Q&A. Before we begin, 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. With that, I hand the call to Kevin.

Kevin Gorman (CEO)

Thank you, Todd. Yeah, I wish they would have told me I have closing thoughts today, but good morning, everyone. We have a lot to go over this morning, but what I'd first like to start out with is a statement that we have no information to share on either luvadaxistat or NBI-568 M4 agonist. Both trials remain blinded and neither database is locked. Now, this has been an excellent quarter. I know you probably get tired of me hearing me say this. I never do. We have better than 30% year-over-year growth for INGREZZA.

We've had an approval of the INGREZZA Sprinkle, priority review for crinecerfont, compelling phase II data for our AMPA modulator and major depressive disorder, multiple new pro- compounds entering the clinic, and best of all, the company will finally be rid of me. Now, while Eric and I will be speaking about INGREZZA and crinecerfont in more detail, I'd like to share a few observations. It's now very obvious that there are so many more TD patients that need and want treatment. It takes investment to get to these patients, and each time we've made that investment, either expanding our sales force or utilizing direct-to-consumer advertising, that's propelled INGREZZA to a new level because we're able to educate more HCPs and reach more patients. From a purely financial perspective, it has always been very ROI positive. The investment doesn't stop there.

We continue to explore INGREZZA in the clinic, in dyskinesia and cerebral palsy, and as an adjunctive treatment for schizophrenia. And finally, we are developing the next generations of VMAT2 inhibitors. This is going to be an area that we plan on being in for a very long time and will be a very important part of Neurocrine. Now, additionally, we have another life-changing drug in crinecerfont, and along with orphan drug designation, breakthrough designation, we now have priority review. We're working with FDA in the review of the medicine, and we are excited to get to the PDUFA date at year-end. The drug will change the entire treatment paradigm for CAH patients. Finally, I believe we have the most robust preclinical and clinical pipeline in neuroscience in the world, and this will become even more apparent next year as our biologics enter the clinic.

I'll shut up now and turn it over to Matt.

Matt Abernethy (CFO)

Thank you, Kevin. 2024 continues to be a tremendous year for Neurocrine. Between positive data for our AMPA potentiator and major depressive disorder, priority review for crinecerfont, and INGREZZA growth, momentum continues to build, positioning us as a leader in neuroscience for many years to come. INGREZZA Q2 sales were $580 million versus $440 million in the prior year, representing 32% year-over-year growth. With this performance, we are raising the 2024 INGREZZA net sales guidance range to $2.25 billion-$2.3 billion, compared to our previous guidance range of $2.1 billion-$2.2 billion.

We are also updating our GAAP SG&A expense guidance by approximately $35 million, with $20 million to support the continued growth of INGREZZA with our expanded sales team and a $15 million non-GAAP impairment charge associated with vacating office space as we migrate to our new campus. Being a high-growth company, we continue to make capital allocation decisions to prioritize accelerating revenue and advancing our R&D pipeline to sustain this growth into the future. With INGREZZA'S momentum, launching a potential second blockbuster with crinecerfont, and advancing clinical programs into phase III, Neurocrine has the building blocks for continued success. Although we're not at a point to provide official financial guidance for 2025, I do want to highlight a few items for you to consider while you develop your operating expense expectations.

For SG&A, over the past several years, our focus has been on generating top-line revenue growth, reaping the benefits of previous investments. Heading into 2025, our investment will increase with an incremental $125 million to support our top priorities with the successful launch of crinecerfont and delivering INGREZZA growth. Regarding R&D investments, although we are still waiting for important data cards to turn over this year. I want to emphasize our willingness to invest heavily behind any program that has positive proof of concept data and accelerate high-value preclinical programs into the clinic. Between growing sales and an advancing pipeline, we find ourselves in a unique position with financial flexibility to advance important potential medicines like our AAV program, through the clinic over the second half of this decade in a non-dilutive manner. A lot of work ahead, but very exciting times here at Neurocrine.

With that, I'll hand the call over to Eric.

Eric Benevich (Chief Commercial Officer)

Thanks, Matt. The momentum we saw with INGREZZA in Q1 certainly carried through into our performance last quarter. Q2 growth of over 30% versus the prior year is a testament to the strength of our underlying business across tardive dyskinesia and Huntington's disease chorea. With sales approaching $1.1 billion in the first half of this year, we've raised and narrowed our full year sales guidance, as Matt mentioned, to a range of $2.25 billion-$2.3 billion at the top end. At the midpoint, this range equals approximately 24% growth versus 2023. As Kevin noted from the podium of a sell-side conference in June, we've learned a lot about the TD market since the launch of INGREZZA seven years ago.

It's critically important that we continuously evolve our approach and appropriately invest in order to help even more patients that can benefit from INGREZZA therapy. We've tried twice before increased the size of our sales team. The first time, early in the launch, by adding more sales specialists to the existing one team structure, and the second time by splitting and creating dedicated teams for our key business segments in psychiatry, neurology, and now in long-term care. The TD market has grown substantially over time in terms of the number of HCPs diagnosing and treating people with TD, and we have seen that these HCPs are promotionally responsive. Each time we expanded the sales force in the past, we saw a clear resulting increase in diagnosis and treatment with INGREZZA, usually a couple of quarters after deployment of the new salespeople.

