Neurocrine Biosciences, Inc. (NBIX) Q2 2024 Earnings Report, Transcript and Summary

Good day everyone and welcome to today's Neurocrine Biosciences' reports Second 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] It is now my pleasure to turn the conference over to Vice President of Investor Relations, Todd Tushla. Please go ahead.

Thank you, Chloe. Welcome to Neurocrine Biosciences' second quarter 2024 earnings call. With me are Kevin Gorman, our current Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eiry Roberts, Chief Medical Officer; Eric Benevich, Chief Commercial Officer; and Kyle Gano, Chief Business Development and Strategy Officer, who, on October 14, will become Neurocrine's next CEO. So, yes, this will be Kevin's last earnings call, and he plans to share a few closing thoughts following Q&A. Before we begin, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. With that, I hand the call to Kevin.

Thank you, Todd. Yes, I wish they would have told me. I have closing thoughts today, but. Good morning, everyone. We have a lot to go over this morning, but what I'd first like to start out with is a statement that we have no information to share on either Luvadaxistat or NBI-'568 or M4 agonist. Both trials remain blinded, and neither database is locked. Now, this has been an excellent quarter. I know you probably get tired of me hearing me say this. I never do. We have better than 30% year-over-year growth for INININGREZZA. We've had an approval of the INININGREZZA SPRINKLE priority review for Crinecerfont. Compelling Phase 2 data for our AMPA modulator and major depressive disorder, multiple new compounds entering the clinic, and best of all, the company will finally be rid of me. Now, while Eric and Eiry will be speaking about INININGREZZA and Crinecerfont in more detail, I'd like to share a few observations. It's now very obvious that there are so many more TD patients that need and want treatment. It takes investment to get to these patients, and each time we've made that investment, either expanding our sales force or utilizing direct to consumer advertising, that's propelled INININGREZZA to a new level, because we're able to educate more HCPs and reach more patients. And from a purely financial perspective, it has always been very ROI positive. But the investment doesn't stop there. We continue to explore INININGREZZA in the clinic, in Dyskinesia and Cerebral Palsy, and it's an adjunctive treatment for Schizophrenia. And finally, we are developing the next generations of VMAT2 Inhibitor. This is going to be an area that we plan on being in for a very long time and will be a very important part of neurofing. Now, additionally, we have another life changing drug in Crinecerfont, and along with orphan drug designation, breakthrough designation, we now have priority review. We're working with FDA in the review of the medicine and we are excited to get to the PDUFA data at year end. The drug will change the entire treatment paradigm for CAH patients. Finally, I believe we have the most robust preclinical and clinical pipeline in neuroscience in the world. And this will become even more apparent next year as our biologics enter the clinic. I'll shut up now and turn it over to Matt.

Thank you, Kevin. 2024 continues to be a tremendous year for Neurocrine; between positive data for our input potentiator and major depressive disorder, priority review for Crinecerfont and in growth of growth momentum continues to build, positioning us as a leader in neuroscience for many years to come. In grossed Q2 sales were $580 million versus $440 million in the prior year, representing 32% year-over-year growth. With this performance, we are raising the 2024 and gross and net sales guidance range to $2.25 billion to $2.3 billion, compared to our previous guidance range of $2.1 billion to $2.2 billion We are also updating our GAAP SG&A expense guidance by approximately $35 million with $20 million to support the continued growth of INININGREZZA with our expanded sales team and a $15 million non-GAAP impairment charge associated with vacating office space as we migrate to our new campus. Being a high growth company, we continue to make capital allocation decisions to prioritize accelerating revenue and advancing our R&D pipeline to sustain this growth into the future. With INININGREZZA's momentum launching a potential second blockbuster with Crinecerfont and advancing clinical programs into phase three, Neurocrine has the building blocks for continued success. Although we're not at a point to provide official financial guidance for 2025, I do want to highlight a few items for you to consider while you develop your operating expense expectations for SG&A over the past several years, our focus has been on generating top-line revenue growth, reaping the benefits of previous investments. Heading into 2025, our investment will increase with an incremental $125 million to support our top priorities with the successful launch of Crinecerfont and delivering ingressive growth. Regarding R&D investments, although we are still waiting for important data cards to turn over this year, I want to emphasize our willingness to invest heavily behind any program that has positive proof of concept data and accelerate high value preclinical programs into the clinic. Between growing sales and an advancing pipeline, we find ourselves in a unique position with financial flexibility to advance important potential medicines like our AMPA program through the clinic over the second half of this decade in a non dilutive manner. A lot of work ahead, but very exciting times here at Neurocrine. With that, I'll hand the call over to Eric.

