Neurocrine Biosciences, Inc.

Hello and welcome everyone joining today's Neurocrine Biosciences Reports Q2 2026 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note this call is being recorded. 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 Sadanti. 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, Ingreza, Crinesity, and Vicat 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 three 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 ICAT-XR. Together, these efforts further strengthened 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 Osevanpator and major depressive disorder, and direct lidine and schizophrenia. Together, with the continued integration of ICAT-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 Sadanti 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 Ingresa and Chronicity, along with a partial quarter contribution from BICAT 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 Ingresa, second quarter net sales were $716 million of 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 Ingresa guidance from $2.7 to $2.8 billion to a new range of $2.825 to $2.875 billion, At the midpoint, this represents approximately 13% year-over-year growth. Chronicity 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 chronicity, reinforcing our confidence in the significant runway for growth. Turning to VicatXR, second quarter proforma net sales were $94 million, with $54 million recognized by Neurocrine from May 18th, the closing date of the Solano acquisition. Integration has progressed well and expect to drive sequential quarterly growth exiting 2026. New patient demand remains 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. Proforma total revenues were $998 million for the second quarter, 2026, when including full quarter Vicat XR sales. This performance underscores the strength and increasing scale of our commercial portfolio across three 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 gap and non-gap 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. BICAT 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 Solano 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 non-cash 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 Thank you, Matt.

Just five years ago, Nurikin was a single-product commercial stage company celebrating Ingresa achieving blockbuster status, surpassing $1 billion in annual sales. Today, our commercial portfolio includes three 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 Ingresa, 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. Chronicity 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 one year ago, providing a strong foundation for continued growth. Turning to BICAT-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 BICAT team and the PWS community. We remain confident in driving sequential growth as we exit 2026, and continue our conviction that VicatXR 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 VicatXR team from Celeno. Q2 was a quarter of significant transformative change for Neurocrine, where we both expanded our existing commercial footprint to better meet the needs of healthcare providers and patients, 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 crinicity and BICAT-XR. Starting with crinicity, we presented two-year data from the ongoing catalyst 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 Kronasti's favorable long-term safety profile. For VICAT-XR, we presented 3-year HQCT 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 with previously discontinued therapy restarted treatment, underscoring the importance of continued treatment in maintaining long-term outcomes. Collectively, these data strengthened the growing body of evidence supporting both chronicity and Viper 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 Ossiphampertor 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 three 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.

Thank you. If you'd like to ask a question, press star 1 on your keypad. To leave the queue at any time, press star 2. Once again, that is star 1 to ask a question. We'll take our first question from Paul Matisse with Stiefel. Your line is open.

Great. Thanks a lot, guys, and congrats on the execution in the great quarter. As it relates to INGREZA, 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 OSCATO MFP being enacted? Thank you so much.

Hey, Paul, this is Kyle. Thanks for the question. Maybe just to start where we are with 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 a path moving forward. It's not just us, but others, that there will 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 the CNET2 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 costs 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.

Okay. Thanks very much.

We'll take our next question from Phil Nadeau with Petey Cowan. Your line is open.

Good afternoon. Thanks for taking our question. Ours is on chronicity, really strong quarter with revenue up 20% quarter over quarter. It sounds from the prepared remarks like everything was steady as she goes. So steady patient ads, good reimbursement, no bolus. I'm curious whether that interpretation is correct. Were there any one-time 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 quarters? Thanks.

Yeah, 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 ads. 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. We're 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.

That's very helpful. Thank you.

We'll move next to Tazeen Ahmad with Bank of America. Your line is open.

Hi, thanks for taking my question. Mine's on BICAP. So this quarter's result is $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 two? Thanks.

Hi, Suzeen. 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, as this reaffirms our convictions about the potential for this medicine to be a blockbuster. We're still deep in the midst of our Thank you very much. and then, you know, 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 VICAT, everything that I've heard, you know, 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 to Zane, this is Kyle. I'm just reminded as we talk about by CACSR, 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 great strategic and financial fit here for us. BICAT-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 Ingresa and Cresti 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, Thank you for joining us.

We're encouraged as we think forward. We'll move next to Brian Scorny with Baird.

The line is open.

Hey, afternoon, guys. Congrats on a great quarter. Maybe to jump in with a question on BICAT as well, you know, I think during the Selena days there's a lot of debate on sort of the differences between sort of new start boluses and sort of dropouts and, you know, as you're sort of getting your head around things right now. Maybe you could 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, you know, do you think that there's an upwards equilibrium of new starts and dropout rates to think about in the coming quarters?

