Good day, everyone, and welcome to today's Neurocrine Biosciences Reports Q4 and Fiscal Year 2024 Earnings Call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions. Please note today's call will be recorded. And I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Vice President of Investor Relations, Todd Tushla.

Thank you, and a good Thursday afternoon to everyone. Welcome to Neurocrine Biosciences fourth quarter and full year 2024 earnings call. Joining me today are Kyle Gano, Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; and Eiry Roberts, Chief Medical Officer. During our call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. We'll go to Q&A after prepared remarks. And as is our custom, and with your help, we will try to get to everyone's questions. At this point, I'll turn the call over to Kyle.

Thanks, Todd. Good afternoon, everyone. Over the last several years, Neurocrine has evolved meaningfully across our entire enterprise, from research and development to commercialization. Our 2024 results demonstrate positive impacts from this evolution, and we are excited to build upon these successes. With four approved medicines coming from our own efforts, we enter 2025 as a fully integrated biopharmaceutical company that is strong, stable, and growing. We are prepared to take on industry challenges and capitalize on opportunities to continue to deliver to patients and shareholders. From a commercial perspective, INGREZZA continues to set the standard. Eight years after introducing the first treatment for tardive dyskinesia, we're on track to once again achieve double-digit year-over-year growth this year. While our guidance reflects a moderated growth rate relative to 2024, which was our all-time highest growth year, we are focused on all opportunities to continue to maximize its impact on patients. From a big picture perspective, INGREZZA's differentiated profile in TD and HD Korea will enable us to do just that. INGREZZA has advantages such as unsurpassed efficacy, the absence of complex titration, a novel sprinkle formulation for patients with difficulty swallowing, and advantages in certain sensitive patient populations such as those that are hepatic pain impaired. This strong, clinically differentiated foundation ensures our ability to help many more patients well into the latter part of the next decade. Combined with our expanded and enhanced sales organization, which was rolled out in the last quarter, we're now better positioned than ever to meet the needs of approximately 90% of the 800,000 tardive dyskinesia patients in the US who remain currently untreated with the VMAT2 inhibitor. Just as INGREZZA transformed the standard of care for TD patients, we anticipate Quinicity will do the same for people living with classical congenital adrenal hyperplasia.…

Thanks, Kyle. 2024 was a tremendous year for Neurocrine with record sales growth for INGREZZA, positive phase two data for both the Muscarinic and AMPA programs, and last but not least, the approval and launch of Quinicity. These achievements cement a strong foundation for Neurocrine's future success. In 2025, we anticipate INGREZZA sales to be $2.5 billion to $2.6 billion, reflecting $250 million of growth at the midpoint of the range. While the guidance range reflects good dollar growth, we saw increased competitive pressure as well as increased utilization management by payers over the course of 2024. This led to a slower growth trajectory heading into 2025. We are taking proactive steps to address this, including efforts to further develop and educate the TD market where still approximately nine of ten TD patients are not currently being treated with VMAT2 inhibitors, as well as efforts to start future sales growth. Most notably, the recent sales force expansion in Q4 last year, which we expect will have a full impact in the second half of 2025 and beyond. Turning to Quinicity, although not providing an annual guide, we do want to provide a few thoughts as you develop your financial models for 2025. We expect Quinicity to be a blockbuster medicine helping many patients with classic CAH. But early revenues are expected to be measured primarily due to three factors. First, the delayed timing of the reimbursement for a new rare disease product. Second, the frequency of patient flow into offices. And third, the trialing that will naturally occur as clinicians obtain real-world experience with a novel medicine like Quinicity. One additional note on Quinicity, we did recognize $2 million in net sales in Q4 for initial model orders from our pharmacy partner in late December. To close, a few comments on our investment profile. We continue to align our operating expenses with our top two capital allocation priorities: which are number one, drive revenue growth, and number two, advance our R&D programs. Our 2025 SG&A operating expense reflects a year of investment behind the Quinicity launch and also the expanded INGREZZA sales force. For R&D, the increased investment in 2025 aligns with our previous guide, reflecting the initiation of our two major psychiatry programs, advancing into phase three with Neurocrine now fully funding the osuvampitor program. Please note, we included $60 million of development milestones in R&D, including $35 million for Takeda and $15 million for Nexera associated with the initiation of our phase three program. If other future development milestones are achieved, we'll update our OpEx guide as appropriate. With that, I now hand the call over to Eric Benevich, our Chief Commercial Officer.