Thanks Matt. The momentum we saw within ININGREZZA in Q1 certainly carried through into our performance last quarter. Q2 growth of over 30% versus the prior year is a testament to the strength of our underlying business across hard eye Dyskinesia and Huntington's disease Chorea. With sales approaching $1.1 billion in the first half of this year, we've raised and narrowed our full year sales guidance.As Matt mentioned, to a range of $2.25 billion to $2.3 billion at the top-end. At the midpoint, this range equals approximately 24% growth versus 2023. As Kevin noted from the podium of a sell-side conference in June, we've learned a lot about the TD market since the launch of ININGREZZA seven years ago. It's critically important that we continuously evolve our approach and appropriately invest in order to help even more patients that can benefit from ingressive therapy. We've tried twice before increased the size of our sales team, the first time early in the launch by adding more sales specialists to the existing one team structure, and the second time by splitting and creating dedicated teams for our key business segments in psychiatry, neurology and now in long term care. The TD market has grown substantially over time in terms of the number of HCPs diagnosing and treating people with TDEM, and we have seen that these HCPs are promotionally responsive. Each time we expanded the sales force in the past, we saw a clear resulting increase in diagnosis and treatment with ININGREZZA, usually a couple of quarters after deployment of the new sales people. Every year, we carefully evaluate the adequacy of our commercial footprint to meet the needs of our HCP customers and the patients they care for. We recognize that there remains much more opportunity to reach and educate HCPs that care for patients living with TD or HD Chorea, and that we need to strategically and carefully adjust our commercial resources to meet their needs. With that as backdrop, as Kevin mentioned in June, we're increasing the size of our psychiatry and long term care sales teams this year to help accelerate appropriate diagnosis and treatment with ININGREZZA. We plan to have the new team members in the field by the fourth quarter of this year. As with prior sales force increases, we expect contributions from the new salespeople once on board, to be tangible a few quarters later. We continue to invest in ININGREZZA because we have strong conviction in the opportunity. In addition to investing in our team, we are investing in the brand. We're proud to have recently made available our new ININGREZZA sprinkle formulation. With this launch only ININGREZZA offers the benefit of a sprinkle formulation that provides an alternative administration option for patients who experience Dysphagia, have difficulty swallowing, or prefer not to swallow a pill. Our data tell us that upwards of 10% of people living with TD or HC chorea experience Dysphagia or difficulty swallowing. It's important for us to provide this new option to patients who want the benefit of treatment without the potential challenge of swallowing a pill. The ININGREZZA sprinkle capsule is easy to open and the granules can be sprinkled on soft food such as applesauce, yogurt or pudding for oral administration. ININGREZZA is the only VMAT2 inhibitor to offer one pill once a day dosing with no complex titration to reach an effective dose, offering both oral capsules and a sprinkle formulation to meet the diverse needs of people living with TD or HD chorea and given the long Runway of exclusivity for 14 more years out to 2038. Expanding our commercial footprint and investing in the brand gives us the opportunity to capitalize on the significant growth opportunities that remain ahead in the TD and AC Chorea markets. Now shifting to Crinecerfont just as we've had a learning launch in TD with ININGREZZA, the same concept will apply to Crinecerfont in congenital adrenal hyperplasia, or CAH. People suffering from CAH have had no new treatment options in over 70 years before the potential approval of Crinecerfont at year-end. Our rare endocrinology commercial team, which is now fully hired, is focused on a number of market development initiatives to better understand and inform the CAH community. In fact, we held a kickoff meeting for our endo franchise team in July and I was struck by their excitement and enthusiasm for really helping the CAH community. Because of the terrific clinical profile of Crinecerfont that emerged, the clear unmet need in CAH and our reputation as a great place to work, we've been fortunate to attract members to our endo team with, on average, more than 20 years of biopharma experience in more than 10 years focused on rare diseases. For the balance of this year, that team will focus primarily on delivering disease education to endocrinology health care providers featuring our "What the C@H?!" initiative. This unbranded educational resource aims to close the gap in CAH understanding and acknowledge the frustration and challenges experienced by members of the CAH community living with and managing this rare genetic endocrine condition. With priority review in hand, we'll be ready to bring Crinecerfont to patients in the new year quickly after FDA approval. We've demonstrated with INGREZZA that we can successfully launch into and build a new therapeutic category. We're committed, and we're excited to do that all over again with Crinecerfont. So with that, I'll turn the call over to my colleague, Dr. Eiry Roberts, our Chief Medical Office.

