Neurocrine Biosciences Inc (NBIX) September 2026 Conference Transcript

Awesome. Thank you very much for the post-lunch session, and we made it such that we have a very exciting company with us to make sure you stay awake during the post-lunch session here. We have Neurokin Management with us. We have Matt Abernathy, the CFO of the company, Eric Benevich, the Chief Commercial Officer of the company, and Todd Tushla, the head of IR at the company. Thank you very much, Team Neurokin, for joining us today.

Well, happy to be here and happy to be called an exciting company. I think that we are an exciting company, and we were talking beforehand. We're treated a little bit like a value company at the moment, but we are a growth company. We have a lot of great things going on right now and really do feel quite fortunate to be in the spot where we have multiple products. We had a billion dollars in revenue this past quarter and a lot of data readouts coming over the next 12 to 24 months, as you know. And as CFO, financial flexibility to continue to invest into the future. So I do feel quite fortunate to have Ingresa, which this man launched nine years ago. $2.85 billion expected at the midpoint of the range, growing 13% year over year, and that's nine years into launch. IP protection, that takes us out to 2038. So that's really the foundation of what's allowed us to invest and build the company to where we're at today. We have Crenicity that was approved in December of 2024. That was for congenital adrenal hyperplasia, the first ever medicine that's been approved for patients in over 70 years. And we've been able to help 15% of patients at this point in the launch. And so a run rate of $750 million coming out of last quarter with tremendous growth opportunity ahead. And then last on the commercial product side, we have Vicat XR, which came to us from the Soleno acquisition. that is going well helping patients who have a very sick it's a very difficult disease and Solano had done a great job helping many patients with with PWS we take it into our hands now and we're going through the integration and feel like there's many more patients that have PWS that are going to benefit from a medicine like Vicat XR we had ninety four million dollars in sales this past quarter and really the aim right now is to get through the integration and to be able to put some magic touches on it that Eric and team will be able to deploy and then grow sequentially exiting the year on the pipeline front we have major data catalysts coming in over the next 12 to 24 months the two that I'd highlight in particular the first one is Osev Ampa tour that's a major depression. That is an AMPA potentiator, so in the ketamine pathway, so it's a validated mechanism. We had excellent phase two data. We're running the trial to ensure that we limit the placebo effect, and we're looking forward to having data from our three trials in 2027. The second major program in phase three is direclidine, and that is our mescarenic agonist, and that is being studied and schizophrenia that has a differentiated product profile that I think will lend itself to safe tolerable ease of use delivery and that will have data in 2027 and 2028 so Mohit when you think about the transformation we've gone through just the last several years they now a billion dollars per quarter we have meaningful data catalyst coming up and tremendous financial flexibility zero debt half a billion in cash and growing coming off of the soleno acquisition we have a lot to look forward to as a company so appreciate Wells Fargo you know being here I also remember I didn't say the forward-looking statements we will be making forward-looking statements so check out our SEC filings so Mohit with with that I'll hand it back to you a lot of great things going on awesome so like the clear sign is like our 12 questions I I only have three of them for Ingresa, so nine for everything else, so that's a sign of things.

But I'll have to start with Ingresa. So I think there has always been this patient, volume price dynamic within Ingresa, and you seem to have kind of turned a leaf there by all the investments that you have done in sales team there. Talk a little bit about how sensitive this market is to, you know, commercialization and marketing aspect of things. And then also, like, I mean, how much growth is left in this market? Because you seem to be growing really rapidly still. And not just you. You and competitor both.