Every year, we carefully evaluate the adequacy of our commercial footprint to meet the needs of our HCP customers and the patients they care for. We recognize that there remains much more opportunity to reach and educate HCPs that care for patients living with TD or HD Chorea, and that we need to strategically and carefully adjust our commercial resources to meet their needs. With that as backdrop, as Kevin mentioned in June, we're increasing the size of our psychiatry and long-term care sales teams this year to help accelerate appropriate diagnosis and treatment with INGREZZA. We plan to have the new team members in the field by the fourth quarter of this year. As with prior sales force increases, we expect contributions from the new salespeople once on board to be tangible a few quarters later.

We continue to invest in INGREZZA because we have strong conviction in the opportunity. In addition to investing in our team, we are investing in the brand. We're proud to have recently made available our new INGREZZA Sprinkle formulation. With this launch, only INGREZZA offers the benefit of a sprinkle formulation that provides an alternative administration option for patients who experience dysphagia, have difficulty swallowing, or prefer not to swallow a pill. Our data tell us that upwards of 10% of people living with TD or HD Chorea experience dysphagia or difficulty swallowing. It's important for us to provide this new option to patients who want the benefit of treatment without the potential challenge of swallowing a pill. The INGREZZA Sprinkle capsule is easy to open, and the granules can be sprinkled on soft food, such as applesauce, yogurt, or pudding for oral administration.

INGREZZA is the only VMAT-2 inhibitor to offer one pill once a day dosing with no complex titration to reach an effective dose, offering both oral capsules and a sprinkle formulation to meet the diverse needs of people living with TD or HD Chorea. Given the long runway of exclusivity for 14 more years out to 2038, expanding our commercial footprint and investing in the brand gives us the opportunity to capitalize on the significant growth opportunities that remain ahead in the TD and HD Chorea markets. Now, shifting to crinecerfont. Just as we've had a learning launch in TD with INGREZZA, the same concept will apply to crinecerfont in congenital adrenal hyperplasia or CAH. People suffering from CAH have had no new treatment options in over 70 years.

Before the potential approval of crinecerfont through year-end, our rare endocrinology commercial team, which is now fully hired, is focused on a number of market development initiatives to better understand and inform the CAH community. In fact, we held a kickoff meeting for our Endo franchise team in July, and I was struck by their excitement and enthusiasm for really helping the CAH community. Because of the terrific clinical profile of crinecerfont that emerged, the clear unmet need in CAH and our reputation as a great place to work, we've been fortunate to attract members to our Endo team with, on average, more than 20 years of biopharma experience and more than 10 years focused on rare diseases. For the balance of this year, that team will focus primarily on delivering disease and education to endocrinology healthcare providers, featuring our What the CAH?! initiative.

This unbranded educational resource aims to close the gap in CAH understanding and acknowledge the frustration and challenges experienced by members of the CAH community living with and managing this rare genetic endocrine condition. With Priority Review in hand, we'll be ready to bring crinecerfont to patients in the new year quickly after FDA approval.

...We've demonstrated with INGREZZA that we can successfully launch into and build a new therapeutic category. We're committed, and we're excited to do that all over again with crinecerfont. With that, I'll turn the call over to my colleague, Dr. Eiry Roberts, our Chief Medical Officer.

Eiry Roberts (Chief Medical Officer)

Thank you, Eric, and good morning to everyone on the call. I'm pleased to share that we made substantial progress with our clinical pipeline in the last quarter, including delivery of several important clinical milestones. I'll begin with NBI-845, a potent, highly selective, potentially first-in-class, positive allosteric AMPA modulator. As a reminder, in April, we announced top-line results from the SAVITRI study in patients with major depressive disorder with inadequate response to currently available treatment. The primary endpoint in the study was achieved, with NBI-845 demonstrating a statistically significant reduction in the Montgomery-Åsberg Depression Rating Scale total score at day 28. The study also met key secondary endpoints, including statistically significant reduction in the MADRS total score at day 56. Importantly, NBI-845 demonstrated a strong effect size and was generally well tolerated.

We are currently working towards an end-of-phase II study meeting with the FDA later this year to support the initiation of registration studies for NBI-845 next year. Turning to crinecerfont, in June, we presented both the adult and pediatric phase III CAHtalyst study results at the ENDO meeting, with parallel publication of the results from both studies in the New England Journal of Medicine. In July, the FDA accepted the crinecerfont filing and granted priority review, thus further recognizing the seriousness of congenital adrenal hyperplasia, the high unmet need, and the potential that crinecerfont can provide significant benefit for patients living with this chronic, debilitating disorder. The PDUFA dates for both the capsule and oral solution NDAs for crinecerfont are now set for late December.

In addition to priority review, the agency had previously granted breakthrough therapy designation, orphan drug designation, and rare pediatric disease designation to crinecerfont. Upon FDA approval, the latter will enable Neurocrine to activate a rare pediatric disease designation priority review voucher, which could then be utilized to accelerate the review process for a future registrational program. While the FDA is not planning for an AdCom meeting, our teams are well prepared to engage with the agency in support of the FDA review process, including an AdCom, if it is scheduled at some point. This quarter, we remain on track to deliver data from NBI-568, our orthosteric selective muscarinic M4 agonist study, as a potential treatment for schizophrenia.