Thanks, Matt. 2025 marks an important year of transformation and execution for our commercial organization. With the recent launch of Quinicity, we have the opportunity to raise the standard of care for the congenital adrenal hyperplasia community and to add an important second growth driver to Neurocrine's commercial portfolio. Before I provide further insight on Quinicity, I want to take a moment to highlight that 2024 was an all-time record growth year for INGREZZA, increasing annual sales by approximately $475 million, driven by increased volume, continued strong compliance, and improvement in gross-to-net dynamics. Even with this record performance, as Matt highlighted, we still have a tremendous opportunity ahead for our INGREZZA franchise. With approximately 800,000 people in the US suffering from TD and less than 10% of them currently being treated with VMAT2 inhibitors, we foresee substantial growth potential in the years to come. With last year's investment to expand the sales force, ongoing healthcare provider disease state education, and direct-to-consumer efforts, we expect continued growth in 2025 across the psychiatry, neurology, and long-term care segments of our business. Notably, healthcare provider turnover remains particularly high in psychiatry and long-term care settings. Therefore, as in prior years, our commercial and medical teams continue to address the high unmet medical need for education and to motivate healthcare providers to screen, diagnose, and treat TD Huntington's Korea patients. Our 2025 INGREZZA net sales guidance range of $2.5 to $2.6 billion contemplates the continuing growth of the VMAT2 class across Tardive Dyskinesia and Huntington's Korea and takes into account key external factors like the increasingly complex payer environment and competitive dynamics. Looking beyond 2025, with INGREZZA's differentiated product profile, an expanded and talented team, and 13 remaining years of exclusivity, we expect to maintain our position as the leader in the VMAT2 market…

Thanks, Eric, and good afternoon to everyone. When I joined Neurocrine over seven years ago, INGREZZA had just received approval for the treatment of tardive dyskinesia, and our pipeline featured just three programs. Over time, we have transformed into a vastly different organization today, and I could not be more proud of the significant progress we've made since 2018. Perhaps there is no program more emblematic of this transformation than Quinicity. We were extremely pleased with the outcome of the FDA approval process and final labeling for Quinicity. Many thanks to the regulatory, clinical development, and all other cross-functional team members who successfully steered the program through development from start to finish. With a strong label that includes efficacy and tolerability data from the adult and pediatric registrational studies, Quinicity has the opportunity to transform the treatment paradigm for patients with classic congenital adrenal hyperplasia. For over 70 years prior to Quinicity's approval, the only available treatment for CAH patients was lifelong treatment with glucocorticoids, usually at high super physiologic doses. This fundamentally flawed approach was the only option for patients and their doctors until Quinicity. Quinicity is the first and only FDA-approved nonsteroidal treatment for classic CAH that enables independent control of ACTH and androgen, creating the opportunity for endocrinologists to work with patients and their families to reduce glucocorticoid dose to more physiologic replacement levels. Since approval, our medical affairs field team has been highly engaged with the endocrinology community, conducting extensive educational programs to support the launch. Meanwhile, our development effort continues to generate valuable longer-term data from the ongoing open-label extension studies in adults and pediatrics and to work towards the generation of clinical data in patients younger than four years old. In parallel, our health outcomes teams are focused on generating important data to characterize…

Thanks, Eiry. Operator, I think we're ready to take questions now.

And we'll take our first question from Phil Nadeau with TD Cowen. Your line is open.

Good afternoon. Thanks for taking our question. It's been very clear that you expect a measured launch for Quinicity in terms of revenue during the first half of this year. You've also guided to giving new start forms as you did today. There's a very vigorous debate among investors as to what is a good trajectory of new start forms and what isn't. We're curious if you'd be willing to provide any of Neurocrine's perspective on what pace of new start forms we should anticipate through the first half of this year and into the second half of 2025. Thanks.

Yeah. Thanks, Phil. This is Eric. So first off, just really pleased that we got an early approval last year, late last year, and a great, very broad label to work with. And, obviously, it gave us an opportunity to get moving a little bit before the end of the year. So those, as we had said earlier this year at the JPMorgan conference, we would be providing updates each quarter on the prior quarter's treatment forms that have come in. And that eleven represents just a few working days, frankly, before the turn of the year. We're really pleased with the early launch dynamics here. Really excited about the feedback that we're getting from providers. And I'm not gonna comment specifically on what constitutes a good ramp, but, you know, so far, so good, and I'd say more than good in terms of the Quinicity launch dynamics. Just a reminder, this is the first new medicine for these patients in over seventy years. So thinking about what the adoption curve might look like, Phil, you know, it's really, I think everybody is wanting to know what that would look like. But as Eric said, receptivity has been incredibly strong so far, and I think you probably sense that in all the market checks that you and the other investors do. So so far, so good. But we're early in the launch and not gonna claim a victory yet. And we'll share more detail in May.

Thanks for taking my question. We'll move next to Paul Matteis with Stifel. Your line is open.

Hey. Thanks so much. Appreciate the question. Can you expound upon this INGREZZA guidance? I feel like looking at our model, I'm really confused because you grew 26%. The guide is less than 10% sequentially. And I know historically, you guys have given conservative guidance. You've done a great job of beating it. But I'm just concerned. Are you trying to send us a greater message here that this market is actually sort of changing going into 2025? Like, what are you seeing during the quarter? And I'm wondering if the street is just getting something there, given that I think that this is above the high end. Thank you.