Yeah, I guess I'll take the second question first. I think the headline is that there's a lot of growth potential left in the VMAT2 category in tardive dyskinesia. If you think about Ingressa, it's an unusual brand, it's an unusual medicine in the sense that it's been on the market now for about nine and a half years and still growing at a double-digit clip. And I think that that is both a testament to the product profile of Ingressa, very effective, very safe, and well-tolerated. And, you know, certainly we've seen strong receptivity and adoption over the years. But also, I think it's due to the fact that the tardive dyskinesia category was so underdeveloped, so to speak, at the time that we launched in 2017. So, you know, we currently estimate over 800,000 people in the U.S. living with tardive dyskinesia. And yet, only about 10% of people are currently being treated with either of the two VMAT2 inhibitors. So there's still a lot of room for organic growth. and as Matt said you know we saw very strong and continued strong growth even in year nine of this launch q2 of this year we posted record number of new patient starts for ingresa which is once again unusual for a product nine years in and a record number of total prescriptions and so it's a testament to the medicine but it's also a testament to the fact that this is a market that still has a lot of growth potential in terms of getting people treated, diagnosed and treated and we expect that momentum to carry us forward into 27 and beyond. The other part of your question was really related to how promotionally sensitive is this and you know what we found is that especially in a category that's so underdeveloped and underdiagnosed very promotionally sensitive and you know what we've done over the years is to make what we think are smart investments where we think it makes sense so for example um we recently and recently is you know about a quarter and a half ago completed um a salesforce expansion and um the basis for this salesforce expansion the rationale was really sort of twofold. One was, you know, we continue to see the base of VMAT2 writers grow. And at the time that we announced our intention to expand our sales force, which would have been late last year, we shared that the size of the VMAT2 prescriber universe had grown by 30% in just the last two years and so in some ways as we've expanded our team over time it's been to keep up with the growth of the market and to make sure that we can call on especially in psychiatry and long-term care those providers that are caring for these patients that either have already been diagnosed or exhibiting the symptoms of TD and you haven't yet gotten a formal diagnosis that's another another example of how promotionally sensitive this category is is the fact that we have for the last I want to say four years or so been running branded DTC on TV some of you may have seen our ads running but essentially reaching out to people that are on antipsychotics that may or may not have been given a diagnosis to explain their abnormal movements encouraging them to speak to their doctor and ask for Ingresa specifically and every time that we've looked at the ROI of our investment in DTC it's come out very positive so we you know we've continued to invest there so I think that the Salesforce expansion the continued investment in DTC are a testament to you know the growth

potential and the opportunity that lays ahead so nine years in we've made great progress but we've got a long way to go still in terms of fully capturing this market opportunity just think 13 year-over-year growth is what we anticipate that in this inclusive of four percent price right headwind in 2026 so this year nine years in all the effort of the team still growing 17 underlying volumes it's an incredible year for the team and also the many patients that is being benefited from that and we made an investment last year in access to expand our access and coverage to 70 percent and i think the fruits of that labor or investment in rebating is is paying off and so as we think about the future in 2027 in particular in 2028 ensuring that we maintain that access is a critical aspect to the to our strategy and so i think one of the most common questions we're getting coming out of the quarter is okay you guys are having a great 2026 what about 27 there was my next question yeah what about 2027 and so there are two pricing headwinds the first one is statutory because we had the small biotech exemption we were not paying the full 20 percent catastrophic coverage rebate for medicare part d patients that is moving from a a 2% rebate to a 5% rebate, and that's off of the WAC. So that's going to be a known headwind. The second aspect is, as we've been negotiating with clients to preserve our access, because our competitor has an MFP where they'll be required to be covered on formulary, we have had to give some modest rebates to be able to maintain that access, but we expect to more than offset any of the price headwinds with the volume that we're going to be able to generate next year in 2027 so we do anticipate being a strong grower next year in 2027 and we'll give more specific color as we get later in this year or early next year so the three percent extra impact that is on vac so but on that price it could be more than three percent is that fair yeah it could be more than the three percent impact but you also only have a segment of about 65% or so patients are actually med D patients got it so it's not on the whole base but you're right in terms of med D the 3% is it's closer to four and a half percent type of an impact since it is then you divide there you multiply by 65% on that kind of power yeah it's probably similar zip code got it very very helpful so do you see the so like because we have seen this with some of these players when they cut the VAC price, they see some kind of net benefit

and maybe volume growth as well because there are some plants who benefit from the lower list price. Do you see any such thing with Austrudo having a lower VAC price versus you having a higher, is there anything?

Yeah, I'll make a more specific comment and then maybe a general comment. The general comment is I think the jury is out in terms of whether MFP negotiated products actually see any increase in access as a result. I think it depends on the brand in terms of what their pre-MFP formulary coverage looked like and to the extent that that brand or that category was managed by the plans. In this case, so the VMAT2 category, you know, we have two medications, Ingreza and reformulated tetrabenazine. Our competitor has historically had been fairly aggressive in terms of their contracting activity, and as a result has had formulary access greater than 90% of Medicare lives most years. so going into 2027 I think there probably will be an increase in coverage to get up to 100% but it's sort of marginal right whereas you know we are at around 70% formulary coverage this year and our expectation for next year is it'll be similar to what it is now but the regardless of what percentage of lives are covered on formulary it doesn't take away the fact that these are specialty medicines that require prior authorization and you know any claims that are approved have to meet the criteria for the plan so you know we'll see how things play out in terms of increased access but ultimately you know our goal is to make sure that we have parity or near parity coverage and when we have parity coverage we find that we do quite well based on the merits of the product profile got it we have a great product in a great market that's still promotionally sensitive as we were talking about before so our focus is to

make sure that all the sand is out of the gears as much as possible and allowing choice for the prescriber choice for the patients and I think over the last 18 months we feel like we're winning and gaining more share and and obviously contributing to the overall top line of Neurokrin.

