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

All right. Welcome, everyone. It's Josh Schimmer from Evercore ISI biotech team. Pleased to introduce the management of Neurocrine Biosciences. We have Kevin Gorman, President and Chief Executive Officer; Matt Abernethy, Chief Financial Officer; and Eiry Roberts, Chief Medical Officer.

So thank you so much for joining. Suitably remote, as I think Neurocrine's been learning all about remote access, particularly in the world of psychiatry in the pandemic. So maybe tell us -- talk to us a little bit about psychiatry life in a pandemic and what that means for INGREZZA.

Yes. Good to see you, Josh, and I want to thank you very much for the opportunity to speak here at Evercore's meeting. Also, we will be making forward-looking statements. So I would direct everyone to our recent SEC filings. Psychiatrists, prior to the pandemic, we're the #1 users of telemedicine. About 10% of their practice was telemedicine. During the pandemic, obviously, everyone during the initial shutdown went over to just about 100% telemedicine. As things opened back up again, most subspecialties came, with the vast majority of their practice, being in person. Psychiatrists, though differently, it's a listening specialty. And so I would say that better than 40% of psychiatrists' practice stayed telemedicine, as everything else opened up and was 80% or 90% back to in person. And within our call universe, I'd say it's probably upwards of 50% of our psychiatrists have stayed on telemedicine. So that presented us with a unique challenge. We got very good during the total shutdown of being able to give our sales team the tools that they were -- that were necessary for them to be able to interact well with the psychiatrists and those remaining in the office. What then we started developing is -- once that was optimized is to help the psychiatrists be able to optimize their telephone and video interactions with the patient. And that's what we continued to do because ours is a movement disorder. So there's unique challenges in order to be able to recognize and diagnose some movement disorder via video than there is when you have an in-person in the office, and there's multiple eyes on that patient. But we have been able to, in the short term, I'll call it, so this acute phase of COVID, that's been here since Q2 onto today, is to be able to give our commercial team the tools and the resources that they're helping the physician through in a telemedicine environment. Those are the short-term tools. Telemedicine is here to stay. So once this pandemic starts to get behind us, they're not going to go down to their previous 10% of visits to be telemedicine. They're not going to be up at 40% or 50% either. It'll be something in between. And so we've been investing heavily -- even before the pandemic, but certainly since the pandemic, investing heavily in tools and technologies that we think are actually going to be very beneficial to service the entire TD market after the pandemic is over. And so those are more long term, but I'd say like a year out is where that is. But as you asked, psychiatrists have been ones that are more comfortable and, therefore, have stayed with telemedicine longer than other subspecialties have.

Maybe help us understand the diagnosis of tardive dyskinesia pre-pandemic in-person. What would clue the psychiatrist in to pursuing -- establishing that diagnosis and how that is different remotely?

Yes. So Josh, I'll take first stab at this, and then I'm sure Eiry would like to jump in, seeing as a lot of the medical side all reports into her. Is -- number one, I would say is that we spent as much, if not more, time in -- with the physician's office staff than we did with the actual psychiatrist in doing our educational efforts and in service programs. Because by and large, that staff, starting with the intake administrator all the way through the nurses and nurses practitioners had their eyes on the patient far longer than what the psychiatrist does. And so we trained all of them up, not to diagnose TD, but to recognize a movement disorder and to be able to look at their hands, their fingers, the way they were -- they'd hold their torso, their jaw and their mouth and then bring that to the attention of the treating physician. So that was a big part of what we did. That's not there now, by and large, in a telemedicine environment, right? And so that was different. And I think that's probably one of the single biggest differences. The second one is, is that video is flat. I don't know about you, but this is not the optimal way that I like to interact with people. It is difficult to pick up on nuances. Even in the best of circumstances, with the technology that you and the Neurocrine team here have, there are shadows on our faces. The quality may not be the best. Sometimes you're going in and out of things. And so you can't see everything that's going on with the face or my tongue as it is now or even maybe the blinking of my eyes. You certainly can't see my hands or my feet or my legs during this. So those are things that are lost. The pros to it is that now a physician is actually more focused on looking at the patient. And when you have just one person on the screen, it's a big screen. Your head is supersized. So you can actually see -- at least facially, you should be able to get a better idea of what's going on. Part of the tools that we give the physician to use now in a video environment are things like activate, have a patient do this with their hand. That can activate what they do with their mouth and their tongue in the TD. So there are certain things that you can actually take advantage of the video environment for. The tougher part is that there's a lot of these patients that telemedicine is just that. It's a telephone. There is no video. It's just a conversation on a phone. That's much more difficult to try to ascertain whether there are movement disorders. So there, it's through a series of questions that you ask the patient and you ask their caregiver or loved one that is with them to help with those. That really is suboptimal to be able to do it by telephone. But there's the environment that we're in. Our commercial team has done an outstanding job in order to break through that. As I said in the Q3 call, which we were a month into Q4, we were seeing NRxs and other leading indicators picking up. That was nice, not to where they were pre pandemic, but better than what they were in Q2. And we saw them coming up a bit. And that was encouraging, but I dampened that in that call by saying we are seeing an uptick in COVID at that point in time, which was like 1.5 months ago, and we anticipate to see it tick up even more through the rest of this year as we are seeing now.