Yeah, no, I appreciate the question. This is Kyle. I think what we've seen on a new patient start basis is a pretty steady Thank you for joining us. So that's what we'll be looking at moving forward. But ultimately, you know, 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 Sweno 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.

Thanks, Kyle.

We'll move next to Mohit Bonsal with Wells Fargo. Your line is open.

Great. Thank you very much for taking my question, and congrats on the great quarter. So just wanted to understand your white hat commentary a little bit better for next few quarters. So you're saying that the patient-in-counsel You can 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 confidently driving sequential growth. But just wondering that how are you, how will you characterize the next few quarters as you integrate the business into your own business? Thank you.

Yeah, 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.

Thank you.

We'll take our next question from Anupam Rama with J.P. Morgan. Your line is open.

Hey, guys. Thanks so much for taking the question. Just wondering what some of the physician feedback has been on some of the two-year chronicity data in both adults and Peds and how these data could impact kind of uptake of the product. Thanks so much.

Thanks, Anupam. Yeah, we're really pleased about the feedback we're getting from the physicians respect to our two-year data that were recently presented at ENDO. Of note, this included both adult and pediatric data and indicated long-term benefits with respect to both angina 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 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 chronicity.

We'll move next to Corey Kasimov with Evercore. The line is open.

Hey. Hey, good afternoon, guys. Thank you for taking the question. So given the recent acquisition of potential future competitors, CAH, can you just talk a little bit about the clinical plan and anticipated timelines for your next-gen chronicity assets to the extent that they're needed to help defend the franchise in the future? Thank you.

Thanks for the question. We do have our next generation medicine going through clinical development right now. That's MPIP1435. 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 a 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 1 data that's come out of the program thus far. We look forward to studying a Phase 2 study shortly and bringing that to patients as quickly as we can. I will say, going back to chronicity 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 chronicity. A lot of room still to grow. We've got about 15%. We'll move next to Jay Olson with Oppenheimer. Your line is open. Oh, hey, guys. Congrats on the quarter, and congrats to Samir.

Our question is related to the future of your psychiatry franchise with data readouts for Osa Vampator and directly being expected next year. Do you have the commercial infrastructure that you would like to have to launch those two products? Or I guess, how are you thinking about building out that organization? Thank you.

Thanks, Jay. So the way I would characterize it is that we have a really good foundation for a future Thank you very much. If you look at the profile of either of those two 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 Ingresa team last fall, We said that the value of that expansion was not only to accelerate the growth of our aggressive business, but also to set us up nicely for future launches of our phase three 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 three data.

I think that'd be a great day if OSA in particular is a 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 and, you know, 2028, 2029 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, you know, I think we're focused on executing as Eric said with Ingresa and continuing to expand the impact we're having across the psychiatry community today.

Great, thank you.

We'll take our next question from Akash Tiwari with Jefferies. Your line is open.

Hey, thanks so much. Just, okay, a few questions on your obesity efforts. So for 2118, the CRF2F, what do you expect for monotherapy weight loss and muscle preservation in your Phase 1 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? Thank you.

Thanks so much for the questions. With respect to our CFR2 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 in weight loss, as I said, but also muscle mass preservation. We have other molecules behind COFR2 with respect to our obesity portfolio, which will be shortly entering the clinic.

We'll move next to Josh Shimmer with Cantor. Your line is open.

Thanks for taking the question. How are you thinking about the ability to smooth top and bottom line growth through the 2029 Ingresa IRA implementation year? And does the answer to that question depend on your Phase 3 readouts next year? How do you expect that to play out under various pipeline scenarios? Thank you.

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 ingress in 2029. But I think overarching what we see in the evolution of our commercial portfolio are medicines that are growing over that timeframe as well. So we'll 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 earning side, or I should say on the income or expense side of the equation, we also have phase three trials that will be sunsetting over that same time frame as well. And our pipeline switches more to an early to mid-stage pipeline, excuse me. and I think that's going to be more or less a view into our 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 one, phase two and phase three 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.

Yeah, 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, if those advance tours are 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. Your line is open.

Hey, guys. Thanks so much for taking my question. It seems like you're seeing really nice growth in the prescriber base for crinicity. I guess I'm curious, what proportion of your target practices are still not using chronicity at all? 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? Thanks.

