Neurocrine Biosciences Inc

NASDAQ:NBIX

Earnings Call Analysis

Navigating Neurocrine's Journey: A Promising Path Ahead

In its latest earnings call, Neurocrine Biosciences showcased impressive growth primarily driven by its flagship drug, INGREZZA, which reported a remarkable 26% year-over-year increase, culminating in $613 million in Q3 sales. The company is raising its full-year guidance for INGREZZA to a range of $2.3 billion to $2.32 billion, indicating significant potential as they tap into an estimated 800,000 individuals in the U.S. suffering from tardive dyskinesia (TD). Despite competition and market dynamics, the company's proactive expansion of its sales force demonstrates its commitment to capturing market share effectively.

The Crinecerfont Opportunity: A New Chapter in Rare Disease Treatment

Anticipating the FDA’s decision on Crinecerfont, Neurocrine is setting the stage for a significant launch in early 2025. The medication targets congenital adrenal hyperplasia (CAH), a condition that hasn't seen new treatments for over seven decades. While the company acknowledges potential hurdles with insurance reimbursement during the product's market introduction, it has established a free goods program designed to bridge the gap until approvals can be secured. The rare endocrinology team is confident in their ability to facilitate access to Crinecerfont, viewing it as a future revenue driver alongside INGREZZA.

Pipeline Developments: Progressing into Clinical Trials

Neurocrine is making strides in its research and development pipeline as it prepares to initiate two major Phase III trials for NBI-845 and NBI-568 in the first half of 2025. The management underscored the importance of these developments, as success in any of these programs could significantly boost Neurocrine's market position and provide innovative treatments in the mental health sphere. For 2025, the company anticipates allocating a percentage of its revenue, likely in the low to mid-30% range, to R&D, promoting continued innovation.

Patient Access Strategies: A Focus on Long-Term Growth

With a mission to ensure patients access their treatments, Neurocrine emphasizes the strength of its contracting strategies, currently enabling over 80% of lives to receive coverage for INGREZZA at a low out-of-pocket cost. This operational success coupled with a robust sales force expansion points to a sustainable growth trajectory for both INGREZZA and Crinecerfont. They are committed to consumer education, adaptability in the reimbursement landscape, and delivering high-value patient care, which are crucial for their operational success in the competitive pharmaceutical market.

Capital Allocation and Shareholder Value: A Strategic Approach

In line with its growth strategy, Neurocrine's Board of Directors recently approved a $300 million accelerated share repurchase plan to enhance shareholder value while maintaining financial flexibility for future investments. The management discussed their confidence that recent share price levels do not reflect the company’s current or future growth prospects. This commitment to returning capital to shareholders demonstrates their focus on sustaining long-term value creation amidst ongoing investments in R&D and commercial capabilities.

Earnings Call Transcript 2024-Q3

[Operator]

Good day, everyone, and welcome to today's Neurocrine Biosciences reports third quarter results. [Operator Instructions] Please note that this call will be recorded, and I will be standing by should you need any assistance. It is now my pleasure to turn today's call over to Todd Tushla, Vice President of Investor Relations. Please go ahead.

[Todd Tushla, executive]

Thank you, and happy Halloween Eve. Welcome to Neurocrine Biosciences Third Quarter 2024 Earnings Call. With me are Kyle Gano, our Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; and Eiry Roberts, Chief Medical Officer. Note that today 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. With that, for the first time, I hand the call to Kyle.

[Kyle Gano, executive]

Thank you, Todd. Before we dive in, I'd like to acknowledge that this is my first earnings call as Neurocrine CEO. I'm excited to share my enthusiasm for our future. So my opening remarks may run a bit longer than usual. First, I want to express my deep gratitude to our Board of Directors for their confidence in my leadership as we embark on this next chapter of growth. Thanks to the exceptional guidance of our past CEOs, Gary Lyons and Kevin Gorman, Neurocrine is in a strong position to become a true leader in neuroscience. I extend my heartfelt thanks to both Gary and Kevin for their invaluable contributions to the company's success.

Given our company's growing multibillion-dollar franchise in INGREZZA, the potential of Crinecerfont as our next blockbuster, the registrational programs for NBI-845 and NBI -568 and what we believe to be the industry's most robust neuroscience-focused pipeline. Neurocrine's future is bright with significant value creation ahead. Built on this at our core, we are a company driven by innovation and operational excellence. Our capital allocation strategy reflects this by prioritizing revenue growth, diversification and regenerative pipeline. As announced in this morning's press release, our Board of Directors has authorized a share repurchase plan of $300 million, which we intend to implement through an accelerated share repurchase transaction. Considering our expected revenue growth for both INGREZZA and Crinecerfont and the breadth of the early to late-stage pipeline, we believe Neurocrine is trading at a significant discount to its underlying enterprise valuation, making share repurchase a high-return investment opportunity.

In addition, we maintain the flexibility to further invest in the growth of our business. On the topic of capital allocation, our strategy is aligned with our plan for value creation. This approach is driven by 4 key pillars that ensure we continue as a high-growth company and position ourselves as a leading neuroscience organization with both commercial and scientific scale and expertise. The 4 pillars of our strategic plan are: one, drive revenue growth by investing in INGREZZA and preparing for a successful Crinecerfont launch; two, aggressively develop our highest value pipeline assets such as NBI 845 and NBI-568, while accelerating early-stage programs to proof-of-concept; three, pursue external opportunities to expand our portfolio with strategically aligned assets that can be rapidly developed into commercial products, leveraging our expertise in neurology, psychiatry, endocrinology and our R&D to commercial infrastructure and four, return excess capital to shareholders beyond what is required for organic and inorganic growth.

