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

Good morning, everyone, and welcome to Morgan Stanley's Global Healthcare Conference. I'm Sean Laaman, Head of U.S. mid-cap biotech equity research here at the firm. Before we commence, for important disclosures, go to our research disclosure website at www.morganstanley.com/researchdisclosures. And if you have any questions, please reach out to your Morgan Stanley sales representative. For this session, we have Neurocrine Biosciences, with CEO, Kyle Gano; and Chief Medical Officer; Sanjay Keswani. Welcome Kyle and Sanjay. Its a pleasure to host you both.

Thanks, Sean.

Maybe just to start, we've got some macro questions. And the first question is with China's rise in biotech innovation, how are you thinking about the competitive position here for Neurocrine? And does it influence your R&D and business development strategy?

No, I appreciate the question. From our view, the competitive advantage that I think we have at Neurocrine is that we're not blind to what's going on in China. And we do have regular conversations with companies in the region to learn about how they're thinking about drug discovery and drug development. I think we all have to admit they do some great science over there, in particular, engineering and engineering at scale on validated biology. And we've seen some molecules come out of China that have been in-licensed by pharmaceutical companies at a very high premium because these molecules are quite good. So we want to understand that at a minimum, how they're doing that over there, and there are some things that we can learn about their approach to these types of molecules that they've been putting together. I think the other side of the coin is that they haven't really been doing a lot of work in diseases of the CNS, the central nervous system. And so from our competitive advantage standpoint, we're still working in that space. We're not quite there yet. And if we're concerned, or worried about them having a leg up there, I think that we're doing quite well here in the United States. But still us going over there regularly, we're keeping a tab on companies that are working in this space. And if they do have something that's interesting, it's good for us to know that. And maybe there's something there for Neurocrine down the road, or again, just learning from them, and how they're tackling these types of issues that we're all facing in the drug development area.

Wonderful Kyle. With respect to AI, how is Neurocrine leveraging AI? And how do you think about AI's disruptive potential?

Right. So on AI, we're not an AI company. So when it comes to leveraging this technology in drug discovery, that's largely done through partnerships, and we do have a couple of those ongoing now on the side of -- try and identify new chemical scaffolds and structures that might be appropriate for us to invest in additional chemistry and moving those forward further in development. So there's a drug discovery component of that. We're not discovering those tools. We're not developing them. We're partnering with other companies to help us in that area. The other side of AI that we are leveraging -- and when I say leveraging both for discovery and this other piece that I'll be mentioning, it's really very early innings for Neurocrine. This is not an area that's, again, that we've invested a lot of our dollars in since the beginning of our conversations about AI. So we're catching up a little bit. But in the areas other than drug discovery, we also look to identify and utilize tools that allow us to do things more efficiently. If we have a team of clinicians that are required to come together to write a study report, that's not necessarily the best use of their skill sets. They're physicians, they can design trials. They can go out and meet with physicians and talk about future trials, the science that we're developing here at Neurocrine. I'd rather not them spend a lot of time writing a study report. So they can bring in the data to an algorithm that's part of an AI tool, and have the AI tool itself help develop that initial study report. And that saves our clinicians' time to do those things that they're most skilled at. So these are the things that we're trying to do and adopt across the organization. Still early days, but I'm excited about what we're talking about at Neurocrine and leveraging these different aspects of the technology moving forward.

Yes. Wonderful Kyle. And final question before we delve into more detail on Neurocrine specifically. But what's been the most impactful for Neurocrine on the regulatory side? Is it MFN? Is it tariffs? Is it the FDA changes?