Yeah, it's an interesting question. I think the way I'd characterize it is that, you know, we're seeing really nice expansion of new prescribers each quarter. And at this stage, you know, we're still, I call it early in the overall commercial ramp. And so there's a long way to go. The reason I sort of qualified my comments a little bit is that as we learn more about this market and with our patient finding opportunity, there is some movement in and out of our target list over time. But overall, the feedback's been very positive. Most of the physicians that have tried chronicity have only treated one patient so far, and I think that's a function of two things. One is the flow of patients into their practices, especially in the adult setting. Patients only come in maybe once a year, so it takes time if they have more than one patient to see them. and then the second thing is really this what we call the long tail of this market. There's really not that many practices that have more than a handful of patients, and there's a lot of physician practices that have only one or two. So ultimately, you know, feel really good about the growth that we've seen, and we talked about this very steady and consistent pace that we're on, and I think that's mostly a testament to the patient-finding efforts and, of course, the execution by our team. Thanks.

We'll move next to Sean Lehman with Morgan Stanley. Your line is open.

Good afternoon, Kyle and team. Hope everyone's well. My question's on the launch trajectory of Cronesti. You keep handily beating our numbers. I'm just wondering how the drug performs against your own internal expectations. Is it Falling in line, and if so, when will you be comfortable giving us guidance if it's beating your expectations internally? What are some of the key areas that it's doing that?

I would say it's quite close to what our internal expectations have been, but with that said, we're learning a tremendous amount each quarter. I'd say from the beginning of launch, we've been very encouraged by the feedback that we're getting by clinicians, and then also the high rates of persistency have been quite strong. And we're seeing a lot of the benefits and hearing those back from clinicians in regards to the longer-term outcomes and the benefit there. So we're still really quite early in launch, only six quarters in. It's premature for us to start thinking about giving a more formal guide. But I would say our internal models are getting closer to the numbers that we're delivering. But still, I'd say to the team, keep over delivering. They've done an incredible job developing a new product that's in the market for the first time in over 70 years and a lot of learning going on and a lot of excitement. So kudos to the team. Well done. And we'll address the guidance piece to your question as we get later in the year to next year. Thank you, Kyle.

We'll move next to Mark Goodman with Learing Partners. Your line is open.

Yeah, on Viacat, I just want to make sure I understand, Matt, what you're saying. Are you saying that we should expect sales to be roughly about the same in 3Q as 2Q, and then 4Q should show some incremental growth versus 3Q? And the reason is because of this gating issue of timing issue, whatever you want to call it, of patients discontinuing from the bolus that occurred, you know, so-called six months ago or so, something like that. And then just if I could, just another question. Just curious what the R&D team thinks about any learnings from the map-like data that were reported earlier this week.

Thanks. Yeah, regarding BICAT, you know, I think you said it correctly, but I would go back and just say we've only had the product for six weeks. and it's a market that we're incredibly excited about. We're hearing great feedback from clinicians alike. So as you said, this is more of a function of getting through some of the bullets of discontinuations and then implementing some of the things that Eric laid out in terms of driving additional patients to being helped with their PWS. So from an expectation perspective, I think what you said aligns with what I was trying to describe.

And I'll take the map-like question. Maybe just to start with where Matt left off on BICAT, just want to make sure everyone appreciates that we are going through an integration of the company. And obviously, that can be a little noisy as you work through that, just as a Salesforce expansion can be. But as you know, we are quite skilled in the art of Salesforce expansions across Ingresa and Quernesity, and we've all come out on the other side much stronger, and we believe that will be the case for BICAT. In terms of MapLite, we did see their data come out here the past couple days. I think it's a good data point for further validating the orthosteric approach for using muscarinic agonists, although their approach is entirely different than our own, and it's worth calling out those differences here. Very similar to Gobemphi, the approved medicine that utilizes the muscarinic mechanism, the MapLite approach also requires an ad-back muscarinic antagonist to manage Side effects, our approach with direct leading is the only approach, a first-in-class approach using a selective M4 agonist that works just all right by itself. It doesn't require anything to add back for mitigating side effects. But we know at the end of the day, efficacy gets your foot in the door. It's really what you do on the other factors that allow you to win, things like safety and tolerability, things like ease of administration, and that's where direct leading is really going to shine. What we saw in our Phase 2 trial, very clean GI profile, no weight gain, no food effect, once a day, no titration. That's how we're going to win here, just as we've seen with other antipsychotics across the spectrum. From low to high efficacy, they all win on safety, tolerability, and ease of administration. Thanks.