Was the recovery in new prescriptions driven by returning -- patients returning to the office and going through that traditional diagnostic pathway? Or was it driven by the new efforts you've made to facilitate telemedicine diagnosis?

It was both. It was that more offices are open. And therefore, the reps were going into more offices. But one important aspect here is quite often, the majority of the time that those offices that were open, the rep is still only seeing the office staff. The physician was still practicing telemedicine remotely. They weren't in their office. So...

I think...

Go ahead, Matt.

Yes. No, to add to that, Josh. It's really encouraging to see, as call activity increased as patients going back into the office increased, we saw a really nice bounce back in our rate of NRx. But as Kevin said earlier, still only 50% of psychiatric visits are in person. So you're going to still deal with that headwind. And our results, I think, as Kevin said, reflects both the opening of the economy a bit more, but then also the tools and techniques that the team is training the psychiatry community on.

So Eiry, maybe we can elaborate a little bit on that, the remote diagnostic tools and what you can do to best approximate that live visit with support staff. Because it doesn't seem easy, but modern technology gives you all sorts of tricks to -- and levers to pull.

Yes, Josh...

The -- I'll just start out first, Eiry, is that there are the short-term acute things that we've put in their hands already. More are coming to take care of the acute environment. And then there are investments, significant investments that we're putting in for the longer term, which I think -- but we're not going to talk in specificity about those. But I'll let Eiry now take over and talk about these things.

Yes. I mean, just a couple of points I'd make, Josh, to add to that. I think Kevin covered a fair bit of the work that we've been doing. I mean the first thing I'd say is that from the very outset, in support of INGREZZA, this has been an educational launch. So we needed to educate psychiatrists, predominantly, on how to look for tardive dyskinesia or undiagnosed tardive dyskinesia and gain confidence in that relative to other potential movement disorders that could be associated with the use of the antipsychotic and other medications in that population. So we were already starting from a position where people were not looking for TD because there were no useful therapies available for TD, and those therapies that they were using or the approaches they were using, such as reducing the antipsychotic and other medication, actually, for the long run were not beneficial for patients and could cause detrimental impact for patients. And so that was an educational process. And, really, what the pandemic has done for us is just required us to educate in a different way. And we're doing that both with the psychiatrists themselves, but also in the way we understand our interactions with patients. And so Kevin alluded to the fact that we've been working very hard to develop new protocols that clinicians can use as they're asking questions of their patient, either on the telephone or on video. And through doing that, they can -- just by asking specific questions that are pertinent to how the patient may perceive their abnormal movements themselves or how their caregivers might perceive that, we can actually get an increased likelihood then of that clinician starting to think, "Okay, this could be TD. I need to explore this further." As Kevin alluded to, obviously, there are a lot of platforms, artificial intelligence, facial recognition technologies that have been used already in areas such as Parkinson's disease to help in the diagnostic approach to understanding TD over the -- over video. And so as Kevin mentioned, we're obviously investing in some of those areas as well for the more medium term to build, hopefully, a toolkit for clinicians, even when they're back in the office that they can use to help understand how to be more confident in making that diagnosis.

