Good day, everyone, and welcome to the Neurocrine Biosciences Reports First Quarter Results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Please note this call may be recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the call over to Todd Tushla, Vice President of Investor Relations. Please go ahead.

Thank you, operator, and good morning, everyone. Welcome to Neurocrine's first quarter 2023 earnings call. This morning, 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. I’ll remind everyone that 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 our prepared remarks, we will once again do our best to address all of your questions. And now, I'll hand the call over to Kevin Gorman.

Thank you, Todd, and good morning. Well, INGREZZA has had yet another very good quarter of sales. And I say this from a dollar perspective, but more importantly, the fundamentals of bringing INGREZZA to patients are even stronger with more new prescriptions than ever. Remarkably, this occurred in Q1, typically our toughest quarter because of insurance reauthorizations. As you know, we call it a tale of two quarters. The first several weeks are spent working through the reauthorization process, followed by a singular focus on patient diagnosis and treatment. What I also find impressive for Q1 is that persistence and adherence remain strong as ever. Patients and prescribers recognize the impact that INGREZZA has on patients with tardive dyskinesia and on their lives. So we're entering Q2 with momentum, and with fundamentals like this in Q1, it bodes very well for a strong year ahead. Now Matt will make some cautionary statements for Q2, but are very valid. But take those in the context that 2023 is setting up to be quite strong. One of the aspects in Neurocrine that I am most proud of is our ability to make difficult decisions with the ultimate goal of utilizing our resources wisely to bring as many life-changing medicines to patients as we can. This requires making tough fiscal decisions to deploy our cash and our talent to grow our business. To that end, we announced this morning that we will be returning the commercialization rights of ONGENTYS to BIAL. Make no mistake, ONGENTYS is a very good drug as evidenced by the positive feedback we have received over the past two plus years. Unfortunately, from the time we licensed this medicine to its launch in 2020, the Parkinson's adjunctive therapeutic category went through fundamental changes that pose significant commercial challenges. Despite our best efforts, we have been unable to surmount those challenges. We are not the only company experiencing these challenges in this therapeutic category. Going forward, both our and BIAL’s primary focus is to ensure new and existing patients do not experience any interruption in receiving ONGENTYS as we transfer commercial activities. Now finally, as Eiry will discuss on this call, we continue to make very good progress on our clinical portfolio and are on track for a number of Phase 2 and Phase 3 readouts later this year and the August PDUFA date of valbenazine for the treatment of chorea in Huntington's disease. As you know, enrollment was impacted in a number of our programs by several macro factors, but the teams have worked diligently and have kept all these programs on time, on budget while retaining the highest level of quality. So with that, I will turn the call over to Matt.

Thank you, Kevin. Good morning. INGREZZA performance in Q1 was strong with record sales coming in at $410 million. The team did an excellent job navigating seasonal payer dynamics and driving new patient starts, setting us up for a great year. We did see a small benefit from the timing of customer orders at the end of Q1, which drove a several-day increase in channel inventory. We expect this to net out during the second quarter. Timing of customer orders can lead to lumpiness in quarterly sales, and we expect this to be a headwind in Q2. However, underlying demand from both new and existing patients appears very strong so far this year. Given we're only one quarter into 2023, we are reiterating our sales guidance and will reevaluate after the second quarter. Needless to say, INGREZZA is set up for a great year. On the financials, we are maintaining our SG&A and R&D expense guidance, with the exception of IPR&D for the Voyager collaboration. Similar to prior years, SG&A experienced an increase in spending for Q1, and we expect it to step down for the remainder of the year. With that, I look forward to your questions, and now I'll hand the call over to Eric.

