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Thank you for your continued patience. Your meeting will begin shortly. Star zero, and a member of our team will be happy to help you. Thank you for your continued patience. Your meeting will begin shortly, and a member of our team will be happy to help you. Hello and welcome everyone to join today's Neurocrine Biosciences Reports Q2 26 Earnings Call. 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. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note this call is being recorded, and we are standing by if you should need any assistance. It is now my pleasure to turn the meeting over to Todd Tushla, Vice President of Investor Relations. Please go ahead.
Happy Thursday, everyone. Welcome to Neurocrine Biosciences' second quarter 26 earnings call. With me today on the call are Kyle W. Gano, Chief Executive Officer; Matthew Abernethy, Chief Financial Officer; Eric S. Benevich, Chief Commercial Officer; Sanjay Keswani, Chief Medical Officer; and in his well-deserved new role as Chief Business Officer, Samir Siddhanti. During today's call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties and actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. In addition, some of the information discussed today includes non-GAAP financial measures that have not been calculated in accordance with US GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of Neurocrine's website. After prepared remarks, we will jump into Q&A. Now I will hand the call off to Kyle.
Thanks, Todd. Good afternoon, everyone. Neurocrine's second quarter performance demonstrates the power of a diversified growth strategy built to compound over time. Our commercial portfolio of first-in-class medicines, INGREZZA, CRENESSITY, and VYKAT XR, delivered another record quarter with product sales exceeding $950 million, enabling more patients to benefit from our innovative medicines. This durable commercial performance provides the financial strength to continue investing in innovation, advance our industry-leading pipeline, and pursue strategic opportunities that further strengthen Neurocrine for long-term growth. Our strategy remains clear: execute on our commercial portfolio to bring our medicines to patients, advance our innovation engine, and deploy capital with discipline. This quarter demonstrated meaningful progress across all three of these priorities. The commercial business continues to generate durable growth, the pipeline is advancing as one of the industry's strongest mid- to late-stage portfolios, and disciplined capital deployment was demonstrated through the successful acquisition and integration of VYKAT XR.
Together, these efforts further strengthen our position in rare disease while building on our leadership in endocrinology. More importantly, these results reflected the continued evolution of Neurocrine. Just a few years ago, we were largely viewed as a single-product company. Today, we have multiple commercial growth drivers and an expanding pipeline across all phases of development, and the financial strength to invest through innovation cycles. Together, these strengths position us to create long-term value for patients, physicians, employees, and shareholders alike. Looking ahead, we remain on track to deliver multiple important clinical milestones in 2027, including Phase 3 data readouts for osavampator in major depressive disorder and dereclidine in schizophrenia. Together with the continued integration of VYKAT XR, these milestones represent the next chapter in Neurocrine's growth and reinforce our confidence in the opportunity ahead.
Before I turn the call to Matthew, I would like to recognize Samir Siddhanti on his recent promotion to Chief Business Officer. Since joining Neurocrine in 2017, Samir has played an integral role in shaping our corporate strategy and business development efforts. As a member of our executive leadership team, he will help guide the next phase of Neurocrine's growth and evolution. Samir, congratulations. We are excited for what is ahead. With that, I will turn the call over to Matthew.
Good afternoon, everyone. For the second quarter, we delivered over $950 million of total revenue, representing nearly 40% year-over-year growth. This reflects full-quarter contributions from INGREZZA and CRENESSITY, along with the partial-quarter contribution from VYKAT XR following the close of the Soleno acquisition. This revenue performance demonstrates accelerating top-line growth, delivering a financial profile with non-GAAP EPS of $2.85 per share. Starting with INGREZZA, second quarter net sales were $716 million, up 15% year-over-year, driven by another quarter of record new patient additions and sustained underlying demand. Given this performance, we are raising our full-year INGREZZA guidance from $2.7 billion to $2.8 billion to a new range of $2.825 billion to $2.875 billion. At the midpoint, this represents approximately 13% year-over-year growth. CRENESSITY's second quarter net sales were $184 million, reflecting continued strong launch execution, consistent new-patient starts, and expanding prescriber adoption.