With these guiding pillars, we are well positioned to deliver substantial near- and long-term value to both patients and shareholders. Now as far as Q3 with INGREZZA, we continue to reach more and more patients suffering from tardive dyskinesia and Huntington's Disease chorea. With an estimated 85% of the 800,000 patients with tardive dyskinesia not yet receiving a VMAT2 inhibitor for the symptoms, there is much work and opportunity ahead. To this end, we are again raising full year INGREZZA guidance. Regarding crinecerfont, our regulatory activities remain on track with potential approvals by year-end. We're excited to deliver a groundbreaking treatment to patients who have lacked a new option for 70 years. Like INGREZZA, Crinecerfont 1 approved will be a first-in-class medicine for patients and has the same hallmarks of a blockbuster medicine. No doubt, Crinecerfont will offer a second leg of revenue growth for Neurocrine and helped diversify our business over time.

On the pipeline front, this year, we obtained proof-of-concept data in 2 of our 3 novel psychiatry Phase II programs. Having spent nearly 25 years in this therapeutic area, I understand inherent risk that comes with drug development within psychiatry. Achieving success in just one of these programs would have been remarkable. -- succeeding in 2 out of 3 exceeded our internal expectations and significantly derisked both assets and their associated biology. As we move NBI-845, our AMPA positive allosteric modulator for major depressive disorder, and MBI -568, our selective inform muscarinic agonist for schizophrenia into registrational studies early next year, we are well positioned for the next key value drivers after INGREZZA and Crinecerfont. With several internally developed molecules set to enter clinical trials and multiple Phase III programs lined up for 2025, prioritizing R&D investment becomes even more critical. Today's decision to deprioritize luvadaxistat and NBI-104, reflects this disciplined approach. Decisions like these are never easy, and I want to acknowledge and thank the patients, families and health care professionals involved in the studies.

Pipeline discipline and capital allocation are cornerstones of our strategy, and we will continue to evaluate all of our clinical and preclinical programs to ensure we invest in potential treatments that offer meaningful value for patients and shareholders alike. In closing, with an exceptional leadership team and a dedicated energized organization, we are well positioned to become the leading neuroscience company. I'd like to wrap up my remarks by sharing thoughts I expressed earlier this year when Kevin announced his retirement. I'm inspired by the work we have ahead more confident than other in the potential of our future and I'm measurably proud to collaborate with the best team in the industry to release suffering for people with great needs, but few options and drive value for our shareholders. With that, I'll now turn it over to Matt.

[Matthew Abernethy, executive]

Thank you, Kyle. Our INGREZZA team delivered $613 million in Q3 sales, reflecting continued strong patient demand and positioning us to increase our guidance range to $2.3 billion to $2.32 billion, reflecting 25% year-over-year growth at the midpoint of this range. The tardive dyskinesia market remains very attractive. And as Kyle mentioned, our #1 capital allocation priority remains investing in INGREZZA. Of note, our psychiatry and long-term care sales force expansion is complete and fully expect to see the benefit of this expansion during the first half of next year. In addition, our Crinecerfont commercial and field medical teams continued to build market awareness of congenital adrenal hyperplasia and [indiscernible] in preparation for the PDUFA date in late December. INGREZZA and Crinecerfont growth over the years ahead will provide Neurocrine the resources to invest in our growing pipeline.

On the R&D side, the teams are busy preparing for the initiation of 2 major Phase III programs in major depressive disorder and schizophrenia. Although we're still working through our budget process for 2025, you should expect an overall increase in both dollars and percentage of revenue allocated to R&D -- likely to be in the low to mid-30% range of revenue next year. We will be meeting with the agency over the coming months on both the MBI-845 and 568 program and we'll provide further insight into R&D investment expectations for 2025 during our Q4 earnings call in early February.

Returning to 2024, we have made significant progress in growing our revenue to over $2 billion in advancing and expanding our pipeline. We anticipate that 2025 will be a year focused on investment for continued growth into the future, which we believe will drive long-term shareholder value. As highlighted in our press release, our Board has approved a $300 million share repurchase plan. In the coming days, we intend to enter into a $300 million accelerated share repurchase transaction, subject to market conditions. Together with our Board, we believe recent share price levels reflect neither the current value of the company today nor the growth prospects we expect to achieve in the future. As a result, we believe this use of capital will benefit our shareholders while also preserving financial flexibility to make the investments required to continue the advancement of our leading neuroscience company.

With that, I'll now hand the call over to our Chief Commercial Officer, Eric Benevich, to provide an update on INGREZZA and also our CAH launch preparations. Eric?

[Eric Benevich, executive]

Thanks, Matt. We again delivered a strong quarter for INGREZZA with over 26% year-over-year growth, driven primarily by demand and continued patient compliance across the tardive dyskinesia and Huntington's disease chorea indications. INGREZZA sales are now annualizing at over $2.4 billion. And with 14 more years of exclusivity ahead of us, we still have a tremendous opportunity to help even more patients. It's been a number of years since we last updated our TD prevalence estimates. After conducting a thorough literature review and analyzing claims data for antipsychotic utilization, we're now estimating TD prevalence of at least 800,000 individuals in the U.S. Given the continually increasing utilization of dopamine blocking antipsychotics, the size of the TD population continues to grow and we continue our efforts to educate and health care providers identify appropriate treatment candidates for INGREZZA.

Earlier this year, we made the decision to expand our INGREZZA sales force. This expansion is really a reflection of 2 things: the remaining significant growth potential in the TD market with only 1/3 or less of TD patients currently diagnosed and the substantially increased number of TD treaters developed over the last few years especially in the psychiatry segment. We made the decision to expand our field teams in a manner consistent with the market dynamics and commensurate with the INGREZZA franchise opportunity. On that note, I'm pleased to report that the psychiatry and long-term care sales force expansions are now complete. Our newest team members are now in the field and settling into their roles. As noted on our Q2 earnings call, based upon our previous experience, it will take a couple of quarters to see the full impact from this expansion on diagnosis and treatment rates.

