Neurocrine Biosciences, Inc. Stock

Good morning, everyone. I'm Sean Laaman, Head of U.S. Mid-Cap Biotech Equity Research here at Morgan Stanley. Before we commence, to make you aware of some of the important disclosures, see those disclosures at the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. And if you do have any questions, please reach out and ask your Morgan Stanley sales representative.

With that said, we have the pleasure of welcoming from Neurocrine Biosciences, their CEO, Kyle Gano; and from IR, Todd Tushla. Welcome, gentlemen, and thank you both for your time today.

Thank you.

Maybe just to kick off proceedings before we get into the heart of Neurocrine, just a question -- just a few general questions on the macro side of the equation for biotech. How is the rise of China originated innovation changing, if at all, your competitive outlook? And does it influence your BD and R&D playbook?

It's a great question, very timely at Neurocrine, I know industry-wide. My view of China is that they are a competitive force, but at the same time, they represent an important source of innovation. And I think that those views, I think, at a high level, seem to be diametrically opposed. But a lot of this, I think, would share that same sentiment. And even on the competitive side of the equation, competition can be a good thing. It can bring out the best in all countries, parties involved.

I've seen that at Neurocrine over the years, in particular when it comes to things that we're developing in competitive spaces or commercially. And I'm confident that the United States will do well to compete in this area. But coming back to China, what I've seen over the course of the past decade, a lot of changes in the region. The speed, the quality, the breadth of the science has really improved. And I think that's something that we appreciate. The competitive bar has been risen, in particular, in areas of validated biology.

And for us, that really expands the universe of innovation that Neurocrine and other companies can access. And we have done that in years -- past couple of years, we have been in China and been successful in bringing in mainly earlier-stage assets that are not material for the organization at a high level, but we have used some of the work that they've done to help us accelerate some of our interest in research.

But how does that change things at Neurocrine today? I would say fundamentally, it doesn't change our view on the mix of internal R&D versus business development. It does change in 1 important way, and that is the importance of speed and selectivity; selectivity, I mean by that, what you choose to invest in.

For validated biology, being right about the science is no longer the most important thing. It's really developing a compelling and efficient drug development plan that allows you to be first to market or nearly so and also having that same plan be one that shines a light on all your points of differentiation throughout each point of development. And that's something that you have to keep in mind now as China opens up access to a new source of assets and technologies for companies in the sector.

The other thing I would call out that I think we'll see more and more of, perhaps even at Neurocrine is leaning into the Chinese ecosystem to help accelerate development. And this can occur in 1 of 2 ways, either directly through more CRO type of relationship or from what I'm seeing out there, companies striking collaborations on the same assets and technologies that I just referred to, but allowing their Chinese partner to develop the asset that comes from that collaboration, say, through the end of Phase I.

And then the company here in the U.S. catches that program as it comes over the ocean and finishes the development plan here in the U.S. and then commercializes it. The benefits, again, speed, allows the company to look at that as a multiplier in terms of programs that they can bring into the portfolio per unit of time. It usually comes at a less of a cost, which is a benefit as well, so they can do more with their R&D dollars. And I think it goes back to an earlier remark, it's also a remark. It's also done with very high quality. So for Neurocrine, that doesn't mean we're moving our R&D to China, but it does put China squarely in the global community of what we want to access to make Neurocrine better and faster for drug development.

Great answer. Thank you, Kyle. And the next question on AI. So are you implementing AI across your business? And can you give an example where it might have changed the decision, a cost outcome or even a POS?

Yes. No, I think it's another great question. For AI and machine learning technologies, it's been something that we've been very deliberate and intentional incorporating to our organization. It's actually in our corporate goals now. There's an element of that last year and this year as well. We have brought in over a year ago, I should say, in 2025, OpenAI, and that's certainly a tool that's used broadly across the organization. Now we also have Anthropic through Claude that we're using across the organization now. So both of those are available for our employees.

I would separate productivity gains from claims about AI suddenly changing or transforming research and development. And I would like to touch on the productivity gains piece first, and I'll come back to R&D. But on the productivity gains side of the equation, there's a lot of near-term opportunity I see for Neurocrine. Employees have adopted it in several different ways, but I can see it accelerating some of their workflow. I've seen it being used in areas of the company that interrogate large data sets, able to move through that more quickly.

There's a lot of redundant tasks that are just very tedious in nature that have been minimized. And just generally, information and knowledge that individual groups might have has been made much more accessible across the organization, and that's benefited us as well. So I've seen it in medicinal chemistry, chemical development chemistry broadly, translational science, clinical development, clinical trial execution. And I would expect that to continue as we look at the next year or so.

The challenge, I think, where most of us run into problems is how do you monetize or see if you're making improvements across your organization with the technology. And for us, it's all about outcomes and KPIs, standards that we can attach to specific problems. And in every organization, there are just repetitive decisions that come up. And for us using AI, can we make those decisions faster? When it comes to repetitive tasks or activities, can we get through those more quickly or in a more cost-effective manner?

When it comes to clinical trials, can we enroll our trials more quickly, trials more quickly with AI tools? Ultimately, what it is going to come down to when we think about an organization in its entirety, can you move through more science without having to proportionately increase the size of your organization? So I know we often talk about increases in headcount or decreases in headcount for AI. I think in the near term, the opportunity is, can you [ minimize ] your growth using AI based on some of the outcomes I just described.

So those are the areas that we'll look for improvements and how we'll look to measure them over the next couple of years. I do want to come back to the R&D side of the equation. I think right now, it's still early days and how we think about improving probabilities of technical success across the R&D portfolio. And the reason for that is the whole idea of machine learning, AI is that you need to have data populate your project in order for it to get reasonable outputs. But if you're working in novel areas of biology, it's very unreasonable to expect what you get from that project or from that programming, if you will, is going to be helpful in improving your probability of technical success. So that's a more mid- to longer-term view. Right now, I think there's a lot of near-term opportunities for us.

Wonderful. Thank you, Kyle. And last question before we dig into the specifics of Neurocrine. But which policy variable, FDA, Medicare negotiations, MFN, tariffs or global pricing matters most to your economics? And what have you changed, if anything, because of it?

Well, we just had our first one-on-one here before this meeting. And I can tell you, it all goes back to INGREZZA and our Medicare negotiation. So this is our version of the Inflation Reduction Act. For INGREZZA, we're exposed in a couple of different ways. Two specifically, directly, we have our IRA moment or MFP, our maximum fair prices implemented in 2029. But indirectly, we're in a 2-product category and our competitor in this space has their IRA moment 2 years before our own. So there's an unintended consequence, if you will, for MFP and MFP adjacent products that we work through.

So I think that's something that is tangible to Neurocrine, unique to Neurocrine, and we spend a lot of time talking to you all about that. And it's probably worth maybe another question on how that looks for us. But for me, when I think about policy, I'd like to separate policy on a singular product like INGREZZA and policy and how it might affect our long-term strategy. And at Neurocrine, we're not building the company to predict what comes out of Washington. That's a slippery slope.

But we are trying to make the company as strong and as resilient and each and every day make it better across those 2 metrics. And for us, that means diversifying the source of our growth and the durability of our growth opportunities. So INGREZZA is a great medicine. We've guided to $2.825 billion to $2.875 billion this year. The market continues to grow double digit each year. We have patent life out to 2038, but it's not just the growth opportunity through INGREZZA, we have now CRENESSITY, a medicine for congenital adrenal hyperplasia that's on an annual run rate of $750 million now.

So that's another piece of our growth story. And more recently, we acquired VYKAT XR, which we're about a little more than a year into launch, and we're about a $400 million run rate right now. So a lot of growth across our commercial portfolio. And when it comes to the durability of our growth, it really focuses our attention on the pipeline. So we've got an industry-leading muscarinic and depression pipeline now with osavampator and direclidine that will read out Phase IIIs next year. We see that as a near-term opportunity for growth. And then we've shown our ability to have a sustainable R&D engine, putting new programs into the clinic each and every year. So ultimately, the best hedge against policy for us is multiple growing products, a deep diversified portfolio, good cash position and the financial capacity to keep investing despite what happened externally.

Sure. great answer. I mean if you go back 18 to 24 months, Neurocrine was largely INGREZZA story, but now you've got 3 commercial products. You've got pretty catalyst-rich sort of 6 to 18 months coming up. You've got 2 major Phase III readouts next year in osavampator and direclidine. How would you characterize the outlook for the business through 2027?

Yes. We've really been focusing on building the business, not just inside our commercial portfolio, but outside across our portfolio as well. And that means adding new programs to Phase I and advancing those programs that were in early stage to mid-stage and of course, Phase III. But maybe just to start from the top, and I won't go through all the programs in detail here, but 3 first-in-class medicines in Q2 generated almost $1 billion in net sales.

And we think about Neurocrine, one of the messages I'd like to leave with you all is that the company has really evolved into a diversified multiproduct biopharmaceutical company. So when we talk about the 3 first-in-class medicines, you got INGREZZA continuously delivering on a commercial -- from a commercial perspective, you've got a great launch with CRENESSITY, and now we're integrating VYKAT XR. Diversification is obvious there, now 25% of our revenue in Q2 came from CRENESSITY and VYKAT XR. It used to be just an INGREZZA story.

And as I mentioned, we've got other commercial products now to talk about. And then when it comes to those medicines delivering for us, they generate a ton of cash flow, and that's able to help fund our late-stage pipeline and also our emerging early-stage pipeline and continuously giving us the flexibility for business development. So it really sets the stage quite well for what we want to do for the company moving forward. It does go back to executing on the clinical trials that we set in motion a couple of years ago.

If we do those well, then that's when the data readouts come next year. Osavampator, direclidine Phase III readouts starting the second half of next year into early 2028. We have Phase II readouts with our next-generation VMAT2 inhibitor, which is NBI-890, as well as another muscarinic program with schizophrenia in early '28. And the list goes on and on. The idea is that the data catalysts that we have next year will be more of the norm. And that will set the company up quite nicely to hopefully deliver a new medicine every couple of years.

Wonderful. Maybe just to hone in on INGREZZA. So reacceleration in growth. We've got an upgrade for this year. What's driving that?

Well, we've learned a lot since we've launched the medicine in 2017. I think through trial and error, if you will, the 2 things that really accelerate growth or magnify our investments is having the right share of voice out there. So that means the right-sized sales force. And we did go through a sales force expansion this year. It was concluded in Q1. We saw the benefits of that already earlier in the year, and we expect that to continue to compound as we get through the remainder of the year.

So share of voice, sales force sizing, that's very important and also having strong access, and we've got that as well. With INGREZZA today, we cover about 70% of all Medicare beneficiary lives, and that puts us in a good spot to get access for the patients that need the medicine. Those are the 2 main drivers on that. And of course, messaging the data generation that we've had over time, we've shown good data on quality of life with our validated instrument. We've shown good remission data, 60% of patients on INGREZZA are symptom-free. And we've also shown recently good PET data, which shows target occupancy that's superior to our competitor in the space. All that gets to get pushed through that sales force. And that's a very compelling story for us out there.

Awesome. I've got a couple of INGREZZA pricing questions. So net price, I believe, was expected to decline 4% to 5% this year. Is that still the right framework heading into 2027?

Yes. So for us, the headwinds on the 4% to 5% price delta this year really comes from the contracting that we did last year. So the 4% to 5% is relative to last year. This year, our price per script, our revenue per script has been relatively consistent throughout the year, and we expect that to be the case as we think about the remainder of this year. Of course, in 2027, our competitor in this space is going through the first year of where their MFP is implemented.

And we do expect some price concessions with the plans, the payers that we're currently on contract with to maintain that same level of access for '27. That will be pretty nominal. But I would also point out that we do have an increase in the statutory rebate that we pay for sales that go through Medicare Part D, in particularly in the catastrophic phase, that phase in that all companies that have the same exemption of us, the specified small manufacturer exemption. That statutory rebate will go from 2% this year to 5% next year, and that's on the WAC.

Sure. Thinking longer term, so you just answered my next 2 pricing questions. But how do you maintain a stable growth on the top and bottom line through '29 implementation year? And how much does that answer depend on CRENESSITY continuing to outperform?

Well, in terms of INGREZZA, it's worth repeating that we continuously see double-digit volume growth out there each year. The market is incredibly robust. We've got about 10% of the 800,000 or so under the care of a VMAT2 inhibitor. So there's plenty of room to grow in this marketplace still. And even despite the price concessions that we pay next year, '27 and '28 are going to be revenue growth years as well as volume growth years for us, of course. So 2029, we do have our IRA moment there.

Our MFP, our maximum fair price should be implemented. We start those negotiations next year. And recall, because we had a small biotech exemption, we know that's going to be within a band of about a 25% to 34% discount off of this non-FAMP number. This is the Federal Average Manufacturing Price. It's a little bit nuanced on this. But ultimately, it's a number that you're discounting from a 2026 value that comes into our negotiations. We would expect revenue to dip in 2029.

So what it means for overall enterprise-wide revenue is going to be a function of how well CRENESSITY and VYKAT XR grows and certainly happy and glad that we have these 2 medicines in our portfolio because they will be growing over this time frame. We also have the opportunity to potentially see osavampator and direclidine pay off over this time frame and be commercial products in that 2029 time frame as well. It probably will offset coming out of the launch necessarily the revenue that we'd want to see for 2 blockbuster medicines like those 2, which we believe they will be. But we have a lot of financial capacity to continue looking externally as well if we need to.

Sure. Moving on to CRENESSITY, very strong Q2 numbers, more than triple what you did in revenue like a year ago. I think you're now 15% Yes, 15%. So 6 quarters in, what do you need to see before we'll be able to get some revenue guidance?

Yes. This comes up now and again in investor one-on-ones. What I would say is, like you said, we're only 6 quarters in. And the launch had been great, but we're still learning a lot about the marketplace, learning a lot about the endocrinology; community; the patients, where, when and who they seek treatment from. So it took us 4 years before we gave INGREZZA guidance. We expect we're going to end this year with some strong momentum with CRENESSITY, and that's something we're going to have to revisit ahead of the Q4 call next year. But I understand you probably want it.

Yes. We do. We want everything. Still on CRENESSITY, is the next leg of growth like adding prescribers? Or is it deepening the number of patients per prescriber?

Yes. I would say it's a little bit of both. As a reference point, there's really 3 sources of where patients seek treatment. There's the centers of excellence. There's about 20 of those, that covers about 15% of the 20,000 or so patients who have classic congenital adrenal hyperplasia. There's pediatric endocrinologists, there's about 1,000 of those. And then you have the community-based endocrinologists, which is about 8,000 and one of the nice things about the launch that was surprising to us in a good way was we're seeing utilization across all 3 sources of that business.

And so as you would expect, the centers of excellence, although we're not fully penetrated there by a long shot, have more prescriptions on a per MD basis. Whereas on the community endocrinology, they may have 1 or 2 patients. And so I think what's going to happen over time as CRENESSITY becomes the standard of care, there's going to be a network effect that's going to help those community endocrinologists who aren't yet treating a patient to treat their 1 or 2 patients and for the folks that are treating to go deeper. So I think the answer is a little bit of both is where growth is going to come from.

Sure. And you also initiated a Phase II in children from 3 months under 4 years. Like how commercially meaningful is that youngest cohort?

Yes, it's super meaningful. There's -- about 1/3 of the patient population is pediatric, and we're approved for age 4 and up right now. The Phase II that you referenced is 3 months to 4 years old. And what we know is that with CRENESSITY, we have a chance to interdict and change the trajectory of especially pediatric patient's life because you know steroids are bad for the brain, bad for the blood, bad for the bone. We can have an overall impact on changing the course of overall hype for these pediatric kids. And so treating earlier has a more profound impact over time. And so we'll get that data sometime in the 2028 time frame.

Wonderful. And last question on CRENESSITY. So looking down the path to Vertex/Crinetics, like how do you...

And that was a big acquisition price. Kind of we are already validating that there is a market there in classic CAH, but now you have Vertex further validating it.

Sure. Yes. I'm with you on that one, Todd. How do you compare CRF1 inhibition with ACTH receptor antagonism. And can the market support both?

Yes. What I would say on that is we work upstream in HPA axis and they're further downstream. Instead of diving too much into the competitive aspects here, they're still several years away from coming to market on the adult front, even further on peds. Meanwhile, we're at 15% market share 6 quarters in. We're becoming the standard of care treatment. And we're making it difficult, not just for a competitor with CRENESSITY's label, which has got uncompromised efficacy, but also uncompromised safety and tolerability. So setting a high bar with CRENESSITY for others, including ourselves with our follow-on peptide that's in development. It's going to be tough to displace a standard of care kind of treatment that we're seeing evolve with CRENESSITY. And time will tell if the competitor product comes to market, but we like how we're positioned right now.

Great. Moving on to VYKAT XR. So there was a joint statement in early August from the Foundation for Prader-Willi, which flagged some deaths and adverse events. And there have been 800-plus patients prescribed since launch. What's your read on those data? And what is the process, if anything, from here with the FDA?

Yes. No, I think it's a good reminder just to level set on the Prader-Willi disease state. These are patients that are -- it's a very serious and complicated disease, and these patients have many comorbidities. At a high level, mortality is multiples above the general population. The mortality rate increases for each decade of life. Life expectancy is in the mid- to late 40s, at least based on what you can find in the literature today. So I think it's a view that needs to be shared.

I think the physicians that came out and shared this letter was shining a light on the complexities of this disease state and also the benefit risk profile of VYKAT XR, in particular, with patients that are very severe in terms of their symptoms. So at a high level, we largely agree with a lot of the things that were pointed out in the letter that came out during the course of our diligence and actually was the emphasis -- has been the emphasis of our educational efforts that we have planned on and are doing now post close of the acquisition.

So right now, it's really a function of making sure that we're doing all we can with real-time data, everything that you mentioned that came out in the FAERS database or the AIMS now is really information that we solicit using our specialty pharmacy. And when you're first in disease, these things do become visible for the first time in patients' physicians' lives. They haven't seen this in a registry type of format. So we have a lot of work ahead of us in terms of patient education, in particular, on the side of physicians, helping them identify the ideal patient and also how to manage and monitor adverse events.

And that's going to be done in a hands-on way with Neurocrine with the help of our specialty pharmacy. But today, just as a reminder, help get us all on the same page, we have over 1,400 patient years of experience now with VYKAT XR. We have patients that have been on the medicine for more than 7 years and benefiting quite well. So I know it's hard to look at the news and get drawn into the safety pieces of the disease of VYKAT XR but there are a lot of patients that are benefiting as well. And that came out through the course of our diligence that there is a compelling benefit-risk profile for VYKAT XR in the Prader-Willi syndrome patient population. It's really on us now to make sure that we have all the tools in place for physicians and families and patients to do well in the medicine, and I know we're up for the challenge.

I think what was interesting following that letter, there were a number of KOL calls to ask about the letter. And largely, all of them that I read were the response was this is nothing new. We knew all about this. So -- and it's part of the awareness campaign that we're going to drive forward.

Got you. Thank you, Todd. That's interesting. I guess sort of commercially on VYKAT XR, what are you watching most closely to evaluate -- I mean, I know you're already done valuation, but to evaluate the longer-term outlook? Is it new starts, discontinuations or persistence?

I'm going to lean on what Todd said about CRENESSITY. It's probably a function of all the sales. I will say that we're starting in a good position from the perspective that new patient starts, enrollment forms, however you want to look at it, has been relatively steady over the past couple of quarters. What we've been looking at is the discontinuation rate over time. I think initially, what you would see in any orphan disease or any first-in-disease medicine is that there is a bolus of patients that come in.

They're excited about having a new treatment option, and they get on the medicine and they try it for the first time. The most severe patients and by that, the most severe, I mean, the ones where the hyperphagia is quite severe were the ones that are coming into the real-world setting with prescription of VYKAT XR. And that's where some complications were having in those particular patients in terms of the adverse events that we're seeing just in that patient population were given rise to the concerns that we've seen in the physician community.

That's a long way of saying that what we saw were discontinuations that exceeded what we saw in the Phase III setting. And we have the ability to see when patients start medicine in a given month, and we can track them over time from 1 month to the next month and so forth. And what we can see now with about a year's worth of data is that the discontinuation rate as it turns into 1 year is about 20% to 25%. So what we see is a good steady-state number for us is to have a discontinuation rate in the 25% to 30% number that includes persistence of going in 1 year to the next.

But once you get that into a steady state position with the steady enrollment that we've seen, we do expect to have sequential growth as we exit this year into 2027. So it's all about the education piece that I mentioned before and making sure that we've identified the right patients, physicians know what to look for in terms of AEs. They know how to manage it, and I think we'll be in a much better place.

Wonderful. Thank you. Maybe to move on to some pipeline questions now. So we look at direclidine. We look at the COBENFY launch, which has been slower than what most would have anticipated. What do you believe Neurocrine needs to show with direclidine to give investors confidence that you've got a good commercial story here?

Well, I think for the antipsychotics in general, I'll put COBENFY into that category because I think we're seeing the same thing is that everyone knows that you get your foot in the door on this therapeutic category in general by moving into schizophrenia. It's a patient population that has continuously the highest unmet need. It sets a price point for you to branch out into other indication and it's the most straightforward development pathway to commercialization.

So what we've seen from COBENFY, at least in my view and our view, is something very consistent with other antipsychotics, the trajectory is pretty much in line with what we thought we would see. But to really get to the larger numbers in terms of valuation revenue, if you will, you really have to branch out to other indications. And we've seen that through CAPLYTA most recently went from schizophrenia to bipolar to MDD. You can look at that same trajectory as the other antipsychotics.

To really do well with muscarinics, you have to move outside of schizophrenia. And I think that's something that BMS appreciates. That's why they're in ADP and bipolar. That's why we have gone into bipolar mania as a second indication nearly in parallel with our efforts in schizophrenia. So we're excited about what we have, but we're also realistic in appreciating that the numbers that we're all wanting to see in terms of revenue are going to be achieved by branching out in other indications, and that's something that we'll be looking at moving forward.

Sure. Thank you, Kyle. And moving on, osavampator -- maybe a very -- for investors, a quick snapshot and overview of the program. When we expect -- when do we expect the Phase III readouts? And how should investors think about differentiation versus esketamine?

Sure. So this differentiation is quite easy. It's an oral tablet that you can take from the convenience of your own home just like any other antidepressant Great safety, great tolerability. There's no monitoring required. There's no devicing that's required to administer the product through an inhalation type of delivery mechanism. So very simple, easy to use and very much consistent with how patients take their medicines today. So I think that's the real take-home there in terms of differentiation.

In terms of the program itself, we have 3 replicate Phase III trials that are ongoing. Each trial is 200 subjects in sample size. It's a 1:1 ratio of active to placebo. So 50-50, and that we believe will be helpful in terms of minimizing the placebo response. It's testing the 1 milligram dose that we saw good results in the Phase II versus placebo, and we're looking at the MADRS at day 56. So that's the plan in terms of the placebo-controlled trials.

Those patients roll over to an open-label study, we also have a randomized withdrawal study that's running in parallel with this as well. So if everything goes well in terms of recruitment, what we're talking about is Phase III data in the second half of next year. And then if those are positive, we would play out the open-label safety data. Recall, we needed at least 100 patients out to 1 year as part of the ICH guidelines for submitting an NDA. And all that wraps up, we'll be able to put an NDA in the hands of the FDA for review somewhere in 2028 with a launch possible somewhere in 2029.

Amazing. Thank you. Still moving on, just in the interest of time, I do have more questions on that one. But just I want to get to the CRF2 and obesity program. So 2118, so once-weekly CRF2 agonist that ended Phase I in May, signal seeking next year. And what we thought was interesting is that Roche's Genentech acquired an asset from Hanmi. I think they paid $190 million upfront, $2.3 billion in milestones sort of doubling down and validating the area, we think.

But how do you interpret that transaction in the context of 2118? And does it increase your confidence in the industry that the industry is converging around CRF2 as a differentiated mechanism for preserving or improving lean mass during weight loss?

Yes. No, I think that was a pretty big deal by Roche to invest almost $200 million in Phase I and of course, all the hard milestones that come with that. That's a pretty significant deal. That is -- I'm guessing they saw something there. CRF and CRF2 is something near and dear to Neurocrine's heart. And for me personally, I in-licensed one of the very first CRF2 agonist from the Salk Institute about 25 years ago and took that forward into some Phase I and Phase II trials for a very acute heart failure indication.

And we had signs that we were on to something very special back then. Unfortunately, for those that know the Neurocrine story, we couldn't develop everything that we wanted to back then and had to discontinue that effort. But for those that were around at that time and are still at Neurocrine today, we always knew that we wanted to revisit this biology. And fortunately, we brought in some folks from Eli Lilly that worked in the same space on around the time that we did, including our Chief Scientific Officer, Jude Onyia, and we reengineered peptides in this space to be longer acting.

Our first molecule that we had, had a half-life of about 15 minutes. Now we're out to 1 week. So these are things that you can do now with all the tools that are available to us. But ultimately, the idea is to get to -- it comes with an appreciation that obesity is a disease of CNS. You start there CRF2 is in the brain. We like leveraging the things that we know about CNS drug development, about CRF biology. It seems like a perfect match for us. And what we've seen after engineering some of the molecules that we have, very good weight loss data in the DIO model in the mouse that shows weight loss comparable to what we see from the incretins.

But to your point, and similar to what Hanmi and others have demonstrated, the weight loss is on the fat side of the equation, not on the muscle. And we've also seen other cardiac and renal benefits as we've seen over time with our work in R2. We also see a differential tolerability profile. It's not going through the GLP pathway. So we don't expect to see nausea, vomiting, those types of things that you would see with the medicines that are available today.

Other than pointing out those kind of differentiation attributes of CRF2, there's another reason why we like this type of approach. In psychiatry, we all know that we're dealing with subjective endpoints, and you don't know definitively what you have until you've completed your Phase III. The only thing that's guaranteed is your expense. I'm joking here a little bit. But we appreciate that there's challenges with psychiatry that you can mitigate by being in endocrinology, specifically in obesity.

You get biomarkers in Phase I, you're dealing with objective endpoints instead of subjective endpoints. You can actually pick winners, the molecules you want to take in the Phase II as early as Phase Ib. And that's really refreshing for Neurocrine. We can get a nice balance in the portfolio about risk benefit and probabilities of technical success. And of course, I give some benefit to us having a rich history in CRF to win here. So I'm excited about what we have.

Wonderful. Well, we're just out of time. So thank you, gentlemen, for your time today. Pleasure to host you. and thanks so much.

Thank you.

Thank you.

All right. I think we're ready to get started. Welcome, everyone. This is Josh Schimmer from the Cantor biotech equity research team. We're very pleased to have from Neurocrine Biosciences, Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; and Todd Tushla, who heads up Investor Relations. Matt, maybe I just kind of want to set the stage here, give us a snapshot of where Neurocrine is today and if there are aspects of the story that you think investors are really missing or not appreciated.

Well, first of all, thanks for hosting us. It's always good to be with you. And good to see your name is Bill Joshua and I'm Matthew. So we got our formal names going on today. So that's always a good thing. We will be making forward-looking statements, and so we direct you to our SEC filings. So we have a lot of great things going on at the company. It's amazing to think just 2 years ago, we were a single product company. Now we're a multiproduct company. Going from one product with INGREZZA to now INGREZZA, CRENESSITY and VYKAT XR.

Last quarter, we had about $1 billion in sales. And it's just -- we pinch ourselves and find ourselves quite fortunate to have 3 growing brands, 3 brands that are helping many patients. And I would just say kudos to the teams that have been involved in that and being able to help so many patients across these different therapeutic areas. In addition to that, if you just rewind 3 to 5 years ago, we probably had 3 pipeline programs. Now we have close to 20. And you think about where is our pipeline and you stack that up against anybody else in the industry, I don't know if there's anybody that has a broader bigger pipeline from Phase I to Phase III than what Neurocrine has.

And I think that's reflective of the strategy that the team has laid out in terms of investing in early-stage research that's now allowing us to put new programs into the clinic, and that spans psychiatry. That's our later-stage programs, neurology, immunology, which we'll touch on more later this year and then also endocrinology. So a lot of great things going on in the pipeline. Of course, the headline are there are 2 major Phase III programs that we're going to have next year. One of them is osavampator, which is an AMPA potentiator that's being studied in major depression. And then we also have direclidine, which is a muscarinic program that is focused initially in schizophrenia.

That data will read out in 2027 and 2028. Those are transformational programs for our company. And so we're looking forward to executing those trials and getting to that data. And then lastly, strong financial position that gives us a lot of flexibility. I think you mentioned what are investors missing or maybe might be overlooked. And I know today, it's important we'll get into nuances of each of our brands. We'll get into nuances of our pipeline program, and it's important for investors to understand those nuances.

But I also would encourage folks to take a step back and look at Neurocrine. In the elevator after our meeting earlier this morning, I was writing up and somebody says to me, Wow, I was -- I've been an investor 15, 20 years ago in Neurocrine. And he says, now you're a big real company. And I think that's an appropriate perspective. We have 3 products with durable top line growth, durable cash flow, and we're working to have a durable, sustainable R&D engine. And I think those allow itself to have us valued in the long run as an enterprise, not as a single product company, not as a binary outcome from a data readout. But we are a company striving to help as many patients as possible, and that's the mission that we're on today. So we're looking forward to being here, and we'll take your questions. However you want to go, Josh.

Sure. Thank you. Well, why don't we begin with INGREZZA. What's probably so remarkable about INGREZZA. It's kind of a product that keeps on giving growth, right, and becoming such an important part of Neurocrine, but it's also a product that's -- for a product that's been on the market for so long, there's still so much to talk about, right? Maybe we can start with the recent sales force expansion that you've completed and how do you think that positions now INGREZZA in the coming quarters and years, especially as you undergo some of the dynamics we'll talk about next under the IRA.

Yes. I guess I'll take a crack at that. Hi, everyone. I'm Eric, and that is my full name. So for those of you that may be a little bit less familiar with INGREZZA, when we think about INGREZZA, we primarily think about the tardive dyskinesia indication. That's the vast majority of our business. It's been on the market for 9-plus years now. And Josh, as you were saying, it keeps delivering robust growth. In fact, in Q2 of this year, we reported a record NRx or new patient starts. We also reported record TRx, which is unusual for a product this far into its life cycle, though I will say that it has a long runway ahead with exclusivity out to 2038.

So if this was a baseball game, I'd say we're in like the fourth inning or fifth inning maybe. But bottom line is that this is still a rapidly growing category, the tardive dyskinesia market. We're on a pace this year for growth in the mid-teens. And certainly, we expect to be able to continue to deliver robust growth going forward. You were talking about '27 and beyond. One of the investments that we recently made was an expansion of our field sales team, and that was completed at the end of Q1 and the expanded team rolled out in Q2 of this year. So it's relatively fresh.

I would say that the expanded sales force is a contributor to the momentum that we've seen, but certainly not the only investment that's delivering these results. This is the most recent expansion. And as we were chatting about earlier, over the years, we've expanded our field sales team 4x. And I think that's really in response to the growth of the category, the growth of the prescriber base for VMAT2 inhibitors. At the time that we announced this most recent expansion last fall, we said that the base of VMAT2 riders had grown by 30% over the prior 2 years.

And so in some ways, every time we expand our team, it's to keep up with the growth of the category to make sure that we're calling on the prescribers that are treating these patients with diagnosed or nondiagnosed tardive dyskinesia. We estimate today that the size of the prevalent population is at least 800,000 in the U.S. Roughly half of those folks have been given a diagnosis to explain their uncontrolled abnormal movements. And yet only about 10% of TD sufferers are currently being treated with one of the 2 approved VMAT2 inhibitors.

So there's a lot of headroom from an organic growth perspective. And certainly, the investments that we make, whether it's in sales force or whether it's in branded DTC, medical education, omnichannel marketing, they all work together to continue to drive recognition, diagnosis and treatment with INGREZZA. So we feel really good about the first 9 years of the launch, but our aspiration is to continue to drive diagnosis and treatment with INGREZZA because there's a whole lot of people still that could be benefiting from treatment.

What's the extent of the sales force expansion that went from when to when? And when do you expect that to really start to reflect in sales? Is it third quarter?

Yes. I would say, based on our historical experience, it does take a couple of quarters to, I would say, have the sort of tangible full benefit of a sales force expansion. The TD market is a little bit different than other categories within psychiatry or behavioral health. Our folks, they have a little bit of a broader scope of role than maybe what you see in antidepressants or antipsychotics. They do a lot of disease state education. They really help educate the providers, especially those that are earlier in career or newer in behavioral health to understand drug-induced movement disorders to distinguish TD from other hyperkinetic or hypokinetic movement disorders, certainly educating them on VMAT2 inhibitors and INGREZZA in particular.

So it takes a little bit longer to get up to speed when you're coming into this therapeutic area. I do think that some of the momentum that we saw in Q2 was due to the expanded sales team that I also believe that we'll see the full impact of the expansion as we exit this year. So ultimately, our learnings as we go forward is each time we do an expansion, I think we get a little bit better at telescoping that time from onboarding to effectiveness. The way that we look at the impact of the expanded team is their ability to drive new patient starts. So it's really about NRx. And ultimately, that's one of the reasons that we have a lot of confidence going into next year.

So $2.85 billion is the midpoint of our guidance range this year, and that reflects 13% year-over-year growth. And included in that is a 4% price headwind. So when you put in context how is INGREZZA growing today and how is the overall TD market growing today, our underlying volume is in the mid- to upper teens. And that's quite significant when you think about how promotionally sensitive the market is to the investments that Eric has been alluding to.

So we continue to invest behind INGREZZA as a growth engine. We understand it's going to be profitable to us all the way until our IP exclusivity window ends in 2038. There'll be some different nuances, and I'm sure we'll talk through those different chapters in terms of price.

Why don't we do that now? That's a perfect segue into '27, '28, '29 because there's a unique shift each year, whether it's catastrophic exposure, whether it's AUSTEDO being negotiated, whether it's INGREZZA being negotiated. Kind of take us through how you anticipate each year playing out primarily with regards to price, price headwinds and access?

Yes. So access is incredibly important in this class. And that's something that we found last year once we were added on to formularies, we went from about 30-some percent to it was about 70% coverage in Med D plans. And I think that's part of the reason why you're seeing stronger volume growth this year as Eric and I have been alluding to.

So preserving access is incredibly important. So the questions we get around 2027 have to do with our competitor has gone through a negotiation with the government where there is a defined MFP. And they're going to be covered up by 100% of plans by statute. So the question has been what is going to happen to INGREZZA within all of these formularies. Fortunately, where we sit today, we do feel as if we're going to be able to maintain coverage at the same levels that we have today. And that was incredibly important strategically as we negotiate -- or as we navigate 2027 and 2028 before our official IRA MFP moment.

So how to think about 2027, there's 2 price headwinds. One is statutory where you go from a 2% statutory rebate to a 5% statutory rebate, and that's because we have the small biotech exemption and the phase-in of the catastrophic coverage rebate. So that's a direct price headwind. The second is to maintain that access, we have had to offer some modest rebates that would allow us to preserve access. But when you take a step back and you think about the underlying volume in the market, what we expect to achieve, we absolutely expect to have strong growth still next year. It will just be a bit offset by these pricing dynamics that we highlighted.

In 2028, we do have another step-up of statutory rebate and price going from 5% to 8%, and that's by statute, but don't see any other price headwinds at the moment. And then we get to our IRA moment in 2029. And fortunately, our IRA negotiation was pushed out 2 years based upon qualifying for the small biotech exemption. In addition to that, we have a defined range of what the potential outcome of negotiation is between 25% discount to 34% discount from a metric called non-FAMP. So there will be a price impact in 2029. There will likely be a dip in overall revenue for INGREZZA as you transition from '28 to '29, but still a very profitable brand and growing from there.

Just one clarifying point. The statutory rebate that Matt was describing applies only to our Medicare business, which is about 2/3 of our volume. So it goes from 2% this year to a 5% next year to 8% in 2028. And that's across all of the Medicare business.

Yes. Got it. Did the 4% price headwind in '26 include that kind of 2% catastrophic exposure, you factored that in?

Yes. In 2025, it was 1%. And then in 2026, it was 2%. So it did contribute about 1% of that year-on-year price impact. But the larger price impact this year had to do with gaining formulary coverage in the middle of 2025.

So kind of inferring, it sounds like '28 may come in again around 4%, maybe even a little higher if you've got that 3% step-up plus some discounting to stay on formulary?

In '28?

'27.

'27. Yes, we haven't been given the formal guide. We'll see where CMS lands with formularies and finalize that, and we will give an update either later this year or as part of our guide early next year.

And then when you get to '29, as you enter into that 25% to 34% discount to non-FAMP. I guess, first, as we clarified this morning, that's actually versus 2021 non-FAMP with some adjustments. But also at that time, the catastrophic obligation will go away as an offset. Are there other offsets to consider other reimbursement dynamics that will kick in, in '29?

Yes. What goes away in '29 when you have a negotiated maximum fair price for Medicare is the catastrophic contribution, like we described, that's being phased in now, that goes away and any voluntary rebate agreements go away. So any contracting that we do today, that goes away.

That's quite a potentially meaningful offset so that 2029 impacts, even with that, you don't think volume growth can keep that franchise flat that year.

It's hard to sit here today and give a 2029 guide. I don't want to dismiss the impact of the negotiated price. And we will get to that being known actually in 2027 by the end of next year. And once we get through that negotiated price window, hopefully, we'll be able to provide a bit more color as to what to expect in 2029. But there is also an element to that, that it bleeds into best price for Medicaid and a few other dynamics.