Approximately 15% of the estimated diagnosed patient population has now been prescribed CRENESSITY, reinforcing our confidence in the significant runway for growth. Turning to VYKAT XR, second quarter pro forma net sales were $94 million, with $54 million recognized by Neurocrine from May 18, the closing date of the Soleno acquisition. Integration has progressed well and we expect to drive sequential quarterly growth exiting 2026. New patient demand remained fairly consistent with the first quarter, while discontinuation rates tracked in line with our expectations following the initial launch bolus in 2025. We have more work to do in developing this market and remain optimistic in the opportunity to help many more patients with PWS over the years ahead. Pro forma total revenues were $998 million for the second quarter 26 when including full quarter VYKAT XR sales. This performance underscores the strength and increasing scale of our commercial business across three highly differentiated products.
Turning to our financials: with the Soleno acquisition now complete, I would like to briefly discuss the financial impact of the transaction, including the purchase accounting and the GAAP to non-GAAP adjustments reflected in our earnings release. We acquired Soleno for approximately $2.9 billion and financed the transaction with cash on hand. We ended the second quarter with approximately $500 million in cash and no debt. Strategically and financially, this is a highly attractive acquisition. VYKAT XR adds another differentiated, durable growth product to our portfolio and is immediately accretive to non-GAAP earnings. Accordingly, we updated operating expense guidance to include the Soleno operating expenses, transaction and integration costs, and the expected purchase accounting intangible and inventory fair-value amortization impacts for the remainder of 2026. We expect approximately $150 million of acquisition-related costs, of which $130 million was recognized in the second quarter.
Our GAAP second quarter results also include noncash purchase accounting amortization of acquired intangible assets and inventory fair-value step-up of approximately $20 million. Overall, our commercial portfolio continues to perform exceptionally well, generating close to $1 billion in pro forma quarterly sales and providing substantial financial flexibility to invest consistent with our capital allocation priorities: to drive revenue growth, advance our expanding pipeline, and pursue additional strategic business development opportunities. With growing sales, an improving financial profile, and meaningful data catalysts ahead, we feel quite fortunate to find ourselves in a position to continue to build a leading global biotech company. With that, I will now hand the call over to Eric S. Benevich.
Thanks, Matthew. Just five years ago, Neurocrine was a single-product commercial-stage company celebrating INGREZZA achieving blockbuster status, surpassing $1 billion in annual sales. Today, our commercial portfolio includes three first-in-class medicines with combined quarterly sales approaching $1 billion and annualizing to approximately $4 billion. This transformation reflects the successful execution of our long-term growth strategy. Starting with INGREZZA, second quarter performance was outstanding with record sales of $716 million, driven by another quarter of all-time highs in both new patient starts and total prescriptions. Based on our increased full-year guidance, we expect to help more patients than ever before who are living with tardive dyskinesia or chorea associated with Huntington's disease. CRENESSITY also delivered another excellent sales quarter, generating $184 million.
The launch continues to follow a very consistent pattern: a steady pace of new patient starts, high persistence and compliance, and favorable reimbursement. Adoption remains balanced across both adult and pediatric patients, male and female patients, and across the business segments of CAH centers of excellence, pediatric endocrinologists, and community adult endocrinologists. Importantly, our prescriber base has nearly tripled compared to one year ago, providing a strong foundation for continued growth. Turning to VYKAT XR, while still very early in the integration of this franchise into our commercial platform, we were encouraged by second quarter trends. New patient starts remained steady on a sequential basis, the prescriber base continued to expand, and discontinuations tracked in line with expectations following the initial bolus of patients who began therapy last year. As with any acquisition, it will take a few quarters to get fully integrated, and we are excited to introduce Neurocrine's commercial, medical, and patient support capabilities to the VYKAT team and the PWS community.
We remain confident in driving sequential growth as we exit 2026 and continue our conviction that VYKAT XR has the potential to become the third blockbuster in our portfolio. Before I wrap, I would like to extend a special thank you to our commercial and medical teams in neuropsychiatry and rare endocrinology, our internal cross-functional colleagues, and the VYKAT XR team from Soleno. Q2 was a quarter of significant transformative change for Neurocrine, where we both expanded our existing commercial footprint to better meet the needs of health care providers and patients while we also began the integration of VYKAT XR into our company. We executed all these significant structural changes without missing a beat in terms of our mission to help more patients. My hat is literally off to our teams for pulling off such a tremendous transformation while simultaneously delivering such a strong quarter. Now I will turn the call over to our Chief Medical Officer, Dr. Sanjay Keswani.