We plan to communicate the phase II study results by a press release and a conference call, where you should expect to see total PANSS score change, placebo-adjusted PANSS score change, effect size, as well as safety and tolerability measures. In Q3, we also remain on track to deliver data for luvadaxistat as a potential treatment for cognitive impairment associated with schizophrenia. All other clinical programs continue to make progress, including our expanding phase I portfolio. In the last quarter, two new phase I molecules entered the clinic: NBI-986, a selective M4 antagonist for the potential treatment of movement disorders, and NBI-567, an M1-preferring muscarinic agonist from our muscarinic agonist portfolio, which now totals four early-stage compounds in development. We'll provide more color on these programs and the remainder of the phase I portfolio as they advance towards phase II.

All in all, I'm pleased with the continued evolution of our portfolio, which reflects the deepest, broadest pipeline in Neurocrine's history. I look forward to continuing to advance and expand these efforts to provide meaningful new therapies for patients living with chronic, debilitating diseases in the fields of neurology, neuropsychiatry, neuroendocrinology, and neuroimmunology. Our goal remains to deliver important improvements in clinical outcome for patients with great needs but few options. For one last time, back to you, Kevin.

Kevin Gorman (CEO)

Ah, thank you very much, Eiry. So you can't imagine how happy she is that it's one last time that she's giving this update. We're ready for your questions this morning.

Operator (participant)

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

Phil Nadeau (Managing Director and Senior Research Analyst)

Good morning. Thanks for taking our question. Kevin, first, congrats to you on a tremendously successful career at Neurocrine. You've really built a biotech bellwether, and your efforts and insight have helped countless patients. So we hope you have a long, happy, and healthy, well-deserved retirement.

Kevin Gorman (CEO)

Thank you very much, Phil.

Phil Nadeau (Managing Director and Senior Research Analyst)

Eiry, a question for you. There's a lot of focus on 568. Thanks for setting the table on what you're gonna announce in the future.... It's been hard to diligence the compound because there's not a ton that's been published on it, but I believe Sosei has presented some data from a healthy volunteer study. Could you review for us that data? What's known from phase I in terms of muscarinic side effects, cardiovascular effects, potency to the target, or any other information that's been released? Thanks.

Eiry Roberts (Chief Medical Officer)

Yeah, thanks, Phil. So as I mentioned on the comments, we will, in this quarter, be delivering the data from our phase II proof of concept study in schizophrenia and kind of articulated what you can hope to see and plan to see as a result of that. You know, in terms of the planning for that study, what I can say is that we had a broad range of both preclinical data and phase I information that made us very confident in terms of the safety and tolerability of the doses that we were choosing to take into the clinic. We saw, as expected, you know, the range of muscarinic-related pharmacology.

I'll also remind you a little bit of the purpose of this phase II study, because I think it's from this study that we're really going to learn more about the efficacy and tolerability of the molecule in schizophrenia and give us some hints around the potential differentiation moving forward for this selective M4 agonist. This is a dose-finding study, and the doses that we took into the study reflect our confidence in terms of the range in which we anticipate seeing the pharmacology of interest. And so, it's a up to potentially four cohort study. Each independent cohort is essentially chosen in this adaptive fashion on the basis of the tolerability seen in the previous cohort.

And so, it allows us the opportunity to demonstrate the range from hopefully minimally effective to maximally tolerated dose within this study. And I think that will be what will be most informative for you as you look at the potential differentiation from other drugs in this broad class.

Phil Nadeau (Managing Director and Senior Research Analyst)

Have you disclosed the adaptive rules? By what rules are the patients shuffled between the arms?

Eiry Roberts (Chief Medical Officer)

We have not disclosed that. What I can say is there is an independent DMC that actually reviews tolerability data for each cohort as we go through the study and makes the recommendation or guides the dose for the next cohort. We do not know those doses in terms of what the total dose in the study is, but obviously it's not going to be very long for this quarter for us to get to those data.

Matt Abernethy (CFO)

During our call that we're gonna have here this quarter when we review the data, we will spend time going through the study design to make sure there's a lot of clarity.

Eiry Roberts (Chief Medical Officer)

Yeah.

Matt Abernethy (CFO)

around that.

Phil Nadeau (Managing Director and Senior Research Analyst)

That's very helpful. Thanks for taking our question, and Kevin, congrats again.

Kevin Gorman (CEO)

Thanks a lot, Phil. And I, as I was going through getting prepared for the day, I made the observation that probably you and I have worked, together, I'll use that term, longer than any other pair of CEO and analysts that I can think of. We both, we both grew up together, so Phil.

Phil Nadeau (Managing Director and Senior Research Analyst)

We did. We did. I think it's been a couple of decades.

Kevin Gorman (CEO)

Yes. Take care.

Phil Nadeau (Managing Director and Senior Research Analyst)

Thanks. You, too.

Operator (participant)

We'll move next to Paul Matteis with Stifel. Your line is open.

Paul Matteis (Managing Director and Head of Therapeutics Research)

Hey, thanks for taking my questions. Excuse me. And, Kevin, I'll echo Phil's congratulations. It's always been a lot of fun working with you and talking to you. I had another question on the muscarinic. There's been a lot of conversation with Eiry related to the PANSS's effect size hurdle, what would be interesting as it relates to efficacy. How are you thinking about other attributes of the target product profile here, and what else is important to you for advancing the molecule? Specifically, I'd love it, Eiry, if you could comment on what you think about QD versus BID, what your expectation is, whether that's kind of important to you, and also just GI side effects and whether you're expecting something that's more emraclidine-like or KarXT-like. Thank you.

