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

Great. Thanks very much. It's my pleasure to be hosting a panel that can trend spotlight and talk about different assets within Neurocrine's pipeline with Neurocrine's Chief Medical Officer, Eiry Roberts; and Chief Business Development Officer, Kyle Gano. So thank you both for joining and always enjoy doing the panel with the 2 of you. I think maybe to start, I don't know, Eiry, if you'd like to make any kind of opening remarks on some of your R&D programs that you're going to have data soon. And feel free to do so, or if not, we can just kind of go 1 by 1 and as you know, I have questions on each. So up to you, but thank you again.

Yes. Well, thanks very much, Paul. It's great to be here, and hi to everybody. We're delighted to be here. Thanks to Stifel for inviting us today. Just wanted to start really and we can then get straight into the questions by saying that we will be making forward-looking statements today, so please refer to our latest SEC filings. And it's probably easiest, Paul, just to get straight into the questions. I know we have a lot we want to try to cover. We have a lot going on in our pipeline. And so yes, let's just get going.

All right, sounds good. So we're going to start with INGREZZA and then talk a little bit about this NMDA program and crinecerfont, some of the NMDA -- some of the epilepsy programs. So I think we'll be able to cover a lot in the next 25 minutes. But maybe starting with Huntington's chorea. That's the next big data readout, I think Phase III results later this year. Can you talk about the trial design and how you powered the effect? And I guess, is it fair to say that the effect size assumptions are largely based off of what we've seen with that data.

Yes. No. Well, thanks for that, Paul. And yes, we're very excited about our Huntington's chorea program. Before -- and as you know, we have a Phase III trial ongoing right now that's enrolling patients around North America in collaboration with the Huntington's Study Group. And just before I start, I do want to make a comment around just giving our support to the Huntington's community of both patients and their families and the Huntington Study Group and other investigators working in this area. It's been a tough couple of weeks for patients suffering with Huntington's disease. And as we know, this is a pretty devastating disorder. Affects around 30,000 people in the United States, and there are no curative or disease-modifying treatments right now. And so to have a failure of potential disease-modifying treatments in this area is really quite a devastating blow for the community. It makes us even more focused on doubling down and ensuring that we can deliver on what we hope will be the value that valbenazine can bring for these patients. Just as a little bit of background, there's 3 elements within Huntington's disease. There's the cognate development, there's the psychological elements, and then there's a really important as well movement disorder-related elements of the disease. About 90% of the patient population, at some time in the course of this degenerative disease, suffer from chorea, which are these dance-like movements that are really very impactful on people's lives. And around about 70% of the population have a chorea that is severe or moderately severe. Despite that, really only about 20% of patients get useful therapy with the use of currently available VMAT2 inhibitors. And one of the challenges, we think there is that the currently available VMAT2 inhibitors have a lot of issues associated with their dosing regimen, with the tolerability profile and the fact that they have complex regimens for patients. Many of these patients really take a lot of different medications for other co-morbid conditions as well. And so we're very encouraged by the fact that we believe valbenazine, if successful in this trial we have ongoing, can deliver a very simple once-a-day, 1-capsule regimen for patients. A lot of patients have difficulty swallowing. There's risk of actually damaging tablets or capsules as they're taken. And we know that for some medications, including currently available VMAT2 inhibitor, that can actually be a potentially significant challenge and safety risk. So we have this Phase III study that is ongoing. We paused briefly last year during the COVID pandemic. But due to the really hard work of the HSG, we're back on track with our enrollment. It's a study that is designed with a primary endpoint at 12 weeks to look at the unified Huntington's disease total career score, and it's a reduction from baseline in that score. The study is powered to deliver on a clinically meaningful reduction in that score. And it also has a significant number of other endpoints, including functional outcome endpoints for those patients. If we're successful with that study and we are on track to read out the data by the end of this year, then we would be moving forward to the agency with a filing on the basis of that single registration quality study for an sNDA using valbenazine in the treatment of Huntington's chorea. And as I said, we are hopeful to be able to build on what is already a differentiated, simple and favorable label for INGREZZA that we have in tardive dyskinesia. And as I mentioned earlier, some of the things that we think could really drive value for patients here are the simplicity of use, the once-a-day, 1-capsule treatment regimen. And also obviously, right now, in tardive dyskinesia, we have a favorable tolerability profile without a black box warning.

