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

Good day, everyone, and welcome to today's Neurocrine Biosciences Company update. [Operator Instructions] Please note, this call may be recorded. [Operator Instructions] It is my pleasure to turn the program over to Todd Tushla.

Thanks, Leo. Good morning, everyone, and thank you for joining our call today on short notice to discuss the collaboration we announced earlier this morning with Takeda. 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. Joining me on the call today is Kevin Gorman, our Chief Executive Officer; Kyle Gano, our Chief Business Development and Strategy Officer; Eiry Roberts, our Chief Medical Officer; Matt Abernethy, our Chief Financial Officer; Eric Benevich, our Chief Commercial Officer; and Jaz Singh, our Vice President of Clinical Development. During this call, Kevin, Kyle and Eiry will provide insight into the collaboration, and then we'll open it up for a handful of questions. With that, I now turn the call over to Kevin Gorman. Kevin?

Thank you, Todd, and good morning, everyone. It may be very early here in San Diego, but I've been really excited about talking to you this morning about this collaboration. First thing I would really like to thank our new collaborator, Takeda, for entrusting us with these very important medicines. These can be absolutely life-changing for patients. I want to take a step back for a second before we talk about this collaboration. Many of you have known us for a long time. For approximately the first 15 years of Neurocrine's history, we were a neuropsychiatry company. We were focused on developing medicines actually with several partners, J&J and GSK, to name a couple of them, for major depressive disorder and anxiety disorders. It's been more recently that we've stepped much more into pure neuroscience in the last dozen or so years. But for the last several years here, 3 to 4, we have been building up our psychiatry presence within the company, as evidenced by Jaz, who you'll be speaking with later on this morning, and Jaz is -- leads up our psychiatry group. We have been preparing to bring in and also develop -- to develop through our own research into psychiatry. So it was very intentional as we -- that this deal has come about with Takeda. As I said, we've been a neuroscience company for some time now, actually 28 years. And if you're going to be in neuroscience, you need to be in all of neuroscience. You need to be able to treat all the patients that you serve. So we are in neurology as evidenced by INGREZZA. We are in -- and also our latest deals that we've done with Xenon and Idorsia for the epilepsies indications. We're in neuroendocrinology, first through ORILISSA and ORIAHNN and in the future with CAH. And now we're in neuropsychiatry and the several important potential medicines that Takeda has entrusted us with. And so we're going to be going into all of those in detail this morning and looking forward to answering your questions. What you're seeing is the evolution of Neurocrine that we talked about starting several years ago as we became a commercial organization, as we've been able to grow and have the resources in order to fully develop. I said at the time and it sounded like an audacious goal to be the leading neuroscience company in the world, but I hope you see that we are serious about that goal. We're going to continue to invest in ourselves and invest with partners who have done just outstanding science, and that's what we're here to talk about this morning. So with that, I will turn it over to Kyle.

