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

Great. Thank you very much everybody for continuing along this afternoon. It's my pleasure to host Eiry Roberts, Neurocrine Chief -- Chief Medical Officer; and Kyle Gano, Head of BD and Strategy at Neurocrine. So thank you both very much.

I though we would just kind of center discussion to start on crinecerfont, the focal seizure readout later this year. And then maybe you can talk a little bit more about your broader strategy. But maybe to start with crinecerfont, I guess the main overarching question that I and other investors have is how do we take the initial biomarker data that's been has been generated, which looks very promising and try to extrapolate that or predict in broader confidence in a clinically meaningful level of steroid dose reduction. So I know it's open ended, but maybe you can start with that, Eiry, and then we can get into more specifics. So thank you.

Yes. Thanks, Paul. So delighted to talk about crinecerfont. As you said, it's an exciting year for us. We recently completed the enrollment in both of our registration phase studies, both in adults and pediatrics, and we are on track to read out the data from both of those in the second half of this year. And so that registration program was performed on the back of a two Phase II dose finding studies that we performed on in adults and one in adolescents. And both were 14 days of dosing duration on a background of stable steroid dosing in that patient population. And what we saw in that study really encouraged us from a hormone level perspective. Because we saw -- taking the adults first of all, there were four dosing cohorts in that study, and we saw very robust changes in each of the hormone levels, even as early as day 1 of dosing, but certainly out to day 14 and those are 17-OHP ACTH and particularly the androgen levels. What was most interesting to us was a very clear dose response that we saw in reduction of androgen levels over that 14 days of dosing with the largest magnitude effect of over 75% of the group having at least a 50% reduction in androgens happening at the highest dose level, which was a 100-milligram BID dose, and that is the dose that we were very clear in discussions with regulators and others that we took into Phase III. And so I think what that taught us and what that Phase II program showed us was that for crinecerfont on a background of stable steroid even in individuals who had some degree of control from their steroid dosing, we could get a profound impact rapidly on the important hormone measures that are used in the management of this disease and to understand the degree of control. And the reason we believe we can do that is because, obviously, crinecerfont acts to a different mechanism of action. It acts directly on the hypothalamic pituitary axis and allows us to regain control of that axis and therefore reduce androgens without the need, hopefully, and that's what we hope to demonstrate in our Phase III program for significantly high dose steroids that are needed to be used currently for patients. And so that's what gave us the confidence. In the Phase III program, as you alluded to, we have the opportunity to also start to look at the ability to reduce steroid dose for patients in the face of keeping androgen control with the crinecerfont dosing.

Excellent. I guess how do physicians [ acts to the ] titrate steroids in the neural world? And do they use things like androgen levels in 17-OHP?

So I think physicians when they're managing patients with CAH have to do two very important things. The first is, because these patients can't produce their own steroid, they have to provide the patients with replacement glucocorticoid because in the absence of giving that replacement treatment, patients would have adrenal insufficiency, they would have adrenal crisis, and they would actually not survive. And so that's #1 treatment for patients. And what clinicians will do to assess whether they're managing that effectively is very clinical. They'll ask patients how they're feeling? Are they fatigued? Are they tired, et cetera? The second important goal then is to suppress these really high androgen levels that patients have with CAH if they're untreated. And unfortunately, in order to do that, the only tool that clinicians have available to them right now is to increase that steroid dose to suppress the androgens. And so then they get to walking this tight rope between what is enough steroid to enable control of the androgens and what is too much steroid, therefore, resulting in the side effects and problems that go along with steroids, be it cardio, metabolic, bone health issues. And so it is a real tight rope that clinicians are walking. And what it really results in is a poor control for the majority of patients at some point during their life. They use every tool available to them to measure how the patient is doing. They use those androgen levels, other hormone levels on an ongoing basis regularly. They also, in children look at bone growth and other clinical measures. And then in adults, they're very interested in cardiometabolic health, not including blood pressure, signs of diabetes, signs of bone problems such as osteopenia, osteoporosis. So it's quite a complex situation for clinicians, but the hormone levels are very important as a part of that management certainly.

Right. Okay. Okay. And so why did you decide to do a steroid-based primary endpoint in the adult study and then androgen-based primary peds study? And what are the kind of broader implications about that as it relates to what matters most to patients at different stages of the disease?

