Neurocrine Biosciences Inc

NASDAQ:NBIX

Earnings Call Transcript 2022-Q2

[Operator]

Good day, everyone. And welcome to today's Neurocrine Biosciences Reports Second Quarter Results [Operator Instructions]. Please note today's call may be recorded, and I will be stnading by should you need any assistance.

It is now my pleasure to turn the conference over to Vice President of Investor Relations, Todd Tushla. Please go ahead.

[Todd Tushla, Vice President of Investor Relations]

Thank you, operator. Good afternoon, everyone, and welcome to our second quarter 2022 earnings call. With me are Kevin Gorman, our Chief Executive Officer; Matt Abernethy, our Chief Financial Officer; Eiry Roberts, our Chief Medical Officer; Eric Benevich, our Chief Commercial Officer; and Kyle Gano, our Chief Business Development and Strategy Officer. During our call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After our prepared remarks, we'll head into Q&A where we'll try to get to everyone's questions.

And now I'll turn the call over to Kevin Gorman.

[Kevin Gorman, Chief Executive Officer]

Thank you, Todd, and good afternoon. As Todd said, we're going to -- I'll keep our opening remarks short to give us enough time for your questions. INGREZZA had a very good Q2. And coupled with our outperformance in Q1, we have had an excellent first half of the year. Eric is going to take you through the quarter in a bit more detail in just a moment. Now in addition, I'm very pleased to say we continue to grow our pipeline, adding two new compounds with validated mechanisms of action in psychiatry, and Eiry will talk a bit about those two. Now as you've seen in our press release, our signal seeking essential tremor study did not yield a strong enough data set to warrant any further development of this compound in ET at this time. While disappointing, we have a rich and diversified portfolio and these resources will be rapidly redeployed.

Now finally, I'd like to say that I'm very pleased with the overall performance of the company thus far this year. We and here, I mean the larger we, all of business and society are dealing with the transition out of the pandemic and into an endemic situation with COVID. Thankfully, in 2022, COVID much more rarely caused a severe disease and death, but it is still highly disruptive to business as usual throughout the world. Increased absences due to testing positive stretches all resources thin at times. We see that in both our clinical and commercial businesses. Times are still uncertain, but we continue to move forward on behalf of patients and for that, I am very proud. I'd like to turn it over to Matt now, please.

[Matt Abernethy, Chief Financial Officer]

Good afternoon. The INGREZZA team delivered $350 million in sales during the second quarter, capitalizing on the strong new patient trends from Q1 and high levels of patient compliance. With the first half of 2022 now behind us, we are raising our annual INGREZZA sales guidance range to $1.35 billion to $1.4 billion based upon the trends we have seen so far this year. As you consider Q3, we expect third quarter sequential growth to be lower as a result of both the acceleration of COVID cases and the typical summer dynamic pressure growth. On the financial front, during the quarter, we were able to retire 55% of our convertible debt to reduce potential dilution and maintain the financial flexibility we need with over $1 billion in cash. Now over to Eric.

[Eric Benevich, Chief Commercial Officer]

Thanks, Matt. Our team continues to do a great job executing on our commercial initiatives. Q2 INGREZZA performance was driven primarily by continued strong persistence and compliance rates for continuing patients, coupled with a record level of new patient starts. As Matt said, given the results through the first half of the year, we've raised guidance to a range that incorporates a couple of scenarios that may play out in the second half of the year. First, as it relates to internal factors, our ongoing direct-to-consumer advertising campaign, called TD Spotlight, continues to encourage patients and caregivers to help seek treatment for their TD. Thus far, we've been pleased with the response, and we plan to continue the campaign through the balance of the year. In addition, the newest members of our expanded field force have been trained and have been in the field now for about a quarter. As we've highlighted before, we anticipate the benefit of our expanded sales organization to be tangible in the latter part of the year.

Regarding what we've seen from an external perspective, new COVID variants continued to provide headwinds for our customers, while telemedicine is still being utilized by psychiatrists with roughly half of their patients. Over the past five years of the INGREZZA launch, we've seen a pattern of seasonal challenges in the third quarter, which has typically softened growth a bit relative to Q2. Therefore, given current dynamics, I would characterize the low end of the new guidance range to be more impacted by COVID, telehealth and Q3 seasonal slowdown and the higher end of the range to be less impacted by external factors, which we are working diligently to mitigate. In closing, we're making steady progress, improving the diagnosis and treatment rates for tardive dyskinesia in the US. This is still a mostly underdeveloped market and we are well positioned to continue driving treatment rates higher to help even more TD patients than ever before. With that, I'll turn the call over to my colleague, Dr. Eiry Roberts.