We'll move next to David Amselum with Piper Sandler. Your line is open.

Thanks. A VICAT question. Can you clarify how much of your discontinuations are from edema? And regarding the management of edema, what are you going to be doing to sort of help patients and practitioners manage through that so as to minimize discontinuations due to fluid retention? Thanks.

Yeah, this is Kyle. I don't think we're going to get into the nature of the discontinuations, but I will say, just like any medicine, especially one that you're inheriting, acquiring, is that there's always the opportunity to improve messaging and education. I know that's going to be a big part of what our team looks at. And the messaging in education is the same, again, across all medicines that we look at for caregivers, for patients, and for physicians. and when it comes to BICAT-XR, obviously you look at even something as simple as a dosing regimen. It's a titration schedule that's required through a weight-based mechanism. That's unique. So making sure that you can educate across that appropriately. Also setting the right expectations in terms of efficacy. This is not like a pain medicine where you see relief the same day you take the medicine. It can take months for the hyperphagia to improve. So these are all things that we're working through right now, and we'll continue to work with the team to get in a really good spot as we look to fully bring the SONO team on board here to Neurocrine and leverage the learnings on both sides to do what's best for patients here.

We'll take our next question from Ash Varma with UBS. Your line is open.

Hey, guys. Thanks for taking my question. So maybe just on the perspective of Crane S3, I wanted to get your thoughts on the competitive dynamic here. So for Tuminent, it's what they've acquired. They did note that there were seven NFD elevation cases versus the prior disclosure by Cranex, which was two cases. but they still ended up paying a pretty hefty premium. From your perspective, what do you think drove that? Is that something that ultimately signals to you that CH can be a very big market, or is it possible that the LFT alleviation is actually a non-issue? Thanks.

Yeah, thanks, Ash, for the question. It's really hard for us to comment on the competitor or any competitors in the spaces that we work in. All I can share with you is the excitement that we have around our own medicine. I'll go back to the catalyst data that we have. Two-year data, 35,000 patient weeks of exposure and accumulating over time where we're able to show 70% of patients at the two-year period were on a physiological dose of a GC and 70% of patients were at a physiological concentration of their androgens. That's a pretty good error to be in for CH and really for any medicine and we'll continue to hopefully accumulate more data of that kind and type as time moves along to show the real benefits for patients.

We'll take our next question from Miles Minter with William Blair. Your line is open.

Hey, congrats on the quarter and thanks for taking the question. I just wanted to hear your thoughts on the chronicity sort of peak opportunity here. Are you still describing that drug as a blockbuster opportunity? I only ask as recent acquisition seems to put your competitor saying that that might be a $3 billion market or greater. Your on an annualized basis the best part of three quarters of a billion dollars already and Eric you said you're really really early on in the launch so I'm just wondering whether a blockbuster drug is the right way to think about this or like that multi-billion dollar sort of claim that the competitive acquisition made is more relevant here. Thanks very much.

Thank you very much. The great team. When you look back over time at other rare disease launches like this, you can see peak penetration between 30% and 50% for chronic type medicines. So, you know, when you look at what the peak opportunity is, that's the zip code. I know that's a pretty broad range, and we're going to work to getting to as high up in that range as possible. But yeah, you can get to a really nice figure quite quickly. But it really comes at the end of the day, a focus on helping as many patients as possible for their CAH. Thanks, Ben. Thanks, Matt.

We'll move next to Rudy Lee with Wolf Research. Your line is open.

Hey, thanks for taking my question. I have a question for the pipeline, just a quick follow-up. Given the trajectory of Code Bumpy and the feedback, I'm just curious on your thoughts on the muscarinis opportunity and maybe to talk about your overall strategy building a muscarini franchise as you have multiple products maybe targeting different indications. Thanks.

