Neurocrine Biosciences, Inc. (NBIX) Earnings Call Transcript & Summary

Okay. We'll go ahead and get started. I want to welcome everyone to the 2020 JPMorgan Health Care Conference. My name's Anupam Rama. I'm one of the senior biotech analysts here at JPMorgan. Our next presenting company is Neurocrine, and presenting on behalf of the company is CEO, Kevin Gorman. And Tessa Romero, Matt Bannon from the team are here as well.

Thank you, Anupam, and thank you, JPMorgan, for the opportunity to present today. I will be making forward-looking statements. So I'd like to direct you to our latest SEC filings. Neurocrine has a long and rich history. For over 25 years, we've been a neuroscience-focused company, but exquisitely focused more in the intersection at neuroendocrinology and neuropsychiatry. What we aim to do always is to focus on patient populations who have diseases and disorders that have largely gone untreated for decades or not treated at all. It leads to a difficult proposition, but I'd like to present to you that Neurocrine has created an engine that has been very successful for us. We have the ability to discover and as importantly, fully develop our own medicines as well as medicines from partners that we enter into. And the type of philosophy, the intensity that you need to go into being a neuroendocrinology, neuropsychiatry company doesn't end with the professionals in R&D. You have to be able to have those exquisite personalities that have the passion to take this drug to the patients. And we've done that now. With this engine, we have 2 approved medicines today. One is INGREZZA and the other one is ORILISSA, INGREZZA for a disease called tardive dyskinesia, which I'll describe in a little bit; ORILISSA for women's health disorder, the initial one is endometriosis. ORILISSA, we partnered after discovering and developing it through Phase II clinical trials and then partnered with AbbVie and they are the ones who took it through Phase III in collaboration with us and then now are solely responsible for the marketing of the drug in the United States. INGREZZA, we took all the way from beginning to end, and we have had a very nice reception in the marketplace over the last 2.5 years with this. But we don't stop there. In addition to picking the hard targets, the hard disease states because this is what patients deserve, we also pick targets that in and of themselves can serve multiple patient populations. So where you see us with INGREZZA, also known as valbenazine, we are in a pivotal program in treating the chorea of Huntington's disease, yet another movement disorder. AbbVie with ORILISSA, also known as elagolix, has it in registration for uterine fibroids and also has it in a proof-of-concept study in polycystic ovarian syndrome. I'll be talking about this dynamic as we go through here. But it's to show you that this is an engine that we've had success with. We're in a unique situation to have 2 approved drugs at this stage of Neurocrine. I stood up here a year ago, and I put up a pipeline that you see here, the ubiquitous pipeline chart. It's a nice pipeline, showing those 2 commercialized drugs, showing a couple of other things in Phase III. Crinecerfont, which I'm going to enjoy speaking about for a genetic disease that children are born with congenital adrenal hyperplasia. And then a new VMAT2 inhibitor that we have going on. Today, what does this look like 1 year later? We've advanced all of these, and we've added substantially more to it. So we don't rest just because we've had some unprecedented success. We continue moving forward, and we're not satisfied with this pipeline either. Where do we plan on being? We are expanding the indications and the number of patients that we can serve. By the end of this year, we anticipate having 3 approved medicines in 4 indications. We have -- we plan on having -- right now, we have 3 pivotal trial programs ongoing, and I hope to be able to, as the year goes on, add to the pivotal trials that are going on. And we have 5 mid-stage to early-stage programs that we're doing. That's an enviable pipeline, and that's where we are as I stand here today. Now let's go a bit more in detail into each one of these programs. INGREZZA, as I said, is the drug that we developed -- we discovered, we developed and we have brought to market in 2017. There was never an approved medicine to treat patients who have tardive dyskinesia. And what is tardive dyskinesia? Tardive dyskinesia is an irreversible lifelong movement disorder. It is caused by taking the important drugs, antipsychotics. But for reasons that we don't understand and approximately 5% to 8% of the 60 million prescriptions now that are written in just the U.S. alone of antipsychotics, patients develop this debilitating movement disorder. A couple of examples you see here. There's at least 500,000 people in the United States with TD. We have been able to change the paradigm a bit with psychiatrists. This is a disease that the psychiatrist caused through no fault of their own. It's important. These are life-saving drugs, these antipsychotics for patients. But they cause this disease of TD. They have had nothing for them for several generations of psychiatrists that are out there. So it was a disease that they ignored, forgot and these patients suffered in silence with no advocates and no treatments until INGREZZA was approved. Right now, we have made the inroads such that when we launched, there were maybe 2% of these 500,000 patients have a diagnosis. We think we're getting close to 20% now with the diagnosis at this point. However, the vast majority of them are not receiving a VMAT2 inhibitor to be able to treat them. So there is a long way that we have to go with this. And it's interesting, for 2.5 years or longer I've been talking about INGREZZA, talking about TD, only from the standpoint of the movement itself, it's a neurological disorder in a psychiatric population. So rightly so, we focused on the exquisite job that this drug does in arresting the movements. Easy drug to take. Once -- one pill once a day is all that it takes. You start out that way. You continue that way. It's when you actually get out there and you are treating thousands of patients that you really begin to understand the full impact of your drug. You see kind of on here, 60% of these people are not able to sleep because of these movements. Their self-esteem, their ability to function is tremendously curtailed. I could go on with these things, but what's more powerful is let's listen to the patients themselves. [Presentation]

