Neurocrine Biosciences Inc

NASDAQ:NBIX

Earnings Call Transcript 2018-Q1

[Operator]

Good day, everyone, and welcome to today's Neurocrine Biosciences Reports First Quarter 2018 Results. [Operator Instructions]. And it is now my pleasure to turn the conference over to CEO, Kevin Gorman.

[Kevin Gorman, CEO & Director]

Thank you. Welcome, everyone, and thank you for joining us on our Q1 earnings call. I'm joined today by Matt Abernethy, our Chief Financial Officer; Eiry Roberts, our Chief Medical Officer; and Eric Benevich, our Chief Commercial Officer. During this call, we will be making forward-looking statements. So I would ask that Jane, please read our safe harbor.

[Jane Sorensen, IR]

Okay. Certain statements made in the course of this conference call that are not historical statements may be forward-looking statements, which are subject to risks and uncertainties. Information, concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements, is contained in the company's SEC filings, including, but not limited to, the company's quarterly report on Form 10-Q and in today's press release. Copies may be obtained by visiting the Investor Relations page on the company's website. Any forward-looking statements are made only as of today's date, and we disclaim any obligation to update these forward-looking statements. Kevin?

[Kevin Gorman, CEO & Director]

Thank you, Jane. We have much to cover on this call, and it's hard not to be excited with everything we're going to be sharing with you. Matt and Eric will be going over yet another very good quarter of growth for INGREZZA, nearly a 40% increase in TRxs over Q4. It was our first time [indiscernible] and reset, and we are very pleased with the outcome. INGREZZA sales exited Q1 strong, and that momentum has continued into Q2.

As Eric's going to discuss with you, with INGREZZA's success to date, which was even beyond our expectations, and its continued adoption that we're seeing, we've made the decision to expand our salesforce. And we're not only investing in INGREZZA's TD future with the salesforce expansion. We're also investing in its future in Tourette's by starting the T-Force PLATINUM study, which Erie is going to go over. Now all that is just INGREZZA. We and our partner, AbbVie, remain very confident in elagolix' approval in Q3. And last quarter, AbbVie announced two positive Phase III studies in uterine fibroids with elagolix with a planned sNDA filing for this indication in 2019. CH is on track and so is the rest of our preclinical pipeline, which we'll be going over.

So with that brief introduction, I'd like to turn it over to the team to go over all the progress in much more detail. So Matt, if you could kick it off with our financial performance.

[Matthew Abernethy, CFO]

Great. Thanks, good afternoon, and thank you for joining our first quarter 2018 earnings conference call. 2018 has gotten off to a positive start both commercially and clinically with continued strength in our INGREZZA sales performance, positive Phase III data for uterine fibroids and a clear path to a first half 2019 NDA submission for opicapone.

Now let's turn to our financial performance. During the first quarter of 2018, INGREZZA saw script volume increase to approximately 12,500 scripts, resulting in $71.1 million in net product sales. This compares to 9,100 scripts and $64.5 million in net product sales for the fourth quarter of 2017. These results, both scripts and net sales dollars, exceeded our internal expectations.

On the TRx demand front, the seasonal effect on new and existing patient demand from insurance plan changes and copayment resets did not have a significant an impact as we had anticipated. During Q1, as was expected, persistence trends migrated lower due to more patients now being on drug longer, impacting the refill rate as compared to previous quarters. Persistence remains above where we expect long-term levels to stabilize.

In addition, new patient add continue to be strong at similar levels for the fourth quarter of 2017. For net revenue per script, we saw a decrease from approximately $7,100 per script in Q4 of 2017 to approximately $5,700 per script in Q1 of 2018. The largest contributor to this decrease was driven by the full quarter impact of the transition for the higher priced two 40-milligram capsules to the one 80-milligram capsule, which was launched late October of 2017. Our net revenue per script was also affected by the seasonal impact from the Medicare Part D doughnut hole and commercial plan copayment resets. We estimate these two programs had a $3 million seasonal headwind on our Q1 2018 results when compared to what we saw in Q4 of 2017.

Net loss for the quarter was $41.8 million or $0.47 loss per share compared to a net loss of $78.3 million or $0.90 loss per share for the same period in 2017. Recall that INGREZZA was launched in the second quarter of 2017. So when comparing 2017 to 2018, there is no corresponding RX revenue.

R&D expenses were $48.9 million during the first quarter of 2018 compared to $51.9 million during the first quarter of 2017. The decrease from the prior year was a result of the timing of a $30 million exclusive licensing payment made to BIAL for opicapone in the first quarter of 2017. This was partially offset by an increase in overall clinical program activity spending, an $8 million nonrecurring stock compensation charge as well as a $10 million milestone payment to BIAL due to the determination an additional Phase III trial was not necessary to proceed with preparing our NDA submission for opicapone.

SG&A expenses increased to $58.6 million for the first quarter of 2018 from $28.1 million for the first quarter of 2017. The increase in SG&A expense is primarily due to commercialization activities for INGREZZA.