Hi, thanks, Rudy. This is Samir here. I really appreciate the question on the muscarinic. So, you know, we've got four shots on goal here with our muscarinic franchise. Directly in NBI 568. That's in Phase 3 right now for the treatment of schizophrenia. In Phase 2 bipolar, Phase 2 study right now ongoing in bipolar mania. All studies remain on track timeline-wise there. Next Generation, NBI 570, that's an M4 preferring, M1, M4 dual. Right now that's in a Phase II study for the treatment of schizophrenia. Where we see opportunity there is the potential for a long-acting injectable. This is a class of medicines that has generated significant commercial sales for other companies here, and we view this as the one and only potential LAI within the muscarinic space. NBI-569, that's earlier right now. It's an M1-M4 duo as well that we're studying in Alzheimer's disease. The view there is to take that into Alzheimer's disease psychosis. And then we've got a fourth compound, NBI-567, that will be soon starting a Phase II study in Alzheimer's cognition. Overall, we feel like we have a best-in-class muscarinic franchise here. Really looking forward to getting the direct reading data next year and going from there.

The only thing I would add to that, these are all. These are all orthosteric agonists that don't require any add-back to block side effects. They are selective on M1 and M4, so they're unique in that regard and put this in a really unique space in the muscarinic category. Very helpful. Thank you.

We'll take our next question from Sumant Kulkarni with Canaccord. Your line is open.

Good afternoon. Thanks for taking our question. This is a bit of a strategic one that has long-term financial implications. So with each commercial product you now have, there's typically been an aspect of pioneering commercialization with the first approvals for the respective indications. But your pipeline includes candidates in large markets where not only do several products exist, but the competitors are typically much larger organizations as well. So could you share any targets for what a steady-state, longer-term operating margin target might look like for Neurocrine as you yourself grow a lot larger?

I'll let Kyle talk about the strategic aspect of how we're going to compete against larger guys in these markets, but I also would comment that Eric and team have done a heck of a job in developing markets and feel like we can compete quite well with them.

Thank you very much.

So I think our focus right now is invest on SG&A to grow sales as much as possible and then also to advance the pipeline and be able to get to these opportunities where we can compete in some of the larger markets where we believe that we can win in.

And maybe just to add to that, this is Kyle. From a strategic perspective, what we're doing is setting up the pipeline to have a portfolio of not only first but best-in-class medicines companies across virology, psychiatry, endocrinology, as well as immunology. These are areas that we think we can compete in in a number of ways, either through the molecules that we design or ultimately in ownership of particular mechanisms that are unique to neurocrine. We've talked about obesity on this call as an example, and we're leading in this category, we believe, with a syrup to agonist, which is quite novel. And, of course, we know a lot about the biology, this being the founding biology of the company. So ultimately, what we do by using this approach is diversifying risk across different therapeutic areas. We appreciate all the psychiatry programs that we have, and we believe we have all winners there. But we also know that the full profile of those assets aren't fully known until the other side of Phase 3s. Thank you for joining us. within a wheelhouse of more traditional neuro psych programs as well that you're used to seeing. But overall, it's going to set the company quite well up over the long term.

We'll take our next question from Danielle Brill with Truist. Your line is open.

Hi, guys. Good afternoon. Thanks so much for the question. A follow-up on chronicity. Thank you so much for joining us. Where do you see the bigger opportunity expanding prescriber breadth or penetration from the existing base? Thank you.

So, I guess the way that I would characterize that, it's a little bit of both in terms of depth versus breadth. You know, we still are adding a substantial number of new prescribers each quarter. And to date, most of the prescribers that have tried chronicity have only treated one or two patients. Now, this is a market that is an inch deep and a mile wide in the sense that, you know, there's a limited number of practices that have more than a handful of classic CH patients. There's a lot of CH patients that are out there in the community, and a lot of the physicians that treat them might only have one patient. So I think that we will continue to see this dynamic of a lot of physicians having only one or two patients under treatment. But, you know, at this stage of the launch, only about a year and a half into it, essentially we're still seeing a lot of adoption by new prescribers, and we think there's a ways to go in terms of building that prescriber base over time.

We'll move next to Igor Nokomovic with Citi. Your line is open.

Hi, great. Thank you for taking the questions, and I'd like to congrats on a strong quarter. My question, a curious question on chronicity. Regarding the rarer subtypes, specifically the 11-beta-hydroxylase patients, what's the status in terms of progress getting the payers to cover that subtype? I'd be curious there, and then quickly on VITAT, do you have any comments with respect to XUS strategy, and where does that fit in terms of your Thank you. Hi.