So it's something that we look at as it will be a little bit of a wound, but it's not a generic like event where you have to completely rightsize your business. This is something as we've thought about sales force investments and positioning ourselves for the future, continued investment behind INGREZZA, continued investment behind our VMAT2 franchise, including our follow-on molecule, which we'll have some data on next year, which we would intend to take in as a long-acting injectable. Our view and one of our strategic pillars is to own and continue to dominate the VMAT2 class. And so you do see some aspects within our pipeline that will point us there over this time horizon. So I know the nuances of this might be difficult to grasp.

You do a really good job explaining it.

Well, I look at it as, man, we're quite fortunate to have a medicine that's growing in an underlying market like this with INGREZZA. And it's also nice to have other products like CRENESSITY and VYKAT that contribute to growth. And by the time we get to 2029, Josh, I think the main question will be what's the next major growth chapter for Neurocrine. And I think with the pipeline readouts and the continued evolution of our other brands, that story will become clearer as we get there, and we have a lot of confidence in the future.

Are there any spending offsets in '29 that can help protect the bottom line and continue to grow the bottom line?

I think there's 2 pieces. We'll always look at our cost structure to make sure it's aligned with the opportunity that we have on the top line. With that said, we do have some meaningful data readouts over the coming year or 2. And in particular, if osavampator is positive and we're required to build out a primary care sales channel, for example, those are investments we're going to be very glad to make, and there might be a window of time where we, forsake operating margin to position ourselves to drive longer-term shareholder value. But yes, we will look at cost structures and making sure they're aligned appropriately to the opportunity. But we do have a lot of interesting aspects that could allow for quality investments over the coming years.

Joshua, I would just say that the great thing about our late-stage pipeline, whether you're talking about a osavampator in major depressive disorder or direclidine in schizophrenia, really nice synergy with our existing footprint in psychiatry. So we've established ourselves as a player in psychiatry. Looking forward to the opportunity to bring one or both of those medicines to patients towards the end of the decade. .

Where do you envision the role for a VMAT2 long-acting injectable? What kind of market share do you anticipate being able to generate compared to INGREZZA?

Yes. The way that we're thinking about the opportunity for a long-acting injectable is if you think about patients with serious mental illness in more particular, patients with schizophrenia or schizoaffective disorder, there's a portion of that patient population that are really noncompliant with oral medicines. And there are several brands of long-acting injectable antipsychotics that are billion dollar drugs as a result.

And so some of these patients have tardive dyskinesia. In fact, there's likely a higher proportion of them that have tardive dyskinesia. But the time they get to a long-acting injectable antipsychotic, they've likely gone through several different oral medicines to get there. And one of the risk factors for TD is the number of prior antipsychotic treatments and the potency of those drugs. So we know that there are some patients that are noncompliant with oral medicines that are on long-acting injectable antipsychotics and as a result, aren't getting treated for their tardive dyskinesia.

So our aspiration was to develop INGREZZA as an LAI formulation. Unfortunately, due to the characteristics of its profile, it's not really compatible with a once monthly or less frequent injection. NBI-'890 is. And so that's one of the aspects of the product profile that we're excited about currently being developed as an oral form, but working on the LAI version of it so that we can offer the opportunity for those patients that are not compliant with oral medicines to still get treated for their TD.

So in terms of the type of penetration you might be able to achieve based on those dynamics?

Yes. It's hard to estimate right now, but we view it as an incremental opportunity. So not necessarily sort of cannibalizing the existing market. These are patients that are not being treated because of their poor compliance with oral medicine.

When you say incremental often and interpret as just modest. Is that what you're implying or incremental add-on, but a substantial add-on to it.

Yes. We can get a little bit more detail when we get further down the road. But the majority of the market opportunity is for the oral form. .

It was a wonderfully crafted response e-mail from Kyle to the Prader-Willi community. Very thoughtful and very attentive to the needs of patients. I think one of the items that came up was a commitment to continue to explore VYKAT XR in the context of potential cardiovascular risk factors. How do you intend on exploring that? Do you have particular trial designs in mind or particular questions you're trying to answer that can help safely position by VYKAT XR in parts of the community that may currently be very hesitant to try it.

This is a devastating disease. It really is it manifests itself at birth and continues to manifest itself all the way until adulthood where many die very young. And so it is a devastating disease that also brings a variety of comorbidities associated with it. And I think what you're alluding to, Josh, is the complexity of those patients and making sure that we can generate data and how to best help and treat and monitor those patients.

So in terms of exact design of that trial, that's something that we're working with the top KOLs to help design. What I can say is there is a formal commitment from all of those KOLs who treat many patients with PWS and are excited about exploring and providing more information to aid in who can be the best patient to select for therapy. But to take a step back, I mean, Prader-Willi's 10,000 patients with hyperphagia, no approved treatment option until VYKAT XR was approved a little over a year ago. And so when we made the acquisition, we really had to gain conviction around 3 things to help substantiate the value we're going to provide.

One is, was there a market need there. And that was the easiest item to overcome. The second piece was, is the medicine -- does the medicine work? And what we were able to explore is we could see for a majority of patients, this medicine does work. It does help their hyperphagia. And this is something that was meaningful to patients and caregivers. The third piece is, could we get comfortable around what the discontinuation rate is, and that is a combination of does the medicine work? And then also, are there any safety aspects that should be considered when titrating up.

And so these are all items that we're very fluent on or at least as fluent as you can get through diligence. And so the aspects of what we're talking about now in the public community, these were all items that we knew we were going to do through diligence. Some of the public letters in the media aspect have only shown a light on this, but these aren't surprising aspects for us to want to continue to invest in these programs to ultimately help as many patients with PWS as possible into the future.

But what kind of growth do you think you can deliver from this franchise before addressing the cardiovascular concerns around the product as you intend to with the clinical trial.

So at the time that we announced the acquisition, it seems like a long time ago, but really, it was just a few months ago. We actually closed on the Soleno acquisition in May. So we've had the VYKAT franchise and the VYKAT team under the Neurocrine umbrella, so to speak, for a relatively short period of time, just a few months. .

Ultimately, we shared our belief at that time, and it's unchanged that VYKAT XR will be a blockbuster drug. It's relatively early in its life cycle. It's only been 5 quarters since it was launched. As Matt said, we estimate around 10,000 patients out there with Prader-Willi syndrome. The Soleno team did a great job of getting it off the ground and getting early adoption, but there's still a long way to go in terms of reaching and educating people about hyperphagia, about VYKAT XR and importantly, safe use. And so our goal is very simple.

We want to continue to drive new patient starts. We want to help folks achieve therapeutic benefit. And part of that is managing through the titration process, monitoring for any adverse events and getting to efficacy and benefit. Each quarter, we expect to see more patients on treatment than the prior quarter. And as we shared at our most recent earnings call, the expectation is that we're going to see sequential quarter-over-quarter growth going forward. So we have a lot of optimism about the opportunity here. As Matt said, this is a devastating illness, and this is a medicine that offers real benefit, but we recognize that we have work to do in terms of turning that opportunity into reality.

Just a minute left, a quick question on CRENESSITY, which has had a very remarkable early launch curve. Any signs of it plateauing?

So like VYKAT XR, CRENESSITY is very early in its commercial ramp as well. During our most recent earnings call, we shared that approximately 15 -- we estimate about 15% of the classic CAH population has now been put on treatment. So it's very early days yet, but there's still a long way to go in terms of fully optimizing that market opportunity. So I would say you should expect growth going forward. .

Okay. And no indication it's slowing at this stage?

So we don't comment on a quarter in the quarter. But what I would say is that we continue to see very steady and predictable growth in terms of new patient adds. One of the great things about chronicity is because it's so well tolerated, it also has really strong persistency. So the numbers keep stacking up.

Excellent. I think that brings our discussion to an end. Matthew, Eric, Todd, thank you so much for joining. Looking forward to a lot more updates from Neurocrine. Thanks, everyone, for tuning in.

Thanks for having us.

So awesome. Thank you very much for the post-lunch session, and we made it such that we have a very exciting company with us to make sure you stay awake during the post-lunch session here. We have Neurocrine management with us. We have Matt Abernethy, the CFO of the company; Eric Benevich, the Chief Commercial Officer of the company; and Todd Tushla, the Head of IR at the company. Thank you very much Team Neurocrine, for joining us today.

Well, happy to be here and happy to be called an exciting company. I think that we are an exciting company, and we were talking beforehand. We're treated a little bit like a value company at the moment, but we are a growth company. We have a lot of great things going on right now and really do feel quite fortunate to be in the spot where we have multiple products. We had $1 billion in revenue this past quarter and a lot of data readouts coming over the next 12 to 24 months, as you know, and as CFO, financial flexibility to continue to invest into the future.

So I do feel quite fortunate to have INGREZZA, which this man launched 9 years ago, $2.85 billion expected at the midpoint of the range, growing 13% year-over-year, and that's 9 years into launch. IP protection that takes us out to 2038. So that's really the foundation of what's allowed us to invest and build the company to where we're at today. We have CRENESSITY that was approved in December of 2024. That was for congenital adrenal hyperplasia, the first-ever medicine that's been approved for patients in over 70 years, and we've been able to help 15% of patients at this point in the launch. And so a run rate of $750 million coming out of last quarter with tremendous growth opportunity ahead.

And then last, on the commercial product side, we have VYKAT XR, which came to us from the Soleno acquisition. That is going well, helping patients who are very sick. It's a very difficult disease. And Soleno had done a great job helping many patients with PWS. We take it into our hands now, and we're going through the integration and feel like there's many more patients that have PWS that are going to benefit from a medicine like VYKAT XR. We had $94 million in sales this past quarter. And really, the aim right now is to get through the integration and to be able to put some magic touches on it that Eric and team will be able to deploy and then grow sequentially exiting the year.

On the pipeline front, we have major data catalysts coming over the next 12 to 24 months. The 2 that I'd highlight in particular, the first one is osavampator, that's for major depression. That is an AMPA potentiator. So in the ketamine pathway. So it's a validated mechanism. We had excellent Phase II data. We're running the trial to ensure that we limit the placebo effect, and we're looking forward to having data from our 3 trials in 2027.

The second major program in Phase III is direclidine, and that is our muscarinic agonist, and that is being studied in schizophrenia. That has a differentiated product profile that I think will lend itself to a safe, tolerable, ease-of-use delivery, and that we'll have data in 2027 and 2028. So Mohit, when you think about the transformation we've gone through just the last several years, now $1 billion per quarter. We have meaningful data catalysts coming up and tremendous financial flexibility, 0 debt, $0.5 billion in cash and growing coming off of the Soleno acquisition. We have a lot to look forward to as a company. So I appreciate Wells Fargo being here. I also remember, I didn't say the forward-looking statements. We will be making forward-looking statements. So check out our SEC filings.

So Mohit, with that, I'll hand it back to you. A lot of great things going on.

Awesome. So like the clear sign is like out of 12 questions, I only had 3 of them for INGREZZA. So 9 for everything else. So that's the sign of things. But I have to start with INGREZZA. So I think there has always been this patient -- volume price dynamic with INGREZZA. And you seem to have like kind of turned a leaf there by all the investments that you have done in sales team there. Talk a little bit about how sensitive this market is to commercialization and marketing aspect of things. And then also, like, I mean, how much growth is left in this market because you seem to be growing really rapidly still. And not just you, you and competitor both.

Yes. I guess I'll take the second question first. I think the headline is that there's a lot of growth potential left in the VMAT2 category in tardive dyskinesia. If you think about INGREZZA, it's an unusual brand. It's an unusual medicine in the sense that it's been on the market now for about 9.5 years and still growing at a double-digit clip. And I think that, that is both a testament to the product profile of INGREZZA, very effective, very safe and well tolerated. And certainly, we've seen strong receptivity and adoption over the years. But also, I think it's due to the fact that the tardive dyskinesia category was so underdeveloped, so to speak, at the time that we launched in 2017. So we currently estimate over 800,000 people in the U.S. living with tardive dyskinesia and yet only about 10% of people are currently being treated with either of the 2 VMAT2 inhibitors. So there's still a lot of room for organic growth. And as Matt said, we saw very strong and continued strong growth even in year 9 of this launch. Q2 of this year, we posted record number of new patient starts for INGREZZA, which is once again unusual for a product 9 years in and a record number of total prescriptions. And so it's a testament to the medicine, but it's also a testament to the fact that this is a market that still has a lot of growth potential in terms of getting people diagnosed and treated. And we expect that momentum to carry us forward into '27 and beyond.

The other part of your question was really related to how promotionally sensitive is this. And what we found is that especially in a category that's so underdeveloped and underdiagnosed, very promotionally sensitive. And what we've done over the years is to make what we think are smart investments where we think it makes sense. So for example, we recently, and recently is about 1.5 quarters ago, completed a sales force expansion. And the basis for this sales force expansion, the rationale was really sort of twofold. One was we continue to see the base of VMAT2 writers grow. And at the time that we announced our intention to expand our sales force, which would have been late last year, we shared that the size of the VMAT2 prescriber universe had grown by 30% in just the last 2 years. And so in some ways, as we've expanded our team over time, it's been to keep up with the growth of the market and to make sure that we can call on, especially in psychiatry and long-term care, those providers that are caring for these patients that either have already been diagnosed or exhibiting the symptoms of TD and you haven't yet gotten a formal diagnosis. That's another example of how promotionally sensitive this category is, is the fact that we have, for the last, I want to say, 4 years or so, been running branded DTC on TV. Some of you may have seen our ads running, but essentially reaching out to people that are on antipsychotics that may or may not have been given a diagnosis to explain their abnormal movements, encouraging them to speak to their doctor and ask for INGREZZA specifically.

And every time that we've looked at the ROI of our investment in DTC, it's come out very positive. So we've continued to invest there. So I think that the sales force expansion, the continued investment in DTC are a testament to the growth potential and the opportunity that lays ahead. So 9 years in, we've made great progress, but we've got a long way to go still in terms of fully capturing this market opportunity.

Just think 13% year-over-year growth is what we anticipate. That is inclusive of 4% price headwind in 2026. So this year, 9 years in, all the effort of the team still growing 17% underlying volumes. It's an incredible year for the team and also the many patients that is being benefited from that. And we made an investment last year in access to expand our access and coverage to 70%. And I think the fruits of that labor or investment in rebating is paying off. And so as we think about the future in 2027, in particular, in 2028, ensuring that we maintain that access is a critical aspect to our strategy. And so I think one of the most common questions we're getting coming out of the quarter is, okay, you guys are having a great 2026. What about...

'27. That was my next question.

Yes. What about 2027? So there are 2 pricing headwinds. The first one is statutory. Because we had the small biotech exemption, we were not paying the full 20% catastrophic coverage rebate for Medicare Part D patients. That is moving from a 2% rebate to a 5% rebate, and that's off of the WAC. So that's going to be a known headwind.

The second aspect is as we've been negotiating with plans to preserve our access because our competitor has an MFP where they'll be required to be covered on formulary. We have had to give some modest rebates to be able to maintain that access. But we expect to more than offset any of the price headwinds with the volume that we're going to be able to generate next year in 2027. So we do anticipate being a strong grower next year in 2027, and we'll give more specific color as we get later in this year or early next year.

So the 3% extra impact, that is on WAC. So -- but on net price, it could be more than 3%. Is that fair?

Yes. It could be more than the 3% impact, but you also only have a segment of about 65% or so of patients are actually Med D patients. So it's not on the whole base. But you're right, in terms of Med D, the 3% is closer to 4.5% type of an impact since it is on WAC.

And then you divide there and you multiply by 65% so that [indiscernible].

Yes. Probably similar ZIP code.

Got it. Very, very helpful. So do you see -- so like AUSTEDO -- because we have seen this with some of these players when they cut the WAC price, they see some kind of net benefit and maybe volume growth as well because there are some plans who benefit from the lower list price. Do you see any such thing with AUSTEDO having a lower WAC price versus you having a higher? Is there anything need to...

Yes. I'll make a more specific comment and then maybe a general comment. The general comment is, I think the jury is out in terms of whether MFP negotiated products actually see any increase in access as a result. I think it depends on the brand in terms of what their pre-MFP formulary coverage looked like and to the extent that, that brand or that category was managed by the plans. In this case, so the VMAT2 category, we have 2 medications, INGREZZA and reformulated tetrabenazine. Our competitor has historically had been fairly aggressive in terms of their contracting activity. And as a result, has had formulary access greater than 90% of Medicare lives in most years.

So going into 2027, I think there probably will be an increase in coverage to get up to 100%, but it's sort of marginal. Whereas we are at around 70% formulary coverage this year and our expectation for next year is it will be similar to what it is now. But regardless of what percentage of lives are covered on formulary, it doesn't take away the fact that these are specialty medicines that require prior authorization and any claims that are approved have to meet the criteria for the plan. So we'll see how things play out in terms of increased access. But ultimately, our goal is to make sure that we have parity or near parity coverage. And when we have parity coverage, we find that we do quite well based on the merits of the product profile.

Got it.

We have a great product in a great market, but it's still promotionally sensitive as we were talking about before. So our focus is to make sure that all the sand is out of the gears as much as possible and allowing choice for the prescriber, choice for the patients. And I think over the last 18 months, we feel like we're winning and gaining more share and obviously contributing to the overall top line of Neurocrine.

Awesome. Thank you for that. So maybe moving to the second product, CRENESSITY. So you've done really well in -- like I think you are probably exceeding the peak sales estimate 3 years ago, what they were for this product probably already second time in a row. So...

I haven't thought about that. But I think you're right, when we received approval, we had been saying blockbuster. But I think the Street was $500 million to $700 million. And our run rate right now is, like I said earlier, $750 million. So, yes.

Right. And it happened with INGREZZA as well. I mean, I remember the time the peak sales was $500 million at some point.

Yes. It feels like after the last couple of quarters of sales that the investment community is starting to believe that this is indeed a blockbuster.

Right. And then there's a company which also acquired another company. So they're talking good numbers as well, right? So we'll get to that. So I think like for last few quarters, like every quarter, you would post a good quarter for CRENESSITY, but people would still worry about -- because your comments were a little bit guarded at that point that we don't know what the steady-state new patient add is. So like we were always thinking that there was probably a bolus, it will go away. This quarter, you sounded a little bit more comfortable around the patient add number. So talk a little bit about like what gives you confidence that you are getting to more of a steady-state patient adds here? And what are you seeing in the marketplace that gives you comfort that you could continue to grow here?

Yes. I'll start off by saying that we've been really pleased and maybe delighted with the launch of CRENESSITY. And as you noted, externally, I think the expectations were more modest in terms of what the potential was for this medication. But we've always believed it can be a blockbuster, and we said that upfront at the beginning of the launch. And now we're on a trajectory to deliver on that.

There's 3 things that have been really favorable with this launch. One is the rate of adoption. And as we saw, there was sort of a bolus of patients that got on treatment in the first couple of quarters. So we saw that in last spring with CRENESSITY. But then ever since then, the rate of new patient adds has been very steady and consistent from week to month-to-month and now quarter-to-quarter. So we see this as a very -- I don't want to say predictable, but reliable trend in terms of new patient starts.

The other thing that's been really favorable has been the persistency. And it's one thing to see what the persistency looks like in clinical trials. It's another thing in the real world. In clinical trials, what we saw in the open-label extension was -- well, first of all, in the double-blind studies, over 95% of patients completed enrolled over into the open-label study. And even at a year, it was about 90% that were still on treatment. And then we just recently rolled out 2-year data. And once again, about 90% of those people were still on drug at the end of the second year. The real-world persistency isn't quite as high as what we saw in the clinical trials, but not that far off. And so we feel really good. This is an outlier to the upside with CRENESSITY. So that's been favorable.

And then the third thing, which I think is an important contributor here is the reimbursement. So this is a rare disease drug. It's nonformulary on most plans. It's mostly a commercial and Medicaid population. But we haven't had any real challenges in terms of getting claims approved. In fact, not only have we had a really high claims approval rate, but it's been faster than what we had expected. And as a result, there's been a lower-than-expected utilization of our free trial program. So ultimately, we're seeing steady adoption. The claims are getting approved and they're getting approved pretty quickly. And then once patients get on treatment, they're able to see their androgens come down and/or start to taper down their glucocorticoids, and we're seeing really strong persistency as a result. And so there's still a lot of headroom in this particular therapeutic area.

During the last earnings call, we disclosed that about 15% of the prevalent population was now on treatment. But that means the majority of people are yet untreated. And so we feel good about the progress we've made so far, but we recognize that there's a lot of work to be done to continue to build our CRENESSITY franchise.

Well, I'll tell you, I'm not surprised that Eric and team could deliver on this. They've done a great job. And I think when you take a step back and you say, why is this successful and why is it going to continue to be successful, it's a market that the only option for these patients was to take high-dose steroids for 70 years. So there is significant need.

The second piece, as Eric said, you can see a dramatic reduction in androgens right after you start taking therapy within the first month. So you can see the efficacy, you can see the stabilization.

And then third is the safety aspect. This is primarily a medicine that's prescribed or the majority right now, a little over 50% are pediatrics. And safety is absolutely critical to getting them to try the medicine and then ultimately to stay on the medicine. So those attributes lend itself for us to believe we're going to continue to chug away and drive meaningful revenue growth over the next several years.

And you had asked about whether we were a little bit more guarded early on. I think it helps to have more data, right? And certainly, like we saw with INGREZZA in TD, this is what I call a learning launch. We're building a new category from scratch. And you have certain assumptions that you have going into a launch like this. Many of the assumptions we were on target, and we made good choices, but you learn as you go. And the more runway we have, the more confidence we have in terms of the direction that things are going to continue to go with this franchise. So I feel very bullish about it.

Underpromising and overdelivering makes product life easier.

I'm just trying to manage upwards.

That takes a lot of work.

For sure. So in terms of paint the picture of the market for me a little bit, in terms of the sales force and all, this is not an undiagnosed patient population for the most part as well? Or is it? Or is there a promotional effort that like, let's say, 6 months down the line, you would realize that you can probably -- you need more resources or something like that? Is there anything like that here?

Yes. I'll caveat it by saying we just completed a small sales force expansion. Small, meaning you can count them on 2 hands, kind of number of FTEs. But ultimately, I wouldn't characterize it as an undiagnosed condition or an underdiagnosed condition. I would characterize it as an undercoded or miscoded population. The reason I say that is classic CAH is the more severe form versus non-classic CAH. And for every classic patient, there's 4 or 5 nonclassic patients. Unfortunately, there is no modifier to the ICD-10 code. So there is a general code for CAH. And if we just focused our patient finding efforts on those practices that have CAH, one or more of those patients in their practice, most of the time, we'd be encountering non-classic patients.

And so as Matt said, we try and be smart and efficient in terms of where we focus our efforts. So in addition to having a small sales team, and when I say small, it's only about 50 or so people that are out there calling on these practices in endocrinology. We've put effort behind patient finding using different data sets. So claims data, EMR data, even lab data to help us find people that look like individuals that are already on treatment. So that's been an important part of our launch success. And that patient finding capability gets better over time, the more data that we sort of feed into it.

So ultimately, we feel like this is a category that has a lot of upside potential to it. But it's still early days yet. If this was a child, I'd say it's like a toddler, right? We're 1.5 years into this launch. We're learning a lot as we go. I don't expect that we're going to have to make any -- we just completed a sales force expansion. I don't see that in the cards anytime soon. But what I do see is continued investment in our patient finding capability and making us more efficient over time.

The last thing I'll say is that there's really 3 segments to our business right now or 3 focus areas on the HCP side. So there's a small number of centers of excellence. There's less than 20 in the U.S. These are typically -- these are clinics that are typically affiliated with teaching hospitals, some of which are accredited by the CARES Foundation, which is the patient advocacy group in CAH.

Secondly, and importantly -- so we think that the centers of excellence account for maybe 15% of the patient potential. Another important segment for us is pediatric endocrinologists, and there's about 1,100 of them in the U.S. And typically, they have more experience managing these patients with classic CAH. They're more likely to have patients in their practice. So they're a really important segment for us. Pediatric population, we estimate at about 1/3 of the overall classic CAH population, but we do expect it's going to account for a majority of our business, and it already is accounting for more than half.

And then the third segment is the largest numerically, which is the adult outpatient endocrinologists. That's where things get a little thin in terms of patient count. So 2/3 of the patients are adults. But if they see an endocrinologist, that endocrinologist might only have 1 or 2 patients, if any, right? So ultimately, for us to be successful in the long run, we have to be able to reach, educate and activate patients that are in the community, some of whom don't even have an endocrinologist. So we'll continue to evolve over time in terms of our approach. But so far, it's been very heartening to see the effect that CRENESSITY is having on these patients. And certainly, I think our business results speak volumes.

Got it. Very, very helpful. One last question on CRENESSITY. So how do you think about the competition here? Like you talked about safety here. The competition is -- like the competitor is sitting upstream of CRENESSITY here a little bit. So you have first-mover advantage. They are coming with their drug. I mean how do you think about the competitive landscape 3, 4 years down the line?

Yes, I'll chime in and then maybe you want to add. I'll start off by saying I really like our position, right? We have a substantial head start years, in fact. And I mentioned earlier that we, just this spring and summer, rolled out very impressive 2-year long-term outcomes data. And these data, I think, were very well received in the physician community because it's delivering on the promise of really what they want to see for a treatment for these classic CAH patients. So if you think about the old treatment paradigm of using supraphysiologic glucocorticoids to suppress the overproduction of ACTH and then downstream androgens, you ended up being able to control androgen excess, but at the expense of exposure to high-dose steroids, which we understand has a lot of negative effects on the brain and the heart and the bones.

Now you bring in CRENESSITY, which is a CRF1 antagonist and really what it's doing is blocking the overproduction of ACTH and therefore, the downstream overproduction of 17-OHP and [indiscernible] and other precursors. So ultimately, what CRENESSITY does is to restore balance. It's allowing the dysregulation of that HPA axis to get reregulated, reduce the amount of ACTH and then therefore, the overproduction of the androgens. And as a result, now we're seeing patients being able to bring down their high-dose steroids, right? So you think about the mechanism of CRENESSITY, it's an upstream mechanism versus you're referring to atumelnant, which is an investigational medicine that doesn't reduce the amount of ACTH, it blocks it at the adrenal gland. So it's unknown, I think, what ultimately the clinical profile is going to look like for that investigational medicine. It's very early days yet. There's not a lot of patients that have been treated with it. And certainly, we don't know what the consequences might be of sustained elevated and uncontrolled overproduction of ACTH because that medicine doesn't reduce ACTH, it simply blocks it at the adrenal.

So I think data will tell the story. And certainly, we feel very good about the long-term safety data that we've generated, both in adults and in pediatric patients and having a several year head start ability to penetrate the patient population to get people on effective treatment. We know from other categories that if patients are being well controlled on their current regimen, if they're tolerating it, it's really hard to move them off and displace them. So like I said at the beginning, I feel really good about where we are, but we'll continue to execute on our plan, and we'll see how things shake out in terms of data over time.

Yes. I would just say people should be cautious in trying to compare small numbers of patients, different levels of baseline. There's nothing that we've seen in their data that would make us feel like CRENESSITY would be displaced.

Got it. Moving to VYKAT. Thank you for all the details on CRENESSITY. So there has been -- so this deal has been a little bit controversial in terms of people are still trying to understand what is the peak sales, how it could look like and there are questions around persistency and all that. Can you tell us like what people are missing, which you saw in this asset and you think that this asset could be a great deal?

Yes. From a strategic perspective, it fits in quite nicely with the rare endocrine franchise. It also adds a durable growth asset, and it allows us scale, and it's already a profitable product even at a $400 million run rate. So for us, when we did the acquisition, we were eyes wide open in terms of some of the challenges that may come with it and some of the things that we could do to overall enhance the offering of VYKAT XR. And so a lot of what we're working on now or identifying or finding is very consistent with what we would have thought going through with the acquisition. We knew the most important aspect is, is there going to be steady new patients coming on to therapy? Is there a benefit? And the good thing is the last 2 quarters, there have been steady new patients coming on to therapy, and this is a devastating disease.

The second piece is you could see in the data -- as we looked at discontinuation rates, you could see in the data from those who started early in launch in about month 6 to 9 after month 9, you had about a 20% to 25% discontinuation rate. And so that's something that we have indicated to the market that, that should be the base level expectation on discontinuation. So for us, as we think about executing, executing and helping identify the right patients, executing and helping ensure there's appropriate monitoring through the titration process to ensure that as many patients with PWS who are appropriate to get treated ultimately get treated.

So we have had a couple of straight quarters of flattening of sales. We had $94 million this past quarter. We do know that we're working through the discontinuation from the bolus of patients. So there's a bit of a tail there. And once we're through that tail, we feel very confident that the commercial initiatives that we have underway are going to lead to sequential growth the rest of this year. So my comment is let focus on us executing, and our numbers are ultimately going to speak for themselves in terms of the deal and the value there. And we see this as a tremendous need for these patients fit strategically for Neurocrine, and we do have a lot of enthusiasm within this product group.

Thank you very much. Todd, what are we going to learn at the event you are hosting at the end of the year?

Yes. Sure. Thanks for the plug there. So in early December, we will be hosting an R&D day that will focus on our neurology and immunology strategies. Neurology, I think, is relatively well understood, some of the pipeline assets we have, less so on the immunology front. So we're looking forward to sharing some of that information with the investment community then.

Got it. So Matt, the question for you is, based on all that, do you think you have enough pipeline to work through? Or do you think there is still more -- like you could deploy more cash?

Well, first of all, I feel fortunate, like I said at the beginning, that we have 3 commercial products that are generating significant cash flow. And those cash flows allow us to reinvest back into the pipeline at a rate of 30% to 35%. That's where we believe that is the right level of reinvestment to lead to sort of a flywheel of future new products. We've been fortunate to have quality pipeline, and we have a lot that investors haven't seen, which we'll highlight at R&D Day. And so we do have a lot to invest in internally. So that is our second priority behind commercial and driving revenue growth.

And then third, we do have a clean balance sheet. We do have capacity to do a business development transaction. But sitting here right now, we've got a lot in our hands right now to execute, help a lot of patients get to some Phase III trial data. So we're always looking. But right now, very much focused on executing what we have.

On that high note, thank you very much for joining us and all the best.

Thank you.

Thank you.

Hello, and welcome, everyone joining today's Neurocrine Biosciences Reports Q2 2026 Earnings Call. [Operator Instructions] 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 2026 Earnings Call. With me today on the call are Kyle Gano, Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric 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 our 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 U.S. 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'll jump into Q&A. Now I'll 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 net 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 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 3 of these priorities.

The commercial business continues to generate durable growth. The pipeline is advancing at 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 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 III data readouts for osavampator in major depressive disorder and direclidine in schizophrenia.

Together with the continued integration of VYKAT XR, these mile zones represent the NIC chapter in Neurocrine's growth and reinforce our confidence in the opportunity ahead. Before I turn the call to Matt, I'd 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's ahead.

With that, I'll turn the call over to Matt.

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 a partial quarter contribution from VYKAT XR following the close of the Simeno 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 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 Solano acquisition. Integration has progressed well and 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 and the opportunity to help many more patients with PWS over the years ahead. Pro forma total revenues were $998 million for the second quarter 2026 when including full quarter VYKAT XR sales. This performance underscores the strength and increasing scale of our commercial portfolio across 3 highly differentiated products.

Turning to our financials. With the Soleno acquisition now complete, I'd 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 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 and 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 Benevich, our Chief Commercial Officer. Eric?

Thanks, Matt. Just 5 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 3 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.

So 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 [indiscernible] associated with Huntington's disease.

CRENESSITY also delivered another excellent sales quarter generating $184 million. The launch continues to follow a very consistent pattern, steady pace of new patient starts, high persistence and compliance and favorable reimbursement. Adoption remains balanced across both adults 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 1 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 remain 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're 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'd 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'll turn the call over to our Chief Medical Officer, Dr. Sanjay Keswani.

Thanks, Eric, and good afternoon, everyone. I'll begin today with highlights from [indiscernible] 2026, where we presented important new data for both CRENESSITY and VYKAT XR. Starting with CRENESSITY, we presented 2-year data from the ongoing catalyst open-label studies in pediatric and adult patients with classic centodrenal 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 3-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 III top line data for sovampator in major depressive disorder in the second half of 2027. We also remain on track to report the first Phase III readout for [indiscernible] in schizophrenia in the second half of 2027 and for the second Phase III 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'll hand the call back to Todd.

Excellent. Clay, let's jump into Q&A.

[Operator Instructions] We will take our first question from Paul Mattis with Stifel.

Congrats on the execution on 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 and any feedback you're getting or any insight you're getting into access dynamics with the [indiscernible] MFP being enacted?

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, and we expect that pricing to remain relatively consistent year-to-year as we think about the second half of 2026.

In terms of 2027, obviously, 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 the path moving forward is not just us but others. -- that there'll be a place for MFP adjacent products for Medicare beneficiaries. And if you couple that with the fact that we're the market leader in the CMD 2 category, there's going to be ample opportunity for us to have the same access that we have here moving forward, strong access through '27 and '28.

So right now, it's all leveraging what we can with our team I would be remiss by not calling out that this market overall continues to grow double-digit year-to-year. So there's a lot of room left in this market, and we'll continue to focus there.

Kyle, any thought on how much additional cost maintaining this access might be next year or beyond?

No, I think it's too early to make a call on that, Paul. We'll have more to comment on that later in the year. Right now, it's been a great first half, and we'll continue to build on the momentum that we've seen. .

We'll take our next question from Phil Nadeau with TD Cowen.

Ours is on CRENESSITY really strong quarter with revenue up 20% quarter-quarter. It sounds from the prepared remarks, like everything was steady as you go. So steady patient adds, good reimbursement no bolus. I'm curious whether that interpretation is correct. Were there any onetime issues in Q2 that made it particularly strong that we shouldn't extrapolate into the back half of the year? Or is this pace of revenue growth reasonable for the next couple of quarters?

Yes. I think characterizing Q2 is really an extension of what we've seen earlier in the launch, a very steady and consistent pattern of new patient adds. We continue to see adoption across all the segments that we're focused on. The pediatric endocrinologists, the adult community endocrinologists and those centers of excellence. Really pleased with the fact that we estimate now that we've got about 15% of the addressable patient population on treatment. And certainly expect to see continued strong momentum as we move forward.

We'll move next to Tazeen Ahmad with Bank of America. .

Mine is on VYKAT. So this quarter's results of $94 million, it's roughly flat sequentially. I just took over this franchise. So -- can you maybe just talk to us about some of the things that you're doing in order to accelerate the launch trajectory now that the franchise is fully under your control and maybe just give some specifics about some of the things that you're doing now that you think could have an effect in a quarter or two?

Yes, Tazeen. So First of all, I'll say that the results that we saw in Q2 were aligned with our expectations coming out of diligence. Certainly, I think we're still learning a lot about the the hyperphagia market opportunity. But we've learned so far, it just reaffirms our convictions about the potential for this medicine to be a blockbuster. And we're still in the deep in the midst of our integration process here. But ultimately, I think the fundamentals are what matters, continuing to find patients to introduce VYKAT XR to the providers that care for them, primarily in endocrinology and then provide good education and guidance around how to select appropriate patients, how to help them through the titration process and to achieve good outcomes.

So I feel very good about the opportunity with VYKAT, everything that I've heard from the physicians that have experience with it. is very positive and certainly look forward to continuing to drive the launch of this product that's still very early in its commercial ramp.

And Tazeen, this is Kyle. I'm just reminded as we talk about VYKAT XR. This is our first earnings call post close, where we've had a discussion on this. So I do want to bring up the merits of the acquisition and the product itself. -- there's great strategic and financial fit here for us. VYKAT XR is a first-in-class, first-in-disease medicine for Prader-Willi syndrome. -- very much of the same category that we've seen for INGREZZA and CRENESSITY upon their launch. So we're really excited about the strategic fit there.

Obviously, we're able to expand on our endocrinology franchise moving forward. But as a product that comes out of the neurocrine umbrella earlier in its launch, not only do we get to treat many thousands of patients under Neurocrine, which is exciting. We also get to reap the financial reward of maximizing all the revenue growth that gets added to our top line as well as diversification. So there's a lot of financial fit there as well, not to mention that we believe the IP estate goes out to the mid-2040s. -- so it's durable as well.

So overall, we're really excited about what we have here. I think Eric called out some of the points that we're looking at now, and we're excited to bring this into the same blockbuster category that we see for CRENESSITY and INGREZZA moving forward.

The only thing I'd 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. So -- we have a ton of confidence in the team, the product and the opportunity to help many more patients with PWS. So we're encouraged as we think forward. .

We'll move next to Brian Skorney with Baird.

Congrats on a great quarter. Maybe I jump in with a question on VYKAT as well. I think during the slides, there's a lot of debate on sort of the differences between sort of new start boluses and sort of dropouts and as you're sort of getting your head around things right now. Maybe you can just kind of characterize what you're seeing out there in terms of like how much of initial bolus numbers are really kind of affecting the dropout rate that we see right now? And when do we -- do you think that there's an upwards equilibrium of new starts and dropout rates to think about in the coming quarters?

Yes. No, I appreciate the question. This is Kyle. I think what we've seen on a new patient start basis is a pretty steady flow of new patient starts over the past couple of quarters. So that's good. That's right along the lines of the expectation we had after completing diligence on the company.

In terms of discontinuations, obviously, with a bolus of patients at the launch. We do see some of those distinuations being pulled through as time has gone along, but we expect to see the ultimate rate settling into what we would see with other orphan medicines in the 25% to 30% range. So that's what we'll be looking at moving forward. But ultimately, our goal here is you'll see sequential growth as we exit 2026 and looking at that in future years. So we're right where we need to be right now. I think more importantly, I'm really excited to see our team bring its resources and the support to the Soleno team now under the Neurocrine brand. and take all of our learnings collectively and make this particular medicine be the best that can be moving forward.