Yes, yes. Okay, very good. Great. I think maybe 1 more aggressive question before we shift gear. I want to try to get on at least a little bit on these other indications you're pursuing. And I know you're probably somewhat limited in what you can say. But I think what's interesting is that you can think mechanistically that depleting synaptic dopamine could have a role of a number of different psychiatric diseases. That said, INGREZZA's a much more expensive drug than many of the other mass market side products. So how did you kind of thread the needle on that and choose 2 indications with a good mechanistic rationale but also ones that are commercially synergistic and value-adding to what you already have?

Yes. So a couple of things there. I mean, first of all, as you know, as an organization, we are really fully committed to the value that we believe and hope that the VMAT platform can -- and that mechanism can bring to patients with both neurological disorders and neuropsychiatric disorders. And we've had research programs and clinical programs ongoing for many, many years in this area to deliver on that. When we think about indications and we think about where we would like to evaluate INGREZZA and valbenazine, and we're really focused on where we believe we can add most value for patients and where there is significant unmet need. So we also applied that as we thought through and looked at the psychiatric and new neurological indications that we're focused on. And so in that regard, we will be moving forward into registration quality studies in both a new psychiatric indication and a neurological indication by the end of this year. And obviously, as we get to that setting, we'll be able to update you more on the nature of those indications and the trial designs, et cetera, that we're looking at.

Yes, okay. All right. And that might be later this year, is that right?

That's our plan, yes. We're moving forward towards that plan.

All right. Well, until you disclose it, we're going to keep guessing. It's not Tourette's though, right?

Well, I think we actually obviously invested very significantly in Tourette's disease. We were very hopeful to be able to add value there. I think what we saw was a very well-run, well-executed program. And although there was pharmacological activity for valbenazine in that patient population, unfortunately, the signal that we were able to demonstrate and efficacy really didn't meet the standard of being able to add the type of value that we would like to add for patients. And so we really believe we evaluated that and we need to move on into other indications.

Yes, yes. Okay, fair enough. All right, switching gears. The NMDA program. So I think everyone understands the kind of basic science of the rationale behind an NMDA and knows that the study missed its primary endpoint. Can you talk about some of the cognitive scales that you used in that trial and your level of confidence that what you saw in cognition in schizophrenia was a real signal?

Yes. So yes, happy to do that, Paul. And so first of all, going back to your comment around the NMDA and hypo-glutamatergic mechanism here. I mean, I think there's a lot of knowledge now in the preclinical setting and from basic biology that implicates the NMDA hypofunction in both the negative symptoms of schizophrenia but also in cognition and particularly in kind of neurodevelopmental issues that are seen very extensively in schizophrenia and also in other disease states. And so I know there was a lot of discussion within Takeda, our partner, even as they were initiating the INTERACT study as to whether the primary focus of that study should be on negative symptoms or should be on cognition itself. And so while we were disappointed that we did not manage to demonstrate an impact on the primary endpoint in that study of negative symptoms, we were not surprised and actually, we're intrigued by the fact that we were able to demonstrate a positive signal on the 2 cognitive measures that were used as key secondaries in that study. The first of those endpoints was the BACS, the Brief Assessment of Cognitive Symptoms in schizophrenia. And that is a task-oriented cognitive assessment. So it's done by the patient. It is similar in nature to the matrix assessment, which is another cognitive battery used in these tests, and you may be familiar with that being used for other medications in this arena. The reality is though that it takes several elements of the matrix that we believe are very relevant in this setting and puts them into a shorter scale that's more -- easier to accommodate in the context of clinical trials. The second was the SCoRS study, which is an -- SCoRS assessment, which is an interview-based assessment. And the goal of doing those 2 is that the BACS obviously measures pure cognitive function in the context of tasks, whereas SCoRS looks at the functional impact of some of that. And it's an interview that includes assessments taken by the patient themselves but also by their caregiver or the person accompanying them to the assessment. And so what was particularly intriguing about the data from the INTERACT study was that we saw a signal on both the BACS and the SCoRS assessment. We're not familiar and working with our external KOLs in this area. They're also not aware of a situation where both of those scales have hit in the context of a signal study. So that adds to our level of interest and intrigue around this finding. Obviously, in order for us to understand fully how we go forward here, we need to replicate that finding. And that is our goal right now is to work on how to do that in a clinical study in a timely fashion such that we can demonstrate that this is hopefully a true signal, in which case, I think it is a pretty significant finding in this field. The only other comment I'd make is that it's not uncommon for medications, at least in the recent past that have been initially studied for negative symptoms, and it failed in that setting to actually look at the cognition part of this NMDA pathway, the GlyT1 inhibitors as an example. And so we are working very hard now to fully analyze the data from the study. We're working with our partners at Takeda very closely, and our intent is to move forward and replicate this finding as soon as possible.

