Neurocrine Biosciences - Q3 2024

Transcript

Operator (participant)

Good day, everyone, and welcome to today's Neurocrine Biosciences' third quarter results. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer period. You may register to ask a question at any time by pressing star one on your telephone keypad. Please note that this call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's call over to Todd Tushla, Vice President of Investor Relations. Please go ahead.

Todd Tushla (VP of Investor Relations)

Thank you, and happy Halloween Eve. Welcome to Neurocrine Biosciences' third quarter 2024 earnings call. With me are Kyle Gano, our Chief Executive Officer, Matt Abernethy, Chief Financial Officer, Eric Benevich, Chief Commercial Officer, and Eiry Roberts, Chief Medical Officer. Note that today 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, for the first time, I hand the call to Kyle.

Kyle Gano (CEO)

Thank you, Todd. Before we dive in, I'd like to acknowledge that this is my first earnings call as Neurocrine CEO. I'm excited to share my enthusiasm for our future, so my opening remarks may run a bit longer than usual. First, I want to express my deep gratitude to our Board of Directors for their confidence in my leadership as we embark on this next chapter of growth. Thanks to the exceptional guidance of our past CEOs, Gary Lyons and Kevin Gorman, Neurocrine is in a strong position to become a true leader in neuroscience. I extend my heartfelt thanks to both Gary and Kevin for their invaluable contributions to the company's success.

Given our company's growing multi-billion dollar franchise in INGREZZA, the potential of crinecerfont as our next blockbuster, the registration programs for NBI-845 and NBI-568, and what we believe to be the industry's most robust neuroscience-focused pipeline, Neurocrine's future is bright with significant value creation ahead. To build on this, at our core, we are a company driven by innovation and operational excellence. Our capital allocation strategy flexes by prioritizing revenue growth, diversification, and regenerative pipeline. As announced in this morning's press release, our Board of Directors has authorized a share repurchase plan of $300 million, which we intend to implement through an accelerated share repurchase transaction. Considering our expected revenue growth for both INGREZZA and crinecerfont and the breadth of the early to late-stage pipeline, we believe Neurocrine is trading at a significant discount to its underlying enterprise valuation, making share repurchase a high-return investment opportunity.

In addition, we maintain the flexibility to further invest in the growth of our business. On the topic of capital allocation, our strategy is aligned with our plan for value creation. This approach is driven by four key pillars that ensure we continue as a high-growth company and position ourselves as a leading neuroscience organization with both commercial and scientific scale and expertise.

The four pillars of our strategic plan are: One, drive revenue growth by investing in INGREZZA and preparing for a successful crinecerfont launch. Two, aggressively develop our highest-value pipeline assets such as NBI-845 and NBI-568 by accelerating early-stage programs to proof of concept. Three, pursue external opportunities to expand our portfolio with strategically aligned assets that can be rapidly developed into commercial products, leveraging our expertise in neurology, psychiatry, endocrinology, and our R&D to commercial infrastructure. And four, return excess capital to shareholders beyond what is required for organic and inorganic growth. With these guiding pillars, we are well-positioned to deliver substantial near and long-term value to both patients and shareholders. Now, as far as Q3 with INGREZZA, we continue to reach more and more patients suffering from tardive dyskinesia and Huntington's disease chorea.

With an estimated 85% of the 800,000 patients with tardive dyskinesia not yet receiving a VMAT2 inhibitor for the symptoms, there is much work and opportunity ahead. To this end, we are again raising full-year INGREZZA guidance. Regarding crinecerfont, our regulatory activities remain on track with potential approvals by year-end. We're excited to deliver a groundbreaking treatment to patients who have lacked a new option for 70 years. Like INGREZZA, crinecerfont, when approved, will be a first-in-class medicine for patients and has the same hallmarks of a blockbuster medicine. No doubt, crinecerfont will offer a second leg of revenue growth for Neurocrine and help diversify our business over time. On the pipeline front, this year we obtained proof of concept data in two of our three novel psychiatry phase 2 programs.

Having spent nearly 25 years in this therapeutic area, I understand the inherent risk that comes with drug development within psychiatry. Achieving success in just one of these programs would have been remarkable. Succeeding in two out of three exceeded our internal expectations and significantly de-risked both assets and their associated biology. As we move NBI-845, our AMPA positive allosteric modulator for major depressive disorder, and NBI-568, our selective M4 muscarinic agonist for schizophrenia, into registrational studies early next year, we are well-positioned for the next key value drivers after INGREZZA and crinecerfont. With several internally developed molecules set to enter clinical trials and multiple phase 3 programs lined up for 2025, prioritizing R&D investment becomes even more critical. Today's decision to deprioritize luvadaxistat and NBI-104 reflects this disciplined approach.

Decisions like these are never easy, and I want to acknowledge and thank the patients, families, and healthcare professionals involved in the studies. Pipeline discipline and capital allocation are cornerstones of our strategy, and we will continue to evaluate all of our clinical and preclinical programs to ensure we invest in potential treatments that offer meaningful value for patients and shareholders alike. In closing, with an exceptional leadership team and a dedicated, energized organization, we are well-positioned to become the leading neuroscience company. I'd like to wrap up my remarks by sharing thoughts I expressed earlier this year when Kevin announced his retirement. I'm inspired by the work we have ahead, more confident than ever in the potential of our future, and immeasurably proud to collaborate with the best team in the industry to relieve suffering for people with great needs but few options and drive value for our shareholders.

With that, I'll now turn it over to Matt.

Matt Abernethy (CFO)

Thank you, Kyle. Our INGREZZA team delivered $613 million in Q3 sales, reflecting continued strong patient demand and positioning us to increase our guidance range to $2.3-$2.32 billion, reflecting 25% year-over-year growth at the midpoint of this range. The tardive dyskinesia market remains very attractive, and as Kyle mentioned, our number one capital allocation priority remains investing in INGREZZA. Of note, our psychiatry and long-term care sales force expansion is complete, and fully expect to see the benefit of this expansion during the first half of next year. In addition, our crinecerfont commercial and field medical teams continued to build market awareness of congenital adrenal hyperplasia and gain disease state insight in preparation for the PDUFA dates in late December. The INGREZZA and crinecerfont growth over the years ahead will provide Neurocrine the resources to invest in our growing pipeline.