Thanks, Matt. Q1 2023 was another good quarter for us, and as Kevin said, the fundamentals were strong. As usual, we spent a good portion of the quarter managing through seasonal payer dynamics. Despite these challenges, we achieved 36% year-over-year sales growth with a record number of new patient starts and continued strong compliance to treatment. We estimate around a third of patients have now been diagnosed with tardive dyskinesia. However, the fact remains that only about half the time are diagnosed patients even offered treatment with the VMAT2 Inhibitor, the American Psychiatric Association's recommended first-line standard of care. Therefore, our ongoing educational efforts continue to focus on recognition and diagnosis of TD and encouraging treatment of appropriate patients with INGREZZA. We feel very good about our Q1 performance and carry our growth momentum into Q2 while reiterating our guidance for 2023. For several years now, our Q1 earnings call coincidentally occurs in the first week of May, which is designated as tardive dyskinesia awareness week. Additionally, May is also designated as mental health awareness month. Looking back, while we are proud of the progress we've made with INGREZZA over the last six years since launch, we still strive to improve the diagnosis and treatment rates for TD, and we will continue to do so over the next decade or more. With that, I'll turn the call over to my colleague Dr. Eiry Roberts, our Chief Medical Officer.

Thank you, Eric, and good morning to everyone on the call. I'm pleased to report that the entire clinical portfolio made steady progress throughout the first quarter. Looking ahead, we remain firmly on track to report top-line results for both the adult and pediatric registrational studies of Crinecerfont for the treatment of congenital adrenal hyperplasia, as well as the two Phase II proof-of-concept studies, specifically NBI-352 in adult focal onset epilepsy and NBI-846 for the treatment of anhedonia associated with major depressive disorder. All four of these data readouts will occur in Q4 2023. Furthermore, we are looking forward to the August 20 PDUFA date for valbenazine as a potential treatment option for patients with chorea associated with Huntington's disease. We are ready and eager to engage further with the Huntington's disease community in service to patients living with HD chorea in the event of successful approval. In discussions with several investors, I know there is significant interest in the progress of our portfolio of muscarinic agonists with potential to address a broad range of neuropsychiatric and neurological disorders. I'm pleased to report that our first molecule, NBI-568, currently under evaluation in a Phase II dose-finding study in schizophrenia, continues to make excellent progress with enrollment. In addition to NBI-568, we plan to take NBI-570, a dual M1/M4 agonist, into Phase I clinical development this year, potentially followed by other differentially selective M1/M4 agonists over time. Overall, I'm very pleased with our teams' performance in executing our portfolio goals thus far, and I look forward to sharing further updates with you as the year progresses. At this point, I'll turn things back to Kevin.

Thank you, Eiry, and we are now ready for your questions.

We'll take our first question from Phil Nadeau with Cowen & Company. Please go ahead. Your line is open.

Good morning. Congratulations on the progress and thanks for taking our questions. Two related commercial questions from us. In terms of the INGREZZA number, it does seem like you saw the seasonality problem with growth quarter-over-quarter in Q1. Can you talk a bit more about what you've done to ensure that Q1 isn't the down quarter that it had been in the past? And second, Matt, on your stocking issue, I think you said a few days of inventory increased, by our math that perhaps translates into about $20 million of stocking in the quarter. Is that a reasonable estimate? Thanks.

No, it's much less than $20 million. I'd just say it's around $10 million or so is what the inventory build was. As it relates to the quarter, it was a really strong quarter with over $100 million of year-over-year growth. We did, of course, benefit from a touch of inventory, but record numbers of new patients ensured patients stayed on medication and had really good persistency. We felt good about how the quarter shook out. Eric can talk a bit about what we've done to ensure that we kept patients on medicine through Q1 and through the reauthorization process. But I'd say last year was the first year that you saw sequential growth for the brand from Q4 to Q1, and we've seen something very similar this year from Q4 to Q1.

Yeah, Phil. I would just say that as we have gone through the first few years of the launch with INGREZZA, we've attempted to learn every Q1. We focus on what works and how we can improve. Ultimately, it involves a lot of teamwork on the part of our field teams to identify practices where we can provide the most assistance, where there are more patients that are likely to require annual reauthorization for the refills. Each year, even though the base of patients gets bigger, the number of people that could potentially experience treatment interruptions grows. We get a little bit better from an execution standpoint, and that's really what's driving our success this year and frankly last year.