Our cash, investment and receivables position as of March 31, 2018 was approximately $785 million, positioning us well to execute our near-term company strategy.

Now a few comments as we look ahead towards the rest of 2018. As you've seen, our partner AbbVie announced that the elagolix PDUFA date for endometriosis has been moved to the third quarter of 2018, and we anticipate earning a $40 million event-based milestone upon approval. As it relates to INGREZZA, as previously mentioned, we remain encouraged by the progress of the launch. We continue to make investments in marketing, training and fulfillment and have recently decided to expand our sales force, which we expect to have completed entering the fourth quarter of 2018. This investment and expanding our sales force reflects the opportunity we see in the tardive dyskinesia market and will allow for expansion of physician visits and greater health care professional coverage to reach as many patients as possible. We continue to learn through this launch and remain very optimistic about the long-term prospects of INGREZZA for tardive dyskinesia patients.

Regarding operating expenses for 2018, we are increasing our operating expense guidance range to $395 million to $420 million from $365 million to $395 million. This increase is primarily driven by our second half of 2018 sales force expansion and the impact of the already mentioned first quarter opicapone milestone and nonrecurring stock compensation charge. We look forward to continuing our commercial and clinical momentum throughout 2018.

And with that, I will now hand the call over to our Chief Commercial Officer, Eric Benevich.

[Eric Benevich, Chief Commercial Officer]

Thanks, Matt, and thanks to everyone for joining us on today's call. Q1 2018 was another great quarter for Neurocrine, where we saw continued strong TRx growth momentum with approximate 40% increase over the prior quarter. We feel very good about the launch trajectory of INGREZZA and are ahead of where we expected to be at this point.

Our success in the marketplace starts with having a strong product profile that's reflected in the favorable label for INGREZZA. Product attributes such as rapid and sustained efficacy, combined with good tolerability, simple dosing featuring one capsule once a day without complex hydration and no-box warning or contraindications are important considerations when selecting a treatment for tardive dyskinesia. We believe these attributes cause INGREZZA to be the preferred drug in the TD market. Regarding payer coverage, we are very pleased with the access we have seen thus far. The majority of health plans have implemented policies that enabled open access to INGREZZA, most commonly, they simply require prior authorization with confirmation of a diagnosis of TD to approve a claim. So far in our launch, approximately 80% of the time when a prescription gets written, it gets filled. And in my experience, this is great coverage for a branded product, let alone a specialty drug. And INGREZZA's affordable, 80% of patients pay $10 or less per month.

In the long run, our success is dependent on building the TD market by increasing appropriate diagnosis and willingness to treat TD. Tardive dyskinesia is still a nascent market, and our team has been hard at work educating and helping change ingrained behaviors formed over many years. Prior to the FDA approval of INGREZZA, there were no approved or effective treatment options for TD. For decades, TD was underrecognized, underdiagnosed, undercoded and undertreated. At Neurocrine, our educational mission spans neurology and psychiatry to help HCPs and their staff understand the TD diagnostic criteria, recognize the variety of presentations in different body regions, the variety of patient types at risk and fully appreciate the multitude of negative impacts TD can have on the quality of people's lives.

We continue to engage with scientific leaders in psychiatry and neurology to help teach our colleagues in peer-to-peer forums such as local programs and sponsor educational content on TD at national medical meetings like we did last week at the American Academy of Neurology, where we had many positive interactions. Suffice it to say, interest in learning about TD is strong and we expect this momentum to continue to the American Psychiatric Association Annual Meeting next week in New York, where we will sponsor commercial and medical exhibit booths, present long-term INGREZZA data and unveil data from our real-world TD epidemiology study called RE-KINECT, highlighting the scope of the current challenges for TD, which Eiry will discuss in greater detail in a moment. All of these direct educational efforts, through our commercial and medical teams and in partnership with outside stakeholder groups, are starting to bear fruit as we are seeing increased recognition and diagnosis of TD occur in the marketplace.

It's important to note that even with the recent progress we have made, it only barely scratches the surface of the long-term potential of INGREZZA in TD. We are now coming up on our one-year anniversary since we launched INGREZZA last May. We have always considered this a learning launch and have gained quite a bit of insight about the TD market during the first year.

We've made adjustments to our disease data awareness efforts, enhanced our product fulfillment process, refined our customer targets, engaged with payers and seen favorable reimbursement emerge, all with positive results in helping more patients with TD.

We're upbeat about the TD market opportunity and are ahead of where we expected to be at this point. Physician receptivity toward TD and INGREZZA messages has been very positive and our sales team has added thousands of health care professionals to our call universe. It's become increasingly clear that a larger sales force is necessary to reach all the right HCPs with the level the frequency and high-touch service required to allow us to help as many patients as possible with INGREZZA. As Matt mentioned earlier, we're planning to expand our field sales team by approximately 50%, with deployment of the reconfigured team expected by the fourth quarter of the year. We believe this planned sales force expansion can help accelerate TD market development and prepare us for the next waves of growth. This investment in expansion is a testament to our conviction in the size of the TD opportunity, our commitment to become the market leader and our belief in the promise that INGREZZA can deliver hope to many patients.