Eiry Roberts (Chief Medical Officer)

Yeah, I mean, I think, I'll go back first of all to the mechanism here. So this is an M4 selective agonist, and so I think we can expect that the profile will be different from certainly a pan-muscarinic agonist in terms of both of the tolerability profile, particularly, and also, obviously, we'll see our data soon to be able to understand relative to a PAN for M4. In our data to date, we have not seen problematic evidence of any GI issues or anything of that sort. I can say that from the phase I and from our preclinical talks data.

In terms of the overall profile, I think we've been pretty consistent in saying one of the good things here is we have a bit of a benchmark to be able to compare within this class. And so, we've signaled that we'd be looking for something like a placebo-adjusted change in PAN score at the primary endpoint of 8 or thereabout or more. But it's also really important to look at the totality of the data, as you mentioned, including the tolerability profile. And obviously, we have a lot of other endpoints that we're looking at within the study that in due course, we'll be able to integrate into a full picture of benefit risk.

Paul Matteis (Managing Director and Head of Therapeutics Research)

Eiry, anything on dosing?

Eiry Roberts (Chief Medical Officer)

Sorry, the QD versus BID. We have in our phase I program looked at both QD and BID dosing for this molecule. We actually don't know the dosing regimens finally in that were tested in the phase II study right now, but we'll obviously know that very soon.

... And it will, at the end of the day, I think, depend on efficacy and tolerability in terms of what's the best regimen.

Operator (participant)

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

Tazeen Ahmad (Managing Director)

Hi, good morning. Thanks for taking my question. Another congrats, Kevin, on building a great company. It's hard to do, and you're gonna be missed. So I wanted to go back to INGREZZA. I wanted to go back to INGREZZA for a minute. Maybe this is a question for Eric. You know, trends have, you know, beaten expectations, you know, practically every quarter it seems, and it's been several quarters. What is it that you think you still need to do that justifies increasing the size of your sales force? Because clearly, you seem to be doing well with the size that you have already. Thanks.

Eric Benevich (Chief Commercial Officer)

Yeah, good morning, Tazeen. So, you know, we're investing in growth. And, as you know, as I mentioned in my prepared remarks, over the course of the seven years that INGREZZA has been on the market, you know, we've continuously evolved in terms of the approach that we take to developing the TD market and to educating HCP customers about INGREZZA, but also the resources that we're putting forward. And so, you know, this is just part of that evolution. And to a certain extent, just like it was a few years ago, you know, we're evolving to meet the needs of our customers. And so, you know, looking at this particular sales force expansion, you know, we've seen that the majority of our business is in the psychiatry segment.

That's actually a segment that we didn't increase in size in terms of FTEs back in 2022. And the number of TD treaters and potential TD treaters has continued to grow over time. And so, you know, we feel it's prudent to add sales FTEs and additional support for the psychiatry segment. And you may recall that LTC was a segment that we moved into a couple of years ago. That's our smallest team, and, you know, we've seen in the few years that we've been in LTC, is that there's tremendous potential in LTC. And so adding additional support for the LTC customers makes a lot of sense to us.

You know, we're gonna continue to monitor how we're doing, but as Matt said, we've seen in the past, every time we've done an expansion like this, it's paid off in terms of positive ROI within a couple of quarters, and that's what we expect to see with this expansion.

Matt Abernethy (CFO)

The only thing I'd add is, you know, it just really reflects the conviction around the market opportunity that's still ahead of us. We firmly believe 7 or 8 out of 10 patients that have TD are not being treated with the VMAT2 inhibitor today. So when you look at the overall market opportunity, you know, still a lot of room left to grow and help many more patients.

Operator (participant)

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

Anupam Rama (Managing Director and Senior Equity Analyst)

Hey, guys, thanks so much for taking the question. Kevin, epic run, man. I'm wishing you all the best moving forward. I'm definitely gonna miss you. Just a quick question-

Kevin Gorman (CEO)

I take it that means I'm no longer invited to the Pebble Beach getaway? Dang it.

Anupam Rama (Managing Director and Senior Equity Analyst)

No, you have like, the professor emeritus invite every year, man. Don't worry about that.

Kevin Gorman (CEO)

Thank you.

Anupam Rama (Managing Director and Senior Equity Analyst)

But you can come to dinner on Sunday night as well at the conference. So what are the key levers for driving growth for the INGREZZA guidance range in terms of the physician segment, psychiatry, neurology, long-term care? Is there any sort of outsized growth that you're seeing there that's driving the guidance range? Thanks so much.

Eric Benevich (Chief Commercial Officer)

Yeah, good morning, Anupam. So, you know, ultimately, you know, what we're seeing is that all three of our business segments are growing really nicely. And, as I mentioned, INGREZZA is a very promotionally sensitive product. And so, you know, as we continue to raise awareness, educate around TD, drive recognition and diagnosis, and differentiate INGREZZA, you know, we've continued to see positive results, and that's both through our field teams as well as through our DTC efforts. And so, you know, we felt very comfortable raising the guidance halfway through the year. You know, we're at, you know, over $1.1 billion in sales. And we also narrowed our guidance.