Okay. And do you think you'd use these same endpoints, Eiry, or might you use the more cumbersome cognitive endpoint that seems to be more preferred by the FDA? Is there any context you can give there?

We're still having those discussions. I think we're highly confident that the -- obviously, the findings that we have in the BACS represent a sub-portion of the matrix assessment. And we know that there's a lot of discussion about the matrix as an assessment overall and it's used for the long run. We'll obviously need to engage with the agency. As we do with all of our programs, we're really keen to have the FDA as a partner with us in this to ensure that what we're doing is consistent with their understanding and thinking as they're looking across other programs. I think we -- but we haven't finalized exactly the design and the endpoints that we would use in the study right now.

Yes. Okay, okay. All right, fair enough. When might we see the full data?

We're working with Takeda. They will be part of the -- it's obviously a study that they owned and initiated. We do want to present the data in a -- as reasonable a time as possible but we don't have a final timing on that right now.

Okay, fair enough. Let's talk about crinecerfont. I think -- and hopefully I said that right.

Yes, you did. Perfect.

I think again, folks who are listening in this panel know this medicine well and some of the data. And I guess my main question is really, how can we triangulate the biomarker data to date to an implied percent reduction in steroid burden for these patients? How do you do that with the mechanics of the study? And is there any way to kind of do that historically when we look at biomarkers like androgens or 17-OHP and try to get an understanding of the actual and next level clinical impact?

Yes. So obviously, that's a really, really important question and one that we've spent a lot of time as we've been generating data on crinecerfont. And actually, as we've worked on CRF1 inhibitors over many, many, many years in CAH now. So a couple of things to say. First of all, the ultimate goal of treating CAH is in the context of a nonsteroidal approach to treatment, which is what the CRF1 antagonist is. It's the -- if this medication is successful, it would be the first time that something that isn't a steroid that's used for treating CAH is actually available for patients. And that would be a huge breakthrough, given that these patients have had nothing very much new for the last 50 to 60 years. So the goal of treatment is to control particularly the androgens that are produced in excess as a result of the disease. And to do that in the setting of having to use as little exogenous steroid treatment as possible. So our -- what we know we have seen so far with crinecerfont in just a very short time, just 14 days, is a very clear dose-related reduction in those key hormone levels of 17-OHP ACTH, and most importantly, androstenedione. And so what that 14-day Phase II study did for us was put us in a very good position in terms of understanding what dose and regimen of crinecerfont we should take forward into our Phase III study. And to do that in a fashion that we knew in a short period of time on the basis of the stable steroid dosing in those patients, we could really get control of that HPA Axis. And so the next part of the question is, can we do that and then also reduce the steroid burden for patients that they have to take exogenously? So that's why the Phase III study is designed to look at those 2 key elements. They're somewhat separate but in the context of the Phase III study, they get linked together. And so we have, obviously, assessments of the hormones 1 month and throughout the study. And then at the 24-week endpoint, we go through essentially a downward titration of steroids in patients that allows us to understand exactly what degree of steroid reduction can we get at. So as we discuss that trial, we discussed it with regulators, with payers and with other key stakeholders, it's very clear that for the long run, any reduction in overall exogenous steroid burden is important. And I think you heard Rich Auchus say that again at the ENDO Meeting at the weekend. Patients taking super-physiologic steroids for the course of their life, they get horrible issues associated with that, metabolic, bone, other issues. So we know that any reduction is important and helpful. The study is powered to detect a reduction that we believe is clinically significant. It does not require us to get everybody to physiologic steroid dosing. Although for the long term, obviously, we'll be interested in understanding whether we can do that for patients once this is available to patients. But really, the focus is on understanding what magnitude of reduction can we achieve. The -- and then over time, we'll be able to demonstrate once the medication is available to patients in a more real-world setting, the impact of that and the clinical impact of that for the long term.