When it comes to the pieces that you bought up there, I think the overwhelming concern is just the uncertainty across all these, right? There's not really any policy that covers things like MFN, or tariffs, or these other issues that we've been facing from a regulatory standpoint yet today. So a lot of it is kind of early days. And our general response is -- because it is early days, we try to focus on those things that we can control in Neurocrine. To make the business as strong as we can, is resilient to anything that comes down the pipeline. And we think this is going to be beneficial for us, and our shareholders and patients down the road. But we'll keep a close eye on all these different things. I will say just at a high level, among these three things, the piece that we didn't necessarily mention here the Inflation Reduction Act. That is one piece that is policy. And we do get a lot of questions on that because it does read on one of our products, INGREZZA, either directly or indirectly through our competition that's in the space as well. So we did get a lot in that area on tariffs and on the FDA piece. Not a lot there to talk about for Neurocrine.

Okay. Wonderful. Maybe jump straight into it. So INGREZZA sales have been a clear area of investor focus as they should have been this year and the competitive dynamics with Teva and AUSTEDO. And then more recently, you lowered the top end of guidance by $50 million. So you comment on what factors led to a revision? And how do you feel about sales are shaping up for this year?

So my view at a high level, the first half performance was really strong at Neurocrine. If we just take a couple of things to mention here. We had back-to-back record NRxs in Q1 and Q2. We saw a record TRx in Q2 as well. Overall, our revenue for the quarter in Q2 is $624 million. That represents 15% quarter-to-quarter growth, and 8% year-to-year growth. This type of performance 8 years in doesn't happen by accident. It really is a function of strength of our commercial organization. The demand that's out there from the perspective of tardive dyskinesia. Only 10% of patients of 800,000 patients are on a VMAT2 inhibitor. So there's still a lot of interest for patients and physicians to get on INGREZZA for the treatment of the symptoms of tardive dyskinesia. And the last piece I'd mention is improvements in our access. We started the year about 45% of all TD and HD Medicare beneficiaries. We're under our Covered Lives category for INGREZZA, and we expanded that from 45% to 70% moving into Q3 of this year. So when you think about the guidance, we did narrow it to $2.5 billion to $2.55 billion. But it really is a function of all those things that I mentioned. It's the cadence and pace of our NRxs throughout the course of the year. It's our TRxs in particular, compliance and persistence as 1 quarter moves to the next. It's our commercial investments, whether it's sales force initiatives across messaging, DTC and its improvements in access. And all these things played a role in that. Bottom line, we're expecting double-digit volume growth this year. The market is very robust. It's going to set us up to close this year strong, and give us a lot of momentum for 2026.

Marvelous. You touched on the macro questions on the IRA piece. But could you comment generally on your expectations for INGREZZA entering price negations in 2027, potential implementation in 2029? And can you give us a flavor of maybe the price expectations, if you can Kyle?

So as we've all talked about the IRA, the Inflation Reduction Act, over the past couple of years, I think we can all agree that it's complicated. There's multiple moving parts. Whether you're talking about limitations and how quickly, or the magnitude you increase the price of your medicines, has got to attract the CPI, or the Part D redesign, or your price negotiation with HHS. So we'll focus on the last piece here now since that was the question. One of the unique things about Neurocrine is that we qualified for the small biotech exemption, and we applied for that, and we do have that status. So that gives us a great deal of cover when it comes to our price negotiation, which does occur in 2027. As it stands now, we'll enter 2027 with this idea that we'll be negotiating with HHS. But we do have a collar. We do have a band where we know that our price for INGREZZA will be discounted in the year 2029 ultimately. But that negotiation will result in a discount of about 25% to 34% discount off of our -- what they call the non-FAMP NRx, or dollars per prescription price. The non-FAMP is an archaic definition that stands for the nonfederal average manufacturing price. It's a price of our prescription of INGREZZA in 2021, that's increased at the CPI from 2021 to 2026, and that number is the basis of the 25% to 34% discount that we'll have. And we'll get that percentage through the course of our negotiation in '27, and that will be the price that we ultimately observe in 2029. So it's not a good thing for our industry, in my view. At least for us in the small biotech exemption, we know what our discount is going to be. It's not a draconian discount. It is that 25% to 34%. It does recognize benefits and inflation between 2021 and 2026. So we'll do our best in '27.