So, you know, what's going to you know allow us to continue to grow in the second half of the year is really that continued driving recognition and diagnosis and treatment, and with INGREZZA as the number one most prescribed VMAT2 inhibitor.

Anupam Rama (Managing Director and Senior Equity Analyst)

Thanks so much for taking our question.

Operator (participant)

Next to Akash Tewari with Jefferies. Your line is open.

Akash Tewari (Managing Director and Senior Equity Analyst)

Hey, thanks so much. And Kevin, it's truly been a pleasure to work with you and the team you've built. For NBI-568, did Nxera measure any biomarkers to assess M4 versus M1 target engagement? There's been some question to how selective you can be for both targets, given receptor similarity. Does your team share that concern? And additionally, for your upcoming readout, how do you determine if patients can dose up to another cohort from a safety perspective? Is it tolerability, or will you also be measuring blood exposures? Thanks so much.

Eiry Roberts (Chief Medical Officer)

... Thanks, Akash. Let me take your second question first. I want to just clarify, and we'll give more information about this when we share the data, but just to clarify the study design. This is an adaptive trial, but that adaptation means that the dose chosen for the next cohort could be within a range or difference from... And so it's not that individual patients titrate within the study. It is that we have a review by an independent group of the dose level that has been given to a series of patients of a given number, and then a decision is made by that group to move to the next dose based on tolerability, and then a brand new cohort of patients enter into the study at that point in time.

So it will be clear, we believe, as to what the dose that we take into further study should be in the event that we see positive benefit and a reasonable tolerability profile. And it won't be that patients have to choose to titrate. On the first question, we are very highly confident about the selectivity of our molecule, and I think Nxera has done a very significant amount of work preclinically, both in vitro and in vivo, profiling a whole range of molecules. And so from that perspective, we're confident this is a selective M4 agonist. And as you see as well in our portfolio, we are exploring other molecules that have more balanced M1 and M4 activity, such as 570.

So I think as we move forward and confirm that in the context of our clinical data, we'll be able to share more about that.

Operator (participant)

We'll move next to Jay Olsen with Oppenheimer. Your line is open.

Jay Olson (Managing Director and Senior Analyst)

Oh, hey, congrats to Kevin on all the work you've done for patients in need and the amazing team you put in place to continue that progress. With that, maybe this would be an appropriate time to ask Kyle, if you could please share your long-term vision for Neurocrine as you step into the leadership role. Thanks for taking the question.

Kyle Gano (Chief Business Development and Strategy Officer)

Thanks, Jay. You gave me probably the toughest question here this morning. You know, Kevin's left quite a legacy here at Neurocrine, and really, I've been honored to work with him the past, well, almost 25 years. It's rare in this industry that you can reinvent a company and see it succeed, and that's exactly what Kevin's done, and there's a lot of learnings that have been made along the way. So thinking about the company today and the strategic plan that we put in place a few years ago, I think it's the right one and the one that we'll continue executing on as I step into this role later in the fall. I think at a high level, there's a lot of exciting opportunities that await us here at Neurocrine.

You know, starting with some of the things that we've delivered on in the past and thinking about the promising future that we have ahead and realizing that we're a fully integrated company today. We discovered and developed three FDA-approved medicines. At each time of their approval, they were first in class. You know, if we pull one of those out, and we talk about INGREZZA, and we've gotten questions on INGREZZA today, there's a medicine that's approved for tardive dyskinesia and Huntington's disease. It's our growing blockbuster. It's first in class. It's a medicine that, even today, has two-thirds of patients still not getting a diagnosis of TD, so a tremendous amount of work still ahead, but also opportunity. That's very exciting for us. You've heard about some of the initiatives here that we have at Neurocrine.

Still, the best dollar spent here is on INGREZZA and seeing all the tremendous opportunity that still lies ahead for us. In 2023, we announced great data for crinecerfont and CAH. There's another opportunity for us to treat many thousands of patients with CAH when approved. If you look at our PDUFA dates later this year, it sets us up nicely for an early 2025 launch when approved. And just as a reminder, like I started this year, crinecerfont as a CRF1 antagonist is another first-in-class medicine at Neurocrine, and it has, we believe, the hallmarks of another blockbuster. So I'm hoping that everyone sees a theme here in the programs that we decide to invest in and take on here at Neurocrine. And that's just our late-stage pipeline and our commercial products.

I already touched on very robust clinical data that we produced here in Q2 for NBI-845. That's a registration program next year for us, and we have two more data cards in Q3 here very shortly. NBI-568, our muscarinic M4 agonist and luvadaxistat in the cognitive impairment associated with schizophrenia. If either one of those or both are positive, they'll join NBI-845 into a very robust phase III pipeline next year. And then we have an entire new R&D transformation that's underfoot. Moving away from externally sourced programs to internally discovered programs. So organic growth at Neurocrine is something that you'll hear much more about from me moving forward. Talking about symptomatic to disease modification and curative therapies, that's something that you'll see next year as you think about gene therapy entering the clinic.