Turning to Crinecerfont, our rare disease endocrinology team remains focused on providing congenital adrenal hyperplasia, or CAH, disease state education to the endocrinology health care providers and patient communities. Our team is eager and ready to immediately begin working with the CAH community should Crinecerfont be approved by the FDA at year-end. I know many investors are contemplating the Crinecerfont launch dynamics. While Crinecerfont has all the characteristics of a future blockbuster, it won't happen overnight. We're building a foundation with our disease state educational efforts during the prelaunch period. And assuming approval, we'll be in a good position to launch quickly. We intend to offer a free goods program during the period when patients -- insurance reimbursement claims are being adjudicated and to enable endocrinologists to get familiar with the benefit risk profile of Crinecerfont. And while payer interactions to date have been positive as with most newly launched products, commercial payers typically have new-to-market coverage restrictions or even policies to block reimbursement for up to the first 6 months when the product is launched. With an estimated 60% to 70% of CEH patients under commercial coverage, this will mean delayed reimbursement for many patients in the first half of the year, but we're adept at managing such situations as seen with our experience managing the formulary exceptions process within INGREZZA.

The goal is to help appropriate CAH patients get started on treatment while we work through their reimbursement. All in all, the rare endocrinology team is super excited about the opportunity to help the CAH patient population who have not had a new treatment option in over 70 years. So with that, I'll turn the call over to my colleague, Dr. Eiry Roberts, our Chief Medical Officer.

[Eiry Roberts, executive]

Thank you, Eric, and good morning, everyone. I'll begin today's clinical update with Crinecerfont. We continue to have constructive interactions with the FDA and remain on track for the December 29 and 30 PDUFA date. Given the calendar and end of the year timing, it would not be surprising to potentially receive approval for both formulations on December 30, which falls on a Monday. Turning to the mid-stage pipeline. Last month, we disclosed that ERUDITE study of luvadaxistat as a potential treatment for cognitive impairment associated with schizophrenia, failed to meet its primary end point. and thus did not replicate the positive findings on cognition previously reported in the INTERACT study.

The results from the Erudite were confounded by variability in cognition measures across the population studied and the potential imbalance in baseline characteristics for enrolled subjects. As Kyle mentioned, we're therefore discontinuing this program, together with the NBI 104 T-type calcium channel antagonist program in CSWS and focusing resources on advancing NBI 845 and NBI 568 into Phase III studies. Both NBI 845, our [indiscernible]-positive allosteric modulator for the treatment of major depressive disorder, and NBI 568, the selective M4 orthosteric agonist for the treatment of schizophrenia continue to make good progress towards our end of Phase II interactions with the FDA which we anticipate will occur over the next few months to enable the start of registrational studies for each of these programs in the first half of 2025.

We will provide more insight into study specifics over the coming months, together with our plans to publish key Phase II information from each of these programs in the latter part of 2025 once these registration studies are up and running. Shifting to NBI 770, our NMDA NR2B NAM negative allosteric modulator for the treatment of major depressive disorder, the Phase II program for this molecule continues to enroll well, with top line data anticipated in 2025. The remainder of the pipeline is also progressing well including the 4 muscarinic programs currently in Phase I development. With that, I'll hand the call back to Kyle. Kyle?

[Kyle Gano, executive]

Thanks Eiry, ready to take questions.

[Operator]

[Operator Instructions]

We'll take our first question from Chris Shibutani with Goldman Sachs.

[Chris Shibutani, analyst]

Congratulations on a clearly strong quarter commercially. I wanted to ask about going forward, thinking about the pipeline, people as well as strategy I really appreciate your comments. I think you have announced previously that you're looking to step away. Kyle, have you given thought to the point people who will be running the role that Eiry has been involved with as well as your previous role, which was really managing the business development leadership there since I noticed quite a bit of focus on capital allocation.

And secondly, can you just give us an update on the next-gen VMAT2 inhibitor. I know we started Phase I at the start of this year, but some visibility into when we could learn more would be great?

[Kyle Gano, executive]

Thanks, Chris. This is Kyle. I'll start and then Eiry -- are and the team add anything that I missed here for our EMA follow-on compound. This is what we're looking here to do is to have a more potent compound that would be amenable to all the same indications that we see advantages for INGREZZA but also offer the opportunity to develop a long-acting injectable, which we know is important to the prescriber base as well as to patients. So staying on that, the program is currently in Phase I. We'll look to move that into patients next year, pending the review of the ongoing Phase I data.

[Operator]

You will go next to Paul Matteis with Stifel.

[Paul Matteis, analyst]

Kyle, congrats on moving to the CEOC. I want to ask you a question just about BD and philosophically where you stand. You guys, in your public commentary over the years have kind of ebbed and flowed to the degree to which you've talked about prioritizing smaller deals versus something larger and that $3 billion to $4 billion range. How do you think about capacity now? And strategically, do you feel like this is the right time for Neurocrine over the next year, 1.5 years to do something that's more meaningful and bolder for a later-stage asset? Or do you still like this kind of smaller BD spread the best strategy that you've employed so far?

[Kyle Gano, executive]

Thanks, Paul. Appreciate the question. In terms of our BD activities, the team that we have here continues to work with a high degree of urgency. Fortunately, we don't feel like we have to do something right now, either large or small. We've got a very deep and diversified portfolio with a number of investments that we're making that are late stage next year, and we've talked about some of those already within NBI 845 in major depressive disorder in NBI-568, our programming in developed with schizophrenia. And behind that, we have a very rich early to mid-stage pipeline that's developing. So right now, in my mind is learning about the landscape and figuring out what areas that we want to invest in the forward, which assets are in those areas, but really focused on executing what we have in the pipeline right now and making sure that we're doing whatever we can there to put those programs in the best possible situation for success. And if something comes out down the road, that is a program, a technology that is something that we could utilize and take advantage of our expertise and infrastructure. We'll look at that seriously. But right now, we feel like we're in a very enviable position.

[Matthew Abernethy, executive]

Yes. Fortunately, our financial flexibility is very strong at the moment. A lot of cash, continued cash flow generation, a very clean balance sheet to retire our convertible debt earlier this year, and you're aware. So we do have financial flexibility into the future if we could decide that was something for us to do and as Kyle said, a very enviable position to be in.

[Operator]

We'll take our next question from David Amsellem with Piper Sandler.