Yeah. I'll tackle that, Paul. So first of all, I just wanna reiterate that, you know, it's amazing that seven years after the launch, that we had a record growth year for INGREZZA in 2024, and we're really proud about that. And as I mentioned in my prepared remarks, our 2025 guidance of $2.5 to $2.6 billion reflects continued growth of the VMAT2 category and external factors such as an increasingly complex payer environment and competitive dynamics. You know, we're taking proactive steps to address the competition, including our recently expanded sales team and DTC. And historically, we've done really well in terms of access reimbursement, and we're gonna continue to provide excellent support to our customers in order to maximize their access to INGREZZA going forward. With INGREZZA's differentiated product profile and expanded and talented team, a long runway of exclusivity, and less than 10% of TD patients currently being treated with VMAT2 inhibitors, we really expect to see continued strong growth for INGREZZA in 2025 and beyond. Maybe just to add, Paul, this is Kyle. You know, we did have our sales force expansion in Q4, which always causes some disruption, and we expect that to pick up steam and help us into 2025 as we get longer into the year and certainly in subsequent years. But on the growth potential, I think that we're ever more bullish on the opportunity for INGREZZA, you know, starting with the differentiation over our other competitor in the space, the deuterium tetrabenazine. You know, starting with the first dose being the efficacious dose, efficacy profile that we have, the ability to present a new formulation for patients that have difficulty swallowing, and advantages in certain patient populations, in particular those with hepatic impairment. All the reasons to believe that continued growth in the product over time. We appreciate there's some headwinds moving into this year, some of them having to do with us and the sales force expansion. But we're ever more excited about the opportunity that remains here in the vast majority of patients still aren't being treated with the VMAT2 inhibitor.

And we'll move next to Tazeen Ahmad with Bank of America. Your line is open.

Great. Thank you for taking my question. Mine is also on INGREZZA. Can you talk about general expectations for 1Q25, maybe comparing them to prior 1Qs, which was part of seasonality? I guess I'm more curious about it this year just given expectations potentially for lowered revenue per script this year relative to 2024. Should we be thinking that you could have a decline in quarter-on-quarter revenue this year? Thanks.

Yeah. Thanks, Tazeen. So, you know, I can't comment on the specifics of our inner quarter performance, but, you know, typically, this is a challenging time of the year due to the need to get our many continuing patients refills in a timely manner, and our teams are really busy executing their plans and working with their HCP customers and with the dispensing pharmacies to minimize any treatment gaps and, of course, retain patients. As you know, Q1 is the quarter each year with the biggest growth-to-net impact due to commercial co-pay contribution and it sets an incremental rebate agreements kicking in. You know, I'll be able to provide a little bit more color on Q1 performance when we get to the Q1 earnings call. But, you know, this is, you know, typical for us to be working through all of these payer-related issues. And it's something that we've got better at each year over the course of the launch. So to be clear, Tazeen, you mentioned net revenue per script year over year. I would just say that embedded in our guidance is an assumption that net revenue per script in 2025 is gonna be very similar to what we saw in 2024. But sequentially, there is that headwind moving from Q4 into Q1, which is around 3%, call it, this year. The other item that I just flagged is that I am keeping an eye on ordering patterns. The way that the calendar sets itself up at the end of the quarter, there may be a little bit of noise. It's all obviously very hard to predict how folks will order, and we obviously don't influence that, but we flag it for you just in case it causes noise at the end of the quarter, but would largely net itself out through the rest of the year and wouldn't be unique to Neurocrine. So a lot of moving parts here. I think our focus remains for TD is to just get more diagnosis, get new patients being generated, and our sales force is very hungry to be able to help in that regard.

We'll move next to Akash Tewari with Jefferies. Your line is open.

Hi. Thanks so much. A quick one on INGREZZA and then on Quinicity. Should we expect that 60/40 market share split holding up given the evolving payer dynamics between INGREZZA and AUSTEDO? Your guide currently implies a 4 to 5% market share loss versus Teva's guide. And then, you know, your team's talked about physicians will likely need to see patients in person before prescribing them Quinicity. Some of our KOL work has suggested otherwise. How many of your new patient starts are done actually with telehealth, and how do you see that dynamic evolving over time?

Maybe I'll start with the INGREZZA question. What we've seen over the past couple of years is great overall growth in the category. It appears that both brands are doing quite well here. I think what we will see and expect moving forward is that we continue to be the market leader and lead on the profile that we have with INGREZZA, which we think is quite differentiating. On the Quinicity piece, I'll let Eric chime in on that one.

Yeah. You know, certainly, I do think there are some endocrinologists that are prepared or comfortable to prescribe Quinicity remotely or virtually without necessarily an accompanying patient visit. But all the work that we've done leading up to the launch indicates that the majority of endocrinologists are gonna wanna see their patient first and have that conversation with them in person before they recommend treatment with Quinicity. And given the fact that it's a new medication with a totally new mechanism of action, it's understandable. And then over time, I think as doctors get more experience, they'll get more comfortable and potentially start to initiate treatment without a patient visit corresponding.

We'll move next to Cory Kasimov with Evercore. Your line is open.

Good afternoon, guys. Thanks for taking the question. Wondering if you could provide additional detail on payer traction with Quinicity, kind of feedback thus far, and how long you expect the free drug program might last? Thank you.