Thank you, Kevin, and good morning to everyone on the call. First, a very big thank you to the development and diligence teams at both Takeda and Neurocrine. The complexity and sheer number of programs shared and reviewed was unprecedented, at least for Neurocrine in terms of our history in business development deals. The teams worked amazingly well from the inception of our discussions. It was a testament to their shared vision and desire to bring innovative medicines to patients. Second, an equal thank you to the business and legal teams, both internally and externally. We came together and mapped out a goal for closing on a strategic partnership. There was really no playbook for what we accomplished and seeing where we landed as a win-win scenario for both organizations, we should all be proud. There are too many names to mention. So if you're listening this morning, I know it's early, you know who you are and I thank you. At Neurocrine, we've consistently articulated that our business development strategy is driven by our commitment to address difficult disease areas with significant unmet need and our desire to partner with companies whose expertise complements our own. We focused on differentiated neuroendocrinology and neuropsychiatry programs with first-in-class or best-in-class potential and set an extremely high bar for any assets that might meet that criteria before we consider moving forward. Today, we firmly delivered on our strategy with the announcement of our strategic collaboration with Takeda, to develop and commercialize potential first-in-class therapies for patients with challenging psychiatric disorders. Let me provide an overview of the collaboration assets and structure. As Kevin mentioned, we entered into an agreement with Takeda to obtain exclusive worldwide rights for 7 pipeline programs, including rights to 3 clinical stage assets, which address schizophrenia, treatment-resistant depression, and anhedonia in depression. In addition, there are 4 preclinical assets of which more information will be shared as those programs mature in development. The transaction will close following Hart-Scott-Rodino review, which we expect to be complete during the third quarter. During our diligence process, we discovered that Takeda did an excellent job developing strong preclinical data packages, which translated into well-run, early-stage clinical studies. The most advanced molecule included in the collaboration is known as TAK-831. TAK-831 is a potential first-in-class D-Amino Acid Oxidase inhibitor, currently in ongoing Phase II studies, including a proof-of-concept study in negative symptoms of schizophrenia. TAK-653 is a potential first-in-class AMPA potentiator and is a Phase II-ready compound with the potential to be developed for treatment-resistant depression. Last but not least, TAK-041 is a potential first-in-class GPR139 agonist and is a Phase II-ready compound with the potential to be developed for the treatment of anhedonia in depression. Now let me turn our attention and highlights of the collaboration and focus on the structure, as summarized in this morning's press release and recently filed 8-K. Neurocrine will be responsible for developing and commercializing all compounds included in the agreement with the strategic oversight provided by a joint steering committee consisting of members from both Neurocrine and Takeda. Under the terms of the license agreement, we will pay Takeda $120 million in cash. For royalty-bearing programs, Takeda will be entitled to development milestones up to $495 million, commercial milestones up to $1.4 billion and royalties based on net sales tiers to high-teen percentage rates. Additionally, the collaboration structure features an attractive risk share agreement where Takeda has an opt-in or opt-out right to a 50:50 expense and profit share with Neurocrine on each clinical program on an asset-by-asset basis. If Takeda chooses to opt-out, the program reverts to a royalty-bearing structure. With this in mind, I'll note that TAK-831 begins with a collaboration as a royalty-bearing product and Takeda retains a onetime opt-in right for 50:50 expense and profit share agreement prior to the initiation of a Phase III clinical trial. For both TAK-653 and TAK-041, we begin the collaboration with Takeda in a 50:50 expense and profit share agreement. For both 653 and 041, Takeda may elect to exercise opt-out rights following the completion of the second Phase II clinical trial and under certain circumstances related to the development and commercialization activities to be performed by Neurocrine prior to the initiation of a Phase III clinical trial. In closing, I'd like to thank our new partners at Takeda for entrusting us with developing these unique assets, which have the potential to address some of the world's most difficult-to-treat mental disorders. Recent agreements with companies doing great science like Voyager Therapeutics, Xenon, Idorsia and now Takeda, continue to highlight Neurocrine's strong partnership capabilities. Our continued investment in INGREZZA and ONGENTYS in our own internal research and development and our business development activities positions Neurocrine to be a leading global neuroscience-focused biopharmaceutical company now and for years to come. Now I'll turn the call over to Dr. Eiry Roberts, who will provide additional color on the new additions to Neurocrine's growing pipeline.

