Neurocrine Biosciences, Inc. Q3 FY2025 earnings call

Management Statement and Operational Highlights

• Commercial Perspective: INGREZZA had record new patient starts and prescriptions, highlighting persistent unmet need for TD and Huntington's chorea. CRENESSITY's strong launch redefined the standard of care for CAH, with early positive response from the community.
• Clinical Portfolio: Phase III studies for osavampator in major depressive disorder and direclidine in schizophrenia on track for enrollment. On track to achieve R&D productivity goals with 4 Phase I and 2 Phase II initiations. Upcoming top line results for valbenazine in Dyskinetic Cerebral Palsy and NBI-'770 in major depressive disorder.
• Sales Force Expansion: Plan to expand INGREZZA and CRENESSITY sales teams. INGREZZA sales force to be restructured and expanded to accelerate TD market development and support future psychiatry portfolio. CRENESSITY sales team expansion to go deeper into community endocrinology practices.
• R&D Day: Upcoming R&D Day in December to provide detail on long-term vision, including neuropsychiatry programs, Muscarinic Agonist portfolio, and next-generation programs.

Segment Performance

• INGREZZA: Net sales of $687 million in Q3, reflecting 28% year-over-year growth. It contributed approximately 87% of the combined net sales of $785 million from INGREZZA and CRENESSITY. The recent investments in expanding the sales force and improving patient access drove record new patient starts and total prescriptions.
• CRENESSITY: Net sales grew sequentially from $53 million in Q2 to $98 million in Q3. It contributed approximately 12% of the combined net sales. The strong launch as a first-in-class therapy for classical congenital adrenal hyperplasia (CAH) showed early positive response from the CAH community.

Guidance

• SG&A expense increase of ~$150 million in 2026 due to sales force expansions for INGREZZA and CRENESSITY.
• Continued focus on revenue growth, advancing R&D programs, enabling business development, and returning capital to shareholders.
• INGREZZA expected to continue strong growth with sticky patient base and market dynamics, leveraging sales force expansion to maximize patient share ahead of IRA impact.

Risks

• DOJ Investigation: Received CID from DOJ regarding sales, marketing, and promotion of INGREZZA; fully cooperating with investigation.
• IRA Impact: Uncertainty around AUSTEDO pricing and its potential effect on INGREZZA's market position, including PBM and health plan strategies.

Question and Answer Q: Congrats on a really strong quarter and great commercial performance. I wanted to just ask about the patient dynamics and patient starts for CRENESSITY. It did seem like enrollment forms were a little bit lower in Q3 than Q2. Was this seasonality or a sign of maybe an early launch bonus?

A: Hi Phil, this is Eric. So Obviously, we're really pretty pleased with the overall adoption of CRENESSITY launch to date and with 540 new treatment forms in Q3. And we saw that as a continuation to the strong adoption that we saw earlier in the year in the first half. We said at the beginning, we expected this to be a steady or measured launch. And so far, it really has borne out that way. The weekly adoption has been really consistent over the course of the summer. We don't think that there's necessarily any kind of quarterly dynamics going on or seasonality. We are still early in the launch, and we'll have to see how things bear out after we've gone through a few cycles. But ultimately, we're really pleased with the enrollment. And with over 1,600 treatment forms through Q3, we're really optimistic and expect to see this accumulation of patients as we go forward.

Q: Let me add my congrats on the quarter. I wanted to ask a question, I guess, about the IRA and I hope you bear with me as it has 2 subparts for this where I got is really only one question. Just can you help us set up how you guys are thinking about the upcoming AUSTEDO price that we'll learn about? And just what are the sort of implications for Neurocrine? And then for INGREZZA, given the increased discounting and now that we're looking at a gross net that's getting up into the mid- to high 30s. Should we think that the worst-case scenario for you has now changed given that the small biotech exemption has the discounting to a level that is actually potentially going to be below where your gross to net ends up?

A: Paul. A lot to unpack there. Maybe I'll start with the first question and see how far we get on that. I think when it comes to AUSTEDO, our view of this is that we'll learn its pricing across both the current immediate release and XR formulations in November. You should hear from CMS late November, if not sooner than that, but that's what we're planning on currently. In terms of our expectations, how it might affect INGREZZA. I think where we stand right now is we're trying to understand what the plans might do in reaction to AUSTEDO's pricing. Our view at this point is both the health plans and the PBMs will use a variety of strategies for medicines that go through the IRA as well as those medicines that are not going through an IRA type of moment. And for us, there are things that we know and don't know. And ultimately, where we stand right now is that INGREZZA is an incredibly sticky medicine. Once patients start INGREZZA, they tend to stay on it, which really means we're looking at -- looking at new patient starts during a 2-year period of '27 to '29 when we reach our own IRA year. So we'll look to contract here over the next, say, 12 to 14 months. As we approach 2027, we'll look to maximize the number of patients that are INGREZZA between now and the end of '26. And that will help us negate any headwinds on NRx's which to date, it's only about 5% of our total TRx. So on a quarterly basis, that number is quite small. We'll look also to see if there's any learnings from those medicines that are negotiated and become implemented next year. And then I think most importantly here, we'll control what we can across INGREZZA, but across the portfolio, we'll look to build the company as strong as we can.