Very interesting. Are there -- I mean, I guess the idea is that there are some telltale signs of tardive dyskinesia that may be detectable by -- well, first of all, risk stratification and then overlaying imaging technology. Is that -- as you think about that path forward, is that just simply a matter of iterating to success? Or is this a little bit more binary in the sense that we're not entirely sure you can use these tools to increase the kind of virtual remote diagnostics, but you're going to give it a shot and see what you have?

I would say that it's -- that the technologies exist. So we're not developing new technologies here. The question is, is that with anything, the data you get out of it is as good as the data you put into it, right? So where the iterative process is, if you will; where the, "Let's give this a shot," is that do we have -- can we develop a large enough data set that can actually be utilized in order to help guide a physician in recognizing and diagnosing TD.

Got it. That's interesting. It was -- because it started out as that diagnostic and awareness challenge and now it's the diagnostic and awareness challenge with more haze.

I look at it as this can help break through the haze. That's -- as Eiry said, this is even something that goes beyond just utilizing it for telemedicine. It can be utilized with the psyche in-the-office visit that they're having face-to-face. That's ultimately where it is, and that's where I think that this can actually help bring treatment to the patients beyond what we had ever thought that we were going to be able to do.

So Josh, this is interesting. You have a turtle on screen, and you brought up haze like Purple Haze. Jimi Hendrix would have enjoyed this session.

Exactly. Is that what that is? It's a turtle.

It's a turtle.

So if we call pre-pandemic days executing at -- that's your 100% baseline and 0% was the absolute nadir for you, executional-ly, during the pandemic, where would you say you are now? And how close back to kind of that 100% can you get before we've put COVID in the past?

Yes. The last part I would say is the easier one for me to answer here, and that is that we'll get back to that 100%. I have no doubt that we can put INGREZZA back on that trajectory that we were just as recently as Q1 of this year. I think as Matt said earlier, maybe I'm mixing that up with some of our one-on-one calls prior to this. But Q1 of this year had the greatest number of NRxs that we've ever seen in the launch. We were set up for a phenomenal 2020 there and then COVID hit. So all the things that we were doing, right, we're really coming to fruition even more so this year. There's no reason -- nothing has fundamentally changed. There's no reason we can't return to that once the COVID abates.

Got it.

Now we do -- but we do -- yes, we do acknowledge, though, that telemedicine is going to have a much higher percentage of business. As Kevin mentioned earlier, somewhere between the 10% it was pre pandemic and 40% to 50% it is today. So that is something that's changed, but I also think the tools and techniques and technologies that we're going to put in place is going to be helpful. The other aspect too is we need to get patients involved in this. A patient asking a doctor about their movements is so important in leading to a diagnostic, but a patient naturally wouldn't go to a psychiatrist and talk to them about their movement disorder. That's like a -- I always use this illustration. You going to a dentist and asking them about your ankle. It just doesn't connect to ask a psychiatrist about movements that you're experiencing. So I think through direct-to-patient advertising, different educational mediums, that's going to also be a helpful boost to continue the development of the TD market, Josh.

This is probably a super silly question, but can you use a VMAT inhibitor with an atypical antipsychotic or any other antipsychotic as you're thinking about life cycle management and what you compare INGREZZA with? Is that -- is there anything to do there, or that's the wrong tree to bark up?

Eiry, you can talk about the medical side of that?

Yes, certainly. So obviously, INGREZZA is used extensively with antipsychotic medication, first generation, second generation. And what we actually demonstrated in our clinical trial program, which was really very useful and supportive information was that there's no need for the psychiatrists to, in any way, change the underlying treatment of the psychiatric disorder when using INGREZZA to treat the tardive dyskinesia. And so that's very different from some of the other historical approaches that we use to try to measure TD and manage TD unsuccessfully. So we know that it is safe and appropriate to use INGREZZA with antipsychotics of any sort, and we have really extensive data on that. To the question around the potential combination or use in treatment of psychiatric disorders, we have not explored that to date at any great length. We do have many indications that we're considering and pursuing for INGREZZA and valbenazine, including, obviously, our Huntington's program and, potentially, other movement disorders. And so at this point, it's potentially an area of interest, but not the one that we have talked about pursuing right now.