Moving away from unvalidated to validated targets. These are all things that provide a great deal of excitement and opportunity, thinking about the future here at Neurocrine and the vision that we have. So really looking forward to a bright future. We talked a lot about some of the things that are underfoot here. It's gonna be based on organic growth, looking at disease states that span psychiatry, neurology, endocrinology, neuroimmunology, and looking at choosing the right target and using the right modality to match with that, we think is gonna be a winning strategy. And wrapped with all this R&D-

... innovation that we hope to bring to patients, is a company that's in the strongest financial position that we've been at here at Neurocrine, certainly in my time, $1.7 billion in cash. There's a lot of things that we can do to add and bring, new differentiated medicines to patients and increase shareholder value along the way. So I hope that gives you a little feel for why I'm excited and some of the things that we can look forward to in terms of the vision of Neurocrine, for the remainder of the year and thinking about 2025.

Jay Olson (Managing Director and Senior Analyst)

Excellent. Thank you, Kyle, and congrats again, Kevin.

Kevin Gorman (CEO)

Thank you.

Operator (participant)

We'll move next to Chris Shibutani with Goldman Sachs. Your line is open.

Kevin Strang (VP, Biotechnology Equity Research)

Hi, this is Kevin Strang on for Chris. Let me just add my congratulations to Kevin and on the quarter for the team. Just had a couple of quick questions for gross net dynamics this quarter. That was something you mentioned in the press release. How should we think about that? Any specifics there, and then going into the second half of the year, for gross to net, what should we expect? And then just a quick one on business development and potentially current appetite there, given your growing internal pipeline, including phase II and phase III assets. Thanks.

Matt Abernethy (CFO)

Yeah, on the BD front, right now, we're very focused on developing those pipelines. We have some important data cards that will read out, you know, here this quarter, and that will really inform how we allocate capital into the future. But we have a lot of great things going on. We do have a lot of financial flexibility, but for the moment, focused internally. From a growth to net dynamic perspective, our growth this quarter was largely driven by volume. You always have a bit of improvement from a growth to net perspective from sequentially from Q1 to Q2, and more of the low single digit type range. And so growth to nets are coming in very much in line with what we had anticipated, so nothing to flag for the second half of the year.

Kevin Strang (VP, Biotechnology Equity Research)

Great. Thank you.

Operator (participant)

We'll move next to Brian Skorney with Baird. Your line is open.

Brian Skorney (Senior Research Analyst)

Hey, good morning, everyone. Thank you for taking my question. Yeah, also let me offer my accolades. Kevin, on a great job. It's been a long time I've been following this story, too. Maybe not as long as Phil, but certainly more than a decade, I think, at this point. It's been an incredible run. I told Matt he had big shoes to fill when he came in following Tim's retirement. So I'll say the same to Kyle here. But if the Kevin to Kyle transition is anything like the Tim to Matt transition, still some great things to come. Sorry, I just have something in my eye here. I know it's sort of a little less-

Kevin Gorman (CEO)

Thank you. Thank you, Brad.

Brian Skorney (Senior Research Analyst)

I know it's sort of a little less discussed readout, but on limited access to that, if you're able to replicate the cognitive effects that you saw in the INTERACT study, how should we think about that as a marketable indication in the absence of a PANSS benefit in patients? What is sort of the clinically meaningful threshold on BACS composite score, that's really a driver here? Or statistically significant, all that really matters for right now.

Eiry Roberts (Chief Medical Officer)

Yeah, I mean, I think this is an area of a highly significant unmet need. I mean, we know that the vast majority of patients suffering with schizophrenia do suffer from the cognitive impairment over time, and it becomes more and more of an issue, I think, with the disease as we obtain more treatments that are useful for treating the positive symptoms. There's really nothing approved yet at all to help patients in this area.

So that's, I think, why we were so encouraged by the data that we saw from the INTERACT study, even though we weren't able to hit on the primary of the negative symptom improvement, having a positive signal on which was robust in terms of the nature of the signal and the magnitude of the change that we saw on both the scores and the BACS. That was the first time that had been seen in a clinical trial. Obviously, we have to replicate that finding and that phase II study, the 200-patient phase II study, looking at BACS and scores again, will give us an indication of the strength of that signal.

If we replicate what was seen in the INTERACT study, I think that's a meaningful step forward in terms of managing this important area for patients with schizophrenia. The next step for us then will be, obviously, to engage with the agency to understand what a registration path would look like. But, you know, it's a really exciting opportunity. It's a huge unmet need. And I think, if we're able to be successful in this next study, we will certainly be very interested in engaging with the agency to understand how to bring benefit to patients in this area.

Brian Skorney (Senior Research Analyst)

Great. Thank you very much.

Operator (participant)

We'll move next to Mohit Bansal with Wells Fargo. Your line is open.

Mohit Bansal (Co-Head of Therapeutics Research)

Great. Thank you very much. And, from my side as well, congrats, Kevin, for an amazing career and, all the best for the very healthy retirement from now on. Thank you very much.

Kevin Gorman (CEO)

Thank you.

Mohit Bansal (Co-Head of Therapeutics Research)

So maybe the question I want to try to understand the adaptive study design for M4. Could you talk a little bit about that? When, like, when you say adaptive, is it for the efficacy as well, or is this mostly for safety? And then when we look at data, should we focus on the highest dose, or should we focus on overall profile of the drug when the data come out? Thank you.