Sure. And what sort of competitive dynamics should we be thinking about with the other VMAT2 and the potential change in prices? How do you think that might play out?

Well, our competitor in the space is a company, Teva, and they actually go through their IRA moment, if you will, on negotiation this year for their price implementation in 2027. I think we'll acknowledge out of the gate, we don't have all the answers for our situation, or for any other company in our industry. But what we can point to is that the TD market is incredibly robust. I mentioned the double-digit volume growth that we expect this year. The 10% of patients, 800,000 patients on a VMAT2 inhibitor day, a long run rate for growth. So we start there. Number two is that our business is pretty well steady all the way through 2026. The outlier here is our negotiation in '27, and what happens to our competitor in the space in '27. But our business into, and through, 2026 is pretty clear in our view. And the last piece is for INGREZZA. Once patients get on INGREZZA, they tend to stay on INGREZZA. Having a movement disorder that reappears after you discontinued therapy is a great motivating tool. So a lot of patients that, again, are on INGREZZA stay on it for a long time, a long course of their treatment. So what that means for us in 2027 is that we're really focusing on, and discussing, what happens to the new patient starts. And that's really where the market goes to in 2027 and beyond? How do you grow the patient population in terms of what medicine they choose, in this case, INGREZZA. And the couple of pieces that we look at there is that we'll continue to have those discussions with the plans, the PBMs the contract in 2027, to see if we can maintain our formulary status. That's one piece. We would be a product, INGREZZA, that is not negotiated, and these plans when we receive a rebate from Neurocrine versus our competitor would not have that advantage any longer. But beyond that, and over our history, we've always worked through an exceptions process. We've been disadvantaged on formularies. We can work through this exceptions process to get patients on INGREZZA. We'll continue to do that. And then lastly, in 2026, we're going to see what the environment looks like in terms of the first 10 medicines that were negotiated. We'll see how those companies that own those medicines react to that environment. And we'll also see, and perhaps more importantly, what the brands that are in the non-negotiated categories are also doing either from a PBM perspective, or just reimbursement in general. So I like where we are through '26. Lets see what happens in '27. We know what the market dynamics are. But I'll go back again, and you'll probably hear me reiterate this. The TD market is incredibly robust. And there's a lot of runway here with INGREZZA. Our IP goes out to 2038. So we're going to be around for the long haul.

Sure. Sure. Thank you, Kyle. Good answer. Just thinking about volume in the neurology, psychiatry and the long-term channels. Can you talk a little bit about that and where you see the most opportunity, or the most growth?

The growth still is largely within psychiatry and it makes sense. I mean the prescribers that we're talking about here are those that are prescribing antipsychotics. And tardive dyskinesia is a movement disorder caused by the long-term use of antipsychotics. We still see, for the foreseeable future, psychiatry being the most productive in terms of the number of TD patients under care. That's about 60%, and the remaining 40% is split equally among neurology and LTC.

Wonderful. Thank you. Switching gears to CRENESSITY. So it seems like the launch is going very, very nicely. Significantly beat consensus expectations, and certainly our number at Q2. But any comments on impact of the Quick Start program. What percent of patients are currently on paid drug? And why is the launch going so well?