What I'd like you to recall is these are patients who have been dealing with a serious mental illness. Many of them, it is with major depressive disorder. When you look at them and you see what the effect it has on their mood by being able to conquer TD with the help of INGREZZA, you gain an appreciation that this in their overall mental health, what a well-being, what a dramatic change this has made in their life. That's not something that you study in pivotal clinical trials. This is what you realize when you go out to the community and you bring this medication to these patients. When you have a medication like INGREZZA, the reception that we have gotten from physicians and from patients, even though we've only gotten to a small fraction of the population, it's been exquisite. The sales force, the sales professionals we have out there, as I say, that bring the same intensity and the same passion to taking the drug to the physicians to helping them get it to the patients has worked out extremely well, and it's every bit as much work as research and development is. And then we gain the proceeds of that also. We announced yesterday that we had $238 million in Q4 and we had a -- 42,000 prescriptions that were written. The drug is outperforming all expectations, and we're still just at the tip of the iceberg of addressing all the needs of the TD population out there. As I said, you don't stop there. So while that is a primary focus for us because we still have a long way to go within the TD population, we are taking this into yet another movement disorder, which is the chorea associated with Huntington's disease. There's 30,000 Huntington's patients. Approximately 90% of them have chorea. The mechanism of their chorea is -- share similarities and from a molecular system is the same as with tardive dyskinesia. The goal here is to bring the same positive aspects, once-a-day treatment, well tolerated, great efficacy, into the Huntington's population now. So we have a single Phase III study that's ongoing that we will use then, if positive, to take to the agency to extend this. ORILISSA, as I said, the second compound that was discovered -- developed at Neurocrine through Phase II trials, working with AbbVie then in the Phase III program. We partnered with AbbVie because these are very large patient populations. And back in that day, Neurocrine didn't have the sophistication nor the resources to be able to take this to the 7 million women who suffer from endometriosis. And AbbVie was able to do that. Drug was approved and launched in 2018. But again, AbbVie didn't stop there. We know the same mechanism here is involved in uterine fibroids, again, a very large patient population. This drug has a PDUFA date in Q2 of 2020. And now they've -- last year, middle of last year, they started a Phase II proof-of-concept study in polycystic ovarian syndrome. And says 3.5 million women here, this is the most common hormonal disorder in women of reproductive age and there's nothing for these women here, and AbbVie is blazing new territory with the end points and bringing a medication to these patients. So we are expanding the use of very important medicines that we've discovered and have out in the market already. And we don't just out-license. We are a net in-licenser. We look to see in a very strategic sense what are the products that exist out there that we think are important drugs that would be -- that we can bring to patients that really creative companies have also discovered, and opicapone is one of those. This was one of those rare opportunities where a small family-owned pharmaceutical company in Portugal had discovered, developed this drug and approximately 3 years ago, had it approved in Europe. They entrusted us with this drug in Parkinson's disease and we licensed the North American rights to it. We now have the drug at the FDA. The agency when we met with them and talked about will you need another pivotal trial in the United States, they said no. So we went straight in with this. We have a PDUFA date of April 26. This is -- Parkinson's is 1 million patients. Approximately 70% of them are on levodopa, carbidopa, and about 70% of them are not well controlled. They have off times, and then they have on times. It's the off times is obviously where they've slowed or they're frozen. This drug is one with a mechanism of inhibiting the enzyme that breaks down levodopa before it has a chance to get to the brain. This is a drug that is going to inhibit that enzyme and will give them much greater on time, and that's what we've shown in Phase III clinical trials and has been accepted exceptionally well over in Europe. We look forward to then bringing this into our sales force so that, that same exceptional sales force can bring this to the Parkinson's patients that so desperately need additional therapeutics. What's next? I just talked to you about 3 drugs that 2 are on the market and knock on wood, one will very shortly be. Well, it's that discovery engine. It's those business development efforts that bring and help feed our development group. So one that we're very excited about is crinecerfont, a bit of a mouthful. Give me a moment. It is a disease that a child is born with, a genetic lesion. It's called congenital adrenal hyperplasia. These children are born without the ability to produce cortisol. Without Cortisol, you die. And until the mid-60s, early '60s before hydrocortisone was invented, all these babies did die. But now with hydrocortisone, you can replace the lack of cortisol with hydrocortisone. Their lives are saved. It's a double-edged sort for these kids, their families and their treating physicians because you're constantly on this teeter-totter. You have the underlying disease that still takes place with this pile-up of androgens that they have. So if you under treat them, if you don't give them really high doses of hydrocortisone, you have all the problems with adrenal crises, androgen -- excess of androgens, hirsutism, infertility, blood pressure problems. So