I'm proud of what our commercial team has accomplished in the first year of the INGREZZA launch, and I'm very excited about what we expect to accomplish throughout the rest of 2018 and the years beyond.

And with that, I'll now turn it over to Eiry Roberts, our Chief Medical Officer.

[Eiry Roberts, Chief Medical Officer]

Thank you, Eric, and good afternoon. I'm very pleased to be able to provide an update on progress this quarter across our clinical programs. For INGREZZA, we recently shared data at the American Academy of Neurology meeting, describing the long-term efficacy and tolerability of INGREZZA in patients with tardive dyskinesia treated for up to 48 weeks. Data from the blinded, long-term extension portion of the Kinect III study and from the open-label Kinect IV study, both demonstrated that in study subjects receiving treatment with INGREZZA, 80 milligrams and/or 40 milligrams, medication was generally well tolerated with no new safety signals detected.

In addition, sustained improvements in TD were demonstrated out to 48 weeks based on condition and patient-rated measures for both the 40-milligram and the 80-milligram treated subjects. In fact, more than 85% of participants in each INGREZZA dose group had a Clinical Global Impression of Change and Patient Global Impression of Change goal indicating much improved or very much improved at 48 weeks.

We also shared results from the Kinect III Phase III study, including data from the long-term extension phase, which showed that for each body region impacted by TD, greater than or equal to 50% of participants who had moderate or severe abnormal movements at baseline improved to mild, minimal or no movements after 48 weeks of treatment with INGREZZA at the 80 and/or 40-milligram dose.

Through our ongoing RE-KINECT study, our perspective real-world dyskinesia screening study, we also continue to generate data to help increase the level of health professional awareness regarding TD in patients with neuropsychiatric disorders. Of note, in the RE-KINECT population, approximately 28% of patients treated with an antipsychotic had symptoms of TD confirmed by a clinician assessment. This included a significant proportion of patients in whom antipsychotics were used to treat mood disorder. In addition, in over half of the patients, symptoms affected two or more body regions.

Turning now to the Tourette indication for valbenazine. The T-Force GOLD study, evaluating optimized doses of valbenazine in approximately 120 pediatric patients with Tourette syndrome, continues to progress according to plan. And we remain on track to release top line data from this study late in 2018. With these data in hand, we plan to meet with the FDA in the first part of 2019 to discuss the path forward to submission of a supplemental NDA in Tourette syndrome for valbenazine.

In parallel with completion of the T-Force GOLD study, we recently initiated T-Force PLATINUM, a double-blind, placebo-controlled, randomized withdrawal study of valbenazine in approximately 180 pediatric patients with Tourette syndrome. To be clear, this initiation of T-Force PLATINUM was not based on a requirement from or any direct interaction with the FDA, but instead it reflects our confidence in the current Tourette's program and our desire to begin to understand the systems of effect and longer-term tolerability in pediatric patients, who responds to initial open-label therapy with valbenazine. Enrollment in this study is expected to begin in Q2 2018 with top line data available at the end of 2019.

For opicapone, as we previously highlighted, we met with the Neurology division of the FDA in January, and received written feedback in February confirming that the division did not require additional Phase III studies prior to our submission of the NDA for opicapone for the treatment of Parkinson's disease, patients with motor fluctuations. We remain on track with the previously announced Phase I studies and other work needed to complete the NDA and for submission in the first half of 2019.

The last program I will highlight today is our congenital adrenal hyperplasia or CAH program. The Phase II proof-of-concept study examining the pharmacokinetics, pharmacodynamics and tolerability of NBI-74788 in adult male and female patients with classic 21 hydroxylase deficiency CAH continues to progress. We anticipate that data from this study will be available later in the summer. With these data in hand, we will meet with the FDA to discuss the path forward for the clinical evaluation of NBI-74788 as a novel treatment for patients with CAH.

We remain very encouraged by the progress we are seeing across all of our development programs and look forward to bringing at least one more compound to the clinic this year.

With that, I will now hand the call back over to Kevin for some closing remarks.

[Kevin Gorman, CEO & Director]

Yes. And so before we go to the Q&A, like I said, it's hard not to be excited here with everything that's going on.

So with that, said, I would like to open it up for questions.

[Operator]

[Operator Instructions]. And we can take our first question from Geoff Meacham with Barclays.

[Geoffrey Meacham, Barclays Bank]

I'm also seeing what I typically do and that is to the extent that you guys can answer it, what have you seen vis-à-vis persistent trends or discontinuation trends? I know early in the launch, but you have almost a year under your belt. And then maybe just relative to your initial expectations, Kevin or Eric, just on the conversion from the 240 mg to the 80 mg, help us with how that played out over the first quarter. And then I have one follow-up on Tourette.