On the R&D side, the teams are busy preparing for the initiation of two major phase 3 programs in major depressive disorder and schizophrenia. Although we're still working through our budget process for 2025, you should expect an overall increase in both dollars and percentage of revenue allocated to R&D, likely to be in the low- to mid-30% range of revenue next year. We will be meeting with the agency over the coming months on both the NBI-845 and NBI-568 programs and will provide further insight into R&D investment expectations for 2025 during our Q4 earnings call in early February. Returning to 2024, we have made significant progress in growing our revenue to over $2 billion and advancing and expanding our pipeline. We anticipate that 2025 will be a year focused on investment for continued growth into the future, which we believe will drive long-term shareholder value.

As highlighted in our press release, our board has approved a $300 million share repurchase plan. In the coming days, we intend to enter into a $300 million accelerated share repurchase transaction subject to market conditions. Together with our board, we believe recent share price levels reflect neither the current value of the company today nor the growth prospects we expect to achieve in the future. As a result, we believe this use of capital will benefit our shareholders while also preserving financial flexibility to make the investments required to continue the advancement of our leading neuroscience company. With that, I'll now hand the call over to our Chief Commercial Officer, Eric Benevich, to provide an update on INGREZZA and also our CAH launch preparations. Eric.

Eric Benevich (Chief Commercial Officer)

Thanks, Matt. We again delivered a strong quarter for INGREZZA with over 26% year-over-year growth driven primarily by demand and continued patient compliance across the tardive dyskinesia and Huntington's disease chorea indications. INGREZZA sales are now annualizing at over $2.4 billion, and with 14 more years of exclusivity ahead of us, we still have a tremendous opportunity to help even more patients. It's been a number of years since we last updated our TD prevalence estimates. After conducting a thorough literature review and analyzing claims data for antipsychotic utilization, we're now estimating TD prevalence of at least 800,000 individuals in the U.S. Given the continually increasing utilization of dopamine-blocking antipsychotics, the size of the TD population continues to grow, and we continue our efforts to educate and help healthcare providers identify appropriate treatment candidates for INGREZZA. Earlier this year, we made the decision to expand our INGREZZA sales force.

This expansion is really a reflection of two things: the remaining significant growth potential in the TD market with only a third or less of TD patients currently diagnosed and the substantially increased number of TD treaters developed over the last few years, especially in the psychiatry segment. We made the decision to expand our field teams in a manner consistent with the market dynamics and commensurate with the INGREZZA franchise opportunity. On that note, I'm pleased to report that the psychiatry and long-term care sales force expansions are now complete. Our newest team members are now in the field and settling into their roles. As noted on our Q2 earnings call, based upon our previous experience, it'll take a couple of quarters to see the full impact from this expansion on diagnosis and treatment rates.

Turning to crinecerfont, our rare disease endocrinology team remains focused on providing congenital adrenal hyperplasia, or CAH, disease state education to the endocrinology healthcare providers and patient communities. Our team is eager and ready to immediately begin working with the CAH community should crinecerfont be approved by the FDA at year-end. I know many investors are contemplating the crinecerfont launch dynamics. While crinecerfont has all the characteristics of a future blockbuster, it won't happen overnight. We're building a foundation with our disease state educational efforts during the pre-launch period, and assuming approval, we'll be in a good position to launch quickly. We intend to offer a free goods program during the period when patients' insurance reimbursement claims are being adjudicated and to enable endocrinologists to get familiar with the benefit-risk profile of crinecerfont.

And while payer interactions to date have been positive, as with most newly launched products, commercial payers typically have new-to-market coverage restrictions or even policies to block reimbursement for up to the first six months when a product is launched. With an estimated 60%-70% of CAH patients under commercial coverage, this will mean delayed reimbursement for many patients in the first half of the year. But we're adept at managing such situations, as seen with our experience managing the formulary exceptions process with INGREZZA. The goal is to help appropriate CAH patients get started on treatment while we work through their reimbursement. All in all, the rare endocrinology team is super excited about the opportunity to help the CAH patient population who have not had a new treatment option in over 70 years.

So with that, I'll turn the call over to my colleague, Dr. Eiry Roberts, our Chief Medical Officer.

Eiry Roberts (CMO)

Thank you, Eric, and good morning, everyone. I'll begin today's clinical update with crinecerfont. We continue to have constructive interactions with the FDA and remain on track for the December 29th and 30th PDUFA dates. Given the calendar and end-of-year timing, it would not be surprising to potentially receive approval for both formulations on December the 30th, which falls on a Monday. Turning to the mid-stage pipeline, last month we disclosed that the ERUDITE study of luvadaxistat as a potential treatment for cognitive impairment associated with schizophrenia failed to meet its primary endpoint and thus did not replicate the positive findings on cognition previously reported in the INTERACT study. The results from the ERUDITE were confounded by variability in cognition measures across the population studied and a potential imbalance in baseline characteristics for enrolled subjects.

As Kyle mentioned, we're therefore discontinuing this program together with the NBI-104 T-type calcium channel antagonist program in CSWS and focusing resources on advancing NBI-845 and NBI-568 into phase 3 studies. Both NBI-845, our AMPA-positive allosteric modulator for the treatment of major depressive disorder, and NBI-568, the selective M4 orthosteric agonist for the treatment of schizophrenia, continue to make good progress towards our end-of-phase 2 interactions with the FDA, which we anticipate will occur over the next few months to enable the start of registrational studies for each of these programs in the first half of 2025. We will provide more insight into study specifics over the coming months, together with our plans to publish key phase 2 information from each of these programs in the latter part of 2025 once these registration studies are up and running.

Shifting to NBI-770, our NMDA NR2B NAM negative allosteric modulator for the treatment of major depressive disorder, the phase 2 program for this molecule continues to enroll well with top-line data anticipated in 2025. The remainder of the pipeline is also progressing well, including the four muscarinic programs currently in phase 1 development. With that, I'll hand the call back to Kyle. Kyle?

Kyle Gano (CEO)

Thanks, Eiry. We're ready to take questions.

