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

Thank you, operator, and good morning, everyone. Welcome to Neurocrine's first quarter 2023 earnings call. This morning, I’m joined by Kevin Gorman, our Chief Executive Officer; Matt Abernethy, our Chief Financial Officer; Eiry Roberts, our Chief Medical Officer; Eric Benevich, our Chief Commercial Officer; and Kyle Gano, our Chief Business Development and Strategy Officer. I’ll remind everyone that during today’s call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After our prepared remarks, we will once again do our best to address all of your questions. And now, I'll hand the call over to Kevin Gorman.

Thank you, Todd, and good morning. Well, INGREZZA has had yet another very good quarter of sales. And I say this from a dollar perspective, but more importantly, the fundamentals of bringing INGREZZA to patients is even stronger with more new prescriptions than ever and remarkably to me, this occurred in Q1 typically our toughest quarter because of insurance reauthorizations. As you know, we call it a tale of two quarters. The first several weeks working through the reauthorization process and the second half going back to a singular focus on patient diagnosis and treatment. What I also find additionally impressive for Q1 is that persistence and adherence remain strong as ever. Patients and prescribers recognize the impact that INGREZZA has on their patients tardive dyskinesia and on their lives. So we're entering Q2 with momentum and with fundamentals like this in Q1, it bodes very well for a very strong year. Now Matt will make some cautionary statements for Q2, but are very valid. But take those in the context that 2023 is setting up to be quite strong. One of the aspects in Neurocrine that I am most proud is our ability to make difficult decisions. With the ultimate goal, to utilize our resources wisely to be able to bring as many life changing medicines to patients as we are capable that requires making tough fiscal decisions to deploy our cash and our talent to grow our business. To that end, we announced this morning that we will be returning the commercialization rights of ONGENTYS to BIAL. Make no mistake on ONGENTYS is a very good drug as evidenced by the positive feedback we have received over the past two plus years. Unfortunately, from the time we licensed this medicine to the launch in 2020, the Parkinson's adjunctive therapeutic category went through fundamental (0:58) changes which pose significant commercial challenges. Despite our best efforts, we have been unable to surmount those challenges. We are not the only company experiencing these challenges in this therapeutic category. Going forward, both our and BIAL’s primary focus is to ensure new and existing patients do not experience any interruption in receiving ONGENTYS as we transfer commercial activities. Now finally, as Eiry will discuss on this call, we continue to make very good progress on our clinical portfolio and are on track for a number of Phase 2 and Phase 3 readouts later this year and the August PDUFA of valbenazine for the treatment of chorea in Huntington's disease. As you know, enrollment was impacted in a number of our programs by several macro factors but the teams have worked diligently and have kept all these programs on time, on budget, while retaining the highest level of quality. So with that, I will turn the call over to Matt.

Thank you, Kevin. Good morning. INGREZZA performance in Q1 was strong with record interact in sales coming in at $410 million. The team did an excellent job navigating seasonal payer dynamics and driving new patient setting us up for a great year. We did see a small benefit from timing of customer orders at the end of Q1, driving a several day increase in days on GM (2:30) channel inventory. We expect this to net out during the second quarter. Timing of customer orders can lead to lumpiness in quarterly sales and expect this to be a headwind in Q2, but underlying demand from both new and existing patients both appear very strong so far this year. Given we're only one quarter into 2023, we are reiterating sales guidance and we'll reevaluate after the second quarter. Needless to say INGREZZA is set up for a great year. On the financials, we are maintaining our SG&A and R&D expense guidance with exception of IPR&D for the Voyager collaboration. Similar to prior years SG&A had an increase in spending for Q1 and expect it to step down the remainder of the year. With that, I look forward to your questions and now hand the call over to Eric. Eric?

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

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

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

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

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

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

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

Perfect. Thank you.

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

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

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

Okay. So what would be your split right now in scripts coming from neurologists versus psychs, because I know psychs was -- more established area.

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

Okay. Thank you.

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

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

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

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

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

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

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

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

I'll take the first part of that question, and then Eric will take the second part of the question. As it relates to net revenue per TRx, we still expect it to be around $5,600 per script this year on average for the year of 2023. We did see a touch of seasonal headwind, as you would expect in our gross to net in Q1, it's around 2% or so. I'm not going to give the exact net revenue per script here for Q1, but going to talk about it more in terms of what we expect for the full year. So overall, expect really a net price increase for the year of around 2% to 3%.