Perfect. Thank you.

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

Thanks for taking my question. I just wanted to follow up on the current status of neurologists coming back in person. I know that during the height of COVID, that was a big challenge, and you guys found ways to navigate around that. But is it still the case that a lot of patients are being seen virtually, or is that something that's changed as the pandemic has subsided? And then I have a follow-up. Thanks.

Hi, Tazeen. Neurology and psychiatry are quite different in that regard. Obviously, during the pandemic, all physician specialties went to a high degree of virtual patient care. But today, we estimate it's less than 10% of patient visits in neurology are virtual. So it's gone back pretty close to pre-pandemic levels. The feedback we hear from neurologists is that they rely on a physical exam to a great extent, and you can't do that remotely. So there's a large difference between what we see in neurology and what we see in psychiatry, where there's still a high degree of telemedicine utilization.

Okay. So what would be your split right now in prescriptions coming from neurologists versus psychiatric physicians? Because I know the psychiatric segment is more established.

Yeah. We still estimate it's in the range of about an 80-20 split, though it obviously changes a little bit from quarter to quarter.

Okay. Thank you.

We'll take our next question from Paul Matteis with Stifel. Please go ahead.

Hey. Thanks so much. Appreciate you taking the questions. I wanted to ask a question about the Crinecerfont studies. I know you've been reluctant to set the bar on steroid sparing, but I wanted to talk more broadly about secondary endpoints in the trial and side effects related to steroid sparing. What secondary endpoints or what steroid-related clinical consequences in these studies or in the open-label extension do you think you have the best shot at showing a benefit on, both from regulatory and commercial reimbursement perspectives? Thank you.

On that question, just to remind everyone, we have two Phase III studies that will read out in the fourth quarter of this year. The pediatric and adult Phase III studies in Crinecerfont will measure a set of endpoints that are important in understanding the overall benefit-risk profile of Crinecerfont. First and foremost, we're obviously interested in the ability of Crinecerfont to control androgens. We have already demonstrated good efficacy in our Phase II program around androgen control. The second aspect is the ability to reduce steroid doses in a controlled way for patients. The third includes a broad range of clinical outcome measures that will be measured in the randomized part of the trial as well as the extensive open-label data set that we will have at the time of submission, if successful. Across those endpoints, if we think about the most impactful outcomes for Crinecerfont patients in terms of clinical benefits, we are very interested in metabolic endpoints and bone-related endpoints. In the pediatric setting, we will also examine growth and other developmental milestones for those patients. We will be looking at the totality of that data to understand the potential benefit-risk of Crinecerfont. So I think that’s what I would say at this point.

We will take our next question from Josh Schimmer with Evercore. Please go ahead.

Thanks very much. Just a couple of quick ones. What was the INGREZZA script number for the quarter? And then Matt, I think in the first quarter, the vast majority of biopharma products saw inventory drawdowns. What do you think led to an inventory build for INGREZZA? Thank you.

Josh, I would say on the inventory front, it really just came down to the timing of an order at the end of the quarter. It was an intentional stocking by our channel. We don't operate the channel with a big bolus of buying in Q4 that leads to simply down in Q1. It was just related to the timing of orders at the end of the quarter. And a reminder on the first part of the question? Yeah. So we’ve reached a scale where we're not going to be providing TRx publicly anymore. Instead, we will provide commentary around net sales, how we’re doing on interactions, and commentary around what our net price is doing. There is, of course, third-party syndicated data available, which is directionally correct but doesn't capture the full data set we see internally for INGREZZA. At this time, since it's the beginning of the year and given the shifts in our distribution model, we feel it's prudent to no longer provide TRx publicly.

We will take our next question from Neena Bitritto-Garg with Citi. Please go ahead.

Hey, guys. Thanks for taking my questions. So just on that point, just on net price. I was wondering if you could comment on the net price per script that you saw for INGREZZA in Q1 and whether you still anticipate about $5,600 per script on average for the full year. Additionally, I’m wondering about where the strength and growth in new starts is primarily coming from, and whether you think that's coming from some of the efforts last year to expand the sales force and target different physician segments. Thanks.