Thank you, Eric, and good morning to everyone on the call. I'm pleased to share that we made substantial progress with our clinical pipeline in the last quarter, including delivery of several important clinical milestones. I'll begin with NBI-'845, a potent, highly selective potentially first-in-class positive allosteric AMPA modulator. As a reminder, in April, we announced top line results from the SAVITRI study in patients with major depressive disorder with inadequate response to currently available treatment. The primary endpoint in the study was achieved with NBI-'845 demonstrating a statistically significant reduction in the Montgomery Asberg Depression Rating Scale total score at day 28. The study also met key secondary endpoints, including a statistically significant reduction in the MADRS total score at day 56. Importantly, NBI-'845 demonstrated a strong effect size and was generally well tolerated. We are currently working towards an end of Phase II study meeting with the FDA later this year to support the initiation of registration studies for NBI-'845 next year. Turning to Crinecerfont. In June, we presented both the adult and pediatric Phase III CAHtalyst study results at the ando meeting, with parallel publication of the results from both studies in the New England Journal of Medicine. In July, the FDA accepted the Crinecerfont filing and granted priority review thus further recognizing the seriousness of congenital adrenal hyperplasia, the high unmet need and the potential that Crinecerfont can provide significant benefit for patients living with this chronic debilitating disorder. The PDUFA dates for both the capsule and oral solution NDAs for Crinecerfont are now set for late December. In addition to priority review, the agency had previously granted breakthrough therapy designation, orphan drug designation and rare pediatric disease designation to Crinecerfont. Upon FDA approval, the latter will enable Neurocrine to activate a rare pediatric disease designation priority review voucher, which could then be utilized to accelerate the review process for a future registrational program. While the FDA is not planning for an outcome meeting, our teams are well prepared to engage with the agency in support of the FDA review process, including an outcome, if it is scheduled at some point. This quarter, we remain on track to deliver data from NBI-'568, our orthosteric selective muscarinic M4 Agonist study as a potential treatment for schizophrenia. We plan to communicate the Phase II study results via press release and a conference call, where you should expect to see total PANNS score change, placebo-adjusted PANNS score change, effect size as well as safety and tolerability measures. In Q3, we also remain on track to deliver data for luvadaxistat as a potential treatment for cognitive impairment associated with schizophrenia. All other clinical programs continue to make progress, including our expanding Phase I portfolio. In the last quarter, 2 new Phase I molecules entered the clinic, NBI-'986, a selective M4 Antagonist, for the potential treatment of movement disorders and NBI-'567, an M1 preferring muscarinic agonist from our muscarinic agonist portfolio, which now totals 4 early-stage compounds in development. We'll provide more color on these programs and the remainder of the Phase I portfolio as they advance towards Phase 2. All in all, I'm pleased with the continued evolution of our portfolio, which reflects the deepest, broadest pipeline in Neurocrine's history. I look forward to continuing to advance and expand these efforts to provide meaningful new therapies for patients living with chronic debilitating diseases in the fields of neurology, neuropsychiatry, neuroendocrinology and neuroimmunology. Our goal remains to deliver important improvements in clinical outcome for patients with great needs, but few options. And for one last time, back to you, Kevin.

Thank you very much, Eiry. So you can't imagine how happy she is that it's one last time that she's given these back to me. We're ready for your questions this morning.

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

Good morning. Thanks for taking our question, Kevin. First, congrats to you on a tremendously successful career at Neurocrine. You've really built the biotech bellwether and your efforts and insights have helped countless patients. So we hope you have a long, happy and healthy well-deserved retirement. Eiry, a question for you. There's a lot of focus on 568. Thanks for setting the table on what you're going to announced in the future. It's been hard to diligence the compound because there's not a ton that's been published on it, but I believe Sosei has presented some data from a healthy volunteer study. Could you review for us that data? What's known from Phase 1 in terms of muscarinic side effects, cardiovascular effects, potency to the target or any other information that's been released?

Yes. Thanks, Phil. So as I mentioned on the comments, we will, in this quarter, be delivering the data from our Phase I proof-of-concept study in schizophrenia and Kevin articulated what you can hope to see and plan to see as a result of that. In terms of the timing for that study, what I can say is that we had a broad range of both preclinical data and Phase I information that made us very confident in terms of the safety and tolerability of the doses that we were choosing to take into the clinic. And we saw, as expected, the range of muscarinic relief to pharmacology. The -- I'll also remind you a little bit of the purpose of this Phase II study because I think it's from this study that we're really going to learn more about the efficacy and tolerability of the molecule in schizophrenia and give us some hints around the potential differentiation moving forward for this selective M4 Agonist. This is a dose-finding study, and the doses that we took into the study reflects our confidence in terms of the range in which we anticipate seeing the pharmacology of interest. And so it's up to potentially 4 cohort study, each independent cohort is essentially chosen in this adaptive fashion on the basis of the tolerability seen in the previous cohort. And so it allows us the opportunity to demonstrate the range from hopefully minimally effective to maximally tolerated dose within this study. And I think that will be what will be most informative for you as you look at the potential differentiation from other drugs in this broad class.

