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

Hello, and welcome, everyone, joining today's Neurocrine Biosciences Reports Q2 2026 Earnings Call. [Operator Instructions] Please note, this call is being recorded. [Operator Instructions] It is now my pleasure to turn the meeting over to Todd Tushla, Vice President of Investor Relations. Please go ahead.

Happy Thursday, everyone. Welcome to Neurocrine Biosciences Second Quarter 2026 Earnings Call. With me today on the call are Kyle Gano, Chief Executive Officer; Matt Abernethy, Chief Financial Officer; Eric Benevich, Chief Commercial Officer; Sanjay Keswani, Chief Medical Officer; and in his well-deserved new role as Chief Business Officer, Samir Siddhanti. During today's call, we will be making forward-looking statements. These statements are subject to certain risks and uncertainties, and our actual results may differ materially. I encourage you to review the risk factors discussed in our latest SEC filings. In addition, some of the information discussed today includes non-GAAP financial measures that have not been calculated in accordance with U.S. GAAP. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in the tables at the end of our earnings release issued earlier today, which has been posted on the Investor Relations page of Neurocrine's website. After prepared remarks, we'll jump into Q&A. Now I'll hand the call off to Kyle.

Thanks, Todd. Good afternoon, everyone. Neurocrine's second quarter performance demonstrates the power of a diversified growth strategy built to compound over time. Our commercial portfolio of first-in-class medicines, INGREZZA, CRENESSITY and VYKAT XR delivered another record quarter with net product sales exceeding $950 million, enabling more patients to benefit from our innovative medicines. This durable commercial performance provides the financial strength to continue investing in innovation, advance our industry-leading pipeline and pursue strategic opportunities that further strengthen Neurocrine for long-term growth. Our strategy remains clear: execute our commercial portfolio to bring our medicines to patients, advance our innovation engine and deploy capital with discipline. This quarter demonstrated meaningful progress across all 3 of these priorities. The commercial business continues to generate durable growth. The pipeline is advancing with one of the industry's strongest mid- to late-stage portfolios. And disciplined capital deployment was demonstrated through the successful acquisition and integration of VYKAT XR. Together, these efforts further strengthen our position in rare disease while building on our leadership in endocrinology. More importantly, these results reflected the continued evolution of Neurocrine. Just a few years ago, we were largely viewed as a single product company. Today, we have multiple commercial growth drivers, an expanding pipeline across all phases of development and the financial strength to invest through innovation cycles. Together, these strengths position us to create long-term value for patients, physicians, employees and shareholders alike. Looking ahead, we remain on track to deliver multiple important clinical milestones in 2027, including Phase III data readouts for osavampator in major depressive disorder and direclidine in schizophrenia. Together with the continued integration of VYKAT XR, these milestones represent the next chapter in Neurocrine's growth and reinforce our confidence in the opportunity ahead. Before I turn the call to Matt, I'd like to recognize Samir Siddhanti on his recent promotion to Chief Business Officer. Since joining Neurocrine in 2017, Samir has played an integral role in shaping our corporate strategy and business development efforts. As a member of our executive leadership team, he will help guide the next phase of Neurocrine's growth and evolution. Samir, congratulations. We are excited for what's ahead. With that, I'll turn the call over to Matt.