[Kevin Gorman, CEO & Director]

Sounds good. I'm going to let Eric, actually take both of your questions here and maybe I'll chime in, but I bet you, he's going to answer them a heck of a lot better than I would.

[Eric Benevich, Chief Commercial Officer]

Hey, Geoff, so with regards to persistence, we have seen it trend down a little bit, but I think that's really a function of having more patients on drug for longer. And it certainly still tends to be above where we expected to see and where we ultimately expected to go over time. So it's early days yet, but we have seen a drift down a little but just as a function of the size of the patient population now being treated. And then with regards to the transition from the 2 by 40s to the 1 by 80, Matt have in his comments that the net sales number that we've seen reflects an impact from that, with a full quarter under our belts. Still to this day, most of the prescriptions coming in or are for 80 milligrams, there are some patients that are adequately treated with 40. But for the most part, we feel like the transition is under our belts.

[Kevin Gorman, CEO & Director]

Matt, do you have anything to add to that?

[Matthew Abernethy, CFO]

No. I'd just highlight as we -- as I discussed in my prepared remarks, we had a step-down in our net revenue per script of about $1,400, and a large portion of that was the impact from the transition from the two 40s to the 80s. We still had some that shift during the quarter as two 40-milligram prescription. But as Eric said, largely under our belt at this point.

[Kevin Gorman, CEO & Director]

So Geoff, you have a Tourette question?

[Geoffrey Meacham, Barclays Bank]

Yes, just on the T-Force PLATINUM, just want to get a sense from you guys, is there something that you feel like you're going to learn from a longer duration of exposure? I just wanted to get us a better sense for the logic there because, I mean, I think last time we talked, the thought was that your ongoing Phase IIb is large enough to really see -- to potentially serve as a registration trial, but now you formally start the registration. So I just want to go into a little bit more detail about the logic with that and maybe dosing and your initial thoughts on design, things of that nature.

[Eiry Roberts, Chief Medical Officer]

Thanks, Geoff, appreciate the question. We remain very confident the T-Force GOLD is the core efficacy study that will help us with understanding the efficacy and tolerability of Tourette -- in Tourette of valbenazine. And that is the core study. It's enrolling well, and we plan to have those data by the end of the year and talk to the FDA after that around the parts to the supplemental NDA. We also know that in the Phase IV setting for other molecules approved in the context of treatment of Tourette, that the FDA has asked for this type of randomized withdrawal trial, and that the data generated from this type of trial are also very important, in terms of describing persistence and long-term tolerability and people who responded to therapy, for prescribers and for the patients themselves. And so we were very happy to be able to make that additional investment proactively at this time, given our ability to do that because we do believe it will answer important questions for prescribers around the persistence of effect in patients who respond to valbenazine initially and the longer-term tolerability in a controlled trial environment.

[Kevin Gorman, CEO & Director]

And Geoff, just to be clear. When we do go to the agency and have a discussion with them next year based on having the data from the T-Force GOLD at the end of this year, with, again, as we've said, our plans haven't changed with very positive data from T-Force GOLD, and with the longer-term data that we did with our initial Phase IIa clinical trials, which, in kids, which you know that we extended those out for six months of dosing, we plan on asking the FDA if this was all sufficient in order to file an sNDA with that. We don't look at this trial that we're doing now as being the second pivotal here. Now if the agency would say that, then, thank goodness we started it. But really what this trial is started for and designed for is to further the understanding of the drug for physicians.

Normally, as Eiry said this would be in a Phase IV setting, but we have the ability to pull forward now these things and have it closer to launch of the drug, so that you're not waiting 1.5 years or more if you look at -- and it's a great situation to be in at Neurocrine now. In the past 18 months, we've increased in the depth of talent of this company tremendously all the way throughout. And also, our financial situation is very good right now. And so we can invest in the future now and not have to wait and do things serially. It would have been great at the time of launch of INGREZZA in TD if we had some of the data that we're just now rolling out into this, like the RE-KINECT study. But unfortunately, we just didn't have the wherewithal and also the cash to be able to do that. Now we do. So we're doing what we said we were going to do, the next best dollar is spent on INGREZZA. You see that in the sales force expansion right now, planning for the future, we're going to invest now, you see it in Tourette's with INGREZZA, planning for the future, we're going to invest now.

[Operator]

And we can go next to Anupam Rama with JPMorgan.

[Anupam Rama, JPMorgan Chase & Co.]

Just a quick one for me in terms of physician prescribing patterns. What are the competitive dynamics you're seeing here with [indiscernible] and the early innings in terms of the types of physicians prescribing the two agents? Any similarities and differences between neurologists and psychiatrists?