Operator (participant)

Certainly, and at this time, if you would like to ask a question, please press star one on your telephone keypad. You may withdraw your question at any time by pressing star two. And again, that is star one. We'll take our first question from Chris Shibutani with Goldman Sachs. Please go ahead.

Chris Shibutani (Senior Analyst and Managing Director of Biotechnology Equity Research)

Thank you very much. Good morning. Congratulations on a clearly strong quarter commercially. I wanted to ask about going forward, thinking about the pipeline people as well as strategy. Eiry, we appreciate your comments. I think you have announced previously that you're looking to step away. Kyle, have you given thought to the point people who will be running the role that Eiry has been involved with, as well as your previous role, which was really managing the business development leadership there, since I noticed quite a bit of focus on capital allocation? And secondly, can you just give us an update on the next-gen VMAT2 inhibitor? I know we started phase 1 at the start of this year, but some visibility into when we could learn more would be great. Thank you.

Kyle Gano (CEO)

Thanks, Chris. This is Kyle. I'll start, and then I'll have Eiry and the team add anything that I missed here. For our VMAT2 follow-on compound, this is NBI-890. What we're looking here to do is to have a more potent compound that would be amenable to all the same indications that we see advantages for INGREZZA, but also offer the opportunity to develop a long-acting injectable, which we know is important to the prescriber base as well as to patients. So stay tuned on that. It's a program that's currently in phase 1. We'll look to move that into patients next year, pending the review of the ongoing phase 1 data.

Chris Shibutani (Senior Analyst and Managing Director of Biotechnology Equity Research)

Yeah. Thank you.

Operator (participant)

You will go next to Paul Matteis with Stifel. Please go ahead.

Paul Matteis (Managing Director of Therapeutics Research)

Thanks so much for taking my question. Kyle, congrats on moving to the CEO seat. I wanted to ask you a question just about BD and philosophically where you stand. You guys and your public commentary over the years have kind of ebbed and flowed to the degree to which you've talked about prioritizing smaller deals versus something larger in the $3 billion - $4 billion range. How do you think about capacity now? And strategically, do you feel like this is the right time for Neurocrine over the next year, year and a half, to do something that's more meaningful and bolder for a later-stage asset? Or do you still like this kind of smaller BD spread-the-bet strategy that you've employed so far? Thanks so much.

Kyle Gano (CEO)

Thanks, Paul. Appreciate the question. In terms of our BD activities, the team that we have here continues to work with a high degree of urgency. Fortunately, we don't feel like we have to do something right now, either large or small. We've got a very deep and diversified portfolio with a number of investments that we're making that are late-stage next year, and we've talked about some of those already with NBI-845 and major depressive disorder, and NBI-568, our program in development for schizophrenia, and behind that, we have a very rich early-to-mid-stage pipeline that's developing.

Right now, my mind is learning about the landscape and figuring out what areas that we want to invest in moving forward, which assets are in those areas, but really focus on executing what we have in the pipeline right now and making sure that we're doing whatever we can there to put those programs in the best possible situation for success. If something comes out down the road that is a program, a technology that is something that we could utilize and takes advantage of our expertise and infrastructure, we'll look at that seriously. Right now, we feel like we're in a very enviable position.

Matt Abernethy (CFO)

Yeah, fortunately, our financial flexibility is very strong at the moment. A lot of cash, continued cash flow generation, a very clean balance sheet. We retired our convertible debt earlier this year, as you're aware. So we do have financial flexibility into the future if we did decide that was something for us to do. And as Kyle said, a very enviable position to be in.

Paul Matteis (Managing Director of Therapeutics Research)

Okay. Thanks, guys.

Operator (participant)

Thank you. We'll take our next question from David Amsellem with Piper Sandler. Please go ahead.

David Amsellem (Managing Director and Senior Research Analyst of Biotechnology)

Hey, thanks. So looking into 2025 and beyond, how are you thinking about the potential that you might need to compete more on price to hold INGREZZA share versus AUSTEDO? And then as you think about IRA negotiations, do you anticipate any impact on INGREZZA pricing once AUSTEDO is included in IRA negotiations? In other words, some sort of spillover effect, if you will. And then secondly, just on 568, just remind us how you're thinking about indications beyond schizophrenia, say, AD psychosis, for instance. And/or are you looking at the other muscarinics for indications beyond schizophrenia? Just help us understand your thought process there. Thank you.

Kyle Gano (CEO)

David, we're going to handle the first chunk of your questions. Just out of respect for others and to relate the muscarinic question to others, but Eric can comment on price. The only real specifics we're going to give as it relates to 2025 on price is you do, or we do, sitting here today, expect our net revenue per script to be very similar to what we've seen in 2024. No significant change that we can see at this time for '25. Eric.

Eric Benevich (Chief Commercial Officer)

Yeah. So what I'll say is that every year we continue to assess our contracting strategies. And we invest in contracts where we think it makes sense. And in some cases, we have contracted access where we think that it's favorable. In other cases, we look at the contract and make decisions to pull back. And so as a result, the coverage landscape changes from year to year. But overall, our access has and continues to remain excellent, with over 80% of lives covered and the majority of patients paying $10 or less. And we expect that to continue into the future. The other thing that I'll say is that we're going to learn from the first few waves of drugs that go through the negotiation process in terms of what their access looks like B2B non-negotiated drugs. So stay tuned.

But ultimately, our goal is to make sure that patients that need access to INGREZZA continue to have access. We're trying to do that in a manner that is responsible from a financial perspective.

David Amsellem (Managing Director and Senior Research Analyst of Biotechnology)

Understood. Thank you.

Operator (participant)

Thank you. We'll take our next question from Akash Tewari with Jefferies. Go ahead.

Phoebe Sigee (Investment Banking Analyst)

Hi. Thank you for taking your question. This is Phoebe on for Akash. On your M1, M4 asset, can you talk about why you feel confident that you don't have to dose with trospium like KarXT does? And then additionally, what should we expect to learn from initial phase 1 human data next year for the muscarinic? Thank you.