I'll take the first part of that question, and then Eric will take the second part. As it relates to net revenue per TRx, we still expect it to be around $5,600 per script this year on average. We did see a slight seasonal headwind, as you would expect, in our gross to net in Q1, around 2%. I'm not going to give the exact net revenue per script for Q1, but will discuss it more in terms of what we expect for the full year. Overall, we anticipate a net price increase for the year of around 2% to 3%.

Hi, Neena. This may not be a super satisfying answer, but we're seeing growth coming from everywhere. Post the expansion and reorganization of our field teams last year, we now have dedicated sales forces in psychiatry, neurology, and long-term care. All three of these segments are growing nicely, as evidenced by our Q1 results and especially the record number of new patient starts we saw this quarter. Regarding the second part of your question about whether our sales force expansion is driving growth, we believe the expansion is already paying dividends.

Got it. Thank you.

We'll move next with Chris Shibutani with Goldman Sachs. Please go ahead.

Thank you very much. With the announcement of the strategic decision on ONGENTYS, I expect that you've also conducted broader portfolio reviews as you think about the balance of the decade. Can you comment about the international plans, particularly for Crinecerfont? You did the deal in the UK in 2022. Please remind us of the regulatory status there? Also, across the biopharma landscape this morning, we have another positive data point on the Alzheimer's front. I believe that neurology within that scope, Alzheimer's has not necessarily been a focus. Does this change your perspective regarding potential commercial opportunities in that realm?

Thanks, Chris. With respect to internationalizing INGREZZA, you're absolutely right. Regarding Crinecerfont, the purchase of Diurnal was a way of setting us up for an entry into Europe initially, assuming we have good data and an approval. We have built an infrastructure there and have a strong on-the-ground presence. We perform many clinical trials over in the UK and Europe. We are leveraging the Diurnal team effectively as they have MSLs in addition to clinical research associates. This is turning out well for us. Commercially, it will be much easier to build into that market. The EU would follow the FDA’s strategy to file, with the U.S. being the first filing for Crinecerfont. In terms of a broader portfolio, Neurocrine has had an exquisite focus on orally active small molecules, especially since many of them need to cross the blood-brain barrier for neuropsychiatric and neurological diseases. However, we are increasingly entering the realm of large molecules and biologics. You'll see us step into antibodies and gene therapies now to broaden our reach and achieve actual disease-modifying and curative therapies within the neuroendocrine and neurological diseases. Psychiatrically, we will continue with orally active small molecules, and have the right targets for specific diseases using the most effective therapeutic modalities.

Great. Thanks for the perspectives.

And we will take our next question from Brian Abrahams with RBC Capital Markets. Please go ahead.

Thanks so much. Congrats on all the progress and thanks for taking my question. With regard to Crinecerfont, our market research suggests that patients are excited about a new treatment option, but some may be hesitant to disrupt their current steroid use. How do you plan to address this? Is it just a matter of having robust data? Are there specific populations you might target initially or educational campaigns you envision? How might this impact uptake curves for this drug? Additionally, does the $10 million mention you made refer to both inventory and shipment timing impact, or is it just inventory?

We believe there is significant unmet need for patients living with congenital adrenal hyperplasia, and if we're successful with our Phase II program for Crinecerfont, we can address that unmet need. The reason you hear ambivalence regarding the willingness to switch from steroid is that these patients have had nothing but steroids. There have been no new approved medications for over 50 years in this space, and so people have settled for less than optimal care. To your point, demonstrating a broad range of robust data supporting the benefit-risk of Crinecerfont will allow us to address that unmet need, and that will require significant education similar to what we did with INGREZZA and TD.

And I'll add that it’s early days yet. We haven't completed our administrational trials. We haven’t really started our formal efforts to reach and educate the various patient and care partner communities within CAH. Crinecerfont represents a meaningful paradigm shift. We plan to educate on the value of treatment with Crinecerfont and what that means for patients and what they can expect. You noted our success in TD, and you could say we can apply those learnings to the opportunity in CAH.