[Eric Benevich, Chief Commercial Officer]

Yes. Well, thanks for the question and -- first of all, I want to say that we're really -- we're very happy with the product profile, with the data that we've generated and the labeling. And I think that, that's reflected in preference for our product, INGREZZA. Certainly, we felt like we had a really strong quarter with about 40% growth. We saw new patient starts similar to Q4. And we feel like we've got a lot of momentum, which is carrying into the current quarter. There are some differences, I think, between the two specialties. And certainly, when it comes to the amount of TD education, most of it is really focused in psychiatry. The -- moving to certain neurologists, who are experts, so we tend to focus more of those conversations on the product attributes. In psychiatry, we're spending more time teaching about the various body regions where TD occurs, the manifestations, how it presents, making sure that they understand and can distinguish TD from other drug-induced movement disorders, et cetera. So there are some differences between the specialties. But I can say that INGREZZA has been received very well across both neurology and psychiatry. And we're going to continue to invest in that momentum.

[Operator]

And we can go next to Tazeen Ahmad with Bank of America.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Maybe to follow up on your decision to increase your sales force, can you talk about the current market? And do you feel that the accounts that you have with your current sales reps that they're saturated in terms of how much penetration you're getting on a per-physician basis, for example? I was wondering also if you could share some data that you've collected over almost the past year about, in general, how many points of contact does it take with the sales rep before a physician does write a script? And then I have a couple of follow-ups.

[Eric Benevich, Chief Commercial Officer]

Okay. Hi, it's Eric again. Your first question or the first part of your question was about potential saturation of physicians. And actually, I would say, it's actually the opposite. What we've uncovered during the first 6 to 9 months of our launch was that our sales team was adding a lot of customers, we've actually added thousands of customers to our call universe and -- of few types, frankly. Health care professionals across neurology psychiatry, we added a lot of Allied Health professionals and we've also uncovered additional institutional accounts in community mental health. So really when you look at it, we uncovered a lot more opportunity without a corresponding increase in our bandwidth. And really I think that the reception that we've seen in the marketplace, the momentum and the growth has given us the conviction to really pull forward the investment, as Kevin talked about. With regards to, I guess, your question was really about the emotional response and the number of calls to generate a prescription, I won't comment specifically on that other than to say that it happens quicker with this drug than other product set I've been associated in the past, which is really heartening.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay. And then can you give as an idea of the proportion of revenue that came from new scripts versus renewals, continuing patients?

[Matthew Abernethy, CFO]

Yes, Tazeen, this is Matt. I'm not going to give the exact mix. But as Eric and I both alluded to as the launch has progressed, you have a lot higher percentage of your overall script base coming from, I guess, you'd call it existing patient as compared to the new NRxs. So we have similar NRX adds, Q4 versus Q1, but the overall weight of the existing continues to go up.

[Tazeen Ahmad, Bank of America Merrill Lynch]

Okay. And can you tell us the proportion of scripts that are coming from Medicare?

[Matthew Abernethy, CFO]

No, we're not going to provide to that specific, those specific questions. What I can say is that the impact from the doughnut hole, just to add some specific color to that, we called out $3 million of headwind as compared to Q4 as what we saw in Q1. As far as underlying -- understanding our patient mix, we recently had a poster presentation in the RE-KINECT study, and that could give you a representation of the mix of type of patients as it relates to demographics and those who would maybe be considered eligible.

[Operator]

And we can go next to Biren Amin with Jefferies.

[Biren Amin, Jefferies]

Can you talk a little bit about how many reps you're planning on hiring? And are these reps going to be focused on a particular channel?

[Eric Benevich, Chief Commercial Officer]

Thanks for the question, Biren. So I mentioned in my comments, approximately a 50% increase in our sales force size. We've said publicly, there's about 140 territories out there now. We're going to be doing some final adjustments to the alignment and territory boundary. But ultimately, we expect to have everyone identified, hired and trained in time for a Q4 deployment. In terms of their role, we're not splitting the team into separate groups or we're having a psych versus neuro or outpatient versus institutional focus. Everyone's going to continue to focus all the customers within their geography and they'll cover both neurology and psychiatry.

[Biren Amin, Jefferies]

Okay. And then just on the persistence trend that you're seeing, I think you noted that some patients are dropping off. Do you know what the reasons are for discontinuation, the top 1 or 2? And are they switching to other therapies?

[Eric Benevich, Chief Commercial Officer]

No. I mean, we don't have that kind of information. But just looking at the trend data, it's really just a function of having a larger number of people having been on drug longer.

[Matthew Abernethy, CFO]

And I, Biren, I would caveat, it's not a function of patients dropping of the drug per se, we understand that these patients on average take their underlying medications, 50% to 60% of the time to begin with. So our comments around persistence are not a flag of people stopping taking it, whether it's due to efficacy or some other matter. It's just more of a statement that as existing patients become a higher percentage of our overall mix as compared to new patients, it just naturally causes overall persistence to be lower.

[Biren Amin, Jefferies]

Got it. And then just a question on T-Force PLATINUM. How many dose arms do you plan to evaluate? And can you just talk a little bit about the randomized withdrawal design and what that entails?