Yeah. So, you know, we put a system in place to make sure that when patients get prescribed Quinicity, they can get on treatment pretty quickly. Coming out of the gate here with this launch, Quinicity is a brand new not on any formularies yet. So the process is to go through a formulary exceptions process for each and every patient. In order to get people started while reimbursement is being secured, we do have a fast start program, which after about a week, if the claim hasn't been approved yet by the health plan, we'll ship free products to them to get them started. And the expectation is that early in the launch, most patients will require a month or possibly two months of free goods before they're able to transition over to reimbursed product. In terms of feedback from the health plans, you know, it's early days yet. You know, what we're seeing is that, as expected, many of these patients are going on to the free goods program initially. But we have had some patients that have had their prescription claims reimbursed pretty quickly, and they've been able to start on commercial product right from the get-go. So so far, so good, and as I said before, we're really pleased with the feedback that we're hearing from endocrinologists and feedback from the CAH community. And we're confident in our ability to get Quinicity reimbursed and to make sure that it's accessible and affordable. We estimate that the majority of patients will pay less than $12 per month. And, Cory, just an example, we had a great win even yesterday. One of the major plans came out with the coverage policy that was very, I guess, friendly in terms of what it would require between, you know, being over the age of four and being confirmed diagnosed with CAH. And so I do think the plans understand the disease, the team is doing a really good job educating those plans, and so far, I'd say that things are positive. But we're only five weeks into launch. So a lot still to go, but early signs are very positive.

That's helpful. Thank you. We'll move next to David Amsellem with Piper Sandler. Your line is open.

Thanks. So you cited utilization management related to INGREZZA. Can you elaborate on what that's looking like, and how does that tie into your competitor's behavior vis-a-vis payers? In other words, is your competitor getting more aggressive with payers in terms of positioning on plans? Thanks.

Yeah. So, you know, obviously, access and affordability are really high priorities for us in Neurocrine, and historically, we've done really well with high prescription dispense rates and most patients paying less than $10 out of pocket per month. And, you know, in terms of utilization management, you know, that's something that evolves over the course of time. And what we saw, especially in the second half of last year, was that some of the plans were starting to tighten up their utilization management, changing the PA criteria periodically. And so, you know, ultimately, you know, we need to stay on top of that payer environment and how plans are managing INGREZZA on a plan-by-plan basis. We have a pretty sophisticated infrastructure to make sure that we're really maximizing access for our patients. We have field reimbursement specialists. We utilize, you know, all the data that we have to make sure, and I should say that we also have a really good pharmacy network in place. So, you know, as I said in my prepared remarks, it's a complex payer environment. You know, payers continue to evolve in terms of how they're managing specialty drugs. And that's something that we expect to see going forward, and that's a factor in our guidance.

We'll move next to Anupam Rama with JPMorgan. Your line is open.

Hi. Thanks so much for taking the question. This is actually Malcolm Cuna on for Anupam. So with regard to the INGREZZA guidance, can you talk a little bit about the levers of growth amongst the segments? Are you expecting outsized growth from any one of the three segments?

Yeah. Malcolm, this is Kyle. I'll start the question. We generally see the greatest growth still continue to come from the psychiatry segment. I think we also see good investment or return on investment from our expansion in LTC over the past couple of years and see that being a larger portion of the business as well in combination with the work and efforts in the neurology space. But I think largely still the growth opportunity remains in psychiatry. You know, some of the headwinds there still involve telemedicine, the turnover in the offices, and the best way to tackle those is through keeping TD top of mind in those different groups that are using those different aspects of telemedicine and MPPs as well, and the way to look at breaking through that is through having greater frequency of interaction, and that's where the Salesforce comes in for us. So in terms of growth overall in psychiatry, but it will come across the board in the segments that we're looking at in psychiatry, LTC, and neurology.

Great. Thank you. We'll move next to Chris Shibutani with Goldman Sachs. Your line is open.

Thank you. Maybe if I could move to the operating expense side of the equation, particularly with the guidance. Now thinking about how we think about over the course of the several years, you did have periods where you reassessed reinvested at more extensive levels. How confident are you in terms of the current thinking about INGREZZA? And then reflecting upon what the potential will be in a market that obviously has some differences, should we think about your confidence and potential need to adjust either up or down or in some other way with Quinicity's launch? Thank you.

Yeah. I think it's very clear within this space that the number one driver of shareholder value is revenue growth. And that's exactly where we've been putting our money over the last five years in those periodic reassessments of INGREZZA that you referred to, whether it was sales force expansion or direct-to-consumer advertising, and then more recently another Salesforce expansion. So from an investment perspective, just over the last three years, you've seen us show tremendous SG&A leverage going from the mid-fifty percent of revenue in SG&A all the way down to the low forty percent. So the investment that you see this year in both Quinicity and the expanded Salesforce, it's gonna be a little bit less leverage coming out of that. But the expectation is that when we look at 2026 and beyond, we aren't sitting here today thinking that we're going to need a significant increase or change in infrastructure required to support both brands. Quinicity in and of itself being a rare disease, and the nature of the patient population, we expect this to be extremely profitable quite quickly. But that's something that will show up from a P&L leverage perspective as you think about 2026.