I'll start by saying that the endpoints holistically in each of the studies are very similar. So although there's a difference in the primary, we are measuring hormone levels, steroid dose and also clinical outcomes in each of the studies. And although the primary endpoint for each of the studies is a relatively short-term, either at 4 weeks for the pediatric study or 6 months for the adult, we do have longer-term follow-up for each of those patients, some of it in the control setting and some of it an open label. And so we will have clinical data as well as both of those important sets of hormone and steroid reduction end points. . The reason for looking at the hormone levels in the pediatric population, is those patients have a very dynamic physiology. They're growing, they're developing. And as a result, there are many things that clinicians have to take into consideration when considering the dosing of steroids in those individuals that go beyond what they need to in the adult setting. For that reason, the hormone levels themselves become critical, as young individuals are growing. And for that reason, we've used that as the primary for that study. As I said, we do have steroid reduction protocols within that pediatric program as well. But then when you move to adults, at least the physiology is more stable for those individuals. There may still be very significant differences in the level of control and the levels of steroids used, but a means of kind of gaining control of the axis, reducing the androgens in crinecerfont and then being able to systematically look at the ability to reduce steroids is more feasible and doable in that adult population. That's why we chose that endpoint.

Okay. So when I think about the trial side and trial risk, right, there's two sources of variability, right? One might be, one clinician versus another clinician's level of sort of aggressiveness and how they might be willing to down-titrate the dose of the steroid? And then the second one is just patient to patient even within a given age range, the level of steroid dose can vary significantly. How do you think about these two sources of variability? And to what degree do you work towards managing them in these trials?

Yes. I mean there is variability. I think -- and that's within an individual, as you described and also across individuals. I think the way in which we designed our trials with input from all the key stakeholders allows us to have inclusion exclusion criteria that help us control that variability. In the adult protocol where the primary endpoint is around steroid reduction, there is a very clear protocol for steroid reduction. And so there's a lot of guidance that's provided to investigators because we seek to achieve that steroid reduction in the face of retaining androgen control. . And so again, that's protocolized in the setting of that study. And that also eliminates the variability to a great extent. In addition, individuals are acting as their own baseline. And so as I mentioned in the adult population, the physiology is much more stable. And so the ability to reduce variability in that sense has also been very helpful for us.

Okay. And in the pediatric study, so the primary endpoint is androgen levels, and I'm sure there's an easy answer to this question. But I guess are you trying to down-titrate the steroid as aggressively in pediatrics as you are in adults protocol?

There's also a protocol for a reduction of steroids in that setting, and we are certainly interested in looking at steroid dose as part of our overall analysis of the information from that study, yes.

So I guess when you thought about designing that study, what made you confident that you can still see androgen reductions in the backdrop of also lowering the steroid that in the absence of crinecerfont will probably lead to an androgen spike. Does that make sense?

It does. I mean I think it was the Phase II data. I mean we saw extremely robust changes in androgens albeit on the back of stable steroid dosing. But in terms of the mechanism of action of action of crinecerfont with the CRF1 antagonism, the hypothesis is and what we understand from all of the data we've seen up to this point is that we gain control of that HPA access, which is what's required really to control the androgens. And in a best case scenario, in a real-world environment long term, I don't know that you'd be able to show this in a clinical trial program. The goal would be to have crinecerfont control the androgens for these patients and just need replacement level glucocorticoids.

Okay. To that point, Eiry, I think you said that the earlier settings in just 2 weeks. Do we have any data beyond that, that suggests that the biomarker changes you're seeing in 17-OHP or androgen levels would continue to deepen over time?

We do not have data longer than 12 weeks other than what we've seen in the context of, obviously, the ongoing Phase III studies. I would say that the studies have gone extremely well. Crinecerfont has now been used in over 1,000 patients, and we've had a really good tolerability profile of the medication. We've also, obviously, had DSMB following this program very closely at the Data Safety Monitoring Board, and there's been no requirement to make any changes in the program. So -- but obviously, we're still fully blinded and later this year, we'll get to kind of unlock the results.

Okay. Great. Do you plan to announce post study readout once?

I think we're still working through the details there. We haven't really talked about that yet.

Okay. Okay. Fair enough. Maybe just one last question on the clinical regulatory side and then Kyle I can ask you a couple of commercial questions related to the work you did originally on this assay. Just on the regulatory side, I know you have buy-in for regulators on the trials that you're conducting, of course. But do you feel like for regulators and for clinicians, Eiry, that you need to see some certain magnitude of change in these measures in order to drive both approval and adoption?