We'll move next to Mohit Bansal with Wells Fargo.

Congrats on a great quarter. So I just wanted to understand your VYKAT commentary a little bit better for next few quarters. So you're saying that the patient new basin start, you expect it to be steady. So wondering I'm wondering that -- so are you saying that the sales could be choppy a little bit. But again, what you are saying is that as you exit 2026 you could see you are confidently driving sequential growth, but just wondering that how are you -- how would you characterize the next few quarters as you integrate the business into your own business.

Yes. So as we move from Q3 to Q4, we would anticipate seeing some sequential growth. And then as you think about going into next year, it's really about that momentum. But as we've talked about, it's that mix of new patient additions and being offset by the discontinuations, and we feel like we'll be through the bolus of the discontinuations here in this quarter. So we would expect to be sequential growers as we've said in Q4 and beyond.

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

Just wondering what some of the physician feedback has been on some of the 2-year CRENESSITY data in both adults and peds. And how these data could impact kind of uptake of the product?

Thanks, Anupam. Yes, we're really pleased about the feedback we're getting from the physicians respect to our 2-year data that we recently presented at Endo. Of note, this included both adult and pediatric data and indicated long-term benefits with respect to both antigen reduction and also [indiscernible] corticoid steroid reduction as well. So really, really excited by that feedback. Also, this is in the context of a really nice safety tolerability profile. So of note, at this point, we have well over 35,000 patient weeks of exposure. Again, very important, bearing in mind the breadth of the population that we're treating with CRENESSITY.

We'll move next to Cory Kasimov with Evercore.

So given the recent acquisition of potential future competitors -- can you just talk a little bit about the clinical plan and anticipated time lines for your next-gen CRENESSITY assets to the extent that they're needed to help defend the franchise in the future? .

Yes. Thanks for the question. We do have our next-generation medicine going through clinical development right now. That's MPIP-435. This is a protein-based therapeutic peptide that we're developing that would be a once weekly or less frequent dose medicine for patients wanting that particular option of not having to worry about taking the medicine on a day-to-day basis.

It may offer additional advantages above that in addition to that because of the PK profile. So we have great Phase I data that's come out of the program thus far, and we look forward to setting a Phase II study shortly and bringing that to patients as quickly as we can. I will say going back to CRENESSITY, just for a moment that it's set a really high bar. It's got great efficacy, great safety, great tolerability and what an outstanding label that we're able to get from the clinical program.

We've got multiple formulations, a wide spectrum of age ranges that are applied to the medicine. And now, as Sanjay just mentioned, multiple years of clinical data that we'll be able to lean on in a multiple year head start. I say this because -- this high bar not only makes it more difficult for our competitors, but even our own programs in our clinical portfolio. So we're really excited about the position that we have right now with CRENESSITY. A lot of room still to grow. We got about 15% of the market currently under CRENESSITY Care, and we're going to continue growing that out over time to become that standard of care for patients.

We'll move next to Jay Olson with Oppenheimer.

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 directly, do you expect the next year. Do you have the commercial infrastructure that you would like to have to launch those 2 products? Or I guess, how are you thinking about building out that organization?

Thanks, Jay. So the way I would characterize it is that we have a really good foundation for future infrastructure that would be required for either osavampator or direclidine or both. As you know, we have a substantial footprint today in psychiatry as well as in long-term care and a very strong reputation with those provider communities. .

If you look at the profile of either of those 2 medicines, it might require us to bolster our teams or to do some reorganization work, but I think that we're in a very good place in terms of being able to leverage our existing foundation. And you may recall that when we were talking 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 our INGREZZA business, but also to set us up nicely for future launches of our Phase III psychiatry assets.

So I don't anticipate any near-term changes to our footprint. But certainly, I think we're well positioned to accelerate those adjustments to our commercial platform on the other side of positive Phase III data

I think that would be a great day if OSA, in particular, is a positive as you think about going into primary care to be able to help those with major depressive disorder. That would require a step-up in overall investment within SG&A and 2028, 2029 type time frame, but I think you'd agree with me that would be something we'd all enjoy to have the privilege of doing.

But in the near term, I think we're focused on executing as Eric said, with INGREZZA and continuing to expand the impact we're having across the psychiatry community today.

We will take our next question from Akash Tewari with Jefferies.

A few questions on your obesity efforts. So for 2118 8, the CRF 2 asset, what do you expect for monotherapy weight loss in muscle preservation in your Phase I trial when you get into obese patients -- and then for 1968, your GGG, is that already in the clinic? I'm surprised you're able to start a combo trial with the CRF this year without any monotherapy data?

And then finally, when we think about the combo, any sense on when we'd be able to get the first full cut of data there.

Thanks so much for the questions. With respect to our CFR 2 agonist, Obviously, we're very excited about this molecule. This is our first obesity molecule in the clinic. We're currently accumulating a Phase I data and we're due to have a signal-seeking study readout next year with respect to both weight loss and also lean mass preservation. So that's really exciting for us.

I'm not sure I'll comment specifically on the exact bar we're looking at. But clearly, we're looking for a robust effect, not just on weight loss, as I said, but also muscle mass preservation. We have other molecules behind CRFR2 with respect to our obesity portfolio, which will be shortly entering the clinic.

We'll move next to Josh Schimmer with Cantor.

How are you thinking about the ability to smooth top and bottom line growth through the 2029 INGREZZA IRA implementation year? And just the answer to that question depends on your Phase III readouts next year. How do you expect that to play out under various pipeline scenarios?

Thanks, Josh. This is Kyle. Obviously, we're keeping an eye on our MFP to IRA outcome. Those discussions will start next year, and certainly, we'll keep everyone updated once we know our MFP that would be applied to INGREZZA in 2029. But I think overarching what we see in the evolution of our commercial portfolio are medicines that are growing over that time frame as well. .

So we think we'll end up being in a good position there to see continued top line revenue growth through the end of this decade and beyond. On the earnings side, or I should say, on the income or an expense side of the equation, we also have Phase III trials that will be sunsetting over that same time frame as well in our pipeline, switches more to an earlier mid-stage type -- pipeline, excuse me. And I think that's going to be more or less a view into a steady state portfolio as we get to the end of this decade. And it all goes back to what we shared at the beginning of this year in terms of expectations around new Phase I, Phase II and Phase III starts. So I like what we have in terms of the company and how we set it up, and we'll keep people informed over the next couple of years as we get closer to 2029.

Yes. EPS variability is really going to be based upon, as you said, the impact of the IRA implementation in 2029. But on the expense side, as I said earlier, is if osavampator is positive, we will spend in advance of sales to build up that sales force in that market. So I think you'll have episodic investments that may lead to some earnings variability, but our North Star is to grow revenue over the long term. And I think from those investments, we'll have very nice earnings growth as you look into the 2030s.

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

It seems like you're seeing really nice growth in the prescriber base for CRENESSITY. I guess I'm curious, what proportion of your target practices are still not using chronicity at all. What is -- at this point, what are some of the barriers for them here at this stage of the launch? And how might you expect to overcome them?

Yes. It's an interesting question. I think the way I'd characterize it is that we're seeing really nice expansion of new prescribers each quarter. And at this stage, we're still, I'd call it, early in the overall commercial ramp. And so there's a long way to go. .

The reason I sort of qualified my comments a little bit is that as we learn more about this market and with our patient finding opportunity, there is some movement in and out of our target list over time. But overall, the feedback has been very positive. Most of the physicians that have tried CRENESSITY have only treated 1 patient so far. And I think that's a function of 2 things. One is the flow of patients into their practices, especially in the adult setting, patients only come in maybe once a year. So it takes time if they have more than one patient to see them.

And then the second thing is really this what we call the long tail of this market, there's really not that many practices that have more than a handful of patients, and there's a lot of lot of physician practices that have only 1 or 2. So ultimately, we feel really good about the growth that we've seen, and we talked about this very steady and consistent pace that we're on. And I think that's mostly a testament to the patient finding efforts and, of course, the execution by our team.

We'll move next to Sean Laaman with Morgan Stanley.

My question is on the launch trajectory of CRENESSITY. You keep handling handily beating our numbers. I'm just wondering how the drug performs against your own internal expectations? Is it falling in line? And if so, when do you -- when would you be comfortable giving us guidance that's beating your expectations internally? What are some of the key areas that it's doing that.

I would say it's quite close to what our internal expectations have been. But with that said, we're learning a tremendous amount each quarter. I'd say from the beginning of launch, we've been very encouraged by the feedback that we're getting by clinicians and then also the high rates of persistency have been quite strong and we're seeing a lot of the benefits and hearing those back from clinicians in regards to the longer-term outcomes and the benefit there.

So we're still really quite early in launch, only 6 quarters in it's premature for us to start thinking about giving a more formal guide. But I would say our internal models are getting closer to the numbers that we're delivering, but still, I'd say, to the team, keep over-delivering. They've done an incredible job developing a new product that's in the market for the first time in over 70 years and a lot of learning going on and a lot of excitement. So kudos to the team well done, and we'll address the guidance piece to your question as we get later in the year to next year.

We'll move next to Marc Goodman with Leerink Partners.

Yes. On VYKAT, I just want to make sure I understand, Matt, what you're saying. Are you saying that we should expect sales to be roughly about the same in 3Q was 2Q and then 4Q should show some incremental growth versus 3Q. And the reason is because of this gating issue of timing issue, whatever you want to call it, of patients discontinuing from the bolus that occurred so called 6 months ago or so, something like that. And then just if I could, just another question. Just curious what the R&D team thinks about any learnings from the MAP like data that reported earlier this week.

Yes. Regarding VYKAT, I think you said it correctly, but I would go back and just say we've only had a product for 6 weeks. And it's a market that we've -- we are incredibly excited about. We're hearing great feedback from clinicians alike. So as you said, this is more of a function of getting through some of the bolus of discontinuations and then implementing some of the things that Eric laid out in terms of driving additional patients being helped with their PWS. So from an expectation perspective, I think what you said aligns with what I was trying to describe.

And I'll take the [indiscernible] like question. Maybe just to start with where [indiscernible] left off on LICAT. I just want to make sure everyone appreciates that we are going through an integration of the company. And obviously, that can be a little noisy as you work through that, just as a sales force expansion can be. But as you know, we are quite skilled in the art of sales force expansions across INGREZZA and CRENESSITY, and we've all come out on the other side much stronger, and we believe that will be the case for VYKAT.

In terms of Mapi, we did see their data come out here in the past couple of days. I think it's a good data point for further validating the orthosteric approach for using muscarinic agonist, although their approach is entirely different than our own, and it's worth calling out those differences here. very similar to COBEMFI, the approved medicine that utilizes the muscarinic mechanism. The map light approach also requires an add-back muscarinic antagonist to manage side effects.

Our approach with direclidine is the only approach a first-in-class approach using a selective M4 agonist that works just all right flying by itself. It doesn't require anything to add back for mitigating side effects. But we know at the end of the day, efficacy gets your foot in the door. It's really what you do on the other factors that allow you to win, things like safety and tolerability things like ease of administration, and that's where direclidine is really going to shine.

What we saw in our Phase II trial, very clean GI profile, no weight gain, no food effect once a day, no titration. That's how we're going to win here just as we've seen with other antipsychotics across the spectrum from low to high efficacy. They all went on safety, tolerability and ease of administration.

We'll move next to David Amsellem with Piper Sandler.

VYKAT question. Can you clarify how much of your discontinuations are from edema and regarding the management of edema -- what are you going to be doing to sort of help patients and practitioners manage through that so as to minimize discontinuations due to fluid retention.

Yes. This is Kyle. I don't think we're going to get into the nature of the discontinuations. But I will say, just like any medicine, especially one that you're inheriting, acquiring is that there's always the opportunity to improve messaging and education. I know that's going to be a big part of what our team looks at. And the messaging in education is the same, again, across all medicines that we look at for caregivers, for patients and for physicians.

And when it comes to VYKAT XR, obviously, you look at even something as simple as a dosing regimen. It's a titration schedule that's required through a weight-based mechanism. That's unique. So making sure that you can educate across that appropriately also setting the right expectations in terms of efficacy. This is not like a pain medicine where you see relief the same day you take the medicine. It can take months for hyperphagia to improve, so these are all things that we're working through right now, and we'll continue to work with the team to get in a really good spot as we look to fully bring the Soleno team on board here to Neurocrine and leverage the learnings on both sides to do what's best for patients here.

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

So maybe just on the perspective of CRENESSITY, I wanted to get your thoughts on the competitive dynamic here. So for tumor which what I acquired, they did note that there were 7 MFT [indiscernible] cases versus the prior disclosure by Kinetic, which was 2 cases, but they still end up paying a pretty hefty premium. I just wanted to understand from your perspective, what do you think drove that? Is that something that ultimately signals to you that [indiscernible] can be a very big market? Or is it possible that the LFT elevations actually be a nonissue.

Yes. Thanks, Ash, for the question. It's really hard for us to comment on the competitor or any competitors in the spaces that we work in. All I can share with you is the excitement that we have around our own medicine. I'll go back to the CATALYST data that we have 2-year data, 35,000 patient weeks of exposure and accumulating over time where we're able to show 70% of patients at the 2-year period were on a physiological dose of a GC and 70% of patients were at a physiological concentration of their androgens. That's a pretty good air to be in for CH and really for any medicine, and we'll continue to hopefully accumulate more data of that kind and type as time moves along to show the real benefits for patients.

We will take our next question from Myles Minter with William Blair.

Congrats on the I just wanted to hear your thoughts on the CRENESSITY sort of peak opportunity here. Are you still describing that drug as a blockbuster opportunity? I only ask as recent acquisition seems to put your competitors saying that, that might be a $3 billion market, a [indiscernible] on an annualized basis, the best part of 3 quarters of a billion dollars already. And Eric, you said you're really, really early on in the launch. So I'm just wondering whether a blockbuster drug is the right way to think about this or like that multibillion dollar sort of claim that the competitive acquisition made is more relevant here.

We're going to take this to the highest number that we can and help as many patients as possible, Myles. I think you said it quite well. The trajectory so far has been very, very strong, very nice, and I think it reflects the great need in the market, the great product we have and also the great team. .

When you look back over time at other rare disease launches like this, you can see peak penetration between 30% and 50% for chronic type medicines. So when you look at what the peak opportunity is, that's the ZIP code. I know that's a pretty broad range, and we're going to work to getting to as high up in that range as possible. But yes, you can get to a really nice figure quite quickly, but it really comes at the end of the day, focus on helping as many patients with possible for their CAH.

We'll move next to Rudy Li with Wolfe Research.

I have a question for the pipeline. Just a quick follow-up. Given the trajectory of [indiscernible] and the feedback I'm just curious on your thoughts on the Mascarenas opportunity and maybe just talk about your overall strategy, building a [indiscernible] franchise because you have multiple products maybe targeting different indications. .

Thanks, Rudy. This is Samir here. I really appreciate the question on the Moscone. So we've got 4 shots on goal here with our Muscronic franchise. -- directly in NBI -568, that's in Phase III right now for the treatment of schizophrenia and Phase II bipolar Phase II study right now ongoing in bipolar mania all studies remain on track time line-wise there.

Our next-generation NBI 570 that's an M4 preferring M1 M4 dual. Right now that's in a Phase II study for the treatment of schizophrenia, where we see opportunity there is the potential for a long-acting injectable. This class of medicines that has generated significant commercial sales for other companies here, and we view this as the one and only potential LAI within the muscarinic space. [indiscernible] 569 that's earlier right now, it's an M1 M4 dual as well that we're studying in an early study in Alzheimer's disease. The view there is to take that into Alzheimer's disease psychosis, and we've got a fourth compound NBI 567 that will be soon starting a Phase II study in Alzheimer's cognition. Overall, we feel like we have a best-in-class muscarinic franchise here, really looking forward to getting the direct within data next year and going from there.

The only thing I would add to that, these are all -- these are all orthosteric agonist that don't require any add-back to block side effects. They are selective on M1 and M4, so they're unique in that regard and puts us in a really unique space in the muscarinic category.

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

This is a bit of a strategic one that has long-term financial implications. So with each commercial product you now have, there's typically been an aspect of pioneering commercialization with the first approvals for the respective indications. But your pipeline indicates -- includes candidates in large markets where not only do several products exist, but the competitors are typically much larger organizations as well. So could you share any targets for what a steady-state longer-term operating margin target might look like for Neurocrine as you yourself grow a lot larger?

I'll let Kyle talk about the [indiscernible] -- or sorry, the strategic aspect of how we're going to compete against larger guys in these markets. But I also would comment that Eric and team have done a heck of a job in developing markets and feel like we can compete quite well with medicines like the muscarinic and also the [indiscernible].

We're not going to give long-term operating margin guidance, but you can see we're becoming quite a profitable company where operating income on a non-GAAP basis is over 30%. So I think our focus right now is invest on SG&A to grow sales as much as possible and then also to advance the pipeline and be able to get to these opportunities where we can compete in some of the larger markets where we believe that we can win in.

And maybe just to add to that, this is Kyle, from a strategic perspective, what we're doing is setting up the pipeline to have a portfolio of not only first but best-in-class medicines across urology, psychiatry and endocrinology as well as immunology. These are areas that we think we can compete in, in a number of ways, either through the molecules that we design or ultimately in ownership of particular mechanisms that are unique to Neurocrine. We've talked about obesity on this call as an example, and we're leading in this category, we believe, with a CRF2 agonist, which is quite novel. .

And of course, we know a lot about the biology being this being -- this being the founding biology of the company. So ultimately, what we do by using this approach is diversifying risk across different therapeutic areas. We appreciate all the psychiatry programs that we have, and we believe we have all winners there. But we also know that the full profile of those assets are fully known until the other side of Phase IIIs.

We balance that by actually being in some of these larger disease states like obesity, where we have biomarkers, objective endpoints and the ability to see data in Phase Ib studies. So overall, I think what we've done is we've really leveled out the portfolio and ability to play for some big wins on some larger opportunities as well as stay with within our wheelhouse of more traditional neurotic programs as well that you're used to seeing. But overall, it's going to set the company quite well up over the long term.

We'll take our next question from Danielle Brill with Truist.

A follow-up on CRENESSITY. So you guys highlighted really strong growth in your prescriber base, but can you comment on trends in repeat prescribing? I think you noted roughly 2/3 prescribers of only were in a single prescription on your prior call. Are you seeing existing prescribers begin to treat more patients? Or is growth still being driven primarily by adding new prescribers? And then as you look forward, where do you see the bigger opportunity expanding prescriber breadth or penetration from the existing base?

So I guess the way that I would characterize that it's a little bit of both in terms of depth versus breadth. We still are adding a substantial number of new prescribers each quarter. And to date, most of the prescribers that have tried chronicity have only treated 1 or 2 patients. Now this is a market that is a [indiscernible] wide in the sense that there's a limited number of practices that have more than a handful of classic CAH patients. And then there's a lot of CAH patients that are out there in the community and a lot of the physicians that treat them might only have 1 patient.

So I think that we will continue to see this dynamic of a lot of physicians having only 1 or 2 patients under treatment. But at this stage of the launch, only about 1.5 years into it, essentially, we're still seeing a lot of adoption by new prescribers. And we think there's a ways to go in terms of building that prescriber base over time.

We'll move next to Igal Komavitz with Citi.

Congrats on a strong quarter. My question -- I had a curious question on CRENESSITY. Regarding the rarer subtypes, specifically the 11 beta-hydroxylase patients -- what's the status in terms of progress getting the payers to cover that subtype? I'd be curious there. And then quickly on VYKAT, do you have any comments with respect to ex U.S. strategy? And where does that fit in terms of your relative prioritization with regard to that the asset?

I just want to reinforce that the the coverage and reimbursement for CRENESSITY has been excellent and has really exceeded our expectations really from the very beginning of the launch. From a coverage perspective, typically, what's required, this is a specialty medicine and the physician has to fill out our prior authorization. Typically, they're required to attest that the patient has classic CAH usually not defining what particular subtype genetic subtype they have, that they're 4 years of age or older and that they're currently on glucocorticoids.

For the vast majority of patients, those are the coverage criteria. And we've seen really high claim approval rates. We've seen that claims tend to get approved pretty quickly. and that it's very affordable for patients with the majority of patients, actually over 90% paying $10 or less per month. So really good on the reimbursement side.

Yes. In terms of VYKAT XR in ex U.S., our first priority right now is to fully integrate the team and make sure that we're doing everything that we can to help the patients here in the U.S. with the approval. As you may recall, Sono did withdraw the EMA filing for review during the closing process of the transaction. So I think once we get our hands around the integration and complete that and move the medicine forward here, we'll go back and revisit the opportunity in territories outside the U.S.

In the meantime, for Europe, all patients that are currently on VYKAT XR will continue on their treatment, and we'll look at some name patient program types of vehicles to help the patients they may want to have access in that region.

We'll move next to Daman [indiscernible] with Guggenheim.

So on the Frederick ataxia program, what we expect from the 2027 Phase I readout more in details tissue compartments will report frataxin protein levels from [indiscernible]? And what would you view as a proof of mechanism. And also, will you report also clinical results, together with the biomarker data?

No, I appreciate the question. We're excited about the Fredetaxia gene therapy program here at Neurocrine. We'll be looking at starting clinical development later this year. And then once we get that study up and running, we'll look forward for actual data in patients towards the end of next year. The nature of what we'll be sharing, I think we'll determine that over the next couple of months into the beginning of the year. And hopefully, we'll have some more commentary around our R&D Day in December.

We'll move next to David Hoang with Deutsche Bank.

Congrats on the quarter. So I was curious to get any feedback that you guys may have or your latest thoughts on the competitive dynamic and threat from your competitor in the VYKAT inhibitor space. So I think your competitor also printed a very strong quarter. They have talked about $3 billion in peak sales and a continued uptake of the Astero XR product. And so as you look over the next few years, recognizing there's some pricing dynamics there. Just what's your, I guess, thoughts on how the market share may play out between 2 products. And if the pie will continue to keep growing in TV or there'll be any share shift between products.

Yes, I'll just start off by saying that the 10 years, almost 10 years into the launch of INGREZZA, the TD market continues to grow very rapidly. We see that there's still a substantial number of untreated patients and even undiagnosed patients out there. And so our focus remains on driving awareness, driving diagnosis and then, obviously, being able to educate providers on the unique benefits of INGREZZA.

And I think that and obviously also continuing to provide strong reimbursement support. And the results speak for themselves. INGREZZA has been the most preferred and the most prescribed VMAD 2 inhibitor since day one and continues to do so. And we've been looking at the most current quarter with strong market growth for VMAD-IIs, INGREZZA outgrew the market. And so we can expect to continue to see that momentum carry forward through the balance of this year.

And as Kyle said earlier, from a coverage and reimbursement perspective, we expect to have good coverage in '27 and '28 that would enable continued strong growth in terms of adoption. So overall, just very pleased with our performance, and we'll let the results speak for themselves.

We'll take our next question from Evan Seigerman with BMO Capital Markets.

I want to touch on osavampator. And may it's clearly a large market. You're very enthusiastic about it. Just walk us through kind of what you're solving for that the existing antidepressant strategies really don't do well -- and what do you mean to show in a Phase III for this truly to be viewed as differentiated rather than incremental.

Yes. Thanks for the question. So just for context, osavampator, is at [indiscernible] and we think provides unique advantages from a differentiation point of view from the existing standard of care. So with respect to efficacy, we're expecting greater efficacy, particularly in individuals who have already being unresponsive or not so responsive to a whole slew of other antidepressants with different mats of action.

But secondly, and also just as importantly, a really nice saving tolerability profile. That was one of the most impressive things actually respect to our Phase II cavitary data was the safety tolerability and the implication is long-term compliance with this medication.

And that does conclude the question-and-answer portion of today's call. I'd now like to turn it back to Kyle 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, certainly at the investor conferences and meetings throughout the remainder of the year. Until then, thanks again for your support and interest, and have a great afternoon and 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.

Welcome to the Goldman Sachs. [indiscernible] You don't have any questions, yes.

Very good. Well, thanks, everyone, for joining us here. We're thrilled to have the team from Neurocrine and Adam Green in the audience for our conversation here today. Maybe just to start, you guys have recently done a transaction. But maybe you could just talk about the core competencies of Neurocrine as a business and how you think then kind of strategically about which products you bring in-house and speak to the Vykat piece.

Can I ask a few questions along the way too?

Yes. I don't promise to answer.

Yes. We will be making forward-looking statements and part of that will be whether you want disperse or the next to win. So we will have an FLS for that. But yes, we have a lot going on at Neurocrine. I was just talking to a gentleman in the back, not Adam. And we were talking about how we went from INGREZZA only to a multiproduct company, and that's been just amazing. And you and I talked about that briefly yesterday. We're actually a real thriving company now, generating cash flows, investing in our pipeline, 20 to 20 or so commercial assets at this point.

So we have a lot of great things going on at the company. INGREZZA guidance range this year, $2.7 billion to $2.8 billion. It's amazing 9 years after launch that it's still growing double digits. We get asked that question all the time, wow, how can you continue to grow INGREZZA and it really comes down to the fundamentals of the market. So many patients with tardive dyskinesia didn't have any help until 2017. And now we're helping those patients and continue to have great growth. CRENESSITY was the game changer for us, obviously, coming after INGREZZA.

CRENESSITY was approved in a rare endocrine product or a disease called congenital adrenal hyperplasia. We've been able to help about 10% of patients in the first year of launch, and we have $150 million of quarterly revenue this past quarter. And then last, you mentioned this, VYKAT XR.

It was a great acquisition, I think, for us, and I'll ask your perspective in a moment. But it brought to us another rare endocrine product. So we have 3 now, 2 rare endocrines or rare endocrine franchise and that was approved in Prader-Willi syndrome, and they had around $100 million of sales last quarter. So when you stack all 3 of those products up over $900 million of revenue at this point and 97% plus gross margin. So you think about the cash flow that is generated from these products, it's quite significant that then allows us to reinvest back into R&D at a rate of 30% to 35%. And as I said earlier, we have 20 clinical programs, the 3 headline programs Osavampator, which is in a Phase III study that's being studied in major depressive disorder. It's an AMPA potentiator.

The second is a Phase III program with direclidine in schizophrenia muscarinic agonist. Both of those programs will have data in 2027. And the second study for direclidine will read out in 2028. So a transformative year on the psych side next year. And then the third program on highlight is actually a Phase I study. I remember, we talked about this at R&D Day, I was sitting right next to you, Grant, and it's in obesity. And it's CRF2 agonist, and we're going to actually have healthy patient obese patient data in the -- in late 2027. So a lot going on, on the pipeline front. And then with our capital, you can see we're generating non-GAAP net income of around $200 million at this point and only growing.

We deployed our capital towards buying Soleno falling cash for $2.9 billion, and that acquisition will be immediately accretive to us. So a lot of great things going on at Neurocrine, and I think you asked about the Soleno transaction. How did that check the box for Neurocrine? And I think it's quite clear from a strategy perspective, a second rare endocrine product for us and adds to the diversification and scale that we would a leading neuroscience company. So there were 3 fundamental variables that we had to get comfortable with to underwrite the deal. The first one was peak penetration. And peak penetration would be at the higher end of the 30% to 50% because there is no other approved treatment option for Prader-Willi.

This was literally the first treatment option ever available to patients. And our expectation is that this will have very nice penetration. The second piece was discontinuation. And this was a question that had been coming up to them as a company and we had to do our own diligence in looking at their patient data as well as looking at what other rare disease launches have done on the discontinuation rate. We underwrote it at around 25% or so discontinuation.

And then lastly, we had to get comfortable with the intellectual property. And we found in reviewing their patent applications as well as their issued patents. We feel comfortable that the IP should extend out into the mid-2040s and that's something that will be clear to -- the street as we get later this year. So I think if we hit any of those variables, we're going to be at a spot where we drive shareholder value well in excess of that $2.9 billion. But what was your take on the transaction?

I'm not on stage right now, but I mean, I think, generally speaking, talking to investors, the view is that you're already annualizing at $400 million in sales. It's already profitable from even just a financial picture. You don't have to think a whole lot of growth room here in order to be comfortable with the deal. But I do want to talk about the growth room here, which is -- as you think about it and you did -- it sounds like a good amount of diligence on your own before underwriting this asset. What have you anticipated lease to get to that and how do you think about the puts and takes could inform cost?

In the pace as quick as possible. But I think when you look back at rare disease launches, you typically get to a path to peak of between 3 and 5 years. And so that's our base expectations. There will be some noise in the early stages First of all, let me back up. I can't take any credit for how the launch has gone so far because this was not underneath our wings and the team did a really excellent job, number one, getting it approved. That was a big feat. And then second, getting it to market. And as I said earlier, if you think about these patients with hyperplasia, they have is unrelenting like obsessive seeking of food and think about the hungriest moment you've ever had and that hunger never goes away even if you're eating.

So think about the devastation that's having on families. I know you have a family yourself and I could only imagine the disruption that has to the patient, to the family and over the long run, some very serious health implications. So getting this approved was an amazing feat for the company -- and then at the time of launch, you had a bolus of patients that rushed to getting treated. And of course, it was on our radar and trying to understand the dynamics there.

So you had a bolus of patients in the first quarter and then you've gotten now into more of a steady state of patient additions where Q1 was very similar to what they saw in Q4. And so from a modeling perspective, I know it gets nuanced in a bid complicated quarter-to-quarter because you have that natural discontinuation rate from the bolus of patients that were added early in the launch.

But ultimately, what you'll find is steady patient adds will stack and compound on top of each other. And over the next, call it, 12 to 18 months, I think we'll be on a good trajectory to become a blockbuster medicine. But there will be some nuances in the near term just because of the bolus effect and as it goes through the natural rate of discontinuation. But we're still early. I mean, we've owned for 3 weeks, so I can't claim to be an expert, but we're excited to have this part of our franchise within rare endocrine.

You mentioned thinking you could get to kind of the 50% range in terms of penetration. And I guess what does that translate to in terms of revenue potential?

Yes. I mean we see this as clearly a blockbuster medicine. There's 10,000 patients with PWS and if you think about 5,000 patients on therapy or net that down for those who discontinue , it doesn't take a lot to become a blockbuster medicine at the price points that are here, and it's very similar in terms of pricing relative to CRENESSITY. So I think the team that we've inherited are very motivated to help these patients. They've been there from the beginning. There's a lot we're learning. This is a very complex patient universe, but the feedback that we're getting from the field has been quite strong.

The feedback that we look through when we are underwriting the deal. It sounds like the medicine works. I was on a KOL call yesterday talking about CAH. And this doctor also treated or it was part of the VYKAt trials and I asked them, does it work? He said absolutely, it works. And so that was always gratifying to hear the benefit that it's having on patients.

So I think it's just a matter of time and getting through some of the learnings how to titrate the medicine and getting education out there. And after that, I think we're going to see nice growth.

From an investor perspective, it feels a lot like the CRENESSITY story, I think, where we said CRENESSITY is going to be a blockbuster.

We believe it's going to be a great product. And then this past quarter, Q1, I think the Street is starting to feel that way as well. For VYKAT XR, we said it's going to be a blockbuster. That's only story, I think similar to CRENESSITY.

Recognizing it's already profitable even kind of in the first couple of quarters of launch of a much smaller company. I guess, could you talk about the potential synergies you see between VYKAT XR, both in terms of competencies in terms of OpEx?

Yes. The synergies for this were clearly strategic and commercial, not necessarily an OpEx synergy with already a profitable company to be able to grow sales and leverage that infrastructure as well as our infrastructure. I think it's naturally going to flow through and be quite an accretive business to us. But the deal wasn't done for cost synergies alone. There, of course, will be some level of redundancy that we'll work through over time. But the strategic lens is that we'll for a long, long while, have a stand-alone VYKAT XR sales force focused on helping people with PWS and we'll have a stand-alone CRENESSITY sales force that is focused on CAH.

And I think for both of those products, the price, the unmet need, the first time ever launching a product in those markets that deserves full attention. And that's our focus, let's invest behind growing sales. And I think the profit flow-through is in quite significant.

Maybe it's a good segue to CRENESSITY itself, which has obviously been a huge focus over the past 1.5 years post launch. Recognizing you're no longer sharing patient start metrics, I guess, what could you share about what you're seeing the launch year-to-date. And I know you just saw some doctors yesterday, so maybe you could tie that -- those conversations into that answer.

Yes. I -- well, let me give a quick anecdote story. I was in Chicago last week at a different conference, and I met with the major AOL there. And she is a really interesting word. She used the word fun when describing using CRENESSITY. And I was sharing with her, as many of you guys know, my son has congenital adrenal hyperplasia, and that's the reason why I joined Neurocrine.

And so we were talking about treating patients. She has given me a little bit of advice and we're talking about her use of CRENESSITY and he mentioned how fun it was she said that she was talking to another colleague who prescribed CRENESSITY for the first time. And 6 weeks later, that doctor called her and said, "You're right, this is really fun, " when they looked at the lab values.

So I think that this is something that as we continue to develop the market as people are seeing the results as we're able to publish longer-term data, which you'll see later this week at Endo. I think the confidence is only growing in terms of the potential for CRENESSITY to benefit in patients.

There's some natural limiters on the pace adoption patients only go and see their clinician 1 to 2 times per year. So they're infrequent and in terms of visiting. The second piece is it's a really fragmented patient population. You have about 85% of the patients spread across many prescribers that maybe only see 1 to 3 patients in a year. So you have CRENESSITY from -- or sorry, CAH for the most part, being a very phenomenal part of a practice of an endocrinologist, a local one. And then the patients are only going in 1 to 2 times per year.

It sets itself up for the need for continued education of the need for continued momentum on the patient side and them actually asking for the therapy. And we're seeing good progress, but I'd call it steady. And that's been the operative word, very steady and consistent new patient start forms as you think about Q4 and Q1.

Great. So you have shared that a majority of physicians who started to prescribe CRENESSITY, have done it for one or a selective number of patients. Can you talk about this versus the number of patients those doctors might be seeing in a year? And how are you thinking about unlocking greater depth for the product?

Yes. I think that there's an opportunity here on breadth and depth. We recently expanded our sales force and the main reason is, number one, ensure that we touch every clinician that we can that potentially has a classic congenital adrenal hyperplasia patients. So the sales force activity is going to be an important aspect here. These clinicians, as I mentioned earlier, maybe only see 1 to 3 patients in the entire year. So there is an opportunity to go deeper with those as they get more experience and seeing the first patient do on therapy.

It's usually about a 6-month cycle of getting androgen levels reducing or modifying with corticoids seeing how those are going. So I think there is a little bit of learning that's going on and trying to identify how is it working and then ultimately, what patients could benefit from the medicine.

In our clinical trials in our 2-year data, we've been able to show that this works for 70% to 80% of patients who try it. And I think that, ultimately, that's the goal in the marketplace is that we would get to a really significant peak penetration level similar to what I mentioned on VYKAT XR, can we get to 50% or so. That's our goal, and that's the hope here. But really, in terms of where does the next patient come from? We have opportunities that are left still at our centers of excellence, significant opportunity there. But then beyond that, it really is fragmented across many prescribers across the United States.

Matt gave a good example of the story about Chicago, where the physician had spoken to the other physician who's just trying it now endocrinologist or kind of classic thinkers but I think internally, what we feel those kind of stories are going to continue to replicate. So you're going to have this network effect over time, which gets you to peak sales pretty quick versus INGREZZA, which is still trying to find a seat.

How are you thinking about the competitive clinical landscape in CA recognizing there's other development stage programs? And what do you think the differentiating features will be of CRENESSITY over time?

Well, number one, being first to market is a great place to be. And especially when you have an efficacious product that's safe and that we're going to have significant data over time here the primary market, the #1 most motivated market is in pediatrics. And in pediatrics, the doctor was with yesterday, the question was, does it work? And what are the side effects.

And the side effect profile of CRENESSITY, I think, is quite strong. And the longer-term data that we have, it would be hard to imagine that you could displace an entrenched products like CRENESSITY that's working in that safe. And we're going to do everything we end to defend our turf. We're committed to helping CAH patients, and we're going to continue to do so over long run.

We've set the bar really high for the Classic CAH patient population with CRENESSITY competition, including our own internal molecules, like we have a tough standard. We have next generation CAH products that are coming out. So when you look at the totality across efficacy, safety and tolerability that CRENESSITY has, it's going to be a tough one to beat.

Maybe switch gears a little bit and go to INGREZZA. You're coming off a couple of quarters of record base growth even this many years into launch, and you mentioned still trying to peak. I guess what do you attribute the success in terms of driving record patient growth? And how sustainable do you think that will continue to be?

It's been a tremendous market for us. I think at the time of launch, we expected peak revenue to be $600 million. That just shows you how good people are forecasting. Now we're at $2.7 billion to $2.8 billion of sales, and it's just a reflection of...

Its better for numbers to go that direction.

That's right. It's better to...

But you want to make sure you make the right investment behind it if it's going to be higher. But you do have tardive dyskinesia carry movement disorder that's caused by prolonged exposure to antipsychotics. As you know, and up until 2017, there was absolutely no treatment options. So there is no reason in a diagnosis of tardive dyskinesia. So over the last 9 years now, we've slowly but surely inched up diagnosis, which is now about 50% of patients have been diagnosed with tardive dyskinesia. So when you think about what does it take to continue to grow these record patients each quarter, it's diagnosis which is aided by our sales force expansion.

And second is keeping tardive dyskinesia on the radar of those clinicians. Clinicians rightfully so are driving and thinking about the underlying mental health condition of the patient they're not necessarily thinking about tardive dyskinesia. So sales rep calls, part of dyskinesia is now on the radar.