I guess, I would have thought that aside from treating tardive dyskinesia, if you could prevent tardive dyskinesia, I don't know if that's a path that VMAT2 inhibitor can take in combination?

What we do know from our clinical data is that once tardive dyskinesia occurs in patients, it is most likely not a reversible condition. And so when treatment is started on INGREZZA or A VMAT2 inhibitor and the patient gets benefit, we know that if that medication is stopped, in the vast majority of patients, the tardive dyskinesia symptoms will return. There's still not full understanding of what causes tardive dyskinesia in some patients rather than others in the psychiatry space. And so whilst it's possible that treatment with a VMAT2 inhibitor could prevent tardive dyskinesia in a small population, there's no real biomarkers or other measures available right now to predict which patients. Other than some phenotypic characteristics like being female, older and the dose of the antipsychotic use that would really help us narrow that population sufficiently to look at it as a more preventative therapy right now.

Maybe we can hone in on Huntington's then, and you mentioned that as a new indication. What do you think's held AUSTEDO back in that setting? And what can INGREZZA do to succeed where AUSTEDO struggled to gain traction?

Yes. Well, as you know, I mean, obviously, Huntington's chorea is a -- has a prevalence of about 30,000 patients in the United States. About 80% of the patients with Huntington chorea will experience -- with Huntington's disease experience chorea of a moderate to severe nature. But of those, there's a very small proportion that actually are treated effectively with the VMAT2 inhibitor now, just 20% of the population. So there's a huge opportunity still in the face of an effective treatment to be able to help patients with Huntington's chorea more extensively. Obviously, as we were kicking off this Phase III study, the single registration study that we have ongoing right now, we had a lot of discussions with clinicians and with key opinion leaders on what -- the answer to your question about why -- what are some of the issues? And we were really favorably -- we had very good response from those clinicians about the potential for valbenazine in that area. And I think a couple of things. First of all, the fact that the VMAT2 inhibitors require more than once-a-day dosing -- a significant proportion of Huntington's patients have problems with swallowing and as a result, having to take multiple medications and multiple tablets any one point in time can be a real problem for patients in that regard. The fact that the titration schedule is complex and challenging for some of these patients as well, it has been seen as a significant issue. And then in many circumstances, the black box warning associated with suicidality with the currently available VMAT2 inhibitors is also seen as a barrier. And so with INGREZZA and the profile that we have there, this being a simple once-a-day treatment with a very simple unit start at 40 milligrams go to 80 milligrams in the tardive dyskinesia population if needed, as the kind of dosing regimen, there's a huge amount of interest in that in the context before we're able to develop a really good data set of efficacy and tolerability data in the context of our current trial.

The black box on suicidality, how do you -- I mean, with a similar mechanism, think of avoiding that? And I guess, from our conversations with specialists, it seemed like if you could at least kind of be aware, intervene early, withdraw drug and really be on top of the issue, it might not be as a significant a problem. Is that part of your strategy? Or how else do you separate from that risk?

Well, we're very confident in the tolerability profile and safety profile that we have in INGREZZA to date. And obviously, we've designed the current study in Huntington's disease to ensure that we're evaluating safety as a kind of primary set of data from that study. Obviously, we'll need to interact with the regulatory agencies to determine the final labeling around that. But certainly, up to this point, we have a very high level of confidence in the data package that we have for INGREZZA as a whole.

Is there a reason INGREZZA would be different with regard to that specific risk?

I mean, I don't think that we have explored that, specifically in any of our preclinical or the data that I'm aware of. I mean each of these molecules is different in terms of their activities. The -- INGREZZA is a very specific and selective VMAT2 inhibitor. We know that's not the case for the other molecules that portray themselves as VMAT2 inhibitors. And so I don't think we really understand that fully in terms of the context that, that has in the clinic. But I would reemphasize, we have -- we are very confident in the current safety and tolerability profile for our own highly selective VMAT2 inhibitor.

Got it. Any other indications that you're envisioning INGREZZA being used for? How are you thinking about expanding the label beyond what we've talked about?

We have several indications that we're currently considering, some of which we're moving forward to implementation. What we've done in the context of those indications is, really, once we get to having a study in place on clinicaltrials.gov, we will be able to talk about those more.