[Kevin Gorman, CEO & Director]

That will all be on clinicaltrials.gov, Biren. So we generally don't like talking about trial designs until they've hit clincaltrials.gov. And then we'll be more than happy to elucidate beyond that. But usually we're -- we -- other than we won't be giving the actual doses for competitive reasons there, but a lot of the other detail is going to be elucidated there. I just like to wait until that's out there in writing.

[Operator]

And we can go next to Phil Nadeau with Cowen and Company.

[Philip Nadeau, Cowen and Company]

First one for Jeff, on a question [indiscernible] then a couple pipeline questions. Jeff, you mentioned in your prepared remarks that the net revenue per prescription was about $5,700 in the quarter, but then you also noted there's like a $3 million hit because of the doughnut hole. If we add that $3 million back, you'd get an average of about $5,900 per prescription. Is that what we should assume for future quarters?

[Kevin Gorman, CEO & Director]

Hey, Phil, before Matt answers that call, I'm going to start looking around to see if the CFO is named Jeff so...

[Philip Nadeau, Cowen and Company]

Sorry, I must have misunderstood who made that comment before.

[Matthew Abernethy, CFO]

No problem. Yes, the impact of the $3 million, just like you said, about $200 difference. The only caveat I would make to your thoughts around what to expect going forward is we did shift some of the product that were still at two 40-milligram capsules versus the 80. So you would have a headwind that would offset that $200 per script headwind. So that's the only caveat I would make to that. And as well as into the future, we've been in a place, where we've not had to get into contracting, and we've not had much of an impact on our gross to net from aspects of that along with we're continuing to see some movement in our underlying payer mix, i.e., increases in Medicaid. But those are the key items I'd tell you to think about.

[Philip Nadeau, Cowen and Company]

Got it. Okay. That's helpful. Then a couple of pipeline questions. First on the T-Force PLATINUM trial, I believe the design that you put in the press release is that patients, who respond to open-label therapy will then be entered into the randomized discontinuation portion. Can you discuss what you expect the response rate is going to be? Do you assume most people are going to respond? Or is there -- do you have any way of gauging what proportion of patients will actually have a meaningful response to therapy?

[Eiry Roberts, Chief Medical Officer]

Well, as Kevin alluded to -- thank you for the question, Kevin alluded to, I think, there'll be more detail around the size of the study, the number of subjects included in the study when it becomes posted on clinicaltrials.gov. And we have designed the study in such a fashion that we believe there will be sufficient number of subjects entering the open-label to achieve the number that we need to then randomize into the randomized withdrawal part. I think it wouldn't be appropriate for me to talk about the expected response rate and -- but you will see from the numbers included in the study what we're anticipating to see in the course of the trial.

[Philip Nadeau, Cowen and Company]

So the 180 patients in the press release, is that the people, who are entering the open-label portion or the number of people entering the randomized?

[Eiry Roberts, Chief Medical Officer]

Correct. Those will be the people entering the open-label treatment at the beginning of the study. And then those that are deemed to respond after optimized treatment with valbenazine in the course of that open-label will be eligible to be randomized into the randomized withdrawal part of the study.

[Philip Nadeau, Cowen and Company]

Got it. Okay. And then the last question is on the CAH market opportunity. I think you've said in the past that there are about 15,000 patients, who could be appropriate for therapy. One, is that still an accurate patient number? And then two, can you give us some sense of what a pricing proxy would be? So broadly, what revenue per patient could we assume when we size to those markets?

[Matthew Abernethy, CFO]

Yes, this is Matt. We've said that the patient population is about 20,000. And we see tremendous value coming from the drug and the potential impact it could have on patients dealing with CAH. It's still too early for us to put a mark in the ground as far as what our pricing could be. But suffice it to say, we see significant value coming from this drug.

[Kevin Gorman, CEO & Director]

And the only other thing I would add, Phil, to what Matt just said is that we would look at this as being the opportunity for Neurocrine to put an ex U.S. footprint. We look at -- we plan on CAH as being a global development plan and that we believe that we could commercialize this ourselves over in Europe. There's approximately the same number of patients over in Europe, and they have a very good registry over there.

[Operator]

And we can go next to Brian Skorney with Robert Baird.

[Brian Skorney, Robert W. Baird & Co.]

I guess just to change it up a little, maybe have a question on elagolix and the request from the FDA for some liver data. Just wanted to see if we can kind of get your updated high-level thoughts, I'm sure you reviewed all the elagolix data that's out there and what you had on internally. And just when you review the data, can you speak to anything that you're seeing or in terms of an effect on LFT, with the FDA? And maybe even speculate on what you think the FDA could be looking for here?

