NBIX - NASDAQ

Good day, everyone, and welcome to today's Neurocrine Biosciences Third Quarter 2025 Results Call. [Operator Instructions] Please note, this call is being recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Vice President of Investor Relations, Todd Tushla.

Hi, everybody, and a very pleasant good afternoon to you wherever you may be. Welcome to Neurocrine Biosciences Third Quarter 2025 Earnings Call. I'm joined today by Kyle Gano, Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; and Sanjay Keswani, Chief Medical Officer. During our call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After prepared remarks and as is our standard practice, we will try to address all your questions. With that, I turn the call over to Kyle.

Thank you, Todd. Good afternoon, everyone. Our third quarter results reflect Neurocrine's exceptional execution and the strength of our enterprise-wide momentum as we continue to deliver across our commercial, clinical and operational objectives. From a commercial perspective, for INGRE

Thank you, Kyle, and good afternoon, everyone. The third quarter was strong across the board for Neurocrine, with $790 million in net product sales, reflecting 28% year-over-year growth. Driven by continued progress both from CRENESSITY and INGRE

Thanks, Matt. Q3 was another banner quarter for our brands. Our commercial and medical teams continued to deliver with a record quarter for both INGRE

Thanks, Eric, and good afternoon to everyone. My prepared remarks for today will be brief as we remain on track for all our clinical programs. We anticipate top line results in the fourth quarter for valbenazine in Dyskinetic Cerebral Palsy as well as for the Phase II proof-of-concept and dose finding study of NBI-'770, that's our NR2B NAM as an adjunctive treatment in major depressor disorder. As a reminder, positive results from NBI-'770 could support a confirmatory Phase II study or the initiation of a Phase III trial in MDD. As Kyle mentioned earlier, the Phase III studies for Osavampator in major depressive disorder and [ direclidineine or NBI-'568 in schizophrenia continue to enroll well, alongside solid progress for the rest of our early to mid-stage pipeline. You've heard us talk about our upcoming R&D day throughout today's call. As my colleagues alluded to, we are excited to welcome the Wall Street community to our San Diego campus where we'll have an opportunity to provide greater detail into our long-term vision, much of which stems from enthusiasm around our clinical and early-stage programs, plans and recent progress. To provide a bit more detail on the agenda, I will provide an overview of our neuropsychiatry programs with a spotlight on Osavampator and our broad Muscarinic Agonist portfolio. Following my presentation, Dr. John Krystal, a leading psychiatrists from Yale University will join me for a moderated Q&A session. Afterwards, Jude Onyia, our Chief Scientific Officer, will discuss Neurocrine's ongoing R&D transformation efforts and preview a few of the next-generation programs expected to enter clinical development. We look forward to seeing many of you there as we unveil the foundation for Neurocrine's next chapter. With that, I will hand the call back to Kyle.

Thanks, Sanjay. I think we're ready to take questions now.

[Operator Instructions] We'll take our first question from Phil Nadeau with TD Cowen.

Congratulations 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? Any insights you can give us on those trends would be helpful as we look to model the next several quarters of CRENESSITY?

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.

Phil, thanks for setting the tone also and asking just one question. So just hygiene purposes, we'll stick to the answering the first question that gets asked.

And we'll go next to Paul Matteis with Stifel.

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 INGRE

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 INGRE

Paul, this is Eric. I just want to chime in and kind of reinforce a couple of points. One is that we do believe that there's room on formularies for MFP adjacent products. We think that PBMs and health plans will behave differently. There's not going to be sort of a uniform approach that they take. And kind of tying in with our prepared remarks, it's really important that we maximize patient share going into '27 and beyond. And currently, that's what we're doing and that's part of the rationale for the sales force expansion for INGRE

And we'll take our next question from Tazeen Ahmad with Bank of America.