Hi, Neena. So this may not be a super satisfying answer, but we're seeing growth coming from everywhere. And what I mean by that is that post the expansion and the reorganization of our field teams last year, we now have dedicated sales forces in psychiatry, neurology and LTC. And all three of those segments are growing nicely, as evidenced by the Q1 results and especially the record number of new patient starts that we saw this past quarter. And the second part of your question was really related to -- is this being driven by the sales force expansion. And our belief is that the sales force expansion is already paying dividends.

Got it. Thank you.

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

Thank you very much. With the announcement of the strategic decision on ONGENTYS, obviously, I expect that you've also done some broader portfolio reviews as you think out to the balance of the decade. Can you comment about sort of the international plans, in particular for Crinecerfont you did the deal over in the UK in 2022. Remind us what the regulatory status is there? And then, this morning across the biopharma landscape, obviously, we have another positive data point on the Alzheimer's front. I believe that neurology within that scope, Alzheimer's has not necessarily been a focus, but does this at all change your point of view in terms of how the commercial opportunities could play out in that realm for you guys? Thanks.

Thanks, Chris. With respect to being able to internationalize INGREZZA, you're absolutely right. We made the -- in Crinecerfont, sorry, I have INGREZZA on the mind this morning as you could understand. With Crinecerfont is that the purchase of Diurnal was a way of setting us up for an entry into Europe initially with Crinecerfont, knock on wood, with good data and an approval there. So we wanted to be able to begin to have an infrastructure there, begin to have on the ground presence. We do a lot of clinical trials over in the UK and Europe. So from a development standpoint, we're leveraging the Diurnal folk, and I should say, the Neurocrine folk now that are over there in a big way already. They also have MSLs in addition to the clinical and the CRAs that they have over there. So that is turning out well for us right now. Commercially, it will be much easier now to be able to build into that. The EU would be following FDA in our strategy to file. So U.S. would be the first filing with Crinecerfont when we have good data and then it will be followed by the EU. When it comes to a broader portfolio, I really think what you see here is that Neurocrine and the portfolio we currently have and what we have been doing is being a Neurocrine Company, we have had an exquisite focus an orally active small molecules, of course, because many of them, whether you're talking about neuro psychiatric and neurological diseases, they needed to cross the blood-brain barrier. But what you do see with us is with the that we've been making more recently, what we're going into is more large molecules, biologics. You're seeing us step into antibodies. Well, you may not be seeing it, but I can tell you that we're developing in preclinically and in research, antibodies, peptides, proteins, gene therapies now in order to broaden our reach and get to actual disease modifying and curative therapies within the neuroendocrine and neurological diseases. I think that psychiatry will be dominated by orally active small molecules, which has, of course, been a traditional strength of ours and we will continue with that going forward. But you're seeing Neurocrine right now in the midst of a transformation from the type of drugs we are going to be introducing into the clinic starting in 2025 and moving forward throughout the decade and years to come.

Great. Thanks for the perspectives.

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

Thanks so much. Congrats on all the progress and thanks for taking my question. With regards to Crinecerfont, so our market research has suggested that patients are very excited about a new treatment option, but there's some equilibrium that some may have struck on their steroid use, which may make them reticent to disrupt things. And I guess I'm wondering how you plan to address this. You obviously have a lot of expertise building markets. Is this -- do you think it's just a matter of having strong totality of data and that being convincing enough? Are there certain cell populations, you may think about targeting initially, who might be optimal candidates or educational campaigns you might envision. And how might this impact how we should be thinking about potential uptake curves for this drug? And then maybe just a real quick housekeeping question. The $10 million that you mentioned, does that refer to both inventory and shipment timing impact or is that just inventory and shipment timing or something else? Thanks.