We'll move next to Marc Goodman with Leerink Partners. Your line is open.

Yeah. Matt, with your comments on ordering patterns, are you suggesting that fourth quarter may have been helped by inventory? Did inventories change and you're expecting maybe first quarter for that to reverse? And then, I guess, my question really is for Eiry to talk about the M1/M4, the 570 molecule that you're pushing forward. Can you just describe the characteristics of that product and how you expect it to be differentiated from one that's on the market today? Thanks.

Yeah. I'll cover the ordering pattern question. You know, it really is more of a Q1 phenomenon. The nature of our business or our wholesalers largely order on a Monday, products delivered on Tuesday, and that's when revenue is recognized typically. And so when you just look at the calendar setup, for the first quarter, only have twelve Tuesdays. And then you have fourteen Tuesdays that pop up in September. So it nets itself out throughout the course of the year. We don't do anything to dictate the timing of orders. This may not become an issue, but I know it's something that I just flagged just in case there is noise around timing of orders because of the nature of just how the calendar falls. So nothing associated with Q4 that I would mention, Marc. And then, Eiry, would you like to answer the muscarinic?

Yep. I'm all. Thanks for the question. Happy to answer that. As we said in the prerecorded remarks, we are actually still completing the phase one evaluation of the 570 M1/M4 molecule in that phase one evaluation in healthy subjects. We have an opportunity to profile the pharmacology associated with both M4 pharmacology and M1. And whilst I can say that we were very confident and pleased with the results that we saw in schizophrenia in our phase two study for 568 through the M4 selective agonist, there's obviously potential for a dual agonist to add additional potential benefit in areas such as cognition through the M1 effect. And so for that reason, we're very keen to take that molecule forward in the second half of this year to test it in a phase two study of schizophrenia as well.

Are there obvious differences versus Karuna's drug?

Well, Karuna's drug is a pan muscarinic agonist. And so it not only hits M1 and M4, but also the other muscarinic subtypes from M2, M3, and M5. And that's the reason why the peripheral trophium has to be added to the cobenci molecule in order to manage the potential side effects associated with the off-target M2, M3, and M5 effects. So we do not hit M2 and M3, or M5, and so we would anticipate there'd be differences for a selective M1, M4. And as I said, when we complete the phase one and go into the study later this year, we'll be able to talk more about what we're anticipating and hoping to see.

We'll move next to Jess Hung with Morgan Stanley. Your line is open.

Thanks for taking my question. Can you talk about the feedback that you heard from the end of phase two meetings for osuvamphetor and 568? And for 568, was there any concern by the agency on the lack of dose response or the benefit was seen with the mainly the 20-milligram dose? Thanks.

Yes. Thank you. We were very happy with the end of phase two meeting for both osuvamphetor and for 568. And I think we got alignment and guidance from the agency for both of those interactions that was supportive of the registration program as we designed it and defined it. Supportive of the dose selection, and particularly as you asked around 568. Now there's complete support for moving forward with the 20-milligram dose into the phase three program. We also got alignment on the endpoints that we were using and the nature of the whole registration plan. So our focus right now is on moving to implement those programs. We already initiated the osuvamphetor first phase three acute study, and we are moving towards initiating the 568 study in the very near future as well.

Thank you. We'll move next to Brian Skorney with Baird. Your line is open.

Hi. This is Charlie Moore on for Brian. Thanks for taking our question. So we were just wondering, looking earlier in the pipeline, about your Friedreich's ataxia gene therapy collaboration with Voyager. And it would just be great to get some color on how you think it could differentiate from current clinical stage gene therapies, one dual and one targeting cardiac tissue, as well as if that's still on track to initiate first human trials this year. Thanks.

And maybe I'll take this question and I'll have Eiry fill any gaps for this. You know, we're really excited about the FA program that we have with Voyager. It's something that we've been working on for several years as a part of our collaboration. We've gone through first and second-generation capsids that allow us to deliver frataxin to targeted tissues. What we have in the approach here that's so exciting is that patients have the opportunity to have an IV-administered gene therapy that delivers frataxin to the cardiovascular. So the cornerstone symptoms of the disease, either the movement component or heart disease, cardiovascular outcomes, would be addressed by our gene therapy in a standalone treatment. So very excited about that. We are on track for graduating this program from preclinical to clinical development later this year.

Great. Thanks so much. My apologies. We'll move next to Mohit Bansal with Wells Fargo. Your line is open.

Okay. Thank you for taking my question. And I'm sorry for keeping staying on here. So if I look at the fourth quarter number and if I just straight line it, it looks like your low end of the guidance assumes just flat line using fourth quarter. So is there something massively changing in your contracting or the pricing dynamic? It does seem like that on your comments. So can you help us understand that? And then also, are you expecting or modeling any benefit of Salesforce expansion here? Because that would mean second quarter second half bump, but that doesn't seem to be part of the guidance here.