Mine is going to be on CRENESSITY. So is it too early to know this, but are payers already looking for a certain level of steroid tapering in order to continue covering therapy? And just in terms of number of days in 3Q versus 4Q, we're heading into holiday season. So how should we be thinking about the potential for seasonal impact for CRENESSITY sales in 4Q?

Thanks for the question, Tazeen. This is Matt. We're not really anticipating seasonality outside of just the pace and cadence of patient visits into the clinician's office. So nothing on the seasonality front. In terms of reimbursement, really has not been a requirement for patients to titrate down steroids to a specific extent. It's really looking at do they have the underlying disease and do they have treatment with hydrocortisone? And if that's the case, reimbursement has been quite smooth. I just give a shout out to the team working on this, advocating on behalf of patients. And I'd say the insurance providers can understand the benefit of this new medicine for these patients.

And we'll go next to Akash Tewari with Jefferies.

This is Steve on for Akash. On INGRE

Yes. No, thank you for the question. So I think the health plans are seeing that part of what Teva is doing is trying to push patients to higher dose strengths of both the BID and the XR formulation of Deutetrabenazine and since that product has a per-milligram pricing structure, higher doses mean more revenue per patient. Health plans are catching on to that. And we have seen examples of health plans that would, for example, cover the BID formulation, but not the XR. So I think that the fact that we've seen this dose creep dynamic and/or patients transitioning to the XR formulation being more expensive to the plan that they've been more willing to engage with us. And I think it partly explains the ability that we've had this year midyear to expand our formulary coverage. The coverage that we have now, we expect to carry through 2026. And so in terms of expectation setting for next year, we should expect at least the same level of formulary coverage that we have now.

But in most instances, we're seeing -- we're at parity from a formulary perspective. And that's always been our goal is to take an approach to give clinicians a choice as to what medicine they prefer. And that's going to be our strategy also going forward.

We'll go next to Mohit Bansal with Wells Fargo.

Great. And would love to touch upon the 10-Q filing and the talks about DOJ investigation. Any color you can provide on that? And how should we think about the next time line from this one?

Hi, Mohit. This is Kyle. I appreciate the question here on this. In August, we received a CID, a Civil Investigative Demand from the DOJ requesting certain documents and information attached to sales, marketing and promotion of INGRE

We'll go next to Cory Kasimov with Evercore.

Mine is on CRENESSITY. I guess I'm wondering if you can speak to where you are with getting CRENESSITY up and running at this point at the centers of excellence and then the progress that's also being made in the community setting where doc see fewer patients. Are you more or less at every COE at this point? And do you see that opportunity on the community level?

Yes. And just to recap, we estimate there's around 20 centers of excellence out there that care for roughly 15% of the classic CAH patient community. Yes. I mean, all the COEs have now started adopting though, I would say, a different pace. And I think that reflects the sort of the different ways that they work, the level of bureaucracy, the level of access, et cetera. But for the most part, our view is that the rate of adoption that we're seeing in the COEs is mostly a function of the rate at which patients are flowing through. We've also been surprised -- very pleasantly surprised, I think, by the rate of adoption with community endocrinologists that treat the adults. Most of these practices, as you rightly call out, only have 1 or 2 patients. And so that's where you get into a much wider pool of HCPs to reach. And kind of tying back to our prepared comments as part of the rationale for expanding our field sales team to go a little bit deeper into our call universe and to be able to reach some of these practices that we haven't yet tapped into.

We'll go next to Anupam Rama with JPMorgan.

Congrats on the quarter. Could you provide a little bit more color and maybe some quantification around the sales force expansion for both products in terms of the segments that are going to be targeted here for INGRE

Yes. So in terms of scale, I would characterize it as about a 30% increase in terms of our overall sales footprint across both products. Obviously, INGRE

This is really a reflection of our belief in the TD market, an opportunity that we have ahead. Eric's track record here, this is probably our fourth expansion. Every time we've done it, we've seen a tremendous response and the team has done a great job driving more patients onto therapy. So I would look at this investment as clearly being to accelerate the market development and to maximize the number of patients on therapy, and we feel fortunate to have 2 great medicines to do this with.