[David Amsellem, analyst]

So looking into '25 and beyond, how are you thinking about the potential that you might need to compete more on price to hold INGREZZA share versus OSTETO? And then as you think about IRA negotiations? Do you anticipate any impact on INGREZZA pricing once OSTETO is included in IRA negotiations. In other words, some sort of spillover effect, if you will, -- and then secondly, just on 568, just remind us how you're thinking about indications beyond schizophrenia, of, say, psychosis, for instance. And -- or are you looking at the other muscarinic for indications beyond schizophrenia, just help us understand your thought process there.

[Matthew Abernethy, executive]

So David, we're going to handle the first chunk of your questions. And just out of respect for others in Q1, we'll leave the muscarinic question to others. But Eric can comment on price. The only real specific we're going to give as it relates to 2025 on price as you do -- or we do sitting here today, expect our net revenue per script to be very similar to what we've seen in 2024. So no significant change that we can see at this time for '25.But here.

[Eric Benevich, executive]

Yes. So what I'll say is that every year, we continue to assess our contracting strategies. And we invest in contracts where we think it makes sense. And -- in some cases, we have contracted access where we think that it's favorable. In other cases, we look at the contract and make decisions to pull back. And so as a result, the coverage landscape changes from year-to-year. But overall, our access has and continues to remain excellent with over 80% of lives covered. And the majority of patients paying $10 or less. And we expect that to continue into the future. The other thing that I'll say is that we're going to learn from the first few ways of drugs that go through the negotiation process in terms of what their access looks like vis-a-vis nonnegotiated drugs. So stay tuned. But ultimately, our goal is to make sure that patients that need access to INGREZZA continue to have access. We're trying to do that in a manner that is responsible from a from a financial perspective.

[Operator]

We'll take our next question from Akash Tewari with Jefferies ahead.

[Unknown Analyst]

This is [indiscernible] on for Akash. On your M1 M4 asset, can you talk about why you feel confident that you don't have to dose with [indiscernible] like KarXT does -- and then additionally, what should we expect to learn from initial Phase I human data next year for the muscarinic.

[Kyle Gano, executive]

Thanks for the question. On NBI 570, it's a very interesting molecule in the sense that it's one of a basket of small molecules that we have in development that range from M1 to M4 selectivity across the muscarinic and 570 is an equal potency on M11 and M4. One of the things that's exciting about this molecule as well as the speed of molecules is that it relies on explicit selectivity of just M1 and M4 across the muscarinic, which we know are the subtypes and M1 through M5 -- so we've got that going for us out of the gate. But the other piece that [indiscernible], our partner has done, is what many companies in the early stages of our discovery do when they're interested in the molecule. They dial in the selectivity that they desire. And then subsequent to that, they actually make the molecule be penetrant to the CNS more versus the periphery and in doing so, when you think about 570, that's how we're able to move forward on the M1 and M4 agonist without the need to add back something of blocks peripheral effects because 570 preferentially gets into the CNS.

In terms of the ongoing program with 570 of the muscarnic, they're all in Phase I right now. They'll be reading out data during the course of 2025 and what that will be able to look at the totality of the the data coming from the different molecules and learn a lot from the pharmacology across M1 and M4 and what that will be able to determine next steps in terms of the patient population.

[Operator]

We'll take your next question from Tazeen mad with Bank of America.

[Tazeen Ahmad, analyst]

On INGREZZA, you had another really strong quarter. How should we be thinking about sequentially the flow in 4Q? Because based on your your guidance, it does seem like it could be a little bit flattish. I know traditionally, 4Q tends to be a stronger quarter. So can you give us a little bit of color on that?

[Matthew Abernethy, executive]

Yes. I think when you look at historical sequential growth in [indiscernible], we fall right into that historical a range of somewhere between $10 million and $20 million sequentially. So I do think our guidance takes that into consideration -- just a few comments for Q4. We do have our new sales team that's in place and actively calling on customers in that handoff process is occurring. But as Eric said in the prepared months, that does take a few quarters to start kicking in. And then the last piece is something that we've had in historical years, a sequential increase in gross to net discount that's associated with channel it's going to be a little bit less than what it has been historically because of some of the higher dynamics, but nonetheless, a higher gross-to-net discount in the fourth quarter.

[Operator]

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

[Jay Olson, analyst]

Congrats on all the progress. We're curious about your level of interest in epilepsy since it's still an area of super high unmet need, and it's also proven to be a difficult area to conduct clinical trials. So we're just curious how committed is Neurocrine to epilepsy. And do you plan to replace the [indiscernible] molecule with another asset?

[Kyle Gano, executive]

Thanks, Jay, this is Kyle. I'll take your question here. We still have a very strong commitment to the area of epilepsy. We have a number of programs that are moving to various stages of preclinical development. And while I don't expect us moving forward with another T-type calcium channel blocker, we do have a mixed NAV1.2, 1.6 inhibitors that we're looking forward to bring up into the clinic next year. So stay tuned on that. Obviously, a lot of the molecules that are required to move forward have a significant body of data around them for GLP tox 90 enabling studies we need to get through those and then so will relay on the other side for advancing that particular asset. That still committed to epilepsy. There's still a high degree of unmet need in that space and we hope to be a player as we move along here.

[Operator]

We'll take our next question from Ash Verma with UBS.

[Ashwani Verma, analyst]

So just on 568, now that you've had some time to digest the results in Phase II. Just what are you learning? Do you think this orthostatic agonism was the issue in this case? And -- how should we think about the rest of the myskinetic pipeline based on what you've learned?

[Eiry Roberts, executive]

I think -- I hope I understood your question properly, Ash, but I think it was that now that we have the exciting Phase II data, how are we thinking about the orthostatic agonism with respect to next step in the context of the broader muscarinic pipeline. So just to address that. So -- thank you. So just to address that, so we are moving forward rapidly with our 568 molecule on the back of the encouraging Phase II data that we saw in schizophrenia and we're planning to enter in the first half of next year, a Phase III registration program for the treatment of schizophrenia.

The first step on that journey will be our interaction at the end of Phase II with the and we're preparing for that in the next couple of months. And so in that regard, we think there is a significant opportunity to add on to the current success that they've been in the muscarinic area. We were very pleased to see the first medication approved with this mechanism in [indiscernible] earlier this quarter. But I think in terms of the activity for and the potential benefit risk profile and improvement in that associated with the selective agent. We believe there's a lot more room in this space to add value for patients. And so we're excited and encouraged with our Phase III planning in that regard.