Thanks, Eric, and good afternoon, everyone. I will begin today with highlights from ENDO 26, where we presented important new data for both CRENESSITY and VYKAT XR. Starting with CRENESSITY, we presented two-year data from the ongoing catalyst open-label studies in pediatric and adult patients with classic congenital adrenal hyperplasia. These results demonstrated meaningful and durable improvements across multiple aspects of health, including cardiometabolic outcomes, bone health, quality of life, and pediatric growth, while continuing to reinforce CRENESSITY's favorable long-term safety profile. For VYKAT XR, we presented three-year HQ-CT and Prader-Willi syndrome profile data comparing treated patients with a natural history cohort. These analyses demonstrated significant and sustained reductions in hyperphagia across all evaluated time points, supporting the durability of treatment benefit.
Additional data also showed meaningful improvements when patients who had previously discontinued therapy restarted treatment, underscoring the importance of continued treatment in maintaining long-term outcomes. Collectively, these data strengthen the growing body of evidence supporting both CRENESSITY and VYKAT XR and highlight the meaningful impact these medicines are having for patients and the endocrinology community. Turning to the pipeline, we continue to make steady progress. Notably, we remain on track to report Phase 3 top-line data for osavampator in major depressive disorder in the second half of 2027. We also remain on track to report the first Phase 3 readout for dereclidine in schizophrenia in the second half of 2027 and the second Phase 3 study in 2028. Looking ahead, we look forward to hosting our neurology and immunology webinar in early December, where we will provide an update on our strategy and highlight key programs across both therapeutic areas. With that, I will hand the call back to Todd.
Excellent. Chloe, let's jump into Q&A.
分析師問答
Thank you. Star 2. We will take our first question from Paul Matteis with Stifel. Your line is open.
Great. Thanks a lot, guys, and congrats on the execution and the great quarter. As it relates to INGREZZA, I was wondering at this point in the year how much visibility do you have on pricing dynamics next year? Any feedback you are getting or any insight into access dynamics with the AUSTEDO MSP being enacted? Thank you so much.
Hey, Paul. This is Kyle. Thanks for the question. Maybe just to start where we are with 2026: great access this year with about 70% of all Medicare lives covered.
Under the contracting that we executed last year, we expect that pricing to remain relatively consistent year to year as we think about the second half of 26. In terms of 2027, our discussions with payers are ongoing now, and we should get a read on that later this year.
But I think where we are right now is we do see a process and a path moving forward — it is not just us, but others, that there will be a place for VMAT2-adjacent products for Medicare beneficiaries. And if you couple that with the fact that we are the market leader in the VMAT2 category, there is going to be ample opportunity for us to have the same access that we have here moving forward, with strong access through 2027 and 2028. Right now, we are leveraging what we can with our team. I would be remiss not to call out that this market overall continues to grow double digits year to year, so there is a lot of room left in this market. We will continue to focus there.
Kyle, any thought on how much additional costs maintaining this access might be next year or beyond?
No, I think it is too early to make a call on that, Paul. We will have more to comment on later in the year. Right now, it's been a great first half and we will continue to build on the momentum that we have seen.
We will take our next question from Philip Nadeau with TD Cowen. Your line is open.
Good afternoon. Thanks for taking our question. Ours is on CRENESSITY. A really good quarter with revenue up 20% quarter-over-quarter. It sounds from the prepared remarks like everything was steady as she goes — steady patient adds, good reimbursement, no bolus — I am curious whether that interpretation is correct. Were there any one-time issues in Q2 that made it particularly strong that we should not extrapolate into the back half of the year? Or is this pace of revenue growth reasonable for the next couple of quarters? Thanks.
Yeah. I think characterizing Q2 as really an extension of what we have seen earlier in the launch is fair — very steady and consistent pattern of new patient adds. We continue to see adoption across all the segments that we are focused on: pediatric endocrinologists, adult community endocrinologists, and centers of excellence. We're really pleased with the fact that we estimate now that about 15% of the addressable patient population is on treatment. We certainly expect to see continued strong momentum as we move forward.
We will move next to Tazeen Ahmad with Bank of America. Your line is open.
Hi. Thanks for taking my question. Mine is on VYKAT. This quarter's results of $94 million are roughly flat sequentially. You just took over this franchise. Can you talk about some of the things you are doing in order to accelerate the launch trajectory now that the franchise is fully under your control? And maybe give specifics about things you are doing now that you think could have an effect in a quarter or two. Thanks.