[Eiry Roberts, Chief Medical Officer]

Thank you, Eric, and good afternoon to everyone on the call. I'll start with a couple of updates from our late stage clinical portfolio. We remain on track for the sNDA submission later this year of valbenazine as a potential treatment for Huntington's disease. In addition, the Phase III adult and pediatric studies for Crinecerfont as a potential treatment for congenital adrenal hyperplasia are progressing well, in line with our goal of delivering data in 2023. Moving to the earlier stage clinical portfolio, we were very pleased to announce the FDA's recent acceptance of the IND for NBI-568, a selective orthosteric M4 agonist for the treatment of schizophrenia. This is the lead molecule in our muscarinic franchise collaboration with Sosei Heptares. And I want to take a moment to thank the teams, both at Neurocrine and Sosei Heptares for their hard work in successfully progressing this molecule into the Phase II study, which will begin enrollment in the near future.

Along with examining the opportunity to expand beyond schizophrenia with 568, our teams continue to work on advancing other novel muscarinic agonists into the clinic, including a potential M1/M4 dual agonist. In addition to moving forward with NBI 568, this month, we will initiate Phase I evaluation for a novel, orally active small molecule, NBI-770, which targets a potentially important mechanism for the treatment of depression. If we are successful in progressing to Phase II clinical development, we will divulge more about both the top [Technical Difficulty]. But I can say that this mechanism of action has already been validated clinically by parenterally administered molecules. If successful, NBI-770 would provide the first oral treatment approach for this target in depression.

Now I'd like to address the results of the signal-seeking study of NBI-104 in essential tremor. The team completed a high quality, single center study of NBI-104 in 30 patients with essential tremor. The intent of this study was to identify potential signals of efficacy and determine the tolerability of NBI-104 in this patient population. NBI-104 was well tolerated at all doses studied. However, top line efficacy results from the study were negative and failed to achieve statistical significance. The study produced a broad data set beyond the top line information, and the team is continuing to evaluate this data with the intent of presenting it at a future medical conference. Based on the totality of data from this study, at this time, we do not plan to proceed further with the clinical development of NBI-104 in essential tremor. It is important to note that these results do not impact the current Phase II study of NBI-104 in epilepsy with continuous spike-in-wave during sleep. Enrollment in this study is complete and we remain on track to disclose top line results by year-end. Finally, I'd like to congratulate our partners at the Mitsubishi Tanabe Pharma Corporation for all their efforts in getting valbenazine approved. We look forward to supporting their launch of DYSVAL for the treatment of tardive dyskinesia in Japan. With that, I'll hand things back to Kevin.

[Kevin Gorman, Chief Executive Officer]

Thank you very much, Eiry. And operator, now we are ready to take questions.

[Operator]

[Operator Instructions] And we'll move first to Phil Nadeau with Cowen & Company.

[Phil Nadeau, Cowen & Company]

Just two from us. First, on the Q1 results for INGREZZA. They're particularly impressive because -- Q2 results for INGREZZA, they're particularly impressive, because Q1 wasn't as impacted by seasonal factors as other Q1s in the past. So I guess we're curious whether we can go into more detail as to what led to the increase in new patient starts in Q2. Was that strictly DTC or were there any of those seasonal factors that did improve in Q2, maybe more than you had initially anticipated, and were there any onetime factors? It does strike us that the bottom end of your guidance, your renewed guidance, suggest down quarters in Q3 and Q4 versus the Q2 run rate? So aside from COVID [recurs], how that could happen? And then the second question is on ET. We're just curious whether the data put into question in your minds, the T-type calcium channel blockers generally, do you think that this was an issue with the disease, with the mechanism or simply compound specific?