And then the third piece I would mention is just patients. Patients have these movements. They have no ideas caused by their antipsychotic and the likelihood of them asking a psychiatrist about those movements is like thinking about going to the dentist and asking the dentists to look at your ankle, it's not a natural thing to do. So direct-to-consumer advertising is something that we've been heavily investing in. You'll probably see some during the world up if you watch it. But yes, we have a great opportunity to help many more patients. But it really comes down to this being naive market that continues to grow and grow mildly.

There's 2 other tailwinds to add on here, though, in terms of the prevalence, we initially thought there were probably 500,000 patients in with this. That has grown to 800,000. The reason why is because antipsychotic use continues to the growth of the patient or the U.S. population.

So the prevalence number continues to grow. And then the second piece is the prescriber community, particularly in psych, we have a whole new class of folks called advanced practice providers, he's a nurse practitioners and what's now called physician associates who have prescriptive authority, and that has grown by about 30% over the last 3 years. You have those 2 factors that are also contributing to this ongoing growth that we're seeing in the market.

Because of the volume headwinds, you were able to deliver relatively flat quarter-over-quarter revenue in the first quarter despite pricing headwinds. As we start to lap those, how should we about revenue growth through the balance of the year and maybe tie that to the guidance that you've already provided?

Yes. quarterly year-on-year growth rates are going to be sort of distorted this year for a few reasons. If you recall, there were a couple of quarters last year, we had one less and one more billing week or order week. And then you had year-on-year, the price that you mentioned. We invested in expanding our access last year. We had one major formulary addition in the second quarter, and then we had another one in the third quarter. So I think for an investor, I would just take a step back and look at our annual guide of $2.7 billion to $2.8 billion.

It implies about in the mid-teens volume growth offset by an annual 4% to 5% year-on-year price headwind. That price headwind is more pronounced year-on-year in the first half, like you said, but over the second half of the year, it will be pretty flattish in terms of year-on-year price. So this product is going to be driven. The growth is going to be driven by continued diagnosis continued new patients being put on therapy.

And we had record numbers of new patients in Q1. So Q1 was a great quarter. That was a surprise for us. We didn't expect to have that level of new patients, and I think it's a testament team, testament to the product, a testament to the market. And of course, we'll go through the normal process that we have and review our guidance range once we get through the first half of the year. Just out of policy, we don't think one quarter is enough to call early in the year. So we've been asked that question a lot. Why didn't you change your guidance with such a good quarter. We said, look, it's good through the first half of the year, and then we'll reassess consistent with what our internal policy is for reviewing guidance.

And as you approach the entrance of IRA negotiated prices in the category next year, how does the volume growth that you've now set up kind of inform what you just do with respect to competitive dynamics as you move into that period?

Yes, I think the biggest aspect to volume growth is access and ensuring that if a patient is prescribed INGREZZA that they get INGREZZA. So access is something that we invested in last year. We now have coverage at around 70% or so of patients are on Medicare Part D formularies. And we would expect that to be pretty similar when we go into next year. From a financial perspective, how does that translate to revenue dollars, more likely, we're in the early stages of negotiation. Obviously, but we'll have some level of price concession. But between it being a great market and good strong volume, we would expect it to be a quite manageable period of time for us next year.

One of the things you guys have invested in commercial businesses sales force. Do you anticipate making any further investments in sales force infrastructure across these products?

I would say every time you make a sales force expansion, you expect it to be your last and so I think that for now, we feel quite good with our sales force. All frequency is a significant driver to sales growth. But when you look at the tiering of clinicians and the number of tons you can reach those clinicians with the size of our sales force, we feel quite good with where we're at.

However, if direclidine or osvamfator were positive and we wanted to start laying a greater foundation for launching future psych products. That's probably when we'd reassess should we add more reps now and maybe it a bit harder and then be in a position to jump quickly into the new products once they launch. So a lot of strategic things I will be thinking through over the long term. But right now, based upon the call activity and the new patients feel quite good with where we're at.

Well, you said before from a capital allocation perspective, there's been no better investment than putting it into INGREZZA, which is then the fuel behind feeding the rest of the pipeline.

Right. That's a reasonably good segue to the development program. So maybe we can start with Osavampator, you highlighted as one of the headline agents. And you anticipate Phase III data next year. Could you just like remind us in that you can drive from Phase II results into those Phase III?

Well, you have a validated pathway with what you see with esketamine. So we know the pathway has been validated there. The Phase II results were really compelling. So as a reminder, there were 2 doses of 1 mg and 3 mg. They both performed. They both worked. The 1 mg worked a little bit better than the 3 mg. So on day 28 of MADRS was a little bit over 4% change for baseline with an effect size of over 0.5 super compelling.

And then it continued to be better at day 56, with 7 -- over 7 change in MADRS size is more than 0.7%. So we've got already a validated pathway. We've got really compelling strong Phase II data. It's safe, well tolerated, in fact, in Phase I MAD SAD studies, we studied it out [indiscernible] for developing this. It had been studied up to 18 milligrams, right?

So this is -- we're going forward with the 1 mg dose. In 5 studies, 3 of the main ones for MDD is a randomized withdrawal study and there's an open-label extension study. But as you said, we're expecting data for those to come next year. And without a doubt, if I had to weight the impact of the pipeline readouts next year, of which there are 10 [indiscernible].

Okay. Assuming success in that program, I guess, what role do you see playing an NBD market? And how should we think...

[indiscernible] a brand-new mechanism of action, everything is SNRIs and SSRIs right now. So we have a chance to have a big impact here of the 20 million people who have MDD. This would be an adjunctive treatment as a subset of that. But assuming we can get close to replicating what we saw in Phase II, we got a really great opportunity to help a lot more people.

I think the goal, if it's efficacious and safe is that it would be second line treatment. I think as Todd said, you want somebody who had a little bit of a response from the -- an underlying first product, and then this would be the second one. I think it has all the attributes. As Todd said, in the Phase II, but it really comes into a competing Phase III, and that's like -- the main focus of our clinical team right now is to make sure that we're enrolling the trial enrolling it with quality patients and enrolling it -- or sorry, in monitoring those patients and those sites in a really controlled way our goal and not have a runaway study here.

We want to be able to get a clean read does this drug work or not work to have a failed study isn't going to be acceptable. We'd rather see a failed drug. But our hope, based upon what we saw in Phase II is a new agent that can really help so many people who struggle with depression and need better treatment on.

We kind of have an ace in the hole with Jaz Singh who is managing room who have previously been at Johnson & Johnson and ran esketamine trial. So he knows what it takes to run high-quality trials.

You also have a broad muscarinic portfolio. Can you talk about how you think the opportunity for that category will play out, particularly in the context of commercial results so far for the more advanced drugs in the loss?

Well, we're rooting for Cobenfy, to be clear. That's another -- that pathway has also been validated and with our lead program is a little bit different than Cobenfy, where Cobenfy is pan-muscarinic agnostic given with the peripheral antagonist. So it has some GI tolerability issues, food effect, multiple doses with our lead program, direclidine which is Phase III studies in schizophrenia. It is a direct agonist of M4.

So hopefully, we won't see this tolerability issues that Cobenfy has, they can be taken with or without food. It's one dose. And we'll have that data for the first of 2 studies next year. The second study right now is going to read out some time in 2028, we're also studying direclidine in bipolar mania, that's Phase II study just started this year.

I think the -- we get asked this question a lot and we always say I think anybody is going into the -- in the antipsychotic market like this. Schizophrenia is sort of a foot in the door but really in terms of value creation, it goes to what's the next indication is going to be that's added on top of this. So I do think there's clearly a differentiation that we'll have on the tolerability and use side of the equation. But ultimately, whether it's them or us or other companies in this space, it's really taking it beyond schizophrenia. Our first entry is bipolar mania by that we have a study going right now. And then we'll be looking at both our M4 as well as our M1/M4 that I think the thesis is that it also plays a role in cognition that we would be able to study that compound in a few other indications.

So I think if you fast forward to probably 18 months from now beyond the schizophrenia data, the whole of the data coming together the further indication strategy for Neurocrine will become quite clear. But right now, we do have a heavy investment in the muscular nice. We do think they play a clear role in psychiatry and also in cognition and we're going to you invest behind it, get the data, and then we'll decide where we go from there.

How are you thinking about the value of having like the breadth of portfolio versus investing behind the single product, assuming like direclidine works, for example?

Yes. Psychiatry is interesting. You've spent so many years trying to understand why certain things work. And I think if you have one shot, you may not make it. So we'd be happy with the lead program, solving all disease states. But you also want to take as many different types of shots on goal, and you might be surprised to see the benefits that somebody may have within broader psychiatric or cognitive condition. So we'll continue to run those tests run those experiments because we are committed to psych. But from a broader pipeline perspective, if you look at our pipeline chart, we talked a lot of the site programs, psych is high risk.

In a Phase III trial, you have a 50-50 like typically, is the medicine going to actually work in that's the lowest of any other therapeutic areas. So one of the strategies as a company is we have moved towards diversification in therapeutic areas. As I mentioned earlier, we do have a lot going on in obesity. We also have other elements in immunology that we'll be touching on at R&D Day later this year and the diversification, not that we don't care about site we love psyche, but we would like to also be talking about other programs across neurology, endocrinology and immunology.

And so I really truly feel like when you take a step back and think about Neurocrine, we're just getting started going from a single product to a multiproduct company in just 2 years with last quarter, over $900 million of sales, including VYKAT SR, a lot of their readouts coming over the next 18 months with a lot more coming behind that. We feel quite fortunate to be in the position that we're in today...

Right. I think that's a great place to end unless you do want to opine on the next. And with that, I think...

He is a per fan.

Well, I don't know what to do with that.

Thank you, Corinne. I appreciate it. .

Thanks.

Thank you everyone for joining us here at the 46th William Blair Annual Growth Stock Conference. I haven't been here for all 46 years, but I have been here for close to 10.

My name is Myles Minter. I'm a senior biotech analyst here at the firm. I cover the neurosciences and then genetic medicines, and it is my pleasure today to introduce Matt Abernethy, the CFO; and also to my right, Todd Tushla, Head of IR at Neurocrine Biosciences, fresh from the West Coast. So thanks very much for attending.

Myles, did disclose that he just came from Scotland. Is that right?

I did. I did.

And my last name is Abernethy, and that's Scottish. You can get some cookies ever go to that town, but really glad to be here. I went to business school in Chicago. And so always nice to see San Diego'esq weather in Chicago. Really nice to be able to be here with you guys today.

A little bit of fun, forward-looking statements. I will be making some, so I direct you to our SEC filings for the related risk factors and uncertainties associated with our company and then also our industry.

We have changed quite a bit. I was just talking to a gentleman before this. We were a single product company, now a multiproduct company, generating significant cash flow, significant data readouts coming in '27 and '28. As a biotech company that had been a single product company for quite some time, I can tell you, it's very nice to be able to speak to you guys today and to be able to share with you guys the story of the great things that we have going on at Neurocrine.

We're a neuroscience company focused in endocrinology, psychiatry, neurology, immunology. We're based in San Diego, California, have over 2,500 employees at this point. Half of those are in San Diego. The other half are spread across the United States, marketing our products, so we have a lot of fun. And if you ever find yourself in San Diego, would love to host you at our new campus. We have a lot of magic going on there, which you can see going into our early-stage research and development pipeline that we'll see in just a little bit. So very much looking forward to talking with you guys today.

So we have 3 pillars, just like every good presentation has to have 3 pillars. The first one is our commercial products. These are generating significant cash flow at this point, growing quite significantly. We had 45% year-over-year growth in Q1. This allows us the ability to invest in R&D, which is the lifeblood of any company within biotech. And then lastly, that's translating to very nice financial returns, where we've been generating significant cash flow, over $200 million of non-GAAP net income in Q1 alone, and we've recently deployed our cash to acquire Soleno Therapeutics, which was for $2.9 billion. It's the biggest acquisition Neurocrine has ever made, but very exciting for us.

On the commercial product side of the equation, we have INGREZZA. That was approved in 2017. That was our only approved medicine until December of 2024, but it's been the lifeblood of our company. It's allowed us to reinvest, build the company to where you see it today and our guidance range is $2.7 billion to $2.8 billion this year with INGREZZA. And that implies mid-teens underlying volume growth in a very attractive market, offset by a little bit of price pressure.

The second medicine that I mentioned earlier was CRENESSITY that's for congenital adrenal hyperplasia. That's a rare endocrine product. We launched that last year. It's been on the market for 5 quarters now. The patients had no other option other than to take high-dose steroids for their condition for their entire life. And this had $150 million of sales alone in the first quarter, and the team has done an incredible job with CRENESSITY.

Last, this is VYKAT XR. This is the one that came to us from that $2.9 billion acquisition. This is for a very rare devastating disease called Prader-Willi syndrome. It was approved in March of 2025. It's been on the market about a year at this point. And similar to CRENESSITY off to a great start, sales are around $100 million in Q1.

So when you add all 3 of these products up, over $900 million in sales in the first quarter alone. For a finance guy, this next part is important, 97% plus gross margins on these products. So you think about the cash flow that's coming from growing sales, the ability to reinvest back into research and development at a rate of 30% to 35% without sacrificing ultimate profitability is something that we've been doing, and we've created a very diversified pipeline at this point, which I'm excited to share with you guys about a bit later in the presentation.

And then lastly, financially, we did do that acquisition for Soleno, $2.9 billion. We pretty much funded that all cash and it will be immediately accretive on a non-GAAP basis to our shareholders on an EPS basis. So overall, very fortunate to be in the position that we find ourselves in today.

So let me tell you a little bit about INGREZZA, and I was talking to an individual here who actually was selling an antipsychotic early in the 60s or 70s. And unfortunately, with antipsychotic use, you have a 10% likelihood of developing a debilitating disorder called tardive dyskinesia. It shows up in the hands, mouth, the base, the trunk, and it's just an unfortunate byproduct of taking an antipsychotic.

And up until 2017, there were absolutely no treatment options for these patients. So if you think about dealing with your underlying mental health condition and then adding a movement disorder on top of that, it's not unsurprising that the stigma that comes with that isolation, the low self worth. And so it's been so rewarding since 2017 to be able to start developing this market.

We estimate that there's around 800,000 patients with tardive dyskinesia but only 2% were diagnosed in 2017 because there were no reasons to make a formal diagnosis because you couldn't do anything about it. Even if you stop the underlying antipsychotic, those movements would stay. So a lot of our effort over the last 9 years has really surrounded diagnosis. And that's one major challenge of -- I get asked all the time. Why don't you have more than 1 out of 10 on a VMAT2 inhibitor today?

It really comes down to the basics of making the diagnosis. And why might that be difficult? These patients are being seen by psychiatrists. The psychiatrists rightfully so are caring more about the patient's underlying mental health condition, working on a computer screen, not looking intently at their patients. So it's not surprising that it's not top of list for a psychiatrist. So a lot of our call frequency with our sales force is simply to put and keep tardive dyskinesia on the radar.

The second piece really has to do with the psychiatrist in getting confidence in making a movement disorder diagnosis. That's something that they're not necessarily trained on, and that's something that we help support them in getting confidence making the diagnosis. The second piece is that -- the second phenomenon is that patients who have tardive dyskinesia, they have no idea who to talk to about it. You wouldn't think about going into the psychiatrist's office and talking to your psychiatrist about a movement disorder.

I'd liken that to going into the dentist's office and asking the dentist to look at your ankle. So if you see our commercial, the INGREZZA jingle commercial on TV, just know we are trying to motivate patients to actually bring it up with the psychiatrists that, "Can I actually get help?", because if they don't bring it up, the clinician may feel like it doesn't bother them, so they're not going to spend the time to ultimately treat.

So overall, it's been quite rewarding to be able to develop the market in this way. But those two fundamental aspects still remain the same challenge in 2026 as it was in 2017, diagnosis and patient activation. So how has that translated financially?

You can see a pretty linear growth patient by patient, adding them on therapy, staying on therapy. Now we're at a place where we're at $2.7 billion to $2.8 billion in sales. And as I said at the outset, this implies the mid-teens underlying growth offset by a little bit of price. But it's very rare to see, Myles, if any other product growing at this clip 9 months or 9 years after launch. And it really comes back to -- I think I can go backwards, yes, there we go. It really goes back to the right hand of this slide.

This is what gives us confidence that growth is going to continue. There's still so many patients with tardive dyskinesia that need help, and it's been a real reward for Neurocrine to be able to help this many patients. We have IP protection that goes out till 2030. So durability of these revenues is quite strong.

Now as I said at the outset, INGREZZA, funded our company and the first product that came as a result of this funding was CRENESSITY. This is an internally advanced compound. It was called crinecerfont, now it's called CRENESSITY. This absolutely changed the game for patients with a disease called classic congenital adrenal hyperplasia. That's a mouthful, so we say CAH. But essentially, what it is, is the patient is born without the ability to produce cortisol. And without cortisol, you die. And up until 1950s, 1960s, all patients with CAH would ultimately pass away until hydrocortisone was developed. So since they can't produce the cortisol, you supplement it with synthetic cortisol, hydrocortisone and ultimately, that's been how you maintain the life of these children and then into adulthood.

There's about 20,000 patients, but you can imagine androgens being out of control, plus high-dose steroids for your entire life. That is not a good recipe for success. So we got approval in December of 2024. First in 70 years to give an option that's not a steroid to patients. And it's been just a tremendous launch thus far.

I was at a conference a few weeks ago and was asked, "Tell me why has CRENESSITY been so successful?" And I would just tell you that it's basic -- that's a three-ingredient recipe. One, your product has to absolutely meet an unmet need. Here, that was quite clear. Second, it really has to make a difference. And you can see the difference quite quickly. And what we've been hearing in the real world is that the results are at least as good as what you see in the clinical trials, if not better, on both the efficacy and safety.

And last, a patient has stay on therapy. And what we have found both from reimbursement, has been over 80% of all prescriptions are getting reimbursed, so no payer pushback and also tolerability and benefit is quite clear. Patients are staying on therapy, and it's making a difference in their life. So how does this translate to revenue?

You can see in Q1 of 2025 a year ago, we're pretty much an INGREZZA only company, and that had been the case for the previous 7 years. You then fast forward to last quarter, you can see $150 million in CRENESSITY sales, about 10% of patients with classic CAH have been treated at this point. And really, the diversification and scale in year-over-year growth is starting to look quite attractive. And for us, as a company, it's amazing, but also for patients just thinking about helping a segment of patients and in particular, kids who're taking high-dose steroids. I think we all know.

If you have had Poison Ivy, if you grew up in the Midwest like me, you start taking steroids, you want to taper off of them as quickly as you can. Think about that your lifeline for the rest of your life. This has been very nice to be able to see androgens going down and then also seeing the glucocorticoids going down.

Last comment here, which is probably the most personal comment I'd make. My son has CAH. And so when I talk about the value to patients, this was something I was working in the medical device industry and somebody reached out to me about the Neurocrine job, and I said I never heard of Neurocrine. I probably called it neurocrine, but looked at the pipeline and then I saw they were working on a medicine for my son. And so 7 years later, we got approved. He was the first commercial patient on therapy. So wanted to share that with you equally special for me.

So moving on to the next product, VYKAT XR. This came to us from the Soleno Therapeutics acquisition. This is for a devastating disorder called Prader-Willi syndrome, and I'll tell you a little bit about that syndrome here in a few minutes. But before we do that, we spent $2.9 billion of shareholder capital. So what is that -- what was the strategic rationale? The first piece is that this is our second rare endocrine product. So CRENESSITY was our first. This gives us start of a franchise here. Very similar call points. So strategically fits right into our wheelhouse commercially.

The second is it adds to both growth and the diversification mission that we've been on to build an enterprise, not just a single product company. And then lastly, this is cash flow positive from day 1, and it's going to be quite accretive in value creation for shareholders given the IP landscape here. We believe it's going to last for quite some time.

So there were really three key aspects that we needed to figure out in diligence. The first one was about the Prader-Willi's market. What was it like? Is there a significant unmet need? And that's the easiest box to the check on. Everything that we found about the PWS community was one that there's extreme need to be able to help those patients. The second question that we had to answer was the safety and efficacy aspect of VYKAT XR. Was it providing benefit? Were the safety signals consistent with what's in the label and what we've seen in clinical studies?

We talked to parents. We talked to KOLs. We talked to patients themselves. And overall, we found this as a great product helping these patients. And then lastly, the IP. I personally didn't want to buy something that was going to fall off into generic landscape in the early 2030s. This is something I wanted strategic value from. And we went through and looked at both the filed and also on published patents or published patents and unpublished patents, and we were able to get a lot of comfort around IP extending into the mid-2040s, which will become more known, publicly likely sometime later this year.

So overall, that was a strategic rationale and some of the aspects that we went through in diligence and trying to convince ourselves of VYKAT XR which is truly changing the game for patients with Prader-Willi syndrome. Prader-Willi's, I had never heard of it until we started diligencing this product. It affects about 10,000 to 12,000 patients. And it's this unrelenting obsessive food-seeking behavior. Think about your hungriest moment that you've ever been and that's how these patients are for their entire lives, and it's devastating, and it leads to a lot of disruption at the home life and the family and with the patients individually.

And this was the first approved treatment in -- ever for these patients. It's been on the market since March of 2025. So about a year now, and you have around 10% of patients who have also been helped with VYKAT XR in the first year or so of launch. So what does this do for Neurocrine?

You can look at the middle pie chart. To be able to see $250 million out of our $900 million coming from something non-INGREZZA, that's a nice picture for us. And it's not to say we don't like INGREZZA, we love INGREZZA. And we think INGREZZA is going to continue to grow into the future. But as we think about managing our business and investments and concentration risk, having two rare endocrine products in our commercial channel has been quite significant. And I think this is just the beginning.

And then lastly, you'll start seeing it accrete into our P&L over the second half of this year. And I think you'll also agree with us in understanding both the scale benefit as well as the profit profile that will come from this acquisition.

So financially, this is an easy picture to interpret. Revenue growing from $570 million last year to $815 million this year, over 40% year-over-year growth, quite significant with a big chunk of that incremental growth coming from CRENESSITY and we feel like we're just getting started with CRENESSITY, as I said earlier. On the R&D front, reinvesting around 30% to 35% back into R&D based upon the quality of the products that we have and that translates to a residual of $200 million of non-GAAP net income.

And you can see at the bottom, the $2.6 billion of cash, that's before we acquired VYKAT XR. This really reflects our core capital allocation priorities. The #1 priority and I think everybody in biotech would say this, who has a commercial product, top line revenue growth matters significantly. So we invest significantly to drive top line revenue growth. That then gets us to the second priority, which is to be able to afford funding the right R&D programs to build the company. And then our third is to use our capital to deploy towards business development in a smart way that will drive returns for our shareholders.

And I think you're seeing that play out in how we're operating our company and that allocation framework has been something we've articulated over the last 3 or 4 years. We are patient in our acquisition process. And obviously, with Soleno, I think it will only accelerate our forward growth from here.

So now let's look at this pipeline. It's pretty cool. If you would have seen a Neurocrine pipeline just 5 years ago, we would have been looking at probably 3 to 5 products. Now we have close to 20 clinical programs. So the scale sticks out to you. And this isn't reckless, this is intentional. We need scale. We need smart scale that's diversified in different approaches and we need programs that will give us data quickly to let us know if there's a there, there or if you can that program and move on to the next, and that's something that you can see showing up in our pipeline.

If you go left to right, the left is earlier, that's preclinical to clinical. We have probably 50 other programs, not on here that are preclinical that Jude and team have queued up for us. But we have to be very selective on how much we want to fund and pace it appropriately. But you can see the color. The color diversification represents different therapeutic areas that we find ourselves going into whether it's psychiatry, neurology, endocrinology or immunology and then the symbols.

The symbols reflect whether it's a small molecule or a large molecule. And you can see on the far right, which is our later stage all small molecule. On the left, being able to get into different modalities has been an important step for us. So this has been quite the journey and kudos to Jude Onyia and his team for all the value that I know are going to be created for shareholders as well as for patients.

If you go to the far right, our 2 marquee Phase III programs. The first one listed here is direclidine, which is a muscarinic agonist. If you remember the acquisition of Karuna by BMS and the product, Cobenfy. This is the same pathway. And this is a medicine that is in a Phase III trial right now and that will read out in 2027, one of the trials and then 2028 for the second trial.

In addition to that, you have osavampator, which is an AMPA potentiator. This is being studied in major depressive disorder. And this is a trial, we'll have 3 trials reading out in 2027. So if you fast forward over the next 12 to 18 months to have answers on those 2 programs and the transformation that could have for our company is quite significant.

The 1 program I called out earlier stage that gets a lot of investor interest has to do with our obesity program. It's the second one to the bottom in the Phase I. This is a CRF2 agonist. It's a different approach, and we're really looking at trying to reduce weight, but primarily in visceral fat as compared to lean muscle mass and so we'll be able to get through our Phase Ib trial in 2027. We'll have data later in the year and that we'll be able to highlight progress on that patient population, which would be a healthy overweight or healthy obese patients.

And so it does give a good directional picture as to are we seeing what we saw in animal models translating into humans. And so that will be another important milestone.

So I'll wrap it up here. Neurocrine has been on an amazing journey. And for me, personally, being part of it, going from single product to multiproduct, multiple cash flow generating assets and being able to invest in meaningful pipeline, programs, has just been very rewarding. You can see, as I said earlier, 3 commercial products, but I want you to think about the patients.

The tardive dyskinesia patient taking INGREZZA. There was never an option for those patients to get [Audio Gap] TD. Similarly with CAH, with CRENESSITY, the only option was to take high-dose steroids for their entire lives. Now you have CRENESSITY to be able to help them. Lastly, on VYKAT XR, never an approved treatment option to help patients with Prader-Willi syndrome. Now we have something to help those patients. So I think we can talk -- I can talk in numbers that this is $900 million, great gross profit to invest in the next medicine.

But we take a step back in a very proud way to think we are truly impacting the lives of patients. And that's what makes investing in life science fund or at least operating company fund. There is high risk, but there is great reward on the other end and glad I could present Neurocrine to you guys today.

Matt requested a standing ovation, so you got one person. We've got 4 minutes for you to Q&A before we break out. We'll definitely take a question from the audience to kick us off, please.

[Technical Difficulty].

So the question has to do with, would a GLP-1 help PWS patients in addition to VYKAT XR?

And so what VYKAT XR is doing is aiding the brain aspect to this, and it's not necessarily helping on the metabolic side of the equation. You're trying to give this to patients before they progress to becoming very obese or diabetic or whatnot. So over time, you could imagine, though, patients who are benefiting from VYKAT XR and their life is stable, that they would be a potential candidate to also be on a GLP-1, but that would be a medical decision. But that was one of the questions that we had is, would a GLP-1 cure PWS or help people with PWS? It would allow them to potentially manage their weight a little bit more, but not the mental obsessive unrelenting behaviors that causes most of the destruction in these patients' lives.

Maybe one on INGREZZA, just IP out to 2038, still a growing franchise. I think you painted a really nice picture of the case for organic growth with that franchise as well. Investors do bring up the competitor and the potential pricing restructure that might go on in 2027 for that product. How does that sort of factor into your long-term growth potential of INGREZZA?

I think regardless of how you skin this. This market is all -- this is going to be driven by volume. How many more patients can you actually be treating with the VMAT2 inhibitor between ourselves and our competitor. So that's number one. I think volume is going to continue to be strong for quite some time. There will be some price pressure as you go through the Inflation Reduction Act, in particular, for us. We will be more than likely selected for negotiation in 2027.

And then that price would take effect in 2029. Fortunately, for us, we know the outcome of that price because we have a small biotech exemption that's going to be between 25% and 34% price impact. And so there will be price pressure in 2029 but still a very durable revenue stream that would continue on from there.

On the competitive front in 2027, our competitor's price kicks in from the government. They've already been negotiated. Our product is pretty closely priced to theirs after their MFP. So right now, we're the lower priced product in the market. And so I think we'll be much closer to parity at that point. So I think any price that we would have to get to stay on formulary and to maintain access would be expected to be very manageable and modest.

And just a very quick one on capital allocation. I think you mentioned multiple times here at the presentation, 30% to 35% back into R&D. You're a company that's generating $750 million to $1 billion in free cash flow and theoretically, that is growing substantially. What about inorganic versus organic R&D? Are we expecting more Soleno like deals or maybe hands in pocket for the time being?

Well, my hands were literally in my pocket. But I think the good part is for Neurocrine right now, we have so much growth on the top line and so much in the pipeline, we don't feel a burning need to go and do something. With that said, we do have the capital flexibility if we wanted to do something. But we like to set up right now with 3 growing products, a pipeline with meaningful catalysts over the next 12 to 18 months. But if the right opportunity did present itself, it's up to us to look at it to determine can we drive shareholder value with doing that acquisition.

But -- sorry, last piece. To be a successful biopharma company, you have to do both. I think if you aren't pursuing anything internally, you're going to miss out and vice versa. And that's been part of the journey of building our pipeline over the last couple of years with Jude Onyia and team a real investment in our early-stage R&D development.

Well said. Thanks very much for joining us today, Matt and Todd here as well. The breakout session will be in Jenny B upstairs. Thanks very much.

Biotech Analyst at the bank. It's my pleasure to have with me our next presenting company, Neurocrine. Sitting up here on stage, there are a couple of familiar faces, Matt Abernethy, who is, of course, Chief Financial Officer; as well as Todd Tushla. Your job again, sir?

I'm the current Vice President of Investor Relations.

Okay. Just wanted to clarify.

He did tell me this is his new title from you this morning, your favorite person. Can you confirm that?

Yes. I did say that. I did in fact say that. We'll put that on your card.

Thank you.

So maybe, Matt, for the few people who aren't as familiar with the company, can you just give us a quick overview of Neurocrine and then we can go into some of the more recent updates that have been happening?

Sure. We are going to be making forward-looking statements, as you can imagine. So check out the latest SEC filings. I'm sure you're excited about that update. But I was reflecting coming out here, Tazeen 8.5 years ago, I joined Neurocrine. In our first conversation, I remember it because you've got a good perspective on things. And if I recall, the conversation was all around elagolix and a little bit around INGREZZA.

And so when you fast forward over the last 8.5 years now, we sit here in a tremendous position. And for me personally, I feel like it's quite fortunate position to be in as a company. There's really 3 attributes that every company is striving for, especially when you're in mid-cap, how do you get from mid-cap to higher mid-cap to large cap, you're really looking at your commercial franchise, first and foremost, do you have durable revenue that's going to continue to grow and deliver.

We have INGREZZA that was actually approved when we first talked, I think, in 2017. It's been on the market for quite some time now. It's for an involuntary movement disorder caused by prolonged exposure to antipsychotics. And unfortunately, they could be hand movements, face movements, trunk movements and up until 2017, there were no available treatment options, as you know. And we continue to surprise to the upside, guidance.

Very recently.

Yes. Guidance this year is $2.7 billion to $2.8 billion. LOE is 2038, and we still have a lot of opportunity left there. The second major product that we have is actually CRENESSITY, which was approved in December of 2024, and that was for classic congenital adrenal hyperplasia. It was the first medicine in over 70 years approved for CAH patients.

And the launch has gone great so far and continues, like you said, surprised to the upside. And I think it's a reflection of just the great unmet need in the marketplace as well as a drug that is working and working well. We have a little bit over 10% of patients on therapy within the first 5 quarters. And last in Q1, we had over $150 million in sales.

And then the third product, which is going to be new for Neurocrine is called VYKAT XR. We have an announced acquisition of Soleno Therapeutics. I'm not going to be able to speak much about it today because it is in its tender offer period. But when you think about a medicine that was approved last April, it's a rare endocrine product similar to CRENESSITY, and they've had a great first 4 quarters of launch, $95 million of sales in Q1.

And so when you aggregate all 3 of these products together, you get to over $900 million of sales in Q1 alone. So the scale of the company is growing, and we would expect it to continue to grow over the future. On the pipeline side, we have close to 20 clinical stage pipeline programs at this point.

And I know people always ask me to choose my favorite kids. And I typically choose kids is my favorite. The 2 lead programs are the Phase III programs. One is osavampato major depressive disorder that reads out in 2027. And then also direclidine, which is a muscarinic agonist that's being studied in schizophrenia that will also read out in 2027 and 2028. Of those 2, my favorite is osavampato for a variety of reasons, which we can get into, if you'd like later.

And then on the early stage, we actually just announced entering the clinic with 2118, our CRF2 agonist, and that's being studied in obesity. And that data in healthy obese people will be read out in late 2027 as well. So -- and then the last piece, the third piece, you got your commercial, you got your pipeline. And then last piece is financials. We've been able to drive significant top line revenue. Profitability is flowing quite well right now.

We had $200 million of non-GAAP net income in the quarter, and we would continue to expect that to grow, while at the same time, prioritizing investment in R&D at a rate of 30% to 35%. So that's a mouthful for the company, but we have a lot going on, a lot to be proud of and as you said, Q1 was quite good.

Okay. So nobody can see us because we don't have video, but you can filing the whole time. So I'm going to take that as a sign that you're pleased with the way things are going so far this year. Let's just do one question on Soleno. I know you're limited on what you can say. But how does it sort of fit in sort of with the other drug launches that you guys are doing?

Obviously, you've demonstrated the ability to have outsized launches and you're taking over someone else's launch here. But what was it, I guess, that you thought would be particularly synergistic?

Well, these are both products between VYKAT XR and CRENESSITY are both rare endocrine products. So as we look in our portfolio and pipeline over the future, we would expect to have a full business around the segment. And there's a lot of valuable synergies from the sales side, not necessarily focused on the cost side right now.

But to be able to go into these clinicians and be able to share about CRENESSITY and also then have another sales force being able to share about VYKAT XR, it was something that was a great strategic fit for us.

The team is quite motivated. They care a lot about the Prader-Willi syndrome patients, a lot of talented people. So we're looking forward to getting this close, and we'll be able to provide more color once we get that behind us. But it is going to be a durable asset for us that goes into the 2040s from an IT perspective, and it's a great strategic fit.

And it's not because Eric doesn't have enough.

Eric is very good at developing markets in rare disease. He would say that the #1 most difficult market he's ever seen or underdeveloped market is actually tardive dyskinesia. Because when you think about nobody being diagnosed in that marketplace, it's something that has taken a lot of effort to get from diagnosis all the way to a prescription being written.

The good thing about the Prader-Willi syndrome is that there is a specific ICD code that allows you to know who the patients are, where they are at. That differs from CRENESSITY and that there isn't a specific classic CAH code. So I think there's some good things that come from a medicine like this for VYKAT. But both VYKAT, TD and CRENESSITY, there's no approved -- there was no approved other medications for these patients prior to the launch of these 3 medicines. So it's going to be quite special in our hands.

Okay. Great. So on the topic of INGREZZA, what quarter of the launch is it now?

We're 9 years in.

9 years in.

9 years in.

So with 9 years in, you still managed to beat expectations on 1Q sales. So can you talk to us about where you think the unmet demand is and how we should generally think about what to expect on uptake, not just for the rest of the year, but for the couple -- next couple of years?

Yes. I would just give another kudos to our sales team and our medical team to be able to get record numbers of new patients in the first quarter, when the first quarter is typically challenged the seasonality is a testament to the work that they did, but it's also a reflection of how many people with tardive dyskinesia continue to need help.

It's debilitating to take an antipsychotic for your mental health. Get your mental health in check and then ultimately develop a movement. And that movement, even if you remove the antipsychotic, it still stays there. So the big basic blocking and tackling that we have underway, it's going to sound boring because it's the exact same thing we've been doing for quite some period of time.

It's really ensuring that HCP is aware and thinking about tardive dyskinesia. These prescribers are primarily psychiatrists and they're thinking about the underlying mental health condition of the patient, not necessarily thinking about tardive dyskinesia. So we see the more the call frequency is or the higher the call frequency, the more likely a clinician is to see the TD and to prescribe INGREZZA. And that's what we're seeing so far. So that's like one basic blocking and tackling item.

The second is the direct-to-consumer advertising in that we know patients have these movements. They may not know what they're from, and they're definitely not thinking about talking to their psychiatrists about a movement disorder. That would be like asking a dentist to look at your ankle that just doesn't happen.

So we have direct-to-consumer advertising campaigns that are putting a name to this movement and encouraging them to talk to their doctor about whether INGREZZA could help them. So a lot of room left to go. Around 50% of the market has been diagnosed at this point. Only 1 in 10 patients with tardive dyskinesia are currently on a VMAT2 inhibitor. So still a lot of room for growth ahead.

So there was a lot of discussion towards the second half of last year on a couple of items. First, the competitor gaining share? And then secondly, what type of negotiation you have to make with payers in order to have coverage. So when do we start to hear, I guess, on the second point about how your discussions for 2027 are going?

Yes. Once we get closer to 2027, we, of course, expect our product to be -- have strong access still. It's a great product in a great market. And I think from a pricing perspective, we're competitively priced relative to AUSTEDO XR. So I would expect access to be strong. The specifics around it, we'll be able to give more color as we get later in the year.

But to the previous question about Teva or AUSTEDO gaining share. If you rewind back to 2024, we hit a period in the second half of that year, where new patient additions were slowing. And at that point, we're accelerating and not just in prescriptions, but then also in revenue dollars because of their titration schedule. And so last year, we also had a sales force expansion. We had record numbers of new patients in Q2, Q3 and then flattish in Q4. And through that period of time, we actually gained 2 share points back.

And so we feel quite good on a TRx on a market basis, but we're in a sort of gain share mode right now, and that's quite attractive. When you think about how is the market doing right now because their results are a little bit difficult to interpret because of their inventory fluctuations and also their pricing schema. But I think we would both agree that the market right now from a TRx perspective is growing in the low to mid-teens, and that's quite strong years.