Yeah. On the contracting front, just to be clear, we did enter in some contracts that have some incremental rebates, but it pretty much offsets the annual price increase. So from a year-over-year perspective on price, pretty flattish. A little sequential down, maybe Q4 to Q1 as I mentioned earlier. So, you know, I understand that the straight line math, there's a lot of variables at play, including pace of new patient additions relative to discontinuations, for example, on a much bigger patient base. And so those are normal growing launch dynamics. And as we mentioned, with the Salesforce expansion, we do expect to have nice momentum in the second half of the year. But it's gonna take a little bit of time for them to get to full speed.

Got it. We'll move next to Ash Verma with UBS. Your line is open.

Great. Yeah. Thanks for taking my question. So just one more on INGREZZA. So do you expect to see more of the utilization management headwind in 2025 on the Medicare Part D plans? We've heard Part D plans are moving branded drugs lower because they have the catastrophic coverage, and with that burden going up, they need to pick up the dollars elsewhere. If you can comment on that, that would be great. Thanks.

Yeah. So a quick comment. We don't expect to see any significant changes in terms of our coverage in 2025 versus 2024. You know? And certainly, we're looking and monitoring closely what's happening with the first wave of medicines that have been negotiated and the impact potentially of other drugs in those classes. But so far, we're not seeing any major shifts. And the other thing I'd point out is that because we are a designated small menu phase in benefit on the contribution to the catastrophic phase, so does our competitors. So there's no one that's advantaged in that regard within the VMAT2 class.

We'll move next to Sumant Kulkarni with Canaccord. Your line is open.

Afternoon. Thanks for taking my question. It's another one on INGREZZA. The product's been on the market for some time now. Comments suggest there's still some way to go on penetration in the tardive dyskinesia market. We seem to be at a point every few quarters when the debates on the growth trajectory around INGREZZA seems to intensify. Right. Then you kind of grow out of that by beating your initial numbers. So to help settle this uncertainty or debate somewhat, your latest philosophy on offering any detail on what you think eventual peak sales potential for INGREZZA might be in the US?

Yeah. It was funny. Kyle and I were talking about this earlier this week that, you know, original models for INGREZZA were peak sales of $500 million. And here we are in 2024 having grown almost $500 million year over year with the market now being close to $4 billion. So we're not gonna give a peak potential, but what we do see, as Eric has alluded to, that still nine out of ten patients with tardive dyskinesia are not currently being treated with the VMAT2 competitor. So we do anticipate there's significant demand out there. And, you know, as you've said, there are ebbs and flows in the market development process for tardive dyskinesia. Some are pretty clear to understand, others, you know, less clear. But we do feel like there's a lot of growth trajectory ahead.

And maybe just to add to that part of the discussion that we had is one of the really unique aspects of tardive dyskinesia is that we believe the underlying prevalence continues to grow at a rate that exceeds the growth rate of the general population. So getting your hands around market size and value is something that's dynamic. You know, the antipsychotic prescription volume was about 75 million last year, and it continues to grow in the low single digits. That's multiples above the growth rate of the general population. That's why you saw us increase our prevalence number late last year. And that's something that we'll continue to revisit on an annual basis. But we're ever more surprised as we get into the market and learn more about it as to how large it can be. And how much work there is still ahead for us. But with that work, a lot more opportunity, and we're quite thankful to be in a situation where we have thirteen more years of market activity to help build the market.

Thanks. We'll move next to Myles Minter with William Blair. Your line is open.

Hey. Maybe one for Eiry just back on 570. You haven't completed the phase one yet. But just curious as to your decision to move in an adult experiencing schizophrenia or acute psychosis and not Alzheimer's disease psychosis? Does that mean you're still contemplating that indication, or is it maybe that you're seeing something on the tolerability side for that molecule that you wanna go into adults first? Prior to the elderly population. Thanks very much.

Yeah. Happy to take that. I think, obviously, we have experience with 568 for the M4 selective in the acute psychosis setting in adults, which makes it a pretty straightforward choice to evaluate 570 in that patient population as well. With respect to other potential indications, obviously, we remain very open to that. And as we continue to generate data, you may well see us going into different indications beyond that initial psychosis study.

I think, Myles, too, this is Kyle. The interesting thing about the muscarinics, as we've discussed, is that there's still a lot to learn about this as a target class. And, fortunately, we have a number of molecules that allow us to compare and contrast the pharmacologies that we have. And one way to do that is to look at a dual pharmacology in the same patient population and see the type of outcomes you can get from a selective and direct agonist that we have in 568. So there's a lot of value, a lot of opportunities here across the molecules that we have, and knowing that we can't do everything at the same time. We like the approach that we have here with 568 going into bipolar mania and then dual going into schizophrenia.

Makes sense. Thanks. We'll take our next question from Laura Chico with Wedbush Securities. Your line is open.

Good afternoon. I'm sorry. Just one clarification for me. With respect to the field force expansion, and I guess I'm trying to relate it back to the 25 guidance here. Wondering whether you're gonna see the biggest benefit from driving new patient starts. Is this the channel expansion or increasing adherence? I guess I'm just trying to understand where the field force impact is most likely to be felt. Any commentary there? Thanks.