Matt Abernethy (CFO)

So, this is Matt jumping in for Eiry. And, I know Kevin mentioned this at the outside of the call. We're going to be pretty limited on what we share at this point regarding NBI-568, and there's been a few questions about the design of the trial. And-

...Like we said, we'll get into those details when we're on the call. The dose, I guess, escalation or the increase to the next cohort is all about safety, as Eiry has mentioned. So we'll leave it at that. And we'll of course, you know, that's part of what you want to see on the dosing side. When you do turn over the data cards, we'll of course be looking at all the levels of dosing. I know there's a lot of appetite for more information on the design and what one might see, but just stay tuned for later this quarter.

Mohit Bansal (Co-Head of Therapeutics Research)

Awesome. Thank you very much. Appreciate it.

Operator (participant)

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

Marc Goodman (Senior Research Analyst)

Yeah, good morning. My congrats to Kevin as well. Eiry, my question is regarding crinecerfont, and obviously, it hits the market first. But given all the data that we've seen from Crinetics at the end of the meeting, just curious your thoughts about this ACTH antagonist and mechanism and how you see that, you know, when it comes in with crinecerfont already on the market and what, what the how, how that market evolves. Thanks.

Eiry Roberts (Chief Medical Officer)

Yeah, I mean, first comment I'd make is I think it's really encouraging to see individuals and companies going into this CAH space now with an attempt to help patients, because obviously, this is a community that's had no medications, new medications for the last 70 years. And of course, you know, we are very far along with our crinecerfont program. As Kyle mentioned, we read out very strong data last year in both adults and pediatrics. I think that's important, given the significant unmet need that exists in the pediatric population.

It's very clear, if you look at the greater than 95% rollover rate from each of the phase III studies into long-term open-label extensions, that the crinecerfont is very well tolerated, and the vast majority of patients are staying with the medicine and gaining benefit from doing that. And so, I think an anti-ACTH approach from a biological perspective makes sense as well. It's downstream of the CRF1 antagonism approach that we have, and we chose that approach because we believed it would be an ideal way to approach the treatment of CAH. Obviously, we have some encouraging data from the anti-ACTH approach now with the Crinetics data. It's a small patient sample.

I think it's going to be important to see how that translates into larger scale later trials with different endpoints from the hormone levels. And I think we're just very focused on bringing crinecerfont forward as rapidly as we can. We're navigating the FDA process well, and we really hope to be able to bring this to patients next year and make a significant difference in their lives.

Marc Goodman (Senior Research Analyst)

Can I just ask a quick question on NBI-568? I mean, the messaging is this 8-point delta on the PANSS. If that comes in, but there's no safety advantage relative to, you know, kind of standard of care here, that KarXT's kind of set, like, what does that mean to the programs?

Eiry Roberts (Chief Medical Officer)

Well, I mean, I think I don't think we look at any one data element in isolation. We're always interested in the totality of the information that's generated from the trial, and so we'll be looking at all of that. And as Matt said, you know, it's gonna be this quarter, we'll be able to have a much more in-depth conversation around that when we see the data.

Marc Goodman (Senior Research Analyst)

Okay, thanks.

Operator (participant)

We'll move next to Carter Gould with Barclays. Your line is open.

Carter Gould (Senior Analyst in US Biopharma Equity Research)

Great. Good morning. Let me offer my congrats to Kevin as well, and best of luck in future endeavors. I wanted to maybe shift things up a bit and go to 845. Should we expect SAVITRI full presentation of that data at a scientific meeting before year-end? And as you contemplate that willingness to invest, does that, I guess, contemplate a potentially broadening out of 845 beyond just MDD? Thank you.

Eiry Roberts (Chief Medical Officer)

I'll answer the second part first. We are highly focused on our major depressive disorder indication right now. Very encouraged by the data that we saw in terms of the effect size, consistency of the information and strength of the signal there, coupled with a favorable tolerability profile. And so, our next step with the program is to engage with the FDA in an end-of-phase II meeting, hopefully to support registration study starting next year. So, certainly there are other opportunities for a mechanism such as AMPA potentiation, but our focus right now is on that MDD inadequate response to treatment population because there's such an unmet need there. But can you repeat your first question for me? Sorry.

Matt Abernethy (CFO)

Data about 568.

Eiry Roberts (Chief Medical Officer)

Oh, actually, we've been clear that what we've shared is what we're going to share for now. I mean, it's really important as we go into the phase III program, I think that we get up and running with these sites. You're very familiar with the issue of expectation bias, placebo response, and other things in these trials. And so it will be. And in parallel with that, we are working on ensuring we have maximal IP around this program. So, it's gonna be a while till we publish the full data set here.

Carter Gould (Senior Analyst in US Biopharma Equity Research)

Thank you. Congrats again, Kevin.

Operator (participant)

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

Myles Minter (Partner and Biotech Equity Research Analyst)

Hi, thanks for taking the question, and congrats, Kevin. I hope the Walt Disney team at Neurocrine HQ stays on beyond your departure.

Kevin Gorman (CEO)

I did notice that.

Myles Minter (Partner and Biotech Equity Research Analyst)

Just a quick one on NBI-570 and NBI-567. When are we actually going to see the phase I data for that? And if that actually does look clean on the nausea and vomiting signal that we're seeing with xanomeline alone, I guess, how does that impact the way that you'd position those molecules against NBI-568 in potential additional indications in? Thanks very much.

Eiry Roberts (Chief Medical Officer)

Thanks. Great question. One we're obviously extremely interested in, and all I can say is that 570 and 567 are both progressing well in the clinic at this point in time, and we're still in phase I, though. As we've said, we need the phase I data to be able to have that integrated conversation. But it makes us really encouraged that we have such a broad portfolio of molecules, all of which are continuing to move forward at this time.