[Matt Abernethy, Chief Financial Officer]

We're going to handle your first set of questions on the INGREZZA front, and then we'll handle ET as we get further into questions as we're going to try to stick to one question first. You're right, Q2 was an incredibly great quarter, reflecting great new patient additions and then also surprisingly very high compliance rates. So I'd say the beat was both internal and then obviously, external came from a nice step-up in compliance and then also a continued trajectory of new patient additions was fairly strong throughout the quarter. We wouldn't flag any onetime items, such as inventory or bulk purchases by any pharmacies. So it was a very clean, straightforward quarter. If you take a step back and think about our guidance range, it really reflects around $300 million growth here. And that's a pretty incredible feet coming out of COVID and then still dealing with the environment that we're dealing with right now. And as Eric mentioned in his prepared remarks, really the downside is very specific to COVID. I think we all see it popping up regionally and that could cause some disruption at the bottom end of the range. And then at the top end of the range, it's all about aggregation on the sales force expansion side. So hopefully, that addresses your question, Phil.

[Operator]

We'll take our next question from Brian Abrahams with RBC Capital Markets.

[Leonid Timashev, RBC Capital Markets]

This is Leonid on for Brian. I just want to go back to 104. I guess, can you just talk a little bit about why you think that it might still be active in some of the epilepsies? And I guess the decision to discontinue, is that [across] all the endpoints or is there any signals that you might be able to tease out as you continue to look at the data, or was it just more bigger picture view on the therapeutic window? And then I guess as we go back to the epilepsy, any epilepsies where you might continue thinking about bringing this drug in as well?

[Eiry Roberts, Chief Medical Officer]

So a couple of questions in there. On the first question, I think the patient population, if you look between essential tremor and the epilepsy population, that we're studying within CSWS. So it's a very different population. And so I don't think you can infer directly from one population to the other. Also to answer the question, I think that Phil asked as well around what do we believe about this in the context of T-type calcium channel antagonist in essential tremor, it's really hard for us to comment on the other molecules in development. But what I can say about the trial that we ran was that it was a high quality single center trial, well controlled and that as we looked at the data, the trial design and the way in which the trial played out, actually were not responsible for the negative results. It was not a failed trial, it was a negative trial. We saw some evidence of activity, but the signal was not sufficiently robust to hit statistical significance or to the clinical relevance, either on the accelerometer or on the [test] endpoints that we looked at. And in particular, the other thing I will say is that we had central assessments as well as local assessments on the TETRAS and there was high concordance between the two sets of assessments. So it was a robust data set. We'll continue to evaluate the data in more depth. But at this point in time, I think we are clear that we will not be moving forward with essential tremor for 104.

[Operator]

And we'll take our next question from Paul Matteis with Stifel.

[Paul Matteis, Stifel]

Over the past few years, you've been super conservative with just the upfront that you've offered in business development. I think you've also been clear that your pipeline is high risk and CNS is difficult. But I guess given the failure of the ET program, given that there have been a number of setbacks, I'm wondering now given your position of strength of INGREZZA, if there's any consideration that you could incorporate a bigger transaction if you have the capacity to do so? And maybe just give us a little bit of an update on your thinking there and whether we could see something more meaningful over this year and next.

[Kevin Gorman, Chief Executive Officer]

I'm going to put that question to Kyle.

[Kyle Gano, Chief Business Development and Strategy Officer]

Paul, as we've talked about this in the past, I think firstly, on the outset for business development versus internally discovered assets, we view them similarly in terms of probability of success. I think that's fair for all organizations to view it from that perspective. And when thinking about things that are strategic versus in licensing, I'd also add that we're really agnostic to structure and the scope of opportunities that we're looking at today. I think the issues are that in the CNS space, we see the assets that are available bifurcated and either extreme in terms of being a late stage commercial, higher value, higher expense items and those that are higher science that are in earlier stage development. And I think we continue to evaluate those to see where their place would be in our own pipeline. So in a nutshell, those strategic types of deals are possible, and we look at those. This as much as we see on in licensing front. In close, if you look at the pipeline today, you see about a dozen assets in mid to late stage development. A balance there with the new programs that we brought in from Phase I to Phase III and a balance of targets that are validated and those that are novel. And those are the types of things that we look at when we create the pipeline and manage to sustain it over time.

[Operator]

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

[Tazeen Ahmad, Bank of America]

So I'd like to just go back to the INGREZZA results from the quarter and your view for the rest of the year. So when you gave your thoughts about what 2Q was looking like, on your 1Q call, you were pretty adamant that you wouldn't expect to see the level of sequential growth that we've been accustomed to. But are you saying that compliance improved after that time, which is about, I don't know, what, five weeks into the quarter, and why would compliance meaningfully change? And I know you've talked about COVID, et cetera. But frankly, we've already had several COVID surges throughout 2Q and that didn't seem to impact, you had a great quarter. So I'm just trying to understand what part of this dynamic you're most concerned about for this quarter or this half of the year that you were still able to overcome in the first half?

