Neurocrine Biosciences (NASDAQ:NBIX) Q1 2020 Earnings Call

0:01 Good day, everyone, and welcome to today's Neurocrine Biosciences Report Q1 2020 results call. At this time, all participants are in a listen-only mode. Later, you'll have the opportunity to ask questions during the question and answer session. You may register to ask a question by pressing the star and one keys on your touch-tone telephone. Excuse me. You may withdraw yourself from the queue by pressing the pound key. Please note, this call may be recorded. I'll be standing by should you need assistance. It is my pleasure to turn the program over to Kevin Gorman.

0:33 Thank you very much, and good afternoon, everyone, and thank you for joining us today. Here with me at Nurocrine is Todd Tushla, our head of investor relations, Matt Abernethy, our chief financial officer, Irie Roberts, our chief medical officer, Eric Benevich, our chief commercial officer, and Kyle Gano, our chief business development officer. Before we get started, Todd, could you read our safe harbor statement, please?

1:00 Yes, good afternoon. Certain statements made in the course of this conference call that are not historical statements may be forward-looking statements, which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements is contained in the company's SEC filings, including but not limited to the company's first quarter 2020 Form 10-Q and in today's press release. copies may be obtained by visiting the investor relations page on the company's website. Any forward-looking statements are made only as of today's date, and we disclaim any obligation to update these forward-looking statements.

1:41 Yeah, thanks, Todd. We're going to keep our opening statements amongst us very brief so that the vast majority of this call, we can take all your questions. I'm sure all of you are dealing with our current situation like we are here. Your mind and emotions are constantly switching between concern for the safety and well-being of your family, friends, coworkers, and then to the well-being of your community and our country. We found comfort and motivation through our work and how I'm very proud of how crucial our industry currently is now more than ever. Today we're going to briefly take you through how we've been approaching our work during this time. Our overriding principles are safety of our employees and their families, support for the patients we serve, and importantly, respect and support for the healthcare workers we call upon now and those that we'll be calling on in the future.

2:40 Neurocrine is in a very fortunate and strong position, not only financially, but with our expanding and progressing pipeline. And importantly, as evidenced by last week's announcement, we have our third approved medicine on GENTIS for the treatment of Parkinson's disease. You may find throughout our call that our tone may be more measured than the numbers and our progress to date deserve. We're acutely aware of the hardship and sacrifices being felt by many individuals and businesses, and we do not take our good fortune lightly. With that, I would like Matt to take you through our Q1 financials and comment briefly on our April performance. Matt?

3:25 Yeah, thank you, Kevin, and good afternoon. Great hearing from many of you over the last several months. As Kevin said, we feel very fortunate with how Neurocrine is positioned to navigate the challenges created by COVID-19 and are grateful to have a solid balance sheet, a tremendous medicine like Ingreza for patients with TB, and a growing pipeline with clear opportunities to make a difference in the field of neuroscience in the years to come, including the recent approval of Ongentis. During the first quarter, our commercial team did an excellent job managing through the payer-related seasonal dynamics to ensure patients remained unaggressive. In fact, we had strong momentum in both total and new prescriptions during the last six weeks of the first quarter.

4:12 These efforts resulted in $231 million in net product sales with approximately 41,500 TRX. Adjusting for channel inventory, we saw a sequential increase in total scripts, which is a great accomplishment considering the unique first quarter dynamics. On the net revenue per tier X front, the sequential growth to net impact was in line with our expectation. Turning to the P&L, our track record of profitability continued with Q1 gap net income of $37 million and non-gap net income of $79 million. On the balance sheet, cash grew to over $1 billion, positioning us well to continue investing in Ingresa, our diversified pipeline, and business development opportunities.