Kyle Gano (CEO)

Good morning. Thanks for the question. On NBI-570, it's a very interesting molecule in the sense that it's one of a basket of small molecules that we have in development that range from M1 to M4 selectivity across the muscarinics, and 570 has equal potency on M1 and M4. One of the things that's exciting about this molecule, as well as the suite of molecules, is that it relies on exquisite selectivity of just M1 and M4 across the muscarinics, which we know are the subtypes M1 through M5, so we've got that going for us out of the gate, but the other piece that Sosei Heptares, now Nxera, our partner, has done is what many companies in the early stages of drug discovery do when they're interested in a CNS molecule. They dial in the selectivity that they desire.

And then subsequent to that, they make the molecule be penetrant to the CNS more versus the periphery. And in doing so, when you think about 570, that's how we're able to move forward on the M1, M4 agonists without the need to add back something that blocks peripheral effects because 570 preferentially gets into the CNS. In terms of the ongoing program with 570 of the muscarinics, they're all in phase 1 right now. They'll be reading out data during the course of 2025. And with that, we'll be able to look at the totality of the data coming from the different molecules and learn a lot from the pharmacology across M1 and M4 and what that will be able to determine next steps in terms of moving into a patient population.

Phoebe Sigee (Investment Banking Analyst)

Okay.

Operator (participant)

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

Tazeen Ahmad (Managing Director of US Equity Research)

Hi, guys. Good morning. Thanks for taking my question. On INGREZZA, you had another really strong quarter. How should we be thinking about sequentially the flow in 4Q? Because based on your guidance, it does seem like it could be a little bit flattish. I know traditionally, 4Q tends to be a stronger quarter. So can you give us a little bit of color on that? Thanks.

Kyle Gano (CEO)

Yeah. I think when you look at historical sequential growth in dollars, we fall right into that historical range of somewhere between $10 million - $20 million sequentially. So I do think our guidance takes that into consideration. Just a few comments for Q4. We do have our new field sales team that's in place and actively calling on customers, and that handoff process is occurring, but as Eric said in the prepared remarks, that does take a few quarters to start kicking in, and then the last piece is something that we've had in historical years, a sequential increase in gross-to-net discount that's associated with channel inventory. It's going to be a little bit less than what it has been historically because of some of the IRA dynamics, but nonetheless, a higher gross-to-net discount in the fourth quarter. Thank you.

Operator (participant)

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

Ash Verma (Executive Director of SMID Biotech & Biopharma)

Oh, hey. Thanks for taking the question. Congrats on all the progress. We're curious about your level of interest in epilepsy since it's still an area of super high unmet need, and it's also proven to be a difficult area to conduct clinical trials. So we're just curious how committed is Neurocrine to epilepsy, and do you plan to replace the Idorsia molecule with another asset? Thank you.

Kyle Gano (CEO)

Thanks, Jay. This is Kyle. I'll take your question here. We still have a very strong commitment to the area of epilepsy. We have a number of programs that are moving through various stages of preclinical development. And while I don't expect us moving forward with another T-type calcium channel blocker, we do have a mixed Nav1.2, Nav1.6 inhibitor that we're looking forward to bring up into the clinic next year. So stay tuned on that. Obviously, a lot of the molecules that are required to move forward have a significant body of data around them for GLP-tox 90 enabling studies. We need to get through those and then see where we land on the other side for advancing that particular asset. But still committed to epilepsy.

There's still a high degree of unmet need in that space, and we hope to be a player as we move along here.

Ash Verma (Executive Director of SMID Biotech & Biopharma)

That's great. Thank you.

Operator (participant)

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

Ash Verma (Executive Director of SMID Biotech & Biopharma)

Hi. Thanks for your question. So just on 568, now that we've had some time to digest the results in phase 2, just what are your learnings? Do you think this orthosteric agonism was the issue in this case, and how should we think about the rest of the muscarinic pipeline based on what you've learned? Thanks.

Eiry Roberts (CMO)

I hope I understood your question properly, Ash, but I think it was that now that we have the exciting phase 2 data, how are we thinking about the orthosteric agonism with respect to next steps in the context of the broader muscarinic pipeline? So, just to address that. Thank you. So, we are moving forward rapidly with our NBI-568 molecule on the back of the encouraging phase 2 data that we saw in schizophrenia, and we're planning to enter in the first half of next year a phase 2 registration program for the treatment of schizophrenia. The first step on that journey will be our interaction at the end of phase 2 with the FDA, and we're preparing for that in the next couple of months.

And so in that regard, we think there is a significant opportunity to add on to the current success that there's been in the muscarinic area. We were very pleased to see the first medication approved with this mechanism in COBENFY earlier this quarter. But I think in terms of the selectivity for M4 and the potential benefit-risk profile and improvement in that associated with a selective agent, we believe there's a lot more room in this space to add value for patients. And so we're excited and encouraged with our phase three planning in that regard. As Kyle mentioned, we do have a suite of muscarinic agonists behind 568, which have, again, high selectivity for either M1 or M4 as orthosteric agonists.

Those are currently in phase 1 development, and we're exploring how to understand the potential areas of investigation beyond phase 1 as we generate data next year, which could range all the way from disorders where improvement in cognition is important all the way through to psychosis, bipolar disorder, and other indications.

Operator (participant)

Thank you. We'll take our next question from Phil Nadeau with TD Cowen. Please go ahead.

Alex Sakhno (Director of Equity Capital Markets)

Hi. This is Alex on for Phil. Congrats on the quarter, and thanks for taking my question. On 568, just curious if the upcoming emraclidine data will inform your pivotal trial plans in any way. And also, could you maybe just walk us through your broader strategy for 568's pivotal, including regulatory conversations and trial design? Thanks.

Eiry Roberts (CMO)

Yeah. So we actually haven't talked very much about the phase 3 trial design yet, and I think we want to clear our way through the end of phase 2 meeting before we do that. But certainly, as we start to post the trials that will be included in that registration program in the first half of next year, we'll be able to get into much more detail around that. With respect to the impact of emraclidine or even COBENFY information on our planning and thinking, I think we're very encouraged by the fact that M4 selectivity appears to be sufficient to produce antipsychotic effects in schizophrenia.

And I think from that point of view, the fact that our molecule is an orthosteric agonist, that's the approach we've chosen, and that's the approach that we are confident in on the back of our phase two data that we generated earlier this year. And so we're very much more focused on our own program in terms of understanding the emerging benefit-risk from our phase two data in ensuring that we're incorporating all of that learning into our phase three trial designs and into our phase three program. And we'll be happy to talk more about that as we clear through the end of phase two data and the phase two interaction with the FDA.