[Kyle Gano, Chief Business Development and Strategy Officer]

Just to be clear on the compliance front, I wouldn't call it a huge surge of better compliance, it's something that you can only really take a look at over longer periods of time. So it's not something you have a clear sight on a couple of weeks into the quarter, five weeks into the quarter. We typically look at it on a quarterly basis to really get an understanding on what refill rates per patient looks like. And slight changes in refill rate per patient definitely drives large revenue contributions. The good thing is patients are staying on medicine and that's something that we've seen ever since the beginning of launch. And I think that's a testament to the medicine itself and our clinicians. I would say in respect to COVID, we don't want this to be a COVID-centric call. We do see sporadic instances of COVID that are taking reps, doctors, patients out of the office, and it just has caused some level of disruption. Our view is always shoot as high as we can with them every quarter but on calls, give a really balanced view as to what the potential scenarios could look like. But Eric, do you have anything to add here?

[Eric Benevich, Chief Commercial Officer]

Maybe just to chime in a little bit. You may recall, Tazeen, that on the Q1 call that we said that we flagged that as a quarter that had a record number of new patient starts. And then now in Q2, we set another record. And I think that the new patient starts are a huge contributor towards the results in Q2. But we carried a lot of momentum coming out of Q1 into Q2, and those new patients started in Q1, of course. As Matt said, we saw really good persistence and adherence in Q2. And of course, when you have small changes in those measures of compliance that can really add up over -- when you've got a patient base as large as ours is now. So I would just flag the new patient starts as an important contributor. And with regards to Q3 and sort of the balance of the year, we have said that Q3 historically has been a slower growth quarter for various reasons over the five years of the launch. And so we want to make sure that investors understand that this year we don't expect to be any different than in years past. The COVID factor is relatively newer compared to the early phase of the launch. But in general, Q3 has been a slower growth quarter, whereas Q2 has almost always been a really strong growth quarter for us.

[Operator]

And we'll move next to Neena Bitritto-Garg with Citi.

[Neena Bitritto-Garg, Citi]

I was just wondering if you could talk a little bit about how much of an impact do you think the the new sales reps had on the 2Q number and how we should think about the impacts there moving forward? I know, Matt, you did talk a little bit about that earlier. But it just seems like at the lower end of the guidance range, you're essentially assuming kind of no growth the next few quarters and at the high end, you're assuming essentially similar level of growth from a dollar perspective to second half of last year. So just trying to understand how the new sales force factors in.

[Eric Benevich, Chief Commercial Officer]

So let me just take a step back and say that we've raised our guidance. And what is now the bottom end of our range was the top end of the range at the time that we issued guidance at the beginning of the year. And so we feel very good about the trajectory that we've been on thus far in 2022. And we're not expecting the second half of the year to be a no-growth scenario. But we do have a range and we wanted to make sure everyone understands where we expect to end up by the end of the year. So that being said, with regards to the first part of your question, which was about the sales force. What we've guided externally is that it's going to take a bit of time for all these new people to hit their stride. Everyone is working really hard to get integrated into their territories, to meet their customers, et cetera, but it takes a little bit of time for folks to really get up to speed. We've hired very experienced people in LTC and in neurology and the backfills in our site team. But just because they're experienced doesn't mean that they've got experience in TD and with INGREZZA.

So I think we're doing all the right things to set everyone up for success, and we're doing a really great job in terms of teamwork and collaboration, handing off customer relationships, sharing best practices, et cetera. But in terms of when we start to see a more tangible impact from the expanded field sales team, it's our belief based on our prior experience with field expansion that it would be towards the latter part of the year. So in summary, we're doing all the right things. We think they are making a contribution, but it's early yet to gauge the degree of that.

[Operator]

And we'll take our next question from Jay Olson with Oppenheimer.

[Jay Olson, Oppenheimer]

Can you talk about your 568 selective M4 agonist will be clinically differentiated from other muscuranic programs like Karuna and Cerevel? And what sort of read across do you expect from the EMERGENT-2 study of KarXT, which is going to read out soon?