Yeah. A couple of things I'd point out with regards to Salesforce expansion and our experience from prior expansions. First of all, and I think we alluded to it earlier. When you hire essentially a new team or expand your existing team, and you deploy them, it takes some time for them to come up with speed and to hit their stride, so to speak. And so we do expect to see the majority of the impact from the expanded team as we go into the second half of the year. Second thing is, in terms of what's the benefit of the team, it's primarily in driving new patient starts. They do a lot of education. They're able to increase our reach and also increase our presence in existing practices, driving recognition and diagnosis, and, of course, initiation with INGREZZA. The two areas that we expanded our team into were psychiatry and long-term care. And as Kyle mentioned earlier, psychiatry continues to be the segment that has the largest patient potential and is still fast-growing, and we recognized that we hadn't really increased our footprint in psychiatry since going back to I think it was 2018. So, ultimately, you know, we do see the opportunity to expand our footprint in both psychiatry and LTC. Those teams are relatively brand new, and we do expect to see the benefit of having that expanded presence, especially in the second half of the year.

Thank you. We'll move next to Ami Fadia with Needham. Your line is open.

Hi. Good evening. Thanks for squeezing me in. I have two very quick questions. Firstly, just follow-up on all the questions around the INGREZZA guidance. It certainly seems quite conservative given all the other comments around the trends. But it sounds like you're taking a conservative view keeping in mind kind of the increased hurdles with regards to prior ops. If you can comment if, you know, that's kind of what's driving this conservatism or if we are missing something there. Then just with regards to the eleven patient forms for Quinicity, can you give us some color around where these patients are being treated? And something about kind of what was the trigger for prescribing the drug to these patients, you know, were they sort of on very high corticosteroids or were they sort of not well controlled on their current treatments? Any color would be helpful. Thank you.

Yeah. On the INGREZZA piece, you know, we've commented previously. I think that there are a number of variables that play out here towards the end of 2024 that reads on our thought on 2025. Competitive pressures there with our competitor in this space with their XR formulation getting to a once-a-day type of medicine after a complex titration regimen. We've also seen the competitive pressures there on the payer front. But I don't wanna discount also something that we talked about, the disruption of our own sales force expansion in Q4. These are things that we saw play out over the course of the second half of last year. Excuse me. And we think that will still be a factor for us as we start 2025. But I don't want to dwell too much on the headwinds that we have here. I also want to call out all the things that we think that will benefit us here into 2025 in subsequent years, and I've touched on these already. But, really, the Salesforce expansion that caused that disruption in Q4 will start playing dividends this year and certainly lean on that heavily in subsequent years as well. And then our differentiated product across things like efficacy, dosing regimen, other formulations for patients with difficulties. So these are all things that will play out with this upside sales force and allow us to do quite nicely over time. So we balance both of these things in terms of our guidance. We are seeing growth this year. It's not going to be, as the guidance suggests, as large as it was in 2024, which was our largest growth year ever, but we still see significant growth during this year and certainly in the following future years as well.

Yeah. And let me just quickly comment on, you know, the sort of what we're seeing in terms of the treatment forms coming in and the sort of the diversity of the patients. So, you know, obviously, you know, we've done work leading up to the launch. You know, our expectation is that adoption will be probably earlier or faster in the pediatric segments. We expect that it will also see more rapid adoption in the centers of excellence. However, early on with a, you know, a relatively small sample size, so to speak, what we are seeing is treatment forms are coming in from community endocrinologists, from endocrinologists that are part of teaching hospitals or CAH clinics. You know, we're seeing patients getting started that are pediatric patients. We're seeing adult patients getting started. So, really, it's very diverse and across the board. And as I said before, I'm just really excited about the momentum and the trajectory that we're on here. It's early days yet, and it's that said, there's still a lot of people that we need to reach and a lot of work that we need to do, but I think that the fact that we had invested in the signature that we had in the second half of last year, we were well prepared for an early approval has really set us up for success this year and beyond with.

Thank you. We'll move next to Uy Ear with Mizuho. Your line is open.

Hey, guys. Thanks for taking your question. So on, questions on INGREZZA, quick one on 4Q, was there a significant or any volume growth in the quarter from Q3 to Q4? And quickly on the guidance as well. Does the guidance assume benefits from the Salesforce expansion? Just wanted to make sure we're clear on that. And thirdly, if I can, could you maybe just help us think how to perhaps think about the INGREZZA sales post-2027 after, you know, I guess, after the price negotiation for AUSTEDO. Thanks.

Go ahead.

Yeah. I think the answer to your questions are yes. We have included the Salesforce expansion in our guidance range. You know, obviously, at the high end of the range, you know, it's contributing at a quicker pace. And so I would just say that the answer to your first two questions are yes. In regards to what happens post-2027, you know, that's something, as Eric mentioned, we're keeping our eyes out looking to see what is happening in the space with other similarly situated, you know, product categories. And but at the end of the day, for us, our main focus right now is growing the TD market. Growing the presence of INGREZZA. There's gonna be a whole lot of uncertainty, I'm sure, for the whole, you know, through the whole IRA implementation. Hard to predict, but what we can control is ensuring that patients who have TD get diagnosed and get an opportunity to take INGREZZA.