And we'll go next to Jay Olson with Oppenheimer.

Congrats on the quarter. We have a pipeline question related to direclidine. As you look at potential indications beyond schizophrenia and bipolar, are you considering Alzheimer's psychosis? And are there any particular lessons you expect to learn from the Cobenfy Phase III study in Alzheimer's when that study reads out and any potential read across to direclidine?

Yes. Thank you so much for the question. So as you mentioned, with 568 or direclidine, we're targeting our Phase III program, schizophrenia. We have initiated a Phase II bipolar mania study, that's this year. We're also very interested in Alzheimer's disease psychosis. We do have a pretty robust muscarinic portfolio, and indeed, we'll unveil that at R&D Day in December. But we have a lot of options in terms of which molecule we use, M1 preferring, M4 preferring, dual agonist for various indications. So at the moment, we're thinking about AD psychosis for one of our follow-on molecules, which has particular advantages with respect to safety considerations in the elderly. Yes, we'll be watching BMS' Cobenfy data very closely. Our understanding is that their ADEPT Phase III study will be reading out relatively soon. They're going to be lessons learned, I think, for the whole field.

We'll go next to David Amsellem with Piper Sandler.

So I wanted to come back to the sales force expansion for INGRE

So on the margin expansion, we've made tremendous progress over the last 5 years being in the low 50% range all the way down to this year, we should be in the low 40% range. And growing revenue to almost $800 million this quarter is just a testament to the investments as well as the markets that we're playing in. So when will we be 100% rightsized? We always invest as much as we can to pull as much revenue forward in any of these situations, and we're learning a lot as we go with the TD market. But overall, from a margin expansion perspective, we look into the last part of this decade as being in a place where we'll continue to drive leverage, albeit maybe not as much as what had been anticipated in '26, but it's really with an eye to maximize the number of patients on therapy heading into the '27 to '29 window.

Maybe I'll just add there to that. I think we touched on this already, but the INGRE

We'll go next to Brian Skorney with Baird.

This is Luke on for Brian. On the upcoming 770 readout, can you talk about your expectations for the data? And what type of result in your view would support a confirmatory Phase II as compared to moving right into pivotal?

Yes. So we are expecting the results of the Phase II study for 770, that's an NR2B NAM, this quarter. Just a context, the Phase II is a relatively small signal finding study, so 72 patients total, with 3 active arms as well as placebo. So I think the likelihood is that we would go into confirmatory Phase IIb if the results we see are encouraging. But we won't discount going to Phase III at this moment. In terms of, frankly, what we'd like to see, we would like to see esketamine-like efficacy, not too dissimilar from SPRAVATO, but without the baggage of some of the associated side effects, which mandate a 2-hour in-house observation period post dose. But I guess we'll see what we see later this quarter.

We'll go next to Brian Abrams with RBC Capital Markets.

Congrats on the quarter. I was wondering if you could talk a little bit more about CRENESSITY persistence, just now that you're several quarters in. Can you be any more specific on in terms of what you're seeing there? And then just the overall KOL feedback around patients who started on the drug early in the launch and the glucocorticoid equilibration at this point now that patients have been on drug for many months.

Yes. I mean the way that I would characterize it is that CRENESSITY's persistence and compliance has been really strong. And certainly, we were hopeful going into the launch that we would see this kind of overall adherence to medication based on our experience in the double-blind studies and the open-label extensions. But the vast majority of people that are starting treatment are -- in the earlier parts of the year are still on treatment. In terms of the feedback on the reduction of GCs, obviously, you all have done your doc calls, you're probably hearing the same kind of thing that we're hearing. Patients are on treatment for a period of time. Doctors want to see how they can reduce the androgens and then they start the process of tapering down the GCs and it varies a little bit from provider to provider and also, I think, is dependent on the particular situation of the patient. But overall, we're seeing really good feedback in terms of both disease control with the androgen reductions and also the opportunity to really bring down those GCs to more physiologic or near physiologic levels.