Thanks, Kyle, and good morning to everyone. We're excited about our partnership with Takeda to develop important potential medicines from Takeda's early to mid-stage psychiatry pipeline. This strategic collaboration leverages Neurocrine's history and current presence in neuropsychiatry and immediately bolsters our neuropsychiatry pipeline. We've been extremely impressed with the high-quality programs Takeda has developed, and I'd like to provide additional information regarding the significant opportunities for TAK-831, 653 and 041. TAK-831 is the most advanced clinical program, having completed multiple Phase I studies in over 200 subjects. It is the only D-Amino Acid Oxidase inhibitor in clinical development with 2 Phase II studies currently ongoing, including the INTERACT, proof-of-concept study in negative symptoms of schizophrenia. While positive symptoms of schizophrenia can generally be managed effectively with currently available antipsychotics, the options for treatment of troublesome negative symptoms are very limited with no medications currently approved by the FDA. Approximately half of patients with schizophrenia experience these negative symptoms, thus creating a very large unmet need in this area. All currently approved antipsychotics work primarily via antagonism of the dopamine D2 receptor and the central role of dopamine in the pathophysiology of schizophrenia is well established. Despite this, it's clear that dysfunction of the dopaminergic system alone may not be sufficient to explain the negative and cognitive symptoms experienced by patients, since antipsychotic treatment has very little effect in improving these symptoms for patients. Converging lines of evidence from animal studies, brain imaging studies, genetic studies and post mortem brain studies have significantly advanced our understanding of the underlying neurobiology of schizophrenia and have implicated glutamate NMDA, the major excitatory neurotransmitter in the brain. Hypofunction of this system is believed to be important in the biology underlying negative symptoms. D-serine is a co-agonist for NMDA, a type of glutamine receptor in forebrain. D-serine itself is metabolized by D-Amino Acid Oxidase. TAK-831, as an inhibitor of DAAO, acts to increase D-serine levels in the forebrain, which has the potential to reverse NMDA hypofunction and thus improve the negative symptoms of disease. Shifting now to TAK-653. This molecule is a potent and selective AMPA receptor positive allosteric modulator, or PAM, which has been also studied in over 100 subjects in Phase I clinical development and is currently ready to move to Phase II for evaluation in treatment-resistant depression. Treatment-resistant depression impacts nearly 1/3 of patients with depression where patients do not benefit adequately from currently available antidepressants. Here also, there have been significant advances in recent years in understanding the neurobiology of depression with converging lines of evidence suggesting that depression is associated with an impairment in synaptic plasticity. Ampakines enhance plasticity at the synapt via an increase in neurotrophic factors and could, therefore, potentially reverse important aspects of the neurobiology of depression. The recent clinical success of ketamine and esketamine adds weight to this argument since their mechanism of action is mediated indirectly through AMPA. Addressing this mechanism more directly with an AMPA PAM could have significant potential advantages over the more indirect method, including lack of dissociative side effects, cardiovascular effects, and potential abuse liability while maintaining the antidepressant effect. Finally, moving to TAK-041. This molecule is an agonist of GPR139, an orphan receptor located in an area of the brain called the habenula. Circuitry in the habenula modulate dopamine, serotonin and other pathways well-established in driving reward-based behavior. Through its agonist activity of GPR139, TAK-041 may, therefore, have an impact on the highly troublesome symptom of anhedonia, which is core in a number of conditions, including depression, schizophrenia, post-traumatic stress disorder, substance abuse and even Parkinson's disease. TAK-041 has also completed multiple Phase I studies in the clinic and is now ready to progress to Phase II development. Our mission at Neurocrine is to discover and develop life-changing treatments for people with serious challenging and currently underserved neurological, endocrine and psychiatric disorders. With today's announcement, we doubled down on our commitment to patients with challenging neuropsychiatric disorders, many of whom we already serve with our efforts in managing tardive dyskinesia with INGREZZA. We are delighted to be able to partner with Takeda on these exciting projects and recognize the outstanding job that the team there has done in develop -- in applying state-of-the-art clinical science to the development of these molecules thus far. In partnership, we will now dedicate ourselves to the further development of these molecules with the goal of addressing key remaining unmet needs for patients living with neuropsychiatric disorders. With that, I'll pass the call back to Kevin. Kevin?

Thank you, Eiry, and Kyle. At this time, I'd like to open it up for questions.

[Operator Instructions] We'll take our first question from Brian Skorney of R.W. Baird.

Congrats on what looks like a really good deal for you guys. I guess focusing on TAK-831. When I look at the study in clinical trials, it's supposed to read out next month. Is this still the time line? And going into the deal, have you seen any unblinded data from the study? Or is there anything about the blinded data that gives you confidence in an impact on negative symptoms?

So I'll start with that. So you're correct in clinicaltrials.gov, that trial is ongoing. Obviously, like many other clinical trials in development right now, there has been some impact associated with the COVID-19 pandemic and there was a brief pause, I think, in the enrollment of active patients in that trial. We still anticipate seeing data from that trial sometime next year. And actually, in collaboration with our colleagues at Takeda, we understand that things are moving forward very well now in terms of continued enrollment. We have not seen any data either blinded or unblinded from that study and neither have our colleagues at Takeda, to date. And in terms of the kind of level of excitement and interest in that target, I think there are several things that I would say in that regard. I mean, first of all, I think we understand this patient population with negative symptoms well, given our involvement with INGREZZA in the treatment of tardive dyskinesia. That's the first point I would make. And so we have learned a great deal about these negative symptoms and the problems that they cause for patients. Secondly, the -- in terms of the 831 molecule from Takeda, I think Takeda did an amazing job in both selecting a very high-quality molecule and also developing the Phase I program, which allowed us to evaluate target engagement and understand exactly which doses we should be taking forward into the further clinical development. And finally, the mechanism itself has a clinical validation to some degree based on a small clinical study that was already performed previously looking at sodium benzoate, which is a much less potent inhibitor of D-Amino Acid Oxidase. And so in that regard, I think we have strong confidence in the mechanism. We believe the Takeda Phase II proof-of-concept study is very well designed. It's -- in terms of the size of the study, it's in the 230 patients or so. And so it will give us a very good opportunity to understand this mechanism in the clinic. Jaz, I don't know if you had anything further to add there.