5:04 We are updating our GAAP and non-GAAP SG&A and R&D expense guidance range to $675 to $725 million and $550 to $600 million, respectively, due to the general delays associated with COVID-19. This compares the previous GAAP and non-GAAP expense guidance of $740 to $770 million and $620 to $650 million, respectively. As we look forward to the future of Ingresa, we remain extremely optimistic about the long-term opportunity to treat many more patients who have tardive dyskinesia. In the short term, so far through April, we are encouraged by the continued strength of Ingresa's refill rates, which are a testimony to the treatment benefits patients derive from Ingresa and our specialty pharmacy network.

5:59 Even with our field teams working remotely, the impact to NRX has actually been less than we originally feared. Admittedly, it is still too early to fully understand the ultimate impact of COVID-19. But I am extremely proud of how Eric and our commercial team have supported our customers thus far through the crisis. With that, I will now hand the call over to Eric Benevich, our Chief Commercial Officer. Eric?

6:30 Thanks, Matt. I'm happy to cover the commercial highlights from Q1. I'd like to start off by thanking our entire commercial team for the excellent results delivered in Q1. It's reflective of the caliber of our employees that they were able to keep up the momentum with Ingresa under very challenging conditions and, more importantly, help many thousands of patients suffering from tardive dyskinesia. Before I discuss our business results, I'd like to acknowledge two important commercial milestones. The first is the recent three-year anniversary of Ingresa's approval. As we sit here today and observe Mental Health Month and Tardive Dyskinesia Awareness Week, it's amazing to reflect upon how much we've accomplished for patients since we launched Ingresa. But perhaps more importantly, as Matt said, we remain very optimistic about the long-term opportunity to help many thousands more patients with tardive dyskinesia.

7:28 And second, approximately two weeks ago, We received approval from the FDA for our second commercial product called Ongentis, a new medication to help patients with Parkinson's disease better manage motor fluctuations. I'm very pleased with the strong label granted by the FDA and believe we have a differentiated medication that will be embraced by the Parkinson's community. Eiry will elaborate on the benefits of Ongentis for patients later on this call. You only get one chance to launch a new drug, and we are extremely enthusiastic about the opportunity to bring this new treatment option to patients with Parkinson's disease later this year. Now, on to our business results.

8:14 Once again this year, Q1 was a tale of two half-quarters. During the first half of Q1, our commercial team was laser-focused on helping patients and healthcare providers overcome seasonal headwinds. These payer-related dynamics included calendar year reauthorization requirements, resets for patient out-of-pocket contributions, and reapproval for Ingresa when patients switched health plans. The combined effect of these factors can potentially delay refills as well as delay new patient starts. With extensive planning and collaboration across teams, our field teams did a great job of helping to minimize treatment disruptions for existing patients as evidenced by steady persistency and strong TRX momentum as we moved through the quarter.

9:02 Regarding new patient starts, like last year, we saw a nice uptick in NRX numbers in the second half of the quarter. As we previously communicated, in response to COVID-19, we took action starting in mid-March to protect the health of our employees, including our customer facing field teams by implementing a work from home policy. As this new policy was being implemented, many of the psychiatry and neurology clinics around the country began to severely restrict patient in-person visits or shut down altogether. In order to support the productivity of our field teams in a remote manner, we pivoted to technologies to enable continued TD education Ingresa Product Presentations, and Reimbursement Assistance.

9:48 Despite the current widespread shelter-in-place directives, our mission remains the same, to help people suffering from TD get effective diagnosis and treatment. At the same time, we realize our customers are struggling to deal with two concurrent public health crises, a COVID-19 pandemic and a burgeoning mental health catastrophe. We are fortunate to have hired such an experienced field team who have strong relationships with healthcare providers and a dedication to serving patients. Our people have the insight and the flexibility to know when to give a customer some space, when to step in with aggressive support, and the awareness to know that sometimes the only support they can offer is to listen sympathetically when their customer needs someone to talk to. Despite our efforts to adapt to this new, rapidly evolving environment, We recognize that COVID-19 will likely have an impact on our business in the near term, especially on new patient starts.

