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

Welcome, everyone, to the 42nd Annual JPMorgan Healthcare Conference. My name is Anupam Rama, I'm one of the senior Biotech Analysts here at JPMorgan. I'm joined by my squad, [ Lorea ] Hall, Malcolm Kuno, and Priyanka Grover. Our next presenting company is Neurocrine, and presenting on behalf of the company, we have CEO, Kevin Gorman. Kevin?

Thank you, Anupam, and welcome, everyone. I want to say a big thanks to Anupam and the JPMorgan team for the opportunity to be here today. We -- I will be making forward-looking statements, so I direct you to our more most recent SEC guidelines. So Neurocrine is a company that has traditionally taken on drug development in areas that have never had drug development before. And I think that, that -- when I show you our pipeline or commercial activities, you'll see that to be true. And that is something that we feel passionately about. It's not that we -- all of our programs, there's never been drug development in. But in our most advanced, in our commercial programs, that's exactly the case. And we're very proud of that. The -- we're a neuroscience company. We've always been a neuroscience company. But neuroscience is more broad than what you may have thought of it in the past. That means it's not only neurology, but it's neuropsychiatry, it's neuroendocrinology. And I think in the very near future, we'll be talking about programs that we have in neuroimmunology also. So we've been in the business for 32 years now, Neurocrine. For about 26 years, we were a pure R&D company. It's only been in the last 6 years that we've been a fully integrated commercial company, and our lead product being INGREZZA for tardive dyskinesia and for the treatment of movements, the choreiform movements in Huntington's disease. Again, an indication, tardive dyskinesia or TD that never had drug development ever. We were the first drug ever developed into this indication, and it's worked out quite well. We've also been in neuroendocrinology, and with our partner, AbbVie, again, a compound that was discovered and developed at Neurocrine, elagolix, now known as ORILISSA or ORIAHNN in women's health disorders is on the market. And then we have a couple of other compounds that we've brought in through an acquisition that are going to be a great complement to what I think is one of the most exciting things I'm going to talk about today, which is our drug crinecerfont, which we presented 2 Phase III readouts late last year that beat even our expectations. And these are going to be a wonderful tag along as we knock on wood, get that drug approved and then brought to market. Here are the numbers. They're great numbers. I'm exceptionally proud of these numbers. It's not that long ago, I could never have imagined that Neurocrine was going to be in this kind of position to have a multibillion-dollar franchise that is growing by 20% or more every single year even after 6 years on the market. And yet, we've only touched the surface of this. We've basically -- we're treating 10% of the addressable population out there. So it has got a lot of legs to it. We -- at the end of last year, we got the approval for Huntington's disease. And also, I think very importantly, we settled our 4 ANDA Litigations to take us out to March of 2038 with exclusivity there. So not only do we still have a huge opportunity in the marketplace in front of us to be able to help these patients, but we have an amazing runway in order to do that. And we have a very, very nice portfolio to back it up. And that's what I'd like to spend most of my time today because the numbers don't tell even the most exciting part of our business. We have this large pipeline. We have mainly dedicated with small molecules, what we're not going to talk about here today, but we talked about it just last month at an R&D Day in great depth, was the transition that Neurocrine has been taking over the last 5 years, but you're going to see come into fruition next year is the biologics and the gene therapies that we have been developing with partners and solely alone in-house. And that's what you're going to see. We're always going to be dedicated to our bread and butter, which is going to be small molecules, but you're going to see this pipeline that we have transitioned over into mainly a large molecule. And we made that decision about 5 years ago because we truly believe that neuroscience, its time has come. What we've learned from neuro-oncology is that we can actually change the course of the disease, and we believe that with CNS diseases, we can be curative by the end of this decade. And our goal is to build the leading neuroscience company in the world. And to do that, you need to cure diseases. So as I said, we have this large pipeline that we have. We have 14 compounds in clinical development right now, in 17 different indications. I'm not expecting you to try to read all this, especially from that distance. But just a few things I would like to highlight out of this pipeline. Number one is, what can you expect from us this year in Phase II readouts? Well, there's going to be 5 Phase II readouts that are going to be taking place. And it does run the gamut between neuropsychiatry and also neuroendocrinology here. I would say one of the most exciting readouts that we're looking forward to is our M4 agonist, that's in Phase II clinical trials. I think 2 companies, Karuna and Cerevel, I guess we can call them now BMS and AbbVie. But Karuna and Cerevel did a marvelous job in really showing the industry that there -- the M4 agonizing that receptor system has a real role to play in psychiatric conditions. What I'm very happy about at Neurocrine is that we have the broadest and deepest muscarinic pipeline of any company in the world. So as I just said, we have the Phase II data in M4 in schizophrenia that's coming out, but the muscarinic system is a number of receptors and we are going to explore every different type of an M1 agonist, M4 agonist and even antagonism here. So what you see that we have in our pipeline is behind the M4 specific agonist, we have M1 specific agonist. We have balanced M1, M4 agonist. We have an M4 preferring agonist that has M1 activity, and an M1 preferring agonist with M4 activity. This is an important system in CNS diseases. And we have the tools now in humans to rapidly