Good afternoon, everyone. For the second quarter, we delivered over $950 million of total revenue, representing nearly 40% year-over-year growth. This reflects full quarter contributions from INGREZZA and CRENESSITY, along with a partial quarter contribution from VYKAT XR following the close of the Soleno acquisition. This revenue performance demonstrates accelerating top line growth, delivering a financial profile with non-GAAP EPS of $2.85 per share. Starting with INGREZZA. Second quarter net sales were $716 million, up 15% year-over-year, driven by another quarter of record new patient additions and sustained underlying demand. Given this performance, we are raising full year INGREZZA guidance from $2.7 billion to $2.8 billion to a new range of $2.825 billion to $2.875 billion. At the midpoint, this represents approximately 13% year-over-year growth. CRENESSITY's second quarter net sales were $184 million, reflecting continued strong launch execution, consistent new patient starts and expanding prescriber adoption. Approximately 15% of the estimated diagnosed patient population has now been prescribed CRENESSITY, reinforcing our confidence in the significant runway for growth. Turning to VYKAT XR. Second quarter pro forma net sales were $94 million, with $54 million recognized by Neurocrine from May 18, the closing date of the Soleno acquisition. Integration has progressed well and expect to drive sequential quarterly growth exiting 2026. New patient demand remained fairly consistent with the first quarter, while discontinuation rates tracked in line with our expectations following the initial launch bolus in 2025. We have more work to do in developing this market and remain optimistic in the opportunity to help many more patients with PWS over the years ahead. Pro forma total revenues were $998 million for the second quarter 2026 when including full quarter VYKAT XR sales. This performance underscores the strength and increasing scale of our commercial portfolio across 3 highly differentiated products. Turning to our financials. With the Soleno acquisition now complete, I'd like to briefly discuss the financial impact of the transaction, including the purchase accounting and the GAAP to non-GAAP adjustments reflected in our earnings release. We acquired Soleno for approximately $2.9 billion and financed the transaction with cash on hand. We ended the second quarter with approximately $500 million in cash and no debt. Strategically and financially, this is a highly attractive acquisition. VYKAT XR adds another differentiated durable growth product to our portfolio and is immediately accretive to non-GAAP earnings. Accordingly, we updated operating expense guidance to include the Soleno operating expenses, transaction and integration costs and the expected purchase accounting intangible and inventory fair value amortization impacts for the remainder of 2026. We expect approximately $150 million of acquisition-related costs, of which $130 million was recognized in the second quarter. Our GAAP second quarter results also include noncash purchase accounting amortization of acquired intangible assets and inventory fair value step-up of approximately $20 million. Overall, our commercial portfolio continues to perform exceptionally well, generating close to $1 billion in pro forma quarterly sales, providing substantial financial flexibility to invest consistent with our capital allocation priorities to drive revenue growth, advance our expanding pipeline and pursue additional strategic business development opportunities. With growing sales, an improving financial profile and meaningful data catalysts ahead, we feel quite fortunate to find ourselves in a position to continue to build a leading global biotech company. With that, I will now hand the call over to Eric Benevich, our Chief Commercial Officer. Eric?

Thanks, Matt. Just 5 years ago, Neurocrine was a single product commercial stage company celebrating INGREZZA achieving blockbuster status, surpassing $1 billion in annual sales. Today, our commercial portfolio includes 3 first-in-class medicines with combined quarterly sales approaching $1 billion and annualizing to approximately $4 billion. This transformation reflects the successful execution of our long-term growth strategy. So starting with INGREZZA, second quarter performance was outstanding with record sales of $716 million, driven by another quarter of all-time highs in both new patient starts and total prescriptions. Based on our increased full year guidance, we expect to help more patients than ever before who are living with tardive dyskinesia or chorea associated with Huntington's disease. CRENESSITY also delivered another excellent sales quarter, generating $184 million. The launch continues to follow a very consistent pattern, steady pace of new patient starts, high persistence and compliance and favorable reimbursement. Adoption remains balanced across both adults and pediatric patients, male and female patients and across the business segments of CAH Centers of Excellence, pediatric endocrinologists and community adult endocrinologists. Importantly, our prescriber base has nearly tripled compared to 1 year ago, providing a strong foundation for continued growth. Turning to VYKAT XR. While still very early in the integration of this franchise into our commercial platform, we were encouraged by second quarter trends. New patient starts remained steady on a sequential basis. The prescriber base continued to expand and discontinuations tracked in line with expectations following the initial bolus of patients who began therapy last year. As with any acquisition, it will take a few quarters to get fully integrated. And we're excited to introduce Neurocrine's commercial, medical and patient support capabilities to the VYKAT team and the PWS community. We remain confident in driving sequential growth as we exit 2026 and continue our conviction that VYKAT XR has the potential to become the third blockbuster in our portfolio. Before I wrap, I'd like to extend a special thank you to our commercial and medical teams in neuropsychiatry and rare endocrinology, our internal cross-functional colleagues and the VYKAT XR team from Soleno. Q2 was a quarter of significant transformative change for Neurocrine, where we both expanded our existing commercial footprint to better meet the needs of health care providers and patients, while we also began the integration of VYKAT XR into our company. We executed all these significant structural changes without missing a beat in terms of our mission to help more patients. My hat is literally off to our teams for pulling off such a tremendous transformation while simultaneously delivering such a strong quarter. Now I'll turn the call over to our Chief Medical Officer, Dr. Sanjay Keswani.