Operator (participant)

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

Speaker 21

Good morning. This is Joan for Brian. Congrats on a strong quarter, and on behalf of Brian, I wanted to pass along our congrats to Kevin on all your accomplishments. And congrats Kyle on the new role. So I wanted to go back to M4. So based on the safety profile from the Associate study and what you're seeing to date per the DSMB recommendation, when you think about potential opportunities beyond schizophrenia, would you hope to expand into indications in younger populations like bipolar? Or do you see opportunities to expand the indication to the older population as well? Thank you.

Eiry Roberts (Chief Medical Officer)

So right now, we're really focused on the data from the phase II study. I mean, there are a lot of opportunities based on the nature of the data that we read out here, and we will consider all of them fully. And I think, that's really all I can say at this point in time. And as we get into this quarter and into the data, we'll be able to say more.

Matt Abernethy (CFO)

Chloe, let's take the next question.

Operator (participant)

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

Cory Kasimov (Senior Managing Director and Fundamental Research Analyst)

Hey, good morning. Thanks for taking the question. Kevin, I'll add my congrats on a great run, and as the most recent analyst to launch coverage, I hope it's not something I said that prompted your move. So, my question is on crinecerfont. There's obviously a big unmet need with next to no innovation in the space in decades, as Eiry alluded to before. So with that backdrop, can you speak to how market education may be a gating factor to the launch and whether or not the CAH Centers of Excellence could be a driving force here?

Eric Benevich (Chief Commercial Officer)

Yeah, I'll take the second question first. You know, certainly we do think that the Centers of Excellence are going to be important. There are not that many of them, though.

Cory Kasimov (Senior Managing Director and Fundamental Research Analyst)

Mm-hmm.

Eric Benevich (Chief Commercial Officer)

You know, we have to make sure that we're not just reaching and accessing those patients and families living with CAH that you know, fortunately for them, have access to a Center of Excellence. There's a majority of the CAH population that are being treated by community endocrinologists. You may have seen that a few months ago, we launched our educational initiative called What the CAH?!, which actually has content that's directed towards endocrinologists and HCPs in endocrinology, as well as a related content focused on patients and families. That's really what we're engaged in right now in the second half of this year, reaching the CAH community, educating them on some of the challenges and opportunities to improve care in CAH.

We're also involved in profiling, you know, future customers, working to validate where these patients are. So ultimately, we want to make sure that we're set up to be in a really good position to have a strong launch when we do receive and hope to receive approval for crinecerfont at the end of the year.

Cory Kasimov (Senior Managing Director and Fundamental Research Analyst)

Great. That's helpful. Thank you.

Operator (participant)

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

Laura Chico (Managing Director Equity Research)

Hey, good morning, guys, and much congratulations to Kevin. I guess I wanted to focus one on INGREZZA here. Obviously, there's an increasing investment in the sales force coming here, but what needs to happen in order to provide peak revenue guidance for INGREZZA? It definitely seems like you have a full command of the market. Just trying to understand what would be the remaining kind of unknowns that are kind of limiting that. Thanks very much.

Eric Benevich (Chief Commercial Officer)

You know, Laura, thanks for the question. And, you know, INGREZZA is going to be a tremendous medicine for patients, and also will come with that, a large peak number someday. But, you know, from a company perspective, we've never provided, you know, peak expectations. This market continues to exceed, you know, our expectations as well as, you know, I think, Wall Street's expectations. So, it's not something that we're in the practice of providing a long-term peak sales range, but we do have conviction behind the continued investment in INGREZZA here, and it really gives us a strong foundation and couple the crinecerfont medicine potential. We really have a strong foundation as we look into the future.

Matt Abernethy (CFO)

Maybe just to add to that, just a reminder, you know, two-thirds of patients still aren't diagnosed with TD. 80% are-

... patients with tardive dyskinesia, we believe, aren't getting a VMAT2 inhibitor. So we think that there's still quite a bit of room here for the opportunity that we have in tardive dyskinesia alone.

Operator (participant)

This does conclude our question and answer session. I would like to turn it back to Kevin for any closing remarks.

Kevin Gorman (CEO)

Yeah, thank you very much. I feel like I should be in my rocking chair right now. Just a few things. You know, this business is a tough business, but it does boil down to some simplicity. You know, we—over the years, we've listened and serve our patients. We also listen and serve our shareholders. Contrary to popular belief, those two aspects of our industry are not at odds, but when done right, they reinforce one another, and they can lead to amazing medicines. Our industry is the most creative, dynamic, and exciting in the world. Can't imagine anything more rewarding. So while we're being, you know, biopharma is being blamed for all the ills of healthcare, it's far from the truth, and I hope that that comes through in the coming years.

I'd like to conclude with thanking our investors, both previous and current, and all of you on the analyst side for your years of support. You've challenged me, oftentimes offered invaluable advice, and I hope that has made me better. I understand it has taken a lot of patience on your part. It's been a bumpy road to get to this point, and I'm sure there's going to be many more bumps in the future. It's but this team, I am certain, will guide the company to more success than we've ever realized. The best days of Neurocrine and the patients we strive to help are in front of us. Thank you.

Operator (participant)

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