Awesome, thank you for that. So maybe moving to the second product, Cronacity. So you've done really well in, like I think you are probably exceeding the peak sales estimate three years ago what this product probably already, second time in a row. So thank you.

I haven't thought about that, but I think you're right. when we received approval we had been saying blockbuster but I think the street was five to seven hundred million yeah and our run rate right now is like I said earlier 750 so yeah and it happened with ingresa as well I mean I remember the time the peak sales was 500 million dollars at some point yeah it feels like after the last couple quarters of sales that the investment community is starting to believe that this is indeed a blockbuster right and And then there's a company which also acquired another company, so they talk about good numbers as well, right?

So we'll get to that. So I think for the last few quarters, like every quarter you would post a good quarter for canesity, but people would still worry about, because your comments were a little bit guarded at that point, that we don't know what the steady state new patient ad is. So we were always thinking that there was probably a bolus, it'll go away. this quarter you sound a little bit more comfortable around the the patient ad numbers so talk a little bit about like what gives you confidence that you are getting to more of a steady-state patient ads here and what are you seeing in the marketplace that gives you comfort that you know you could continue to grow here yeah I'll start off by saying that we've been really pleased and maybe delighted with the with the launch of chronicity and and you know as you noted externally I think the expectations were more modest in terms of what the potential was for this medication.

We've always believed it can be a blockbuster and you know we said that up front at the beginning of the launch and now we're on you know on a trajectory to deliver on that. There's three things that have been really favorable with this launch. One is the the rate of adoption and you know as we saw there was sort of a bolus of patients that got on treatment in the first couple quarters so we call it that last spring with chronicity but then ever since then the the rate of new patient ads has been very steady and consistent from week to week to month to month and now quarter to quarter so we see this as a very I don't want to say predictable but reliable trend in terms of new patient starts the other thing that's been really favorable has been the persistency and you know it's one thing to see what the persistency looks like in clinical trials it's another thing in the real world in clinical trials what we saw in the open label extension was well first of all in the double blind studies over 95% of patients completed and rolled over into the open-label study and even at a year it was about 90% that were still on treatment and then we just recently rolled out two-year data and once again about 90% of those people were still on drug at the end of the of the second year the real-world persistency isn't quite as high as what we saw in the clinical trials but not that far off and so we feel really good this is an outlier to the upside right with with chronicity so that's been favorable and then the third thing which you know I think is an important contributor here is the reimbursement so this is a rare disease drug it's non formulary on most plans it's mostly a commercial and Medicaid population but we haven't had any real challenges in terms of getting claims approved in fact not only have we had a really high claims approval rate but it's been faster than what we had expected and as a result there's been a lower than expected utilization of our our free trial program so ultimately you know we're seeing steady adoption the claims are getting approved and they're getting approved pretty quickly and then once patients get on treatment you know they're able to see their androgens come down and or start to taper down their their glucocorticoids and we're seeing really strong persistency as a result and so there's still a lot of headroom in this particular therapeutic area during the last earnings call we disclosed it about 15% of the prevalent population was now on treatment but that means the majority of people are yet untreated and so we feel good about the progress we've made so far but we recognize that there's a lot of work to be done to you know continue to to build our chronicity franchise well I'll tell you I'm not surprised that Eric and team

could deliver on this he's they've done a great job and you know I think when you take a step back and you say why is this successful and why is it going to continue to be successful it's a market that the only option for these patients was to take high-dose steroids for 70 years so there's significant need the second piece as Eric said you can see a dramatic reduction in androgens right after you start taking therapy within the first month so you can see the efficacy you can see the stabilization and then third is the safety aspect this is primarily a medicine that's prescribed or the majority right now a

little over 50 percent are pediatrics and safety is absolutely critical to getting them to try the medicine and then ultimately to stay on the medicine so those attributes one itself for us that believe we're going to continue to chug away and drive meaningful revenue growth over the next several years and you had asked about you know whether we were a little bit more guarded early on I think it helps to have more data right right and certainly like we saw with ingressa in td this is what you know what i call a learning launch we're building a new category from scratch and you know you have certain assumptions that you have going into a launch like this many of the assumptions we were on target and we made good choices but you learn as you go and um the more uh runway we have the the more confidence we have in terms of the direction that things are going to continue to go with this with this franchise so i feel very bullish about it.