So, Brian, from a revenue recognition perspective, we recognize revenue once the bottles are shipped and delivered to the distributor. So what I would say about your question: Yes, it involved shipments, which were delivered and had to do with the timing of when those specialty distributors placed their orders at the end of the quarter. It was simply a matter of timing and higher than what would normally be held at that distributor.

Thanks so much, everyone.

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

Hey, guys. Thanks for taking the question. I want to dig a bit deeper into long-term care facilities. I know you've touted this as an area of growth for INGREZZA and made brief comments earlier in the call. What trends are you seeing in this segment specifically?

We're a few quarters in, but it's still early days yet. Long-term care is a brand new segment for us, which we originally considered at the beginning of the launch. While we knew we didn't have the capacity to take it on at that time, we made a commitment last year and built a dedicated team to support long-term care. We're pleased with the progress we've seen so far, and I look forward to providing more details as we move forward.

We will take our next question from Carter Gould with Barclays. Please go ahead.

Great. Good morning. Thanks for taking the questions. Eiry, with 352, I don't believe you guys have disclosed the doses you're evaluating in the FOS study. Can you clarify that? And more broadly, how are you thinking about target exposure with steady state and trough levels? Any thoughts on the Phase I TMS data's informative potential on that front? Thank you.

The 352 study is a dose-finding study. It's a four-arm parallel randomized study with three different dose levels in that case. The endpoint at 12 weeks focuses on understanding seizure frequency and reduction from baseline for individual patients. The doses chosen were based on our Phase I and preclinical data involving various epilepsy models. We are confident about covering the target dose range and conducting a well-controlled signal-seeking study regarding efficacy and benefit-risk for 352.

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

Hi. Thanks for taking the questions. Regarding the decision to stop providing updates on the prescription growth rate for INGREZZA moving forward, could you comment on the accuracy of the scripts visible through our IMS? I know previously you cautioned against that, but is that getting better as a way to track INGREZZA? Additionally, I wanted your thoughts on building the Huntington's disease chorea market. Is it similar to tardive dyskinesia, or is it more about taking share from existing VMAT inhibitors?

Hi, Myles. Regarding TRx, I would say third-party syndicated data provides a directional view into our performance and is a bit more stable than it had been in the past. While it is not 100% accurate, I would say it is more directionally correct now than historically. The second part of your question regarding HD chorea: we are excited about our plans to introduce valbenazine to that patient population. There is significant unmet need among these patients, as only about 20% of those with HD chorea are treated with VMAT2 inhibitors, which are the only agents indicated for chorea in HD. We believe some of the reasons that INGREZZA is the most prescribed agent in TD will apply equally here in HD chorea, but we need to receive approval first.

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

Hi, this is Mike Riyadh on for Jeff Hung. Thanks for taking our questions. We had a question about the 352 Phase II study in FOS. Given that patients are required to be on background therapy, are there concerns about drug-drug interactions, or does this limit the ability to measure 352’s pharmacodynamics? What extent could those be mitigated during running of the study? Thank you.

The trial design did allow patients who have had incomplete or inadequate responses to be included while being on up to four medications. We understand the pharmacokinetics and disposition of 352 well from the Phase I and preclinical data. Therefore, the number of exclusions required is minimal, reflecting a lack of drug-drug interactions based on previous data. Regarding the pharmacodynamics, even with patients on multiple medications who are not experiencing seizure suppression, we should have the ability to demonstrate additional benefits.

Perfect. Thank you.

We’ll take our next question from Marc Goodman with SVB Securities. Please go ahead.

Matt, it seems like there's a lot going on in R&D behind the scenes. Can you give us a sense of how the company will manage the increase in spending over the next few years? Should we model R&D as a percent of sales going up, or will we gain leverage?