So one of the benefits that we had with CRENESSITY that we did not have with INGREZZA, our two medicines that we commercialize here in the U.S., is that we're able to do disease state education for CH in advance of CRENESSITY's launch in December of 2024. And that helped really lay the foundation with physicians that perhaps a new medicine was coming. It was all disease data education of course. But what that meant for us is that we signaled the time of CRENESSITY's launch that we believe the most motivated patient segment was a pediatric one. You have the families taking care of these kids. The mothers and fathers, and they're very motivated to get a new medicine for their children. Also, the long-term benefits are greater the earlier start you start with CRENESSITY. So a lot of motivating reasons to have these pediatric patients start with CRENESSITY. It's exactly what we saw. We were trending exactly where we thought those numbers would be. But I think the disease state education really helped us take up a lot of the adults that we didn't think we would have out of the gate. So a lot of the good success, early successes, are acquiring all those patients that were in the pediatric segment, but also a fair number of adult patients. It's still favors the pediatric side of the patient population. But that was a nice surprise. The other piece is that our reimbursement rate for dispensed scripts is quite high. About 75%, 76%. And that number is a little bit higher than we thought out of the gate as well. Because it takes some time for the various plans to work through getting a medicine like this reimbursed, that's new for disease data rare disease. They come up to speed. They have to understand what CH is. And so far, the team has done very well getting those prescriptions reimbursed. So if you look at the program that we have for patients, it really is a patient coming into the system. They are signed a care coordinator right out of the gate. If they're not seeing a prescription going down the path of getting reimbursed, a patient can be put into the Quick Start program. So they get a 30-day supply of CRENESSITY. And during that time frame, hopefully, they'll get the prescription reimbursed. If they can't afford the medicine, they don't have insurance, or the insurance doesn't cover enough on the medicine. They can offer -- also be offered free goods, CRENESSITY at $0 through our patient assistance program. So it's really provided a nice foundation by which we can start our commercial offers. But so far the reimburse rate has been quite good.

Great. Great. And where do you expect the mix will settle between pediatrics and adults? My guess would be that the adult population is a larger data set. But maybe give us some insights or thoughts around that?

Well, for congenital adrenal hyperplasia in the U.S., we estimate the prevalence to be around 20,000. And the demographics of the age and gender represents what you would see in the general population as well. So to your point, about 2:1 adults, the pediatrics is what we see as the general size and composition of the population. In the near term, I would still expect to see the pediatric population be favored just because of the motivating factors and what they're trying to achieve for these kids. But over time, if you capture all the CH market, you're going to see a flip, or transition, to the adult patient population at some point.

Awesome. Thank you, Kyle. And can you comment more generally on your competitive position versus a potential drug from Crinetics coming up? And maybe sort of put the pros and cons of both?

Right. It's probably a little bit too early to comment on the competition as of yet. And it really is to be fair to the competition, trying to compare two different data sets that are quite disparate. What I would say is that competition is not necessarily a bad thing, gives patients options. And if Neurocrine can be a party that helps shine the light on the disease state that really hasn't any had any medication for over 7 years. That's a good place for us to be. We did that with INGREZZA. Makes me feel quite satisfied leading a company that develops these first-in-class medicines. I will say that if you look at CH, and it probably is something you can pull through other orphan diseases as well. Efficacy gets your foot in the door, but safety and tolerability won the day. And I really like the approach that we've taken with CRENESSITY, and able to recapture the HPA access by working at the CRF receptor in pituitary. Allows us to reduce and control ACTH, as well as downstream androgens. And then layering on top of that, the ability to reduce GC doses over time and bring down the burden of using high doses of GCs over time is something that's very -- we think is the right way to treat CH.

Awesome. Thank you. And you provide rationale for the Phase I study of 1435. And what's your goal for the program? And when might we hear more?

NBI-1435 is our long-acting injectable of a CRFR1 antagonist. So it's a next-generation medicine, if you will, to CRENESSITY. It's not CRENESSITY itself. It's a different molecule that we discovered and developed at Neurocrine. A lot of times when you think about long-acting injectables, you think about improvements in compliance, or compliance being a driving force. And certainly, that's a variable here. But really, for me, it is the ability to achieve a steady-state maximal concentration over a period of time that will allow you to maximize the efficacy of antagonizing the CF receptor. So I have a very high bar. I'm going to see improvements in efficacy over CRENESSITY, if we can. Of course, the compliance piece is there for people that have difficulty taking multiple oral medications on a daily basis. But we're just starting off this study. And I think it's something as we get further along in the year, we'll know and we'll have some data, and we'll share with you when it becomes available.