[Kevin Gorman, CEO & Director]

Brian, thanks for the question. There are no updated thoughts that we have on this, this is all being completely handed by AbbVie and, I think, really quite well. We had never -- when AbbVie advised us that the FDA had asked us and AbbVie had put together an entire response, including having an independent expert response to it too, we had gone back into our entire database, and we don't see anything that's a liver signal. And I really do think that the most powerful aspect of this that we, as Neurocrine, can speak to this, is if you go into the New England Journal of Medicine article that is more than 1,000 pages long and go ahead and try and again peer-reviewed by the rigorous standards of the New England Journal, you can go in and Google liver, you can go and Google LFT, AST, bilirubin, you're not going to find anything there, it never rose to any level of importance. So I think I have great confidence in my partner, AbbVie, that they've responded really well to the FDA. And so we have all, I would say, completely undiminished confidence in the approval of this drug.

[Operator]

And we can go next to Jay Olson with Oppenheimer.

[Jay Olson, Oppenheimer]

I guess I have a question about some of the data that was presented at AAN. And I think it was maybe surprising how high the percent of patients on atypical antipsychotics experiencing tardive dyskinesia is at around 28%. Did you find that physicians at AAN were surprised by that number? And then, I guess, within that context, can you maybe just talk about sort of where we are along the penetration curve of reaching those 28% of patient?

[Eiry Roberts, Chief Medical Officer]

Well, I'll start. Thank you very much for the question. I think we were really very further extremely important to perform the RE-KINECT study because of the real need to help understand tardive dyskinesia in this patient population because I think as Eric mentioned earlier, it's undiagnosed and untreated obviously, up until fairly recently. And I think there are a lot of beliefs in the prescribing community about the current prevalence. Now we know that this study will not address that prevalence question directly, but we do believe that it provides important information for health care professionals to understand their patients a little better in a real world setting. It was clear in terms of the occurrence of symptoms in patients that it really was in that high 20s. The other thing that was very important in the context of that study was the fact that it was not only in patients with schizoaffective disorder but also seen in patients with mood disorder. And so I think we believe there are important information. We will continue with that study, it's ongoing at the moment. We continue to generate new information from the study, additional information will be shared at APA. And maybe I'll hand over to Eric for additional comments relating to your question.

[Eric Benevich, Chief Commercial Officer]

Yes, Jay, just a couple of additional points. One is that the findings of the RE-KINECT study are actually very consistent with what's published in the medical literature about the prevalence of TD. If you look at the data around first-generation neuroleptics, you'll see that most of the estimates, prevalence estimates, are in the low to mid-30% range. Prevalence estimates for the second-generation antipsychotics are in the teens and low-20s. So the findings from the RE-KINECT study, where patients are prospectively strained are actually in line with previously reported prevalence estimates. However, most physicians, when you do market research, would estimate lower. And so I think that in presenting the data to neurology, it's important to put it into the context. And part of our message is look at the value of screening, how many patients were identified in a community setting with TD symptoms. And certainly in neurology, where all the patients gets referred to them, either with a diagnosis of TD or suspected TD, it's a little bit of a different paradigm than in psychiatry, where they're caring for these patients every day. So we're going to be presenting additional data at the APA next week. And our message to both neurology and psychiatry is TD is prevalent. It's more common than what you may believe. Certainly, when screening is implemented in community practices, there's a lot of TD out there, and the important thing is what you're going to do. And our message is diagnose and treat.

[Jay Olson, Oppenheimer]

Great. It's very helpful. And then I had one follow-up question on the sales force expansion, which you described as being for the purpose of reaching additional caregivers, who treat tardive dyskinesia. But I guess, just thinking longer term, are you also preparing for launch of Tourette syndrome and opicapone? And can you just maybe comment on how opicapone is performing in Europe?

[Eric Benevich, Chief Commercial Officer]

Yes. I'll answer the first part of the question, which is that, yes, part of the rationale for the sales force expansion is to prepare us for the future launch of opicapone. And so it gives us additional bandwidth within neurology. Frankly, we already called on most of the neurologists that we would need to call on for opicapone. But when we did some additional work, we recognized that we do need to expand our footprint there a little bit. And then with regard to the performance of opicapone in Europe, thus far, it's early days. Our partner, BIAL, has launched it in a few markets, in Germany, in England, recently in Spain. They're very pleased with the uptake. Certainly, they're seeing it to place -- displace, I should say, the existing COMT inhibitors. And we've started our commercial work here as you may imagine, and the feedback so far from the movement disorder neurologist is that they're very excited about the opportunity to have this product available to them in the U.S.

[Kevin Gorman, CEO & Director]

And the one thing I'll add to that is that, obviously, I'm not going to disclose anything that's confidential to our partner, BIAL, and they are a private company. So they don't have any public reporting responsibilities. Suffice it to say that as INGREZZA has completely outstripped what our internal forecasts were, opicapone has really outstripped BIAL's internal forecast that they're experiencing in Europe. So we'll use the same for them, as Eric just said, that we use always when talking about the future of INGREZZA. We're very pleased with the launch of INGREZZA, and they're very pleased with the launch of opicapone over in Europe.

[Operator]

And we can go next to Alan Carr with Needham & Company.