I think you covered it completely.

Our next question is from Paul Matteis of Stifel.

Congrats on an interesting deal. On 831, there was also a study in Friedreich's ataxia. Can you speak to that? What did that study show? Is that indication still of interest? And then on 653, AMPA has been a target that's been theoretically really interesting in mood disorders for a couple of decades. And I think there's been a number of PAMs, a few agonists. What have been the difficulties with pursuing this pathway with a small molecule? And why do you think 653 is in good position to breakthrough?

Sure. Thank you very much. Very, very good questions. I'll start with the first one, the TAK-831 in Friedreich's ataxia. That was a clinical study that was done with Takeda based upon good preclinical signs based on it. Now that study did not show any potential efficacy for Friedreich's ataxia. So further work on that was -- is not being conducted. More of the science -- as we look carefully into the science, it's much closer related to schizophrenia and other conditions that we're considering thinking about but we're not quite there at this point. Shifting to your question on TAK-653. You're absolutely correct that there is -- the number -- there's been almost decades of work on AMPA PAMs or ampakines in a number of conditions, including depression, cognition and so forth. We spent a lot of time thinking about what was the reason behind none of them making it into an approvable stage. There are a few common things that sort of come across one of these compounds. And one of the limitations is there's a class effect when you get too high, any ampakine can lead to seizures. And what's really been unknown was, what's the magnitude of receptor occupancy that any of those compounds have had? Where do you see efficacy? And what's the relationship to this adverse events of seizures? So that's limited the development of most of those compounds being studied at a far too lower dose, likely to be effective. So what's really changed this year is now that there's an availability of PET ligands that really allow us to go and address those very basic questions that I think need to be addressed before we can really move this compound forward. So the first steps that we intend to take to really answer those questions about therapeutic occupancy, so we can really define what the safety and the ranges and the potential efficacy measures, which I think will help towards understanding this mechanism and potentially towards success of this compound.

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

Kevin, just wanted to get your thoughts about some of the comments that you made at the beginning. You've had tremendous success focusing on an area where there's only a couple of options and you are by far -- INGREZZA is by far the best option out there. For the indications that you've now partnered with Takeda on, you're now moving into an area which could have multiple competitors. And so maybe for, let's say, 831, based on the mechanism of action of this particular asset, how do you think it could differ from other molecules that are also relatively advanced in the clinic? And then I have a follow-up to that.

Yes, Tazeen, these are areas that are -- have a lot more competitors in them, obviously. And a number of drugs are approved. However, the unmet medical need is still extremely high, just going with the negative symptoms of schizophrenia. I think that there are going to be plenty of room here for more than one compound to treat these patients' negative symptoms. We have the DAAO inhibitor, TAK-831 is the most advanced that can be the first one to market here if things go well for us. So I think it's another situation where Neurocrine can take the lead in this. So we're excited about the mechanism. And as Jaz had pointed out, when talking about TAK-653 and AMPA potentiation and having an -- and talking about what a good molecule that is and the science now that we have available to us in psychiatry, the tools that we haven't had before, the same goes with the DAAO inhibitors here. Takeda did an outstanding job of developing this. And as we'll be sharing, as time goes on, understanding receptor occupancy, understanding a well-characterized molecule at the receptor and then also having other types of biomarkers that help us follow this. So I don't think you're seeing a departure from where we've been. Where you see us in each and every program that we have here is, as Kyle said, first-in-class and/or best-in-class within all of the areas that we're in. And so these areas that we went into with Takeda offer us that. So while there's a more crowded field for what we're actually trying to accomplish, it's very sparse. And as I started out, the unmet need is enormous in each of these areas.