10:49 The strength of our commercial team, Ingresa's attractive product profile, and the sheer unmet need in TD will likely be key drivers of accelerating momentum when we eventually transition back into the field and re-engage with our customers face-to-face in the hopefully not too distant future. I remain very enthusiastic about our team's mission of delivering on hope for people suffering from TD and soon Parkinson's disease. I'm excited at the opportunity to expand our reach in movement disorders with the launch of Ongentis as we continue to have high conviction in the growth prospects of Ingresa in the coming months and years. We're ready to help grow Neurocrine from a single commercial product company to a company offering multiple treatments for patients.

11:36 So with that, I'll turn the call over to my colleague, Eiry, our Chief Medical Officer.

11:40 Thank you, Eric, and good afternoon to everyone on the call. I'm happy to provide an update on our clinical programs, but before I begin, I would like to add my own thanks and gratitude to all the healthcare and other service professionals who continue to work so hard on the frontline of this pandemic. I also want to convey my thanks to the FDA for their continued high level of engagement with Neurocrine during this challenging time. Our team was especially impressed with their partnership as we navigated through the recent regulatory approval process for Ungentis. A little less than two weeks ago, on April the 24th, the FDA approved once daily ongentis as an adjunctive treatment to levodopa carbidopa for the treatment of patients with Parkinson's disease experiencing off episodes.

12:37 Ongentis is an oral selective inhibitor of catechol-O-methyltransferase, or COMT, a key enzyme involved in the breakdown of levodopa in the bloodstream. Levodopa Carvodopa is the current gold standard for treatment of motor symptoms in Parkinson's disease. But as the disease progresses, the therapeutic effect of Levodopa Carvodopa can wear off, and patients may begin to experience off-time between treatment doses, during which an increase in their Parkinson's disease motor symptoms, such as tremor, slowed movement, and difficulty walking, occur. Through its selective inhibition of COMT, ongentis, as an adjunctive therapy given once a day administered at bedtime, increases and prolongs the therapeutic blood levels of levodopa carbidopa and therefore results in more consistent motor control for patients with PD, including a reduction in off-time and improvement in on-time without troublesome dyskinesia.

13:43 I'd like to recognize our team, who worked diligently with the FDA to achieve this timely approval for Ongentis, and we're excited to bring this important new treatment option to patients living with Parkinson's disease. Shifting gears now, the COVID-19 pandemic has impacted many clinical trials across our industry over the past few months, including our own. We announced last month that we temporarily paused enrollment of new patients in three ongoing studies, the phase three registration study of valbenazine to treat chorea in Huntington's disease, the restore one registrational study for NBIB1817 in Parkinson's disease, and the phase two pediatric study of cronecifont in congenital adrenal hyperplasia.

14:35 In managing through these trials, our top priority is to protect the safety of participating patients and to ensure the integrity of the data generated from the clinical studies during these challenging times. To that end, we are working closely with our investigators to adapt assessment measures and trial monitoring as needed to both ensure the safety of all current study participants and to determine when and how to reopen these studies for new enrollment in a safe and effective manner. It is important to note, however, that while these ongoing studies are temporarily paused to new enrollment, we continue to make progress on all fronts to ensure that we are well positioned to launch the new clinical studies planned for the second half of this year. We're conducting pre-study tasks and initiation efforts using virtual technologies in order to be ready to initiate these studies as soon as it is safe and appropriate for our investigative sites to do so.

15:38 These efforts include all pre-study initiation preparations for our single global registration study of cronecifont in adults with congenital adrenal hyperplasia and for two mid-stage studies in rare pediatric epilepsy pending our exercise of the option with eidosia. Regarding Cronesophon, following the recent cancellation of the live endo meeting, results of the Phase II proof-of-concept study in adult patients with classic CAH will be presented at the endo online meeting scheduled for June. We also recently engaged in end-of-Phase II interactions with the FDA, which provided clarity on the Phase III study required for registration of chronesophontin in adult patients. And we're currently moving ahead to implement this global registrational study design in the second half of the year.