Great. Great. Maybe a bit of advertising for you here, but you've got the R&D Day in San Diego in December 16, I believe it is. Can you give us a feel for what we should expect?

Maybe I'll let Sanjay share his thoughts.

Sure. So R&D Day on December 16, and has two major components. The first is a focus on the neuropsychiatry portfolio. As you know, you have two Phase III programs, osavampator as well as 568 which we now call Direclidine, which I think is actually kind of a cool name. And then we have a pretty large muscarinic portfolio behind Direclidine as well. So we're speaking about those programs, a lot of indications potentially in play in AD psychosis. Something that is very interesting to us. You're going to be watching [indiscernible] efforts then very closely, but many other indications bipolar mania, bipolar depression, et cetera, et cetera. So we'll unveil kind of our strategy with respect to our muscarinics as well as [indiscernible]. And then the second major component is really showcasing our early phase portfolio. So as you know, and I think Jude Onyia has discussed this before, who's our Chief Scientific Officer, we have a whole slew of large molecules coming into our portfolio. We just talked about 1435 which is our molecule for CAH, but there's lots of stuff behind that. And so we'll be talking about that as well. And then lastly, going to San Diego in December is not a bad thing. It's a beautiful campus. So yes, what's not to like?

It is. I have been there before. San Diego, any campus. But Sanjay, how do you think about the differences between M4 selective, and M1/M4 dual selective?

Yes. So I mean, traditionally, and this is certainly, I think, still our current view. We regard M4 as being really important in terms of psychotic or antipsychotic activity. While M1 agonism could be very helpful from a cognitive point of view. But we do have the opportunity to really probe and titrate how much M1 and how much M4 we want. Because we have a whole bunch of molecules, which again, we'll talk about R&D Day. So we have M4 preferring molecules. We have M1 preferred molecules. We have an M1 and M4 dual agonist as well. And so it does allow us to play in a number of different indications. The more M1 preferring could be more suitable for cognition, for example, cognitive impairment associated with Alzheimer's disease, or Lewy body disease. And clearly, there's lots to play in this psychotic space with respect to the M4, as respect of bipolar mania, as well as schizophrenia.

Sure. Thank you. And just to clarify, so the M4 agonist is 568 for bipolar disorder? Provide some more rationale and we see potential for a muscarinic outside of schizophrenia?

Yes. So well, bipolar mania is a really important indication. In fact, we're starting a Phase II study this year with direct lead on 568. The sense is that actually translates well schizophrenia to bipolar mania if you look at antipsychotic space. There have been many successful translations. Also from a preclinical point of view, we do have compelling data in an amphetamine-induced hyperactivity model, which is the model people use for bipolar mania. So we're quite bullish on efficacy and bipolar mania.

Wonderful. Moving on to the MDD pipeline. But looking at the history and success with the NDA agonist ketamine, with Spravato and then you've got 845 and 770, the program. So we have potential for meaningful commercial opportunity. So you can help us compare and contrast between NDA and AMPA for major depression?