Okay. If this Phase II study is positive and you move on to a Phase III, how big of a study do you think you would need? Or how big of a program do you think you would need there? And what kind of impact to R&D should we expect this year, if any?

Thanks for the question. It's Eiry here. It's actually too early for us to be able to predict in that regard what the Phase III development would look like. We're really looking forward very much to seeing the Phase II data next year. This is a very well-designed study. We believe it will help us understand this mechanism of action, which is very novel. And despite the fact there is some clinical validation, this is entirely different from the D2 antagonists and the dopaminergic approaches that have been taken in schizophrenia before. And so we are really interested in seeing those data and understanding from those data, what the next appropriate steps would be. And obviously, once we have that in hand, we'll be able to talk more about what our registration phase program would look like.

Jaz, do you want to speak a little bit about -- maybe a little bit more than what I did about the competitive environment here with 831?

Sure. I think this is an area, negative symptoms schizophrenia is probably one of the core underlying symptomatology within schizophrenia. While we have a number of treatments that are available for the positive symptoms, there are really no treatments at all that target either the negative symptoms or relatedly cognition, which are really the underlying conditions. Now if -- there are at least 2 companies that I'm aware of that are working on these symptoms, on these conditions, namely, Minerva and ACADIA. And they're working on a different mechanism altogether. You've probably seen recently that the results presented both by Minerva and ACADIA, which I think look promising. With TAK-831 and going after under -- the glutamate, I think you're really going into the core part of the pathophysiology. And looking at the -- reversing the NMDA hypofunction, has the potential of really reversing the absolute core part. Now we don't have proof-of-concept as yet, that needs to come. And once we have the proof-of-concept, then you can really compare what the outcomes of each of the studies look like. But from a scientific perspective, I think really reversing the core pathophysiology of the underlying condition, I hope it'll really lead to good clinical outcomes, which will benefit patients and clinicians alike.

Okay. And any impact to R&D this year? That's my last question.

Tazeen, so yes, we will have an impact to R&D spending this year as we finish out the Phase II study as well as get ready for the initiation of the Phase II studies of the earlier programs. We'll provide an operating expense guide here during our Q2 earnings call here in a couple of months. Relative to the upfront, $120 million that will be expensed as IP R&D once the deal closes, so it will hit our GAAP P&L in the third quarter. But overall, Takeda, just like Kyle, Kevin, Eiry, everyone said, Takeda has done a great job with these programs. And I think this deal really balances the right risk share relationship. That's a win-win for both parties. So we really look forward to advancing these programs and then also continuing to expand our pipeline.

We'll move next to Charles Duncan of Cantor Fitzgerald.

Kevin and team, congrats on a pretty interesting low upfront cost deal for expanding pipeline opportunities. I wanted to ask a couple of questions about 653. With regard to moving forward in the Phase II study, I think you kind of alluded to this, but when could we anticipate 653 to move into Phase II? And what are the kind of rate-limiting steps for that? And then in terms of indications, beyond TRD, would you consider MDD and/or even suicidality or PTSD, given the mechanism of action with 653?

Yes. I'll take the first part, and then I'll ask Jaz, if you'd like to make some comments. Currently, we plan to be working with our colleagues at Takeda, once this deal is completed, to prepare the 653 molecule for Phase II testing, and we hope to begin that testing next year. So Jaz, any thoughts with respect to the indications and mechanism?

So I think the initial development that was being conducted with Takeda was in treatment-resistant depression. We're looking at this and thinking about what other potential indications. And as you correctly pointed out, given the science that there's a number of potential indications that it could target and I think we have to do our own sequencing as to where exactly how to prioritize it. I think the first studies that we intend to do are really to answer very basic questions on the science. And I think from there on, we'll follow the science as to where -- what are the potential indications, one or more, that will lead to it. We're not quite there yet.

Okay. And then second question is regarding, let's say, I think counted 4 preclinical assets. You said that there would be increased visibility sometime in the future. I think Kyle mentioned that. Could you help us understand when in the future, you might see some IND-enabling studies or even start of clinical development of any one of those assets?