Thanks, Eric, and good afternoon, everyone. I'll begin today with highlights from ENDO 2026, where we presented important new data for both CRENESSITY and VYKAT XR. Starting with CRENESSITY, we presented 2-year data from the ongoing CAHtalyst open-label studies in pediatric and adult patients with classic congenital adrenal hyperplasia. These results demonstrated meaningful and durable improvements across multiple aspects of health, including cardiometabolic outcomes, bone health, quality of life and pediatric growth while continuing to reinforce CRENESSITY's favorable long-term safety profile. For VYKAT XR, we presented 3-year HQ-CT and Prader-Willi syndrome profile data comparing treated patients with a natural history cohort. These analyses demonstrated significant and sustained reductions in hyperphagia across all evaluated time points, supporting the durability of treatment benefit. Additional data also showed meaningful improvements when patients who had previously discontinued therapy restarted treatment, underscoring the importance of continued treatment in maintaining long-term outcomes. Collectively, these data strengthen the growing body of evidence supporting both CRENESSITY and VYKAT XR and highlight the meaningful impact these medicines are having for patients and the endocrinology community. Turning to the pipeline. We continue to make steady progress. Notably, we remain on track to report Phase III top line data for osavampator in major depressive disorder in the second half of 2027. We also remain on track to report the first Phase III readout for direclidine in schizophrenia in the second half of 2027 and for the second Phase III study in 2028. Looking ahead, we look forward to hosting our neurology and immunology webinar in early December where we will provide an update on our strategy and highlight key programs across both therapeutic areas. With that, I'll hand the call back to Todd.

Excellent. Chloe, let's jump into Q&A.

[Operator Instructions] We will take our first question from Paul Matteis with Stifel.

Congrats on the execution on the great quarter. As it relates to INGREZZA, I was wondering at this point in the year, how much visibility do you have on pricing dynamics next year? And any feedback you're getting or any insight you're getting into access dynamics with the AUSTEDO MFP being enacted?

Paul, this is Kyle. Thanks for the question. Maybe just to start where we are for 2026, great access this year with about 70% of all Medicare lives covered under the contracting that we executed last year, and we expect that pricing to remain relatively consistent year-to-year as we think about the second half of 2026. In terms of 2027, obviously, our discussions with payers are ongoing now, and we should get a read on that later this year. But I think where we are right now is we do see a process and the path moving forward is not just us but others that there'll be a place for MFP adjacent products for Medicare beneficiaries. And if you couple that with the fact that we're the market leader in this VMAT2 category, there's going to be ample opportunity for us to have the same access that we have here moving forward, strong access through '27 and '28. So right now, it's all leveraging what we can with our team. I would be remiss by not calling out that this market overall continues to grow double-digit year-to-year. So there's a lot of room left in this market, and we'll continue to focus there.

Kyle, any thought on how much additional cost maintaining this access might be next year or beyond?

No, I think it's too early to make a call on that, Paul. We'll have more to comment on that later in the year. Right now, it's been a great first half, and we'll continue to build on the momentum that we've seen.

We'll take our next question from Phil Nadeau with TD Cowen.