I had brought up the question about 2027 because last year, you said that you had started negotiations a little bit earlier than you normally would for 2026. So I think people remember that, and they'll be thinking about when you start talking about it only because people want to...

Yes, I think there was an element of that, that we brought it up because the plans were asking for us to have an incremental discount in the current year that we were at, which was unusual. But the trade-off was more just to go from 45% covered Medicare Part D to 70% and you're seeing that flow through with the new patient starts.

So we would not expect to add any other lives on from -- in terms of our coverage status for 2026. We like where we're at around 70%. And we'd expect similar levels as we look ahead.

So maybe let's move on to CRENESSITY. So that's also had an outsized launch. And can you just talk about the dynamics there? Obviously, a much newer launch than INGREZZA, it's also a more, I guess, technically smaller opportunity for disease. So what are the differences in how the commercial team is looking into gaining share there versus what needed to be done for INGREZZA?

Yes. There's really 3 things that it takes to have a successful drug launch. One is there has to be a high unmet need. The second is the drug actually has to work. And then the third, there has to be a level of tolerability that allows them to stay on therapy, and we're checking the box on all 3.

There's never been an improved medicine outside of high-dose hydrocortisone for these patients with classic CAH until CRENESSITY was approved. And I think what we can see both in our clinical data as well as our open-label extension data that we continue to put out, the benefit is significant to these patients.

The second piece is, I think, anecdotally, we hear feedback that the medicine is working at least as good as what was in the clinical trials, if not better. And my anecdotal experience with my own son on CRENESSITY is it's much better than what was shown in the clinical trials. And so it's been quite a benefit for him and my family.

And then the third piece is that the tolerability side of the equation. It seems as if patients are staying on therapy. And right now, from a persistency and compliance perspective, it mirrors or looks very similar to what we saw in the open-label extension study, which is over 80%.

So we had done a survey before the quarter, and it indicated everything that you just mentioned. As you had indicated, you've now moved away from providing, let's say, script numbers. Intra-quarter, how reliable though, do you think it is to be looking at the vendors that provide scripts?

Well, first of all, I would caution when you have very low numbers, it can be skewed a lot. And I think many weeks where I would see those numbers being quoted externally, it wouldn't align with what we're seeing internally. So I don't know much about the data sources. I also had people talking about patients not being reauthorized on therapy and getting insurance claim data. We've not seen anything like that. So I would caution you on over reliance on some of the third-party data. Maybe at some point, it will get more accurate. But right now, it just -- it wouldn't be something that I would recommend.

Now as it relates to Q1 performance, last year, as we went from Q2 to Q3 to Q4, we had the steady step down of a number of enrollments, which were quite significant, but they were a trend down from 600 to 500 to 400. And I think there is a concern that we've passed out the market, everybody who wanted it at the KOL got it, and now it's going to be quite low.

And what we saw from Q4 to Q1 is very consistent enrollment forms from what we saw in Q4. And I think as those new patients continue to roll on medicine and by and large, many of the patients are staying on therapy, there's a compounding benefit that we would expect to continue.

And just as a reminder, there isn't the same seasonality for CRENESSITY as service trend also, right? -- for 1Q?

That's right. There is on the gross to net side, an element where the commercial patients have their co-pay resets and then we cover that. But in terms of reauthorization because 70% of these patients are commercial, they go through their reauthorization that's more mirrored to how long their plan had approved them to be able to continue to get CRENESSITY.

Typically, we see a 6-month initial cycle and then a 12-month approval thereafter. And we've not seen anything that would lend itself to thinking that reimbursement would become more challenging. That's been one of the upsides in the early stages of launch is that we've had over 80% of our TRxs are actually reimbursed -- and it's a testament to our specialty pharmacy PANTHERx they do a great job with this and then also our field payer team. And I think there's also an awareness of the impact of CAH in high-dose steroids on patients that cause the plans to cover...

What is in terms of sales...

It's growing every quarter.

It's probably now 1.3 million, 1.4 million in ZIP code.

And so how does that kind of compare to the market and the research that you guys have done?

We've clearly said that this could be a blockbuster medicine. And I think that it tees itself up given the price point. If you do get to the range of rare disease launches, if you look at what could peak penetration be for a medicine that's chronic medicine that's treating more or less the symptoms or controlling the underlying disease itself, you see a range of 30% to 50% overall adoption within the marketplace.

So I think if we ever get into that level of ZIP code of 30% to 50%, I think that you can see your way to some fairly large numbers that you're referring to. And I think that's really up to us and the clinician community to continue to help as many PAH patients as possible.

Let me tack on that the patent goes into the -- so looking at the commercial base of business that we have or we'll soon have is this just got a durable commercial revenue stream.

Yes. So I think our first peak sales number for INGREZZA in like $1 billion and some people thought that was too high. So it is a bit of a tradition that people...

INGREZZA is still trying to find its peak.

Yes. So on the point of like having a long runway, how do you see the competitive landscape evolving in the next several years?

Well, I do think going back to the runway piece, the past the peak is much quicker in a rare disease medicine like this as compared to -- we're still 9 years in for INGREZZA. I think it's about a 5-year period of time. So you think about the progress that we can make between the time we launch to that 5-year mark relative to competition, I think we're going to have a very dominant position in the marketplace.

So as we look at any competition, it's going to have to cross a very high bar to get patients to switch therapy, let alone disrupt the standard of care. So we, of course, keep an eye on competition. But when you have a medicine that's working, a medicine that's safe and data that supports your claims that are going to multiple years, multiple patient lives ahead of competition, we like that position.

And it's setting a high bar, not just for competition, but also for our own internally developed molecules that we're trying to pick the next generation like 1435 is the name of the product. So could not see across efficacy, safety and tolerability has given us something to go forward, but it's not going to be easy to beat it.

Okay. So let's talk about other aspects of the pipeline. So 2027 is going to be a big year for pipeline for Neurocrine.

It's going to be the first of many data-rich years for the company, the way the pipeline is set up.

Yes. So maybe let's start with urocortin. How are you thinking about -- well, remind us when that Phase III is.

Yes. So this is a selective M4 agonist that differs from Cobenfy, which Bristol has, which is a combination of a pan muscarinic agonist and a peripheral antagonist and different than emraclidine, which is a positive allosteric modulator and requires endogenous acetylcholine to work. So this is a first-in-class, best-in-class approach.

The Phase III studies for schizophrenia are enrolling. I was just texting Samir. He's got a site visit, making sure that we're conducting well-run trials. There's 2 main studies in schizophrenia. The first one is set out to read out in 2027. The second one in 2028. And we also have a program in bipolar mania for the same drug in Phase II.

So the 2 Phase III studies, the first one that's going to read out next year, how much of a read-through would it be for the one in 2028?

For schizophrenia, the way the trial is typically designed, you need to win on 1 out of 2. So we'll see.

Yes. But in Psych, it's always difficult to predict the outcome. And so that's why companies like ourselves, even if the regulatory guidance says that you only need one positive, which here, I think, combined with the Phase II and all the safety data we have with direclidine, I think one would be sufficient.

So you would still as a company want to run 2 because there are so many dynamics at play in terms of trial quality and clinical site quality. So we'll see. But we like the setup. We like what we think that the muscarinics can bring to the class of medicine for psychiatry, one that's safe, tolerable, easy to use, that's going to be one that we're going to look forward to launching.

One question about FDA interactions. It does look like there's going to continue to be some staffing changes there. Does that impact any of the conversations that you're having?

No. I think actually, the FDA has been quite positive and productive on all of our programs and even had some recent correspondence as of last week on our Friedreich's Ataxia program that was quite positive.

So I wouldn't foresee there to be much disruption. But of course, instability brings opportunity or moments of crisis. And I think that's something that all of us in the industry are getting used to it at this point. So it's always disappointing to see change, but I think we're resilient, and we'll be able to manage through.

Okay. And then let's maybe talk about osavampator since Matt, you mentioned it's one of your favorites. So why are you excited about that?

Well, first of all, I think the efficacy in Phase II was significant. And osavampator for those who aren't as familiar as an AMPA potentiator and it is a mechanism that many people have tried to explore in the past, but nobody has been able to drug it without causing some side effects. And thankfully, our partner, Takeda, developed this medicine tremendously well, and we're testing this in adjunctive therapy for major depressive disorder.

And so this is a significant unmet need, needs new mechanisms beyond D2. And I think that this has an opportunity to do that. So #1, on the efficacy front, we had 2 doses, both doses worked, 1 milligram and 3 milligram. 1 milligram worked a little bit better than the 3 milligram. And so we, from a risk reward perspective, chose the lower dose, and we've taken that lower dose into -- we have 3 active Phase III trials. We have one randomized withdrawal study, and then we also have an open-label extension study.

So a lot going on behind osavampator. So why am I excited beyond the efficacy financially, you get to a major market quickly. And I think this major market, if you have a new mechanism and people are -- and it's safe, I think it's something that people will be trying quite quickly and with the goal of being second line.

So our team is up for the challenge to get this enrolled and to get quality data, and then we'll see where we take it from there. But it could be quite transformative in a quick period of time for the company within our psych franchise. So we have the rare endocrine franchise that we talked about. We also have our INGREZZA psych franchise, and that's how the company is developing right now.

You also have obesity. So your focus on that seems to have evolved. I think initially, you started talking about metabolic disorders.

It had it coming on party in December, R&D Day.

I went to obesity at Jason and now we're full on obesity. So why does it make sense? I guess similar question to what we have been talking about with CRENESSITY. How do you see the competitive landscape evolving there because it does seem like there's going to be a lot of options for folks...

I think there's going to be a lot of options in terms of mechanism, in terms of administration, in terms of the frequency of how often you take it. So there's going to be a lot of opportunities for others to play in this space. There is a new mechanism that we're exploring CRF2 agonist. This is obviously using the heritage that we have on the CRF pathway from when we were, I guess, born by Kevin Gorman. We were talking about Kevin earlier today.

But I do think that this is a natural evolution to be able to look at the other side of CRF. And we also hired an expert team. Jude Onyia, our Chief Scientific Officer, led large molecules at Lilly. And we also have a handful of others who are experts in some of the other obesity assets.

So I think that it makes sense because of our core capability, also the market, there are pockets of need. And this is likely something that will be combined with our own proprietary GGG over time that will give it even more potency. So our view is let's explore it.

Financially, it's not a big investment to get to Phase I data. And actually, in Phase I data, it can inform what your Phase II or Phase III data might end up looking like as compared to sites is much more risky. And you really don't know until you get through a Phase III obesity, you can get a quick read within your Phase I trials for a little amount of money and then you can figure out strategically where you take it from there.

So I'm proud of the team and what they've been able to develop. I'm still personally getting up to speed on the obesity space because there's so much going on. It could be a full-time job to keep up on everything. But we do like the exploration of this pathway, and I'd personally like to know we're going to have data next year that will tell us if there's a there, there.

Okay. And then last question. I think people were waiting for years and years for you guys to decide what you were going to buy. And so now you've bought Soleno or buying Soleno. What is your thought about business development in the nearer term now that this is going to be integrated?

Well, this is one that we can handle financially with our cash on hand and it is also EBITDA accretive immediately and non-GAAP EPS accretive immediately. So from a financial position, you could practically still do some M&A. But for us, our focus is going to be on integrating that, integrating it very well, reestablishing our cash position. And then if the right acquisition is out there, we'll, of course, look carefully at it.

But when you think about INGREZZA, CRENESSITY, VYKAT, [indiscernible], direclidine, obesity, we have a lot on our plate right now, and it's not a necessity that we do anything. But I'm personally so thankful we're able to come to an agreement with Soleno, provides a great foundation combined with INGREZZA and CRENESSITY for us to grow off of for many years ahead.

Okay. With that, we're out of time. Thanks, Todd. From San Diego, and thanks, everybody, for joining.

Thank you.

Hello, and welcome, everyone joining today's Neurocrine Biosciences' Q1 2026 Earnings Call. [Operator Instructions] Please note, this call is being recorded. 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.

Thank you, and happy Cinco to mile to everyone. Welcome to Neurocrine Biosciences First Quarter 2026 Earnings Call. Joining me today are Kyle Gano, Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; Sanjay Keswani, Chief Medical Officer; and Samir Sadanti, Vice President of Strategy and Corporate Development.

During today's call, we will be making forward-looking statements, including statements containing projections regarding future events such as the anticipated closing of our acquisition of Sileno Therapeutics. 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. In addition, some of the information discussed today includes non-GAAP financial measures that have not been calculated in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented at the tables at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of the company's website. Following prepared remarks, we will address your questions.

With that, I'll hand the call off to Kyle.

Thanks, Todd. Good afternoon, everyone. Over the past several years, we've articulated a clear vision to become a leading biopharmaceutical company driven by growing and diversifying our revenue base while advancing and expanding our pipeline. Our first quarter performance reflects meaningful progress along that path. For the first time in Neurocrine's history, quarterly net product sales exceeded $800 million, representing 44% year-over-year growth. These outstanding results were primarily driven by INGREZZA, now in its ninth year since launch and continue to grow at a double-digit rate.

With INGREZZA guidance reaffirmed at $2.7 billion to $2.8 billion, Krenesninow annualizing at over $600 million per year and the pending addition of ICAT XR to our commercial portfolio, we are well positioned to deliver record net product sales in 2026. Regarding VCAT XR and the pending acquisition of Celeno Therapeutics, we will be limited in our ability to address questions a day given the ongoing tender offer. The acquisition remains on track to close in the second quarter.

That said, we've been impressed by the line team's accomplishments in delivering strong clinical results in a complex disease enabling broad utilization with a simple label and overseeing a strong launch of ICAT XR. We look forward to formally welcoming them to the Neurocrine team shortly. Together, we will remain focused on ensuring a seamless integration with a singular goal of serving patients with Potter Wiley syndrome in the United States. Beyond strengthening our commercial portfolio, we continue to invest in our R&D engine across neurology, psychiatry, endocrinology and immunology. Our pipeline progress is evident by our plan for 6 new Phase I and 4 new Phase II programs this year alone.

In 2027, we will report key data readouts for rosedapador, major depressive disorder, directed in schizophrenia and MBIP-2118 in obesity, just to name a few. When you combine the durability and remaining growth opportunity for our commercial assets, our innovative R&D engine and our strengthening financial profile, Neurocrine is uniquely positioned to deliver sustained value for both patients and shareholders. enterprise-wide momentum has never been stronger, and we're just getting started.

With that, I'll turn the call over to Matt.

Thank you, Kyle, and good afternoon, everyone. First, congratulations to our commercial and medical teams on an outstanding quarter. we delivered more than $800 million in total revenue with over 40% year-over-year growth. Importantly, for both INGREZZA and Cronecity, this performance reflects strong underlying demand and the meaningful impact we are having on patients' lives. Starting with INGREZZA. First quarter 2026 sales were $657 million, up 20% year-over-year. driven by double-digit volume growth and record new patient additions. When adjusting for 1 less order week in Q1 2025, growth was approximately 11%.

We are encouraged by the strength of the business exiting Q1 and are reaffirming our 2026 INGREZZA guidance of $2.7 billion to $2.8 billion. Consistent with our historical approach, we will revisit guidance following the first half of the year. Turning to Cronecity. First quarter 2026 sales were $153 million driven by strong persistency and consistent new patient enrollment forms compared to Q4. We continue to see broad prescriber adoption and favorable reimbursement dynamics.

As anticipated, we saw some slight gross to net pressure in Q1 due to commercial co-pay resets. As we look ahead, we remain very encouraged by what we're seeing and continue to believe Pranesity is well positioned to become a blockbuster medicine. Our revenue performance continues to support R&D investment while expanding profitability. During the first quarter, we generated around $200 million of net income on a GAAP and non-GAAP basis, respectively, reflecting strong operating execution.

On a GAAP basis, these results included gains related to equity investments and the sale of the diurnal business. On a non-GAAP basis, these results include $44 million in milestone expense into IP R&D. As you model operating expenses for the rest of the year, the full impact of the commercial expansion will be seen starting in the second quarter. So stepping back, INGREZZA and Kronesity together provide a growing commercial foundation, generating durable cash flows that enable continued investment in innovation and strategic business development opportunities.

This aligns directly with our capital allocation priorities and number one, drive revenue growth; number 2, advance our pipeline; and three, invest in business development. Regarding the announced acquisition of Sileno and Vicat XR, we are excited to add this asset to our portfolio and strengthen our long-term growth profile. We are not providing financial guidance related to the transaction at this time and will limit commentary during Q&A. Assuming a second quarter close, we expect to provide additional financial details on our Q2 earnings call. Overall, the first quarter reflects strong momentum across both our commercial portfolio and pipeline. with multiple key data readouts expected over the next 18 months, including Osabampator, direcadine and our CRF2-obesity program.

With that, I will hand the call over to Eric Benevich, our Chief Commercial Officer. Eric?

Thanks, Matt. May 1 marked the 9-year anniversary of the INGREZZA launch. It's remarkable that now 9 years post FDA approval and launch, we continue to deliver record new patient starts. This is a testament to both our commercial execution and the high unmet need of the tardive dyskinesia community. Our ongoing investments in the sales force, marketing initiatives, including DTC and improved formulary access are clearly driving strong results. I want to acknowledge our commercial and medical teams who continue to make a meaningful difference for patients to relieve the burden of tardive dyskinesia or Korea associated with Huntington's disease.

While proud of these achievements, we're even more encouraged by the significant opportunity that remains. Approximately 90% of the estimated 800,000 TD patients in the U.S. are currently not receiving standard of care first-line treatment with a VMAT2 inhibitor like INGREZZA. With continued rapid growth in antipsychotic utilization, the prevalence of tardive dyskinesia is expected to rise over time at a rate exceeding U.S. population growth. With an increased base of psychiatric health care providers to call on for our recently expanded sales force, we anticipate these tailwinds to support strong demand and sales through the back half of the year.

Before I wrap up my comments on INGREZZA, I'd like to remind everyone that May is mental health awareness month. And this week, in particular, is TD Awareness Week, what we affectionately refer to as TDA around here. This is an important week we circle on our calendar each year where we partner with key patient advocacy organizations in mental health along with state and local governments across the country to raise awareness and to deliver hope to the many thousands of people needlessly suffering from TD.

Now turning to chronocity, the strong momentum from 2025, the first year of our commercial launch carried over into our Q1 2026 performance. The Cronecity launch continues to progress extremely well with steady new patient starts, high persistency and compliance rates and favorable reimbursement consistent with the trends we observed in the fourth quarter of 2025. Importantly, we are seeing growing trial and adoption across all prescriber segments, including CAH Centers of Excellence, pediatric endocrinologists and community adult endocrinologists.

Through Q1, we've seen over 1,200 health care providers prescribe Croesity. Adoption remains balanced across both pediatric and adult populations as well as between female and male patients. With a modest ongoing skew towards pediatrics and females consistent with prior trends. As Sanjay will discuss in more detail, we continue to generate compelling long-term efficacy, safety and tolerability data that further reinforces the value proposition and Cronesiti's emerging position as the standard of care treatment together with low-dose GCs for patients with classic CAH. With sales now annualizing at greater than $600 million, Cronesity is well on its way to achieving blockbuster status.

So with that, I'll turn the call over to Dr. Sanjay Keswani, our Chief Medical Officer, to discuss progress with our exciting clinical pipeline.

Thanks, Eric, and good afternoon, everyone. I'd like to begin with highlights from 2 recent scientific conferences. Firstly, the American Association of Clinical Endocrinology 2026 Annual Meeting in Las Vegas. At this meeting, we presented new 2-year Conect data from the Phase III CATALYST adult study, demonstrating sustained and substantial reductions in glucocorticoid doses in adults with classic congenital adrenal hypoplasia. Approximately 70% of patients achieved glucocorticoid doses within the physiological range without compromising antigen control.

Indeed, a similar proportion of patients, i.e., 70% sustainably achieved normal levels of androgens. These 2-year findings demonstrated that Cronesti provided durable androgen control while enabling meaningful reductions in glucorticoid exposure. resulting in positive impacts on bone health, bone aging, hercutism, acne, wait and insulin resistance. Importantly, these benefits were sustained over time with greater than 80% study retention and no new safety or tolerability signals were observed.

Collectively, these findings support Cronecity as a long-term treatment option that meaningfully advances the standard of care for people living with classic CAH. We look forward to providing additional 2-year data across a broader set of clinical endpoints and outcomes at upcoming medical meetings, including Endo 2026 in June. Also in April, at the Academy of Managed Care Pharmacy 2026 Annual Meeting, we presented the first real-world head-to-head claims data comparing INGREZZA to deuterated tetrabenazine. These data demonstrated greater treatment persistence with INGREZZA capsules including higher rates of long-term treatment continuation and lower rates of switching between medications among adults with tadive dyskinesia.

Importantly, this higher persistence with INGREZZA was observed early in treatment and sustained over a 6-month follow-up period. As a first real-world comparison of its kind, these findings provide meaningful evidence to inform decisions in clinical practice and further reinforce INGREZZA's differentiated profile.

Turning to our clinical portfolio. Our focus this year is on building and advancing the pipeline. We've initiated 3 Phase II studies, all of which are currently enrolling. These include NBI890, our next-generation VMAT2 follow-on in tidalyskinesia, directed our selective M4 muscarinic agonist in bipolamania; and NBI-570 our selective dual M1 and M4 muscarinic agonist in schizophrenia. Our fourth Phase II study will be for crinecerfont in patients under 4 years of age with classic CAH. This study is on track for initiation in the coming months.

In addition, we currently have a total of 9 Phase I programs underway, including NBIP2118, a corticotropin-releasing factor type II receptor peptide agonist or obesity with top line data expected in 2027. We plan to initiate 4 additional Phase I studies in 2026, including NBIP-1968, our proprietary GGG agonist in combination with NBIP-2018 for obesity. NBIB-223, our gene therapy program for Friedreich's ataxia and NBI188, our CRF1 antagonist for an indication in women's health. This strong pipeline momentum in 2026 positions Neurocrine for multiple significant data catalysts in 2027, including top line Phase III readouts for Osabapator in major depressive disorder and the first Phase III study of direction schizophrenia, with a second Phase III study readout anticipated the following year.

In summary, our execution in 2026 is focused on advancing a broad and diversified pipeline setting the foundation for significant clinical and commercial value creation beginning in 2027. And as we highlighted at our 2025 R&D Day last December, this is just the beginning.

With that, I will hand the call back to Kyle.

Thanks, Sanjay. Nicky, I think we're ready for questions now.

[Operator Instructions] We will take our first question from Tazeen Amas with Bank of America.

Congratulations on a strong quarter. I wanted to ask about Cronesciti growth relative to where you thought it would be at this stage, how is that launch progressing? And can you talk to us about what the physician activation efforts have been, are they reactivating older patients? And where are most of their scripts currently coming from?

Thanks, Tazeen. I'll let Eric take that question.

Tazeen, I would say overall that we're ahead of where we expected to be at this point, approximately 5 quarters into the launch. Certainly, we are very pleased with the continued adoption that we saw in Q1. I would describe the new patient starts as very steady and consistent with the trend that we saw from Q4, along with continued strong persistency and compliance and favorable reimbursement. So as a result, the prescriptions and the sales are really accumulating nicely.

I will point out, though, that most physicians that have prescribed chronicity have only treated 1 patient thus far. And even though we've made great progress in the first year of the launch there, the majority of patients have yet to be treated. So we see a substantial opportunity ahead.

We will move next with Paul Matisse with Stifel.

Congrats on a great quarter. For INGREZZA and Cenessity, can you confirm that there weren't any material changes in inventory build or other one-offs that would have temporarily boosted the results for this 1Q? And then just as a second part to this for INGREZZA, in prior years, there's been some nuanced seasonality considerations and headwinds in 1Q that have been problematic for you temporarily in January and February, but then ultimately lead to some tailwinds into 2Q. I was wondering if you can speak to what that seasonality dynamic might have been this quarter? Has it gotten better now that you've contracted? And just as a result, like what could the cadence look like sequentially this year versus prior years?

Yes. So on the inventory, there was nothing material, nothing to note, a really clean quarter, reflecting very strong underlying demand. Team did a really good job managing through seasonality this quarter and would expect it to be somewhat similar to what you've seen historically. So well done to the team, and we're set up for a nice growth year, the rest of 2026.

Our next question comes from Brian Abrams with RBC Capital Markets.

My congrats on the quarter as well. On Kinesis, so it sounds like the new patient start forms have been steady and consistent. I was wondering if you could elaborate a little bit more on that? And maybe what's the right way we should be thinking about the expected cadence going forward just based on the trends that you've been observing of late?

Thanks, Brian. This is Kyle. I think Eric did a nice job articulating what we've seen in terms of new patient starts for Q1. As we mentioned previously, we are moving away from sharing specific numbers and focusing more on top line net sales moving forward, which would be consistent with other companies just where orphan medicines, but leaning into that and providing color where we think it's relevant. And in terms of Q1, we did see good steady new patient starts going from Q4 to Q1, and that extended to persistency and consistency or compliance as well and then continued good reimbursement rate of dispense scripts.

So with that, there's been broad accumulation of patients over time since long, and that's what's given right to first on performance in Q1, and we look forward to building on that with our expanded sales team here in the remainder of the year.

We will move next with Cory Kasimov with Evercore ISI.

Great. Appreciate you taking the -- and yes, it was a great quarter, but I do want to switch gears a little bit and ask about the pipeline. I'm curious if there's anything you can say as to the accrual of your ongoing Phase III neuropsych assets to both MDD and schizophrenia, and when do you think you might be in a better position to provide more granular or narrowed guidance on timing of these top line readouts that might kind of attract a little bit more attention there.

I appreciate the question. I think I'll let Sanjay take this.

Yes. So with respect to our current Phase III program, specifically in seat for MDD and directed in schizophrenia, they're all enrolling really well. So we're very happy with the current enrollment rate. And indeed, they should be reading out next year osiampator, all 3 Phase III studies. As per directed, we're expecting the first Phase III next year, but the second Phase III the following year. So everything on track as originally envisaged.

Our next question comes from Caren Johnson with Goldman Sachs.

I was just curious if you could talk a little bit about the reauthorization processes you saw for Conect in 1Q? And if you could provide any kind of commentary on reimbursements you're seeing in that population?

Yes. So as a reminder, the patient population with classic CAH that are starting chronicity are quite different than from a payer perspective than what we see with tardive dyskinesia. So CH population is primarily commercially insured and secondarily, Medicaid, the second biggest segment. So we don't see a surge in reauthorizations at the beginning of the calendar year, like we do with INGREZZA because of the low Medicare exposure. Really, what we see is that typically, when a patient gets authorization for their first prescription, it's normally going to be either 6 or 12 months. And then those reauthorizations happen as that initial set of prescriptions runs out of authorized fills.

So -- Overall, we've seen really high rate of reauthorization approvals, just like we saw with initial approvals for Kronecity, and it's going very well.

Our next question comes from Phil Nadeau with TD Cowen.

Congratulations. I wanted to follow up on the answer that you gave to Tazeen's question. I think in the answer to your question, you said that the vast majority of physicians have only written for conicity once. We're curious to have a little bit more detail on where the patients starting are coming from, whether it's community or expert centers or on checks adjustment to have been a decent proportion of patients coming from expert centers. So is that likely to continue? Do you feel like you've begun to saturate that part of the market and are moving more into community? Or is there still a lot more room to go at the expert centers?

Yes. In a nutshell, we haven't saturated any part of this market yet. Still early days with the commercial ramp for Cronecity. As a reminder, thinking about the 3 segments of prescribers out there, the centers of excellence, the pediatric endocrinologists and the adult and the community endocrinologist. What we estimated was about 15-ish percent of the patients are currently under the care of 1 of those centers of excellence. And I would say, in general, the -- in terms of the distribution of the business so far, it's been proportional in terms of sources of business. And ultimately, we recognize that probably the biggest rate limiter for getting patients started is the flow of patients through these practices. Most of these patients only see their physician once a year if they're adult patients. And if it's a pediatric patient, it could be 2 or 3 times a year.

So I think that's a contributor to this very steady rate of new patient adds. And certainly, being early in the launch, some of these physicians are getting their initial experience that they have additional patients, they're just waiting for them to come through. I think the sales force expansion is really going to allow us to increase not only the depth of prescribing, but also to increase the breadth of the prescriber base.

We will move next with Brian Skorney with Baird.

Great quarter. it seems like we've become pretty accustomed and truly seems good at modeling sort of the first quarter headwind INGREZZA basis. You've spoken about much different payer mix for corona. But I'm just wondering if you could kind of give any color or even quantification of any sort of seasonality you're seeing there? I mean -- or should we kind of walking this as sort of a step up from here on out would be somewhere in the $20 million per quarter range.

Brian, a clarifier, -- are you making the comment relative to INGREZZA or what to expect seasonality for Krones.

No. What to expect -- what, if anything, you're seeing in terms of seasonality for corona, I think the Street pretty much understands the seasonality dynamic for INGREZZA also ask them. Can we try to help us try and understand what, if any, there is for cranes that you're seeing?

Yes. On the gross to net front, maybe a couple of points of improvement coming off of Q1, but overall, we're still pretty early in this launch cycle, so to be able to tag a normal seasonality, it would be hard for us to say. But we do know, as Eric was mentioning earlier, the flow of patients is pretty consistent quarter in, quarter out just because of how constrained the prescriber universes. So I wouldn't necessarily point to massive levels of seasonality like you -- maybe not massive, but seasonality like you see with INGREZZA.

Yes, an -- I'm sorry, I'll just tag on and say that we don't have the bolus of reauthorizations in Q1 like we do for INGREZZA. And it's still early in the commercial ramp for Cronecity. And we're learning a lot about the patient dynamics and sort of the ebbs and flows. But I think the overlying theme has been just really consistent adoption across the community. And obviously, with the sales force expansion, we'll be able to get deeper with the existing prescriber base and also expand that base over time.

Our next question comes from Anupam Rama with JPMorgan.

Congrats on the quarter. So just a quick question about the upcoming ENDO meeting. What are some of the key market sort of physician outreach initiatives that you're going to have at the conference as well as any -- remind us of any data updates we could be expecting for Kinect at the meeting?

So Anupam, I'll sort of handle the first part of your question. So obviously, we're looking forward to Endo coming up in June as an opportunity to engage with the broader endocrinology community. In fact, we were just at a couple of important endocrinology meetings since these past few weeks, this past weekend. the Pediatric Endocrine Society meeting was up in unit of the woods in San Francisco, and I was there and was really impressed with the, let's call it, the energy and the enthusiasm that we are seeing from the pediatric endos that had experience with cronecity. There were 2 different seminars on CAH at that meeting, and both of them were packed room, which I think is indicative of the level of interest, had a bunch of KOL engagements at that meeting. And so it certainly came away with a lot of momentum and we expect to have similar momentum coming out of the ENDO meeting in June.

And I'll just answer the second part of the question, Anupam. So the community continued to be enthused by our 2-year open-label data showing the impact of decreased doses of glucortigoid and also decreased androgen levels. And so that relates to better weight control, decrease intern resistance as well as decreased issues of realization, like decreased acne and also decreased advancement of bone age, which is obviously incredibly important in terms of attainment of other heights for children.

And this is all in the context of really good safety and tolerability. So we've now had 35,000 patient week exposures. So all in all, really excited about the reception we're getting from the community, both at recent endoconferences and future ones this year.

Our next question comes from Jay Olson with Oppenheimer.

Congrats on all the progress and thank you for providing these update. You're planning to move your Friedreich's ataxia gene therapy program to the clinic this year, can you just talk about the Phase I study design and what sort of initial data we should expect in 2027. And then separately, for your NLRP3 program that you recently licensed you could maybe talk about the time line for moving that into the clinic and where that molecule fits into your core therapeutic areas?

Yes, Jay, this is Kyle. Thanks for the question. I think I'll just focus on the predrataxia program, and we can catch up offline on the other programs in the portfolio. But we're looking at starting the FA program here shortly. Once we have all the details of that ironed out, you'll see that up on clinicaltrials.gov, and we'll be able to talk in more details on that. But we are planning on sharing patient-level data towards the end of next year. So kind of consider this as a Phase Ib trial will be starting initially in the patient population. So we're excited to potentially offer a curative therapy for patients, and I look forward to talking more about this later this year, in particular at R&D Day when we can go over the program in more detail.

We will move next with Myles Minter with William Blair.

Just wanted to get your updated thoughts on your BCG agonist here. Obviously, we've got Lilly's Transcend type 2 diabetes data, which is pretty impressive but did show pretty high rates of vomiting and diarrhea and nausea. So just considering you're still proposing to put this in a combo with a CRF 2 agonist. I'm just wondering your updated thoughts on the therapeutic window here and -- as you put that into the Phase 1 development here this year.

Thanks for your question, Miles. Yes, it's still early days for us. So clearly, we're going to be very excited about the readout for, as you mentioned, our CRR2 agonist for obesity, which will be next year. And we're assuming that will be our core constituent of a number of different combinations including 1 with the BCG program. Our BCG program, we are targeting for first in human this year. And so we'll have the potential to actually look iteratively at clinical data for both programs to understand the ideal combination as it affects the risk-benefit profile.

We will move next with Ash Verma with UBS.

This is Jon on for Ash. For INGREZZA payer coverage standpoint, we saw that data XR has lost preferred coverage with a few key points recently. We just wanted to understand the implications of that for INGREZZA for rest of this year and next year. Do you think it's possible that PBMs are switching commercial coverage in front of the IRA year to defend or rebates?

Maybe I'll take this question here. Our coverage as it relates to 2026 is very similar to where we exited 2025. We have about 70% of all TD and HD Medicare beneficiary lives covered for INGREZZA and that puts us in a good spot in terms of the loss of deuterated tetrabenazine on certain plans. I think on a relative basis, things that are approved for INGREZZA, but we wouldn't expect any wide changes out there in terms of reimbursement for INGREZZA.

We will move next with Marc Goodman with Leerink.

This is Pam on for Mark. Just to follow-up on a previous question on the 24-month data for Kinect. Can you remind us again of the prevalence of the insulin resistance and obesity in pediatric CAH patients and also in adults? And how would this data received by with the physicians? And how clinically meaningful did they find it? Regarding the persistency, it's been also been very strong to date. Can you remind us again what are the main reasons for patients discontinuing honesty -- that's it for us.

So with respect to the first part of the question. So unfortunately, weight gain as well as issues with insulin resistance and other cardiometabolic issues -- we're actually quite common in the pediatric CH population. And this largely relates to the high doses of logo corticoids that they receive. And it's also thought that the androgen levels that they are typically on, with respect to the elevation can also contribute to this cardiometabolic morbidity. So the impacts we've seen with cronesity we expect the 2-year data have been really well received by the community with respect to them being clinically meaningful. But I'll hand it over to Eric for the second part.

Yes. Actually, I just want to emphasize that we've seen really very strong persistence and compliance with chronicity in the real-world setting, consistent with what we saw in our Phase III trials. As a reminder, in the adult and the pediatric studies, it was around 95% of patients that completed in those trials and rolled over. And then in the 2-year open-label data that we just have been presenting recently at the conferences, over 80% of patients completed 2 years. So it's been very favorable in terms of patients continuing to stay on treatment. And I think that, that's a big contributor to the accumulation of prescriptions and sales that we're seeing this early in the launch.

We will move next to Mohit Bansal with Wells Fargo Securities.

This is Susan on for Mohit. Congrats on the solid quarter. Two questions from us. One on Chronocity. I apologize if I missed this, but did you quantify new patient starts versus persistent patients? And if you can't give specific answer, just high level, what does that look like? And then the follow-up on pipeline. For cipro MDD, how do you guys envision positioning the drugs?

So I'll handle the first part of your question. No, we didn't give a specific number of new patient starts. But what we did say is that the rate of new patient adds in Q1 was very steady, and the trend was very consistent with what we saw in Q4 of last year.

So the second part of the question. So of note, our current patient population for our Phase III studies are patients who have not done well on an antidepressant. So typically, they're on a present that has not achieved a good response, and we're essentially adding on to that antidepressant to achieve a superior response. So this is potentially the niche that we could occupy in the marketplace as well. early, we're also looking at other life cycle opportunities with respect to this molecule.

We will move next with Fadia with Needham.

This is Poonam on for Ami. Congrats on a great quarter. For Kinect, you have previously noted that you've penetrated approximately 10% of the addressable market with higher demand in pediatric followed by other finals and other means. How do you see those trends evolving the sale. And for NBIP-2118, what would you need to see in the Phase I data that would support further development?

Yes. So we're not at the point yet where we're giving guidance on chronicity. But what I can say is that we're still early in the commercial ramp and we're learning a lot about this patient population and this prescriber base. We saw a very steady and consistent -- I should say, and consistent rate of new patient adds in Q1. With the sales force expansion, we expect that we'll be able to -- be able to build the depth in that prescriber base, but also continue to add new prescribers. There's a lot of these patients also that are not under the care of an endocrinologist. And so with our patient finding efforts, we expect to be able to reach and activate some of those patients this year as well. So I feel very good about where we are with the launch of Cronescity. And certainly, there's a lot of room for organic growth going forward.

On NBIP20118, we're just getting that study up and running, and we'll have data on that in the second half of 2027.

We will move next with David Amsellem with Viper Semler..

Wondering if you could talk more about 14.35 given that you're going to have Phase II data in CAH next year. Can you talk about relative potency versus cronecity at the CRF1 receptor? And then also, what do you need to see in terms of differentiation versus cones in terms of clinical outcomes and biomarker outcomes in order to justify further advancement.