16:34 We look forward to advancing this much-needed novel treatment option for adult patients with CAH. In closing, while it is challenging to ultimately predict what kind of impact the pandemic will have on our clinical timelines overall, our plan for 2020 currently remains unchanged to have three registrational programs and four mid-stage programs ongoing by year-end. I'll close by thanking all my colleagues at Neurocrine for their truly inspirational efforts and dedication to our company's mission to relieve patient suffering and enhance patients' lives. With that, I'll hand back to Kevin.

17:16 Thank you, Eiry and Matt and Eric. So that'll do it for our prepared statements, and we're ready to take your questions. All right. At this time, we'll take our first question from Paul Matisse of Stiefel. Your line is open.

17:33 Great. Thanks so much for taking my questions and congrats on the quarter. Two things for me. I was wondering if you could comment on the average script per patient that you saw in 1Q, maybe quantitatively or at least qualitatively relative to that funky dynamic from 1Q 2019 that confounded results. And then separately, I was just struck by your guys' bullish commentary on NRX in April. You guys are usually the kings of how to being conservative and then maybe beating that conservative tone. So maybe you could just comment a little bit more detail on what exactly you're seeing with Ingresa thus far in terms of NRX. Thanks so much.

18:16 Thanks, Paul, for your question. Why don't we start out, Matt, do you want to take the stab and followed by Eric on the first part of Paul's question?

18:26 Yeah, sure, Paul. Thanks for the question and also for calling us kings. We appreciate that. From a Rx per patient perspective, as we had flagged heading into the quarter, since we had double the number of patients this year as compared to this time last year, there is a potential for a significant headwind. Even if we kept the refill rate per patient the same in Q1 as we did last year in Q1, that could have been a significant headwind. You can see in our results for this quarter, since we actually had a sequential increase in TRX when you normalize for channel inventory, you saw that the teams that were in place actually drove a bit higher refill rate per patient in the first quarter. So it was a heck of a job by the team, and they did an excellent job.

19:27 Yeah, Paul, this is Eric. So to answer the second half of your question, we feel good about the momentum that we've carried into Q2. As I mentioned in my prepared remarks, Q1 was a really good quarter from an NRX perspective. In fact, it was one of the best quarters that we've had to date. Now, obviously, going into Q2, the pandemic hit in a widespread basis. Shelter-in-Place Directives were implemented in states across the country, and we had to adapt. We implemented a work-from-home policy and pulled our field teams out. However, despite all this, we saw really good, consistent refill rates and we expected that there would be an impact to NRX, but it was less than what we had expected to see given the dynamics.

20:32 It's early days yet, and certainly we're watching things very carefully, and this doesn't affect our long-term optimism about the opportunity within Greza and Tardive Dyskinesia, but certainly wanted to convey that in terms of our business momentum, we feel good about what we've seen thus far.

20:56 Thank you. And Matt, you met... Matt, you meant relative to Q1 last year, right, in terms of refill rates, not Q4? Is that correct?

21:05 Yeah, that's correct. And the only thing I would add on NRX for April is is that if you read a lot of the different surveys across the industry, call volume is down significantly as patient visits have also gone down significantly. I think most say between 65% and 75% decline. So our commentary around NRX is those aren't tightly correlated at this point. But as Eric said and as I mentioned in my prepared remarks, it is still too early to make a formal call on Q2 and what it's going to look like. It really depends on when people start opening back up and patient flow picks back up in person. So thanks, Paul.

21:57 Thank you. We'll take our next question from Viren Amin. Your line is open.

22:06 Hi, guys. Thanks for taking my questions. Can you maybe just talk about inventory levels? I think you added about $4 million in Q1, and you had, I think, another $11 million in Q4. So I just want to understand where you lie. I think typical average is around four to six weeks. So maybe if you could just address that.