[Eiry Roberts, Chief Medical Officer]

We're very excited about our 568 program, and we're really pleased to be able to rapidly get to a point with the FDA that they cleared us to start the Phase II study, which will be beginning enrollment very soon. This is a Phase II dose finding study in patients with schizophrenia. And I think just to remind you, 568 is an orthosteric agonist selective agonist of M4. And so it is the first molecule of that nature to go into this disease area. I think we were very encouraged by the validation of the M4 mechanism by both Karuna and Cerevel in acute psychosis. But clearly, the profile of a direct agonist versus a positive modulator versus a nonselective muscarinic agonist, it's difficult to predict right now with the differentiation between those molecules. For us, the most important thing is for us to get going on the Phase II study. We believe it's a well designed dose finding study that will allow us to answer some key questions in this disease area, and we'll be progressing as rapidly as possible to enroll that study.

[Operator]

And we'll move next to Carter Gould with Barclays.

[Carter Gould, Barclays]

I wanted to come to the DTC campaign, it's what now over a year. And I want to -- if you could help us on just how do you think that's contributing to the extent that the magnitude there? And if there's been any thought to expanding that, or how you see that kind of evolving going forward?

[Eric Benevich, Chief Commercial Officer]

We're really pleased with the DTC campaign, and it's meeting our expectations in terms of the behaviors that we're looking for in the target patients in care partner population. We've consistently seen high rates of people visiting the Web site, lots of downloads and page views and of course, people registering to receive information from the company. Ultimately, it's an important contributor towards new patient starts. And we continue to look at key performance indicators and assess the return on investment of the DTC campaign. And as I mentioned in my prepared remarks, we're pleased with it and we're going to continue through at least the end of the year and we'll reevaluate when we get a little further down the road, what the plan looks like for 2023. In terms of how much of a contributor it is to our success, obviously, we've got a lot of different initiatives at any given time. But we think it's an important contributor along with other marketing programs with the expanded field force, et cetera. And all of these things together are what's really driving the strong growth that we've seen this year, the raising of our guidance and our expectation that we've got a lot of headroom here in terms of this market opportunity and we're going to continue to invest as we see appropriate.

[Operator]

Next question is from Anupam Rama with JPMorgan.

[Anupam Rama, JPMorgan]

Matt, I'm sorry if I missed this in your opening comments. But maybe you could highlight a little bit about the R&D expense increase for the year and what's really driving that and which program specifically?

[Matt Abernethy, Chief Financial Officer]

On the R&D expense, that is $30 million [of spend], it's milestone associated with the Sosei Heptares muscarinic program. So we triggered that milestone with the acceptance of the IND and initiation of the Phase II. So it's purely a milestone related expense.

[Operator]

And we'll move next to Brian Skorney with Baird.

[Brian Skorney, Baird]

So I was hoping to get any thoughts on the sNDA front. I know it's about a year before you would launch given the time line. I just wondered if you started to do any work to understand how this might accelerate growth? Do you think this will be a switching market from Deutetrabenazine, or it will be targeting BMAT naive patients? Just trying to think ahead based on what the current needs in this market where you would anticipate drawing patients from, and how much of an inflection that drive?

[Eric Benevich, Chief Commercial Officer]

Well, yes, we're certainly excited about the opportunity. We're very excited about the data. Obviously, we have to see what the labeling looks like, but we're pretty far along in our planning. One way to think about this is that this is completely incremental to our TD market. There's very, very little off label prescribing of INGREZZA. And so we think that INGREZZA offers a differentiated treatment option for patients with Huntington's disease that are suffering from choreiform movements. As you may know, the majority of patients that have Huntington's chorea are not treated with VMAT2 inhibitors for various reasons. And so the majority of our growth opportunity is really to tap into that untreated chorea patient population. Certainly, there will be some patients that are treated with current treatments that may choose to switch to INGREZZA but we don't view this as a -- primarily a switching market opportunity. Our aim is to really address the majority of patients that aren't being treated for various reasons. And we think that the profile that we have in TD lends itself well in terms of those product attributes that make us the most prescribed preferred product in TD hopefully will translate well into the HD market. So we're looking forward to that opportunity next year.

[Operator]

And we'll move next to Chris Shibutani with Goldman Sachs.