Hi, Tazeen. First, the results we saw in Q2 were aligned with our expectations coming out of diligence. We are still learning a lot about the hyperphagia market opportunity, but what we have learned so far reaffirms our convictions about the potential for this medicine to be a blockbuster. We're deep in the integration process, but ultimately the fundamentals matter: continue to find patients, introduce VYKAT XR to the providers that care for them — primarily in endocrinology — and provide good education and guidance around how to select appropriate patients, how to help them through the titration process, and to achieve good outcomes. I feel very good about the opportunity with VYKAT. Everything we have heard from physicians who have experience with it is very positive, and we look forward to continuing to drive the launch of this product that is still very early in its commercial ramp.
And, Tazeen, this is Kyle. I just want to highlight the merits of the acquisition and the product itself. There is a great strategic and financial fit here for us. VYKAT XR is a first-in-class medicine for Prader-Willi syndrome, very much of the same category that we have seen for INGREZZA and CRENESSITY upon their launch. We are really excited about this strategic fit. We expand our endocrinology franchise and get to treat many thousands of patients under Neurocrine, which is exciting; we also get to realize the financial benefit of the revenue growth that will be added to our top line as well as diversification. We believe the IP estate extends into the mid-2040s, so it is durable as well. Overall, we are really excited about what we have here. Eric called out some of the points we are looking at now, and we are excited to bring this into the same blockbuster category that we see for CRENESSITY and INGREZZA moving forward.
The only thing I would add is this was very much in line with our internal expectations. We knew what we were buying, and this has a tremendous amount of opportunity to help many more patients. We have a ton of confidence in the team, the product, and the opportunity to help many more patients with PWS. So we are encouraged as we think forward.
We will move next to Brian Skorney with Baird. Your line is open.
Congrats on a great quarter. Maybe to jump in with a question on VYKAT as well: during the Soleno days, there was a lot of debate on the differences between new-start boluses and dropouts. As you are getting your head around things right now, can you characterize what you are seeing in terms of how much the initial bolus numbers are really affecting things, the dropout rate we see right now, and when we might expect an upward equilibrium of new starts versus dropout rates to think about in the coming quarters?
I appreciate the question. What we have seen on a new patient start basis is a pretty steady flow of new patient starts over the past couple of quarters, which aligns with our expectations after diligence on the company. In terms of discontinuations, with the bolus of patients at launch, we do see some discontinuations; over time, we expect the ultimate rate to settle into what we would see with other orphan medicines in the 25% to 30% range. That is what we will be looking at moving forward. Ultimately, our goal is to see sequential growth as we exit 2026 and in future years, so we are right where we need to be now. More importantly, I'm excited to see our team bring its resources and support to the Soleno team now under the Neurocrine brand, take our learnings collectively, and make this medicine the best it can be.
We will move next to Mohit Bansal with Wells Fargo. Your line is open.
Great. Thank you very much for taking my question and congrats on the great quarter. Just wanted to understand VYKAT a little better for the next few quarters. You are saying that new patient starts will be steady. So are you saying that sales could be choppy a little bit? But again, what you are saying is that as you exit 2026 you can see driving sequential growth. How would you characterize the next few quarters as you integrate the business into your own? Thank you.
As we move from Q3 to Q4 we would anticipate seeing sequential growth. As you think about going into next year, it's really about that momentum. As we've talked about, it's the mix of new patient additions offset by discontinuations, and we feel like we'll be through the bolus of discontinuations here this quarter. So we would expect to be sequential growers in Q4 and beyond.
We will take our next question from Anupam Rama with JPMorgan. Your line is open.
Just wondering what some of the physician feedback has been on the two-year CRENESSITY data in both adults and pediatrics, and how these data could impact uptake of the product? Thanks so much.
Thanks, Anupam. We're really pleased with the feedback from physicians regarding our two-year data presented at ENDO. This included both adult and pediatric data and indicated long-term benefits with respect to androgen reduction and also glucocorticoid steroid reduction. We're really excited by that feedback, especially in the context of a very favorable safety profile. At this point, we have well over 35,000 patient-weeks of exposure, which is important given the breadth of the population we are treating with CRENESSITY.
We will move next to Cory Kasimov with Evercore. Your line is open.