And have you disclosed the adaptive rules, by what rules are the patients shuffled between the arms?

We have not disclosed that. What I can say is there is an independent DMC actually reviews tolerability data for each cohort as we go through the study and makes the recommendation or guides the dose for the next cohort. We do not know those doses in terms of what the total dose in the study is and -- but obviously, it's not going to be very long for this quarter for us to get to those data.

And during our call that we're going to have here this quarter when we review the data, we will spend time going through this study designed to make sure there's a lot of clarity around that.

Kevin, congrats again.

Thanks a lot, Phill. And I -- as I was going through getting prepared for today, I made the observation that probably, you and I have worked together. I'll use that term longer than any other pair of CEO and analysts that I can remember. We're both -- we're loved together.

We'll move next to Paul Matteis with Stifel. Your line is open.

Hey, thanks for taking my questions. Excuse me. And Kevin, I'll echo Phil's congratulations. It's always been a lot of fun working with you and talking to you. I have another question on the muscarinic. There's been a lot of conversation with Eriy related to the PANNS effect size hurdle. What would be interesting as it relates to efficacy? How are you thinking about other attributes of the target product profile here? And what else is important to you for advancing the molecule? Specifically, I love it, Eiry, if you could comment on what you think about QD versus BID, what your expectation is, whether that's kind of important to you? And also just GI side effects and whether you're expecting something that's more emraclidine-like or KarXT-like?

Yes. I mean, I think, I'll go back first of all to the mechanism here. So this is an M4 selective agonist. And so I think we can expect that the profile will be different from certainly a PAM muscarinic agonist in terms of both of the tolerability profile, particularly. And also, obviously, we will see our data soon to be able to understand relative to a PAM for M4. In our data to date, we have not seen problematic evidence of any GI issues or anything of that. So I can say that from the Phase I and from our preclinical talks data. In terms of the overall profile, I think we've been pretty consistent in saying -- one of the good things here is we have a bit of a benchmark to be able to compare within this class. And so we've signaled that we'd be looking for something like a placebo-adjusted change in PANNS Score at the primary endpoint of eight or thereabouts or more. But it's also really important to look at the totality of the data, as you mentioned, including the tolerability profile. And obviously, we have a lot of other end points that we're looking at within the study that in due course, we'll be able to integrate into a full picture of benefit risk.

Eiry, anything on dosing there?

On the -- sorry, the QD versus BID. We have in our Phase I program, looked at both QD and BID dosing for this molecule. We actually don't know the dosing regimen finally that were tested in the Phase II study right now, but we'll obviously know that very soon. And it will, at the end of the day, I think depends on efficacy and tolerability in terms of what's the best regimen.

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

Hi. Good morning. Thanks for taking my question. Another congrats, Kevin, on building a great company. It's hard to do and you're going to be missed. I wanted to go back to INGREZZA. I wanted to go back to INGREZZA for a minute. Maybe just a question for Eric. Trends have beaten expectations practically every quarter it seems, and it's been several quarters. What is it that you think you still need to do that justifies increasing the size of your sales force? Because clearly, you seem to be doing well with the size that you have already?

Yes, Tazeen. So we're investing in growth. And as I mentioned in my prepared remarks, over the course of the seven years that INGREZZA has been on the market, we've continuously evolved in terms of the approach that we take to developing the TD market and to educating HCP customers about INGREZZA, but also the resources that we're putting forward. And so this is just part of that evolution. And to a certain extent, just like it was a few years ago, we're evolving to meet the needs of our customers. And so looking at this particular sales force expansion, we've seen that the majority of our business is in the psychiatry segment. That's actually a segment that we didn't increase in size in terms of FTEs back in 2022 and the number of TD treaters and potential TD treaters has continued to grow over time. And so we feel it's prudent to add sales FTEs and additional support for the psychiatry segment. And you may recall that LTC was a segment that we moved into a couple of years ago. That's our smallest team. And what we've seen in the few years that we've been in LTC is that there's tremendous potential and so adding additional support for the LTC customers makes a lot of sense to us. So we're going to continue to monitor how we're doing. But as Matt said, we've seen in the past every time we've done an extension like this, it's paid off in terms of positive ROI within a couple of quarters, and that's what we expect to see with this expansion.

The only thing I'd add is, it just really reflects the conviction around the market opportunity that's still ahead of us. We firmly believe seven or eight out of 10 patients that have TD, are not being treated with the VMAT2 inhibitor today. So when you look at the overall market opportunity, still a lot of room left to grow and help many more patients.