and simultaneously explore these different pharmacologies in a number of different diseases, both neurological and neuropsychiatric diseases. We also have an M4 antagonist, so playing both sides of it in the antagonist for movement disorders. So in the next 2 to 3 years, this is going to form, I think, a huge part of Neurocrine's late-stage portfolio that's going to be in there. But what I'd like to spend a lot of time today is on crinecerfont for a rare genetic disorder called congenital adrenal hyperplasia. And as I said last year -- late last year, we read out 2 Phase III clinical trials, 1 in pediatrics, 1 in adults on this. The results were spectacular. I'm not going to go over the results today because that is all over our website. We've done multiple presentations and importantly, later this year, we look for presenting at a large medical conference that results in a lot more detail than what we have thus far, and then in a premier publication. But what I do want to do is because I think many of you might be new to what is CAH. So as again, I said, it's a -- it's a genetic mutation that takes place in a fundamental multi-organ system for life, not only in humans, but in all vertebrates have this what's called the hypothalamic pituitary adrenal axis. This is fundamental to life. It's complicated, but we don't need to know all the complications of it. There's a factor that's released by the hypothalamus that stimulates the pituitary, the pituitary then in response releases ACTH, which then acts on the adrenal glands, and the adrenal glands for today's presentation, do 2 really important things. They make all of the androgens in our body, and number two, they make cortisol, absolutely necessary for a human to live. Like all endocrine systems, they have feedback regulations. So cortisol isn't there just to do its primary purpose throughout the body. Cortisol also then feeds back to the pituitary, in a negative way feeds back into the hypothalamus, and says, "Okay, stop. Stop this release of ACTH." So that way, you have balanced androgens, balanced cortisol, and so it's a [ diurnal ] rhythm that takes place in that -- in this system. Unfortunately, in CAH patients, they are born without the ability to make cortisol. So all these babies died until the mid-1960s, like 1963, 1964, when hydrocortisone was brought to the market. Hydrocortisone was brought as an anti-inflammatory, the endocrinologists immediately recognized, we can save these children. Now, we can start giving them hydrocortisone. First thoughts were, well, all we need to do is give them replacement doses of hydrocortisone and we're good to go. They'll be fine. Yes. Forgot about that negative feedback regulation that cortisol does, that hydrocortisone isn't really good at. So physicians are really left in a very, very bad spot. Fundamental for all medical professionals is do no harm. Endocrinologists treating CAH patients have no choice but to do harm. They've got 1 drug. That's it. Developed in the 1960s, and it's hydrocortisone. So there's this balancing act from birth all the way through end of life that they have to do with these patients. Do I try to keep the hydrocortisone levels that they take every single day? Do I try to keep them really low but let their androgens run wild in the body? That's 1 choice. You do that, you're going to have infertility in women, ambiguous genitalia, that takes place. You're going to have testicular tumors in males. You're going to have bone disease. You're going to have very short stature for patients as they develop. There's a number of problems, and I won't even go into the psychiatric problems of having very high dose -- very high levels of androgens in the body. Or you give very high levels of hydrocortisone every day, super therapeutic levels of hydrocortisone. Well, now what are you left with? You're left with obesity, diabetes, bone demineralization. You have profound effects and fractures in these patients. And you have short stature, then again. So what do you do? You have this balance and they're just, as throughout the patient's life, they just try to let one go out of control for whatever period of time is tolerable and then let the other one go out of control. That's a horrible place for the physician to be in. That's a lot of suffering for the patient to be in. What does crinecerfont do? For the very first time, these patients, and as our Phase III clinical trial showed, crinecerfont takes care of the androgen access. We've shown it absolutely, that you take crinecerfont, orally active pill, and now you can bring androgens down to normal levels. Forget about hydrocortisone for the time being. So you can bring the androgens down. They still need to take hydrocortisone because they still can't make cortisol. But now the goal always was the dream that we had with the androgens under control, you don't need the super physiological doses of hydrocortisone to get them under control. Can you bring those steroid levels down dramatically? Perhaps -- bless you. Perhaps even bring them down to physiologic. That was the dream. And that's what the Phase III data allowed us to see. And as impressive as that Phase III data was, that you can bring the androgens down to normal and then bring exogenous hydrocortisone just replacement levels, the safety data in crinecerfont is equally as impressive, safety and tolerability. I think you can see that my enthusiasm is palpable. I never thought that at one company, we're going to see another drug, which was INGREZZA in tardive dyskinesia, the Phase II and Phase III program there was tremendous control of abnormal and voluntary movements, great safety profile. I would say that this compound now exceeds that in CAH. We're really fortunate. It's good enough for me to talk about this, but I really think, what is most important is let's see what the treating physicians have to say about it. So again, in that R&D day last month, we were able to bring a panel up of CAH patients, CAH caregiver, a mother of a child with CAH, and treating physicians. And that was the highlight of the whole day. And for everyone that was there, that was the first time they've ever seen [ med ] heard from a CAH patient. Can't do that here, but I'll try the next best thing. So let's look first at 3 endocrinologists who treat actually quite a number of CAH patients. [Presentation]