Yes. Chaz, we're -- we'll talk about those when we have firm time lines in place for those. As you can imagine, you can only do so much before while negotiating a deal. And we're now entering into HSR. So again, you can only do so much during that period of time. Once the transaction is completed and we can collaborate, we'll be giving updates.

Okay. And last question is regarding COVID-19. It seems like transactions are being done generally, but I wonder if you wanted to offer any color on, say, the time lines of this particular collaboration or challenges and how you dealt with them during this COVID-19, call it, shelter-in-place environment. I'm curious how you manage this?

I didn't. That was Kyle. So, Kyle why don't you answer that question, please.

A great question. I think that we all got used to using our Zoom application quite well on both the development and business development side of the teams that were attached to these programs. And it involved just regular calls, as you would expect, to get through the diligence process. It was a unique deal in the sense that I think maybe with the exception of myself, there were no in-person interactions throughout the diligence process. So that's -- that is our new reality. But we did strike off really good communications and partnerships and relationships early on in the process that set us up for success as we went through our discussions.

Yes. I'd just add one thing there as well to what Kyle said. Kyle made the comment that we struck a really good relationship early on. I think a lot of that was predicated on the development side and the fact that we had a very similar vision with respect to how we thought about each of these molecules and these mechanisms. I think that really helped in the alignment as we were thinking about where would these potential medicines add value most for patients and what would be the most appropriate way to take them forward. And so it was really encouraging to see that, and we look forward to that continued partnership as we move forward with these molecules now.

Finally, with regard to intellectual property, can we assume that just pick one, let's say, 831 has long-lived IP behind it?

Kyle, go ahead.

Good question. I think the expectation for IP up to the mid to late 2030s should be something that we should consider looking forward for the programs across the board.

We'll move next to Anupam Rama of JPMorgan.

Congrats on the deal. And just I had a quick clarification question. The $495 million in development milestones, how do they break down between, say, phased transition versus regulatory milestones or the regulatory milestones included as part of sort of the $1.4 billion of commercial milestones?

Kyle, go ahead and give a broad overview on that.

Yes, we haven't broken out the milestones and granularity by program, but typically, the development milestones include clinical transitions as well as regulatory, like approvals, commercial milestones are sales based.

And they increase over time.

Kyle, do you want to shed some light on how those evolve relative to profit share?

Yes. So good point. I think that -- as we laid out here in the 8-K and the press release, the clinical programs have attached to them a 50:50 cost share and profit share for programs and in commercialization. The programs that are Phase II ready, we start off those in a cost share type of environment. And for 831, we start off with a royalty-bearing product scenario with the opt-in at Phase III. Now for all the cost share, profit share programs, once they enter that particular scenario, they are not tied to any development or sales-based milestones, only for programs for multi bearing do those have development and sales-based milestones.

We'll move next Biren Amin of Jefferies.

Just a question on the opt-in. When can Takeda opt-in?

Yes, Kyle?

For TAK-831, the time point is after the ongoing Phase II program prior to the initiation of Phase III.

All right. And then I guess on TAK-831, given the data is expected next year, is Neurocrine responsible for conducting the data analysis on this trial? And is there -- I guess, when you did your diligence on the trial, is there a certain threshold on effect size that you hope to see with 831, especially given, I think, Eiry mentioned that sodium benzoate had some clinical proof-of-concept in a small trial? And I think there they saw 0.6 point effect size benefit?

I'll start, and then I'll ask Jaz, if he has any comments relative to the trial design itself. Takeda is actually continuing to execute this trial, including the analysis of the final data. Although, obviously, we will be integrally involved in that analysis and review of the data and decision-making moving forward. Jaz, any thoughts?

I think regarding the effect size, we hope we'll see a clinically meaningful effect size. The study is powered to detect an effect size of at least 0.3. What we see, of course, will depend on time and we have to take into the consideration of changes that happened in relationship to COVID-19, but we're optimistic that it would be promising.

And I guess just on that trial, some more questions. Are you looking at functional endpoints as secondary like PSP, for example, that would suggest cognitive and functional improvements, a secondary endpoint? And then I guess the other question is, how do you look at geographical differences in this area, given I think, ACADIA saw some effects in the U.S. population given the sodium benzoate Phase II trial was conducted in Taiwan?