Matt Abernethy (CFO)

And maybe just to add to that, the excitement that we have around our own program stems from the fact that we're the only approach that can selectively and directly activate M4 and deliver on the promise that we've seen from the muscarinics thus far without any need to rely on any other aspect of an add-back therapy or some sort of endogenous ligand for either efficacy or safety and tolerability. And we think at the end of the day, physicians are going to be feeling a lot more confident about our approach to be able to be used in a wider population of the patients.

Alex Sakhno (Director of Equity Capital Markets)

Thank you.

Operator (participant)

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

Anupam Rama (Managing Director and Senior Equity Analyst)

Hey, guys. Thanks so much for taking the question. Going to ask the same question I've asked for the last 10 years on third-quarter earnings. So any chance of an INGREZZA pre-announced and guidance at a small healthcare conference in January, or is this more of a fourth-quarter earnings report scenario in February?

Matt Abernethy (CFO)

Yeah. Anupam, I can pick up a trend without you even acknowledging it. So always good to hear your question. We're obviously looking forward to JPMorgan this year. Kyle has an ambitious plan for 2025 with full detail. But as is consistent with the last, I believe, two years, this will be the third year where we do not pre-announce our revenue at the JPMorgan conference. And we'll say commentary for both Q4 results and then four-year sales guidance for 2025 until our February earnings call. But always glad to see you in January to kick off the new year.

Operator (participant)

Thank you. We'll move next to Evan Seigerman with BMO Capital Markets. Please go ahead.

Evan Seigerman (Managing Director of Healthcare Research)

Hi, guys. Thank you so much for taking my question. So as we think about your sales force expansion and the opportunity for treatment of chorea associated with Huntington's disease, how should we really frame that opportunity? I know Kevin's been there. But with the investment, where do you see, I guess, INGREZZA going in the next couple of years? And how does this really compare with the TD market? I think secondarily, why focus on new epidemiology for TD now? Does that imply that you're not satisfied with where TD is going? You're trying to emphasize that there's still more room to grow? I'm just trying to get a better understanding of what that commercial story looks like.

Eric Benevich (Chief Commercial Officer)

Yeah. Let me take your second question first in terms of our reassessment of the prevalence of TD. And that's something that we haven't looked at for a number of years. And so I would look at that as more of just updating our prevalence estimates using a methodology that's similar and consistent with what we had done previously. The time that we launched in 2017, our estimate was at least 500,000 people in the U.S. with TD. A couple of years later, we updated our estimate to at least 600,000. And fast forward, I think it's been four or five years since the last time we looked at it. And the numbers of people living with TD continue to grow, I think commensurate with the expanded use of antipsychotics, especially in non-psychotic conditions.

And so in our prepared remarks, we did update the number now to at least 800,000 people with TD in the U.S. And I think that that number is similar to other estimates that are out there and frankly, maybe a little bit on the low end of the range. So that's the prevalence story. In terms of the sales team, we certainly felt like the decision to expand our sales force was in line with the growth of the market. And let me just go with that. Oh, okay. And certainly, as I mentioned in the prepared remarks, consistent with the growth of the prescriber base in TD. And in terms of Huntington's, the only part of our commercial team that we didn't expand or change really was the neurology team. And the strategy of penetrating that Huntington's opportunity is primarily through our neurology sales force.

On a relative basis, the neurology opportunity is much smaller. Excuse me. The Huntington's opportunity is a lot smaller than it is in tardive dyskinesia. And yet, there's still significant unmet need in Huntington's chorea. You may have seen that we recently presented some data showing the use of INGREZZA in patients that are with Huntington's chorea that are also on antipsychotics. And I think that that's some important data to get out there because that is a segment of patients with Huntington's chorea that are typically not treated with VMAT2 inhibitors. And so we wanted to show that they have no impact on relative safety, but they can still improve their choreiform movements. And so overall, the growth driver in the future will continue to be primarily TD, but Huntington's is still an important strategic opportunity for us, especially within the framework of our neurology team.

Matt Abernethy (CFO)

Maybe just to put a finer point on that, we talked about the TD prevalence being around 800,000 in the U.S. For HD chorea, there's about 30,000 patients. About 20,000 patients have chorea that's moderate-severe. About 5,000 patients currently on a VMAT2 inhibitor. So the 15,000 patients that we're looking to address, that's about a 50-to-1 ratio of patients that we can serve with INGREZZA when you look at the opportunity versus TD. So we do feel that the greater opportunity moving forward will be in tardive dyskinesia. But we'd like to penetrate more into the HD chorea space, in particular with the launch of our INGREZZA SPRINKLE to help access patients who might have difficulty swallowing or dysphagia. That tends to be more prevalent in the HD population.

Operator (participant)

Thank you. We'll take our next question from Cory Kasimov with Evercore. Please go ahead.

Cory Kasimov (Senior Managing Director)

Hey, good morning, guys. Thanks for taking the question. Wanted to ask about crinecerfont. And if you can talk about how many prescribers are located at the CAH Centers of Excellence in the portion of the overall patient population they serve. And are there certain segments of the CAH population they are most eager to treat upon approval? Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah. So let me take a step back and say that we're really excited about the opportunity to make a difference with the CAH community with the PDUFA date coming up here at the end of the year. We've been preparing for a launch early in 2025. As you know, we have a sales force that's out there. They're doing disease state education right now. They're meeting with future customers. They're profiling and learning about their practices. And so this is all important work that will help us get off to a strong start once we, knock on wood, get approval later this year. In terms of the proportion of the patient population that's within the care of the CARES Foundation Centers of Excellence, there's only about a dozen or so of those Centers of Excellence out there.

We're still learning about what proportion of the patient population are being managed through those centers. I would say it's in the range of 10%-15% of patients in total. The majority of patients with CAH are still being cared for within community endocrinology practices and also within pediatric endocrinology practices. Obviously, we are going to be putting a lot of focus early on on those two segments, the pediatric endocrinologists as well as the CARES centers. Ultimately, for us to really make a difference in this patient population, we're going to have to make sure that we also are reaching out to those patients that are cared for in community endocrinology practices. Do you have anything else to add, Eiry?