[Chris Shibutani, Goldman Sachs]

Congratulations on a very strong quarter. I wanted to ask, Kevin, in particular, your point of view on a bigger picture topic that's come across this week, especially to the commercial pharmaceutical companies, and that is the potential for legislation that would involve potential for Medicare drug pricing negotiations, discussions from different companies, talk about the implications on certain types of drugs, small molecule versus biologics, exposures to different payer groups, impact on how people are thinking about investing in innovation, pipeline strategy. Could you share your thoughts from your vantage point, and also remind us what any implications you feel might be from Neurocrine specifically?

[Kevin Gorman, Chief Executive Officer]

Chris, it's a very timely and important question, maybe a little too timely. There's a lot of moving parts that are taking place right now. You read the press reports as early as this morning as well as our own Washington, D.C. team suggest, things appear to be very much in flux. As such, it would be premature for me to talk about that or speculate on the impact on our company or whatever ultimately ends up in the bill. But when there is clarity, we will be talking about this and we will be giving specific thoughts on that. I'm sorry that I don't want to speculate now, I think the term is the sausage still appears to be made and so we'll wait and see how that turns out.

[Operator]

We'll take our next question from Myles Minter with William Blair.

[Myles Minter, William Blair]

Just on 568, are you planning alongside the Phase II study to run a separate study monitoring cardiovascular effects of that mechanism. And maybe within the Phase II study, do you plan to do an adjunctive therapy arm?

[Eiry Roberts, Chief Medical Officer]

We don't have plans for adjunctive therapy in the current study. The current Phase II study is focused on understanding dose responsiveness in acute psychosis. We will have extensive safety measures throughout the study, including cardiovascular assessment. But at this time, we are not planning a separate cardiovascular study. We really intend to see what the information looks like from the current -- the ongoing Phase II study and then decide how to proceed from there given that obviously this is a selective M4 agonist rather than the molecules that have been in the clinic before.

[Operator]

And we'll move next to Danielle Brill with Raymond James.

[Danielle Brill, Raymond James]

I just have a quick follow-up about the contribution of the new sales hires. And I guess, maybe I'll ask a little differently. But has the prescribing mix shifted at all or is it still 80% contribution from psychiatrists, 20% neurologists?

[Eric Benevich, Chief Commercial Officer]

So we're still seeing, in general, that the mix of prescribers is pretty similar to what it was a quarter ago. Like I said, they've been very recently deployed. And we are seeing positive signs in terms of both the activity and the response to the promotional efforts. But I would caution everyone from attributing the strong Q2 to the fact that we deployed an expanded field sales team. Those were essentially simultaneous events. But ultimately, we do expect that with the expansion of the field sales team and the deployment to three distinct segments that we're going to be able to go deeper in psychiatry neurology and of course, LTC is essentially an untapped market for us previously. And so we'll be able to provide, I think, more detail when we get further along in the year in terms of how things are shaping up. But we're very optimistic about the opportunity that we have with this larger of a field organization to be able to support and reach more customers.

[Operator]

We'll take our next question from Laura Chico with Wedbush.

[Laura Chico, Wedbush]

I guess back to INGREZZA, how do you think directionally about the peak run rate at this point? And I guess I'm just trying to understand how the outlook may have changed in recent quarters following not only the adjustments to the field force, but also in terms of how you might be thinking now about the exclusivity runway for INGREZZA?

[Matt Abernethy, Chief Financial Officer]

Laura, this is Matt. On the exclusivity front, we feel very confident with the strength of our patent space that we’ll have protection into the mid-2030s, and we feel very good about that. As it relates to the peak, we've not given any commentary associated with what we think the peak will be. But I think the growth that you've seen so far this year just really reflects how much of an opportunity we still have in the tardive dyskinesia market. And we think there's only 25% of patients that have received a diagnosis and only half of those being treated at this point. We look at this market as continuing to be untapped, and the growth is even reflective of an environment where telehealth is still 50%. So Eric, anything to add there?

[Eric Benevich, Chief Commercial Officer]

The only other thing that I would point out is that in addition to the majority of patients still being as yet undiagnosed, about half the time when patients are diagnosed with TD, they're not offered a VMAT2 inhibitor. And so there's a significant amount of progress still to be made in terms of making sure that people with TD get diagnosed and they get offered effective treatment. The other thing I would point out, and it somewhat relates to the last question as well, is that we've seen tremendous growth in the number of advanced practice providers that are now diagnosing and treating TD. They're an important part of the care system, both in neurology and in psychiatry, and we're talking about nurse practitioners and physician assistance here. With the expansion of our field organization, we're going to be able to reach and educate more of those important health care providers. And so even though we're five years into the launch, we feel like there's a long way to go in terms of continuing to develop the TD market and to help as many patients as possible.