As Kyle mentioned, we do have a suite of muscarinic agonists behind 568, which have, again, high cell activity for either M1 or M4 as orthosteric agonist and those are currently in Phase I development, and we're exploring how to understand the potential areas of investigation beyond Phase I as we generate data next year, which could range all the way from disorders where improvement in cognition is important all the way through to psychosis, bipolar disorder and other indications.

[Operator]

We'll take our next question from Phil Nadeau with PD Cowen.

[Unknown Analyst]

This is Alex on for Phil. Congrats on the quarter -- on 568, just curious of the upcoming emracladine data will form a pivotal trial plans in any way? And also, could you maybe just walk us through your broader strategy for 568 Pivotal, including regulatory conversations and trial design?

[Eiry Roberts, executive]

Yes. So we actually haven't talked very much about the Phase III trial design yet, and I think we want to clear our way through the end of Phase II meeting before we do that. But certainly, as we start to post the trials that will be improved in that registration program in the first half of next year, we'll be able to get into much more detail around that. With respect to the impact of [indiscernible] information on our planning and thinking. I think we're very encouraged by the fact that N47 appears to be sufficient to produce psychotic set in dyskinesia. And I think from that point of view, the fact that our [indiscernible] agonist, that's the approach we've chosen and that's the approach that we are confident on the back of our Phase II data that we generated earlier this year. And so we're very much more focused on our own program in terms of understanding the emerging benefit risk from our Phase II data in ensuring that we're incorporating all about loading into our Phase III trial designs and into our Phase III program. And we'll be happy to talk more about that as we go through the Phase II interaction.

[Kyle Gano, executive]

And maybe just to add to that, the excitement that we have around our own program stems from the fact that we're the only approach that can selectively and directly activate them for and deliver on the promise that we've seen from the muscarinic thus far without any need to rely on any other aspect of an add-back therapy or some sort of endogenous ligand for either efficacy or safety, tolerability. And we think at the end of the day, physicians are going to be feeling a lot more confident about our approach to be able to be used in a wider population of the patients.

[Operator]

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

[Anupam Rama, analyst]

Going to ask the second question I've asked for the last 10 years on third quarter earnings. So any chance of an INGREZZA preannounced and guidance at a small health care conference in January? Or is this more of a fourth quarter earnings report scenario in February?

[Matthew Abernethy, executive]

Yes. Anupam, you're -- I can pick up a trend about you even acknowledging it. So always good to hear your question. We're obviously looking forward to JPMorgan this year Kyle has an ambitious plan for 2025 with both detail. But as it's consistent with the last, I believe 2 years -- this will be the third year where we do not preannounce our revenue at the JPMorgan conference and we'll save commentary for both Q4 results and then full year sales guidance for 2025 until February earnings call. But I'm always glad to see you in January to kick off the new year.

[Operator]

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

[Evan Seigerman, analyst]

So as we think about your sales force expansion and the opportunities for the treatment of Korea associated with Huntington's disease, how should we really frame that opportunity? I know [indiscernible] been there. But with the investment, where do you see, I guess, INGREZZA going in the next couple of years? I mean how does this really compare with the TD market. I think secondarily, why focus on no epidemiology for TD now, does that imply that you're not satisfied with where TD is going you're trying to emphasize that there's still more room to grow. I'm just trying to get a better understanding of what that commercial story looks like?

[Eric Benevich, executive]

Yes, let me take your second question first in terms of our reassessment of the prevalence of TD. And that's something that we haven't looked at for a number of years. And so I would look at that as more of just an updating our prevalence estimates using a methodology that's similarly consistent with what we had done previously. The time that we launched in 2017, our estimate was at least 500,000 people in the U.S. with TD. A couple of years later, we updated our estimate to at least $600,000. And then fast forward, I think it's been 4 or 5 years since the last time we looked at it. And the numbers of people living where TD continues to grow, I think, commensurate with the expanded use of antipsychotics, especially in nonpsychotic conditions. And so in our prepared remarks, we did update the number now to at least 10,000 people with TD in the U.S. And I think that, that number is similar to other estimates that are out there and frankly, maybe a little bit on the low end of the range. So that's the prevalent story. In terms of the sales team, we certainly felt like the decision to expand our sales force was in line with the growth of the market..

Okay. And certainly, as I mentioned in the prepared remarks, consistent with the growth of the prescriber base in TD, and in terms of Huntington's, the only part of our commercial team that we didn't expand or change really was the neurology team. And the strategy of penetrating that Huntington's opportunity is primarily through our neurology sales force. On a relative basis, the neurology opportunity is much smaller, excuse me, the Huntington's opportunity is a lot smaller than it is in tardive dyskinesia. And yet there's still significant unmet need in Huntington's chorea. You may have seen that we've recently presented some data showing the use of INGREZZA in patients that are with Huntington's chorea that are also on antipsychotics. And I think that that's some important data to get out there because that is a segment of patients with Huntington's chorea that are typically not treated with VMAT2 inhibitors. And so we wanted to show that they would have no impact on relative safety, but they can still improve their Creaform movements. And so overall, the growth driver in the future will continue to be primarily TD, but Huntington is still an important strategic opportunity for us, especially within the framework of a neurology team.

[Kyle Gano, executive]

Maybe just to put a finer point on that. We talked about the TD prevalence being around 800,000 in the U.S. for HD chorea. There's about 30,000 patients, about 20,000 patients have chorea that's moderate summer about 5,000 patients currently on a VMAT2 inhibitor. So the 15,000 patients that we're looking to address, that's about a 50:1 ratio of patients that we can serve with INGREZZA when you look at the opportunity versus TD. So we do feel that the greater opportunity moving forward will be in tardive dyskinesia, but we look to penetrate more into the HD chorea space, in particular, with the launch of our Ingrezza sprinkle to help access patients that might have difficulty swallowing with dysphagia that tends to be more prevalent in the HD population.