Yes. So we're really excited about our 1,435 program. So just a contact. This is an injectable peptide. So the nice thing here is we could administer this infrequently to individuals. Then secondly, we have some nice data, at least preclinically with respect to better durable efficacy. And that relates to both the length of the efficacy, but also the depth of the efficacy as well. but the nice things from a drug development point of view is that we have good biomarkers in the area of CAH. So we can directly compare the biomarker readouts, including androgen reduction for this Phase II program compared to our prior results with Kronescity.

And maybe just to add a bit here more on this call at our R&D Day, we outlined a tiered strategy for our endocrine franchise as it relates to diseases of HP access dysregulation, Croniecity is going to be the foundational therapy that's part of this for many years into the future. So you can consider that first line in an NBIP1435 offers patients an alternative route of administration. and potentially other types of differentiation as we'll be able to identify in the clinical program, and you can think of that as a second line. And it's part of a whole series of programs that we think that can target different patient populations for CH patients moving forward.

We will take our next question from Yigal Nochomovitz with Citi.

Congrats on the strong quarter as well. I was curious with regards to the 90% of TD patients that are not currently on a VMAT2 inhibitor. I'm wondering with regard to the recent consensus recommendations on TD screening in the long-term care setting. to what extent that may help advance the gains in market share in that 90% of the segment of TD patients?

Yes, certainly, it's going to help -- what we've seen over time is that in part due to our educational efforts, we've raised awareness of tardive dyskinesia and certainly more commonly and more frequently, we see routine screening for tardive dyskinesia across different care settings, including long-term care more recently. And so having some criteria and consensus around the need for screening and have screen, especially for residents and long-term care facilities. I think raises that index of suspicion in nursing homes, and we can get more people helped.

The other thing that I'll reinforce here is that month of May is our mental health awareness month. And this week, in particular, is TD Awareness Week. And certainly, our teams in the field, our sales teams, our medical teams are leveraging TD Awareness Week to really raise the energy and the excitement around TD screening across all care settings, including long-term care.

We will move next with Sumant Kulkarni with Canaccord.

It's 2 parts. What are your thoughts on developing CRF antagonist in commission and working memory related indications? And you have a lot of pipeline programs now that target several therapeutic areas, so are there some that are already earmarked for external partnering depending on how they progress in the pipeline?

Yes. Sumant, this is Kyle. I'll take your second question here on the partnering piece. I'll go right now is to be able to move forward programs across our key therapeutic areas: neurology, psychiatry, endocrinology and immunology. Right now, I would say our pipeline is more weighted to psychiatry. But as our R&D engine moves more programs in the clinic, you will see that evolve into other modalities, small molecules, proteins, peptides as well as therapies across disease modification and symptomatic treatment of disease. And we'll follow the science into these different therapeutic areas as we have expertise now across these.

Right now, we don't have anything slated for partnering. But as time moves along and we see how these programs progress. we'd certainly be in a spot to consider those types of relationships moving forward. It's not something that's foreign to us. As you know, Neurocrine was built on partnerships both in and out licensing.

With respect to the first question, it's really, really interesting concept. Indeed, just anecdotally, in our CH patients, we have reported improvements in executive functioning suggested that there may be a link to CRF and cognition. So clearly, that's an area of study for us, and I'm sure we'll be producing some data on that down the road.

We will move next with Jatin Suneja with Guggenheim.

A really quick 1 for Matt. Can you maybe help me understand the tax? I think last year was about 30% for the year. How should we model this year and maybe in the long term?

Yes. I always love tax questions. No, I would expect our non-GAAP effective tax rate to be between 22% and 24% this year and within the low 20s percent going forward. So I think that's the appropriate way to model.

We will move next with Danielle Brill with Therese Securities.

Congrats on the strong quarter. So you mentioned with Cronecity that you have slightly more traction with females and pediatrics as expected. But curious what additional clinical or real-world evidence are needed or would help drive broader buy-in from the male and adult CAH patients? And then sorry if I missed this before, but was there any rationale behind the diurnal sale, anything to read into on that?

Yes. This is Kyle. I'll start with the Diana piece. I think for our perspective, looking at the opportunity in Europe, which is primarily where the medicine is currently available. We felt that was well better suited in an organization that had other products in the commercial landscape at the current time. We'll consider looking at our own medicines as they evolve through the pipeline in the commercial landscape. But we felt that was the right move earlier this year. On the other question, Eric, would you like to take that one?

Yes. So thinking about these different patient segments, it's very clear that there's high motivation to treat these pediatric patients, and we saw that at the Pediatric Endocrine Society meeting this past week. The theme is that with these younger patients, you need to protect the bone age, you need to protect the growth trajectory and you need to prevent early onset puberty. for older patients, for adult patients, depending on gender, the rationale for treatment, I think, is a little bit different. Certainly, for these adult patients, there's concern about bone mineral density, the potential for increased cardiovascular risk. mood disorders, et cetera.

So depending on one's gender and 1 stage of life, I think that there's benefit from treatment with Cronescity. For males in particular, I can say, as an adult mail myself, we're not the best of seeing our doctors frequently were not very compliant. So our expectation from a pre-approval work that we did was that it would probably take a little bit longer to really to onboard adult male patients relative to the female patients and to the pediatric patients.

We will move next with Laura Chico with Wedbush Securities.

I've got 1 on Cronescity. I won't ask about the pace of new patient adds for the remainder of '26 versus '25. But I might ask about what your expectations are in terms of maintaining compliance and persistence this year versus last year. You mentioned the expanded field force. You've also seen gains on the reimbursement side. So just trying to think about how we should think about the persistency and compliance rates in '26 on Cronescity?

Thanks, Laura. So we've been looking at compliance and persistency throughout the course of the first year of the launch, and we've seen that it's very consistent regardless of when patients started on treatment, whether it was early last year, mid last year or even the latter part of last year. It's been very consistent. And I think it's really a function of 2 things. One is the really great tolerability profile of Cronecity that emerged in the clinical trials and the open label extension. But also the fact that we have a single pharmacy distributor, which is Panther, and they do a great job of reaching out to the patients and following up with them, and they've had a lot of success in terms of when it's time to get that refill being able to reach that patient and to get it authorized.

We will move next with Huang with Deutsche Bank.

This is Sam on for David. Just a quick 1 on crinecerfont in CAA patients under the age 4 of the impending Phase II study. How should we be thinking about the opportunity for this patient subset perhaps in terms of patient numbers or unmet need or potential contribution to the existing CAH franchise down the line? And then if there's anything else you can share in terms of the regulatory or commercial time line for this development?

So I'll tackle the, I guess, the unmet need part. So obviously, that's an important -- like I said, for these younger patients, the earlier you can intervene the better in terms of protecting that growth trajectory in the bone age and so on. Right now, the labeling is limited to patients that are age 4 and above. And we have gotten a fair number of inquiries from parents with children that are under 4 asking about the availability or whether they can get treatment and certainly from their pediatric endocrinologists. So we recognize that there's an unmet need there, and we'd like to be able to address it.

Yes, in respect to the regulatory path. So clearly, we need data in patients less than 4 years of age. That's the main rationale for starting this U.S.-based study. And we expect the time lines we're assuming in the next couple of years, we'll have the data to potentially expand the label.

We will move next with Rudy Lee with Wolf Research.

Congrats again on the strong quarter. sell follow-up question on INGREZZA. I think we touched on seasonality already. But can you provide more color on the pattern for the remaining 3 quarters especially given the relatively stronger 1Q versus prior years? And did you note any changes in the market dynamics for the RA negotiation for Rasco?

So in general, we expect 2026 to be similar to prior years, where we experienced seasonal payer disruption in Q1 primarily related to Medicare patients needing to get reauthorized in commercial patients having a reset of their out-of-pocket co-pay. Thankfully, we've moved through that phase of the year already. This year, we were also in the midst of an expansion. And I would point out that our team did an incredibly great job of continuing to keep the momentum going with our business and to expand our field sales organization. And that became effective in early Q2. Generally, what we see after that Q1 payer seasonality is just a really strong focus on execution, being able to drive new patient starts through screening initiatives over the course of the balance of the year.

And this year, in particular, with an expanded field sales team. As I mentioned in my prepared remarks, we expect to see tangible lift and benefit from the expanded team as we get into the latter part of the year.

We will move next with Evan Seigerman with BMO Capital Markets.

McMartin on for Evan. Congrats on a quarter. Just doubling back on the persistence and compliance rates for Prenesti. I know you noted that these have been really strong and consistent since the launch. But for the few discontinuations that do occur are those mostly due to insurance-related issues or product profile? And have those changed over the course of the first year at all?

Yes, it's hard to really comment on what turned out to be a very low rate of patients discontinuing. In general, I would say that we haven't seen people discontinuing due to insurance reasons. In fact, out-of-pocket costs are really low, they're less than $10 per patient per month in many patients, nothing at all. And so affordability hasn't really been an issue or a reason to discontinue. There have been instances where patients have moved or they've been lost to follow up. but those are very few and far between. And certainly, we've been very pleased with the persistency that we've seen about 5 quarters now into this launch.

Thank you. And at this time, there are no further questions in queue. I will now turn the call back over to Kyle Gano for closing comments.

Thanks, Nick, and thanks, everyone, for joining the call today, your continued interest and support in Neurocrine. We are very encouraged by the strong start of the year that gives us a lot of momentum when we think about the remaining quarters. And likewise, our continued momentum across our commercial portfolio. the progress to advance our clinical pipeline, and we're very looking forward to looking -- to connecting with you all upcoming investor conferences and events. Thanks again, and talk to you soon.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.

Hello and welcome, everyone joining today's Neurocrine to acquire Soleno Therapeutics conference call. [Operator Instructions] 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.

Good Monday morning, everyone. Thanks for joining the Neurocrine Biosciences call to discuss our planned acquisition of Soleno Therapeutics. On the call with me are Kyle Gano, Chief Executive Officer; and Samir Siddhanti, Vice President of Strategy and Business Development.

Kyle and Samir will provide opening comments, and then we'll move to a Q&A session, where we'll also be joined by Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; and Sanjay Keswani, our Chief Medical Officer. Note that we posted today's slides to the Investors section of our website at neurocrine.com that you can follow along with for the discussion.

During today's call, we will be making forward-looking statements about the proposed tender offer for all shares of Soleno Therapeutics and subsequent merger and the business prospects of Neurocrine, including expectations regarding the tender offers anticipated occurrence, manner and timing, satisfaction of the required conditions to the tender offer and subsequent merger, its potential benefits and financial impact for Neurocrine, our integration plans, the development and potential expansion of Soleno's commercial product, VYKAT XR and other statements that are not historical facts.

These statements are subject to certain risks and uncertainties, and our actual results may differ materially depending on whether the transactions are completed as anticipated, if at all, the number of Soleno stockholders that will tender shares in the offer, the possibility of competing offers or acquisition proposals, Neurocrine's ability to realize the anticipated benefits of the proposed transactions, Neurocrine's ability to leverage its capabilities to extend the reach of VYKAT XR to more patients and additional factors set forth in the press release issued today and Neurocrine's filings with the Securities and Exchange Commission.

Further, we will be filing documents related to the tender offer, and we encourage you to read them since they will have important information about the tender offer. With that, I'll hand the call to Kyle.

Thanks, Todd, and good morning, everyone. We're pleased to announce that Neurocrine has entered into a definitive agreement to acquire Soleno Therapeutics. This is an important and exciting day for our company, our shareholders and employees, and most importantly, for the Prader-Willi Syndrome patients and the Prader-Willi Syndrome community.

Let me begin with the key takeaways on Slide 4 of today's presentation. First, Soleno is an exceptional strategic and financial fit with Neurocrine, and this acquisition reinforces Neurocrine's commitment to delivering therapies that are transformative for patients. The Soleno team has done an outstanding job advancing VYKAT XR, demonstrating strong efficacy in a complex disease with a clean and straightforward label that enables broad utilization. Importantly, both organizations share a deep commitment to patients. We believe this unique alignment will enable seamless integration grounded in a patient-first mindset.

Second, the acquisition of Soleno will accelerate Neurocrine's revenue growth and portfolio diversification strategy continuing Neurocrine's evolution and transformation to a leading biopharmaceutical company with multiple first-in-class medicines. The addition of VYKAT XR, a first-in-class treatment for hyperphagia and Prader-Willi Syndrome represents a highly competitive example of our strategy to bring forward novel medicines that are transformative for patients and their families.

Third, the transaction will position Neurocrine to deliver sustained growth and value creation. Soleno immediately increases our top line revenue growth, enabling us to continue to innovate and deliver more medicines for patients. With a strong intellectual property estate, VYKAT XR supports continued innovation, development and long-term value creation.

Slide 5 outlines the attractive financial terms of the transaction, under which Neurocrine through a subsidiary, will commence a cash tender offer to acquire all the outstanding shares of Soleno at a price of $53 per share, representing a total enterprise transaction value of approximately $2.9 billion. The transaction is not subject to any financing condition and will be funded with cash on hand, and we plan to optimize our capital structure by taking on a modest level of prepayable debt. We expect the acquisition to deliver meaningful financial benefits including accelerated revenue growth and enhanced cash flow generation through greater commercial diversification.

On Slide 6, you see an overview of Soleno in their product VYKAT XR. We believe VYKAT XR has blockbuster potential given the size of the patient population, the unmet need and Prader-Willi Syndrome and supported by a strong intellectual property estate. We are excited to build on the strong foundation established by the Soleno team and will look to educate an increased awareness in order to help more patients living with Prader-Willi Syndrome access effective treatment.

With this addition, our high-growth portfolio now totals 3 first-in-class medicines: INGREZZA, CRENESSITY and VYKAT XR, we expect the transaction to be immediately accretive to revenue growth in 2026.

I'll now turn the call over to Samir Siddhanti, Vice President of Business Development and Strategy, who led the acquisition process.

Thanks, Kyle, and good morning, everyone. Over the next few slides, I'll briefly cover the product, the disease and the opportunity. Staying on Slide 6. VYKAT XR was approved by the FDA in March 2025 and launched in the U.S. in the second quarter. The launch has been strong, generating $190 million in 2025 revenue to Soleno, including $92 million in the fourth quarter alone. This early performance reflects strong physician adoption and more importantly, the meaningful impact by VYKAT XR is having on both patients and caregivers. We greatly admire what the Soleno team has accomplished and look forward to building on this foundation to reach more patients.

Turning to Slide 7. Prader-Willi Syndrome is a rare genetic neurodevelopmental disorder, affecting approximately 10,000 people in the United States. The disease is characterized by neurological, behavioral and metabolic dysfunction. It's defining features hyperphagia, a chronic and life-threatening condition marked by a persistent hunger that drives compulsive food-seeking behavior and significantly impacts quality of life for both patients and their families. This insatiable hunger is often accompanied by serious behavioral challenges and comorbidities, which can increase mortality. Given the severity of the condition, there remains a clear need for effective treatments like VYKAT XR.

Turning to Slide 8. VYKAT XR is the first and only FDA-approved treatment for hyperphagia in patients with Prader-Willi Syndrome. By directly addressing the core and most life-threatening symptom of the disease, VYKAT XR is positioned to play a central role in treatment.

Given this profile, we see a significant opportunity in the U.S. With a well-defined patient population and high unmet need, Neurocrine's capabilities addressing diseases at the intersection of neuroscience and endocrinology position us well to expand access and reach more patients. Alongside CRENESSITY and our growing endocrinology pipeline, including NBIP-'1435 for CAH and NBIP-'2118 for obesity, VYKAT XR will be an important addition to Neurocrine's portfolio.

I'll now hand the call back to Kyle.

Thanks, Samir. Turning to Slide 9. Neurocrine is well positioned to expand adoption of VYKAT XR by leveraging our commercial infrastructure and therapeutic expertise across the full spectrum of symptoms experienced by individuals with Prader-Willi Syndrome. With continued growth from INGREZZA, a strong early launch trajectory for CRENESSITY and now the addition of VYKAT XR, we are excited to have 3 growing medicines that have achieved or we believe will achieve blockbuster status.

Slide 10 reflects our continued enterprise-wide momentum and disciplined approach across commercial, R&D and financial priorities as well as the key pipeline milestones in 2026 and that will build on the strong foundation we've established across the business.

Lastly, Slide 11 outlines how this acquisition strengthens our leadership position in endocrinology and rare disease and enhances our ability to deliver sustained growth and value.

With that, let's open up the line for questions.

[Operator Instructions] And we'll take our first question from Paul Matteis with Stifel -- apologies, we'll move to Brian Skorney with Baird.

Congratulations on the deal here. This is Charlie on for Brian. So we were just wondering, as you think about the landscape out there, there are a few competitive assets in development for Prader-Willi. It's a growing area of interest. So could you just talk to us about your confidence in the competitive profile here and where you see the landscape going in the next few years?

Thanks, Charlie. I appreciate the question this morning. I think I'll let Samir field this question.

Charlie, thanks for the question. Let me just start by saying that we're really excited about this transaction. We've been following this company in space for some time. And this sits right at the intersection of Neuro and Endo, so it really couldn't be a better strategic fit for us here.

We had a thorough diligence process that included evaluating the competitive landscape. We've been tracking that very closely. There's unfortunately been some setbacks in the space over the last 12 months. We feel good about where this asset is positioned to be a best and first-in-class treatment for PWS.

We'll move next to Paul Matteis with Stifel.

Not sure what happened there. Two quick things. One, can you guys talk about the diligence you did that made you confident on VYKAT persistence on a go-forward basis? And two, does the deal value here credit anything in Europe? And what are your thoughts on approval prospects there?

Thanks, Paul. Appreciate the questions here. Maybe just to catch up on the diligence piece. This was a rigorous diligence process that we undertook. We are well situated to review programs and assets and endocrinology space, given our team that developed CRENESSITY and brought that to that patient population in congenital adrenal hyperplasia. So we're well skilled here in experience when it comes to looking at programs in this space.

And likewise, on the commercialization side of things. And we've heard -- you've heard from us over the past couple of years, and we've talked about the launch of rare disease medicines. There's always ebbs and flows, when it comes to start forms as well as patients coming in and off of therapy. And what we've seen thus far across our diligence is all the profile aspects of a potential blockbuster in the making with VYKAT XR. So very pleased overall with the data that we've seen through launch and leading through all the information that we reviewed thus far in the data in 2026. So a very good view there overall.

In terms of Europe, we have no plans for bringing this medicine into Europe at the moment. Our deal value and model only contemplated the U.S. opportunity. And this was deliberate and intentional and very much the same way we've talked about CRENESSITY.

You only get one time to launch a medicine in a rare disease that's even more important. Each patient is important as you think about the early years of the launch. So right now, the focus is just on the U.S. opportunity, creating -- continuing to leverage the momentum the team developed in 2025 for 2026 and beyond.

Is that because of [ MFN ] risk, Kyle?

No, that's certainly just looking at making sure that we continue focusing on the U.S. launch. In rare disease, each patient is important. You want to make sure that you're able to leverage all the things that you started at the beginning of the launch without missing a beat. So it really is just the continuity of what the team has created on the side of Soleno and continuing that momentum in 2026.

We'll take our next question from Tazeen Ahmad with Bank of America.

This is Jeremy on for Tazeen. Congrats on the update today. I just wanted to ask a quick question on once the VYKAT XR launch is fully in Neurocrine's hand, what are the key focuses that the sales team will look to key in on in order to continue a strong launch? And then maybe just a follow-up on the prior question, just with regards to how you guys are thinking about long-term persistence of the therapy, just how that factors into your peak sales expectations?

Thanks, Jeremy. Maybe I'll pass this question to Eric. Eric, would you like to share your thoughts.

Yes. So I just want to reiterate how excited we are about the opportunity to build on the great work that the Soleno team has done launching VYKAT XR. And certainly, it's still very early in its commercial ramp.

We're excited with what we saw in 2025 in terms of the receptivity and the uptake and recognize though that there's still a long way to go, given the size of the PWS patient population and the significant unmet need.

One of the things that we've seen is that there's still need for ongoing education in the endocrinology community to help the providers really understand, I think, the full range of impact of hyperphagia. It's not just the insatiable hunger that these patients experienced. But really the behavioral aspects that need to be fully appreciated, the preoccupation with food that drive to consume food, all the behavioral problems that come from this and then, of course, the overeating and all the way to the point of morbid obesity or even gastric rupture or choking. So we recognize that the Soleno team has done a great job thus far, but there's still a lot of people to reach and educate in the community. And so I think that will be one of the focuses as we go forward for sure.

Phil Nadeau with TD Cowen.

Congratulations on the deal. Two questions from us. So first, following up on the last question. It's our impression that most patients here are diagnosed and either treated at an expert center or institutionalized. In your prepared remarks, you talked about reaching additional patients. So can you give us some sense of where those additional patients are and what proportion of the market you think Neurocrine can reach that perhaps Soleno couldn't? And then second, maybe more detailed question, I think Soleno has guided to 1,000 patient start forms within the first 12 months of launch. What's your confidence that, that number will be hit?

Eric, do you want to comment on this?

Sure. Yes. Let me take the second part of the question first. Our confidence is high. Obviously, we did substantial diligence and looking at all aspects of the commercial opportunity here and we recognize that, as I mentioned earlier, it is still early in the commercial ramp.

We see some similarities to our experience with CRENESSITY in the sense of there are some centers and some practices that have a concentration of these PWS patients, but there also is what we call a long tail of patients that are being cared for in community practices.

And certainly, those are -- the majority of patients are sort of outside of these centers of excellence or of these more concentrated practices. So it takes time to reach them all. And we also see that similar to what we see in the opportunity with CRENESSITY in CAH that these patients aren't necessarily seeing the providers frequently over the course of the year. So there might be only 1 or 2 times per year that they're seeing that they're seeing their endocrinologists. And so we have to make sure that VYKAT XR is top of mind when they do have those interactions.

So certainly, there's a lot of opportunity here. And in terms of reaching the patients and reaching that opportunity, we'll be continuing to look at how VYKAT XR is resourced. But obviously, we feel like the Soleno team has done a great job thus far of getting out there and driving the awareness and the education in those community practices and in those centers of excellence. And we think that certainly, we can build on the work that -- the excellent work that the Soleno team has done to be able to reach the vast majority of these patients that need treatment over time.

Maybe just to comment here real quickly to tie a bow on this. There's going to be a lot of things that we're not going to be able to talk about near-term views on the opportunity just because we don't -- we haven't officially acquired the company yet. But our diligence uncovered that we have a very good view on the long-term opportunity here, and we do believe VYKAT XR has all the hallmarks of a blockbuster medicine, and that's what we're keeping our eye on.

We'll take our next question from Brian Abrahams with RBC Capital Markets.

Maybe building on the last question. Just wondering if you can talk a little bit more specifically on how much overlap there is on the call points between CAH and Prader-Willi, maybe quantify the potential for synergies there. And then I guess I'm also curious how this transaction might affect your future capital deployment strategy, whether it changes your plans to reinvest about 35% of your revenue in internal R&D?

Maybe I'll start the question, and then I'll turn it over to Matt to share a few of his thoughts here. Just on the synergy piece, just to point out, our view right now, just to frame it is this is less of a cost synergy play as it is -- as much as it is about adding an additional first-in-class medicine to accelerate our revenue growth and diversification objectives. But of course, there is synergy here when it relates to 2 organizations working in the endocrinology and rare disease space.

And I'll just call out here, I think what Neurocrine brings and what Soleno brings when we combine the companies is certainly commercial scale. I think Neurocrine also offers medical capabilities across endocrinology and rare disease that we'll be able to leverage moving forward.

And then if you think about some of the areas that we've excelled in, at least in my view, for INGREZZA and CRENESSITY, these are both, I would say, similar disease states in terms of being first-in-class. Things like patient finding activities, diagnosis, education for health care providers as well as patients and then access. These are things that I think 1 plus 1 is going to be greater than 2, bringing our medicines together and we'll be able to leverage moving forward.

Now we haven't gone through the overlap here exactly on the prescribers. That's something that we'll get into over the coming weeks and certainly post close. Matt, do you have any thoughts?

No. This is a great transaction. And our capital deployment strategy is not going to change as a result of this highly profitable immediately from day 1, and we all feel really fortunate to have this product in our hands.

We'll move next to Corinne Johnson with Goldman Sachs.

Maybe you could speak to the confidence that you have in the patent protection into -- I think you've said the 2040s. I think Soleno was citing 2035. So could you just speak to kind of your confidence in the IP there?

I appreciate the question. This is Kyle. One of the things that I was pleasantly surprised when we got into diligence is how like-minded both our organizations are in protecting intellectual property and discoveries that have come out of the program. In the course of our diligence, we were able to uncover a pretty robust patent estate, and that gives us confidence that we believe that we'll have exclusivity out to the mid-2040s. So very excited to see that, and it's very consistent with what we've seen across the robustness of their program, ranging from clinical, et cetera. They've done a really excellent job there.

We'll move next to Cory Kasimov with Evercore ISI.

I know you said the deal is immediately accretive to the top line. But over the short to intermediate term, how are you thinking about accretion dilution with regards to the bottom line here?

It's immediately accretive post-close in 2026. It's already generating cash, and we won't be diluting shareholders by issuing shares here. This is an all-cash transaction with a modest level of prepayable debt. So I do feel like this is going to generate nice bottom line growth. But as Kyle said, this is all about revenue. This is about helping more patients and that's what our main focus is going to be on.

We'll move next to Anupam Rama with JPMorgan.

This is Joyce on for Anupam. If I could follow up on the EU for a second. I understand you guys have no plans for the EU, but are you looking specifically to partner out the EU Rest of World opportunity? .

Yes, we'll evaluate that as time moves along. Right now, it really is about focusing our team's effort on continuing the momentum from 2025 moving forward. And we'll have plenty of opportunity to understand the opportunities to bring this important medicine to other jurisdictions down the road.

We'll move next to Josh Schimmer with Cantor.

First, how do you get comfortable that the safety profile of VYKAT XR is going to remain adequate to support meaningful adoption going forward, considering some of the issues that have been very permanently discussed? And then while you've noted that the European launch is not a focus for the company, do you expect European approval on this review? And if so, will you be launching in Europe or not?

First, thanks, Josh. Appreciate the questions here. This is Kyle. Maybe I'll start with your first question. Obviously, we had a very large team diligence the program just as we would for any clinical commercial stage asset. And we had the luxury here to be able to review over 50 years of diazoxide safety, tolerability and efficacy data. And all those elements are pretty well characterized over the many decades of use.

Really, the focus then from our view on perspective was looking at the placebo-controlled as well as the open-label extension data. And with that leading up to the NDA review, we had patients or Soleno had patients on medicine for over 4.5 years. So we have a pretty good feel for this medicine versus if it was another one that was first entering the marketplace, and it gives us great confidence in the safety and tolerability as well as the efficacy that we see in the Prader-Willi syndrome patient population, which is quite robust.

So overall, the risk benefit profile is quite favorable for patients with Prader-Willi Syndrome. And as we've discussed here in a couple of different question, this is a very complex serious disease. And we think that this medicine fits nicely and will serve as a nice foundational medicine for patients for many decades.

We're excited what we have here in VYKAT XR. In terms of your EU question, I think we'll continue to evaluate what happens with the current review in Europe. But right now, it really is making sure that we continue the good success that the team has generated on the side of Soleno last year, and making sure that we're doing all that we can for patients here now, especially as we move through what we will call your typical integration. We don't want to have any efforts that would dilute the good commercial success that the team has seen thus far.

We'll take our next question from Mohit Bansal with Wells Fargo.

Congrats on the deal. So when we did our due diligence, there were a couple of topics which came across. So number one was that it takes a while for patients to realize the BMI benefit here and that could impact persistence. And then number two, the monitoring requirement with edema or not official requirement, but monitoring of edema, could be important given that this is a very complicated disease. So keeping those 2 things in mind, how do you think about the expansion of this drug beyond the KOL centers and then going into community, because that seemed to be a challenge when we spoke to KOLs last week or so.

Thanks. This is Kyle. I'll take the question here a bit, and I'll see if Sanjay has a couple of remarks to add.

I think when it comes to diazoxide and what we've seen thus far from the data set, I think it's important to appreciate that this is not a medicine for weight loss. This is a medicine that treats the hyperphagia that's associated with Prader-Willi syndrome. So as such, we're not looking for necessarily the opportunity to have patients lose weight here, although if you start patients younger at a lower BMI, you can maintain their weight over time, and that would be something that we would look at moving forward. So I think that's point number one.

On the other point, in terms of safety, if you will, we're talking about fluid retention in hyperglycemia primarily. These are things that are monitorable and also reversible if needed by discontinuing or lowering the dose. So these are things that we'll be looking at moving forward.

Certainly, there's going to be a very significant education component here. Soleno has done a great job of starting that process, and we'll look to continue to evolve that. And when you're working in these rare disease spaces, you have to make sure that you're open to continuously learning and adapting your education over time. And these are things that we'll do to optimize messaging and hopefully allow us to reach even more patients as time moves along.

Let me ask Sanjay, if he has anything to add.

Thank you, Kyle. I just want to emphasize that this medication impacts a defining symptom of the disease, which is hyperphagic behavior or food-seeking behaviors. And this has enormous impact on both the patient and the family completely independent of weight. What was interesting when we looked at the clinical data was that weight was actually prevented in terms of increase. So that was actually very reassuring as well. And then obviously, when thinking about a safety profile, we're looking at efficacy and also the severity of the disease. So we're very comfortable with the risk benefit profile that we've seen.

We'll move next to David Amsellem with Piper Sandler.

So can you comment on overall access, the mix between Medicaid and commercially covered patients? And how you're feeling based on your diligence regarding access and the extent to which you think there needs to be more improvements in the access paradigm once you take over the asset.

I appreciate the question. Eric, would you want to comment on this?

Yes. This is -- so far, what we've seen is that access has been really great in terms of getting prescriptions reimbursed. The majority of these patients are either commercially insured or via Medicaid. That is a similar payer mix to what we see with CRENESSITY in CAH and similar to what we've seen with CRENESSITY, they've had a very high rate of reimbursed prescriptions in 2025. So we feel good about the reimbursement.

Certainly, it appears that payers recognize the severity of hyperphagia and PWS. And thus far, they've been reimbursing these claims, initial fills as well as reauthorizations. And so that's something you have to monitor closely as you go forward with the launch. But so far, so great with VYKAT XR. So that's part of the enthusiasm that we have and why we feel like this certainly has blockbuster potential.

And at this time, I would like to turn it back to Kyle Gano for any additional or closing remarks.

Thanks, again, everyone, for joining this morning. It's really been an exciting time here at Neurocrine to talk about VYKAT XR, a first-in-class medicine for the hyperphagia associated with Prader-Willi syndrome. It really sits nicely with what we've done with CRENESSITY and INGREZZA, also first-in-class medicines and our commitment to bring transformative medicines forward for patients and their families.

If I could just leave you with a couple of thoughts. We believe that VYKAT XR is well on its way to become a blockbuster medicine. It has durable revenue that will continue, we believe, out to the mid-2040s, and it is an excellent strategic fit, as you've heard from many of us here this morning. So we're excited to continue this dialogue with you all as we move through this period of time as we close on this transaction. But it's exciting day for Neurocrine, the Prader-Willi Syndrome community and shareholders. We look forward to catching you -- catching up with you all in the coming weeks. 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.

All right. Thanks very much. It's my pleasure to be moderating this chat with Kyle Gano, CEO of Neurocrine; and Todd Tushla, Head of IR, who I made the joke is also moonlighting as an aircraft controller right now.

I thought you were going to talk about my green shirt for St. Patrick's Day.

You look great, man. I like the shirt. But yes, sounds good. I mean, I think, obviously, anyone listening here knows the story well. But Kyle, do you want to just kind of give us a couple of minute sort of snapshot of 2026 as a big year for Neurocrine, and then we can do Q&A. So that sounds good?

Yes, it sounds great. Thanks, Paul. And thanks for Stifel for having us here this afternoon. So yes, if I look at 2026 as we exited the prior year, we're entering this year, with a great deal of enterprise-wide momentum, and this comes on the heels of an expanding and diversified portfolio that we're executing on this year with an exquisite focus on delivering a lot of data next year in 2027, Phase II and Phase III trials, which would really represent the first year of many years to come where we expect data flow just like we're anticipating for 2027.

It's not to say there's a lot going on this year, but it is one of execution and performance. Last year, if you look at the commercial side of the business, we had just north of $2.8 billion in revenue. That's about 22% year-to-year growth, which is outstanding. That comes with the benefit of CRENESSITY adding to our topline each year now moving forward. And as a good reminder, when I talked about CRENESSITY and our revenue, it's our ability to diversify over INGREZZA, overtime, we had about 12% revenue diversification on top of INGREZZA last year in 2025. So a great way to think about the company as being a multiproduct, diversified biopharmaceutical company moving forward.

Just to tick off a few things about our individual commercial products, INGREZZA, eighth year into commercialization. We saw $2.51 billion in revenue. That's about a 9% year-to-year growth, double-digit volume growth on the year, record NRx over multiple quarters. It was a great year by all accounts. Little bit of a hit on gross to net there on our net price per script with some contracts that we took on in 2025, but it makes up -- we make it up this year with a really clean year from a contracting perspective and access perspective.

This year, we've guided to $2.7 billion to $2.8 billion in revenue. And we've got the focus here in a couple of different areas. I just alluded to, one, taking full advantage of the access that we acquired last year throughout 2026, leveraging our sales force expansion, which will be live in Q2. And there, we'll be looking at going deeper with existing prescribers as well as meeting new prescribers now on the antipsychotic side of the business, we've got about 30% new prescribers over the past couple of years that we weren't calling on. So we're able to reach those for the first time. And then also other sales initiatives, including a new DTC campaign that will come out later this year. So we're really excited about the opportunity that's out there. Good reminder, 10% of the 800,000 patients or Ono VMAT2 inhibitor. It's a lot of growth out there that remains, and we've got IP out to 2038 to support all the growth that we see in the product.

For CRENESSITY, switching gears a little bit, first, commercial -- first year of commercial sale of $300 million in revenue last year. We had about 10% under care of CRENESSITY of the entire CH market. So that's a great milestone, but it also means there's 90% of the market still ahead for us. And by all accounts, every measure that we look at, we exceeded all of our internal expectations this past year, starting with reimbursement rates that were high, 80% of dispensed scripts were reimbursed. We saw a very good persistence throughout the course of the year, and it really sets us up well for a strong second year 2026.

We're looking to continue supporting the educational needs of physicians and patients to hopefully change the standard of care in CH just much -- or much like we've done with INGREZZA and tardive dyskinesia. We've got plenty of time to do that with IP out to the early 2040s. So that's the commercial pipeline. And then we've got an industry-leading neuropsychiatry portfolio, osavampator and direclidine will deliver Phase III data in 2027, in particular, the second half of 2027 and early '28 for direclidine. We've got a number of Phase II programs that will read out over a similar time frame. NBI-570 is our M1, M4 dual agonist in schizophrenia right now. And of course, our VMAT2 efforts in terms of getting a next-generation inhibitor are moving along the pipeline nicely as well and NBI-890 is in a Phase II trial that will read out towards the end of next year.

So a lot on the commercial front, a lot on the pipeline. I'll just -- I'll stop there in terms of the highlights. We really are focusing on execution this year to deliver the data across our Phase II and Phase III programs in 2027.

Yes. Okay. Great. Maybe as it relates to the INGREZZA guide, right? So I think you guys said that price is going to be flat. Is that right?

Yes. So just to recap on the guidance for this year, $2.7 billion to $2.8 billion. When we look at the guidance, whether it's this year or years past, obviously, we look at trends leading up to the time we're having those discussions internally, but it really comes down to the pace and cadence of NRxs as well as what we're seeing on TRx the prior year. And then the timing of sales force and other marketing initiatives that happened during the course of the year. When it comes to specifics on NRx in particular, when we think about this year, just a couple of things to call out. We'll be looking at about a 4% to 5% price decline year-to-year for the expanded access that we have now to be maintaining that throughout the course of 2026.

So that 4% to 5% decline is relative to what we saw exiting 2025. And then in Q1, recall -- Q1 of this year, recall if we reflect back in Q1 of 2025, the differences in our business is that we brought on a couple of contracts. We did take a hit on the net price per script. So on a Q1-to-Q1 basis, that decline on a net price per script is about 10%. So we have those, I'd say, a little bit of a headwind there throughout the course of this year about 4% to 5%. You do see...

Is that due Kyle? I thought at one point...

So I'll just clarify, I think, Paul, I know where you're coming from. It was flat coming out of the second half of the year of 2025. So we had entered into those contracts over the second half of the year, coming out of the end...

But on a blended basis from the whole year is where you're talking...

That's right.

There you go on a blended basis...

I think that's helpful context for everyone's model.

And to repeat, the biggest hit -- like Kyle said, the biggest headwind is the anniversary heading into Q1, where you're going to have somewhere around 10% price hit, but that recovers a bit into Q2 and then you're on even ground in the second half of the year.

Yes. Yes. Other than that, I mean, we're looking at another strong year. We anticipate double-digit volume growth this year just as we saw last year. And with the price per script relatively flat over the course of the year, as we just described, expecting a nice strong year for the brand.

Yes. Yes. Okay. On -- just looking ahead to 2027. Do you feel like there's a lot of uncertainty on where the price of INGREZZA might be going? Like do you feel like you're going to get more information and how plans are going to be dealing with the Austedo MFP or -- because I think on the market side and the investor side, this is seen as a big source of variance, but I'm wondering if you also see it as a big source of variance.

Yes. I mean the way I think about the IRA, there's really 3 periods here when we think about Neurocrine. There's 2026 or what's left of it, when both Teva and Neurocrine are not in the period where either company is observing or implementing an MFP there's '27 and '28 where Teva, our competitor in this space is -- has their MFP implemented. And then there's 2029 when Neurocrine has its MFP implemented. So this year, relatively normal year for us. We've got great access, 70% of TD and HD patients are under the contracts that we have with plans today. So it's a really good place for us to be. That's why I go back to my earlier remarks and maximizing that now in combination with the sales force expansion that we have ongoing.