22:26 Thanks. So, Matt, do you want to take that one?

22:30 Yeah, sure thing. So from a channel inventory perspective, it's very difficult to predict, and it can be highly variable, even based upon the day the quarter ends. Most of our channel orders on a Monday, for example, or Tuesday, and so depending on the timing, there may be a little bit more stocking at the end of a quarter if it lands on Monday, Tuesday, or Wednesday. So when you normalize for channel inventory, Barron, you know, we really had, you know, 27 of sales results in Q4, and you also normalized to that same place for Q1 around 227. However, since there's such a big gross to net discount period, or Gross to Net Discount, it leads to a sequential increase in TRX. But from a days on end perspective with the NERC channel, it's right around two weeks.

23:31 Okay, that's helpful. And then I guess on the new prescription starts that you're seeing, Can you maybe describe what percentage comes from switching from existing therapies that patients are on versus a treatment-naive patient, given we've got the COVID epidemic and it's probably harder for a treatment-naive patient to go in to see a doctor?

23:58 Yeah, Barron, I'll have Eric start with that.

24:04 Yeah. The answer is that we don't have that information. It's not clear how much of this has been driven by switching, and I assume that you're talking about deuterated tetrabenazine. In the work that we've done in the past, you know, looking at market research and so on, there's been very little of that kind of activity. The vast majority of new patient starts has been driven by our educational efforts, helping providers to identify previously undiagnosed patients, and then certainly educating them about the risks and benefits of treatment within GREZA. I assume that that's probably still the case in this current environment. And just to kind of tack on a little bit to what Matt was talking about, certainly there's been a substantial drop in patient visits over the last, let's say, six weeks or so across different sectors of healthcare, including in psychiatry and in neurology.

25:07 but that's been partially offset by an uptick that we've seen in telemedicine. And so certainly we've made efforts to understand those dynamics and to help providers in our universe understand how they can continue to assess patients for TD symptoms, how they can monitor patients that are currently on Ingreza, etc. And so that may partially explain why, even in these times where there's been a dramatic decrease in patient flow through the clinics, it hasn't been, as Kevin said, proportionally impacting our business.

25:46 And Barron, what I'll add on to that is, as Eric just talked about telemedicine, you know, going before COVID, psychiatry was the specialty that utilized telemedicine the most than any other specialty. That clearly has increased and ramped up from there. and so that's what Eric meant is that we've been looking at this, we've been in studying telemedicine for a couple of years even prior to this and so with an experienced and talented sales force they were able to plug into that and I think that is, as Eric said, one of the reasons why The treatment, the NRX that we're seeing here is not nearly what we had feared it would be.

26:44 But I'll always put in the cautionary statement, as Matt has done and Eric has done, this is still early into this quarter. And so we just need to see and stay on top of and adapt to what is going to continue to happen throughout this quarter and beyond. Great. Thank you. Our next question is from Brian Abrams of RBC Capital Markets. Hi, this is Leo on for Brian. Thanks for taking my question. I had a question on the CAH program. Just wanted to know what the recent feedback has been in a regulatory sense on the pivotal trials that you're planning to run.

27:30 And are you potentially looking at something like concomitant steroid use and steroid reduction as an endpoint compared to normalization of biomarkers? And I might have a quick follow-up as well.

27:43 So thanks for the question Leo, it's Eiry here and we did meet with the FDA as planned and in terms of the actual design of the study as we've said before I think on several calls we do believe that the hormone levels of A4, 17-OHP and ACTH are very important and they are used extensively in the management of patients with CAH In addition, we believe it will be important to understand the impact that a CRF1 antagonist can have on the dose of exogenous glucocorticoids that's required to continue to control the disease. As I mentioned, we are actually finalizing that single pivotal phase 3 study in adults That's a global study and we'll be moving towards implementation of that in the second half of this year. And once that study is posted on clinicaltrials.gov, obviously there'll be a lot more information about the design of the study and the endpoints that we're looking at there.

