Neurocrine Biosciences, Inc. (NASDAQ:NBIX) Q2 2023 Earnings Call Transcript

Neurocrine Biosciences, Inc. (NASDAQ:NBIX) Q2 2023 Earnings Call Transcript August 1, 2023

Neurocrine Biosciences, Inc. misses on earnings expectations. Reported EPS is $-0.18 EPS, expectations were $0.77.

Operator: Good day, everyone, and welcome to today’s Neurocrine Biosciences Reports Second Quarter Results. [Operator Instructions] It is now my pleasure to turn today’s program over to Todd Tushla, Vice President of Investor Relations.

Todd Tushla: Good morning, and welcome to Neurocrine’s second quarter 2023 earnings call. Today, I’m joined by Kevin Gorman, our Chief Executive Officer; Matt Abernethy, our Chief Financial Officer; Eiry Roberts, our Chief Medical Officer; Eric Benevich, our Chief Commercial Officer; and Kyle Gano, our Chief Business Development and Strategy Officer. During today’s call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After prepared remarks, we will jump into Q&A. With that, I’ll turn the call over to Kevin Gorman.

Kevin Gorman: Thank you, Todd, and good morning, everyone. It’s a pleasure to be here this morning. We’ve had a very strong first half of the year, as you can see from our press release this morning, we are raising our guidance. So what was previously the high end of the range is now the bottom of the range, very strong performance and very proud of our commercial team out there with INGREZZA. We’re now set up for a really exciting second half of the year. We have multiple readouts coming from our pipeline, led by our PDUFA date for INGREZZA and the Chorea associated with Huntington. We have a Focal Onset Seizure and data coming out, Anhedonia – data coming out. And last but not least at all, is the CAH studies, both in the adult and in the pediatric population, and Eiry is going to have a lot more to say about that a little later, and we’ll also be taking your questions on that.

So quite a bit going on here. It’s all been very nice thus far. So I’m really looking for the second half of the year. And right now, I’m going to turn it over to Matt.

Matt Abernethy: Good morning. Neurocrine continues to execute with growing INGREZZA sales, improving profits and an advancing pipeline. During the second quarter, INGREZZA sales were $440 million with year-over-year growth of 26%, driven by record new patients. Our commercial and medical affair teams continue to do an excellent job educating prescribers and developing the TD market, helping many new patients receive treatment. With the solid first half of the year, we are increasing 2023 INGREZZA sales guidance from $1.77 billion to $1.82 billion, reflecting over 25% growth at the midpoint of the range. This compares to our previous INGREZZA sales guidance range of $1.67 billion to $1.77 billion. With growth in sales and reduced operating expenses, our profit profile improved during the quarter to over $120 million of non-GAAP net income.

These profits generated strong cash flow and now have over $1.3 billion of cash on hand, providing plenty of financial flexibility to execute our strategy by allocating capital towards developing the TD market for INGREZZA, advancing our clinical pipeline and expanding our internal research efforts. We believe this strategy will create shareholder value in both the short and long term. I will now hand the call over to Eric Benevich, our Chief Commercial Officer.

Eric Benevich: Thanks, Matt. I’m very pleased with INGREZZA’s sales performance through the first half of the year. Year-over-year sales grew 26%, driven by strong prescription demand across new and existing patients. As previously noted, we anticipate a majority of growth in 2023 to be driven by the psychiatry and neurology business segments where most TD patients receive their care. In long-term care, we are gaining traction and expect to see good growth as we continue to develop that segment. With $850 million of INGREZZA sales in the first half of the year, as Matt said, we felt it prudent to raise the guidance range from $1.67 to $1.77 billion, up to now $1.77 billion to $1.82 billion. The low and high end of the updated range is driven primarily by the pace of new patient starts throughout the second half of the year.

Outside of TD, our commercial and medical teams have been preparing for the anticipated FDA approval and subsequent launch of valbenazine to treat Chorea associated with Huntington disease. Despite the availability of improved treatment options, there remains a significant unmet need across this patient population. While we have not factored in any potential HD Chorea sales into our guidance, we are confident in the efficacy and safety data that we’ve generated with valbenazine in the clinical program, and we look forward to a potential approval in HD Chorea next month. We believe we can make a positive difference for patients suffering from HD Chorea. All in all, we are on track to deliver another year of record results for INGREZZA. Growth numbers like these are especially impressive for our product in its sixth year on the market.

However, the fact remains that a majority of TD patients still have not received the diagnosis or even any explanation for their TD movements. We know we still have a tremendous opportunity to help more TD patients and hopefully, someday soon, HD Chorea patients as well. With that, I’ll turn the call over to Dr. Eiry Roberts, our Chief Medical Officer.