Got it. Given maybe a profile that wasn't quite what we were looking for in Tourette's, do we kind of have a good sense as to what happened there? And is Tourette's still an opportunity? Or is the biology just not aligned with VMAT inhibition?

Well, I think the first thing to say about Tourette's was that we ran a robust and, I think, well-designed and well-implemented set of clinical trials for valbenazine in Tourette's. And we were able to demonstrate, in the context of that study and the final study, particularly the Phase III study, that the valbenazine clearly had biological activity in patients with Tourette's. However, the magnitude of the effect that we were able to see was not sufficient for that to be a positive study or, really, for us to believe that, that would be clinically relevant or beneficial for the patients. We did -- as you can imagine, a very extensive subgroup -- set of subgroup analyses. And had we been in a position that we were able to identify a population, clearly, that we thought could benefit in a more systematic way from the medication, we would have taken that forward. So right now, we are not pursuing the work in the Tourette's environment, although we obviously remain very committed to understanding the unmet need in that area. And if there are other approaches that we can take in the future, we will certainly attempt to do that.

Got it. Then we will patiently await the new indications that you are pursuing with INGREZZA. Something tells me we should be paying attention given the mechanism and potential utility. Maybe we can hop over now to crinecerfont. This one, to me, always seems like a program that starts out like super straightforward, you understand the biology relative to congenital adrenal hyperplasia. Then it gets really hard because we're trying to figure out, like, what profile do you need to show to get this approved and really profile the product. And then it gets really easy again because it's like this fairly straightforward targeted therapy for a genetic disease. So maybe kind of take us through a little bit of that progression and particularly that difficult part. What makes CAH a difficult indication when it comes to trial design, regulatory prospects and how you're going to address that?

Well, as you mentioned, I mean, obviously, congenital adrenal hyperplasia is a lifelong disorder that requires treatment, really, from shortly after birth in the majority of patients. And the treatment -- the 2 real problems that patients with congenital adrenal hyperplasia have is, first of all, they're not able to produce the normal levels of steroids that they need to survive in terms of everyday survival of the glucocorticoids and mineralocorticoids, in some circumstances. And so they need to have that replaced. And that's relatively straightforward to do with corticosteroids given daily for patients. The other problem, though, is because of where the issue occurs in that genetic disorder, there is overproduction of androgen levels, which are really problematic for patients, even at birth in female patients, but over time, over the lifetime, that excess androgens results in abnormalities in growth, abnormalities in fertility and multiple other issues over the lifespan. And so the -- just replacing steroids that are missing for patients with CAH is not enough to control that excess of androgens that patients have. And so up until this point, as we started exploring the CRF antagonist, the only treatment that was available for patients was to really increase that dosing of steroids so that it damped down the whole access for patients with CAH and resulted in a reduction back to normal of those androgen levels. So the way you think about it, the problem then is if you're giving very high doses of steroids to patients over multiple years, you get all the problems that we know are associated with steroid use. So you get metabolic syndrome, cardiovascular disease, obesity, brittle bone disorder, all of those problems. And so it's really like a teeter-totter for clinicians and their patients. They're trying to understand what's just enough steroid for me to control these androgens to some degree versus letting the androgens run wild versus giving too much steroid and then getting all the other problems. So what we do with the CRF1 antagonist is we go in and we actually impact the disease process itself, essentially, at the site of where that problem is within the whole integrated process. And so the goal is to be able to give the CRF1 antagonist as a routine everyday treatment and just then, hopefully, have to replace the steroids that are missing, the glucocorticoids that are missing. Now what that means in terms of clinical trials is the first thing we had to demonstrate with that potential medicine was if we took patients who were on their usual steroid treatment and we added in the CRF1 antagonist, could we drive those biomarker, the androgen levels and other biomarkers, 17-hydroxyprogesterone, et cetera, lower, and we were able to demonstrate that in our Phase II study. We saw very favorable, encouraging dose-responsive reductions in those hormone levels. So that was point number one. The next thing is now going into a larger registration study, we're going to look at how we demonstrate that reduction again, but in the context of being able to reduce the high levels of steroids that patients were originally on. And so if we're able to do that and we're able to control the hormones that are abnormally high, including androgens for those patients and reduce the steroid that's needed day-to-day, then that would really be a breakthrough therapy for patients in this arena and something that they haven't had as a different option other than steroids for 50-plus years. That's the design of the Phase III study. We have a very significant clinical database for this -- our molecule, crinecerfont, going into that study. We've got broad buy-in to that study design from regulators, payers and other groups around the U.S. and in Europe. And so we're, right now, in the middle of implementing that study. And if we're successful with those data, we really believe that this could be an effective path forward and a new and different treatment for patients with CAH. The other thing I'd say is that in addition to the adult patient program, which we have going on right now, we're also initiating and kicking off our registration study in pediatrics. Because, obviously, the earlier we can treat patients with CAH, the better, and our goal is to kick off that registration, which is, again, a single registration study that will be done in the U.S. and Europe during next year.