[Operator]

We'll take our next question from Cory Kasimov with Evercore.

[Cory Kasimov, analyst]

I wanted to ask about [indiscernible]. And if you can talk about how many prescribers are located at the CAA centers of excellence and the portion of the overall patient population they serve? And are there certain segments of the CAH population they are most eager to treat upon approval?

[Eric Benevich, executive]

Yes. So let me take a step back and say that we're really excited about the opportunity to make a difference with the CAH community with the PDUFA date coming up here at the end of the year. we've been preparing for a launch early in 2025. As you know, we have a sales force that's out there. They're doing disease state education right now. They're meeting with future customers, their profiling and learning about their practices. And so this is all important work that will help us get off to a strong start once we knock on wood get approval. -- later this year. In terms of the proportion of the patient population that's within the care of the Cares Foundation Centers of Excellence, there's only about a dozen or so of those centers of excellence out there. And we're still learning about what proportion of the patient population are being managed through those centers. But I would say it's in the range of 10% to 15% of patients in total. And so the majority of patients with CAH are still being cared for within community endocrinology practices and also within pediatric endocrinology practices.

So obviously, we are going to be putting a lot of focus early on, on those 2 segments. The pediatric endocrinologists as well as the care centers. But ultimately, for us to really make a difference in this patient population, we're going to have to make sure that we also are reaching out to those patients that are cared for and community endocrinology practices. Do you have anything else to add, Eiry?

[Eiry Roberts, executive]

No. I think you said it well, Eric. I mean I think there is a lot of excitement that we're hearing as we talking with clinicians who are working with these patients given that there's been nothing new for this patient population in the last 70 years. And we do know in terms of focus, but in the pediatric setting, obviously, there is a very significant level of interest in potential medication that could help with androgen reduction in that patient population where very tight management of androgen levels become so critical and faces normal growth and development. And so we are seeing a lot of -- a very significant interest as we continue to hopefully progress towards an approval for both pediatric and adult patients living with congenital by the end of this year. Eric, you answer something else.

[Eric Benevich, executive]

Yes. Just one last thing I want to say is that our team -- the receptivity that we've seen since our team has gone out into the field since this summer has been really strong. So I think there's really great interest in the endocrinology community. And certainly, I think it's a testament to the unmet need in CAH.

[Operator]

We'll move next to Brian [indiscernible].

[Unknown Analyst]

This is [indiscernible] on for Brian. With the upcoming pivotal trials in psychiatry, should we expect 845 and 568 to progress largely in parallel following the end of Phase II meeting? Or will you be looking to emphasize or accelerate one program over the other?

[Kyle Gano, executive]

I appreciate the question. I think given the proximity of when we reported top line data would be commensurate with how we would look at starting the Phase III trials in 2025. We don't anticipate any needs to stagger them any particular way for any reason. It's going to be more based on when we have our end of Phase II discussions and we can stand up the typical trials for both 845 and 568. So I expect them to be started nearly at a similar time frame, but not have the exact sign for both of these studies.

[Eiry Roberts, executive]

The only thing I'd add there, [indiscernible], is that obviously, from an operational perspective as well, these are focused on 2 different indications within the psychiatry space. But 845 in major depressive disorder and 568 in schizophrenia. So we don't anticipate competition for patients between our 2 programs, which I think is really important. The internal team is extremely excited about the opportunity to potentially bring value in both of these areas with these programs moving forward.

[Operator]

We will move next to Carter Gould with Barclays.

[Carter L. Gould, analyst]

Maybe to follow up on one of the earlier questions. had some time ago in the queue, I guess, for a long time, we looked at Neurocrine pipeline, you guys were sort of mid-stage heavy that's clearly evolved. And now it's a little bit more of, I guess, a barbell approach where you've clearly made those Phase III investments are about to make those Phase III investments in the earlier stage pipeline now at least from kind of where we sit, seems very focused on VMAT and muscarinic, so can you maybe talk about how you're looking at that early-stage portfolio, your -- I guess, the breadth and diversity of those assets? And should we expect sort of another replenishment either through in-licensing or homegrown assets to sort of bubble up over the course of '25?

[Kyle Gano, executive]

Yes. Thanks for the question. I think also, we'd like to point out that in addition to the later-stage assets and the earlier portfolio that you mentioned that spans the muscarinic agonist and VMAT2. We also have a muscarinic antagonist that we're moving forward for a variety of movement disorders. And then in Phase II, we have an NR2B NAM that we're moving for the major depressive disorder. So there's a lot going on across the organization in terms of early to the late-stage portfolio. And we'll have more to say about what's emerging in terms of our earlier-stage portfolio and add to the clinical programs in early 2025. So stay tuned on that. There's a lot of productivity that's ongoing right now in our labs, and it just takes a bit of time to move that forward in the clinic, and we'll start seeing that in 2025.

[Operator]

I'll take a question from Brian Abrahams with RBC Capital Markets.

[Unknown Analyst]

This is Joe on for Brian. Can you elaborate more on the growth drivers you're seeing on INGREZZA, the degree of demand versus gross to net versus any other contributions you could know for us-- and how are you thinking about -- what are you seeing on the ground in terms of the competitive landscape in the TD market?

[Eric Benevich, executive]

Yes. In terms of the dynamics for Q3, it's primarily driven -- the growth is primarily driven by demand. And as I mentioned in my prepared remarks, continued strong compliance for INGREZZA. In terms of the competitive dynamics, this is a growing market. And obviously, we've seen strong growth since we launched 7 years ago in counting. As Kyle mentioned in his prepared remarks, less than 20% of patients are currently being treated with the VMAT2 inhibitor, which are the recommended first-line treatment in the treatment guidelines. So there's still a long opportunity ahead of us with 14 more years of exclusivity. And we continue to invest in that growth. I think as indicated by the recent expansion of our field sales team and our continued investment in DTC. So growth is primarily organic and will continue to be for the foreseeable future.

[Operator]

Thank you. We'll take our next question from Mohit Bansal with Wells Fargo.