Eiry Roberts (CMO)

No, I think you said it well, Eric. I mean, I think there is a lot of excitement that we're hearing as we're talking with clinicians who are working with these patients, given that there's been nothing new for this patient population in the last 70 years. And we do know in terms of focus that in the pediatric setting, obviously, there is a very significant level of interest in a potential medication that could help with androgen reduction in that patient population where very tight management of androgen levels becomes so critical in the face of normal growth and development. And so we are seeing a lot of very significant interest as we continue to hopefully progress towards an approval for both pediatric and adult patients living with congenital adrenal hyperplasia by the end of this year. Eric, you had something else.

Eric Benevich (Chief Commercial Officer)

Oh, yeah. Just one last thing I want to say is that our team, the receptivity that we've seen since our team has gone out into the field since this summer has been really strong. So I think there's really great interest in the endocrinology community. And certainly, I think it's a testament to the unmet need in CAH.

Cory Kasimov (Senior Managing Director)

That's helpful. Thank you.

Operator (participant)

Thank you. We'll move next to Brian Skorney with Baird. Please go ahead.

Luke Stepien (Investment Banking Director)

Hi. This is Luke on for Brian. With the upcoming pivotal trials in psychiatry, should we expect 845 and 568 to progress largely in parallel following the end of phase 2 meetings, or will you be looking to emphasize or accelerate one program over the other? Thanks.

Kyle Gano (CEO)

I appreciate the question. I think given the proximity of what we reported top-line data would be commensurate with how we would look at starting the phase three trials in 2025. We don't anticipate any needs to stagger them in any particular way for any reason. It's going to be more based on when we have our end of phase two discussions and when we can stand up the pivotal trials for both 845 and 568. So I expect them to be started nearly at a similar timeframe, but not at the exact time for both of these studies.

Eiry Roberts (CMO)

The only thing I'd add there, Kyle, is that obviously from an operational perspective as well, these are focused on two different indications within the psychiatry space, with 845 in major depressive disorder and 568 in schizophrenia. So we don't anticipate competition for patients between our two programs, which I think is really important. And the internal team is extremely excited about the opportunity to potentially bring value in both of these areas with these programs moving forward.

Operator (participant)

Thank you. We'll move next to Carter Gould with Barclays. Please go ahead.

Carter Gould (Senior Analyst)

Hi. Good morning. Thanks for taking the question. Maybe to follow up on one of the earlier questions some time ago in the queue. I guess for a long time, we looked at Neurocrine pipeline. You guys were sort of mid-stage heavy. That's clearly evolved. And now it's a little bit more of, I guess, a barbell approach where you've clearly made those phase three investments. We're about to make those phase three investments. And the earlier stage pipeline now, at least from kind of where we sit, seems very focused on VMATs and muscarinics. So can you maybe talk about how you're looking at that early stage portfolio, I guess, the breadth and diversity of those assets? And should we expect sort of another replenishment either through in-licensing or homegrown assets to sort of bubble up over the course of 2025?

Kyle Gano (CEO)

Yeah. Thanks for the question. I think also we'd like to point out that in addition to the later stage assets and the earlier portfolio that you mentioned that spanned the muscarinic agonist and VMAT2, we also have a muscarinic antagonist that we're moving forward for a variety of movement disorders. And then in phase 2, we have an NR2B NAM that we're moving forward, a major depressive disorder. So there's a lot going on across the organization in terms of early to the late stage portfolio. And we'll have more to say about what's emerging in terms of our earlier stage portfolio and adds to the clinical programs in early 2025. So stay tuned on that. There's a lot of productivity that's ongoing right now in our labs. And it just takes a bit of time to move that forward into clinic. And we'll start seeing that in 2025.

Cory Kasimov (Senior Managing Director)

Understood. Thank you.

Operator (participant)

Thank you. We'll take a question from Brian Abrahams with RBC Capital Markets. Please go ahead.

John Thurlow (Managing Director and U.S. COO)

Hi. This is John for Brian. Thank you for taking our question. Can you elaborate more on the growth drivers you're seeing on INGREZZA, the degree of demand versus gross to net versus any other contributions you could note for us? And how are you thinking about what are you seeing on the ground in terms of the competitive landscape in the TD market? Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah. In terms of the dynamics for Q3, it's primarily driven. The growth is primarily driven by demand. And as I mentioned in my prepared remarks, continued strong compliance for INGREZZA. In terms of the competitive dynamics, this is a growing market. And obviously, we've seen strong growth since we launched seven years ago and counting. As Kyle mentioned in his prepared remarks, less than 20% of patients are currently being treated with a VMAT2 inhibitor, which are the recommended first-line treatment in the treatment guidelines. So there's still a long opportunity ahead of us with 14 more years of exclusivity. And we continue to invest in that growth, I think, as indicated by the recent expansion of our field sales team and our continued investment in DTC. So growth is primarily organic and will continue to be for the foreseeable future.

John Thurlow (Managing Director and U.S. COO)

Got it. Thank you.

Operator (participant)

Thank you. We'll take our next question from Mohit Bansal with Wells Fargo. Please go ahead.

Mohit Bansal (Managing Director and Co-Head of Therapeutics Research)

Great. Thank you very much for taking my question. And Kyle, congrats on your first call as a CEO. Maybe we would love to understand how you are thinking about internally, you are thinking about the upcoming competition in CAH space. I mean, kind of we are probably putting cards before the horse here, but there is an ACTH antagonist out there as well. How do you see that as a competitor to crinecerfont? Do you see this as a direct competitor or more like lines of therapy where something could be first-line versus second-line? How should we think about that?

Kyle Gano (CEO)

Maybe I'll start that question. If there's anything I'm missing, I'll ask my team to chime in here, so when we think about CAH, I think we can all agree that this is a very serious disease. At the heart of the matter is the body's struggle to capture its HPA axis, and by HPA, I mean the hypothalamus pituitary adrenal axis. In terms of how the disease is initiated, it's caused by mutations on the CYP21A2 gene, and that results in dysfunction or absence of the synthesis of cortisol, which is the key regulator of the HPA axis, so for the past 70 years, patients, physicians have used supraphysiological or very high doses of GCs, glucocorticoids, to act as that regulator of the HPA axis.