Got it. And the Phase II was just too short to look at lowering steroid dose. Is that why you didn't [ dose-escalated ]?

Well, I think we wanted to understand the mechanisms of the molecule in impacting those hormone levels alone initially before we change too many other things about the steroid dosing within those individuals, because it would have confounded the data for us.

Super helpful. What is a clinically relevant reduction in steroid levels? And as we think about the addressable patient population, what percent of patients are at a high enough steroid level to derive that kind of a benefit?

Eiry, were you able to hear that question?

No, Eiry looks frozen to me.

Eiry does look frozen. So I'll take a stab at that, Josh. So you're asking basically what is going to be a statistically -- or what is going to be a clinically significant decrease in the exogenously added glucocorticoids. And really, where the KOLs that we have interacted with, both over in Europe and in the United States, have said that the deleterious effects are so well-known and so far-reaching that almost any decrease in the exogenous steroid levels is going to be an improvement, okay? So that -- I'm not saying that it can be tiny, but it doesn't have to get it all the way down to just physiological levels to have a significant improvement over their health. And so, Eiry, do you have anything to add to the little you heard there?

Yes, sorry, I fell off the call. You've got to just love this remote environment, haven't you. Yes, now I think that -- I think it's with the -- it's obviously the most important question that we needed to ask as we were designing the study and understanding what would really constitute clinical value for patients. So to what Kevin said, we were really encouraged by the feedback we got, not only from the clinicians working in this area and patients themselves, but also from groups like payers globally as to the fact that if you can reduce the steroids by any amount, that is beneficial for the long run. And there's actually -- there's analogs that we can look to in that regard. If we look at diseases like asthma, if we look at COPD, if we look at lupus, and whether you've been -- it's been able to -- possible to reduce steroid doses, that has resulted in beneficial outcomes. And payers, especially in Europe, have actually recognized that as an appropriate endpoint for those types of disease states.

Got it. What is the average dose of steroids that these patients are taking at baseline?

It's actually fairly variable. And our -- if you look at the normal physiological dosing of glucocorticoid, that production is around 8 to 12 milligrams per meter squared. Doses can vary all over the place. It can be up to 50 milligrams of hydrocortisone a day. It can be significantly lower than that. But the study is designed such that it's looking up for a change from baseline within an individual subject. And so that adds to the power of being able to look at the actual impact of the medication.

And that's important in the study design that Eiry and her team have come up with because the patient changes. As she said, it's a teeter-totter on dealing with this, and it changes with age, and by age, I don't mean over many years, which it obviously does, but even within a year. It can change by other health status that the patient is going through. So it is not that you get a patient who's static right here, and that's how you're dealing with them.

Got it. Maybe I can pivot to the Takeda assets. I guess, I look at the programs, they seem maybe a little bit higher risk in terms of pathway biology. Maybe I'm missing something. But if they succeed, obviously, the unmet need for these settings is incredibly high. What should we know about these programs to maybe think about a higher probability of success and thinking a little less speculative about them?

So Eiry, I'm going to let you jump on that. And with the time that we have available, it will probably just be the negative symptoms, one that schizophrenia, that we'll get to. But Josh, I just wanted to -- you're absolutely right. When you're in psychiatry, in almost any indication, you're in a higher risk area. So I'm only going to talk about the structure of the deal, actually dealt with that. And that's what I think is so nice and where it's great for both Takeda and ourselves is these are 50-50 profit and cost sharing for these indications. So we each get to cut our risk through this. And Takeda actually gets a single point in time for each one of the programs in order to opt out of something like that. So the deal itself is one that addresses part of that risk. Now the scientific risk, I'll let Eiry speak to.