And now, from 2 parents of CAH patients and then a young woman who has CAH. [Presentation]

This is a really difficult disease for everyone that's involved in it. The parents, the kids, all through life, their transitions that they have to make when you're talking to parents, when they're dropping their child off of college. And the child is terrified now. It's the first time they have to try to manage this disease on their own. And as I said, the endocrinologists are in a lose-lose situation. Some of them just really hate if a CAH patient comes through the door. It's too damn difficult. It is hard. It is complicated. But what crinecerfont does is it makes it very simple. Crinecerfont can take care of -- nonsteroid, takes care of the androgen excess and therefore allows the glucocorticoids to be normalized that you take each day. It will be a life-changing medicine for these patients, and we look so forward to bringing this to market. As I said, we'll be filing the NDA later this year. We got breakthrough designation from the FDA late last year, which is really nice. As soon as they saw the data, they gave us breakthrough. And currently on this drug, I can feel confident, which is a new information today that says that we will have intellectual property protection. At this point in time, at least until 2035, much as we did within INGREZZA, we have lots of active efforts where there is going to be more and more patents going into the Orange Book over the next 2 years. So I would see us as improving even on that quite a bit. So very important to us. A lot of work that we're doing here. And even now, we're working on the second generation of crinecerfont. So we have a lot of things that we're going to do in 2024. We're advancing Phase I programs. That's the largest number of Phase I programs that we've ever done. Putting it in, as I said, we have 5 Phase II data readouts that are taking place. And you're going to start to see that we have developed internally a sustainable R&D engine. It's 1 thing to make that big leap that very few biotech companies are able to do to be a commercial company with important blockbuster, multibillion-dollar products. Got another one coming out behind now with crinecerfont. But can you show that you can generate that internally? And that's what you'll be seeing from us because we do believe we have that internal engine now. What about longer term? Longer term, the approval of crinecerfont next year in both the U.S. and in Europe, and we plan on commercializing this ourselves in Europe. So this is going to be the drug that globalizes us. As I said, we're going to be a large molecule company, we're going to be agnostic to what the therapeutic modality is in all of these neuroscience areas that we're going into. And so that means that, we look that in 2025, we will have 2 gene therapy programs in the clinic. We are advancing. Our goal is to advance 20 development candidates between now and 2027. It's an ambitious goal, but it's one that I think that we can actually meet and potentially beat. The clinical pipeline right now is weighted towards psychiatry. You're going to see that waiting go more to neuroendocrinology, neurology and neuroimmunology. Better balances between the biologics and the small molecules. And we're going to go after diseases that are still very much underserved, but have been validated, that have been validated genetically to a great extent. So that, that should increase the rate of success that we have. And if we're -- programs die, compounds don't work. That's the name of our business. That's just the way it is actually most things. We, like every one of my colleagues that you've heard, you want that to happen, those failures, to happen earlier rather than later. And then with INGREZZA, as I said, we have a long runway. We have so many thousands of patients still yet to treat. So that is the one thing, that is going to be an engine for us for years to come. The employees at Neurocrine are really proud of what they have accomplished but they're much more excited about what they're going to accomplish. With that, I would like to bring my squad up here who actually does all the work.

My squad too.

Yes. But we all know that. And then we'd like -- we'd be more than happy to take your questions.

While they're coming up, I just want to remind everybody that -- many of you have heard this. [Operator Instructions]. But I wanted to...

Could I just really -- before you start it, can each one of you just introduce yourselves, please?

Can you hear me?

Yes. Okay.

Yes, Matt Abernethy, CFO. I have been with the company in the last 6 years, and just thankful to have this opportunity and excited about everything that Kevin highlighted here today.

Thanks, Matt. Kyle Gano, Chief Business Development and Strategy Officer, been with the company for over 20 years.

Jude Onyia, Chief Science Officer, and I've been at Neurocrine now for 2 years.

Hi, everyone. I'm Eric Benevich, Chief Commercial Officer.

Eiry Roberts, Chief Medical Officer. I've been with the company for 6 years.

Okay. Jump right in now.

All right. So what do you say are the biggest challenges that you see in terms of building the CAH market?

So rather than listen to me talk anymore, Eric?