Thanks, Marc. We are taking advantage of the real amazing changes in science to address serious neurological and neuroendocrine diseases. This is why you're seeing us invest heavily in research and preclinical development. You have seen a noticeable increase in investment here. We're working to move from just a small molecule company to a biologics company now. I think we've made solid progress in researching new therapeutic approaches. Matt can elaborate on how this will translate to sales and our financials.

From a capital allocation perspective, we want to invest around 30% of sales in R&D, which we believe would allow us to build a sustaining pipeline. Currently, we have many programs underway, such as CAH trials, muscarinic programs, and many others. Given the momentum we currently have, we're excited to begin seeing the results of our efforts this year. We anticipate being able to provide updates on the CAH data in early Q4. Therefore, it's fair to assume 30% or so moving forward, dependent on value-creating programs. We are focused on quality rather than quantity.

Thanks. If I could just follow up on the anhedonia work, Eiry. Can you discuss the work you've done to support dosing and what that looks like? I know it's oral once a week. How did you get there?

For the anhedonia program, the dosing schedule for the Phase II study was defined based on our preclinical and Phase I clinical data. This is similar to the dosing of other medications, such as ketamine or esketamine used in major depressive disorders. This allowed us to establish the dosing schedule we are testing. There is little work historically in anhedonia, and there are no approved medications for the symptom within the major depressive disorder spectrum. As we advance and collect data, we look forward to the end of the year.

We'll take our next question from Brian Skorney with Baird. Please go ahead.

Hey, good morning, everyone. Thanks for taking my question. I want to talk about Crinecerfont. Can you help us understand the differences in the studies, specifically around the statistical significant hurdles? What would be clinically significant? Seemingly, you have substantial-sized studies, so it appears you can hit statistically. However, is hitting a key value enough for commercial justification? What are we looking for in totality to gauge significant demand for this product?

Brian, hitting statistical significance is essential as the first step to understanding the benefit-risk of Crinecerfont. The primary endpoints we've chosen are important for patients, such as controlling androgens and the ability to reduce steroid doses. While we have designed the program to measure various parameters, we believe the totality of the data will ultimately illustrate the product's value to CAH patients. The longer-term open-label study data will also be significant.

We'll take our next question from Danielle Brill with Raymond James. Please go ahead.

Hi, guys. Good morning. Thanks for taking the question. I have a question on CAH regarding the potential for functional unblinding and measures taken to mitigate that risk. And then quickly on INGREZZA, have you encountered any headwinds or expect disruptions from Teva's new once-daily product?

As Kevin mentioned earlier, the quality of our clinical trial data is paramount. We have many measures in place to maintain this, including central discussions about endpoints and the data itself; hence, we are not worried about functional unblinding.

Regarding your question about deutetrabenazine XR, that product hasn't been rolled out yet. However, we've reviewed the data and profile, and it still remains a complex treatment from an administrative perspective. Most maintain regimens require two pills of different strengths and necessitate mandatory titration for up to seven weeks. We're prepared for this, and our teams have been trained. We're confident that INGREZZA will remain the most preferred and prescribed TD treatment due to its one pill, once-daily dosing and no mandatory titration. So we feel good about our momentum in the market.

Thank you.

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

Congrats on the quarter, and thanks for the update. Recognizing that you've got a large deal on the books already this year, what is your appetite for additional business development? What areas of interest and priorities for capital allocation do you have for the remainder of the year?

Thanks, Jay. This is Kyle. We remain quite active on the business development side. We have a sense of urgency; however, we won't pursue anything without thoroughly evaluating whether a program is the right fit for the company. We're currently looking into neurology, psychiatry, endocrinology, and immunology with a particular focus on neurology across those categories. Our priorities include INGREZZA and valbenazine, as well as our pipeline. We are interested in innovative science, platform technologies, and differentiated modalities that can change the standard of care. We are open to both late-stage and commercial opportunities, and we are agnostic to deal structure. We'll continue searching for new programs to bring to the company and will share news on that in the future.

Great. Thank you, Kyle.

The next question comes from Laura Chico with Wedbush Securities. Please go ahead.