What we get with crinecerfont is the ability for the patient to capture or recapture their HPA axis, allows them to control ACTH, reduce ACTH, and therefore reduce and control their androgens. And at the same time, when we think about that, when you control ACTH, the androgens, you're able to remove the requirement for excessive use of glucocorticoids. And we've seen it from our phase three trials that that puts a number of patients into using a physiological range of their GC dose. When we think about the competition, then our approach uses the angle of working upstream at the HPA axis to control the regulation of the HPA at the top. And then everything below that, we're able to reduce and control as well, starting with ACTH.

Our competitor in this space, a company here in San Diego that we know quite well, Crinetics, is developing an ACTH antagonist called atumelnant. And it's an early stage clinical development right now with a small number of subjects. I think time will tell to see how their approach will work relative to ours because they actually work downstream of our approach. So they only look at the androgens, not the other piece of the cascade with the ACTH. But ultimately, where we are right now, we're very excited about our position. We've got very strong efficacy across both children and adults. We've got excellent safety and tolerability. And we have formulations that match the needs of both children and adults. So we feel like we're in a very fortunate position here.

We look forward to hopefully getting approval later this year in launching this important medicine for patients, which is going to change the standard of care in CAH.

Mohit Bansal (Managing Director and Co-Head of Therapeutics Research)

Helpful. Thank you.

Operator (participant)

Thank you. We'll take our next question from Marc Goodman with Leerink Partners. Please go ahead.

Marc Goodman (Senior Research Analyst)

Yeah. I just want to come back to that question about INGREZZA competition and the competitive environment. There seems to be a lot of agita going into the quarter. A lot of investors kind of felt that Teva has been the one growing faster. They're making more noise. Can you give us a sense of what's really going on out there? Do you feel like you're outgunned with respect to the share of voice and the noise on the media? Maybe you could just give us a sense there. I think the prescription trends have really confused people. So anything you could do to help us just think about this? Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah. I mean, obviously, we felt good about the quarter we just reported. As I mentioned before, the VMAT2 market is a growing market. The vast majority of TD patients remain undiagnosed and untreated. Both brands are growing. And as expected, with the rollout of their XR formulation of deuterated tetrabenazine, it's helped the growth of our competitor. However, INGREZZA is and it remains the most prescribed VMAT2 inhibitor with over a million prescriptions written since launch. And with 14 more years of exclusivity ahead, we believe strongly in the growth of the potential of INGREZZA and continue to invest in our franchise commensurate with the opportunity. And I think the testament to that is the recent sales force expansion that we just completed. And as I mentioned in my prepared remarks, specifically in psychiatry and in LTC.

Psychiatry is the area that we didn't touch when we expanded our team back in 2022, and we felt that with the growth of the prescriber base, we were overdue in terms of adding more FTEs there to continue to support that segment. LTC is a relatively newer segment for us, and certainly, it's been fast growing, and we think that the investment there was appropriate, so overall, with continued investment in our team and in DTC and other areas of promotion, we think that this is a sign of the conviction we have in the current and the long-term opportunity with INGREZZA.

Operator (participant)

Thank you. We will take our next question from Myles Minter with William Blair. Please go ahead.

Myles Minter (Biotech Equity Research Analyst)

Hi. Thanks for taking the question. I think just over a week ago, there was some correspondence in the New England Journal of Medicine about crinecerfont from a couple of Spanish docs, and they were kind of calling into question the definition you use for normal thresholds of daily glucocorticoid dosing. Just curious as to your response to that, and if payers, in particular, in your early conversations are asking for surrogate metrics like insulin resistance and percent of total fat mass as sort of confirmatory endpoints that you are getting efficacy in this population. Thanks.

Eiry Roberts (CMO)

Yeah. Thanks, Mark. So first of all, I think we're really happy with the phase 3 data that we have both from an efficacy perspective in terms of the androgen reduction effect of crinecerfont and the ability to reduce steroids in the vast majority of the population treated. And that's the case in both the pediatric and the adult population. Now, in terms of the discussion in the New England Journal of Medicine, I think it's important that there's a discussion around what criteria were used in a clinical trial, etc. But I will remind you, this is the first time a trial of this sort has ever been done. And so we negotiated very closely with the agency to come to the set of definitions that were used, including the definition of what constitutes physiologic levels of GC. And that was important because this is a highly heterogeneous population.

And so I think our bottom line from the crinecerfont data set that we generated is that we really believe that the vast majority of patients living with CAH, whether they be pediatric or adult patients, can gain benefit from treatment of crinecerfont if and when it's approved. And so from that point of view, we feel highly encouraged. And I think it's going to be very important to understand the real-world experience of patients once we start to get out into this chronic condition and once we start to see the long-term benefits that can result from a treatment like crinecerfont.

Operator (participant)

Thank you. We'll take our next question from Jeff Hung with Morgan Stanley. Please go ahead.

Michael Riad (VP)

Hi. This is Michael Riad on for Jeff Hung. Thank you for taking our questions. And Kyle, congrats on the strong start. For the NMDA NR2B program, is it safe to assume that 770 is being developed as an adjunct to background antidepressants? And if so, how are you thinking about evaluating the top line? What would you want to see to gauge the competitive potential, like maybe versus SPRAVATO? Thank you.

Eiry Roberts (CMO)

Yes, in the context of the trial that's being performed right now in phase two, the patient population is those who have inadequate response to currently available antidepressants. That actually could, in due course, be both as an adjunctive treatment or potentially as a standalone monotherapy. One of the key differentiators from this obviously is a mechanism that acts in a similar fashion to ketamine, but being more selective in terms of the mechanism of action, we hope could translate into a favorable benefit risk profile relative to other treatments in this space. One key differentiator is this is an oral mechanism, obviously, compared to some of the other things that are out there right now.

Michael Riad (VP)

Thank you. That's very helpful.

Operator (participant)

Thank you. We'll take our next question from Laura Chico with Wedbush Securities. Please go ahead.