Okay. Thank you. We'll take our next question from Brian Abrahams with RBC Capital Markets. Your line is open.

Hi. This is Joe on for Brian. Thank you for taking our question. So related to the earlier question on TD market share split, I believe the market share has been pretty stable over time even after competitor XR launch. I'm just wondering if there's anything more that'll drive the changes to the competitive dynamics this year. And how are you thinking about the changes in payer dynamics beyond 2025? Do you believe the complexity and the dynamics will persist? Thank you.

Yeah. So, you know, we've always said that we have a formidable competitor. And, you know, they appear to have gained a few share points in 2024 due to the rollout of their extended-release formulation of a deuterium-modified tetrabenazine, as one might expect. But INGREZZA is the leader in the VMAT2 category. And we continue to, you know, project growth for the class and for INGREZZA. There's, as I mentioned earlier, a lot of headroom with nine out of ten patients with TD as yet undiagnosed and untreated. Currently with the VMAT2 inhibitors. So, you know, we certainly are bullish in terms of the long-term and near-term potential of INGREZZA to continue driving that growth. And with thirteen more years of exclusivity, you know, I'm glad that we have that time to do it. You know, thinking beyond 2026 and 2027, you know, I mentioned that it's a complex payer environment. And the Inflation Reduction Act makes it even more complex. But, you know, we're gonna continue to do what we need to do to make sure that patients have access to INGREZZA this year and in coming years.

And maybe just to add to that as a reminder to everyone, I think we have it in our remarks, but we do have been given the specified small manufacturer exemption as well as a small biotech exemption. So that's confirmed, and, you know, we would expect our price negotiation observation event to be in 2029. So to Eric's point, we have the opportunity to learn, prepare, and adjust to the new world that we'll all be in over the next couple of years as products are negotiated at CMS and seeing how that affects potential other products in similar categories.

We'll move next to Evan Seigerman with BMO Capital Markets. Your line is open.

Hi. On for Evan Seigerman. Thanks for taking our question. Wanted to ask if you could talk about the decision to amend the agreement with Takeda and get worldwide development and commercial rights ex-Japan for osuvamphetor. This decision driven by increased confidence in pursuing additional indications beyond MDD, or was this decision more based on just the profile and MDD alone? Thank you.

I'll start this. This is Kyle. You know, I think that so we're very excited about the data that we have that came out of the phase two program, and quite frankly, so was Takeda. As we've seen from Takeda over the past several years, they've been making a number of strategic decisions that moved them away from kind of class called psychiatric disease, and, you know, MDD, osuvamphetor, fit squarely in there. And the nature of our collaboration really affected their P&L in terms of their expense profile on a year-to-year basis. So knowing that they appreciated the data that we have and still like to be involved in this, we both work towards an arrangement where they are able to continue developing this asset in their territory, which is Japan. This particular compound came out of efforts from their Japanese R&D facility, and there's quite a bit of pride there in the to take this forward in their country. And we'll continue to work together to develop osuvamphetor outside of Japan with Neurocrine and the lion's share of the rights. So it's a win-win for both companies. We're able to move forward more quickly, being a smaller, more nimble company, and we think that that will ultimately allow us to have the best opportunity to bring this medicine to patients as quickly as we possibly can. So we're excited. We continue to work with our team there, and we'll look to move this into phase three this year.

Appreciate the color. Thanks, guys.

And it does appear that there are no further questions at this time. I would now like to turn it back to Kyle for any additional or closing remarks.

Thank you, and thanks, everyone, for joining the call this afternoon. As you can see, we've got a lot going on here at the company, and we've hit on a number of different points throughout our conversation through opening remarks about 2025 being a year of execution, a year of evolution, and it really is. And it does start with our efforts on our commercial products, INGREZZA and Quinicity. The goal here is to drive revenue growth and diversification over time, so it's very important we continue to execute on our commercial medicines and make sure that they are brought to patients as quickly and broadly as possible. Other pieces of execution involve supporting those programs that are in process in our pipeline. We've talked about our phase three assets, osuvamphetor, MDI 568, and MDD in schizophrenia at six dot successful or respectively. And that's just the tip of the iceberg. We have programs in phase two, coming on board from our Muscarinic portfolio. You have data readouts that span phase two and phase three MDD and the adjunctive treatment of schizophrenia, as well as the dyskinesia associated with cerebral palsy. A couple phase one starts this quarter, and then the fun begins. The real concept of diversified and sustainable portfolio with our R&D transformation and bringing new products that are in the space of peptides, antibodies, and gene therapy. Those are all things that become a reality in the second half of this year. So we're extremely excited about sharing this news with you as we move forward into 2025 and meeting you all at the healthcare conferences throughout the course of the year.

This does conclude today's program. Thank you for your participation. You may disconnect at any time, and have a wonderful afternoon. Goodbye.