Yes, all really good questions. We do -- the study, Takeda did include a number of secondary endpoints that include cognition and functional endpoints. So we will be looking at the data from all of those studies when the data comes in sometime next year. This study is being conducted globally, includes U.S. as well as a number of countries in Europe. And I think there was an advantage of conducting the Phase II study globally because then it's better reflective of what you're likely to see in Phase III studies and helps derisk. And this, combined with some of the other countries, I think, helps us kind of determine what other sites and what regions do we want to go to, to be able to make sure that we can derisk the program and conduct the studies more successfully.

We'll take that question from Phil Nadeau of Cowen & Company.

Kevin, first, a question for you. I'm curious to get your thoughts on why Takeda was looking to out-license these compounds. Is this a strategic decision of Takeda, are they getting out of CNS or was there other motivation behind looking for a partner?

Yes. I think that Takeda did not out-license these, and Takeda is definitely not getting out of CNS. What you're seeing here is that obviously, with the big merger that Takeda has done, they're really forward-thinking creative company. And so they wanted to make sure that they were still going to be involved in these compounds, which they believe very much in, in these therapeutic areas. And that's where I think the real creativity of both of our business development groups and our R&D colleagues came together and came to a really nice structure that recognized and respected each company's capabilities and expertise here in psychiatry and put that together with the structure that allowed, as Kyle said, a real win-win in order for both of us to share in the development with Neurocrine taking the lead on that and then to be able to share the profits once we're commercial on the market.

Great. That's helpful. And then just one last question. On the small Phase II -- the 30-some patient Phase II that's looking at the eye-blink test in schizophrenia for 831. Could you discuss the significance of that trial? How does that fit into your decision whether 831 will be moved forward, if at all?

Thank you for the question. This is Jaz. I'll take that question. That's -- the small count is really a proof-of-mechanism study. I think the -- looking at eye-blink, mismatch negativity, really helps us understand the dose response to target the relationship of biomarkers to that. Now that's a very small study. It's in -- a single-site study and it's only 2 weeks. So it really helps us better understand the mechanism by which you're kind of seeing the CNS effects. And downstream, it has impact in just understanding -- a better understanding of how this relates to relationship in improving schizophrenia. But I think it also strategically leads us to see whether -- how you can use these compounds for further development for other compounds that are related to it or have similar biomarker-related effects and how that would relate to clinical efficacy, differentiation and also in relationship to development and other conditions -- neurological conditions.

And is the timing of that data the same as the larger Phase II sometime next year? Or is there a chance that we could get that data earlier, sometime this year?

That study is ongoing. It's a single-site study. So -- and a smaller study. As that site starts picking up recruitment, we hope that, that study will be completed sooner, and the results are available closer to end of this year or early next year. But it really depends on when the site can open up. So the timing is a little difficult to determine.

I really appreciate your attention and interest this morning. Neurocrine has a very diverse portfolio, right now. We have -- we think that we've built a portfolio here very intentionally that goes after important diseases, diseases that demand attention and demand new and innovative compounds to come forward. This portfolio, I believe, also balances risk quite well as we've gone through it. We have a number of medicines that fall into, if you will, precision medicine. Well-defined mechanisms that we know are responsible for disease, CAH, which we've just shown in the recent data, I think, very nicely that now we can actually affect the underlying disease in these patients. The Xenon and Idorsia collaborations where you know you are working on targets that are absolutely responsible for the disease. And so now we couple that with -- here we are going into psychiatry, which admittedly has been one where it's much -- been much more difficult to link mechanism to disease. But as I said in the beginning, what we have now, and as Eiry and Jaz have outlined, a wonderful set of compounds that Takeda has done a very good job, not only in the initial selection, but in the full development pathway here, where we are working with pathways that are well known, but have been very difficult in the past in order to drug. And here, Takeda has done an outstanding job of being able to drug them. We know a lot about the target engagement, and we do have biomarkers that we're able to look at. And that is really unusual that -- in neuropsychiatric diseases. So again, a very deep pipeline. We're in 3 of the 4 areas in neuroscience that we want to be in. So we still have room to grow in each of these and into other areas of neuroscience in the future, both internally and through additional external partnerships. So with that, I'd like to thank you and wish you a great day today.

This does conclude today's Neurocrine Biosciences company update. You may now disconnect your lines. And everyone, have a good day.