Yes, okay. That was really interesting. Now 1 quick follow-up on that. Can you just contextualize, how high is the actual steroid burden in these patients when you say super-physiologic? And how much would you need to reduce the steroid dose to get patients into the kind of normal range? Are we talking about like a 90% reduction or a 50% reduction? Like how do you think about that?

Well, the other thing that I think is really important about this disease state to understand is that there's a lot of heterogeneity between patients and even within a patient over time. And that's why as we designed our study, we wanted to look from a real-world perspective. And so we will have patients within the study who have a significantly -- a significant range of difference in their steroid exposure coming into the study. And so if you think about it, we want to be able to get to that 8 -- if physiologic is 8 to 12 essentially in terms of the daily load of steroid of hydrocortisone equivalent. So well, anybody starting above that is already at risk of being exposed to higher levels and to the side effects associated with that. We know that some patients are on 30, 35, 40 hydrocortisone equivalents per day. But that doesn't -- if their overall load is lower than that, it doesn't preclude them from coming into the study. And so we're really looking within a patient at that change in the context of obviously being able to still maintain the antigens within control.

No, that's really helpful. And I might have missed it, but like what is the kind of ballpark baseline ranges of steroid burden that you see in a group of patients with this disease?

Yes. It depends on age. It depends on the sex. It depends on the control of the individual patient at that point in time. It can go from anywhere from 15 up to 40s. I mean, it's really very variable. I mean, this is one of the reasons why we didn't try to dichotomize or subdivide the population anyway. We're really interested in that control within an individual because we know that this is such a long-term disease for people that at certain points in their life during the course of that disease, they're going to be in differential levels of control and it's very variable. And so to get a handle on that, we wanted to make sure that we -- this study was as real-world as possible and therefore could be applied as broadly as possible into the patient population as we come out of the back end.

Yes, okay. Great, Eiry. All right. Maybe in the last 5 minutes here, let's talk a little bit about a couple of your epilepsy programs. And I don't know how much time we have to get super deep. But maybe for Kyle, this asset you licensed from Xenon, XEN901, it's a sodium channel modulator. There's a bunch of sodium channel modulators out there. What gave you the confidence that this was differentiated? And when you think about the actual path to clinical differentiation, do you see this as something that is as effective as a standard of care or safer or something where you can push the dose way higher and maybe even have a best-in-class drug for epilepsy?

Thanks, Paul. There's a couple of questions in there, and let me just start by saying that our interest in the program with Xenon dated back many years. And what we appreciated from the outset was their approach to the discovery of novel sodium channel blockers. What we're looking at with XEN901 or NBI-352 is the potential to be the first de novo design sodium channel blocker that selectively targets and inhibits Nav1.6. And what I mean by de novo design is that's through traditional MedChem type of activities we got the compound that we have today versus some of the first- and second-generation sodium channel blockers that were more or less discovered via phenotypic screening and the mechanism of action reverse engineered. 352 works in all the same animal models of the known sodium channel blockers, which are not only sodium channel blockers but are also mixed with other MLAs as well, including calcium channels. But what we're talking about in terms of selectivity and potency is 352 targets 1.6 with more than 100-fold potency and selectivity advantages over all of the nonselective sodium channel blockers. So if you look at Phenytoin, Carbamazepine, Lamotrigine depending on what you're looking at, we're talking about 100-fold greater potency and selectivity. That is quite novel. And when you match that with the appreciation that Nav1.6 the most abundant sodium channel in the human brain due to its excitatory role in the CNS, it represents a very exciting target not only for epilepsy but for a variety of other CNS diseases. And that's what gave rise to our interest here.

Great. Awesome. You want to talk about next steps there before we quickly switch to the T-type program, just to finish it off?