[Operator]

We'll take our next question from Charles Duncan with Cantor Fitzgerald.

[Unidentified Analyst]

It's [Avi] on the line for Charles. So we were wondering if this past quarter's performance was primarily driven by new prescribers or I guess, an acceleration in the growth of prescriber base, or if it was more from greater depth amongst current prescribers?

[Matt Abernethy, Chief Financial Officer]

What we've long said is a lot of the opportunity that we have left with INGREZZA and the development of the tardive dyskinesia market is really going deeper with existing clinicians. We did see new [riders] this quarter and we are starting to call on a new segment in LTC, as well as with more focus in neurology. So over time, we would expect that we will have a nice increase in prescriber base. But I'd say, by enlarge, the biggest majority of our scripts came from existing prescribers going deeper.

[Eric Benevich, Chief Commercial Officer]

Just to tack on to that, it's not so much about the new writers, it's about the new patient starts. And as Matt said, not just increasing the breadth but the depth of our business is important. We'll continue to see new prescribers get added over time, especially as we tackle new market segments like LTC. But ultimately, most of the patients that have TD are within the practices that we're already calling on. And we continue to focus on helping people recognize TD to make the appropriate distinction between TD and other drug induced movement disorders and of course, to offer effective treatment with INGREZZA when it's diagnosed.

[Operator]

And we'll move next to Evan Seigerman with BMO Capital Markets.

[Unidentified Analyst]

Keith on here for Evan. Just wondering if you could provide any color on the INGREZZA inventory build? And then to that end, does the DTC program impact channel dynamics or revenue recognition cadence?

[Matt Abernethy, Chief Financial Officer]

So on the inventory front, we've been at a very stable inventory position, so nothing to flag there, and I believe I commented on that earlier. So the results were fairly clean this quarter. And as Eric mentioned on the direct-to-consumer advertising campaign, all the indicators are pointing towards a very successful DTC program at this point with what we're seeing in all the Web site metrics and call center metrics. And so I would say it's performing at our expectations.

[Eric Benevich, Chief Commercial Officer]

The only other thing I would add, Keith, is that in terms of does DTC impact channel dynamics? No, it doesn't. Ultimately, we have a limited pharmacy network. It's a large limited pharmacy network, and we think that it meets the needs of our customers from an access and flexibility perspective. But any prescriptions that are written for INGREZZA are going to get filled through that channel.

[Operator]

We'll move next to Marc Goodman with SVB.

[Marc Goodman, SVB]

I joined a little late, so I'm not sure if you actually answered this question about gross to nets and average selling price in the quarter, if you can answer that. But more importantly, I was curious, I know you're probably finishing up on the payer contracting for next year. If you can give us a sense of how you're thinking about ASPs into next year as well for INGREZZA?

[Matt Abernethy, Chief Financial Officer]

So for the quarter, we saw a rebound in net revenue per script as we had expected, a bit above $5,400 and would still lead everybody to a guide for this year of $5,400 net revenue per script. It's a bit premature for us to cover 2023 in terms of both coverage as well as net revenue per script, but it's something that we will obviously give some insight to as the year progresses. And if we did see, Marc, at this time, something structurally that was going to change, that would give us a lot of concern over our ability to continue to allow patients to have access to this medicine or a significant impact to our price when we're thinking about 2023, we would give everybody as much of a heads up as possible. And sitting here today, that's not our expectation.

[Operator]

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

[David Amsellem, Piper Sandler]

Sorry if you addressed this, but on INGREZZA, can you just go through the extent to which you're getting contribution from the long term care setting? I know this is an opportunity you talked about in the past. And maybe looking ahead, what's your view on how big a portion of the mix that could be over time?

[Eric Benevich, Chief Commercial Officer]

So our long term care team has been very recently deployed into that setting. And so it's very early in the process yet in terms of being able to generate that business. We certainly feel very confident about the opportunity, otherwise, wouldn't have built a dedicated sales force there. We recognize that in nursing homes and other types of residential facilities that care for patients that there is a significant use of antipsychotics and other medicines that could cause TD. This is a care segment that we were very interested in and attracted to at the time that we're planning to launch. But unfortunately, we didn't feel like we were in a position to introduce INGREZZA into this care segment during the initial launch phase really because of capacity constraint issues. And so we prioritized focusing our go-to-market approach on outpatient neurology with an emphasis on movement disorders, as well as private practice psychiatry and community mental health clinics, and that's really represented the focus for the first few years of the launch.