Yes. I mean we, obviously, talked a lot about that in the context of our interactions with the KOL community with payers. And I mean -- and I think the challenge here is that this is an area with significant unmet need. I mean there are very few treatment options for patients. We know from literature and registries that these patients have a higher cardiometabolic morbidity. They also have higher bone morbidity. And so -- and that is in large part related to the high doses of steroids that they have to take for a lifetime. And so I think -- and then if you look to other areas such as rheumatoid arthritis, asthma, COPD, it's very clear that being able to reduce steroid level from that higher exposure over time is beneficial for patients. And so the clear message that we got is any reduction in steroid for patients for the long term chronically is a good thing. In the absence of having performed this type of program before or had any real research in CAH before I think clinicians are just really excited at the prospect at least when we talk to them of having an option that doesn't revolve around the use of steroids that can allow them to help these patients with controlling androgen levels and hopefully just get them back to treating this disease like, I need to replace the missing steroids that these patients aren't making.

Makes sense. Kyle, when you did work on this program, I guess, what work did you do? And again, I'm making assumptions here so [ probably the ] assumptions are wrong, but what work did you do to kind of get comfort that if you had a [ steroid-steered ] medicine in CAH that you could price it like an orphan drug as the prevalence and unmet need would deserve.

Well, I'll just start by saying that we've been in this space -- I know we've talked about crinecerfont and our efforts here in the pivotal program, but we actually first achieved a positive outcome in CAH trial over 10 years ago. So we've been looking at this space for quite a long time in getting our understanding through research that we've done over this time frame. I think Eiry outlined the benefits of this treatment option. And I think what we've seen from payers is that, that would be valued based on different options and different outcomes of the studies, I should say. I think you have to overlay the context of what we're trying to achieve here where there has been no new treatment option since the 1960s, and that's been the steroid itself. So I think there's a lot of room here that we can look at in terms of having the commercial opportunity. Of course, you start with the epidemiology, about 30,000 in the U.S. and about 50,000 in Europe. So it is an orphan opportunity truly, as you rightly pointed out. And if we can deliver on the profile that we think that we can achieve based on the Phase II data, I think there will be a very nice opportunity here for Neurocrine and certainly and what we're here for to benefit all these patients with CAH today. There's no reason why the medicine shouldn't be used by all patients.

Yes. Okay. Great. Anything else you'd like to add on crinecerfont before we move on?

I think that's great, Paul. I think you covered a lot of ground there.

Okay. Switching gears to 352 in focal seizures. So I'm just going to talk a little bit about the biological hypothesis. And I guess how much confidence can we have that 1.6 is the core driver of efficacy for existing sodium channel modulators and epilepsy to that?

Yes. No, I think that's a great question. Just as a reminder for everyone listening in about what we're talking about here. It's NBI-352, it's a selective sodium channel inhibitor targeting Nav1.6. It's currently in two clinical studies, one for epilepsy SCN8A and another for focal onset seizures, and it's the latter study that we'll have data on later this year. It is first-in-class as far as we can see out there. It's a precision medicine approach, in particular, as you think about SCN8A, it's an option an opportunity to target the actual disease, not just the symptoms. So I think that's very attractive to us. And to your point, I know we're short on time here, so I'll try to stay on task. Nav1.6 is the most abundant sodium channel in the human brain. And due to its [indiscernible] role in the [indiscernible] it's an attractive target for epilepsy. So I think you start there. And then why epilepsy for Neurocrine? It's the fourth largest most common neurological disorder. And then you overlay some of the work that we've done alone and in combination with standards. You look at a variety of animal models of epilepsy, which are generally fairly predictive of the human condition, if you can achieve the same exposures. We see efficacy with 352 in all of these animal models of disease for epilepsy. So that gives us comfort that we're doing the right thing here, and we're looking at delivering something that can reduce seizure frequency, perhaps increase the responder rate, but do so in a manner that delivers a much safer and more tolerable medicine for patients. I think sometimes we don't talk much -- as much as we should about how sodium channel blockade is such a foundational part of treating virtually every epilepsy type of disorder and disease. If you look at just topiramate, valproic acid, lacosamide, lamotrigine, the first-generation blockers like carbamazepine, those total more than 50 million prescriptions per year. That's huge. And we think that we have the opportunity with 352 if they can deliver on the profile that we're hoping to be the go-to sodium channel blockade medicine for these patients that are currently requiring sodium channel blocker.

So Kyle, if we think about -- this is a placebo-controlled study. So what other trials should we be looking to kind of contemplate with either a better safety profile or a clearly bigger effect size would be in a study like this?

Right. Well, I'll start and then maybe I'll lean on Eiry here a little bit. I think we need to keep in mind that for this Phase II study that we have ongoing. It is more signal-seeking in nature. We're looking at a variety of doses. And given that safety and tolerability is a key differentiator for us, that's actually what we're looking at here in this particular study. And then all those particular efficacy parameters that would be -- those that read on epilepsy would be looking at from a secondary perspective. But I think this sets us up quite nicely in terms of the data set that we get from this. And as I mentioned, if we get to the exposures that we've seen in the animal models, and we see good data here, it sets us up nicely to be very aggressive as a next step for the program. And let me stop there and see if Eiry has anything to add to that.