Hey. Good afternoon, guys. Thank you for taking the question. Given the recent acquisition of a potential future competitor in CAH, can you talk a little bit about the clinical plan and anticipated timelines for your next-gen CRENESSITY assets to the extent they are needed to help defend the franchise in the future? Thank you.
Thanks for the question. We do have a next-generation medicine going through clinical development right now, NBI-112, which is a protein-based therapeutic peptide that we are developing as a once-weekly or less frequent dosed medicine for patients who want that option of not taking a medicine day-to-day. It may offer additional advantages because of the PK profile. We have great Phase 1 data so far, and we look forward to starting a Phase 2 study shortly and bringing that to patients as quickly as we can. Going back to CRENESSITY, it set a really high bar with great efficacy, safety, tolerability, and an outstanding label from the clinical program. We have multiple formulations and a wide spectrum of age ranges. Now, with multiple years of clinical data, we have a multi-year head start. That high bar not only makes it more difficult for competitors, but also for our own programs. We are excited about the position CRENESSITY has right now — a lot of room still to grow, about 15% of the market currently on treatment, and we will continue growing that over time to become the standard of care for patients.
We will move next to Jay Olson with Oppenheimer. Your line is open.
Hey, guys. Congrats on the quarter and congrats to Samir. Our question is related to the future of your psychiatry franchise with data readouts for osavampator and dereclidine expected next year. Do you have the commercial infrastructure you would like to have to launch those two products, or how are you thinking about building out that organization? Thank you.
Thanks, Jay. We have a really good foundation for the infrastructure that would be required for either osavampator or dereclidine or both. We have a substantial footprint today in psychiatry as well as in long-term care and a very strong reputation with those provider communities. Depending on the profile of those medicines, we might need to bolster our teams or reorganize, but we are in a very good place to leverage our existing foundation. You may recall that when we spoke about the planned expansion of our INGREZZA team last fall, we said that the value of that expansion was not only to accelerate the growth of INGREZZA, but also to set us up nicely for future launches of our Phase 3 psychiatry assets. I don't anticipate near-term changes to our footprint, but we are well positioned to accelerate adjustments to our commercial platform on the other side of positive Phase 3 data.
I think that would be a great outcome if osavampator is positive: going into primary care to help those with major depressive disorder would require a step-up in overall investment within SG&A in the 2028–2030 timeframe, but that would be something we would enjoy doing. In the near term, we are focused on executing with INGREZZA and continuing to expand our impact across the psychiatry community today.
Great. Thank you.
We will take our next question from Akash Tewari with Jefferies. Your line is open.
Hey. Thanks so much. A few questions on your obesity efforts. For your CRF2 asset, what do you expect for monotherapy weight loss and muscle preservation in your Phase 1 trial when you get into obese patients? And for your triple G, is that already in the clinic? I am surprised you are able to start a combo trial with the CRF2 this year without any monotherapy data. Finally, for the combo, any sense on when we would be able to get the first full cut of data? Thank you.
Thanks for the questions. With respect to our CRF2 agonist, we are very excited about this molecule. It is our first molecule in the clinic. We are currently accumulating Phase 1 data and are due to have a signal-seeking study readout next year with respect to both weight loss and lean mass preservation. We are looking for a robust effect not just in weight loss, but also in muscle mass preservation. We have other molecules behind the CRF2 in our obesity portfolio that will shortly enter the clinic.
We will move next to Josh Schimmer with Cantor. Your line is open.
Thanks for taking the question. How are you thinking about the ability to smooth top- and bottom-line growth through the 2029 INGREZZA IRA implementation year? Does the answer depend on your Phase 3 readouts next year? How do you expect that to play out under various pipeline scenarios? Thank you.
Thanks, Josh. We are watching the MFP to IRA outcome; those discussions will start next year, and we'll keep everyone updated once we know the MFP that would be applied to INGREZZA in 2029. Overarchingly, we see our commercial portfolio medicines growing over that time frame, so we expect to be in a good position to see continued top-line revenue growth through the end of the decade and beyond. On the expense side, we also have Phase 3 trials that will be sunsetting over that same time frame as our pipeline shifts to an earlier- to mid-stage portfolio, which more or less represents a steady-state view as we get to the end of the decade. This ties back to our expectations around new Phase 1, Phase 2, and Phase 3 starts. We like how the company is set up and will keep people informed as we get closer to 2029.