Ours is on CRENESSITY, really strong quarter with revenue up 20% quarter-over-quarter. It sounds from the prepared remarks like everything was steady as you go. So steady patient adds, good reimbursement, no bolus. I'm curious whether that interpretation is correct. Were there any onetime issues in Q2 that made it particularly strong that we shouldn't extrapolate into the back half of the year? Or is this pace of revenue growth reasonable for the next couple of quarters?

Yes. I think characterizing Q2 is really an extension of what we've seen earlier in the launch, a very steady and consistent pattern of new patient adds. We continue to see adoption across all the segments that we're focused on. The pediatric endocrinologists, the adult community endocrinologists and those Centers of Excellence. Really pleased with the fact that we estimate now that we've got about 15% of the addressable patient population on treatment and certainly expect to see continued strong momentum as we move forward.

We'll move next to Tazeen Ahmad with Bank of America.

Mine is on VYKAT. So this quarter's results of $94 million, it's roughly flat sequentially. You just took over this franchise. So can you maybe just talk to us about some of the things that you're doing in order to accelerate the launch trajectory now that the franchise is fully under your control? And maybe just give some specifics about some of the things that you're doing now that you think could have an effect in a quarter or 2?

Yes, Tazeen. So first of all, I'll say that the results that we saw in Q2 were aligned with our expectations coming out of diligence. Certainly, I think we're still learning a lot about the hyperphagia market opportunity. But we've learned so far, it just reaffirms our convictions about the potential for this medicine to be a blockbuster. And we're still in the -- deep in the midst of our integration process here. But ultimately, I think the fundamentals are what matters, continuing to find patients to introduce VYKAT XR to the providers that care for them, primarily in endocrinology and then provide good education and guidance around how to select appropriate patients, how to help them through the titration process and to achieve good outcomes. So I feel very good about the opportunity with VYKAT. Everything that I've heard from the physicians that have experience with it is very positive and certainly look forward to continuing to drive the launch of this product that's still very early in its commercial ramp.

And Tazeen, this is Kyle. I'm just reminded as we talk about VYKAT XR, this is our first earnings call post close, where we've had a discussion on this. So I do want to bring up the merits of the acquisition and the product itself. There's a great strategic and financial fit here for us. VYKAT XR is a first-in-class, first-in-disease medicine for Prader-Willi syndrome, very much of the same category that we've seen for INGREZZA and CRENESSITY upon their launch. So we're really excited about the strategic fit there. Obviously, we're able to expand on our endocrinology franchise moving forward. But as a product that comes under the Neurocrine umbrella earlier in its launch, not only do we get to treat many thousands of patients under Neurocrine, which is exciting, we also get to reap the financial reward of maximizing all the revenue growth that gets added to our top line as well as diversification. So there's a lot of financial fit there as well, not to mention that we believe the IP estate goes out to the mid-2040s. So it's durable as well. So overall, we're really excited about what we have here. I think Eric called out some of the points that we're looking at now, and we're excited to bring this into the same blockbuster category that we see for CRENESSITY and INGREZZA moving forward.

The only thing I'd add is this was very much in line with our internal expectations. We knew what we were buying, and this has a tremendous amount of opportunity to help many more patients. So we have a ton of confidence in the team, the product and the opportunity to help many more patients with PWS. So we're encouraged as we think forward.

We'll move next to Brian Skorney with Baird.

Congrats on a great quarter. Maybe to jump in with a question on VYKAT as well. I think during the Soleno days, there was a lot of debate on sort of the differences between sort of new start boluses and sort of dropouts and as you're sort of getting your head around things right now, maybe you can just kind of characterize what you're seeing out there in terms of like how much of initial bolus numbers are really kind of affecting the dropout rate that we see right now? And when do we -- do you think that there's an upwards equilibrium of new starts and dropout rates to think about in the coming quarters?