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

Hey, guys, thanks so much for taking the question. Kevin, epic run man, wishing you all the best going forward. I'm definitely going to miss you. Just a quick question. So what are the key levers for driving growth for the INGREZZA guidance rate in terms of the physician segment, psychiatry, neurology, long-term care. Is there any sort of outsized growth that you're seeing there that's driving the guidance range?

Anupam, so ultimately, what we're seeing is that all 3 of our business segments are growing really nicely. And as I mentioned, INGREZZA is a very promotionally sensitive product. And so as we continue to raise awareness, educate around TD, drive recognition and diagnosis and differentiate INGREZZA, we've continued to see positive results. And that's both through our field teams as well as through our DTC efforts. And so we felt very comfortable raising the guidance halfway through the year. We're over $1.1 billion in sales. and we also narrowed our guidance. So what's going to allow us to continue to grow in the second half of the year is really that continued driving recognition and diagnosis and treatment and with INGREZZA as the #1 most prescribed VMAT2 inhibitor.

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

Hey, thanks so much. And Kevin, it's really been a pleasure to work with you and the team you've built. For 568, did Nxera measure any biomarker success, M4 versus M1 target engagement. There's been some questions of how selective you can be for both targets given receptor similarity? Does your team share that concern? And additionally, for your upcoming readout, how do you determine if patients can dose up to another cohort from a safety perspective? Is it tolerability? Or will you also be measuring flood exposures?

Thanks, Akash. Let me take your second question first. Let me just clarify, and we'll give more information about this when we share the data, but just to clarify the study design. This is an adaptive trial. But that adaptation means that the dose chosen for the next cohort could be within a range of different from -- and so it's not that individual patients titrate within the study. It is that we have a review by an independent group of the dose level that has been given to a series of patients of a given number. And then the decision is made by that group to move to the next dose based on tolerability and then [indiscernible] cohort of patients enter into the study at that point in time. So we don't -- it will be clear, we believe, as to what the dose that we take into the study should be in the event that we see positive benefit and a reasonable tolerability profile. And it won't be that patients have to choose to titrate. On the first question, we are highly confident about the selectivity of our molecule. And I think Nxera has done a very significant amount of work preclinically, both in vitro and in vivo profiling, a whole range of molecules. So from that perspective, we're confident this is a selective M4 agonist. And as you see as well in our portfolio, we are exploring other molecules that have more balanced M1 and M4 activity such as 570. And so I think as we move forward and confirm that in the context of our clinical data, we'll be able to share more about that.

We'll move next to Jay Olson with Oppenheimer. Your line is open.

Oh, hey. Congrats to Kevin on all the work you've done for patients in need and the amazing team you put in place to continue that progress. And with that, maybe this would be an appropriate time to ask Kyle, if you could please share your long-term vision for Neurocrine as you step into a leadership role?

Great, Jay, you give me the opportunity to answer the toughest question here this morning. Kevin left quite a legacy here at Neurocrine and really have been honored to work with him in the past, almost 25 years. It's rare in this industry that you can reinvest a company and see it succeed, and that's exactly what Kevin has done. And there's a lot of learnings that have been made along the way. So thinking about the company today and the strategic plan that we put in place a few years ago, I think it's the right one and the one that we'll continue executing on as I step into this role later in the fall. I think at a high level, there's a lot of exciting opportunities that await us here at Neurocrine, starting with some of the things that we've delivered on in the past and thinking about the promising future that we have ahead and realizing that we're a fully integrated company today. We discovered and developed 3 FDA-approved medicines. At each time of their approval, they were first in box. If we pull one of those out, we talk about INGREZZA, we've gotten questions on INGREZZA today. There's a medicine that's approved for tardive Dyskinesia and Huntington's disease. It's our growing blockbuster, it's first-in-class. It's a medicine that even today has two third of patients still not getting a diagnosis of TD. So a tremendous amount of work still ahead, but also opportunity. And that's very exciting for us. You've heard about some of the initiatives here that we have at Neurocrine. Still the best dollar spent here is on INGREZZA and seeing all the tremendous opportunity that still lies ahead for us. In 2023, we announced great data for Crinecerfont CH. There's another opportunity for us to treat many thousands of the patients with CH when approved. If you look at our PDUFA dates later this year, it sets us up nicely for an early 2025 launch when approved. And just as a reminder, like I started this year, Crinecerfont is a CRF1 antagonist is another first-in-class medicine at Neurocrine and has, we believe, the hallmarks of another blockbuster. So I'm hoping that everyone sees a theme here in the programs that we decide to invest in and take on here at Neurocrine. And that's just our late-stage pipeline and our commercial products. Eiry touched on very robust clinical data that we produced here in Q2 for NBI-'845, that's a registration program next year for us. And we have 2 more data cards in Q3 here very shortly. 568 our muscarinic M4 agonist and luvadaxistat in the Cognitive Impairment Associated with Schizophrenia. If either one of those or both are positive, they'll join 845 and we have a very robust Phase III pipeline next year. And then we have an entire new R&D transformation that's under food, moving away from externally sourced programs to internally discovered programs, so organic growth at Neurocrine is something that you'll hear much more about from me moving forward, talking about symptomatic to disease modification and curative therapies. That's something that you'll see next year as you think about gene therapy entering the clinic, moving away from unvalidated to validated targets. These are all things that provide a great deal of excitement and opportunity thinking about the future here at Neurocrine and the vision that we have. So really looking forward to a bright future, we talked a lot about some of the things that are under looked here. It's going to be based on organic growth, looking at disease states that spans psychiatry, neurology, endocrinology, immunology and looking at choosing the right target and using the right modality to match with that we think is going to be a winning strategy and wrapped with all this R&D innovation that we hope to bring to patients is a company that's in the strongest financial position that we've been here at Neurocrine, certainly in my time, $1.7 billion in cash. There's a lot of things that we can do to add and bring new differentiated medicines to patients and increase shareholder value along the way. So I hope that gives you a little feel for why I'm excited and some of the things that we can look forward to in terms of the vision of Neurocrine for the remainder of the year and thinking about 2025.