I just want to reinforce that the coverage and reimbursement for chronicity has been excellent and has really exceeded our expectations right from the very beginning of the launch. You know, from a coverage perspective, typically what's required, this is a specialty medicine, and the physician has to fill out a prior authorization form. Typically, they're required to attest that the patient has classic CAH, usually not defining what particular subtype, genetic subtype they have, that they're four years of age or older, and that they're currently on glucocorticoids. For the vast majority of patients, those are the coverage criteria. And we've seen really high claim approval rates. We've seen that claims tend to get approved pretty quickly and that it's very affordable for patients with the majority of patients actually over 90% paying $10 or less per month. So really good on the reimbursement side.

In terms of BICAD XR and XUS, our first priority right now is to fully integrate the team and make sure that we're doing everything that we can to help the patients here in the U.S. with approval. As you may recall, Swano did withdraw the EMA filing for review during the closing process of the transaction. So I think once we get our hands around the integration and complete that and move the medicine forward here, we'll go back and revisit the opportunity in territories outside the U.S. In the meantime, for Europe, all patients that are currently on Vicat XR will continue to continue on their treatment, and we'll look at some name patient program types of vehicles to help other patients that may want to have access in that region. Thank you.

We'll move next to Dalma Kayati with Guggenheim. Your line is open.

Hi, good afternoon, and thank you for taking my question. So on the Frederick Ataxia program, what should we expect from the 2027 Phase 1 readout? More in details. Which tissue compartments will you report frataxin protein levels from? Buccal cells, skin, or muscle? And what would you view as a proof of mechanism? And also, will you report also clinical results together with the biomarker data? Thank you.

I appreciate the question. We're excited about the pre-duxotaxia gene therapy program here at Neurocrine. We'll be looking at starting clinical development later this year. And then once we get that study up and running, we'll look forward for actual data in patients towards the end of next year. The nature of what we'll be sharing, I think we'll determine that over the next couple months into the beginning of the year, and hopefully we'll have some more commentary around our R&D day in December.

We'll move next to David Huang with Deutsche Bank. Your line is open.

Hi there. Congrats on the quarter, and thanks for taking my question. So we're curious to get any feedback that you guys may have or your latest thoughts on the competitive dynamic and thread from your competitor in the VMAT inhibitor space. So I think your competitor also printed a very strong quarter. They have talked about $3 billion in peak sales and continued uptake of the Offsetto XR product. And so as you look over the next few years, recognizing there's some pricing dynamics there, Just what's your, I guess, thoughts on how the market share may play out between two products and if the pie will continue to keep growing in PD or there'll be any share shifts between products? Thanks a lot.

Yeah, I'll just start off by saying that the, you know, 10 years, almost 10 years into the launch of Ingresa, the Thank you very much. Thank you. Thank you very much. and Greza outgrew the market. And so, you know, we can expect to continue to see that momentum carry forward through the balance of this year. And as Kyle said earlier, from a coverage and reimbursement perspective, you know, we expect to have good coverage in 27 and 28 that will enable continued strong growth in terms of adoption. So overall, just very pleased with our performance and, you know, we'll let the results speak for themselves.

We'll take our next question from Evan Siegerman with BMO Capital Markets. The line is open.

Hi, guys. Thank you so much for taking my question. I want to touch on Oza Vantor. MDD is clearly a large market. You're very enthusiastic about it. Just walk us through kind of what you're solving for that the existing antidepressant strategies really don't do well, and what do you need to show in a phase three for this truly to be viewed as differentiated rather than incremental?

Thank you.

Yeah, thanks for the question. So just for context, Ossipanthotor is an AMPA potentiator, and we think provides unique advantages from a differentiation point of view from the existing standards of care. So with respect to efficacy, we're expecting greater efficacy, particularly in individuals who have already been unresponsive or not so responsive to a whole slew of other antidepressants with different methods of action. But secondly, and also just as importantly, a really nice safety and tolerability profile. That was one of the most impressive things, actually, with respect to our Phase II Cevitri data, was the safety and tolerability, and the implication is long-term compliance with this medication.

And that does conclude the question-and-answer portion of today's call. I'd now like to turn it back to Kyle Gano for any additional or closing remarks.

Thanks everyone for joining us today. We appreciate your time and thoughtful questions. We look forward to continuing the conversation with many of you, certainly at the investor conferences and meetings throughout the remainder of the year. Until then, thanks again for your support and interest and have a great afternoon and goodbye for now.

Thank you. This brings us to the end of today's meeting. We appreciate your time and participation. You may now disconnect.