We'll go next to Marc Goodman with Leerink Partners.

Yes. Matt, at the beginning of the year, you were pretty conservative with respect to the CRENESSITY launch. I think your main issue, if I remember, was just reimbursement concerns and how quickly that would be adopted. Obviously, that's been adopted way better than anybody could have expected, I suppose. So how do we think about gross to nets now? I mean they clearly have come down a lot, just working through the numbers. Are we continuing to move lower quite a bit outside of maybe the first quarter next year just because first quarter is unusual? But if you think about the next 3, 4 quarters, are they just going to continue to come down and ramp down to more normalized levels for what we consider an orphan product like this?

Marc, that's quite fair. In terms of a guide for gross to net, I would just characterize it as being less than a 20% gross to net discount and that's something that -- in the foreseeable future, that's something we would be anticipating. Part of the gross to net dynamics has to do with the nature of the patients. They're primarily commercial, but we also have a base of Medicaid patients, so you pay the statutory rebate. But overall, the rate of reimbursement, as you mentioned, it's above 80%. As Eric said, 9 out of 10 patients have ultimately ended up with an adjudicated claim. So I feel quite strong with where we're at and reaching a pretty darn good level in terms of how we think about the future.

We'll go next to Sean Laaman with Morgan Stanley.

Maybe just circling back on INGRE

Yes. Neurology represents about 15% of our total volume. Obviously, all of the business segments, neurology, psychiatry and LTC have been growing like gangbusters this year, in particular. But on a relative basis, it's now the smallest segment that we have. And we view it as important, but it doesn't have the same kind of patient potential that we see in psychiatry. As I said in my prepared remarks, the fastest-growing segment is really advanced practice providers that are in behavioral health. And so this reorganization and kind of combining our teams across psychiatry and neurology sort of puts our resources where we see the highest growth potential. And behaviorally, the psychiatry segment and the neurology segment are more similar to each other than LTC. And so we're keeping LTC separate, expanding that team. We're combining our psych and neurology teams and then expanding that team. And ultimately, we want to make sure that we can keep up with the pace of this market that's very fast growing and continue to drive new patient starts. This is an investment in growth, as we said, and we really like the trajectory that we're on now.

Maybe just to add to that real quickly on the neuro piece. Just keep in mind, a lot of interest has come from the side of the chorea side of the indication opportunity with INGRE

We'll go next to Yigal Nochomovitz with Citi.

I had one on capital management. You mentioned, obviously, the increase in SG&A of about $150 million to expand both sales forces. So with that in mind, I'm just curious how are you thinking about the continuation of the buyback at the pace of that buyback related to the new $500 million buyback allocation?

Yes. So we have $2.1 billion in cash right now, no debt. We're profitable. Where we're putting the capital right now is prioritizing top line growth as well as investing in R&D at 35% is what our target range is. We, of course, have flexibility to do share buyback. But I would say that our bias is to utilize our capital to -- for business development activities. But right now, focused on driving our own internal initiatives.

We'll go next to Corinne Johnson with Goldman Sachs.

Maybe a question for us. Can you talk about where you stand with respect to share of kind of new to category or new to class patients with INGRE

Yes. As Matt mentioned, the new patient starts or NRx in any given week or month are single-digit percent of total TRx. But they're critically important because of the persistency and compliance that these patients have on INGRE

We'll go next to Ash Verma with UBS.

I'm just trying to understand the medium-term growth outlook for INGRE

Yes. I guess the way that I would characterize that is that this year, the VMAT2 market is experiencing double-digit growth. And our brand is growing faster than the market. So we're really pleased with the growth trajectory that we're on. In fact, as we mentioned earlier, for Q3, that was -- that represented 12% year-over-year growth. So the goal is to continue and carry that forward into 2026 and beyond, and to maximize our patient share. We'll be able to give more color as we get closer to our Q4 earnings call and talk about the projections for 2026. But at this point, it looks like we'll be able to see a continuing strong, robust growing market for VMAT2s and INGRE

We'll go next to Ami Fadia with Needham.