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

This is Cameron trying on for Chris. Let me just add my congratulations to Kevin and on the quarter for the team. Just had a couple of quick questions for gross to net dynamics this quarter. That was something you mentioned in the press release, how should we think about that? Any specifics there? And then going into the second half of the year, for gross to net, what should we expect? And then just a quick one on business development and potentially current appetite there given your growing internal pipeline, including Phase II and Phase III assets?

On the BD front, right now, we're very focused on developing those our pipeline. We have some important data cards that will read out here this quarter and that will really inform how we allocate capital into the future. But we have a lot of great things going on. We do have a lot of financial flexibility, but for the moment, focus internally. From a gross-to-net dynamic perspective, our growth this quarter was largely driven by volume you always have a bit of improvement from a gross to net perspective from sequentially from Q1 to Q2 and more of the low single-digit type range. And so gross to nets are coming in very much in line with what we had anticipated. So nothing to flag for the second half of the year.

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

Hey, good morning, everyone. Thank you for taking the question. And also, let me offer my accolades gotten on a great job. It's been a long time. I've been following the story, too, maybe not as long as Phil, but certainly more than a decade, I think, at this point, it's been an incredible run. I told Matt, he had big shoes to fill when he came in following Tim's retirement, also same for Kyle here. But if the Kevin's and Kyle's transitions, anything like them, Tim's and Matt's transition, still some great things to come. Sorry, I have something in my eye here. I know it's sort of a little less discussed readout. But on luvadaxistat, if you're able to replicate the cognitive effects that you saw in the INTERACT study. How should we think about that as a marketable indication in the absence of a PAM's benefits in patients? And what is sort of the clinically meaningful threshold on VAC composite score, but that's really a driver here? Or is statistically significant all that really matters for right now?

Yes. I mean, I think this is an area of a highly significant unmet need. I mean we know that the vast majority of patients with -- suffering with schizophrenia, do suffer from the cognitive impairment over time, and it becomes more and more of an issue, I think, with the disease as we obtain more treatments that are useful for treating the positive symptoms. There's really nothing approved yet at all to help patients in this area. And so that's, I think, why we were so encouraged by the data that we saw from the INTERACT study even though we weren't able to hit on the primary of the negative symptom improvement, having a positive signal on -- which was robust in terms of the nature of the signal, the magnitude of the change that we saw on both the scores and the back, that was the first time that has been seen in a clinical trial. Obviously, we have to replicate that finding. And that Phase II study, the 200-patient Phase II study, looking at PANNS Scores again, will give us an indication of the strength of that signal. If we replicate what we've seen in the INTERACT study, I think that's a meaningful step forward in terms of managing this important area for patients with schizophrenia and the next step for us, then we'll be obviously to engage with the agency to understand what the registration path would look like. But it's a really exciting opportunity. It's a huge unmet need. And I think if we're able to be successful in this next study, we will certainly be very interested in engaging with the agency to understand how to bring benefit to patients in this area.

We'll move next to Mohit Bansal with Wells Fargo. Your line is open, Mohit.