Brian, thanks. We believe there is significant unmet need for patients living with CAH and that unmet need, if we're successful with our Phase II program and for Crinecerfont can be met by Crinecerfont. The reason why I think you hear some kind of ambivalence about willingness to switch from steroid is that these patients have had nothing but steroid. And in fact, there's been no new approved medications for over 50 years in this space. And so I think people have had to settle for less than optimal care. And so to your point, I think our ability to demonstrate a broad range of robust data in support of the benefit risk of Crinecerfont will allow us to address that unmet need and that will need to be supported by a significant amount of education and other approaches in a similar fashion to what we have done with INGREZZA and TD.

Yeah. And I'll just add that its early days yet. We haven't completed our administrational trials. And as a company, we haven't really started our formal efforts to reach and educate the various patient and care partner communities within CAH. Crinecerfont does represent, I think, a pretty meaningful paradigm shift. And part of what we'll be doing on the other side of data and then leading up to approval and knock on [indiscernible] launch is to educate on the value of treatment with Crinecerfont and what that means to patients, what they can expect. You noted that we've demonstrated success in TD in building a new market from scratch and I think we can apply some of our learnings towards the opportunity in CAH.

So from a -- Brian, from a revenue recognition perspective, you recognize revenue once the bottles are shipped and delivered to the distribution -- your distributor. So what I would say in terms of your question, yes, it was shipped, delivered and it really just had to do with the timing of when those specialty distributors, pharmacies placed the order at the end of the quarter. It was just a bit out of cadence and higher than what would normally be held at that distributor.

Thanks so much, everyone.

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

Hey, guys. Thanks so much for taking the question. Just wanted to maybe dig in a little bit more on the long-term care facilities. I know you've trust this as an area of growth for INGREZZA and made some brief comments earlier in the call. But what are you seeing in terms of trends in this segment specifically?

Yeah. Hi, Anupam. So I would say that we're a few quarters in, but it's still early days yet. This is a brand new segment for us, long-term care and site of care that we had looked at the very beginning of the launch and decided that we didn't have the capacity to take that on. And so obviously, last year, we made the commitment. We built a dedicated team and they've been out there and doing all the things necessary for long-term success in long-term care. But ultimately, it's still an area that's just getting off the ground relative to psychiatry and neurology that are more a little bit further along in terms of market development. But very pleased with the progress that we're seeing. And certainly, I look forward to providing more details as we get a little bit further down the road.

Thanks so much – taking my question.

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

Great. Good morning. Thanks for taking the questions. Maybe Eiry, coming to 352. I don't believe you guys have disclosed the doses you're looking at in the FOS study, but maybe just clarify that, if you have. And I guess, more broadly, how you're thinking about sort of target exposure, kind of sort of a steady state AUC or a trough levels? Any color on that? And if the Phase I TMS data may be informative on that front? Thank you.

So the 352 study is a dose-finding study. It's a four-arm parallel randomized study, three different dose levels of 352 in that study with a 12-week endpoint that is focused on understanding seizure frequency and reduction in seizure frequency from baseline for individual patients. In terms of the doses that we chose there, the Phase I data and all of the preclinical data from the different animal models of epilepsy, which as you know, translate reasonably well into the clinic were used in order to define the doses that we took into that study. And so we are confident that we are covering the target with that dose range and that this is a well-controlled signal-seeking study in terms of the efficacy and benefit risk for 352.

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

Hi. Thanks for taking the questions. Just on the decision to not provide updates on the prescription growth rate for INGREZZA moving forward. Maybe you can comment on the accuracy of the scripts that we can see through our [indiscernible] IMS, I know previously, you've cautioned against that, but maybe you can comment whether that is getting better as a way to track INGREZZA. And then secondly, I just wanted your thoughts on how much you need to build the Huntington's disease career market? Is it similar to tardive dyskinesia or is it more about just taking share from the VMAT inhibitors that are already in that space? Thanks.

Hi, Myles. So for the TRx, what I'd say about the third-party syndicated data will give you a directional view into how we're performing. It's a bit more stable than it has been in the past. We, of course, won't affirm that is 100% accurate. But I would say it's more directionally correct than it had been historically. So with that, I'm going to hand the second part of the question over to Eric, specific to HD.