Yes. I mean, I think you're absolutely right, Josh. The unmet need in the areas that we are pursuing here with these 3 different clinical molecules is huge. And you're also absolutely right that this has been a challenging area for development of new medicines and new mechanisms. I think there are really 3 things that gave us -- as holistically across the portfolio, that gave us a level of confidence around this partnership, in addition to what Kevin mentioned about the collaboration structure. The first is that the mechanisms of action, if you think about DAAO inhibition as an example, NMDA hypofunction, there's so many tools now available in the preclinical and genetic setting to understand the role that, that has in the fundamental biology of schizophrenia. And so we know that, that mechanism in and of itself is important. And so we also know that certain approaches in the clinic, historically, to look at D-serine, sodium benzoate, drugs that actually impact that pathway of DAAO inhibition, they've shown some beneficial impact in negative symptoms, not sufficient really to be robust enough and repetitive enough and probably related to the potency and lack of true activity of the medications that are tested. That would be another thing we'd say. The second thing is Takeda had done an awesome job in doing the translational medicine approaches and looking at the biomarkers that are appropriate for each of these molecules, such that one of the key risks that exists always in the psychiatry drug development, and I've worked in this area for years, is -- was actually diminished. And that is, am I really hitting the target that's of interest. Am I getting the drug in the brain? And am I having some evidence of a pharmacodynamic impact that can give me confidence that I'm at least testing the hypothesis I want to test in the clinic? And then the third thing, which has also been a really big issue for psychiatry drug development is study design and dose selection. And again, I think we were very confident with the DAAO inhibitor, particularly in the clinical program that Takeda have put together in Phase II in terms of the trial design, the fact that it was a global trial rather than being a single-country trial, that the dose selection was very well considered and thought through. And so I think even though we obviously are still in an area of high risk from a disease area perspective, the nature of the molecules that we have in hand, we believe they're very high quality. They've been well characterized. And the trial designs that have been put in place up to this point and that we will continue to do will really address this question of truly dissecting out -- testing hypothesis and getting to a straightforward answer.

So maybe in the final minutes, more of a strategic question. So Kevin, with the balance sheet and financial flexibility of Neurocrine, you can probably go out and do 5 to 10 more of these Takeda-like deals where maybe they're a little bit higher risk, you're risk sharing, the upfront is fairly modest, or you could go out and do a much smaller number of deals that are maybe a little bit more expensive, a little less speculative. How do you think about that balance? And how do you deploy your own balance sheet to expand the pipeline?

Yes. Josh, you're right. We're in a great financial position, and it'll only get better with time as we come out of COVID and INGREZZA hits its normal stride again. So it does offer us a tremendous amount of optionality. The first and foremost that we look for in a deal is not the size of the deal. It's not whether it's a collaboration, whether it's an in-license, whether it's an acquisition. #1 is just looking at is the science really there. And then second, which runs right on the heel, is it going to be a transformative medicine for the patients' lives that it's going to be addressing? Or is it just going to be a little tweak in it? And so we want to be there, whether it's in straight neuroscience, whether it's a neuroendocrinology, whether it's in neuropsychiatry and, hopefully, in the future, in neuroimmunology, we want to be at the front of those with some cutting-edge. But when it comes to what kind of deal that we would do, I'm agnostic to that. You present us with great science in a high unmet medical need area, we're going to do the deal that's right for Neurocrine and the other site. That's what we're going to get, that's what we're going to go for.

It seems like a good time to be in neurology with a lot of large companies having exited the field in some wonderful innovation around. Almost saying the same thing about endocrinology with potential partners to crinecerfont and to build out that portfolio.

You're absolutely right. It is a wonderful time to be in neurology and endocrinology. And again, we're real fortunate to be in the position that we are that we can be a real substantial partner for any of those great young companies that are out there right now.

Excellent. Well, thanks so much for taking the time to chat with us and looking forward to seeing Neurocrine navigate in the pandemic and then explode coming out of it.

Thank you very much, Josh. Look, [ friend ], have a happy holidays.

Thank you. Take care.

Take care.