Maybe I'll start, and Sanjay, please chime in if I miss anything. But I think this is a good reminder on this particular question. Just to share with you in difficult disease states like MDD, our approach at Neurocrine is that we like to approach it and looking at a biological pathway that's been validated. And for us, that starts with the ketamine pathway, or PCP pathway, that starts with the antagonism of the NMDA receptor. So at a high level, just to map out where we are playing here. If you look at looking at the top of the pathway, NMDA receptor, and something like ketamine, what it does is it antagonizes the NMDA receptor and increases glutamate GABAergic inhibitory neurons. It does so in a way that there's a super GABAergic state that is invokes. And it causes glutamate to push through the entirety of the neuron. It gives a rapid response. And that's one of the benefits of ketamine is that you get this quick onset of action and relief of your symptoms. But it also is associated with a lot of disassociated effects, as well as the other consequences in safety and tolerability issues that required to be administered in the hospital setting. So what is our approach to this? Well, if you want to think about osavampator first and foremost, it works downstream with the NDMA receptor. It does not overactivate the neuron in terms of glutamate. It uses the glutamade that's proximal to the channel. And acts just as we've talked about with positive allosteric modulators over time by opening the channel and allowing glutamate to flow through the system and activate it that way. That is a nice kind of soft touch approach for the treating of the symptoms of MDD. The trade-off there is it's not a fast acting option. It's more of a traditional 4- to 6- to 8-week type of approach to get to maximal efficacy. And that's what we demonstrated in our first Phase II trial, what we're looking at for a Phase III study. Very good safety and tolerability. Very strong efficacy in terms of the MADRS scores as our primary endpoint. But not a fast onset of action. On the other hand, 770 is our NMDA NR2B NIM. It works at a subunit of the MDA receptor. And the thought and hypothesis that we have and others over time, is that while it invokes a super GABAergic state, it's transient and not to the same extent as ketamine. So we will get a fast onset of action. That's what we're anticipating. That's we've designed in our Phase II trial. But hopefully, without all the side effects and tolerability issues that we see with ketamine itself. So for 770, again, our NR2B NIM, we're looking at the MADRS as the primary endpoint at day 5. For osavampator, we're looking at the MADRS but at day 56. Different approaches within a validated biological pathway.

Very, very interesting topic. How is the 845 trial proceeding? And is there any sort of way we can catch the expected Phase II top line data for 770 expected in December, I believe?

Yes, it's 845 osavampator is doing really well from a recruitment point of view. So we've actually initiated all 3 Phase III studies. So these are 8 week studies in depression. And we're expecting the top line data in 2027. With respect to the 770, or the NR2B NIM program, the Phase II data is expected Q4 of this year. In fact, you will be looking at that data very soon.

Wonderful. Just being sort of conscious of time, I want to get to some financial questions. But several other programs in your pipeline, but touch on at least one more M4 986. So unlike other muscarinic antipsychotics, this is an M4 block. Can you briefly touch on the M4 blockade and its potential for treating movement disorders. And if you could touch on the history with Artane as having derisked the target?

Yes. It's interesting one. This is actually a homegrown molecule, 986. So Artane or trihexyphenidyl, I think about it, right, is basically a muscarinic agonist that's been traditionally used for many, many years, for decades in the neurology space, primarily in Parkinson's tremor, but also dystonia. The problem with it are side effects, which relate to cognition, dizziness, confusion. And so if we had essentially a better Artane, which is more tolerable, we think it could be a winner. That's essentially 986. We believe that Artane's efficacy is actually due to M4 blockade. And so we have a specific M4 blocker that's 986. So we'll be looking to start a Phase II study in the next year or so in either PD tremor or dystonia.

Yes, it's very much the opposite of the muscarinic agonist story. The muscarinics will suffer from the same, whether you're looking at antagonist or agonists, they suffer from the same challenge and that selectivity. So you can get pan muscarinic antagonist the key is getting selective ones. And it just so happens that if you look at our agonist, or antagonist portfolio, we've got that built into the molecules, which is the real positive here.

Sure. Marvelous. Just taking a step back and looking at the investment case. So I sort of covered your stock for not that long now, and sort of been in American for 1 year, or pretend American for 1 year. But it's sort of coming and looking with a fresh set of eyes and you've got two marketed products, which are both growing sort of very nicely. You've got a fairly rich pipeline and looking at consensus that doesn't seem that there's a lot factored into your pipeline. The stock was mild at around $100 for a while, and it's -- I think most people think it's worth in that $160 to $200 bracket, you're some way there. But just stepping back, you've got that top line growth, and it seems that you're just trying to get the modeling of the OpEx right. It seems that you're going to be generating quite a lot of cash. I'm just wondering is that the case? Or do you think you've got to get that cash to get some of those R&D programs across the line? Or is it going to be a story of good top line, improving profitability, and then you've got a very rich pipeline on top of that?