Yes. No, I appreciate the question. This is Kyle. I think what we've seen on a new patient start basis is a pretty steady flow of new patient starts over the past couple of quarters. So that's good. That's right along the lines of the expectation we had after completing diligence on the company. In terms of discontinuations, obviously, with a bolus of patients at the launch, we do see some of those discontinuations being pulled through as time has gone along, but we expect to see the ultimate rate settling into what we would see with other orphan medicines in the 25% to 30% range. So that's what we'll be looking at moving forward. But ultimately, our goal here is you'll see sequential growth as we exit 2026 and looking at that in future years. So we're right where we need to be right now. I think more importantly, I'm really excited to see our team bring its resources and the support to the Soleno team now under the Neurocrine brand and take all of our learnings collectively and make this particular medicine be the best that can be moving forward.

We'll move next to Mohit Bansal with Wells Fargo.

Congrats on a great quarter. So I just wanted to understand your VYKAT commentary a little bit better for next few quarters. So you're saying that the patient -- new patient start, you expect it to be steady. So wondering that -- so are you saying that the sales could be choppy a little bit? But again, what you are saying is that as you exit 2026, you can see you are confident in driving sequential growth. But just wondering that how are you -- how would you characterize the next few quarters as you integrate the business into your own business?

Yes. So as we move from Q3 to Q4, we would anticipate seeing some sequential growth. And then as you think about going into next year, it's really about that momentum. But as we've talked about, it's that mix of new patient additions and being offset by the discontinuations, and we feel like we'll be through the bolus of the discontinuations here in this quarter. So we would expect to be sequential growers as we've said in Q4 and beyond.

We'll take our next question from Anupam Rama with JPMorgan.

Just wondering what some of the physician feedback has been on some of the 2-year CRENESSITY data in both adults and peds. And how these data could impact kind of uptake of the product?

Thanks, Anupam. Yes, we're really pleased about the feedback we're getting from the physicians with respect to our 2-year data that we recently presented at ENDO. Of note, this included both adult and pediatric data and indicated long-term benefits with respect to both androgen reduction and also glucocorticoid steroid reduction as well. So really, really excited by that feedback. Also, this is in the context of a really nice safety-tolerability profile. So of note, at this point, we have well over 35,000 patient weeks of exposure. Again, very important, bearing in mind the breadth of the population that we're treating with CRENESSITY.

We'll move next to Cory Kasimov with Evercore.

So given the recent acquisition of potential future competitor in CAH, can you just talk a little bit about the clinical plan and anticipated time lines for your next-gen CRENESSITY assets to the extent that they're needed to help defend the franchise in the future?

Yes. Thanks for the question. We do have our next-generation medicine going through clinical development right now. That's NBIP-01435. This is a protein-based therapeutic peptide that we're developing that would be a once weekly or less frequent dosed medicine for patients wanting that particular option of not having to worry about taking the medicine on a day-to-day basis. It may offer additional advantages above that in addition to that because of the PK profile. So we have great Phase I data that's come out of the program thus far, and we look forward to starting a Phase II study shortly and bringing that to patients as quickly as we can. I will say going back to CRENESSITY, just for a moment that it's set a really high bar. It's got great efficacy, great safety, great tolerability and what an outstanding label that we're able to get from the clinical program. We've got multiple formulations, a wide spectrum of age ranges that are applied to the medicine. And now, as Sanjay just mentioned, multiple years of clinical data that we'll be able to lean on in a multiple year head start. I say this because this high bar not only makes it more difficult for our competitors, but even our own programs in our clinical portfolio. So we're really excited about the position that we have right now with CRENESSITY. A lot of room still to grow. We've got about 15% of the market currently under CRENESSITY's care, and we're going to continue growing that out over time to become that standard of care for patients.

We'll move next to Jay Olson with Oppenheimer.

Congrats on the quarter, and congrats to Samir. Our question is related to the future of your psychiatry franchise with data readouts for osavampator and direclidine expected next year. Do you have the commercial infrastructure that you would like to have to launch those 2 products? Or I guess, how are you thinking about building out that organization?