Yeah. Hi. So with regards to the HD chorea market opportunity, obviously, we're excited about the plans that we have for introducing valbenazine to that patient population. And as we've said before, we see that there's still significant unmet need in this group of patients that are living with Huntington's disease and experiencing chorea. Only about 20% of people with HD chorea are actually treated with VMAT2 inhibitors, which are the only agents that are actually indicated for chorea and HD. Obviously, we're excited about the clinical profile that emerged from our development program and we believe that some of the reasons that, that INGREZZA is the most prescribed agent in TD would apply equally here in HD chorea. But we need to get approval. We’re looking forward to that. And obviously, we’re doing all the things that you need to do in advance to prepare for that eventual expansion of the label.

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

Hi. This is Mike Riyadh (ph) on for Jeff Hung. Thanks for taking our questions. We also had a question on the 352 Phase II study in FOS. So the patients are required to be on background therapy. Are there any concerns for drug-drug interactions or does this limit the ability to measure 352’s pharmacodynamics and what extent could those be mitigated during running? Thank you.

Mike, so the trial design does -- given the patient population that we are interested in serving here is one that have incomplete or inadequate response to previously used anti-seizure medication. That is why we allow up to four other medications in the context of the patient population coming into the trial. Obviously, we understand the pharmacokinetics and disposition of 352 well from the Phase I and preclinical data. And so as you see from the inclusion/exclusion criteria in clinicaltrials.gov, the number of exclusions required is low and that reflects the lack of drug-drug interactions that we've seen in the context of our previous data. In terms of the pharmacodynamic effect of the medication. I think, as you’ve seen for other useful adjunctive treatments in epilepsy, there is still an ability to demonstrate additional benefits since these patients are not experiencing the seizure suppression that they need in order to be well controlled. And so we don’t have a concern around the ability to demonstrate that if 352 is an effective medication.

Perfect. Thank you.

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

Matt, it seems like there's a lot going on in R&D behind the scenes. And I guess we should expect R&D spending to kind of continue to increase over the next few years. Can you just give us a sense of how the company will be managing that process and how we should be thinking of modeling R&D? I mean, as a percent of sales as we go up, or will we gain leverage? I mean, or is this just we're going to continue to increase? And just give us a sense of what you're thinking about that because obviously, the numbers could get big.

Yeah. Thanks, Marc. So I'm just going to start out just from the high level and just saying that we're taking advantage right now of the real amazing changes that have taken place in the science in order to address really serious neurological and neuroendocrine diseases. And so that's why you're seeing us invest heavily in our research and preclinical development, especially -- and so you're going to see, I think we've -- you've seen a big bolus of investment here early on. And I think -- not I think, I'm very impressed in over the last couple of years or so, just the progress that we've made in being able to move ourselves from just a small molecule company to a real biologics company from the research standpoint. And Matt can talk a little bit more about how that's going to stack up against sales and the financials.

How we think about it from a capital allocation perspective is that somewhere around 30% of sales would be some level that we'd want to invest in R&D and we feel like that would allow us to build a pipeline in a portfolio that would cause us to be a sustaining company. When you look at where we're at from a P&L perspective today, if you think about the CAH trials that we have ongoing, the muscarinic programs, FOS, a dozen other programs now in the clinic. We have a lot of momentum right now. And I think all of us around the table are really looking forward to start seeing the cards turnover from all the efforts that we've undertook the last several years. And I think that has really teed up for the second half of this year. And as we flagged expect the CAH data to be available early in Q4. So from a capital allocation perspective, I think it's fair to assume 30% or so, but it's obviously dependent upon value creating programs. And we're not just going for quantity. We really want to find the quality that will drive value for patients and for shareholders.

Thanks. If I could just ask a quick question on the anhedonia work, Eiry. Can you just talk about the work that you've done to support the dosing and how you're thinking about dosing and what's been done, I mean, oral once a week, how we've gotten there?

Yeah. So for our anhedonia program, the dosing schedule that we're using in that Phase II study was defined based on our preclinical and Phase I clinical data and an understanding of the biology associated with this target. And so from that perspective, in a similar fashion to some of the other medications such as ketamine, esketamine used in the major depressive disorders. That's what enabled us to come up with the dosing schedule that we're testing there. Obviously, this is a proof-of-concept study. Also, there is very little work that has been done historically in anhedonia, as you know. There are no medications approved for the treatment of anhedonia, which is a really difficult symptom within the major depressive disorder spectrum. And at the end of this year, in Q4, we look forward to understanding whether we're able to demonstrate a signal in anhedonia in this study.

