Neurocrine Biosciences, Inc. (NASDAQ:NBIX) Q4 2022 Earnings Call Transcript

Neurocrine Biosciences, Inc. (NASDAQ:NBIX) Q4 2022 Earnings Call Transcript February 6, 2023

Operator: Good day, everyone, and welcome to today's Neurocrine Biosciences Reports Fourth Quarter and Year End 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. . 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.

Todd Tushla: Thank you, and a good Monday morning to everyone. Welcome to Neurocrine's fourth quarter and full year 2022 earnings call. 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. During this 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 will be jumping into Q&A after prepared remarks and as is customary, we will do our best to get to all of your questions. With that, I'll turn things over to Kevin.

Kevin Gorman: Thanks, Todd, and good morning. Over the last several years, we have launched a number of initiatives to bring INGREZZA to TD patients and relieve their suffering. Now many of those initiatives have been very successful as evidenced most recently by the growth of INGREZZA in 2022 as we announced this morning. We're going to continue to build on those efforts and anticipate continued meaningful growth in 2023 out into the foreseeable future. Now the initiatives that are most obvious to you are the expansion of our sales force and our direct-to-consumer advertising. What is less obvious but very important are all the other teams within the company that are force multipliers in making sure TD sufferers are appropriately treated.

Many of these efforts are aimed at educating healthcare professionals, their staff, payers and their medical advisers and importantly, for the first time, patients have groups advocating for the disease and their care. Again, these efforts have yielded significant results for sufferers of TD to date, and we will continue that momentum because the vast majority remains undiagnosed and untreated. Switching gears, we have a deep and diversified portfolio of mid and late-stage medicines that will have important readouts this year and into 2024. We've invested meaningfully in our research and development such that multiple new molecules will enter the clinic each year on a consistent basis to ensure a product flow into the future. I'll stop there.

And with that, turn it over to Matt.

Matt Abernethy: Thank you, Kevin. Good morning. Good to see many of you over the past month. With INGREZZA sales growth of over $350 million in 2022, a record number of TD patients helped and in advancing pipeline, Neurocrine is in an excellent position for years to come. On the clinical side, CAH enrollment accelerated during the fourth quarter, enabling us to provide top line data in the second half of this year. On the financial front, our balance sheet strengthened in 2022, ending the year with over $1.2 billion in cash while using $280 million to retire a large portion of our convertible debt. For 2023, we expect another strong growth year for INGREZZA with sales of between $1.67 billion to $1.77 billion, reflecting an underdeveloped TD market supported by an expanded sales force and ongoing marketing initiatives.

For SG&A and R&D expenses, we intend to invest just over $1.4 billion in 2023, reflecting an overall increase in R&D spending, primarily related to advancing our 12 mid to late-stage clinical programs, including our muscarinic franchise as well as expanded preclinical research efforts. Specific to 2023 SG&A expense, while our investment in INGREZZA will increase to support continued TD growth in the hopeful indication in Huntington's, we do expect to show SG&A leverage of around 300 basis points. I look forward to your questions later in the call. Now over to Eric.

Photo by camilo jimenez on Unsplash

Eric Benevich: Thanks, Matt. INGREZZA's strong performance in 2022 was exemplified by four quarters in a row with year-over-year growth exceeding 30%. Our commercial and medical affairs teams really executed well to help more tardive dyskinesia patients get treated than ever before, and we carry this momentum into 2023. Yet much work remains ahead of us. Seven out of 10 of the approximately 600,000 people in the U.S. living with TD still have not been diagnosed. And half the time, those that receive a diagnosis aren't offered first-line standard of care treatment with a VMAT2 inhibitor. So the opportunity for organic growth for INGREZZA remains significant. Our 2023 revenue guidance range of $1.67 billion to $1.77 billion assumes approximately 20% year-over-year growth at the midpoint.

The low end is a conservative estimate and contemplates pre-recessionary pressure in the U.S., while the high end reflects less macro headwinds and accelerated new patient growth. You should anticipate the majority of growth in 2023 to be driven by our psychiatry and neurology business segments, which are the relatively more developed segments of our business. Long-term care is a completely new site of care for INGREZZA, and we are just getting off the ground there. Our long-term care team has been making great strides getting up to speed on the unique and complex operational dynamics within LTC and how that impacts TD care. While we estimate somewhere in the range of 10% to 15% of TD patients are in an LTC setting, it will likely take a few more quarters before we see a tangible impact to overall sales given the relatively smaller size and higher complexity of that business environment.

On the patient activation front, last year's direct-to-consumer campaign exceeded our expected internal metrics. So we will continue with that investment in 2023. Our newest DTC campaign, which we refer to as impressions, is now on the air via broadcast, streaming and digital channels. The campaign highlights INGREZZA as the simple choice with proven efficacy and it's the number one prescribed treatment for tardive dyskinesia. All-in-all, we're well poised for growth in 2023 and beyond. With that, I will turn the call over now to my colleague, Dr. Eiry Roberts, to discuss our clinical progress. Eiry?

Eiry Roberts: Thank you, Eric, and good morning to everyone on the call. 2023 promises to be an important year for the Neurocrine pipeline with a number of milestones and data readouts, including the August 20 PDUFA date for valbenazine as a potential treatment option for patients with chorea associated with Huntington's disease. We were very pleased with the safety and efficacy results from the KINECT-HD study and with data from the subsequent six-month follow up, which formed the basis of our supplemental New Drug Application that was accepted by the FDA in December of 2022. On the clinical front, I'm pleased to announce that enrollment is complete in both the adult and pediatric registrational studies of crinecerfont as the treatment of congenital adrenal hyperplasia.

These trials were designed with input from all key stakeholders, including clinical experts in the field, patients, advocacy groups and regulatory agencies in the U.S. and Europe. I'd like to congratulate everyone involved in the crinecerfont program for all their hard work in getting us to where we are today. This program will provide the largest trial data set ever generated in patients with CAH. And we look forward to sharing top line results from both studies in the second half of this year. In addition to crinecerfont, we anticipate reporting studies from two Phase 2 proof-of-concept studies, NBI-352 for the treatment of focal onset seizure in adults and NBI-846 as a treatment for anhedonia associated with major depressive disorder. Both these top line data sets are expected in the second half of 2023.

Turning to our growing muscarinic portfolio, the team continues to make very good progress with enrollment in the Phase 2 study of NBI-568, a selective M4 agonist for the treatment of schizophrenia. We also remain on track to initiate a Phase 1 study of a dual M1/M4 agonist from this platform, NBI-570, later this year. To complement this robust pipeline in Phase 2 and 3, we plan to continue the growth of our early-stage pipeline by advancing additional new chemical entities into Phase 1 this year. I'm very pleased with the current robustness of our clinical pipeline and look forward to further strengthening this pipeline in partnership with our Chief Scientific Officer, Jude Onyia. Under Jude's leadership of research and preclinical development, we're investing in a range of modalities, including small molecules, peptides, proteins and gene therapy to deliver on the goal of providing symptomatic disease modifying and curative treatments for patients living with serious diseases in the field of neuroscience.

As I reflect on where we are as an R&D organization, the foundation and the opportunity for our pipeline has never been stronger. With that, I'll turn the call back to Kevin. Kevin?

Kevin Gorman: Thank you, Eiry. And with that, I will open it up for questions.

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