Yes. So the plan right now is we're moving forward in SCN8A in adolescents. We're initiating that trial Q3 this year, and then we'll look to expand into younger age groups once we get some additional data in the FDA's hands to approve us moving into lower or younger children. And then we'll be looking at starting a focal onset seizure disorder study later in the year. I think that there is very good roadmap to where we might be thinking if you look at where other sodium channel blockers have shown utility but perhaps been inhibited in their use by their side effect profile. And those range from -- we've seen activity in pain, bipolar disorder. And let's not forget that there's probably a number of other orphan diseases in the epilepsy space that would make sense with the sodium channel blocker to explore. So very exciting kind of platform to target here. And keep in mind that Xenon found a binding pocket within 1.6 that was conserved between 1.6 and 1.2. And we'll be looking at exploiting that pharmacology in subsequent compounds as we are working with them now preclinically in our research cooperation.

Awesome, okay. Any quick comments you can make on the T-type calcium channel modulator? My main question is really, this is kind of an old mechanism that honestly has -- historically had real prospects in migraine and epilepsy. And it's like a little bit less clear to me why it fell by the wayside. So any context there and how this molecule is differentiated as we look at other drugs in this class, like the one from Praxis and the one from Xenon as well.

Yes. No, I think appreciation here in context is in the sodium channel blocker space, the issue has always been selectivity. That has dogged the field. And Xenon's problem that they solved was discovering this binding site that's not conserved in the other subtypes. In the calcium channel space, it's always been getting a molecule that has good pharmaco character -- or good chemical characteristics that is developable and allows you to have good exposure that's not variable. And that has really dogged the field because of the high doses that have been required to get to the exposures necessary for efficacy. And what maybe the folks out there don't know is that Idorsia has had a long history in the calcium channel space. The CEO there, Jean-Paul Clozel, was one of the first discoverers of a calcium channel blocker for cardiovascular disease. And he spent a good part of his career working on flipping, but he was able to discover from peripheral effects on getting something in the CNS. So Neurocrine, having a similar interest in this target going back several decades, understand the challenges of getting good molecules on this target. We've reviewed everything that's out there. So you've mentioned some of the competitors in the space. And we believe that we have the best-in-class T-type calcium channel blocker for a number of reasons. And what we're hoping to do is leverage some of the hope and promise of this mechanism by having a molecule that you can actually test these hypotheses well and definitively in Phase II. And we're starting that effort in CSWS. But there are other areas that we'll be looking to explore over time as well. And you've probably seen that there'll be a new study in this particular -- on this particular program starting this year.

Got it, great. One question from somebody who's listening in. Can you ask Kyle generally how he's thinking about BD where the company is now? And has it changed versus 1 to 2 years ago?

Yes. I mean, that's a great question. The pipeline has really expanded over the past couple of years and I appreciate that. It doesn't suggest that we're any less interested in continuing to build the pipeline. I think, firstly, we appreciate the programs and assets can be fleeting and are scarce. And what that tells me and us is that we need to maximize the value of the existing pipeline in our commercial products. And that's a guiding principle. And we'll continue to invest in our commercial success of INGREZZA and ONGENTYS in the near, mid and long term. But then comes BD and our strategy there hasn't changed. We continue to be focused on bringing in assets and technology within neurology, neuropsychiatry and endocrinology. I think the question probably that you received stems from some of the setbacks we've had recently. We've talked about Takeda, we've talked about Voyager in the past. And I think one thing that should be mentioned is that for Neurocrine, we expect the same attrition for products that we acquire externally as we do internally. And neuroscience is a top area. And we're going to continue to invest in programs that are supported by good science with data along the development continuum that support and validate the opportunity and then assets with strong IP. And the programs mentioned here, even with Takeda and Voyager, they had all of these. And as Eiry mentioned, for 844, we did get some really interesting data here so we'll see. That could be something that comes back and is able to help a lot of patients with cognitive impairment.

Cool, awesome. We're looking forward to that and we're looking forward to more data from Neurocrine this year. So thank you both for joining and for staying a few extra minutes. I appreciate it, and look forward to connecting with you again, soon.

Good to see you, Paul. Thanks.

Thanks, Paul. Take care.