Thanks.

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

Hey. Good morning, everyone. Thanks for taking my question. My question as well is just on Crinecerfont. I was hoping maybe Eiry can -- just kind of set us up to understand sort of the differences in these studies between sort of the statistical significant hurdle? And what would sort of be gained clinically significant? I mean these are fairly sized study. So it seems like you can hit statistically. But I'm wondering is -- hitting on a key value is that enough to kind of commercially justifying. Like what would we be really looking for and sort of the totality of data to think you'd see a very significant demand for this product?

Well, Brian, obviously, hitting statistical significance is important as the first step in the context of understanding the benefit risk of Crinecerfont. And the way we've designed the programs, we believe that the primary endpoints that we've chosen, namely androgen levels at week four in the pediatric study and the ability to reduce steroid dose in the adult study. Those are important endpoints for patients in and of themselves. Having said that, obviously, the study looks at a lot of very different parameters beyond that. And the parameters across the two studies are very similar. And so you're correct that the totality of the data will be important in terms of understanding the overall value of Crinecerfont potentially for patients with CAH. And in addition to the short-term data, we're interested in the longer-term open label study data that will generate in support of Crinecerfont as well. And so I think it's not really possible to say right now, what pattern might emerge from that overall data set that would be most encouraging, but I think we are measuring everything that is relevant for these patients in the context of these trials, and we look forward to being able to turn over the cards on that data and the fourth quarter of this year.

Great. Thank you.

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

Hi, guys. Good morning. Thanks so much. I have a question on CAH as well. I'm curious about the potential for functional unwinding and measures taken to mitigate that risk. And then, quickly on INGREZZA, I’m curious if you've encountered any headwinds or you expect any disruption from Teva's new once daily offset it (ph)? Thank you.

I think as Kevin alluded to earlier, the quality of our clinical trial data is paramount to us in terms of the trial design and our ability to protect the blinding of subjects and obviously, the safety and integrity of subjects throughout the trial. And we have many measures in place in order to address that, including central discussion of endpoint, central discussion of overview of the actual data itself. And so I think in the context of that, and in terms of the variability for these patients of the hormone levels and other things that they experienced throughout the course of their lives, I think we are not worried about the issue of functional unblinding at this time.

Yeah. With regards to your question about deutetrabenazine XR, that product hasn't been rolled out yet. But what I will say is that we've had a chance to take a look at the data and the profile and it remains a complicated treatment from an administrative perspective. Most of the maintenance regimens require two pills of different strengths and still requires mandatory titration for up to seven weeks. So we've prepared for this. Our teams have been trained. We're very confident that INGREZZA will remain the most preferred, most prescribed TD treatment. And it's the only one with one pill once a day dosing and no mandatory titration. So we feel good about our momentum in the market or we’re going to continue to do the things that we’ve been doing to develop the [Technical Difficulty] market and to be the market leader.

Thank you.

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

Well, hey. Congrats on the quarter and thanks for update recognizing that you've got a large deal on the books already this year. Just curious about your appetite for additional business development, what your thoughts are on potential areas of interest and priorities for capital allocation for the remainder of the year? Thank you.

Thanks, Jay. This is Kyle. I appreciate the question. Obviously, we remain quite active on the BD side of things that's part of what we do here at Neurocrine. I think that we work with the spirit of urgency, but we don't feel like we need to do anything without looking at a program and seeing our technology, if it's the right type of program to bring in to the company. As our interest that we've outlined previously, we're currently looking at things in neurology, psychiatry, endocrinology and immunology with a lens on neurology across those broad categories. Our priorities are pillars, of course, INGREZZA and valbenazine and in the pipeline of business development. We've talked a lot about the areas that are of interest to us on where we find ourselves migrating towards programs and technology that bring in innovative science, platform technologies and differentiating modalities. But overarching the theme here is that we could potentially bring in a medicine that changes the standard of care. And when you look at those types of opportunities, it comes along with strong IP as well. But we're open to a later stage in commercial opportunities. We've also mentioned that in previous meetings as well. And given the diversity of deals that we've done over time, you can see that we're also agnostic in terms of deal structure. So we remain active. We'll continue to look at bringing in new programs to the company and having more news on that over time. So maybe I'll stop there.