Great. Thank you very much from my side as well, congrats Kevin for an amazing career and all the best for the very healthy retirement from now on. So maybe the question I want to -- trying to understand the adaptive study design for M4. Could you talk a little bit about that and like when you say adaptive, is it for the efficacy as well? Or is it mostly for safety? And then when we look at data, should we focus on the highest dose? Or should we focus on overall profile of the drug when the data come out?

So this is Matt jumping in for Eiry. And I know Kevin mentioned this outside of the call, we're going to be pretty limited on what we shared at this point regarding 568, and there's been a few questions about the design of the trial. And like we said, we'll get into those details when we're on the call. The dose, I guess, escalation or the increase to the next cohort is all about safety, as Eiry has mentioned. So we'll leave it at that. And we'll, of course, that's part of what you want to see on the dosing side. When you do turn over the data cards, we'll of course be looking at all the levels of dosing. So I know there's a lot of appetite for more information on the design than what one might see, but just stay tuned for later this quarter.

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

Yes. Good morning. Congrats to Kevin as well. I read -- my question is regarding Crinecerfont, and obviously, it hits the market first. But given all the data that we've seen from Crinetics at the endo meeting, just curious your thoughts about this ACTH antagonist and mechanism and how you see that when it comes in with Crinecerfont already on the market? And what -- how that market evolves?

Yes. I mean, the first comment I'd make is, I think really encouraging to see individuals and companies going into this CAA space now with an attempt to help patients because obviously, this is a community that's had no medication -- new medications for the last 70 years. And of course, we are very far along with our Crinecerfont program. As Kyle mentioned, we read out very strong data last year in both adult [indiscernible] pediatrics. I think that's important given the significant unmet need that exists in the pediatric population. And it's very clear if you look at the greater than 95% rollover rate from each of the Phase III studies into long-term open-label extension that the Crinecerfont is very well tolerated. And the vast majority of patients are staying with the medicine and gaining benefit from doing that. And so I think an anti-ACTH approach from a biological perspective makes sense as well. It's the downstream of the CRF1 antagonism approach that we have. And we chose that approach because we believe it would be an ideal way to approach the treatment of CAH. Obviously, we have some encouraging data from the anti-ACTH approach now with the kinetic data. The small patient sample, I think it's going to be important to see how that translates into larger scale later trials with different endpoints from the hormone levels. And I think we're just very focused on bringing Crinecerfont forward as rapidly as we can. We're navigating the FDA process well. We really hope to be able to bring this to patients next year and make a significant difference in their life.

And can I just ask a quick question on 568? I mean the messaging is this eight point delta on the PANNS. If that comes in, but there's no safety advantage relative to kind of standard of care here that KarXT has kind of set? Like what does that mean to the program?

Well, I mean, I think -- I don't think we look at any one data element in isolation. We're always interested in the totality of the information that's generated from the trial. And so we'll be looking at all of that. And as Matt said, it's going to be this quarter, we'll be able to have a much more in-depth conversation around that when we see the data.

We'll move next to Carter Gould with Barclays. Your line is open.

Great. Good morning. Let me offer my congrats to Kevin as well and best of luck in future endeavors. I wanted to maybe shift things up a bit and go to 845. Should we expect Vetri full presentation of that data at the scientific meeting before year-end? And as you contemplate that willingness to invest. Does that -- I guess, does that contemplate a potentially broadening out of 845 beyond just MDD?

I'll answer the second part first. We are highly focused on our major to press facility indication right now. Very encouraged by the data that we saw in terms of the effect to see the information and strength of the signal there, coupled with the favorable tolerability profile. And so our next step with the program is to engage with the FDA in an end of Phase II meeting, hopefully, to support [indiscernible] study starting of next year. So certainly, there are other opportunities for a mechanism such as ample potentiation, but our focus right now is on that NDD inadequate response to treatment population because there's such an unmet need there. But can you repeat your first question for me? Sorry.

Data about the verti?

Actually, we've been clear that what we've shared is what we're going to share for now. I mean it's really important as we go into the Phase III program. I think that we get up and running with these sites. You're very familiar with the issue of expectation by a placebo response and those things in these trials. And so it will be -- and in parallel with that, we are working on ensuring we have maximum IP around this program. So it's going to be a while until we publish the full data set.

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

Hey, thanks for taking the question and congrats Kevin. I hope the Walt Disney team at Neurocrine HQ stays on beyond your departure. I did notice that. Just a quick one on 570 and 567. When are we actually going to see the Phase I data for that? And if that actually does look clean on the nausea and vomiting signal that we've seen with [indiscernible] alone, I guess how does that impact the way that you position those molecules against 5, 6, eight potential additional indications?