Under-promising and over-delivering makes tors life easier. I'm just trying to manage upwards.

That takes a lot of work.

For sure. So in terms of like, you know, in terms of being the picture of the market for me a little bit, in terms of the sales force and all, this is not an undiagnosed patient population for the most part as well, or is it? or is there a is there a promotional effort that like let's say six months down the line you would realize that you can probably you need more resources or something like that is there anything like that here yeah I'll caveat it by saying we just completed a small Salesforce expansion okay small meeting you can count them on two hands kind of number of FTEs but ultimately I wouldn't characterize it as an undiagnosed condition or an under diagnosed

condition I would characterize it as an undercoated or miscoded okay population reason I say that is classic CAH is the more severe form versus non classic CAH and for every classic patient there's four or five non classic patients unfortunately there is no modifier to the ICD-10 code so there is a general code for CAH. And if we just focused our patient finding efforts on those practices that have CAH, one or more of those patients in their practice, most of the time we'd be encountering non-classifications. And so as Matt said, we try and be smart and efficient in terms of where we focus our efforts. So in addition to having a small sales team, and when I say small, it's only about 50 or so people right that are out there calling on these practices in endocrinology we've put effort behind patient finding you know using different data sets so claims data EMR data even lab data to help us find people that look like individuals that are already on treatment so that's been an important part of our of our launch success and that patient finding capability gets better over time the more data that we that we sort of feed into it so ultimately you know we feel like this is you know this is a category that has a lot of upside potential to it but you know it's still early days yet you know if this was a a child I'd say it's like a toddler right we're a year and a half into this launch we're learning a lot as we go I don't expect that we're going to have to make any you know we just completed a Salesforce expansion I don't see that in the cards anytime soon but what I do see is continued investment in our patient finding capability and you know making us more efficient over time the last thing I'll say is that there's really three segments to our business right now or three focus areas on the HCP side so there's a small number of centers of excellence there's less than 20 in the u.s. these are typically a fill these are clinics that are typically affiliated with with teaching hospitals some of which are accredited by the cares foundation which is the patient advocacy group in CAH secondly and importantly so we think that the the centers of excellence account for maybe 15% of the patient potential. Another important segment for us is pediatric endocrinologists. There's about 1,100 of them in the U.S., and typically they have more experience managing these patients with classic CAH. They're more likely to have patients in their practice, so they're a really important segment for us. Pediatric population, we estimated about a third of the overall classic CH population but we do expect it's going to account for a majority of our of our business and it already is accounting for more than half and then the third segment is the largest numerically which is the adult outpatient endocrinologists that's where things get a little thin in terms of patient counts so two-thirds of the patients are adults but if they see an endocrinologist that endocrinologist might only have one or two patients if any yeah right so ultimately for us to be successful in the long run we have to be able to reach

educate and activate patients that are in the community some of whom don't even have an endocrinologist so you know we'll continue to evolve over time in terms of our approach but so far it's been very heartening to see the effect that chronicity is having on these patients and certainly I think our business results speak volumes got it very very helpful thank you for the detailed answer there one last question on conacity so how do you think about the competition here like you talked about safety here the competition is like the competitor is sitting upstream of conacity here a little bit so you have fast more advantage they are coming with their drug I mean how do you think