Great. Thank you, Kyle.

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

Good morning. Thank you very much for taking the question. I wanted to pivot back towards schizophrenia. And wondering if you could remind us on the strategy with respect to the muscarinic agents. You mentioned you're advancing dual M1/M4 later this year. I guess bigger picture though, would you consider ultimately advancing multiple agents such as an M4 selective and an M1/M4. I guess maybe any commentary there on how you see the evolution proceeding. Thank you.

Thanks. That was one of the attractions of the deal that we were able to do with Sosei Heptares was the ability to again, access to not just one molecule in the muscarinic agonist space, but to a range of a portfolio of molecules with differential selectivity. There's a huge opportunity, we believe for this set of targets to serve patients broadly with both neuropsychiatric disorders and neurological disorders. We're starting, obviously, with the M4 selective agonist in the treatment of acute psychosis. And as Matt mentioned earlier as well, I think we're doing extremely well with the enrollment in that Phase II study, and we look to reading out the data there. We are progressing an M1/M4 dual agonist into the clinic this year and we will be considering both additional or similar neuropsychiatric disorders but also potentially neuropsychiatric disorders of that molecule. And then when we think about M1 selective molecules which we also have within the portfolio of actives that we gain access too, they are obviously a broad range of different opportunities there ranging from cognition to other neurological disorders. So we’re very excited about that portfolio and we believe that this set of mechanisms can be potentially very beneficial for patients across a broad range of indications.

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

Good morning. Thanks for taking question. Assuming Crinecerfont is approved, could you give us your latest thoughts on potential pricing? Clearly, tardive dyskinesia and CAH are very different disease states. But if you could give us a frame of reference for Crinecerfont, at least relative to annual INGREZZA pricing, that would be very helpful. Another reason I'm asking this is because if I remember right, INGREZZA price at launch far exceeded investor expectations at the time.

Sumant, I do think it's very premature to talk about pricing at this point for a number of reasons, not the least of which we do not have any of the Phase III data in. Pricing is one that is very much hinges on what is the ultimate benefit that you bring to this patient population. We see that Crinecerfont can be highly beneficial to this patient population. But one needs to develop the data set, go and have discussions with the FDA, ultimately come out with the label. Lot of work goes on actually has already started, but in the very beginning of developing the entire wealth of data that we go through before we settle on a range of prices. So thank you for the question, but too premature.

Got it. Thanks.

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

Hey, thanks. So just on the psychiatry pipeline. On the M1/M4, I know it's early, but any thoughts on how you would think about differentiation, whether it's efficacy, safety in schizophrenia versus the late stage product KarXT that's in development. That's number one. And I just want to ask a second question on psychiatry pipeline in general. Over time, I wanted to make sure I didn't misinterpret your remarks, Kevin. But is it fair to say that you may take your foot off the gas in terms of small molecule development in psychiatry and just philosophically, how do you think about that? Thank you.

So I'll take the first part very quickly. No, there is no taking the foot off the gas. We're dedicated to psychiatry. What I was saying is that for the foreseeable future, we do not see a role for biologics in psychiatry. So therefore, our small molecule efforts in psychiatry will stay as robust as ever. And actually, the small molecule efforts against neurological targets and neuroendocrine targets will stay robust. What we're able to do now is taking advantage of some of the real exciting science that has been developed over the 10 or 15 years in biologics, apply it to neurological diseases, neuroendocrine diseases. What that will allow Neurocrine to do, what it allows us to do right now is let's choose the right target for the right disease and then be able to hit it with the right therapeutic modality. We are not constrained any longer by just small molecules. We have all of the therapeutic modalities at our fingertips. Eiry?

Yeah. On the question of differentiation, it really is too early to be able to talk about that. I think the power and the value that we have with this portfolio of highly differentiated muscarinic agonist is the ability to conduct the preclinical and clinical experiments that will allow us to understand that differentiation. And as I mentioned, I don't believe that for a dual M1/M4 that we are constrained to schizophrenia as a single indication in that setting either. And so I do believe there's a lot of opportunity both in the neurological and psychiatry space for this portfolio.