Good morning. Thank you for taking the question. I wanted to pivot back towards schizophrenia regarding the strategy for muscarinic agents. You mentioned advancing dual M1/M4 later this year. Would you consider advancing multiple agents, such as M4 selective and M1/M4? Any commentary on how you see the evolution proceeding?

Thanks. The appeal of the deal with Sosei Heptares was being able to access not just one molecule in the muscarinic agonist space, but a range of molecules with differential selectivity. We believe there’s a huge opportunity for this set of targets to serve patients with both neuropsychiatric and neurological disorders broadly. We're initiating with the M4 selective agonist targeting acute psychosis and progressing its development. The M1/M4 dual agonist will also move into the clinic. When considering M1 selective molecules, we also see numerous opportunities ranging from cognition to other neurological disorders. We believe this portfolio presents exciting prospects for various indications.

We'll take our next question from Sumant Kulkarni with Canaccord. Please go ahead.

Good morning. Thanks for taking the question. Assuming Crinecerfont is approved, what's your latest thoughts regarding potential pricing? Tardive dyskinesia and CAH are different, but could you give us a frame of reference for Crinecerfont relative to annual INGREZZA pricing? This question arises as INGREZZA price at launch exceeded investor expectations.

Sumant, I think it's very premature to discuss pricing for several reasons. We do not yet have the Phase III data, and pricing hinges on the ultimate benefit we bring to this patient population. We see Crinecerfont can be highly beneficial, but we need to develop the complete data set and discuss it with the FDA before we settle on a price range. Thank you for your question.

Got it. Thanks.

We'll move next with David Amsellem with Piper Sandler. Please go ahead.

Hey, thanks. Regarding the psychiatry pipeline, for the M1/M4, while it's early, any insight into differentiation regarding efficacy and safety in schizophrenia versus KarXT that is in late-stage development? Also, is it fair to say that you may allow small molecule development in psychiatry to slow down, and from a philosophical standpoint, how do you approach this?

There is no slowing down of our efforts in psychiatry. We are dedicated to this field. For the foreseeable future, we do not see a role for biologics in psychiatry, meaning our small molecule efforts in psychiatry remain strong. We're leveraging exciting advancements in biologics targeting neurological diseases, allowing us to select the right targets for the appropriate diseases with the right therapeutic modality. We are not limited to small molecules anymore.

Regarding differentiation, it's too early to speak about that in depth. However, we believe the portfolio of highly differentiated muscarinic agonists will allow us to understand their difference through clinical and preclinical experimentation. We also believe that the dual M1/M4 could be applicable to indications beyond schizophrenia, providing ample opportunities in psychiatric and neurological realms.

I would just add that our starting position is advantageous, as no other company has an M1/M4 dual agonist in development that avoids the necessity for an add-back mechanism to mitigate off-target muscarinic activity side effects. We are enthusiastic about this program and our other molecules that we have.

We’ll take our next question from Akash Tewari with Jefferies. Please go ahead.

Hi, thanks so much. We've seen that Crinecerfont has shown greater than 5% neutropenia when studied in other CNS indications. Discontinuations were 12.5% in the highest dose group, mainly due to neutropenia. What are your expectations for neutropenia going into your CAH data? What level of dropouts have you accounted for in your powering for the trial? Thank you.

As you noted, in the major depressive disorder study, there were sporadic lab measures indicating low white counts, but no clinically significant adverse events correlated to those laboratory measures. We have not observed low white counts or neutropenia in the context of our work in CAH, and we’ve treated over 1,000 patients with Crinecerfont. Patient safety is paramount for this program, and we do not have concerns regarding neutropenia with this molecule.

We will take our next question from Evan Seigerman. Please go ahead, with BMO Capital.

Hey, guys. This is Keith on for Evan. Thanks for taking our questions. On the anhedonia readout, could you provide a sense of improvements on the DAR scale that could translate to functional levels in the clinic? Additionally, could you connect anhedonia to a broader set of negative symptomology across mental illness? How do you see this as a distinct symptom?