Right. It's a very fair question. In my view, where we are standing here today as a company, we're firing on all cylinders, and that goes with what we're doing commercially and across the R&D portfolio. But my North Star at Neurocrine is to look at those investments that continues down that path of a high-growth company. So revenue growth, revenue diversification and showing you all that we have a sustainable pipeline. And that's -- those three pieces, I think, are ones that every company should aspire for, and that gives you great long-term success. And we have bits and pieces of all of those that I can point to that gives you some comfort that we're moving in the right direction there, but I don't feel comfortable that we're there across all those variables quite yet. So we are a fully integrated company. We are a profitable organization. But in the near term, we're not looking to direct our investments to maximize profit. We're investing in growth right now to help us down those different variables of a high-growth company. On the commercial side of the business, it really is driving and maximizing the investment and opportunity value for INGREZZA and CRENESSITY. And I spoke to both our Q2 revenue number for INGREZZA, $624 million. Also the guidance this year, we talked on $2.5 billion to $2.55 billion. On an enterprise-wise perspective, if we look at CRENESSITY coming into the mix, the $682 million in revenue for Q2. That's 17% year-to-year growth. Those are the things I'd like us all to be starting to get familiar with Neurocrine. It's not just an INGREZZA story. It's a CRENESSITY story moving forward. Over the past couple of years, we have shown leverage on our commercial expense line of the business still. I think it is important to point that out. As the products mature, as our investments play out as they have done over time, we have shown 1,000 basis points improvement in leverage. We would expect that to continue as we move through the launch of CRENESSITY. So we can get leverage from our investments in our products, and our commercialization efforts, and those also grow the top line. So those are both working for us. On the R&D side of the equation. We usually look to invest about 35% of net sales into R&D, and that's kind of where we are this year. That number may be slightly higher or slightly lower, depending on the quality of the assets. But to give you all kind of a nice benchmark for our directly named Phase III trials, these are inpatient studies. 280 subjects each approximately. These are $75 million to $100 million of Phase III studies, and there are two of them that we're doing at a placebo controlled. So there is a time right now where we're having multiple registrational studies that are up and running, and there's a high spend there. We're still going to meet that kind of benchmark of about 35%. But in a couple of years down the road, those Phase III programs will be gone. And our pipeline will be earlier stage. So they could be a little bit lower than that 35% number. So all these things are playing into our calculus here. But right now, I really like what we've created at the company and our prospects here over the near term, and we are looking to continue to invest in growth.

Wonderful great answer, Kyle. Do you feel like you've got the R&D pipeline right sized at the moment, like we shouldn't be thinking about other business development opportunities necessarily outside the scope of what Neurocrine currently has?

That's a fair question. I think if you look at the portfolio today, you'll see that there are great -- there has been a great deal of reliance on external collaborations that we've struck over the years. Moving forward, you're going to see a right mix of internally discovered programs as well. Right now, related to the BD question specifically, I don't see a great need for us to bring something in from the outside. If anything, our research team is over delivering on what our goals were from several years ago in terms of having a certain number of programs in clinical development. Just this year, we've already started 3 new Phase I programs, and we have a line of sight to a couple others this year. Our goal, I think I mentioned this at prior meetings, the productivity of our R&D team will be as such that we'll deliver at least 4 new Phase I starts per year, 2 new Phase II starts per year. And in any given time, we'll have 3 Phase III programs. And that will allow us to talk about having a portfolio that will deliver a product. A new product every other year. So that's where we're headed, and that will be largely driven by our internal efforts moving forward, and we'll be able to selectively drop in things from the outside when needed.

Wonderful. In the interest of time, one final question and that is -- did I not ask something that I should have?

We didn't talk about our next-gen VMAT2 program. So perhaps we can [indiscernible] that in some of our side discussions with you all. But look forward to that discussion. And thank you once again for having us here today.

Thank you, Kyle. Thank you, Sanjay. Greatly appreciate it.

Thanks, everyone.