No, I think you said it well. I mean it is a signal-seeking proof-of-concept study. And we intend to come out of this study, understanding a fair bit about dose selection for our next program. And to Kyle's point, we will be looking at all the traditional efficacy endpoints change from baseline in seizure frequency proportion of patients achieving a 50% reduction in steroids, et cetera. But we'll be looking at the data in its entirety in order to understand the performance of the molecule in this setting.

Okay. So I guess the hope is to potentially improve upon efficacy and safety. Is that right?

I mean that would be the ideal scenario, right? I mean I think that one of the hypotheses out there, and we've seen this and even the clinical trials that have been produced by medicines like lamotrigine and things of that sort that you do see a nice dose response as you go to higher doses, but a lot of patients can't get to that dose. So what they end up doing in practice is that the layer actually multiple sodium channel blockers on top of each other to get the knockdown that they need. So I think that, that's something that we look at carefully. And we're wondering if we can be that specific blocker that's there that gets to the desired level of knockdown and you can alleviate the need to use combination sodium blocker therapy moving forward.

Okay. Great. Well, there's obviously a lot of avenues we take this conversation, but maybe a little bit on the just general strategic side, Kyle. Neurocrine has now been talking for over a year about capacity to do a $3 billion to $4 billion deal, something came up. Talking about maybe doing more in neurology, maybe even more in a kind of neuroendocrine. What's the sort of latest and greatest on your strategic thinking? And how would you sort of characterize the sense of urgency right now to acquire an asset that maybe has a lower risk profile than, say, an earlier stage gene therapy [indiscernible]

Right. No, I think it's a question that we often get. I would say we don't feel a sense of urgency. We're quite excited about the pipeline that we've created and how we've created it over the past couple of years and what things will be coming down the pipe from preclinical to clinical side of things. That being said, we're always aggressive on the side of business development. We look at a variety of different things with the lens of innovative science, platform technologies, differentiated approaches to new modalities. Anything that will result in a medicine down the road that would change the standard of care. Those are things that we're looking at. And that brings us into early to mid-stage clinical development types of opportunities as well as late stage to commercial opportunities. I know everyone would love to have one of those late-stage commercial opportunities in our core therapeutic areas, there are a few of them. And we are -- we continually look at those and try to get smarter and see where they are both in their clinical development time lines as well as their commercial trajectory and see if those make sense over time. But in parallel, we'll also continue to look at these earlier-stage deals to see how we can add to the pipeline, and we'll make sure that we don't miss anything that's there in either one of these sides of the equation. If they come up and they make sense to Neurocrine, we're going to look at bringing those assets in. We've mentioned a target number of $3 billion to $4 billion valuation that we could look at for the types of things that we can bring in the company. I think it's just a function of our cash position, our market cap more than anything else. And that's a goalpost for us. So we'll continue to refresh what we look at over time. But bottom line is we're as aggressive as we've ever been and we'll continue to look at adding portfolio assets should they make sense to the organization and be consistent with our strategy and our interest and capabilities.

Excellent. Can I sneak in one last question in the last 60 seconds? What might be the timing that we could get some data from the muscarinic program? And what do you see as a clearest path to differentiation for this asset?

So what you can see on ct.gov for the 568 asset, we have the primary completion date in December of '24. So you can see data coming out early in the subsequent year. I think we're really excited to see where we are from the recruitment perspective, and we're confident we'll have the data in 2024. Now, how early in 2024 is to be determined, but we're really happy with the way the recruitment has gone thus far. On the side of differentiation, just keep in mind, our perspective is no medicine is created equal here. The approach is taken by [indiscernible] Neurocrine are vastly different, and there's an opportunity for all of this to be differentiated. The other piece is that when we think about schizophrenia and antipsychotics in general, this is a category where patients are recycling through different medicines over time. There are some 2 dozen antipsychotics, 70 million prescriptions. You layer on top of that a novel mechanism of action like the muscarinics and being only 3 players there, there's ample room for us to help many different patients over time and for us all to win. So I think that's probably where our pause here and say we're really excited about the program and the opportunity around the muscarinics, it's not just about a single molecule and disease states for that molecule, it's multiple molecules, multiple disease states, and we're looking at maximizing the value of the franchise, not just a single molecule.

Excellent. Thank you both for joining in the [indiscernible] of time. I appreciate it.

Thanks Paul.

Thanks Paul. Take care.

Take care. Bye-bye.