28:50 Thanks. And if I can just follow up on maybe more of a broader strategic perspective. I know previously you had mentioned that you were going to go it alone in here for the global studies. And I just want to know if that thinking has evolved given the global pandemic and the macroeconomic conditions and perhaps how site identification is going.

29:13 So I'll take the very first part of that from a strategic aspect. No, that hasn't changed at all in our thinking. We still plan on... doing this Phase 3 trial alone, doing the registration in both territories, and commercializing in both territories ourselves. Eiry, you want to talk a bit more about how it's gone?

29:34 Yeah, absolutely. I mean, we have external partners we're working with in the form of contract research organizations that obviously have a very broad reach globally, and we've been working very closely with those teams and also with our investigative sites that are selected and The regulators and ethics committees in Europe and in the U.S. towards the ability to implement in the second half of this year.

30:02 Yeah, you know, you do, even during this period of time, you do get some pleasant surprises. And I'd say one of the pleasant surprises that we have found is that working with the outside partners throughout all of our programs here whether it's CROs, whether it's the clinical trial sites that we're currently working with, the ones that we are signing up for the trials that are all going to be starting in the second half, and certainly the regulatory agencies, both EMA and FDA, they have not missed a beat. They've all been extremely responsive and we've been able to work highly effectively with all of them telephonically.

30:50 Thanks, that was very helpful. Our next question is from Tazeen Ahmad of Bank of America. Tazeen, you may want to check your mute switch. Your line is open. And once again, Tazeen Ahmad, your line is open. Please check your mute switch. We'll move next to Brian Scorney of Baird. Your line is open.

31:21 Hi, thank you. This is Jack Dong in for Brian. Thank you for taking our questions. I just had one quick one. I was wondering if you could talk a little bit about the payer mix of Ingresa and how many of the patients are commercial versus government insurance and how you could see kind of the broader macroeconomic trends in the U.S. playing out there and if there are any risks to the business associated with the kind of potential shift to government insurance plans if unemployment increases as we've seen in the past.

31:47 Thank you. Yeah, so Jack, we've not talked about what our actual payer mix is between private and public. As we had said originally when we had launched, looking at the antipsychotics as a proxy for this patient population, we saw approximately a 50-50 mix. We said all along that it's actually a bit higher in the public payer arena for this drug nut. Thank you for joining us. We keep a pulse on what's happening here. It is evolving continuously.

32:44 I don't think I can make any intelligent, forward-looking statements here, other than to say that we monitor, we're involved, and we will react appropriately. And Eric, do you have more to say?

32:58 Yeah, the only other thing I'll add is that regardless of the patient's insurance status, our commitment to making sure that they can get access to Ingresa remains unchanged.

33:10 Awesome. Thank you so much.

33:11 Thank you. We'll move next to Anupam Rama of J.P. Morgan. Your line is open.

33:22 Hey, guys. Thanks for taking the question and congrats on the quarter. Just a quick question on the Apikapone launch. So I should be thinking about sort of that resolution of the supply issue and the gain factors to getting the product launched here in the back half of the year. Thanks so much.

33:38 Yeah, thank you, Anupam. We do have the COVID pandemic, and that in and of itself makes it impractical for us, and as you've seen with many companies, to launch into this environment. But on top of that, as we had discussed back in January, which seems like years ago, we at a conference, that our partner Bial, who is 100% responsible for supply chain, had an incident in a supply chain, and they are rectifying that. We stay in close contact with them through each step of the process as that's being rectified.

34:25 We'll stay tuned. We'll probably give you an update in early summer about what our launch plans are, the timings.

34:39 Got it. Thank you. We'll take our next question from Jay Olson of Oppenheimer. Your line is open.