It's on NBI-'770. Given that this study is not necessarily powered for statistical significance, just on an absolute basis, what is the level of change in the primary endpoint that you're looking to see as you think about some of the other drugs, such as SPRAVATO or rather psychedelics in the space? And eventually, are you thinking of studying this in TRD or MDD? Just sort of current thoughts.

Yes, really good question. So yes, it's a relatively small study. So I'm hesitant to give an effect size that, frankly, we would be considered as successful versus not because I think there's a huge amount of unmet need in this population. As you mentioned, there are potentially 2 populations that we could target with 770. And one is adjunctive treatment in MDD, which is currently where the program is headed. But we clearly could go down the SPRAVATO route with respect to TRD as well with this mechanism. So we have a couple of options. We will decide that, I think, based on the data that we'll receive later this quarter.

We'll go next to Sumant Kulkarni with Canaccord.

As the Inflation Reduction Act kicks in for your competitor, could you comment on where you might see the most impact on INGRE

Yes, let me take the second part of your question here. We'd love to have the challenge of having 3 products into psychiatry and long-term care at the same time. Obviously, we're really excited about the late-stage pipeline with both direclidine and osavampator in Phase III trials. And as Kyle said in his prepared remarks, data and potential launches later in the latter half of this decade. This expansion that we're in the midst of now, I think sets us up well for being able to move and launch with either of those 2 products or potentially both. So I would say that it's not sufficient, meaning, for example, if we end up having the opportunity to launch osavampator, we won't have the coverage of the primary care -- future primary care prescribers that we would need to reach. So this gets us partly the way there, but not fully. And so I do think it reduces the amount of changes that we would have to make to prepare for either of those 2 launches down the road.

In terms of impact from the IRA and the negotiation, our view is that patients are -- existing patients are ultimately going to stay on therapy during this window of time. So you're thinking about a 2-year window when you're dealing with new patients and where do they go. So a lot of what we're doing right now is to maximize the number of patients on therapy between now and 2027. And we're going to control every single thing that we can to maximize that number, and we think we'll be successful during that window of time. But we will learn more in terms of what the MFP is for AUSTEDO as well as payer behavior over the coming months. But for what we can control, we're doing everything we can possible. We have a great market with a great medicine here.

And we'll go next to Yatin Suneja with Guggenheim.

One clarification, the 14-week dynamic or one extra week dynamic, that is just specific to INGRE

Yes. CRENESSITY inventory build was about $7 million for the quarter. And then as it relates to the 14 week, that does pertain to INGRE

And we'll go next to Myles Minter with William Blair.

This one is just on CRENESSITY new starts. I think in the second quarter, you had 664. You got 540 this quarter. So some sort of warehousing effect that's bleeding out of those patients. Can we expect that sort of trajectory for the next quarter and maybe a return to growth when you get that sales force expansion hitting into the new year?

Yes. The way I would characterize the adoption in Q3 was that very consistent and steady. We said this would be a measured launch. And so far, it has played out that way. Although the overall rate of adoption, I think, since day 1 has been a little bit quicker than what we anticipated prior to the launch. We were helped out a little bit in Q2 by the wind down of the adult open-label study. And so there were some patients that transitioned towards the end of Q2 to commercial drug that bumped up numbers a little bit. But overall, I'd say that the rate of weekly enrollments has been pretty consistent across both Q2 and Q3.

Maybe I'll just add here quickly. The launch continues to exceed our expectations, and that's across the board, enrollment forms, persistence, compliance and that's played out here ultimately. As time moves along, the combination of the steady adoption of CRENESSITY as well as the persistency is going to stack volume over time and gives us all the confidence that we have a need for this to be our next blockbuster here.