Laura Chico (Managing Director)

Good morning. Thank you very much for taking the question. Just with respect to the 800,000 TD revision there, could you provide additional color in terms of the breakdown of severity or kind of estimates within there? I guess I'm trying to understand how does this impact or change your views on the peak INGREZZA opportunity in tardive dyskinesia? Thank you.

Eric Benevich (Chief Commercial Officer)

Yeah. We don't have any color in terms of severity. Overall, when you look at the literature, the estimate is that about half to two-thirds of patients would be in that moderate to severe category. And the balance being milder TD. So in the medical literature, there's really no standard definition of what constitutes mild, moderate, or severe TD. And so ultimately, the guidance that we give to the HCP community is that not only do they need to look for abnormal movements and differentiate TD from other drug-induced movement disorders, but they really need to look at the patient and have a conversation with the patient and understand to what extent does that impact their quality of life and their functionality. And even milder abnormal movements can significantly negatively impact these patients.

What you see in terms of people that are being treated with INGREZZA today is a mixture of people with more severe and less severe abnormal movements, but certainly significantly negatively impacting their lives. So in terms of the overall population, we feel that the 800,000 number is, like I said, very supportable and frankly, probably on the more conservative end of the range of estimates that are out there. But ultimately, our mission remains unchanged. Less than 20% of people are currently being treated with VMAT2 inhibitors. And we've got a lot of growth opportunity ahead.

Laura Chico (Managing Director)

Thanks very much.

Operator (participant)

Thank you. We'll take our next question from Yatin Suneja with Guggenheim. Please go ahead.

Hi. This is Dalma for Yatin. Congrats on the quarter and thanks for taking our question. So on the 845 in MDD, can you guide us through your strategy for the pivotal program? How many studies are you planning to run? And can we expect to see phase 2 data at any upcoming conference? Thank you.

Eiry Roberts (CMO)

Thanks for that. So in terms of the actual program design for phase 3, obviously, we'll be following the path that's been followed by other antidepressants in registrational development. But we haven't talked specifically about the number of trials or design of the trials. And we'll do that after we have engaged in our end-of-phase 2 interaction with the FDA and are starting those trials next year. And yes, I think as we alluded to in our early comments, we are planning to release the information from our phase 2 program in the latter part of next year.

Thank you.

Operator (participant)

Thank you. We'll take our next question from Uy Ear with Mizuho. Please go ahead.

Uy Ear (VP and Senior Equity Analyst)

Hey, guys. Yeah. Thanks for taking my question. Just going back to the crinecerfont launch bit, you guys indicated that you'll be giving out free drugs, whatnot, before the insurance comes on. Maybe just help us understand a bit about the number of patients that are currently on free drugs at the moment with your safety extension studies. And how do you sort of maybe focus on in terms of uptake? Would you be giving free drugs essentially to everyone that comes on? Or yeah, just want to give maybe a better sense of the demand at the outset. Are you seeing a lot of excitement, demand with respect to this drug? Thanks.

Eiry Roberts (CMO)

I'll answer the piece about the long-term extension first. We do have long-term extension programs going on right now globally in both pediatric and adult patients. And two comments around that. First of all, I think it's enabling us to collect some longer-term real-world information about these patients. And that's important. And secondly, the number of patients remaining in the program remains incredibly high with very, very few dropouts, which I think, again, is indicative of the ongoing tolerability, safety, and excellent uptake with respect to crinecerfont in this program.

Eric Benevich (Chief Commercial Officer)

Yeah. And with regards to the reimbursement dynamics, as I mentioned in my prepared remarks, the majority of these patients in the CAH community are either commercially insured or through Medicaid. And many commercial insurance plans have policies in place that restrict reimbursement for new drugs and/or have new-to-market blocks in place. And so the expectation is that even as we get patients started on therapy, it's going to take some time to work through the reimbursement. And so we are going to have a program in place that allows us to get patients started. And that is really across both commercial and Medicaid. Ultimately, we're confident in our ability to get patients started as indicated by our success with INGREZZA. And we saw similar dynamics early in the INGREZZA launch. But ultimately, we think that crinecerfont offers a significant opportunity here for us to diversify our revenue.

We think that ultimately creates a lot of value for the CAH community. We'll have a lot more to talk about when we get closer to launch in terms of our access strategy.

Uy Ear (VP and Senior Equity Analyst)

Okay. Thank you.

Operator (participant)

Thank you. And we will take our final question from Amy Fadio with Needham & Company. Please go ahead.

Hi. This is Duna on for Amy. Thank you for taking our question. So on NBI-845, how do you see it fitting into the current treatment paradigm? And what are your expectations from the upcoming FDA meeting? Thank you.

Eiry Roberts (CMO)

In terms of the FDA meeting, we will be getting clarity on our phase three strategy. That will enable us to start our phase three program in the first half of next year. In terms of the indication or the area of focus in major depressive disorder, the phase two data that we generated was in the context of inadequate response to currently available treatments. In that setting, we anticipate that this could either be an adjunctive treatment to other antidepressants currently in the field or as a standalone monotherapy. We'll be exploring both as we move forward.

Thank you for your response.

Operator (participant)

Thank you, and there are no further questions at this time. I'll turn the call back to Kyle for closing remarks.

Kyle Gano (CEO)

Thanks, Ashley. So this morning, we've covered a great deal of ground. I'd like to close by reinforcing my opening message. Our exceptional leadership team and our energized organization are really positioning Neurocrine as the leader in neuroscience moving forward. I'm certainly inspired by all the work that's ahead and ever more confident in our potential. Today, we touched on a lot of different things. We talked about a bit on our strategy, our pipeline, and our promising commercial opportunities. If you think about this being my first earnings call, I'm hoping you take away two things from our opening remarks and our Q&A. One is our commitment to discovering, developing, and commercializing innovative medicines. I think you've seen from our discussions that this comes with risks and it requires time and investment.

But I'm hoping that you also see that we're equally committed to delivering near and long-term value for our organization and our shareholders. So with that, I think that we'll close here today by saying that it's a busy year ahead for us all. And we're looking forward to connecting with many of you virtually and in person for those of you that will be attending some of the many healthcare conferences that remain here in the next couple of months. So with that, thanks again for the call. And looking forward to speaking with you soon.

Operator (participant)

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