[Alan Carr, Needham & Company]

Maybe we can come back to CAH. I think you all talked about having data for that in second quarter, middle of the year and much later, but I'm wondering if there's anything into that, you can comment on how enrollment's going? And then also maybe give us a reminder on design of this, how many doses you're going to be looking at, and that sort of thing?

[Eiry Roberts, Chief Medical Officer]

We really remain very excited still in the potential for this molecule in CAH to demonstrate value for patients with CAH. The study is ongoing. It's a study performed in two cohorts of patients, up to 16 to 20 patients in total, adult patients with classic CAH. The study has 14 days of dosing. So we're able to look at multiple dosing effect on pharmacokinetic, pharmacodynamics and tolerability. And it's a complex study requiring a couple of overnight stays. And it continues to progress very efficiently, and we hope to be able to share data ongoing throughout the late summer. With those data, based on our understanding of the pharmacodynamic effect of the molecule, then we will obviously go to the agency to discuss the next steps and potential path forward for the submission of that molecule for treatment of CAH.

[Operator]

And we can go next to Andrew Peters with Deutsche Bank.

[Andrew Peters, Deutsche Bank]

I guess I wanted to drill down a bit more on a prior question, and I know you've given a lot of info so far in the sales force expansion. But just wanted to get a sense of expectations on when you could start to see some of these newer patients or newer accounts start to prescribe INGREZZA. Just based on your experience so far with the launch, is it something that's going to take time to develop relationships with these new accounts and identify the patients as well? Or is it something where the physicians are likely familiar already? Just want to understand kind of the cadence and the timing on how revenue could potentially be impacted by this expansion.

[Eric Benevich, Chief Commercial Officer]

Yes. Thanks for the question, Andrew. And actually there's a couple of things to think about. Between now and Q4 when we deploy the new team, we're going to be engaged in identifying, screening and on-boarding, training, deploying our new sales team. Our existing team is great, and we're really proud of the way that they've performed, thus far. And we're relying on them to keep up the momentum and minimize any distractions for our customers. So that can be a big focus for us in the near term, is to really minimize any disruption to our launch trajectory. And then we're going to get the new folks out there. We're going to be employing some tactics, such as using the existing teams, introduce them to the new folks, to some of their new customers and so on, so we have an orderly hand-off and transition of some of those customer relationships.

Ultimately, I think it's a mix of being able to reach new customers, but more importantly, existing accounts more frequently. And so with a larger team in place, we can go deeper in psychiatry and neurology than we have been able to with the existing team. As I mentioned earlier, we brought in thousands of customers in the first year of the launch, and we recognize the value of those customers. We want to make sure that we're reaching them with the right frequency and the right level of support, so that we can help as many patients as possible with INGREZZA. So I think that, that kind of lays out what the plan is going to look like between now and the end of the year, and then kind of what to expect as this new team hits the field and starts to gain some traction.

[Operator]

And it appears we have no further questions at this time. I'll go ahead and turn it back over to you, Kevin, for any additional or closing remarks.

[Kevin Gorman, CEO & Director]

Thank you very much, and I really appreciate everyone's questions throughout this call. We're going to be at APA. We're going to be holding several events at APA, and I know that we'll see many of you there. We look forward to that.

I'm going to leave you again with the fact of how enthusiastic we are in just continuing to see how this launch has gone and is going with INGREZZA, and to reiterate once again, everything that we do with INGREZZA is based on the fact that we are seeing a great reception out there in the marketplace by all health care professionals that we interact with. We're seeing an incredible impact on patients' lives who have taken INGREZZA, and yet we have just scratched the surface here. And the reason why we've just scratched the surface is because there really is a huge educational effort that we are going through with this. Eric and his team have a number of initiatives that we don't talk about, that are gaining traction. There are a number more that we'll be putting in place. Eiry and her team, I think the RE-KINECT study is an extremely important study, and that is going to just continue to add information over time. And her and the Medical Affairs team is doing a terrific job in meeting with KOLs and continuing to educate there. That is going to be the theme that you've heard from me that will just continue on and on. This isn't about competition that's going on with this marketplace, this is about expanding this marketplace. And as I said, we've only just begun to scratch the surface. But everything, and I think that you would agree with us, everything that we've seen in the performance of INGREZZA to date, says invest, invest, invest in this. And that's exactly what you're seeing us do.

And as I said a little earlier, it is a real pleasure now with the position that Neurocrine is in, that we have the ability to proactively invest across our entire business. And that's what you're going to be -- that's what you're going to see us do, in our pipeline, the current one we have and in building the future pipeline.

And then last, what I'll leave you with is if you look up at Neurocrine right now, we have, over the next four years, we can have 4 compounds commercialized for 6 indications between ourselves and our partner, AbbVie, and that's very exciting to us. So I look forward to meeting you all in Boston and New York over the coming weeks. And I thank you very much for your attention. Take care.

[Operator]

And this does conclude today's call. Thank you, everyone, for your participation. You may disconnect at any time and have a great day.