about the competitive landscape three four years down the line you know I'll chime in and then maybe you want to add I'll start off by saying I really like our position mm-hmm all right we have a substantial head start years in fact and you know we I mentioned earlier that we just this spring and summer rolled out very impressive two-year long-term outcomes data and these data I think were very well received in the physician community because it's delivering on the promise of really what they want to see for a treatment for these classic CH patients so if you think about the old treatment paradigm of using super physiologic glucocorticoids to suppress the overproduction of ACTH and then downstream androgens you know you ended up being able to control androgen excess but at the expense of exposure to high dose steroids which you know we understand has a lot of negative effects on the brain and the heart and the bones now you know you bring in chronicity which is a CRF1 antagonist and really what it's doing is blocking the overproduction of ACTH and therefore the downstream overproduction of 17 OHP and androstenedione and other other precursors so ultimately what chronicity does is to restore balance it's it's allowing the dysregulation of that HPA access to get re-regulated reduce the amount of a ACTH and then therefore the overproduction of the androgens and there and as a result now we're seeing patients being able to bring down their they're high-dose steroids right so you think about the mechanism of chronicity it's an upstream mechanism versus you know you're referring to up to monant which is an investigational medicine that doesn't reduce the amount of ACTH it blocks it at at the adrenal gland so it's it's unknown I think you know when what ultimately the clinical profile is gonna look like for that investigational medicine. It's very early days yet. There's not a lot of patients that have been treated with it. And certainly we don't know what the consequences might be of sustained, elevated, and uncontrolled overproduction of ACTH because that medicine doesn't reduce ACTH, it simply blocks it at the adrenal. so I think data will tell the story and certainly we feel very good about the long-term safety data that we've generated both in adults and in pediatric patients and having a several-year head start ability to to penetrate the patient population to get people on effective treatment we know from other categories that if patients are being well controlled on their current regimen if they're tolerating it it's really hard to move them off and displace them so like I said at the beginning feel really good about where we are but you know we'll continue to execute on our plan and we'll see how things shake out in terms of data over time yeah I would just say people should be cautious and trying to compare small numbers of patients different levels of baselines there's nothing that we've seen in their data that would make us feel like cronicity would be displaced.

Got it.

Moving to buy cut, thank you for all the decision on cronicity. So there has been, so this deal has been a little bit controversial in terms of people are still trying to understand what is the peak sales for how it could look like and there is there are questions around or persistency and all that. Can you tell us what people are basing, which you saw in this asset, and you think that this asset could be a great deal?

Yeah, from a strategic perspective, it fits in quite nicely with the rare endocrine franchise. It also adds a durable growth asset, and it allows a scale, and it's already a profitable product, even at a $400 million run rate. So for us, when we did the acquisition, we were eyes wide open in terms of some of the challenges that may come with it and some of the things that we could do to overall enhance the offering of ICAT-XR. And so a lot of what we're working on now or identifying or finding is very consistent with what we would have thought going through with the acquisition. We knew the most important aspect is, is there going to be steady new patients coming on to therapy? Is there a benefit? And the good thing is the last two quarters there have been steady new patients coming on to therapy and this is a devastating disease the second piece is you could see in the data as we looked at discontinuation rates you could see in the data from those who started early in launch at about month six to nine after month nine you had about a 20% to 25% discontinuation rate and so that's something that we have have indicated to the market that that should be the base level expectation on this continuation. So for us, as we think about executing, executing and helping identify the right patients, executing and helping ensure there's appropriate monitoring through the titration process to ensure that as many patients with PWS who are appropriate to get treated ultimately get treated. So we have had a couple straight quarters of flattening of sales. We had $94 million this past quarter. We do know that we're working through the discontinuation from the bolus of patients, so there's a bit of a tail there. And once we're through that tail, we feel very confident that the commercial initiatives that we have underway are going to lead to sequential growth the rest of this year. So my comment is let focus on us executing, and our numbers are ultimately going to speak for themselves in terms of the deal and the value there. and we see this as a tremendous need for these patients that strategically for neurocrime and we do have a lot of enthusiasm within this product group thank you very much Todd what are we going to learn at the event you are hosting at the end of the year yeah sure thanks for the plug there so in early December we will be hosting an R&D day that will focus on our neurology and immunology strategies neurology I think is relatively well understood some of the pipeline assets we have less so on the immunology front so we're looking forward to sharing some of that information with the investment community then got it so so Matt the question for you is based on all that do you think you have enough pipeline to work through or do you think there's still more like you could deploy more cash well first of all I feel fortunate like i said at the beginning that we have three commercial products that are generating significant cash flows right and those cash flows allow us to reinvest back into the pipeline at a rate of 30 to 35 percent that's where we believe that is the right level of reinvestment to lead to sort of a flywheel of future new products we've been fortunate to have quality pipeline and we have a lot that investors haven't seen which we'll highlight at r d day and so we do have a lot to invest in internally so that is our second priority behind commercial and driving revenue growth and then third we do have a clean balance sheet we do have capacity to do business development transaction but sitting here right now we've got a lot on our hands in our hands right now to execute help a lot of patients get to some phase three trial data so we're always looking but right now very much focused on executing what we have on that high note thank you very much for joining us and all the best thank you