Yeah. This is Kyle. I'll just add and close on that. I think the -- where my starting point, our starting point is on this, is that there's no other company that has a M1/M4 dual agonist that is out there in development that we're aware of, that doesn't require an add back of some sort to mitigate some of the peripheral effects of off-target muscarinic activity. So I think we're very excited with the one that we have and taking that forward, as Eiry mentioned, we don’t have clinical data to differentiate, but certainly being in the position that we have right now is a starting position. We have a lot of excitement around this program across the dual and other molecules that we have.

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

Hey. Thanks so much. So we've seen that Crinecerfont has shown greater than 5% neutropenia when it's been studied in other CNS indications. And then discontinuations were 12.5% in the highest dose group, mainly due to neutropenia. So what are your expectations for neutropenia going into your CH data? And what level of dropouts have you baked in, in your powering for the trial? Thank you.

Thanks for that. So as you rightly said, the study in which a sporadic laboratory measures of low white count was seen was in major depressive disorder. And Crinecerfont was studied in a Phase II study of major depressive disorder prior to us actually having our hands on the molecule. In that setting, there were no adverse events associated with the laboratory measures and neutropenia was also seen in the control arm, which was citalopram (ph) in that study. We have seen no evidence of low white counts or neutropenia in the context of the work that we've done in CAH nor is there a signal in the preclinical setting. We now have over 1,000 patients treated with Crinecerfont. And so obviously, as you can imagine, patient safety is paramount for us in the context of this program and we don't worry about neutropenia in the context of this molecule.

That’s really helpful. Thank you.

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

Hey, guys. This is Keith on for Evan. Thanks for taking our questions. I guess on the anhedonia readout, I know we're a ways out. But could you give us a sense of what could data would look like maybe more specifically, what improvements on the DAR scale (ph) could translate to in the clinic or on a functional level. And then could you draw a line from anhedonia to broader set of negative symptomology cross mental illness. Like, how do you think of this as a distinct symptom. Thanks.

As you know, there are no drugs approved for the treatment of anhedonia and major depressive disease. And in fact, there have been very few clinical trials done. This is a proof-of-concept Phase II study. We have measures embedded within the study looking at both the anhedonia (ph) scales and also the major depressive scales themselves. And so it's impossible at this point in time prior to the readout of that data to be able to kind of draw any conclusions or lines to any other symptoms. We're very excited about the mechanism here. And obviously, this is a huge unmet need for patients with major depressive disorder and that trial is progressing extremely well. There's a lot of interest and we look forward to seeing the data at the end of the year.

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

Hi. This is Serena on for Mohit Bansal. Thanks so much for taking our question. So I want to ask two questions. First, on the cadence of SG&A spend. Just given that significant growth in Q1, what comes off in the rest of the year? And then two, I wanted to understand the CAH market a little better. And if you have any info line, like, what proportion of patients are found in centers of excellence versus treated by general endocrinologists or elsewhere? And also do you see patients needing to be on this drug chronically or they only be treated during times of poor control? Thank you.

Hi. I'll answer both of those questions. On the SG&A spending, there was a bolus of spending in Q1. You should expect that to step down in Q2. And the way that I look at it is we expect to hit our expense guidance range. And so I take the remainder of the SG&A spending and divide it by three. It's going to be pretty consistent, I believe, Q2 through Q4. On the CAH front, yeah, there is -- it's nice, there is some centers of excellence that help treat many patients with CAH. And I think that the KOLs there will be the thought leaders to help inform what the local endocrinologists do to help support patients with CAH. And we do believe this would be chronic therapy that they take for – potentially for their entire life, something that would allow them to reduce their level of steroid exposure over a lifetime could pay significant benefit to those patients. But we’ll see what the data looks like, and we’ll continue to help develop this adjunctive therapy in CAH.

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

Hi. Thanks for taking my question. So for the Crinecerfont pediatric study, do you have four-week primary endpoint data on baseline info reduction in-house already. If you can comment on that, please? And are you waiting for the 28-week data on the secondaries to top line this? Thanks.