We'll go next to Danielle Brill with Truist.

This is Alex on for Danielle. Another one on CRENESSITY. Just curious if you're seeing any new -- any shift in the new prescription breakdown between pediatrics and adult? And additionally, any trends in the usage of the free drug program?

No major shifts from the demographic perspective. It still is skewing towards younger patients and primarily towards female patients. That pattern kind of kicked in after about a quarter or so on the market, and it's been pretty steady ever since. And then what was the second half of your question, I'm sorry?

Just on...

That was on the drug part?

Yes.

Yes. It's actually continues to be less than what we had anticipated it would be. The idea being that if insurance hadn't approved the claim after about a week, that we would be able to offer a month supply of CRENESSITY to get someone started pretty quickly. And as I mentioned earlier, 9 out of 10 patients that are on CRENESSITY have gotten their prescription approved through their insurance. And so not that many people end up on the free drug program, to be honest with you.

We'll go next to Laura Chico with Wedbush Securities.

One of the pipeline with respect to valbenazine and dyskinetic cerebral palsy. The data coming up here. Can you talk a little bit more about what will constitute a meaningful change in chorea score in a CP population? But also, I guess, against the backdrop of the INGRE

Yes, I'll do the first question really quickly, and I'll hand on for the second. So this population of dyskinetic cerebral palsy doesn't have a priori-validated scale. So essentially, we're borrowing from the UHDRS, Huntington's scale. That's a total maximum chorea scale. Our assumption is that typically a significant effect in that would be meaningful enough. Clearly, we'll be seeing the totality of the data later this quarter.

And maybe -- this is Kyle. Just to add to next steps on this. We would take a data set if it was robust to the agency and ensure that there's a path forward for an NDA submission. And with the current size and composition of the sales force, we would be covered there in case that was an sNDA.

This is Eric. The last thing, I'll chime in here. The DCP population is larger than the Huntington's chorea population, but still substantially smaller than the TD population. And the expanded sales team, if this turned into an indication down the road, would be able to cover all the potential prescribers.

We'll go next to David Hoang with Deutsche Bank.

So again, congrats on a strong quarter. I saw you have reiterated but not raised guidance. So I guess you mentioned the extra week in Q3 for ordering, but we think about the -- what the Q4 number may look like, I think the guide implies something to like down mid-single digits to flattish. Anything else to think about in there in terms of maybe whether you envision seasonal dynamics or perhaps there's some degree of embedded conservatism?

Yes. If you back out the 14th week, I think it gets you into a place to grow off of. And then sequentially, what you've seen over the last handful of years is the fourth quarter typically will have a range of $15 million to $20 million of sequential growth. So my recommendation, David, is to normalize Q3 to a 13-week and then think about that type of a growth trajectory. Price should be pretty consistent. It was down 6% to 7% year-over-year in the third quarter. That should be something that you would experience in Q4 as well. So nothing abnormal on the pricing side.

And our final question comes from Evan Seigerman with BMO Capital Markets.

In your 10-Q filed today, there was a disclosure about the Make America Healthy Again commission issuing warning letters regarding DTC advertisements. You indicated that you got one for INGRE

Yes, I'll take this question. This is Kyle. I think many of us in the industry received a similar letter with similar types of contents in there. I think what a good view to have on this as a pharma member is we're committed to conducting responsible advertising for us. It is an important part of our business. We think it's a good opportunity for us to reach patients and also educate out there. We'll continue to look at that as an opportunity. But rest assured, we continue to do this in a responsible way, and we'll look to continue doing that moving forward.

And this does conclude today's question-and-answer session. I will now turn the call over to Kyle Gano for any additional or closing remarks.

Thank you, and thanks, everyone, for the good discussion and call this afternoon. Looking ahead, we are confident in the company's direction and momentum. We hope you can see here today that we're executing with clarity and discipline.,, Expanding 2 commercial franchises in INGRE