34:50 Oh, hey, congrats on working through this pandemic, and thank you for taking the questions. I think you said the unexpected strength in new patient starts for Ingrizo was supported by your transition to online physician education. And I was wondering if you could attribute any of the new patient starts to your consumer education program. And then related to that, I was wondering if there's any way you could use your EMBRACE program to refer new patients to physicians who practice telemedicine.

35:22 Thank you, Jay.

35:24 Eric, do you want to? Yeah, Jay, thanks for the question. Certainly, I think that the cumulative effect of everything that we've done over the last three years is contributing to the sustained momentum that we've seen coming out of Q1 into Q2. The Talk About TD unbranded disease state education program that you mentioned that's targeted towards patients, we believe is contributing to that as well. Even though there is a lower volume of patients having face-to-face visits, many of them are still having the opportunity to talk to their physician, and certainly we continue to try and educate them about abnormal movements and the possibility that it could be TD and to encourage that dialogue.

36:16 Ultimately, The strength that we've seen coming out of Q1 into Q2 is really, like I said, a cumulative effect of everything that we've been doing. And we're really very thankful that we hired such a strong team, that they've got the relationships, and that they've been able to really pivot very quickly and move from an in-person, face-to-face model to remote teams. Thank you very much.

37:02 As we saw in Q1, it was this tale of two quarters where you had a bit slower first half of the first quarter, and then the ramp picked back up in the second half of the quarter as patients got back to more normalized refill rates and enteraxes were flowing steadily. So we did have, as Eric just mentioned, a nice momentum, nice trajectory prior to COVID-19. I just want to make sure our comments about NRXs in April are not taken out of context, I think, in how you asked the question. I just want to be clear. We're not seeing a sequential increase or growth out of NRX. We are seeing growth.

37:47 are, like we said, better than we had anticipated NRX given the changing dynamics. But I wanted to make sure I provided that clarification given a couple other questions.

38:00 Great. That's super helpful. Thank you. And are you able to refer TD patients who need doctors practicing telemedicine to a network of doctors local to them?

38:15 Yeah, sorry, I neglected to answer the last part of your question. No, not currently. The call to action with the Talk About PD ad is to talk to your doctor. We have certainly discussed and we're evaluating if there's an opportunity to direct patients towards a specific physician in their area that's been educated on TD. So stay tuned.

38:41 Super. Thank you very much. Our next question is from Charles Duncan of Kantor.

38:49 Your line is open. Hi, guys. Kevin and team, congratulations on a good revenue quarter, and thank you for taking my questions. I had a commercial question and then a brief pipeline question. Regarding the commercial question, you know, folks are talking about the NRX, and Matt, you kind of just clarified it to the previous question, but I'm really wondering if you think about the interactions that you're having with prescribers, say, in early April versus early May versus what may be in early June. Is there any way to quantify or at least qualitatively discuss that kind of flow? Was it more, I guess, difficult to get to people in early April than maybe early May?

39:46 And what would you anticipate for early June?

39:50 Yeah, I'll take your question. So I think that as we went through the tail part of March and into early April, there was a lot of adapting that we were doing at that time, both in the field and in the home office to support what our customer-facing team was doing. and certainly there was a lot of change happening across the country at different rates and at different times. And we started to see more and more practices essentially restrict access to patients, only emergency visits or shut down entirely. Our field team, we needed to pretty quickly equip with new tools and technologies that would allow them to or enable them to have those remote interactions with their customers.

40:45 And so there was a period of time where we were very furiously making a lot of changes on the fly, so to speak, to be able to support what we were trying to do with our customers and, frankly, to support what they were trying to do with their patients. I think that over the course of April we settled into a bit of a rhythm Certainly, we learned a fair bit about what was working, what was less effective, and certainly made some changes in terms of the resources that were available to our sales and our reimbursement field teams. So, at this point, I feel like it's a relatively steady state in terms of what that cadence looks like and the types of interactions that we're having.