EPS variability will be influenced by the impact of the IRA implementation in 2029. On the expense side, if osavampator is positive, we will spend in advance of sales to build up that sales force in that market. You should expect episodic investments that may lead to some earnings variability, but our north star is to grow revenue over the long term. From those investments, we expect very nice earnings growth as you look into the 2030s.
We will move next to Brian Abrahams with RBC Capital Markets. Your line is open.
Hey, guys. Thanks so much for taking my question. It seems like you are seeing really nice growth in the prescriber base for CRENESSITY. What proportion of your target practices are still not using CRENESSITY at all? What are some of the barriers for them at this stage of the launch, and how might you expect to overcome them? Thanks.
It's an interesting question. We are seeing nice expansion of new prescribers each quarter, but we are still early in the overall commercial ramp, so there is a long way to go. As we learn more about the market and patient-finding opportunities, some practices move in and out of our target list over time. Overall feedback has been very positive. Most physicians who have tried CRENESSITY have only treated one patient so far, which is a function of patient flow — especially in the adult setting where patients may only come in once a year — and the long tail of the market where many practices have only one or two patients. We feel really good about the growth we have seen and will continue the patient-finding efforts and execution by our team.
We will move to Sean Lehmann with Morgan Stanley. Your line is open.
Good afternoon, Kyle and team. My question is on the launch trajectory of CRENESSITY. You keep handily beating our numbers. How does the drug perform against your own internal expectations? Is it falling in line? If so, when will you be comfortable giving guidance? If it is beating your expectations internally, what are some of the key areas where it is doing that?
I would say CRENESSITY is quite close to our internal expectations, but we are learning a tremendous amount each quarter. From the beginning of the launch, we've been encouraged by clinician feedback and strong persistency rates. We're still early in launch — only six quarters in — and it is premature to give a formal guide, but our internal models are getting closer to the numbers we are delivering.
Thank you, Sean.
We will move next to Marc Goodman with Leerink Partners. Your line is open.
Yes. On VYKAT, I just want to make sure I understand, Matthew: are you saying we should expect sales to be roughly about the same in Q3 as Q2, and then Q4 should show some incremental growth versus Q3? Is the reason because of the gating or timing issue of patients discontinuing from the bolus that occurred approximately six months ago? Also, curious what the R&D team thinks about any learnings from the MapLight data reported earlier this week. Thanks.
Regarding VYKAT XR, I think your characterization aligns with ours, but I would emphasize that we've only had the product for six weeks. From an expectation perspective, it is more a function of getting through the bolus of discontinuations and then implementing the things Eric laid out to drive additional patients. So the pattern you described aligns with what we expect.
I'll add on MapLight. We saw their data come out over the past couple of days. It's a useful data point for validating the muscarinic approach, although their pharmacologic approach differs from ours. Unlike that approach, our dereclidine development is a selective M4 agonist that is intended to work on its own, without requiring an add-back muscarinic antagonist to manage side effects. We think efficacy gets your foot in the door, but safety, tolerability, and ease of administration are critical to winning. In our Phase 2 trial, dereclidine showed a clean GI profile, no weight gain, no food effect, once-daily dosing, and no titration — attributes we expect to be differentiating.
We will move next to David Amsellem with Piper Sandler. Your line is open.
Thanks. A VYKAT question: can you clarify how much of your discontinuations are from edema? Regarding management of edema, what are you going to be doing to help patients and practitioners manage through that so as to minimize discontinuation due to fluid retention? Thanks.
I don't think we are going to get into the specific nature of the discontinuations, but like any medicine — especially one you are inheriting via acquisition — there's always an opportunity to improve messaging and education. That's going to be a big part of our approach: education for caregivers, patients, and physicians. With VYKAT XR, the dosing regimen involves a weight-based titration schedule, which is unique, so appropriate education around that is critical. Also, setting the right expectations in terms of efficacy is important: VYKAT XR is not like a pain medicine where you see relief the same day — it can take months for hyperphagia to improve. We are working through all of these items as we integrate the Soleno team into Neurocrine and leverage learnings on both sides.
We will take our next question from Ashwani Varma with UBS. Your line is open.
Hey, guys. Thanks for taking my question. Regarding CRENESSITY, I wanted to get your thoughts on the competitor dynamic. The acquirer noted seven LFT cases versus a prior disclosure of two cases. They still paid a pretty hefty premium. What do you think drove that? Does this signal CAH can be a very big market, or is it possible that the LFT elevation is a nonissue? Thanks.