[Mohit Bansal, analyst]

Kyle, congrats on your first call as CEO. Maybe I would love to understand how you are thinking about -- internally you are thinking about the upcoming competition in CH space? I mean, kind of we probably putting cart before the horse here, but there is an ACTH antagonist out there as well. How do you see that as a competitor to Crinecerfont? Do you see this as a direct competitor or more like in line of therapy where something could be first line versus second line, how should we think about that?

[Kyle Gano, executive]

Maybe I'll start that question, if there's anything I'm missing. I'll ask my team to chime in here. So when we think about CAH, I think we can all agree that this is a very serious disease. At the heart of the matter is the body struggled to capture its HPA access. And by HPA, I mean, hypothalamus pituitary adrenal access. In terms of how the disease is initiated, it's caused by mutations on the SIP 21 A2 gene, and that results in dysfunction or asking of the synthesis cortisol, which is the key regulator of the HPA access. So for the past 70 years, patients, physicians had to use, super physiological or very high doses of GCs, glucocorticoids to act as that regulator of the HP access. What we get with Crinecerfont is the ability for the patient to capture or recapture their HPA access, allows them to control ACTH, reduce ACT, therefore, control -- reducing control antigens.

And at the same time, we think about that when you control ACHH endogens, you're able to remove the requirement for excessive control of your excessive use of glucocorticoids. And we've seen it from our Phase III trials that, that puts a number of patients into using a physiological range of their GC dose. So when you think about the competition, then our coach uses the angle of working upstream at the HD Access to control the regulation of the HPA at the top and then everything below that, we're able to reduce and control as well, starting with. Our competitor in this space, a company here in San Diego that we know quite well. Kinaxis developing the ACTH antagonist called [indiscernible]. And it's an early stage clinical development right now with a small number of subjects. I think time will tell to see how their approach will work realistic on ours because they actually work downstream of our approach.

So they only look at the androgens, not the other piece of the cascade, which ACTH but ultimately, where we are right now, we're very excited about our position. We've got very strong efficacy across both children and adults. We've got excellent safety and tolerability, and we have formulations to match the needs of both children and adults. So we feel like we're in a very fortunate position here, and we look forward to hopefully getting approval later this year in launching this important medicine for patients, which is going to change the standard of care in ACTH.

[Operator]

We'll take our next question from Mark Good with Leerink Partners.

[Marc Goodman, analyst]

I just want to come back to that question about INGREZZA competition and the competitive environment. There seems to be a lot of agita going into the quarter. A lot of investors kind of felt that Teva has been the one growing faster. They're making more noise. Can you give us a sense of what's really going on out there? Do you feel like you're out gun with respect to the share of voice and the noise on the media. Maybe you could just give us a sense there. I think the prescription trends have really confused people. So anything you could do to help us just think about this?

[Eric Benevich, executive]

Yes. I mean, obviously, we felt good about the quarter we just reported. And as I mentioned before, the VMAT2 market is a growing market. The vast majority of TD patients remain undiagnosed and untreated -- both brands are growing. And as expected, with the rollout of their XR formulation of deuterated tetrabenazine, it's helped the growth of our competitor. However, INGREZZA is and it remains the most prescribed VMAT2 inhibitor with over 1 million prescriptions written since launch. And with 14 more years of exclusivity ahead, we believe strongly in the growth of the potential of INGREZZA and continue to invest in our franchise, commenced with the opportunity. And I think the testament to that is the recent sales force expansion that we just completed as I mentioned in my prepared remarks, specifically in psychiatry and in LTC.

Psychiatry is the area that we didn't touch when we expanded our team back in 2022. And we felt that the growth of the prescriber base, we were overdue in terms of adding more FTEs to continue to support that segment. LTC is a relatively newer segment for us. And certainly, it's been fast growing, and we think that the investment there was appropriate. So overall, with continued investment in our team and in DTC and other areas of promotion, we think that this is a sign of the conviction we have in the current and the long-term opportunity with INGREZZA.

[Operator]

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

[Myles Minter, analyst]

I think just over a week ago, there were some correspondence in the New England Journal about Crinecerfont from a couple of Spanish stocks and that would kind of call in the question the definition you used for normal threshold of daily glucocorticoid dosing. Just curious as to your response to that -- and if payers in particular in your early conversations, they're asking for surrogate metrics like insulin resistance and percent of total fat mass is sort of confirmatory endpoints that you are getting efficacy in this population.

[Eiry Roberts, executive]

Yes. Thanks, Mark. So first of all, I think we are really happy with the Phase III data that we have both from an efficacy perspective in terms of the androgen reduction effect of Crinecerfont and the ability to reduce steroids in the vast majority of the population treated. And that's the case in both the pediatric and the adult population. Now in terms of the discussion in the New England Journal, and I think it's important that there's a discussion around what criteria we used in a clinical trial, et cetera. But I want to remind you, this is the first time a trial of this store has ever been done. And so we negotiated very closely with the agency to come to the set of definitions that we use, including the definition of what constitutes to physiologic levels of that was important because this is a highly heterogeneous population. And so I think our bottom line from the cronestipan data set that we generated is that we really believe that the vast majority of patients living with CAH, whether they be pediatric or result patients can gain benefit from treatment of connected bonds if they can well is approved.

And so from that point of view, we highly encouraged -- and I think it's going to be very important to understand the real-world experience of patients once we start to get out into this chronic condition and once we start to see the long-term benefits that can result from a treatment like on.

[Operator]

We'll take our next question from Jeffrey Hung Morgan Stanley.

[Unknown Analyst]

This is Michael [indiscernible] on for Jeff Hung. Kyle, congrats on the strong start. -- for the NMDA NR2B program, is it safe to assume that 770 is being developed as an adjunct to background antidepressants? And if so, how are you thinking about evaluating the top line? What would you want to see to gauge the competitive potential like maybe versus Privado.