And then when we got into last year, we revisited our readiness to take on long term care. We made the decision to reorganize and expand our field sales team, and we've felt the time was right to tackle this. From a scale perspective, it's probably not as large of an opportunity as the other segments that I've described. But it's meaningful and it's significant. And there's a large number of patients that can benefit from INGREZZA, which is the most important thing. So as we get further down the road, I'll be able to provide more color in terms of how things are shaping up, not just with the long term care team but also our new dedicated and expanded focus in neurology with our neurology sales force. So stay tuned.

[Operator]

We'll move next to Ami Fadia with Needham & Company.

[Unidentified Analyst]

This is [Ameen] on for Ami. I was wondering if you can give some color on -- obviously, you created a dedicated sales force for the neurology side of INGREZZA's business. What are the early feedbacks that you are seeing there, and how should we think about the impact of this expansion in the sales force for the remainder of the year?

[Eric Benevich, Chief Commercial Officer]

With regards to neurology, in particular, the feedback has been very positive. We've said that neurology has represented about 15% to 20% of our business for INGREZZA. Certainly, we think that it could be more. And we did the analytics support the case for expanding our focus in neurology with a dedicated sales team. And really, we've got a team that has two products with INGREZZA and ONGENTYS that they can bring into neurology. And we think that, frankly, they work well together, meaning, for example, that ONGENTYS can really help the neurology team get access to some of these movement specialists. And so we're very pleased with the early feedback. About three quarters of the team we hired from outside the company. So they're still learning the rope, so to speak, but they're quick learners. And we've started calling on a broader set of neurologists than what we were calling on previously with our smaller sales organization. So ultimately, we feel good about the investment, all the early signs are very positive. And as I said before, we think that there's a lot of growth opportunity in neurology that we couldn't really tap into under the old structure. So as we get later in the year and into next year, I'll be able to provide a lot more color in terms of how things are going really across all three of those care segments.

[Operator]

And we'll move next to Yatin Suneja with Guggenheim Partners.

[Yatin Suneja, Guggenheim Partners]

I have a question on 352. Could you talk about the expectation from the adult focal onset seizure study that you're running? I understand it is a dose finding study. But in terms of the product attributes, in terms of the signal from efficacy standpoint, what would you like to see for you to -- that would warrant further development in a bigger study?

[Eiry Roberts, Chief Medical Officer]

Yes, we're very excited about the 352 program, both in focal onset epilepsy and in the rare disease epilepsy SCN8A, and we have those two Phase II programs going on in parallel. For the focal onset seizures, that is a dose finding study. And in adults we are evaluating as the primary endpoint there, the seizure frequency using a [value] approach. And so that will be the primary endpoint at the end of the study. We also obviously will be looking at tolerability, the adverse event profile and the exposure to the drug in that setting in addition to other quality of life and other measures that are described, I think, in our posting around this study. Obviously, we'll be looking at the totality of the data from the Phase II dose finding study in order to understand whether or not to progress. But to date, based on the Phase I data from this program, we've been very encouraged by the profile of the molecule and we intend to read out the data from this study sometime next year.

[Operator]

And it looks like we got to the end of all the questions now. So I would now like to turn things back to Kevin.

[Kevin Gorman, Chief Executive Officer]

Thank you very much, Chloe. And thank you, everyone, today, especially for the focus of your questions. It allowed us to get through everyone and I hope you found our answers to be transparent and to be helpful. We've had an extremely good first half of the year, and I'm really looking forward to continued growth in the second half of the year. We've made significant investments in INGREZZA over the six to 12 months, and we expect those to increase our reach to our patient population as the year progresses. I'm also very optimistic about our pipeline that we've built to date. Over the next 18 months, we have a number of important clinical readouts.

To remind you, we have five pivotal programs. We have seven Phase II programs. And we're adding a new and very interesting Phase I program that we’ll be talking about all of those more in the coming months. So overall, I think in what is still a challenging environment, Neurocrine has done an outstanding job here. And we are looking forward to getting together with many, if not all of you, throughout the remainder of the year. So once again, thank you very much for your attention.

[Operator]

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