It's hard for us to comment on competitors. I can only share the excitement we have around our own medicine. I will go back to the catalyst data: we have two-year data and 35,000 patient-weeks of exposure, and we've demonstrated that 70% of patients at two years were on a physiologic dose of a glucocorticoid, and 70% of patients were at physiological androgen levels. That's a strong data position for CAH and for the medicine, and we will continue to accumulate data to show the real benefits for patients.
We will take our next question from Myles Minter with William Blair. Your line is open.
Hi. Congrats on the quarter and thanks for taking the question. I wanted to hear your thoughts on CRENESSITY's peak opportunity. Are you still describing that drug as a blockbuster opportunity? Recent acquisition commentary suggested this might be a $3 billion market or greater. You're already annualizing at roughly $750 million. Is blockbuster the right way to think about this or is a multi-dollar figure more relevant? Thanks.
We're focused on helping as many patients as possible. The trajectory so far has been very strong and reflects the great need in the market, the product profile, and the team. Looking at other rare disease launches like this, you can see peak penetration in a broad range, and when you think about peak opportunity, that's the ZIP code. We will work to reach as high in that range as possible, focusing on helping as many patients with CAH as we can.
We will move next to Rudy Lee with Wylie Research. Your line is open.
Hi, thanks for taking my question. A follow-up on the pipeline: given the trajectory of the muscarinic programs and the feedback, can you speak to the opportunity and your overall strategy with the muscarinic franchise as you have multiple products targeting different indications? Thanks.
Thanks, Rudy. We have four shots on goal within our muscarinic franchise. NBI-68 is in Phase 3 for the treatment of schizophrenia and a Phase 2 study in bipolar mania is ongoing; timelines remain on track. NBI-75 is an M4-preferring M1/M4 dual that is in a Phase 2 study for schizophrenia; we see potential there and for a long-acting injectable (LAI) — a class that has generated significant commercial sales. NBI-9 is earlier, an M4 dual being studied in an early Alzheimer's disease study with the view to move into Alzheimer's disease psychosis, and NBI-7 will soon start a Phase 2 study in Alzheimer's cognition. Overall, we feel we have a best-in-class muscarinic franchise and look forward to direct-lead data next year.
I'll add that these are all orthosteric agonists that do not require any add-back to block side effects. They are selective on M1 and M4, which is unique and puts us in a strong position in the muscarinic category.
We will take our next question from Sumant Kulkarni with Canaccord. Your line is open.
This is a strategic question with long-term financial implications. With each commercial product you have pioneered commercialization in its first approvals. Your pipeline includes candidates in large markets where competitors are larger organizations. Could you share any targets for what a steady-state longer-term operating margin might look like for Neurocrine as you grow much larger?
I'll let Kyle address strategy, but from a financial perspective Eric and his team have done a great job developing markets, and we feel like we can compete well. I won't give long-term operating margin guidance, but you can see we are becoming a profitable company: non-GAAP operating income is over 30%. Our focus is to invest in SG&A to grow sales and advance the pipeline so we can compete in larger markets where we believe we can win.
Strategically, we're building a portfolio of first- and best-in-class medicines across neurology, psychiatry, endocrinology, and immunology. These are areas where we can compete through the merit of our molecules or unique mechanisms. For example, our CRF2 agonist in obesity is novel and leverages biological expertise. We diversify risk across therapeutic areas to pursue big wins while maintaining our core neuropsychiatry strengths — overall setting the company up well long term.
We will take our next question from Danielle Brill with Truist. Your line is open.
Hi, guys. Good afternoon. Thanks so much. A follow-up on CRENESSITY: you highlighted really strong growth in your prescriber base. Can you comment on trends in repeat prescribing? I think you noted roughly two-thirds of prescribers have only written a single prescription on your prior call. Are you seeing existing prescribers begin to treat more patients, or is growth still driven primarily by adding new prescribers? And where do you see the bigger opportunity: expanding prescriber breadth or penetration from the existing base? Thank you.
It's a bit of both — depth and breadth. We're still adding a substantial number of new prescribers each quarter, and to date most prescribers that have tried CRENESSITY have only treated one patient. This reflects patient flow and the long tail of this market — many practices have only one or two patients. We will continue to see adoption by new prescribers and also build depth over time.
We will move next to Yigal Nochomovitz with Citi. Your line is open.