Eiry Roberts: Thank you, Eric, and good morning to everyone on the call. Our clinical programs continue to make steady progress, which will lead to several important milestones and data readouts throughout the rest of this year and in the years to come. Looking specifically to the second half of this year, we will soon be reaching inflection points for a number of mid- to late-stage programs, beginning with the August 20 PDUFA date for valbenazine for the treatment of Chorea associated with Huntington’s disease. Eric highlighted the confidence we have in the strong efficacy and safe and data package generated to support approval. We’ve also had very good engagement with the FDA and look forward to the agency’s feedback regarding the potential approval for an important second indication for valbenazine.

With respect to data readouts, we remain on track to report top line results from 4 studies in the fourth quarter of this year. This includes data from both the pediatric and adult registrational studies of Crinecerfont for the treatment of Congenital Adrenal Hyperplasia. Separately, enrollment is now complete in 2 Phase II studies, both of which remain on track to readout in Q4. This includes NBI-352 for the treatment of focal onset seizure in adults and NBI-846 for the treatment of anhedonia associated with major depressive disorder. Turning now to our muscarinic portfolio. We are making very good progress with enrollment in the Phase II study of NBI-568 for the treatment of schizophrenia. In addition, this year, we’re advancing into Phase I, our second muscarinic molecule, NBI-570, a dual M1 M4 agonist.

These first 2 assets represent just the first wave of muscarinic compounds, we expect to progress into the clinic over time and explore across a number of neuropsychiatric conditions. Overall, I continue to be very pleased with the progress our teams are making with the most broad and diverse pipeline Neurocrine has ever had. And with that, I’ll hand the call back to Kevin. Kevin?

Kevin Gorman: Thank you very much, Eiry. And we’re ready to take questions now.

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Q&A Session

Operator: [Operator Instructions] And we will take our first question from Paul Matteis with Stifel. Your line is open.

Paul Matteis: Hey. Thanks so much for taking the question and congrats on the quarter. Hope you don’t mind if I ask kind of a pipeline BD question. You’ve talked historically about how there’s really not a lot of high-quality neuroscience assets that could kind of fit your budget and make it kind of near to midterm impact on the top line. In the context of that, I guess, how do you think about crinecerfont and what that could do to Neurocrine scope. If crinecerfont works as well as you hoped, could Neurocrine start to go into the direction of either endocrine, rare disease and really not just be in neuroscience for the foreseeable future? Thanks so much.

Kevin Gorman: Thanks for the question, Paul. Good morning. Kyle can add to what I would say is, but we do look in the endocrine space quite a bit. As you know from discussions that you’ve had with Kyle and him speaking at several of your conferences, he and his team look broad and deeply into both neuro endocrine – into neuroendocrinology, neuroscience and also neuropsychiatry. So it is not an area that we’ve ignored at all that we are poised to go into if we see assets that really meet all of our criteria. Kyle, do you want to add to that?

Kyle Gano: Yes. Just to add to Kevin’s remarks, I think what would be interesting is with positive data with crinecerfont, it does open the door to looking at things that are later stage commercial on the endo side, which we haven’t done historically. So we know what those opportunities look like, and we await our crinecerfont data.

Operator: We will take our next question from Tazeen Ahmad with Bank of America. Your line is open.

Tazeen Ahmad: Okay. Hi, guys. Thanks for taking my question. Maybe just for giving us a sense of what to expect for focal onset seizure. The top line data that you expect in 4Q, what should we expect? And what should we really be comparing that to in terms of standard of care to get a sense of whether or not your product could have improvements but currently given…

Eiry Roberts: Tazeen, it’s Eiry here. Thanks for that. I think I got all the questions you were breaking up a little bit. But – so we are very much looking forward to reading out the data from our Phase II proof of concept. It’s a dose-finding proof-of-concept study, initial Phase II in focal onset seizures. Three things we’re predominantly interested in the context of this study. First of all, obviously, the initial tolerability and safety of 352 in this patient population in adults. The second is to understand the pharmacokinetic profile, which will help us with understanding exposure response and position us well for future dose selection in other trials, if we’re successful. And the third is obviously the measures of seizure frequency.

And we will be looking at seizure frequency comparing from baseline to the primary end point. And essentially, we look at the normalized seizure frequency over an 8-week period of monitoring. And so obviously, the absolute change from baseline compared between the treatment and placebo. Also, we’ll be interested in the number of patients achieving a 50% reduction in seizures. And from the small study also looking at whether any patients are able to become seizure-free. Looking at the totality of that information, then obviously, that will give us an indication of the strength of any signal that we’re seeing and that will position us well for future discussions.

Tazeen Ahmad: And is there any kind of minimum amount that you’re looking for in terms of improvement in seizure rate that would determine a go, no go?

Eiry Roberts: And obviously, there have been a fair number of new trials in this area in the recent past that have demonstrated efficacy for new molecules in this space. We’ll be interested in understanding that data. But in reality, we’ll be focused on the context of our own information to understand the next steps.