So that's good. When it comes to '27 and '28, that's the Teva MFP implementation period where we're not in the same situation. And when we look at what happened with Teva and Austedo, we feel that they landed in a pretty good spot, right, within the range that we had planned on internally in terms of their discount to their 2024 WACC, which is about 38% or which was 38%. That's a pretty good spot for us, and we know that we can manage through that and can still see really good growth for the brand. And when we think about our actions and our own activities this year, we're not expecting any midterm or midyear adds like we saw in 2025, it's stable now this year.

So what our focus and attention is, is negotiating with those Medicare plans now for '27. And those things or those discussions are ongoing, and we'll have an update on where they land or where we land with them later this year. Again, that will be for contracting for 2027. But we believe that there'll be a place for adjacent MFP products in these Medicare plans moving forward. We've already heard and see that from other brands that are out there today. And we know that we'll be able to manage through the next year and '28 quite well. And then we have our own MFP Imputation and IRA activities that will be supporting our 2029 year.

Yes. Okay. Makes sense, Kyle. As it relates to CRENESSITY, how are you setting the expectation of what can be a good outcome this year? And I think it's -- I think on the Wall Street side, like everyone knows that the ad rate is going to settle into some sort of steady state number, but the question is when is that going to happen? It feels like with -- this is one of those launches where people are going to be emotionally sensitive to very small differences in start forms. But how are you kind of like helping people think about like where this hits the trajectory now that we're past the bolus.

I have two cents on that. The start form piece was a big point of the Q4 call for exactly the reasons you highlighted. But I think if you're close to orphan launches, it's very typical to have a nonlinear path for new patient start forms. That's what we expected. That's what we saw. The new patient start forms internally beat our expectations with each passing quarter in 2025. And so to have that get to 10% of the patients in year 1 is a super strong start. And I think our expectations are if you combine what we're calling steady ads. And so I get that question quite a bit from Street, what do you mean study? And by study, we look at it weekly, in 2025, not providing any guidance for this year.

But for 2025, what you saw were double-digit adds throughout the course of a quarter. Now they varied across Q1 through Q4. But we never had an instance where you put up a 0 in 1 week and something like a 50. It will be nice, consistent double digits. And as long as you continue that into this year and combine that with what Kyle mentioned from the outset, very strong compliance and persistence at least through year 1, in line with what we saw with the open-label extension, combined with strong reimbursement, I think we're going to get -- I think this is the year, perhaps this quarter, hopefully, where people have less emotion about the new patient starts and you're looking at the trend line in net revenue, which is going to be an upward slope.

Yes. Yes. Okay. I'm always prepared for like a first quarter for Neurocrine that is a little confusing on either like INGREZZA or re-auth or something like that. Anything you're selling weeks? And then I'm always prepared for the 2Q set up to be great. But anything we need to keep in mind with 1Q and any complexities in sort of interpreting the upcoming quarter?

We know for INGREZZA. We go through the reauthorization quarter. There's always noise around that...

Is that better now that you guys have paid up for all this access?

There's still the piece of patients having to go through their process of getting their prescription refilled. That doesn't change. They still go through that dynamic each year. And we see that across all specialty medicines. It's not something that's unique to us. In fact, we often look at other branded antipsychotics and see what their patterns look like and not surprisingly VMAT2 inhibitors and antipsychotics kind of move together in terms of their ups and downs on an annual basis. But so you have reauthorizations through Q1 for INGREZZA, and then you have the pay down for commercial for the commercial plans for CRENESSITY in Q1. That gives you a little bit of a gross to net hit, but that works itself through in Q1 as well.

So we don't give any other intra-quarter guidance beyond that, but I'm looking for good years for both INGREZZA and CRENESSITY. And I think we touched a bit on the ebbs and flows and orphan drug launches, and I'm sure you've done this work, too, Paul, if you look at orphan drug launches that have some of the redeeming qualities of CRENESSITY, we're certainly on our way to blockbuster status category based on first year performance. We want to make sure we just continue focusing on that for patients, and I think one at a good place.

Yes. Yes. Okay. Very good. On the AMPA-PAM, so you have this great Phase II data, you're in Phase III. And I think -- the discounts that investors seem to give it are just one, the sort of MDD is hard discount and two, the dose response dynamic, it's like people want things to fit neatly into a nice box. But you obviously have looked at tons of MDD data sets from your time in BD and probably others maybe even at Neurocrine before I covered the company. But like what makes you so confident that this is like a replicable data set and that you know your dose going into Phase III.

Well, first of all, I will -- I'll take and appreciate that there's going to be uncertainty for any program in psychiatry. I think it's just the history of the space warrants the right level of concern because you have Phase II trials that seem to look good in Phase III, they don't necessarily replicate. There are things that we're doing to ensure that give us the highest possible chance of succeeding, but I appreciate that history. I guess I'd point to 2 things -- 3 things when it comes to our own program.

Number one is that we're working already in a validated pathway and that validated pathways by esketamine and associated in the receptor antagonist. You can go back 50 years through things like PCP that run through the same NMDA pathway. It's one that's been well paved. So you have that confidence knowing that you're leaning into out of the gate. Number two, we've also been part of that validation with our Phase II data in and of itself. Now where our AMPA-PAM or potentiator operates as downstream with the NDA receptor, but it requires the same messenger, if you will, to activate the system, which is a glutamate and that's what we're utilizing here moving forward. And then the last one is that our own Phase II data was spectacular.

I know we often describe an inverted or a irregular dose response. But in our view, both doses worked. This is a small signal-seeking study, not necessarily trying to get a p-value on each of the doses that we used, but that could have been probable. That would have been the case if we would have had a larger sample size here across both our 1 and 3-milligram doses. But overall, a very robust result. We move forward with the 1 milligram, but just to recap the efficacy here, we saw efficacy that improved from day 28 to 56. So there's an improvement -- or there's a robustness that continues to expand in terms of the efficacy magnitude over time, which is compelling suggests that the longer that you're on the medicine, the better you'll do. But at the day 56, we saw very robust results of about a 4.5 point MADRS improvement and 7.5 points at day 56, with an effect size that ranges from 0.55 to 0.75.

Of all the medicines that I've reviewed over the years, either in our pipeline or externally, I've never seen that robust of a result. So we're quite pleased with that in addition to all those additional things about working in a validated pathway that gives us comfort. So the gold in for us in Phase II is to replicate that signal. And to do that, we try to lean into things like simplicity and trial design and also trying to not go too far from where we were in our Phase II trial. So in this Phase II study, we used 2 doses, about 40 to 45 subjects each versus about 80 subjects on placebo.

In our Phase III trial, we're going to be 1:1 active to placebo and about 100 subjects of active versus 100 on placebo. So we really are dialing in to maximize both the signal and the statistics here in the Phase III trial design with a similar number of sites, similar geographies, similar team that's doing the oversight and that should ensure that we are giving this program the best chance to succeed.

I'll just add, what's torpedoed a lot of these programs and AMPA have been the safety margin, right? And here, we've studied this molecule up to 18x the dose in SAD/MAD studies versus the 1 mg got a 15 and so the safety and tolerability profile in the Phase II SAVITRI study was great. This seems to be behaving nicely on top of the efficacy that you're going to get.

Have there -- like some of these other AMPA-PAMs that have run into seizure issues. Have any of them shown like clinical proof of concept in mood disorders that would help corroborate this result?

No. And the reason why is, is that typically -- and this is a little bit nuanced, when you see a seizure or an animal model or in tox studies, Typically, you're giving a tenfold haircut on your margins by the agency. So they're never able to push the dose to the efficacious range in terms of exposures in Phase II to show an effect. And that's just been a very unfortunate kind of draw back on molecules of this mechanism. In fact, this is the second one that Takeda brought to the market. Recall this is a program that we in-licensed from Takeda. And they did an outstanding job really profiling molecules in this space, not only their own, but others to really drive a dial into a molecule that behaves like a potentiator or a positive allosteric modulator versus an agonist that would over activate the AMPA target in the system, and that gives rise to the seizure findings.

It's a good point to mention here the AMPA antagonist saw the opposite of what we have actually prevent seizures. That's Fycompa. So it makes sense that if you overactate the system, you would cause seizures. And that's been the challenge of our industry is to get to potentiators or PAMs.

Yes. Okay. And so you're running a huge program here, multiple studies. The first is reading out 2027.

Second half of '27, all of them will read out...

All 3 of them in '27.

All of them will read out in the second half of '27. And is that 2 parallel group and one randomized withdrawal? There are 3 placebo-controlled trials and one randomized withdrawal. The randomized withdrawal study we have one in the direclidine program as well, really help more from a payer standpoint than anything else. We'll have all the placebo-controlled study to result so well in advance of that one. But obviously, in psychiatry, related to how we started the discussion is risky, and we have a more traditional program in terms of the number of studies that we're working on here, doing 3 and looking to get at least to that hit positive.

Yes. Okay. Okay. Do you think this IIB has any regulatory utility that you already completed?

Our work out of the gate when we started this Phase II trial or the SAVITRI trial was that it would not be a pivotal trial. It's a smaller exploratory signal-seeking study. We're really trying to magnify what we could see in the MADRS. A lot of the other measures that you'd want in a placebo-controlled trial in Phase III for payers or for other means they're fully exploiting the profile of the molecule were in this Phase II trial. So it's not something that we've planned on leaning on. And to that end, as we mentioned on the timing of the Phase III trials, they're all going to be more or less reading out on top of each other.

So the value of a leading in 2 Phase IIb trial or Phase II trial may be less given what we've got going on right now. I know that a lot of the questions that we received in this area pertains to the openness right now, maybe of the FDA of looking at a plausible mechanism to bring in...

Who is asking you that?

One pivotal trial. I don't know if that's going to be a case here, but I'm just acknowledging that's there. I know a lot of other companies are trying to figure out what that means.

Right. I don't know, to me, I'm just -- my thought is like these parallel group studies can fail if you already have one in the bag. And then you're doing a randomized withdrawal study, which has a good chance right? Like you're already far along the way, right? But, yes, okay. People have talked a lot about the muscarinics. I actually wanted to ask you just quickly you have a next-gen VMAT2 that no one really talks about, right? And look at what AUSTEDO XR has kind of done to that franchise. How are you framing that opportunity? Like is there something like an XR AUSTEDO analog with the INGREZZA franchise with your next gen?

Well, it's been really difficult to get something that's been -- that has a better profile than INGREZZA. It's once a day has a lot of redeeming qualities. I mean the things that we're working on for the next-gen really are working at the margins of things that we -- that someone could poke for INGREZZA. But the overarching theme for the next-generation molecules are potency, once-daily dosing and low total daily dose. And the goal here is to drive an additional product that would be married to the oral that would be a long-acting injectable. You'd be surprised how much we hear from physicians of desiring that type of formulation to help with compliance in those patients side-by-side with their antipsychotics.

And that's been something that has been the top priority for us in a next-generation approach. And we've got 2 shots at doing that now with NBI-890 and NBI-675. 890 is in the lead and just started a Phase II trial in tardive dyskinesia, and we'll have data on that second half of next year as well, goes back to our data-rich 2027. But the idea there is that you'll get the exposures that are commensurate with efficacy and you'll be able to start a long-acting injectable program around that, just using that exposure range as a guide.

Yes. Okay. And then on the muscarinics side, I think there's been enough conversation for now just on kind of interrogating that the M4 data set you had. Where are you at the M1/M4. And do you feel like that might have a higher POS? Like do you like the dual more?

Yes. No. So we are very excited, obviously, for direclidine. We wouldn't be investing in it in the way that we are if we didn't think it had a lot of redeeming qualities over the current competition in the space, which is Cobenfy, but what we want to answer ourselves and we'll see here in early 2028, but the dual molecule that we have in a Phase II trial and now for schizophrenia is NBI-570. And there's been, as you've heard from us and others, this concept that M1 is for cognition and in-force for psychosis, but can they benefit each other in a complementary way in either one of those areas if you're looking at a single indication.

So by that, I mean, would you get more efficacy by adding M1 on top of them for into a disease of psychosis like schizophrenia. Or would be adding M4 on top of an M1 give you some benefit in a patient population with Alzheimer's. So these are things that we're going to be able to answer. And we see that from our Phase I studies all of our agonists have completely different profiles. I mean one of the things that's nice to see is that all of them are going to be able to be dosed in Phase II and Phase III without any formulation work once a day, but different profiles overall, we'll be able to see what those look like in the different patient populations. The dual is a little bit ahead of the other molecules. So it's in that Phase II trial.

Now for schizophrenia, we also have another type of dual different ratios of M1 and M4 in NBI-569 that we've earmarked for Alzheimer's disease psychosis and then we have a more traditional M1 agonist in development for Alzheimer's disease cognition.

How fast could you move Kyle with the dual in ADP, assuming this -- we see a signal from Cobenfy or something like that?

We'd be able to move into a broader Phase II trial probably beginning of next year. What we're doing right now in Phase I, which we think is going to be a differentiator in and of itself is show good safety and tolerability in the elderly population with 569. That will also help us triangulate to dose in dose selection for our larger Phase II trial next year.

Yes, yes. Okay. Anything else you want to highlight that you feel like everyone's overlooking or not appreciating that you are enthusiastic about?

I'd highlight probably 2. You captured one here, the next-generation VMAT2 program. I'd also highlight our next-generation program for CAH, which is NBIP-1435. That's another program that's going to move rapidly through the clinic, given our experience in CAH. It's in Phase I now, but we're moving into Phase II/III later this year, and that's something that could be a near-term commercial opportunity over the next 4-, 5-year period and offer something different over CRENESSITY in much the same way.

What's the mechanism of that?

It's a CRF1 antagonist, but it's a long-acting injectable. So it is offering something completely different than oral and we're excited about that one. And then related to CRF, we also have our diversified view of moving from R1 as an antagonist to R2 in CRF in metabolic disease, in particular, BC, that will deliver data in patients in the next year as well. So we'll see how that approach works and some things that I know that people are interested to see.

Yes. Well, great. Well, thank you, guys. I really appreciate it. It's always good to see you, Kyle, and Todd. You always make me chuckle. So it's good to see you too, man.

Don't forget about the strong financial profile. So if somebody is out there. It's time to invest now.

There you go. There you go. I think our story is simple, Paul. It's a growing blockbuster, one in the making, an expanding diversified pipeline, a lot of data in 2027, sustainable innovation engine and a strong financial profile position just like Todd mentioned.

Yes. Yes. Okay. Well, great, guys. Thank you so much. Have a good rest of your day, and we'll talk to you soon.

You as well.

Thanks, Paul.

Thanks, everyone, for listening.

Thanks for joining us. I'm Marc Goodman, one of the Biopharma Analyst at Leerink, and it's great to have Neurocrine here. We have Matt Abernethy, who's the CFO; and Todd Tushla, who's the IR guy. Thank you very much for joining us.

Matt, I'll give you a chance just to make an opening comment, maybe not too long, but just kind of set the stage.

I'll try to run out the clock if that's okay. And we'll pivot a little bit throughout this presentation. How about that, Marc? We will be making forward-looking statements. So we'll direct you to our latest SEC filings for the related risk factors and uncertainties associated with our company and then also our industry. Now that we have that fun fact behind us. We're at a great spot, Marc. We had -- how long was that dinner last night about 2 hours?

Yes, because they didn't serve the food very quickly.

Yes. They were still catching the salmon. But to be at a spot where you have 2 approved products at this point is just incredible. You have $2.7 billion to $2.8 billion guide for the year for INGREZZA. INGREZZA has actually been on the market 9 years now. And to be at a place to have double-digit growth still is just quite significant. We recently expanded the sales force. The sales force will be in place starting the beginning of Q2, but was at a national sales meeting a few weeks ago and just the energy is high to be able to help these patients with tardive dyskinesia. So a lot of excitement there.

Our second approved product really transformed the company, I would say, and that was with CRENESSITY for congenital adrenal hyperplasia. It's the first product approved in over 70 years for these patients. The only option for these patients prior to CRENESSITY's approval was just to take high-dose steroids. So there wasn't a good option. And in the first year of launch, I think we had over $300 million in sales, 2,000 patients being helped and that really sets us up well for continued growth into the future.

I think I read a recent IQVIA report that would put this launch actually within the top 10% of all rare disease launches of all time and so a big shout out to the team for being able to execute in that way.

With INGREZZA and CRENESSITY, we're able to take that cash and reinvest it back into the business. We put around 35% of our revenue back into R&D. That's a capital allocation philosophy for us. We have 2 late-stage Phase III trials. The first one is in schizophrenia. The second one is in depression. We started those trials last year and we intend to read those out in 2027 and 2028. In addition to that, we highlighted at R&D Day, all the progress that Jude Onyia and team have been making. They're way ahead of schedule. But for us, as we think about creating a major company here that has a market cap of $30 billion to $50 billion, you have to have great commercial products, and you also have to have an internal R&D engine that can sustain your R&D pipeline into the future. And I think that, that's what Jude and team are creating.

On the financial front, of course, being CFO, I like this part. We have over $2.5 billion of cash. We've accumulated a couple of billion in cash over the last handful of years. We've been able to pay down our convertible debt. And we have no debt at this point. So $2.5 billion in cash, no debt, 30% non-GAAP operating income. And so cash flow is quite good, even with all the investments that we're making right now.

So we have a lot that we're looking forward to, and I feel quite fortunate and honestly, Marc, to be sitting here as CFO of Neurocrine.

So when you think about this year, what's most exciting to you? What are you focused on?

Well, what's most exciting? I think there's really 2 things that pop out to me. The first one is with CRENESSITY. CRENESSITY is near and dear to my personal heart. Many of you guys might know this, but my son has classic CAH. He's one of the 20,000 patients in the United States that have CAH. And I didn't know anybody who was working on a medicine for CAH until Neurocrine reached out to me 8.5 years ago about the CFO role. And so for me, the journey to move my family across the country to San Diego and then you fast forward 7 or 8 years later, and there is an approval for my son, that just is incredible. And so fun to be part of a company that's helping patients with CAH. And my son actually was the first commercial patient on product. So he's got the longest experience base.

So I would just say, I feel quite blessed to be part of a company like this. I was at the sales meeting a few weeks ago, and the team is just ecstatic. The stories that we're hearing in terms of patient benefits, the stories as it relates to what the clinicians are thinking. There's no doubt in my mind that this can ultimately be a blockbuster medicine. And I'm sure we can get into more of the attributes of why we're bullish on the prospects for CRENESSITY this year. But for me, that's number one, and I know that's more personal and biased but a lot of optimism for this year.

The second one is osavampator. Osavampator is an input potentiator that's being studied in major depression. I think we can all relate to patients that have depression and need a better option. This had tremendous Phase II data. And we're now executing those trials and ensuring that patient enrollment is done in a quality manner so that when we get the data in 2027, you're not going to be sitting wondering, was this a failed trial, you'd rather be a failed drug if the data does read out negatively. But we have a lot of reason for hope. And I'd say those are the top 2 items when you say, what am I most focused on or most excited about? I would lead with those 2.

Let's talk about CRENESSITY just for a minute and talk about the -- just some of the numbers. I think one of the things that we're always focused on with these types of launches is where are the patients. And so talk about where these patients are and the patient -- the 2,000 patients that are on product today, where are they? And I guess the context is centers of excellence versus the community. Just give us a sense of what's going on there.

Yes, there's 20,000 patients with classic CAH that's what our best estimate is at that time. You also have 60,000 to 80,000 patients with what's called nonclassic CAH or what they've been coded that way. So part of the patient finding exercises is being able to sift through because there's not a specific ICD-10 code for classic CAH is trying to parse through classic versus nonclassic. But when we look at the marketplace, there's about 8 -- like full on centers of excellence accredited by the CARES Foundation. And there's another 20 or so that you would call what I call almost the COE. They don't quite fit the full criteria, but they see a lot of CAH patients.

So in that, call it, 30 institutions, you have about 15% of the patient population, so about 3,000 patients. The rest are spread amongst different regional endocrinologists in different even primary care physicians and for women, OB/GYNs. So you have a disbursement outside of that concentration of 15% is where the patients are at right now.

When you take a step into where did we get the first 2,000 patients from? Somebody asked me recently, like, wow, you've tapped out of the centers of excellence. You got most of your patients from there. The next leg of this lift is going to be so much harder than it was first. And yes, with every rare disease launch, you have patients who raise their hands or clinicians who are fast adopters upfront. But I really do want to reflect that less than 50% of the 2,000 patients came from centers of excellence.

So you still have a significant amount of opportunity to gain access to patients at centers of excellence. And so as we look through our growth prospects, we have a lot of depth left still at COEs, a lot a depth with those clinicians who have written this first year. And then we also have people who have not written yet. And so a lot of effort is still going to go behind this launch, but we're very optimistic.

Talk about the COEs who've not written yet. And why have they not written yet?

Well, it's a good question for them. But what I would say is these folks feel like they're very skilled in the art to treat patients with CAH. They've dedicated their entire life's work towards that. So for those patients or for those COEs who haven't written with much depth at this point, I think the feedback is, one, I want to make sure this is safe in the long run for these patients. I also want to understand for pediatrics, you're really caring about the progression of the disease, in particular, with androgen control and how those that then translate to accelerating bone age versus chronological age.

So I think part of what's holding COEs back is just simply wanting to see outcomes of how patients are doing on therapy. And thankfully, we have a very nice open-label extension study. We've shared some with investment community, but at a conference later this year at ENDO, we'll be really highlighting, especially on pediatrics, the improvement that patients are seeing in growth velocity and bone age advancement relative to chronological age. And so that will be a big event for us to be able to ensure that we can share the data that support this being efficacious, but then also safe. Any time you're talking about putting a medicine on board a young child, you're wondering about safety. And so far, it's been pretty much right to label and the experiences that we're hearing back from clinicians has been quite strong.

So how many doctors have written so far?

A little bit over 1,000. So there's about 8,000 clinicians in our call universe, you could basically say if you have 3,000 to 5,000 patients that are ultimately prescribing, that gets you more to the peak penetration would be. When we -- also coming out of the last call, there's been a lot of questions around the step-down that we've seen in enrollment forms each quarter. And when we go back and look at all the rare disease launches, that's not surprising. There's ebbs and flows of new patients being put on to therapy. This is one that is only prescribed as patients actually go into the clinician's office 1 or 2 times per year. And ultimately, those who got on medicine early, it takes 6 to 12 months to see the benefit of what those patients are seeing and experiencing.

So I don't think it's abnormal to see ebbs and flows but still what you're asking is, number one, does the medicine work? Number two, is it safe? And then from a company perspective, are we getting reimbursement? So what we've been surprised to the upside on are that feedback has been the drug is working as advertised, it's safe, and we have very strong reimbursement at this point. So with those characteristics and studying even what other rare disease launches have ultimately done, peak penetration of between 30% and 50% is the median of what you see rare disease launches get to. And I don't see any reason why we couldn't get into that ZIP code given the efficacy and safety and even some of the KOLs and clinicians have said that they believe 80%, 8-0 percent of patients with classic CAH could benefit from a medicine like CRENESSITY.

So a lot of excitement. And I think when you accumulate patients over time, this ultimately becomes a very nice and big drug for the company.

So you started to talk about reimbursement. Just give us a sense of the evolution of the reimbursement over year 1 and what's going to happen in year 2?

Yes. So when we launched the medicine, I think we conditioned the Street that we would have most patients going on free drug the beginning of launch. And then over time, it would progress into a reimbursed script. The opposite was true. And I think that, that was because, number one, we had a great pharmacy partner and PANTHERx. They're very skilled at the art here.

The second piece is, I think as you talk to plans and commercial plans, these are complex patients and it's pretty easy to understand high-dose steroids aren't good for patients over the course of their entire life. And since 70% of these patients are commercial, what we ultimately found is this is being managed through an exceptions process, each claim. And we've been very encouraged by what we've seen. Typically after 3 to 6 months to get a 12-month authorization, you're typically looking for feedback from the clinician that androgens are being suppressed and that's about it.

So I don't think we could ask for anything better on the reimbursement side, and we had a team out engaging with payers for 6 months prior to launch. And so I think that's really what set the foundation for success.

Marc, you got like steady new patient adds in an unmet need area. You've got very strong compliance and persistence for existing patients, and you have very strong reimbursement. So all that sets up for a blockbuster product. I think internally, the question for us is it's similar to kind of where INGREZZA was, how big can this be? And we don't know yet, but it's going to be a blockbuster.

Right? So the reimbursement today is just not an issue, like patients.

Over 80% of prescriptions are being reimbursed.

And the ones that are -- it's just a small pushback?

Yes, or they have a -- yes, a small pushback. And even the actual ultimate patient percentage that get a reimbursement is higher than that 80% because that reflects those who maybe had a month or 2 of free medicine and then ultimately get on to reimbursed. But in those limited instances where insurance won't cover it for whatever reason, as long as they're a classic CAH patient, they get free medicine. And that's been the push to the clinicians that if you write a prescription of CRENESSITY, your patient is going to get CRENESSITY within the first 10 days.

And I think that's another piece when you brought up earlier, why have some COEs not written it, it's just the faith of are my patients really going to get on medicine and what is going to be the complexity of having to care for CRENESSITY being on board for the patients. And I think we've made it as easy as possible.

And for those COEs that haven't written, it's not a matter of if it's going to be when. But we'll get in there.

And just mention persistence again. So what are we talking about?

Very high along the lines with the open-label extension study. So you're talking north of 80%.

Yes, amazing. And one last thing is product awareness just to kind of come back to those 8,000 doctors. You mentioned 1,000 have written so far. So you've increased the sales force a little bit to kind of go after more. Just give us a sense of how many of those 8,000 have been touched so far. Did they even have product awareness, so to speak?

Yes. I mean a lot of these, if you're talking about 20,000 patients and you have 17,000 of those at non-COEs, they're spread out. And you have many doctors who see maybe one. And so what you're trying to do is figure out how do you engage with that clinician when they're only seeing one patient a year and they're sort of it's not the priority. How do you ensure you time of visit of product awareness with when that patient is coming in. So there's some pretty cool data-driven call point activities where you can potentially see, for example, in a de-identified way when labs might be being done and they're ordered by a clinician and that would maybe trigger going and making sure there's product awareness.

So I think the biggest aspect is, number one, just the feedback that is the drug working and hearing that, whether it's at ENDO or other endocrine society meetings and then timing and awareness visit in proximity to when the patient is actually coming in to keep it on the radar, I think, is part of the recipe here for continued progress, but all good. And I mean, it's exciting to be part of the -- it's exciting to be part of the company. There's -- in drug discovery, you have a really high rate of failure. We're experts at family and you have to celebrate the win. And for us to have 2 internally developed compounds make it all the way into the promise land and being selling well, it's quite encouraging.

And even hearing in the landscape positive data from other companies, biotech is an important vehicle to be able to help society. And I think there's been a lot of negative rhetoric that has put some pressure on the industry. But when you take a step back and think about transforming lives of people who struggle, it's very rewarding and very satisfying and very proud of where we're at as a company.

Let's flip gears to INGREZZA, $2.7 billion to $2.8 billion. Give us a sense of volume versus price in the expectation? And then break it down a little bit how you're thinking about each one.

Yes. So price is the most straightforward because we entered into contracting last year. throughout the year that expanded our access with Medicare Part D from around 40% to over 70% by the end of the year. So there was a lot of noise and confusion that occurred last year with INGREZZA and that's all behind us at this point. So if you think about price just running it through 2026, sequentially, very consistent with how we exited the year. However, when those price impacts occurred throughout last year, you still have the year-over-year headwinds associated with that.

So for the year, I'd expect net price to be down year-over-year close to 4 -- call it, 4% to 5%, more heavily weighted or most heavily weighted in Q1 and then a little bit of price compression in Q2 and then more flattish year-over-year in price in the second half of the year. Our $2.7 billion and $2.8 billion implies about at the midpoint, almost 10% growth. And so if you remove the 4%, you're talking about a 14% to 15% growth year volume-wise for the company. So this blockbuster all comes down to volume, it all comes down to developing the tardive dyskinesia market. Even 9 years into launch between ourselves and our competitor you have only 10% of the 800,000 patients actually taking a VMAT2 inhibitor today.

So call frequency matters in a significant way to put tardive dyskinesia on the radar of these mental health clinics and facilities. And so we recently expanded our sales force to continue to ensure that we have the right level of call frequency to be able to drive that volume.

So if you ask within the range, what's going to be the key factor of being at the high end or the low end, it all comes down to new patient generation. And that's going to be on the heels of our sales force expansion as well as some of the direct-to-consumer advertising effort.

It's volume. Pricing is kind of locked in for this year.

Yes.

What about for next year pricing? How do you think about?

We'll figure out pricing throughout this year. We're going through the negotiations with the plans right now. But for those who aren't as close to the story or maybe understand the background of your question. This time last year, I remember a lot of conversation was Teva was selected for negotiation for their medicine, which was going to have an MFP in 2027. And there was fear that if that price was going to be so low that there is going to be price compression on INGREZZA or we'd be kicked out of formulary in a way that would allow patients not to get access to INGREZZA.

So I think 2 things have happened over the past year that have been encouraging that make us feel like it's going to be a manageable window of time for us. One, their negotiated price ended up becoming public and the discount was not as bad as what people had feared. The second piece is it's also become clear in terms of their XR and their milligram pricing strategy that the price is actually going up on a net basis. And so where we sit as a position product in a payer's mind, were in our mind or perspective, a better product at a very affordable price. We don't see a major reason why we won't continue to have strong access through '27 and '28.

So we'll get through the negotiations. We'll find out if we're on or off formulary at the end of this year. But ultimately, we do expect that we'll have strong access in '27 and '28.

Yes. And both companies obviously are trying to grow the market. Where is share of those new patients today roughly?

So new patient share, at least our internal information would put us at about 55% new patients, and they're at about 45% new patients.

And that's data as of like last quarter or last month?

We track it every week. But that's probably on average the last...

Last couple of weeks...

Second half of last year. That's a pretty good proxy.

So it's pretty much the whole second half, you were running more share than they were.

Yes. And that's different than what we had exiting 2024. We had been at a spot between the XR launch and then also their expanded sales force that we were actually at a place where we were not gaining as much and they were at a higher share. And so we've seen that reverse throughout 2025, and that led to record numbers in new patients in Q2 and Q3 and about the same in Q4 as what we saw in Q3. So a significant progress being made on the new patient side of the equation last year.

Switching gears. One investor comment that I hear quite often, and you hear this, I'm sure, too, is wow, at Neurocrine. Great company, great products, but boy they sure do spend a lot of money. So I guess maybe you can address that as a general question. But I think interesting -- a second part of the question is, wow they're moving into obesity? I mean, like how much are they going to spend on obesity. It's a huge crazy space to get into like I think it's important to help people understand like how you're thinking about obesity? Well kind of 2 questions, but it's a...

Yes, that's a buzzword. Anytime you say obesity, I think why are you running into such a competitive space. And I think we're fortunate, honestly, we have an endocrine division that's been in place for quite some time. We have experts that we've hired from all the major companies. And Jude Onyia, our Chief Scientific Officer, actually was the originator of all the large molecules at Lilly.

So I think we know what we're getting ourselves into. And I think we know how we might be able to differentiate. I think it's clear there's not going to be just one winner in this space. There's going to be a lot of different forms in terms of book mechanism as well as ultimately the ease of administration or the frequency of administration. So I think there's a lot for us to continue to pursue in obesity.

And from an investment perspective, it's pretty modest to get to patient level data or at least a healthy obese patient level data. We'll start a trial this year. We'll get some data next year, and we'll let data do the talking in terms of where we go from there. The magnitude of investment goes up significantly when you get -- especially in the Phase IIb or a Phase III setting. But in terms of our capital allocation strategy, we want to invest around 35% of revenue back into R&D. And if you have the quality assets to be able to invest behind that and reach a threshold decision that's data-driven, that's the approach that we're taking right now.

Every analysis that we do, Marc, on shareholder value, what drives shareholder value. The #1 factor is correlation to medium-term revenue growth. And so you can see our #1 capital allocation priority is to invest behind continuing to drive revenue growth. So we'll get critiques around sales force investments, direct-to-consumer investments. We, of course, could find a way to be more profitable in the short term, but we're looking at trying to create long-term shareholder returns here on the SG&A front. And like I said, on R&D, you have to be able to show a sustainable pipeline, and that's something that we're doing within R&D at the 35% investment clip.

And lastly, just to be clear, we're very profitable. I mean 30% non-GAAP operating income. We are committed to staying profitable. It's just we're not focused on maximizing short-term profitability. We do feel like the investments we're making will set us up for long-term success.

And where does business development kind of fit in? Give us a sense of BD last year and how you're thinking about it now?

We did a lot of smaller deals to really enable Jude Onyia's group. I think Samir Siddhanti and team did close to 10 business development transactions.

Many we didn't hear about.

Many of you didn't hear about. They're just smaller in nature and things that you could throw into your development candidate pool. And and go through and see what you have. So we've been focused on the early stage and we're also very focused last year on getting the Phase III trials up and running. So if you think about the capacity of the company, we had CRENESSITY launching, you had the pipeline expanding.

Our focus last year from a BD perspective is more small internal tuck-ins. But we, of course, have the financial flexibility if the right asset came across our plate at the right time, we would, of course, be in a position to act. But right now, feel good with what we have.

Good. Good. Thank you. Thanks for joining us. Appreciate it.

Thanks. Always fun.

Good morning and welcome once again to TD Cowen's 46th Annual Healthcare Conference. I'm Phil Nadeau, one of the biotech analysts here at Cowen. And it's my pleasure to moderate a fireside chat with Neurocrine Biosciences. Those of you who follow our research know that Neurocrine is one of our top picks for this year based on its growth prospects. So we're happy to push the team on that today. We have with us Kyle Gano, CEO; Jude Onyia, the CSO; and Todd Tushla, Vice President of IR. Guys, I'll kick it to you to start.

Can you give us a brief state of the company overview, biggest strengths, biggest challenges? And what does Neurocrine need to achieve to drive outperformance over the next year or 2?

Well, thanks, Phil. Thanks to Cowen for having us out here and be able to share our story on Neurocrine. There's a lot of things in that first question there. So I'll do my best. Maybe I'll start with the bookends there and the state of the company and thoughts on drivers of overperformance. I think you capture, in doing so, some of those things in between. When it comes to the state of the company, I think it's important to recognize where we are at present. And in my view, I think we'd all agree here on the stage, Jude and Todd, that the company is operating in a position of strength. I think that's an important place to start.

And it really does begin with appreciation that we have 2 commercial value drivers now with INGREZZA and CRENESSITY. Both of these medicines have a long runway in terms of intellectual property. Both of them are indicated for disease states of significant high unmet medical need, and that gives a lot of opportunity in terms of future growth. When we think about INGREZZA after 8 years of commercialization, we saw double-digit volume growth in 2025, and we're expecting that again this year. We also see a medicine that has the best clinical performance of VMAT2 inhibitors in the commercial setting. It's also the lowest-priced medicine as well. Having those 2 features differentiates us in the minds of the health care providers and the payers.

This is exactly the types of things you want to see in your best-in-class medicine. CRENESSITY is our medicine approved for a rare endocrine disease called congenital adrenal hyperplasia. It was approved in December of 2024. So '25 was the first full year of commercialization, and it's in a really good trajectory right now with over $300 million in sales after a first year with great underlying demand. With this early-stage -- early profile that we have, we believe we're well on our way for a blockbuster, which I think is a very important point to make and pause on as well because a reminder that with that blockbuster status comes increased confidence in double-digit revenue growth year after year as well as revenue diversification on top of INGREZZA. And those are the hallmarks of what I've been trying to achieve since I stepped into the CEO role.

Behind these 2 medicines, then we've got our industry-leading neuropsychiatry portfolio with data that will begin in 2027. And I say begin because this portfolio consists of multiple mid- and late-stage assets that is not only going to share or provide data in 2027, but for multiple years beyond this. I think that's important. When you can give confidence around the time lines, I think that differentiates us over companies in our space. The other item that I'd point out is that -- and one that I think is underappreciated is our R&D engine. I don't think we're giving any credit on that today. It's a fully operational, sustainable R&D engine that is going to allow us to not be dependent upon one program or one data set in the future. It's going to be able to produce reliably multiple high-quality programs.

And initially, you'll see that leading into areas of our expertise in neurology and psychiatry and CRF biology. And hopefully, we'll be able to talk about some of those programs as we move through the Q&A here. And then the last piece I'd call out is we're also sitting in a position of financial strength. I would characterize our business as being high margin and cash generative, and that gives us resiliency and optionality. Those are both, I would say, strengths and add to our competitive advantage versus other companies in our space and something that we'll be able to lean on as well as our financial discipline when we think about capital allocation, being able to take advantage either of our internal pipeline or things externally from an opportunistic standpoint is something that we view as very valuable.

Another strength just to round out the discussion here is our team. We have a proven ability to launch medicines, scale our commercial infrastructure, execute clinical studies and get medicines over the finish line in terms of FDA, and that really paints a really good, strong company. Now I do feel you touched on challenges, weaknesses, strengths, weaknesses. I do want to acknowledge that externally, there are questions around certain areas of the business. One of those that comes up most frequently is the IRA. That's a headwind for our industry and a headwind for INGREZZA, and we take the IRA quite seriously. We've been were wargaming. We've been planning over the past couple of years for our moment when INGREZZA receives its MFP and when that's implemented in 2029.