Hi, great. Thanks for taking the questions and congrats on a strong quarter. Quick question on CRENESSITY regarding the rarer subtypes, specifically 11-beta-hydroxylase patients: what is the status in terms of progress getting payers to cover that subtype? And then quickly on VYKAT, any comments with respect to ex-U.S. strategy and how that fits in terms of prioritization for the asset? Thank you.
Coverage and reimbursement for CRENESSITY has been excellent and exceeded our expectations from the beginning of the launch. Typically, for specialty medicines physicians fill out a prior authorization attesting that the patient has classic CAH — usually not defining the genetic subtype — that they are 4 years of age or older, and that they are currently on glucocorticoids. For the vast majority of patients those are the coverage criteria, we have seen high claim approval rates, and claims get approved quickly. It's very affordable for patients: the majority pay $10 or less per month.
On VYKAT XR ex-U.S.: our first priority is to fully integrate the team and make sure we are doing everything possible to help patients in the U.S. As you may recall, Soleno withdrew the EMA filing during the closing process. Once we complete integration, we will revisit territories outside the U.S. In the meantime, for Europe, all patients currently on VYKAT XR will continue their treatment and we will consider named-patient program vehicles to help other patients seeking access in that region.
We will move next to Basma Chayati with Guggenheim. Your line is open.
Hi, good afternoon. Thanks for taking my question. On the Friedreich's ataxia program, what should we expect from the 2027 Phase I readout? Which tissue compartment will you report for frataxin protein levels — buccal cells, skin, or muscle? What would you view as proof of mechanism, and will you report clinical results together with the biomarker data? Thank you.
We are excited about the Friedreich's ataxia gene therapy program. We plan to start clinical development later this year, and once the study is up and running we will look forward to data in patients towards the end of next year. The nature of what we will be sharing will be determined over the next couple of months into the beginning of the year, and we hope to provide more commentary around our R&D Day in December.
We will move next to David Hoang with Deutsche Bank. Your line is open.
Hi there. Congrats on the quarter and thanks for taking my question. Curious to get your latest thoughts on the competitive dynamic and threat from competitors in the VMAT inhibitor space. Your competitor also printed a very strong quarter and has talked about $3 billion in peak sales and continued uptake of their product. As you look over the next few years, recognizing there are pricing dynamics, what are your thoughts on how market share may play out between two products and whether the pie will continue to grow in tardive dyskinesia, or will there be share shifts? Thanks a lot.
Ten years into the launch of INGREZZA, the TD market continues to grow very rapidly. There are still substantial numbers of untreated and undiagnosed patients. Our focus remains on driving awareness, diagnosis, and educating providers on the unique benefits of INGREZZA, while continuing to provide strong reimbursement support. INGREZZA has been the most preferred and most prescribed VMAT2 inhibitor since day one and continues to do so. In the most current quarter, with strong market growth for VMAT2s, INGREZZA outgrew the market and we expect that momentum to carry forward through the balance of the year. From a coverage perspective, we expect to have good coverage in 2027 and 2028 that will enable continued strong adoption.
Overall, we're pleased with our performance and will let the results speak for themselves.
We will take our next question from Evan Seigerman with BMO Capital Markets. Your line is open.
Hi, thank you so much for taking my question. I want to touch on osavampator in MDD. This is a large market. You are enthusiastic about it. Walk us through what you are solving for that existing antidepressant strategies do not do well. What do you need to show in a Phase 3 for this to be viewed as differentiated rather than incremental? Thank you.
Thanks for the question. Osavampator is an AMPA potentiator and we think it provides unique advantages versus existing standard-of-care antidepressants. We expect greater efficacy in individuals who have been unresponsive or not sufficiently responsive to other antidepressants with different mechanisms. Equally important, we saw a very favorable safety and tolerability profile in our Phase 2 SAVITRI data, which implies the potential for better long-term compliance. In Phase 3, we will be looking for robust efficacy and a favorable benefit-risk profile that supports differentiation.
That concludes the question-and-answer portion of today's call. I would now like to turn it back to Kyle W. Gano for any additional or closing remarks.
Thanks, everyone, for joining us today. We appreciate your time and thoughtful questions. We look forward to continuing the conversation with many of you at investor conferences and meetings throughout the remainder of the year. Until then, thanks again for your support and interest, and have a great afternoon. Goodbye for now.
Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.