Thanks, Jay. So the way I would characterize it is that we have a really good foundation for a future infrastructure that would be required for either osavampator or direclidine or both. As you know, we have a substantial footprint today in psychiatry as well as in long-term care and a very strong reputation with those provider communities. If you look at the profile of either of those 2 medicines, it might require us to bolster our teams or to do some reorganization work, but I think that we're in a very good place in terms of being able to leverage our existing foundation. And you may recall that when we were talking about the planned expansion of our INGREZZA team last fall, we said that the value of that expansion was not only to accelerate the growth of our INGREZZA business, but also to set us up nicely for future launches of our Phase III psychiatry assets. So I don't anticipate any near-term changes to our footprint. But certainly, I think we're well positioned to accelerate those adjustments to our commercial platform on the other side of positive Phase III data.

I think that'd be a great day if OSA, in particular, is positive as you think about going into primary care to be able to help those with major depressive disorder. That would require a step-up in overall investment within SG&A in 2028, 2029 type time frame. But I think you'd agree with me, that would be something we'd all enjoy to have the privilege of doing. But in the near term, I think we're focused on executing, as Eric said, with INGREZZA and continuing to expand the impact we're having across the psychiatry community today.

We will take our next question from Akash Tewari with Jefferies.

Just a few questions on your obesity efforts. So for 2118, the CRF2 asset, what do you expect for monotherapy, weight loss and muscle preservation in your Phase I trial when you get into obese patients? And then for 1968, your GGG, is that already in the clinic? I'm surprised you're able to start a combo trial with the CRF2 this year without any monotherapy data? And then finally, when we think about the combo, any sense on when we'd be able to get the first full cut of data there?

Thanks so much for the questions. With respect to our CFR2 (sic) [ CRF2 ] agonist, obviously, we're very excited about this molecule. This is our first obesity molecule in the clinic. We're currently accumulating Phase I data, and we're due to have a signal-seeking study readout next year with respect to both weight loss and also lean mass preservation. So that's really exciting for us. I'm not sure if I'll comment specifically on the exact bar we're looking at. But clearly, we're looking for a robust effect, not just on weight loss, as I said, but also muscle mass preservation. We have other molecules behind CRF2 with respect to our obesity portfolio, which will be shortly entering the clinic.

We'll move next to Josh Schimmer with Cantor.

How are you thinking about the ability to smooth top and bottom line growth through the 2029 INGREZZA IRA implementation year? And just the answer to that question depends on your Phase III readouts next year. How do you expect that to play out under various pipeline scenarios?

Thanks, Josh. This is Kyle. Obviously, we're keeping an eye on our MFP to IRA outcome. Those discussions will start next year. And certainly, we'll keep everyone updated once we know our MFP that would be applied to INGREZZA in 2029. But I think overarching, what we see in the evolution of our commercial portfolio are medicines that are growing over that time frame as well. So we think we'll end up being in a good position there to see continued top line revenue growth through the end of this decade and beyond. On the earnings side, or I should say, on the income or an expense side of the equation, we also have Phase III trials that will be sunsetting over that same time frame as well in our pipeline, switches more to an earlier mid-stage type -- pipeline, excuse me. And I think that's going to be more or less a view into a steady state portfolio as we get to the end of this decade. And it all goes back to what we shared at the beginning of this year in terms of expectations around new Phase I, Phase II and Phase III starts. So I like what we have in terms of the company and how we set it up, and we'll keep people informed over the next couple of years as we get closer to 2029.

Yes. EPS variability is really going to be based upon, as you said, the impact of the IRA implementation in 2029. But on the expense side, as I said earlier, is if osavampator is positive, we will spend in advance of sales to build up that sales force in that market. So I think you'll have episodic investments that may lead to some earnings variability, but our North Star is to grow revenue over the long term. And I think from those investments, we'll have very nice earnings growth as you look into the 2030s.

We'll move next to Brian Abrahams with RBC Capital Markets.

It seems like you're seeing really nice growth in the prescriber base for CRENESSITY. I guess I'm curious, what proportion of your target practices are still not using CRENESSITY at all? What are -- at this point, what are some of the barriers for them here at this stage of the launch? And how might you expect to overcome them?