As you know, no drugs are approved for treating anhedonia in major depressive disease, and there has been limited clinical trial work historically. This is a proof-of-concept Phase II study. We have embedded measures within the study to evaluate both anhedonia scales and major depressive scales. It's impossible to draw any conclusions or lines to other symptoms ahead of the data readout.

Our next question comes from Mohit Bansal with Wells Fargo. Please go ahead.

Hi, this is Serena on for Mohit Bansal. I have two questions. First, on the cadence of SG&A spend, given the significant growth in Q1, what comes off in the rest of the year? Second, I'd like to understand the CAH market better. What proportion of patients are found in centers of excellence versus treated by general endocrinologists? Do you see patients needing chronic treatment with this drug or just during times of poor control?

On SG&A spending, there was a spike in Q1. You should expect it to decrease in Q2. I look at it and believe we’ll hit our expense guidance range, taking the remainder of SG&A spending and dividing it by three for consistency through Q2 to Q4. In terms of CAH, a number of patients are treated at centers of excellence, with KOLs acting as thought leaders to guide local endocrinologists in supporting patients with CAH. We believe this will be a chronic therapy, helping patients reduce steroid exposure over their lives and provide significant advantages, but we’ll have to see the data going forward.

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

Hi, thanks for taking my question. For the Crinecerfont pediatric study, do you have four-week primary endpoint data on baseline info reduction in-house? If so, what’s your plan for waiting until you obtain 28-week data on the secondaries for topline?

While the primary endpoint is the four-week data, the study will remain blinded until the 24-week steroid reduction part of the treatment. So, as we have indicated, the data will be in-house in Q4 of this year.

Nikki, we'll take the next question.

Our next question comes from Yatin Suneja with Guggenheim Partners. Please go ahead.

Hey, guys. Thank you for squeezing me in. I have a quick question on 352, the FOS study. Can you provide an update on enrollment and your confidence in Q4 guidance?

The study is being performed outside the United States. At this point in time, we believe this has greatly helped with enrollment, which is currently on track for us to have data in Q4 of this year.

Nikki, we will take the next question, please. Thank you.

The next question comes from Uy Ear with Mizuho. Please go ahead.

Hey, guys. Thanks for squeezing me in. I want to clarify – with the added sales force, is the growth coming from more breadth, or are you seeing depth in terms of physicians prescribing more drugs to patients?

We are seeing growth across all three segments: psychiatry, neurology, and long-term care. The expansion of our sales team allowed us to reach ACPs we hadn't previously targeted, resulting in new prescriber additions. We also see increased patient volumes from our existing prescribers. Therefore, our growth truly comes from everywhere, and we are very pleased with the results across all business segments.

If I can, could I squeeze in a question on Crinecerfont?

Hey, Uy. We'll follow up with you. We've got to get one more question in. Thanks.

We will take our last question from Ami Fadia with Needham. Please go ahead.

Great. Thanks for squeezing me in. INGREZZA's performance was strong this quarter, and it leads me to wonder about the upcoming quarters and the growth baked into your guidance. Can you comment on this? At what point would you consider reevaluating your growth forecast? Also, regarding Huntington's disease chorea, how rapidly do you think sales will grow given the awareness levels among physicians treating TD patients?

We're encouraged by INGREZZA's results for this quarter. We have moving parts to consider for Q2, primarily related to inventory. However, we expect to reevaluate guidance in the middle of the year based on underlying demand. Today, as Kevin, Eric, and I have indicated, we are seeing record new patient additions, meaning our outlook looks positive. Regarding HD, post-approval, we anticipate it may take time to educate and ramp up usage. We wouldn't expect massive increases in sales in Q4; it will take time as we move towards 2024 to provide a clearer strategy.

I want to thank everyone for joining us today. A couple of closing comments: my performance today with INGREZZA reaffirms this. We're allocating more resources towards the underdeveloped market while trying to change undiagnosed and untreated patients. We look forward to the upcoming data readouts in the second half of the year, along with the PDUFA date in August for Huntington's. Thank you again, and have a wonderful day. Looking forward to speaking with you soon.

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