then what you try to do is you give them very high doses every day of their life. But now you're getting all the problems that are associated with taking an exogenous steroid that's there, and they're constantly on this teeter-totter. The promise of crinecerfont is twofold: one, to take the underlying disease, treat those endogenous hormones of those, bring those back into control and by virtue of doing that, allow the fact now that you don't have to give massive doses of hydrocortisone. You only have to give replacement doses, so physiological doses, take care of both sides of that teeter-totter. We got very good Phase II data last year. That will be in its entirety presented in March at the Endo conference here in San Francisco, and we're looking forward to sharing that. We've met with FDA. We've met with EMA, and we have agreement on a single Phase III pivotal study that were being kicked off worldwide here with crinecerfont in adults with CAH. What you really want to do -- the adults need the drug, but what you really want to do is treat these patients as early as possible, as young as possible. So we have a Phase II study now ongoing in the pediatric population. We plan on meeting with FDA and EMA later this year in order to talk to them about what is the pivotal program going to look like for the pediatric population in CAH. So stay tuned. But this is a very exciting program for us. Again, nothing's been developed to treat these patients in 60 years. We understand that there can -- we -- I hope I've shown you that we're very good at discovering, developing and commercializing, bringing to patients important treatments for chronic diseases. But there's a lot of great science that's going on now. There has never been a better time to be in the biopharmaceutical industry than it is now. We now have the ability to have precision medicine. I think that's been shown in spades with the oncology field. We have that same opportunity now in neuroscience, and particularly when it comes to epilepsies, these pediatric epilepsies, these rare epilepsies where you see gain of function mutations in a very specific ion channel. And working with extremely creative companies, such as Xenon, and now an option that we have that we announced on Friday with Idorsia, we are able to work with them, stand on their shoulders for really interesting drugs that they've discovered and now apply this development and commercialization engine that we have made to those 2 things to enter into precision medicine. What's the next step beyond precision medicine? There's the promise that we can cure diseases. And we've seen curative treatments now just starting down to the market, but a hard place to cure is within the CNS. But you have to start now. You have to decide if you're going to be a world-leading neuroscience company that you have to then go into that now. We looked -- we surveyed the entire arena of academic industry who is doing really novel creative science on gene therapy within the CNS field. And we did a deal, a large deal with Voyager late last -- late in 2018. And this brings us 4 assets, the most advanced, which is in pivotal studies right now in Parkinson's disease. Here is a situation where Parkinson's is a neurodegenerative disease. There's an enzyme that is in the brain that allows for the release of dopamine from levodopa so that you can actually treat the disease. Those neurons are lost over time. And these patients no longer can -- they don't get a benefit from levodopa. Here, we can replace that gene. It's not -- it is not a cure. But what it does is it resets the clock 7 years earlier in the disease. That is huge to have that kind of disease-modifying effect. Patients have been treated. We'll be reporting on data that's 3 years out in patients. Xenon and others utilizing this academic collaborators have monkey data that goes out 9, probably even 10 years now, where you're still seeing the same levels of the enzyme being expressed. That's very, very encouraging for this. So we have an ongoing pivotal study. We are adding a second pivotal study here after talking to the regulators. That second one will be both in the United States and in Europe. So if you're listening, you're seeing that we have become a worldwide drug developer now on our own. So we're going to go from our home market in the United States, and we're going to be now entering into Europe carefully and deliberately. We also have a preclinical asset that comes from the work of Voyager in Friedreich's ataxia. The hope is this can become curative for this neurological disease. And then Neurocrine has been working on a number of diseases over the years, utilizing small molecules, but we see we can't get there with small molecules. We had to put several interesting targets on the shelf, hoping 1 day there will be a way to get to them. We've nominated 2 of those targets. These are genes of interest of Neurocrine that Voyager will put their technology against. And we haven't announced what those are, but those have been selected. So I've told you a lot about the gene therapy for Parkinson's already. It would be a onetime treatment in their lifetime. And then I've told you also that with the Xenon collaboration, this is a highly specific, one single channel, the sodium channel 1.6, that has an up-mutation that's in it, and we're putting in an inhibitor of this. And these are kids who right now are utilizing a drug that's 50, 60 years old. These children are -- because of the massive amounts of this drug, the lack of selectivity, parents get to interact with their baby maybe 2 hours a day. They just sleep most of the time and other serious side effects. We hope this is going to have a very potent effect. Our vision for the future, as you all well know, this takes a long time to discover and develop drugs. 5 years ago up here, we had 0 commercial products, we had 3 pipeline programs, and we had 1 partner, which is AbbVie. And today, as I said, in 2020, we hope to have 3 medicines in 4 indications. We have 3 ongoing pivotal studies, 5 mid-stage, and we really value our partners. What we've shown that we can do to date is we can really effectively treat important diseases and disorders and make a huge difference in people's lives. Tomorrow, we want to be able to cure them. Thank you.