Great question. One we're obviously extremely interested in. And all I can say is that 570, 567 are both progressing well in the clinic at this point in time. And we're still in Phase 1, though. And as we've said, we need the Phase I data to be able to have that integrated compensation. It makes us really encouraged that it has such a broad portfolio of molecule role, which are continuing to move forward at this time.

We'll move next to Brian Abrams with RBC Capital Markets.

This is Joe on for Brian. Congrats on the strong quarter. And on behalf of Brian, I wanted to pass along our congrats to Kevin on all your accomplishments and congrats, Kyle, on the new role. So I wanted to go back to M4. So based on the safety profile from the Sosei study and what you're seeing to date per the DSMB recommendation. When you think about potential opportunities beyond schizophrenia, would you hope to expand into indications in younger populations like bipolar? Or do you see opportunities to expand the indication to the older population as well?

So right now, we're really focused on the data from the Phase II study. I mean there are a lot of opportunities based on the nature of the data that we read out here, and we will consider all of them fully. And I think -- that's really all I can say at this point in time and as we get into this quarter and [indiscernible] the date, we'll be able to say more. .

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

Hey, good morning. Thanks for taking the question, Kevin. I'll add my congrats on a great run and is the most recent analyst to launch coverage. I hope it's not something I said that prompted your mode. So my question is on Crinecerfont. There's obviously a big unmet need with next to no innovation in the space in decades that Eiry alluded to before. So with that backdrop, can you speak to how market education may be a gating factor to the launch? And whether or not the CAH centers of excellence could be a driving force here?

Yes, I'll take the second question first. Certainly, we do think that the centers of excellence are going to be important. There are not that many of them though. And so we have to make sure that we're not just reaching and accessing those patients and families living with CAH that fortunately for them, have access to a center of excellence. There's a majority of the CAH population that are being treated by community endocrinologists. And you may have seen that a few months ago, we launched our educational initiative called “What the C@H,” which actually has content that's directed towards endocrinologists and HCPs in endocrinology as well as related content focused on patients and families. And so that's really what we're engaged in right now in the second half of this year, reaching the CAH community, educating them on some of the challenges and opportunities to improve care in CAH. We're also involved in profiling future customers, working to validate where these patients are. And so ultimately, we want to make sure that we're set up to be in a really good position to have a strong launch when we do receive and hope to receive approval for Crinecerfont at the end of the year.

We'll move next to Laura Chico with Wedbush. Your line is open.

Hey, good morning, guys, and much congratulations to Kevin. I guess I wanted to focus one on INGREZZA here. Obviously, there's an increasing investment in the sales force coming here, but what needs to happen in order to provide peak revenue guidance for INGREZZA? It definitely seems like you have a full command of the market. Just trying to understand what would be the remaining kind of unknowns that are kind of limiting that?

Laura, thanks for the question. And INGREZZA is going to be a tremendous medicine for patients and also we'll come with that a large feet number someday. But from a company perspective, we've never provided peak expectations. This market continues to exceed our expectations as well as, I think, Wall Street's expectations. So it's not something that we're in the practice of providing a long-term range but we do have conviction behind the continued investment in INGREZZA here, and it really gives us a strong foundation and couple the Crinecerfont medicine potential, we really have a strong foundation as we look into the future.

Yes. Maybe just to add to that, just a reminder, two third of patients still aren't diagnosed with TD. 80% are patients with tardive Dyskinesia , we believe aren't getting a VMAT2 inhibitor. So we think that there is still quite a bit of room here for the opportunity that we have in tardive Dyskinesia alone.

This does conclude our question-and-answer session. I would like to turn it back to Kevin for any closing remarks.

Yes. Thank you very much. I feel like I should be in my rocking chair right now. Just a few things. This business is a tough business, but [indiscernible] boil down that to some simplicity. Over the years, we've listened and serve our patients. We also listen and serve our shareholders. And contrary to popular belief those 2 aspects of our industry and not an odds, but when done right, they reinforce one another and they can lead to amazing medicines. Our industry is the most creative, dynamic and exciting in the world. I can't imagine anything more rewarding. So while we're being biopharma -- is being blamed for all the ills of health care, it's far from the truth. And I hope that, that comes through in the coming years. I'd like to conclude with thanking our investors both previous and current and all of you on the analyst side for your years of support you've challenged me, often offered me valuable advice, and I hope that has made me better. I understand there is a stake a lot of patients on your part. It's been a bumpy road to get to this point, and I'm sure there's going to be many more ups in the future. It's -- but this team, I am certain will guide the company to more success than we've ever realized. The best phase of Neurocrine and the patients we strive to help are in front of us. Thank you.

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