We've also been preparing for our competitor in the space when their medicine has its MFP implemented in 2027. We feel these situations are quite manageable because we plan for it. We don't see any change in our business fundamentally in terms of the trajectory of where the business is going, let alone INGREZZA. On chronicity, we've heard there's a focus around the new patient start optics. I've had the opportunity to review a lot of orphan medicine launches over the years and very rarely have ever seen a launch go perfectly linear. On a quarterly basis, there's always ebbs and flows in new patient starts, and that's what we've seen in our launch thus far with CRENESSITY. But overall, as I mentioned in my opening remarks here, the underlying demand is quite good. We're on a rare blockbuster trajectory here in terms of sales. And we feel that it's better to look long term.

And the goal here is to change the standard of care for patients. And when that's your North Star, you're going to end in a good spot on that regardless of what might happen on a shorter period of time. And the last thing I would say on the challenges side of the business, we know that there's also some questions around our investments on the SG&A and R&D side of the business. We're one of those few businesses that's profitable, but we're not looking to maximize profit on a given quarter. We're really looking at investing in growth now in a fashion that's consistent with what we can do and achieve at Neurocrine, but driving long-term shareholder is our North Star at Neurocrine, which means investing in the pipeline, expanding indications and the programs that we do have. And certainly, the capabilities that allow us to deliver that is something that's very important.

And regardless of our spend, one of the things that we look at the benchmark is our peer group. And we feel that we'll always be within a range of what our peers are spending across both SG&A and R&D. And ultimately, we look to deliver that shareholder value for you all. So to sum all that up, it really does simplify down to just a few key priorities for us for this year. I think these will speak to areas where we can outperform, double-digit volume growth for INGREZZA, outperforming on sales and performance with INGREZZA. It's successfully completing our scaling of the CRENESSITY launch. We have a sales force expansion that's ongoing now.

We want to pull through the momentum from '25 into '26, expand the addressable patient population and continue executing out in the field, and that will ensure continued sales growth throughout the year. Of course, I mentioned the pipeline is executing on our mid- to late-stage pipeline to deliver the data next year as we've described. So the simple story for Neurocrine, 2 commercial drivers. We have a differentiated portfolio that will start delivering data next year and years beyond. We've got a sustainable R&D engine. We are coming at this in a position of financial strength. There's a lot of things to be excited about.

Working hard to keep your top pick rating.

We appreciate that. Maybe to drill down on some of the pillars that you mentioned. First, on INGREZZA, double-digit revenue growth this year. Your guidance calls for year-over-year growth of 8% to 12% versus 26% in 2024 and 9% in 2025. What are the pulls -- pushes and pulls incorporated into the guidance? What could drive revenue growth in excess of guidance? And are there any key risks that could make it fall short?

Yes. I think on the growth numbers you described, those are on net sales. On volume, we've always experienced a pretty steady double-digit volume growth year after year after year. I think that speaks to the robustness of the TD market. And where we've experienced larger growth years in terms of net sales, it's often been in a moment where we've had less coverage in terms of access, and we've seen some improvements there on gross to net. But overall, what's been stable, what's been consistent, what we've leaned on year after year is that consistent double-digit volume growth, and that's what we anticipate this year.

So in terms of pushes, we've got a market that continues to grow as a VMAT2 category. We know that the prevalence of TD is still outpacing the growth rate of the general population. So you've seen us and our competitor over the past couple of years, increase the actual prevalence of TD and that's something that we'll still see as a dynamic moving forward. Related to that, the number of prescribers that are prescribing antipsychotics, which are the underlying cause of TD continue to expand. And we'll also be able to lean into all these different things, good access and a sales force expansion that will be complete in Q2 that we'll see the benefits as the year goes on. So those are all things that will help us this year.

The headwinds that we often talk about for INGREZZA is there's this IRA still overhang. We feel it's manageable, but it's simply a topic that we often face externally when we meet with you all. It's there. I think we'll see the uncertainty around that wane as we move into '27 and we see what the dynamics are of the payers. At that point, we have our own contract negotiations ongoing for '27 now. that we'll be able to share with you all by the end of this year. And then our own IRA moment comes in 2029.

We appreciate that, that's there. And again, we do take that seriously, but we're in a good spot today. The other piece as we enter 2026, there is going to be a small single-digit headwind on the price per script relative to where we were this time last year, and that's something that we'll face in Q1 as we move through reauthorization as well. So those are the kind of the pushes and pulls we have in the marketplace right now. But overall, I think we see a very healthy market out there and the opportunity is there for us to go out and get it.

On IRA, in particular, your competitor, Teva, guides to consistent growth through their IRA negotiated price. Does Neurocrine share that view for INGREZZA?

Yes. I think that the way the market is set up right now, it's very promotionally sensitive. You have us and our competitor in this space doing a lot out in the field in terms of education, either through different types of media like DTC or through our sales force. And that's going to continue driving diagnosis in the patient population. And with diagnosis becomes -- that results ultimately in a treatment. So we see the market being very robust over the next couple of years.

We estimate that there's approximately 40,000 patients on therapy today out of a total addressable market of 250,000. Does that sound consistent with your own internal estimates? And what could peak penetration be?

Well, I think you're probably in the ballpark, maybe a little bit light on that. It's an interesting question in terms of peak market share. There's really no good comps or comparable out there for you all in TD, and we appreciate that's being -- that's always been one challenge of trying to get your hands around what the true market opportunity is. Again, I'll lean in the market continues to grow quite robustly. And that's with the denominator prevalence number that continues to rise. So I think that would be a good question to revisit maybe a year or 2 down the road as we continue to grow the market. But right now, it doesn't seem like it's slowing at all.

Turning to CRENESSITY . Investors are closely tracking that launch. How has the patient awareness, physician awareness and initial utilization compared to Neurocrine's own expectations?

Yes. Certainly, when we started out at the beginning of '25 in the first full year of commercialization, had we known we ended where we were, we would have been doing happy dance much earlier. We exceeded all of our expectations, and that's across any commercial metric you'd want to talk about, whether it's enrollment forms, net sales, reach in terms of physicians, et cetera. We beat that at the end of the year and really any time point in between. So we're really excited about what being able to create in just that first year.

And just a reminder, we exited '25 with about 10% of the total pool -- patient pool under the care of CRENESSITY. And that's just a really nice milestone to think about when we're helping so many patients after a very short period of time, and we're looking to continue building on that momentum for this year with the idea that we can treat many more thousands of patients. So we're in a good spot, good momentum. There's been good receptivity across the key stakeholders. In this case, we're talking about the health care providers, the patients that are using medicines, advocacy and even payers see the value of what we're bringing to the table.

As you referenced before, the biggest debate among investors on CRENESSITY is the trajectory of the launch from here. What is Neurocrine's understanding of whether there's initial patient bolus and how consistent uptake should be from here on out?

Yes. I'll comment because I feel that a lot of those questions after the Q4 earnings call was this hand-wringing about the new patient start form from Q2 to Q3 to Q4. Our feeling is this is common for an orphan disease launch. We expected ebbs and flows. We were beating our own internal expectations with each quarter, but you're going to have ups and downs. What's important here out the gate is we've got 10% of the patient population, which is signaling the unmet need. It's going to continue to grow.

And if you have steady -- what we're calling steady adds. And by that, I mean, looking back, we've never had a week where you had 0 or single digit and then you had a 50. It's in the double-digit range. And as long as you have steady new patient adds, which we fully expect to have and you have a heavily compliant and persistent patient population, which we've seen through year 1, it's consistent with what we see in the open-label extension and you have solid reimbursement, what you're going to see going forward instead of over-indexing on new patient starts, you're going to see an upwards trajectory in net sales, which is what I feel the investment community is going to be paying most attention here coming in Q1 and the rest of the year.

Speaking of that, TD Cowen projects $301 million of revenue this year. How do you feel about a $301 million this year, and $1.4 billion in 2030. Did either of those numbers...

We haven't given forward-looking guidance, but we firmly believe this is going to be Neurocrine's second blockbuster product.

I think we debate internally how big can...

I think that's the more interesting question internally is -- it's similar to INGREZZA, right? How big can it go?

What type of peak penetration would be possible? And how do you look at the competitive environment? There are some other agents that are in late-stage development.

Well, on the market share type of question, I'd start with when you go out and you survey physicians, what you hear from them is that only about 15% to 20% of their patients get reasonable control of their androgens on a physiological dose of their GC. And if you ask them a different question, but related, what percentage of your patients could benefit by using CRENESSITY and you triangulate to this 80% number of the addressable patient population. Now we all know that sometimes you can get increased views of utilization of physicians and market research, but I think it speaks to the unmet need that's out there.

If you look at the orphan drug launches out there, you can see a range of market shares that these medicines have achieved as high as 50%. So certainly, we keep an eye on that 50% to 80% number that we have from our market research, and we think those are achievable. But ultimately, I do think we'll see peak market share or utilization at a time period that's faster than INGREZZA. INGREZZA tends to be a steady product in terms of number of patients each year. It feels like for orphan diseases, you often see kind of a threshold or a tipping point where physicians understand how to use the medicine and it's turned over to patients pretty quickly and rapidly. I don't think we're quite there yet with CRENESSITY . But when that happens, that's when you really adopted your medicine in the standard of care for patients, and that's the goal here.

Great. Jude, thanks for making the trip. Maybe we'll turn to you in R&D. Can you enunciate Neurocrine's R&D strategy? What therapeutic areas are of interest, what modalities and what risk profile?

Yes. Thank you. So to speak about the strategy, let me frame the vision first and foremost. I think we have this vision of a future state where Neurocrine emerges as a top leader in the CNS space. And with that framing, the way we see leadership is really around the ability to advance really good innovative molecules consistently to the clinic -- through the clinic all the way to commercialization. And so we set a goal that at the long term, we will be the company that will advance one new molecule launch every other year, okay? Working backwards, and we built a strategy around what will it take to get there, okay? And we built a strategy to ensure the breadth and the depth and the flow that is needed. And we focus the elements of the strategy on a couple of components.

First and foremost is really around diversifying our therapeutic areas. As you know, historically, we were heavily overweighted in neuropsychiatry while maintaining that footprint, we are growing investments in neurology. We are growing investments in endocrinology as well as building a new franchise in neuroimmunology and immunology applicable to all of the therapeutic areas. We believe that this balance really, really reflects our strength in our core areas, but brings in new growth vectors, okay? And the second piece of that is really going into not just the symptomatic treatments to disease-modifying therapies. So that's the components of the therapeutic areas.

On the modalities, of course, to enable the strategies for the therapeutic areas and the delivery for the therapeutic areas, we modernize that capability to become a multi-modality innovative organization. Specifically, while in the past, we were largely a small molecule company. We've maintained a strong footprint in small molecule, but we've dialed in peptides, proteins, antibodies, antibody conjugates and gene therapy. And what this, of course, allows us to do is to match modality to proven biology, okay? It gives you flexibility, optionality to quickly go into specific targets and build competitive molecules and differentiated molecules of the future.

And the top component of that strategy is then with the therapeutic areas in place, with the modalities in place, where do you point that engine, okay? What is our innovation philosophy and where do you point the engine? Our innovation philosophy is really around pragmatic innovation, pointing that engine on proven biology. So this is that balance of exploration of new places and exploitation of already validated spaces, okay? Novel mechanisms validated with looking with fresh eyes in old areas. And we quickly pragmatically balanced our portfolio, 75% to proven biology. And these are high-value, high confidence genetically and clinically validated targets that we believe we can quickly design molecules.

A key component of that strategy is making molecule design and engineering a key competitive advantage for Neurocrine. And I can tell you unequivocally that today, our molecule design and engineering is probably one of the most sophisticated in our industry today. And this is allowing us to quickly go after the molecules, the targets we like and quickly advance the pipeline -- a competitive pipeline. And the last component of strategy worth noting is the role of external innovation. We have seamlessly integrated internal and external innovation and using external innovation as an accelerant to drive the growth of the strategy and the growth of the pipeline. And today, when you look at our pipeline, one thing that stands out, 50% of our early phase is enabled by external innovation, okay? This is an intentional strategy to punch above our weight.

And going forward, we continue to see this integration of internal and external as a way to quickly get to the future that we see. And when you put all this together, you heard Kyle talk about the pipeline. I joined Neurocrine to be part of this transformation in the making. I love the pipeline. I see incredible pipeline. The engine is built. It's delivering on the pipeline. If you look today, 4 molecules in Phase II or 3 or 4; 8 molecules in Phase I, another 6 shots that have a shot at getting into Phase I this year. And behind that, we have a lot of molecules ready to continue to reload. I can see 2 years, I can see 3 years in the continuity of the pipeline. What impresses me the most is not the number. It's the quality inherent in the pipeline, and also the quality inherent in the people who've built the pipeline, the expertise, the capabilities, which we call the engine that is in place to continue to do this year-over-year.

I would guess that as 2026 moves on, we'll start to get a lot of questions about the Phase III programs. But here today, the #1 question we get on the pipeline, it can be summarized as basically what is Neurocrine doing in obesity. Can you talk about why Neurocrine is moving into obesity and the science behind the candidate?

It's an excellent question. And I tend to say why not obesity. And I think at our last R&D Day in December, and I think also in January at JPMorgan, both Kyle and I reemphasized our emerging obesity strategy, the mechanics of that strategy, our emerging pipeline. We unfolded -- we shared 4 molecules at this point as well as also some of our ambitions in this space. So let me reiterate why we believe this is really, really important and why we believe we're so well positioned in the next phase of the obesity market. And I want to underline the next phase because the current phase is already in play, and we're positioning for the next phase. So let's look at obesity.

The data suggests that this is probably one of the biggest commercial opportunities our industry has ever seen, okay? The second component is that obesity is a CNS disease. And for a CNS company, okay, with ambitions to be a leader in the CNS space, it will be a disservice to the investors and the shareholders to not play in this space, especially and especially when you believe and we believe that we have truly differentiated competitive molecules that we can advance in this space. And so let's talk about the next phase of the obesity market, okay? So the epicenter of the current market are the GLP-1s, okay? The GLP-1s have proven beyond reasonable doubt. The significant weight loss is indeed possible, but hasn't cured the disease.

So where does the opportunities lie? The next phase isn't going to be about more incremental weight loss. It's really going to be defined by quality weight loss, okay? And what do I refer to as quality weight loss, multiple components, tolerability, durability, fat-specific weight loss, lean mass preservation of muscle maintenance or again, better delivery or even more efficient delivery options and disease comorbidities. These are where the opportunities. And consistently, I want to clarify, that's where our strategy is focused. That's where we believe we can compete and win. So our strategy focuses deliberately on building that 20, 30s plus obesity pipeline and franchise. First and foremost, anchored around CRF2, okay? As you remember, Neurocrine was founded in part on the science of CRF.

This is a mechanism we know. This is a mechanism we're uniquely positioned and the molecule we have a weekly potent CRF2 agonist covers much of the gaps in this space, okay? Fat selective weight loss with lean mass preservation and frankly, in some lower doses, again, in lean mass, we believe this mechanism is more tolerable. We believe, given the muscle component that this is going to be more durable. And another component is that this mechanism also affects -- has positive effects on cardiovascular, positive effects on kidney, we believe will address some of the disease comorbidities in some disease population. So that's our first entry into the market. And this goes in by the end of the first half of the year, IND -- first demand by the end of the first half of the year.

But we're not making a binary bet. We've built to win in this space, we built a moat around CRF2 with potential combination opportunities. While we are confident you can do a monotherapy, okay? We're preparing for opportunities for potential add-on, follow-on maintenance as the case may be. We have a Q weekly triple agonist that, again, is going to go into demand this year. We have a univalent molecule that combines -- it's one molecule, triple agonist, CRF2 agonist, GLP/GIP agonist, all in one molecule that drive fast specific weight loss and maintenance of muscle with many of the benefits that we've already talked about. And the last molecule we shared is the Q monthly, okay? We believe this is a leading -- industry-leading Q monthly, frankly, probably Q3 monthly based on the half-life of this molecule and how we have tuned this triple G agonist to be industry leader, okay?

The last point I want to make, if we sound so confident, it's really based grounded in the capability and the talent we have in the organization. Some of us participated you may not -- some of us participated in creation of the much celebrated incretins, the likes of Mounjaro, Zepbound, Retatrutide. I used to be -- I led the biologics organization at Lilly for many years prior to joining Neurocrine, ahead of peptide therapeutics led that team when I was at Lilly. We have one of the inventors of Mounjaro and Zepbound, a lead scientist at Lilly. We have many of the expertise we need to really, really build and deliver, which brings me to the second component, how we design molecule, our ability to design and tune molecules.

Again, as a point I made earlier, it's probably one of the most sophisticated in the industry. And the last point I'll make, if as Chief Medical Officer we hear, Sanjay. Sanjay will quickly make the point that with a robust and growing clinical organization, well positioned to execute on the strategy, we believe we can quickly get to proof of concept -- very quickly to the proof of concept and really get to the performance -- through performance of these molecules, cheaply and very fast.

So we're looking forward to having data on our CRF2 program in obesity second half of next year. And to Jude's point, one of the positives of working in this space, obviously, we know a lot about CRF and CRF biology through CRENESSITY and prior programs and my time at Neurocrine. You've got objective endpoints, which compares nicely to the subjective endpoints that we deal with in psychiatry. You get the pick winners in Phase I versus Phase III and you have biomarkers along the way. So these are all things that you can lean into and take advantage of if you're a company like Neurocrine.

Perfect. With that, I think we're out of time. So thank you guys for making the trip out to us.

Thank you. Appreciate it.

Thank you all.

Hello, and welcome, everyone, joining today's Neurocrine Biosciences Fourth Quarter and Fiscal Year 2025 Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions]

And it is now my pleasure to turn the meeting over to Todd Tushla, Vice President of Investor Relations. Please go ahead.

Happy Wednesday to everyone, and welcome to Neurocrine Biosciences Fourth Quarter and 2025 Year-end Earnings Call. With me today are Kyle Gano, Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; Sanjay Keswani, Chief Medical Officer; and for the first time, we are very pleased to be joined by Samir Sadanti, Vice President of Strategy and Corporate Development.

During today's call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. After prepared remarks, we'll be happy to address any questions.

With that, Kyle, take it away.

Thanks, Todd. Good afternoon, everyone. A hallmark of a healthy company is the strength of the foundation beneath it. As Neurocrine enters 2026, our foundation is stronger than at any point in our more than 30-year history and it continues to strengthen. With growing enterprise-wide momentum and strategic balance diversification, Neurocrine has entered a new era of meaningful growth led by our first and best-in-class commercial brands.

INGREZZA performance continues to impress. Strategic investments in access and sales force expansion drove a record year for both new and total prescriptions. This momentum carries us into 2026, where despite 9 years post launch, we expect double-digit volume-driven growth supported by continued demand from the roughly 9 out of 10 TD or HD Korea patients not currently taking a VMAT2 inhibitor.

Like INGREZZA, CRENESSITY's launch has also been exceptionally strong. By the end of the fourth quarter, our first full commercial year after its approval in December 2024, prescriptions covered over 10% of the classic and general adrenal hyperplasia patient population, underscoring the tremendous unmet need. What a great start, and I'd like to thank our team for making this all possible. This strong early adoption across patients, caregivers and prescribers reinforces our conviction that CRENESSITY will become Neurocrine's second blockbuster product.

With an FDA-approved label supporting uncompromised efficacy, including an efficacious first dose with no requirement for titration, multiple formulations for pediatric and adult populations and a favorable safety and tolerability profile, CRENESSITY is rapidly becoming the standard of care for patients with classic CH. This profile mirrors the attributes that supported the success of INGREZZA and underscores our confidence in CRENESSITY's impact for patients and Neurocrine moving forward.

Turning to research and development. At our December R&D Day, we outlined 3 strategic pillars. First, we aim to lead the VMAT2 category by leveraging our deep INGREZZA experience and advancing next-generation VMAT2 inhibitors. By way of background, INGREZZA was the first approved treatment for tardive dyskinesia and Neurocrine paid the path for the development of new medicines in this space. Our nearly 20-year history provides a durable foundation for category leadership. This starts with NBI-'890, which recently entered into Phase II in tardive dyskinesia and with MBI-'675, which is falling close behind. Both of these products have the potential for long-acting injectable formulations.

Second, we are delivering on the promise of CRF through a two-pronged approach: advancing next-generation CRF1 antagonist, such as NBIP-'1435 in CH and expanding the platform with CRF2 agonist starting with NBIP-'2118 into adjacent areas, including metabolic diseases such as obesity. For more than 30 years, Neurocrine has been a pioneer in CRF biology, and this experience uniquely positions us to evolve and expand what CRF-based therapies can deliver.

Third, we are maximizing and evolving the pipeline, which is stronger than ever. This is led by our late-stage industry-leading neuropsychiatry portfolio, including two Phase III programs, osiapator major depressive disorder and direct leading in schizophrenia. Like INGREZZA and CRENESSITY before them, both represent potential first and best-in-class medicines. We expect top line data from the osavampator studies in the first of 2 studies in 2027 and which is shaping up to be the most data-rich year in Neurocrine's history.

In 2025, we achieved our Phase I through Phase III objectives for the first time, making it the most productive clinical year in our history. We also have a clear line of sight to repeating this level of performance in 2026, accelerating us towards our goal of delivering one new medicine every 2 years at steady state. As I said from the outset, we entered 2026 with the strongest foundation in Neurocrine's history. It is incumbent upon me, our leadership team and the entire organization to continue executing and delivering for patients and shareholders.

We appreciate your support. And with that, I'll turn the call over to Matt.

Thank you, Kyle, and good afternoon, everyone. 2025 was a noteworthy year for Neurocrine as total product sales grew to more than $2.8 billion, representing 22% year-over-year growth. This performance reflects continued strength and durability from INGREZZA and the successful initial launch of CRENESSITY. Together, these products form the foundation of our growth and generate durable cash flows that support long-term shareholder value creation.

INGREZZA generated just over $2.5 billion in revenue, up 9% year-over-year, driven by double-digit volume growth, partially offset by pricing concessions associated with formulary access investments to support long-term growth. Fourth quarter performance was in line with expectations outlined on our Q3 call. New prescriptions remain near record levels achieved in Q3, a strong result given the ongoing sales force expansion.

Looking ahead, we are guiding to INGREZZA sales in the range of $2.7 billion to $2.8 billion in 2026, representing approximately 10% growth. This outlook reflects continued double-digit volume growth, including contributions from the expanded sales force in the second half of the year partially offset by price declines tied to formulary access improvements implemented in 2025. Overall, we expect net pricing in 2026 to be relatively consistent with levels exiting 2025. INGREZZA enters the year with strong NRx momentum, broad access and an expanded commercial team ready to execute.

For CRENESSITY, we exited 2025 with over $300 million in net product sales and approximately 10% of addressable patients being prescribed CRENESSITY. As a first in disease launch, quarter-to-quarter enrollment form activity can be variable, but what gives us confidence is the number of patients on therapy, refill behavior and the speed of reimbursement. Feedback remains extremely positive and our first year on the market exceeded both internal and external expectations.

Given that CRENESSITY is the first product approved for classic CAH in more than 70 years, with much still to learn around market dynamics, we are not providing specific sales guidance for 2026. Later in the call, Eric will discuss the initiatives underway to continue developing this attractive market.

Turning to the financials. Our cash position increased by approximately $700 million from $1.8 billion at the end of 2024 to $2.5 billion at the end of 2025, reflecting strong operating performance and a healthy balance sheet. While maximizing near-term profitability is not our primary objective, we remain highly profitable, delivering approximately 30% non-GAAP operating margin or roughly $850 million of non-GAAP operating income for 2025, including $83 million of R&D milestones and IP R&D expense.

In 2026, we expect another strong year of non-GAAP operating income, driven by increased product sales partially offset by investments across SG&A and R&D. These investments align with our top capital allocation priorities of driving revenue growth and advancing our pipeline. SG&A growth year-over-year primarily reflects investments related to our 2026 sales force expansion, which we expect to be completed by the end of the first quarter. At the midpoint of our guidance range, GAAP SG&A is expected to be in the low 40% of sales for 2026.

R&D expense growth reflects a full year of investment in our Phase III programs for osavampator and direclidine with data expected in 2027 as well as the initiation of multiple Phase II and Phase I programs, including obesity. Overall, we expect GAAP R&D expense, excluding approximately $25 million in milestones to be in the mid-30% of sales range, consistent with our prior commentary. Overall, 2026 is shaping up to be another important year for Neurocrine as we continue to grow INGREZZA and CRENESSITY while advancing our pipeline. We entered the year with strong momentum and are well positioned for continued growth.

With that, I'll turn the call over to Eric Benevich, our Chief Commercial Officer. Eric?

Thanks, Matt. I'm very proud of our team's performance last year across both CRENESSITY and INGREZZA, and I'm equally enthusiastic about the significant opportunity ahead for both brands. Matt covered the financial highlights, so I'll add additional color and highlight key focus areas to drive continued growth for both brands.

For the CRENESSITY launch, you've heard us say so far so great, and 2025 certainly lived up to that mantra with over $300 million of net sales in the first full year on the market. Throughout 2025, we saw strong demand across pediatric and adult patients and across both genders with prescriptions now trending towards a majority of pediatric patients in female patients on therapy. Importantly, while new patient starts may vary from week-to-week and quarter-to-quarter, once a patient initiates treatment with CRENESSITY, they tend to stay on CRENESSITY. This real-world experience is consistent with our experience in the open-label extension studies.

As we've said from the outset, as a first in disease medicine, CRENESSITY is a learning launch, very much aligned with our experience with INGREZZA in TD. In fact, the parallels between the two launches are remarkably similar. Both INGREZZA and CRENESSITY are first in disease therapies for conditions that previously lacked specifically FDA-approved treatment options and both achieved approximately $300 million in sales in their first 12 months.

Being a first in disease launch, we still have much to learn about the patient population, the prescriber base and potential seasonal dynamics. And similar to INGREZZA, while we're not providing specific annual guidance in year 2, we remain highly confident that CRENESSITY will be Neurocrine's second blockbuster medicine as we establish it together with replacement of glucocorticoids as the standard of care treatment for patients with classic congenital adrenal hyperplasia.

As we enter CRENESSITY's second full year on the market, the natural question is, so what's next? As I noted this time last year, long-term success CRENESSITY will be driven by our ability to reach, educate and activate the CH community on this breakthrough medicine. To date, more than 1,000 prescribers have written a prescription for CRENESSITY, yet roughly 2/3 have treated only one patient so far, underscoring both the progress we've made and the opportunity ahead.

To support continued growth, we're focused on several key priorities in 2026. As previously announced, we're expanding the CRENESSITY sales force with new representatives hitting the field in April. This is a rare disease team so the overall FTE numbers are still small. However, this expansion will allow us to go deeper within the existing endocrinology HCP base and allow us to expand our reach into additional potential prescribers. While endocrinologists remain central, we've learned some classic CAH patients are managed outside of endocrinology by primary care providers or OB-GYNs.

We're excited to leverage AI and other technology tools to help identify and engage providers likely to be caring for classic CAH patients. We're also continuing to invest in medical education to improve the community's understanding of CAH, the limitations of GC monotherapy and reinforce CRENESSITY's compelling product profile. It remains the first and only new CAH specific treatment in 70 years. As a potent and selective CRF1 antagonist, CRENESSITY targets the source of dysregulation in CAH and directly prevents the surge of excess ACTH from the pituitary to restore downstream androgen control and enable physiologic steroid dosing. Furthermore, CRENESSITY has the largest data set in adults and children with classic CAH, which includes greater than 450 patient years of clinical trial exposure and greater than 550 patient years of real-world exposure.

With a favorable long-term safety profile, robust efficacy and broad labeling, it's clear why uptake has been so strong after only 1 year on the market. In fact, we estimate that we've gotten approximately 10% of the classic CAH population on therapy in the first year of availability. This is an important milestone for us. We believe as the word continues to spread in the CAH community, as the endocrinology prescriber base expands and as they share their real-world clinical experiences, we'll see a continued peer-to-peer effect that will deepen disease understanding and drive broader adoption.

Now turning to INGREZZA. We had a record number of new patient starts and a record number of total patients on therapy in 2025. Today, we estimate only about 10% of the prevalent TD population is currently taking a VMAT2 inhibitor. Even 9 years since our launch, there remains a substantial opportunity to grow the class, grow our market share and help more patients start and stay on therapy. With double-digit growth momentum, strong formulary access and an expanded and reorganized sales force set to hit the field in Q2, a class-leading and differentiated product profile and 12 more years of remaining exclusivity, INGREZZA is well poised to help many, many more TD and HD patients.

So with that, I'll turn the call over to my colleague, Dr. Sanjay Keswani, to share our pipeline progress.

Thanks, Eric, and good afternoon, everyone. In keeping with this year's focus on momentum and strategic diversification, our clinical organization will enroll in advance more studies than at any point in Neurocrine's history. While most of my future earnings remarks will center on enrollment progress and study initiations, today, I'll highlight recently disclosed data for our 2 commercial assets, INGREZZA and CRENESSITY. An optimal way to compare therapies is through head-to-head studies. With that in mind, we recently published first of its kind head-to-head data comparing INGREZZA and AUSTEDO XR at the 64th Annual Meeting of the American College of neuropharmacology. PET imaging results confirmed what we've long believed not all VMAT2 inhibitors are equal.

In this study, INGREZZA demonstrated a nearly twofold higher VMAT2 target occupancy compared with therapeutic doses of AUSTEDO XR, an important finding that indicates INGREZZA's superior efficacy in treating tardive dyskinesia.

Turning to CRENESSITY, we recently shared data from our open-label extension study. While multiple analyses are still underway and will be presented at upcoming endocrinology meetings, including Endo2026, the main takeaway is clear. Across both adult and pediatric CAH patients, CRENESSITY continues to show robust sustained clinically meaningful benefits through 2 years of treatment. We see durable reductions in excess ACTH and androgens directly addressing the underlying pathophysiology of CAH and maintaining control over time.

In pediatrics, CRENESSITY delivered sustained ACTH suppression while preserving normal physiological signaling, including the immune stress response. Hence, rates of adrenal insufficiency remained very low, 0 in the pediatric double-blind study and 1.6% in adults, identical between active and placebo patients.

In a prepubertal subset, we also observed slowing of bone age advancement, translating to a predicted adult height increase of over 2 inches. In adults, approximately 70% of patients were brought into the physiological steroid range while maintaining androgen control and about 40% of overweight or obese patients achieved at least 5% weight loss over 2 years, reflecting CRENESSITY's beneficial cardio metabolic effects. Safe and tolerability remained excellent with approximately 80% retention at 2 years, no new safety signals and over 35,000 patient weeks of exposure. Overall, these data reinforce CRENESSITY's strong differentiation across efficacy, safety and tolerability, and support our conviction that will continue to be the standard of care treatment for patients with classical congenital adrenal lipoplasia.

Regarding our industry-leading neuropsychiatry programs, the late-stage Phase III studies for osofapator in major depressive disorder and direct laden in schizophrenia are enrolling well. And just last month, we initiated a Phase II study of NBI-'890, our next-generation VMAT2 inhibitor for the treatment of tardive dyskinesia. All other studies in our portfolio are advancing as expected, and we look forward to keeping you apprised of our progress.

With that, I'll hand the call back to Kyle.

Thanks, I think we can go ahead and take questions now.

[Operator Instructions] Our first question comes from Paul Matteis with Stifel.

I appreciate that you're not guiding on CRENESSITY, but I was wondering if you could maybe give us either a window into the first 6 weeks of 2026. Or just more broadly, the number on the revenue side, obviously way above consensus in 4Q. But as we look at start forms, there is a slight decline from 2Q to 3Q and 3Q to 4Q. Curious in your perspective on what you're seeing now and where you think this kind of patient add rate might plateau in say, the near to midterm?

Paul, so we're going to start giving weekly sales information out on the web. Just kidding. I mean it's been a tremendous year for -- it's been a tremendous year for CRENESSITY, over $300 million in the first year. Congratulations to the team. And we really look forward to year 2 being another strong, exciting year. We do anticipate meaningful steady new patient additions every single quarter. That's going to lead to a very nice growth year. We still, of course, have a whole lot to learn associated with this launch. As you remember, with INGREZZA -- it took us about 4 years to get to a guide, but we will be providing insight every quarter as it relates to net sales demand and overall reimbursement dynamics. I'd say looking around the table, we couldn't be more proud of the team in what's been accomplished this year and really feel good with how we're positioned for the years ahead.

We'll take our next question from Cory Kasimov with Evercore ISI.

Wanted to ask about that receptor occupancy poster from late January regarding INGREZZA versus AUSTEDO. Curious how you might use this information? And what are the potential implications here with regard to your next-gen VMAT2 inhibitors?

Yes. So we're quite excited by the data we showed, which is actually a head-to-head PET study between AUSTEDO XR and INGREZZA. And as we articulated in our recent press release, we saw nearly double the target occupancy for INGREZZA after 1 dose versus ASTEDA-XR. And even when we measured at steady-state concentrations, we still had a markedly superior advantage in terms of VMAT2 target engagement. We think this underlines the efficacy that we see in INGREZZA in the community of patients with tardive dyskinesia as our belief is that the higher the rate of VMAT2 target occupancy, the greater the efficacy in terms of control of tardive dyskinesia.

In terms of the second part of your question, we clearly have a lot of experience in terms of matching receptor occupancy with clinically efficacious doses. And we're utilizing that relationship with our 2 VMAT2 follow-ons. Indeed, we started a Phase II study of our first follow-on in tardive dyskinesia quite recently.

We'll take our next question from Phil Nadeau with TD Cowen.

Congratulations on a productive year. I just wanted to follow up on Paul's question on patient dynamics with Predict. I think in your prepared remarks, you mentioned the possibility of seasonality in patient demand. And I think investors are all debating whether there could have been an early launch bolus to patient initiations. Appreciating that you still have a lot to learn. What have you learned about those two factors in patient dynamics, 1 in early launch bolus and two, whether there's any seasonality as you go through the year?

Yes. Thanks, Phil. This is Kyle. Good question here on that. I think it's important to keep in mind that the similarities that Eric called out of his opening remarks here are quite true and accurate across the board. In terms of the first year of launch, we've gone through our first Q1 through Q4. As we've learned in most orphan diseases and launches, whether it was INGREZZA or looking at others, there's always ebbs and flows in enrollment forms, and in particular, early in launch, it's typically a function of frequency of office visits when patients initially hear about the opportunity for a new medicine and physicians getting the bird out. So I think it's too early to call whether or not there's any seasonality component. It takes a couple of quarters to draw those conclusions across multiple years. And it took us a while to get to that level of confidence with INGREZZA. So I think it's prudent right now to collect that information and make a more sound decision about guidance enrollment forms, things of that sort as we get a little bit further in the launch. But rest assured, great feedback out there across all the stakeholders, prescribers, physicians and even payers out there. So nothing out there is saying that we're anywhere but moving towards changing the standard of care and achieving blockbuster status like we've done with INGREZZA.

We'll take our next question from Brian Abrahams with RBC Capital Markets.

And my congrats as well on a very productive year. Question on the expense side. It seems like you're expecting a little bit of an uptick in R&D expenses for this year relative to 2025. Can you talk a little bit more about the components of that? How much of that is some of the earlier-stage programs like obesity? And how quickly could some of those costs potentially roll off in 2027 once the Phase III's readout?

Yes. Thank you for the question. The cost increase is really on the heels of the Phase III trials and pushing those forward for a full year this year in 2026. The obesity investment is actually quite minimal for 2026, but of course, is a really important program for us to be able to drive shareholder value creation, which we would expect some level of data in '27. But from an expense, when do expenses roll off, we would anticipate for the major Phase III programs. Those will carry on through 2027 with a big chunk falling off in 2028.

We'll move next to Tazeen Ahmad with Bank of America.

I wanted to go back to CRENESSITY for a second. So I know it took what is it, 3 or 4 years before you guys started giving guidance on INGREZZA. What kind of metrics did you need to collect in order to get confident in providing guidance? And do you have a sense of whether or not it would take that length of time before you get confident with CRENESSITY and providing sales guidance for that as well.

Yes. Tazeen, maybe I'll tackle the second question first. It may not take as long to get to a point where we feel comfortable giving guidance with CRENESSITY as it did with INGREZZA. This is a rare disease, INGREZZA's not a rare disease, but it was at the time a rarely diagnosed disease. We have a single essentially a single prescriber base in endocrinology versus multiple different specialties and different sites of care and so on, which made getting a handle on INGREZZA a little bit more challenging early on.

As I mentioned in my prepared remarks, both our first in disease therapies, both are breakthrough medicines. But as Kyle stated, we've gone through one cycle so far with Cronecity and Classic CAH and has been a learning launch for us. There's a few factors that have been a little bit different than what we expected, but different in the positive the adoption rate was greater than what we had expected coming into this launch, which is awesome. Certainly, the reimbursement has been favorable. And we've been very pleased with the persistency that we've seen when patients start treatment, they tend to stay on it.

So as we get more experience in this community, in this CH community and as we learn more about how we're able to reach sort of beyond that first 10% of the population that I talked about, then I think we'll get to a point down the road where we feel more comfortable providing specific guidance.

Let's not confuse not providing guidance with not expecting significant growth this year. Everything that we see from steady enrollments of new patients along with patients staying on therapy -- everything points to their continuing to be strong growth. It's just a company decision that we made to not provide a guide here.

We'll move next to Corinne Johnson with Goldman Sachs.

I guess beyond the pricing discussion with respect to INGREZZA and AUSTEDO, which I guess is now better understood. How are you thinking about volume impact to INGREZZA next year with asset becoming a negotiated product? And how do you think formularies are going to handle here products in the context of maybe more like relatively competitive pricing than we could have expected.