Although the primary endpoint is the four-week data, the study is blinded out to the 24-week steroid reduction part of that maintenance treatment. And so as we signaled, the data will be in-house in Q4 of this year. [Multiple Speakers]

Nikki, we'll take the next question.

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

Hey, guys. Thank you for squeezing me in. Just a quick question on 352, the FOS study. Can you maybe just give a little bit update on how the enrollment is and what confidence in 4Q guidance? I mean you're seeing a little bit of a delay in enrollment from other competing studies, especially looking at FOS? And then the other question I have is, is this just an outside U.S. focused study, we don't see U.S. side, so just curious where the study is focused on? Thanks.

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

Nikki, we'll take the next question please. Thank you.

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

Hey, guys. Thanks for squeezing me in. Just a quick question. I think you guys mentioned growth for INGREZZA was coming from everywhere. Just wondering with the added sales force. Are you seeing largely growth more from breadth or are you also seeing depth in terms of physicians prescribing more drugs to the patients? Thanks.

Yeah. To build on my earlier comments, we're seeing nice growth across all three of the segments, psychiatry, neurology and the newest segment, which is long-term care. Obviously, with the expansion of our sales team, we were able to reach more ACPs. ACPs that we hadn't been able to reach previously. So we are seeing the addition of new prescribers as part of what's driving growth. And we're also seeing an increase in patient volume from the existing prescriber base. So going back once again to the theme of growth coming from everywhere. These are different segments in terms of how developed they are. But ultimately, we're very pleased with the results that we're seeing across all segments of our business.

If I can, can I squeeze in a question on Crinecerfont.

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

Thanks.

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

Great. Thanks for squeezing me in. With regards to your -- the performance of INGREZZA in the quarter was pretty strong and sort of leads me to think about the growth you see in the upcoming quarters and the growth that's baked into guidance. Can you comment on how you see that progressing? And at what point would you consider reevaluating your guidance there? And then secondly, with regards to Huntington's disease chorea, how quickly do you given the awareness level amongst physicians that do treat TD patients? Thank you.

Yeah. I think we're really encouraged with what we saw in INGREZZA for this quarter. And as you mentioned, we do have a few moving parts as we think about Q2, specifically around inventory. But our expectation is we'll reevaluate guidance here in the middle of the year, and we'll see what underlying demand looks like. But as we sit here today, as Kevin mentioned, as Eric mentioned, as I've mentioned, record numbers in new patients, things look good from an underlying demand perspective. On HD, I think post-approval, it is going to take a bit of time to educate. I wouldn't expect a massive ramp in sales, for example, in Q4, it's going to be something that will take time to bleed in. So I think that as we get post-approval and then we get towards 2024, we'll be able to provide more insight into our exact strategy and how that's evolving. Thank you.

So I want to thank everyone -- I want to thank everyone today. Just a couple of closing comments. I know you probably think I sound like a broken record, but our performance today to INGREZZA's performance to date really supports this. We are still at the very beginnings of this market. Eric has said many times, he's never seen such an undeveloped market. We work hard at developing it. There's still the vast majority of patients are left undiagnosed untreated. And we really look forward to changing that in the coming year and years, I should say, we have a huge runway with this drug in order to continue to invest in it as we have done and to then see how the growth of this drug is just going to continue in the future. Specific to this year, as I said, as I started, you start a year like we've started it, it traditionally is just a really good year that we look forward to. Yeah. There's some lumpiness. I think that's the word that Matt used that we're going to experience in quarter-to-quarter, probably why giving quarter-to-quarter growth is not the best way to look at things. And also why I said always judge INGREZZA on its full year performance and that has always been outstanding. And as I to reiterate, I think it's going to be outstanding again. The other thing is that we are really focused on, as that we've made commitments to ourselves, to our patients, to you, that we're going to have several data readouts in the second half of this year and we're going to perform on those data readouts. We will have all of those in. And we are very much looking forward to the PDUFA date in August of this year with Huntington's. So once again, I'd like to thank you all this morning for your questions. I'm sorry that we couldn't get to absolutely everyone. There were times you're going to have to help us with not having multiple questions, please, in the future. So that we can give everyone a chance. We try to keep our opening remarks short and our closing remarks shorter. So with that, I’ll say have a wonderful day, and look forward to talking to you soon in the meetings throughout the year.

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