[Eiry Roberts, executive]

So yes, in the trial that's being performed right now in Phase II, the peaking population is those that have inadequate response to currently available antidepressants. -- that actually could, in due course, be both as an adjusted treatment or potentially as a stand-alone monotherapy. One of the key differentiators from this obviously the mechanism that acts in a similar fashion to Ketamine but being more selective in terms of the mechanism of action, we hope could translate into a favorable benefit risk profile relative to other treatments in this space. Once we differentiate this is an oral mechanism obviously, compared to some of the other things that are out there right now.

[Operator]

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

[Laura Chico, analyst]

Just with respect to the 800,000 TD revision there. Could you provide additional color in terms of the breakdown of severity or kind of estimates within there? I guess I'm trying to understand how does this impact or change your views on the peak INGREZZA opportunity in target dyskinesia?

[Eric Benevich, executive]

Yes. We don't have any color in terms of severity. Overall, when you look at the literature, the estimate is that about 1/2 to 2/3 of patients would be in that moderate to severe category. -- and the balance being milder TD. So in the medical literature, there's really no standard definition of what constitutes mild, moderate or severe TD. And so ultimately, the guidance that we give to the HCP community is that not only did the need to look for abnormal movements and differentiate TD from other drug in movement disorders, but they really need to look at the patient that have a conversation with the patient and understand to what extent does that impact their quality of life and their functionality and even milder abnormal movements can significantly negatively impact these patients.

And so what you see in terms of people that are being treated with INGREZZA today is a mixture of people with more severe and less severe abnormal movements but certainly significantly negatively impacting their lives. So in terms of the overall population, we feel that the 800,000 number is, like I said, very supportable and frankly, probably on the more conservative end of the range of estimates that are out there. But ultimately, our mission remains unchanged less than 20% of people are currently being treated with the VMAT2 inhibitors, and we've got a lot of growth opportunity ahead.

[Operator]

We'll take our next question from Yatin Suneja with Guggenheim.

[Unknown Analyst]

[indiscernible] so on the 845 in MGT, can you guide us through your strategy for the pivotal program? How many studies are you planning to run? And can we expect to see Phase II day in upcoming conference?

[Eiry Roberts, executive]

Thanks for that. So in terms of the actual program design that lobviously, we'll be following the path that's been followed by other antidepressants in registrational development. But we haven't talked specifically about a number of trials or design the trials, and we will do that after we have engaged in the Phase II interaction with the FDA and the start in those trials next year. And yes, I think we alluded to in our early comments, we are planning to release the information from our Phase II program in the latter part of next year.

[Operator]

We'll take our next question from Uy Ear with Mizuho.

[Uy Ear, analyst]

Just going back to the Crinecerfont launch a bit, you guys indicated that you'll be giving out pre drugs whatnot before the insurance comes on, -- just maybe just help us understand a bit about the number of patients that are currently on free drugs at the moment with your extension safety extension studies? And how do you sort of maybe focus on in terms of uptake. Would you be giving free drugs essentially to everyone that comes on? Or yes, I just want to give maybe a better sense of the the demand at the outset? Like are you seeing a lot of excitement demand with respect to this drug?

[Eiry Roberts, executive]

I'll answer the piece about the long-term extension basis. We do have long-term extension programs going on right now globally in both pediatric and adult patients -- 2 comments around that. First of all, I think it's enabling us to collect some longer-term real-world information about these patients and that's important. And secondly, the number of patients remaining in the program remains incredibly high, which -- with very, very few dropouts, which I think, again, is indicative of the ongoing tolerability, safety and excellent update with respect to Crinecerfont in this program.

[Eric Benevich, executive]

Yes. And with regards to the reimbursement dynamics, as I mentioned in my prepared remarks, the majority of these patients in the CAH community are either commercially insured or through Medicaid. And many commercial insurance plans have policies in place that restrict reimbursement for new drugs. -- and/or have new-to-market blocks in place. And so the expectation is that even as we get patients started on therapy, the -- it's going to take some time to work through the reimbursement.

So we are going to have a program in place that allows us to get patients started and that is really across both commercial and Medicaid. -- ultimately, we're confident in our ability to get patients started as indicated by our success with INGREZZA, and we saw similar dynamics early in the INGREZZA launch. But ultimately, we think that Crinecerfont offers a significant opportunity here for us to diversify our revenue. And we think that ultimately creates a lot of value for the CAH community. So we'll have a lot more to talk about when we get closer with the launch in terms of our access strategy.

[Operator]

And we will take our final question from Ami Fadia with Needham & Company.

[Unknown Analyst]

This is [indiscernible]. So on NBI 845, how do you see it fitting into the current treatment paradigm? And what are your expectations from the upcoming FDA meeting?

[Eiry Roberts, executive]

So in terms of the FDA meeting, we will be getting clarity on our Phase III strategy, and that will enable us to start our Phase III program in the first half of next year. In terms of the indication or the area of focus in major depressive disorder, the Phase II data that we generated was in the context of inadequate response to currently available treatments. And then in that setting, we anticipate that this could either be an adjunctive treatment to other antidepressants currently in the field or as a stand-alone monotherapy and we'll be exploring both as we move forward.

[Operator]

And there are no further questions at this time. I'll turn the call back to Kyle for closing remarks.

[Kyle Gano, executive]

Thanks, Ashley. So this morning, we covered a great deal of ground. I'd like to close by reinforcing my opening message, our exceptional leadership team and our energized organization are really positioning Neurocrine to lead in neuroscience moving forward. I'm certainly inspired by all the work that's ahead and ever more confident in our potential. Today, we touched on a lot of different things. We talked about a bit on our strategy, our pipeline and our pharmacy commercial opportunities. If you think about this being my first earnings call, I'm hoping you take away 2 things from our opening remarks and our Q&A. One is our commitment to discovery, developing and commercializing innovative medicines. And I think you've seen from our discussions that this comes with risks and it requires time and investment. But I hope thing that you also see that we're committed equally committed to delivering near and long-term value for our organization and our shareholders.

So with that, I think that we'll close here today by saying that busy year-end ahead for us all, and we're looking forward to connecting with many of you virtually and in person, for those of you that will be attending some of the many health care conferences that remain here in the next couple of months. So with that, next again for the call and look forward to speaking with you soon.

[Operator]

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