41:32 However, now we're starting to see that as certain states are starting to loosen up the restrictions and so on, we're doing a fair bit of planning in terms of what does re-engagement in face-to-face types of interactions with customer look like, how can we do so safely, etc. So I think that the focus is shifting a little bit towards what the future looks like and how we're going to start to have those kinds of engagements with customers like we had in the past, where we can do so and at what pace.

42:07 That's helpful, Eric, and supportive of our thesis and the use of telemedicine in psychiatry. That said, let me ask you if you see psychiatry being a little bit easier nut to crack, if you will, versus, say, neurology and thinking about possibly an impact of a second wave when you're launching and on Gensys later on this year.

42:34 I'll comment on that, and then perhaps Eiry can comment as well. So as Kevin mentioned, pre-COVID, there was a higher utilization of telemedicine within psychiatry, and there's a number of factors that drove that. One is that there was a very large gap between the number of patients that need psychiatric treatment support versus the number of providers. And you see this especially in rural areas. And so many of these mental health clinics have resorted to engaging a telepsychiatrist that could be a county away or across the state to help provide medical services for these patients in their immediate geo area.

43:24 So that was already utilized to a higher degree than what we saw in other physician specialties. The COVID-19 pandemic really just accelerated. And what we saw was that some of the restrictions that were put in place and the standards have been relaxed by the government. For example, it used to be that the patient had to be in a clinic. They had to be engaging with the remote psychiatrist via a closed circuit TV network, essentially. et cetera, and now some of these, a good portion, frankly, of these telepsychiatry consults are via phone. The patients at home, the physician could be at home as well.

44:12 So we're trying to understand those dynamics. You know, what happens once the emergency declaration is lifted? To what extent do things go back towards what they were pre-COVID or to what extent will telemedicine remain a core part of psychiatry? Certainly, you know, we're also trying to understand the impact on neurology and the potential impact on our launch with Ongentis. But this is something that we've been keeping an eye on for some time, and certainly I think we're better prepared probably than many other companies because we had been doing some work to understand how telemedicine could affect TD and our ingressive franchise, and we're able to leverage that work that we did previously.

45:00 Yeah, and the only thing I'd add to that, Eric, is I think it is definitely correct that psychiatry historically has been further ahead in terms of the employment of telemedicine approaches, at least through our interaction with the movement disorder neurology community, both through our Huntington study and also through preparation for the Angentis launch, it's very clear that that community is adapting rapidly in order to try to serve their patients in a different way in this setting. And one of the advantages I think that the Angentis population will have is that many of those patients will already be known to their neurologist and will be in a relationship with their neurologist already.

45:46 and so we are seeing in that setting that there's a lot of use of remote technology and assessment techniques that are enabling the clinicians and healthcare professionals to support their patients very effectively, including potentially changing or adding additional treatment options.

46:05 Chas, did we answer your question?

46:07 Yes, you did. Thank you very much, Kevin. Helpful added color, Eric and Irie. Thank you. We'll move next to Phil Nadeau of Cowan and Company.

46:19 Phil Nadeau Good afternoon. Thanks for taking my questions. First one, clarification question on the prescription numbers. I think you're citing 41,500 TRX and Q1. I believe we had in our notes that there were 42,100 TRX in Q4, yet you're calling Q1 a sequential increase. Could you correct our figures if they're wrong, or on what basis are you denoting Q1 as an increase?

46:49 Yeah, so our TRX numbers include implied TRX for the channel inventory. So in Q4, for example, where we had an $11 million inventory bill that represented, call it around, and a little over 2,000 TRX in the quarter. So our reported TRX you would need to reduce by around 2,000. And then this quarter you had a $4 million channel inventory build, which would represent six or 700 type level of implied TRX.

47:31 That's helpful. Second, on the NRX trends that you noted in April, in the past you've suggested that NRX, there can be a lag from when the patient is seen by the physician to when the NRX is actually realized and becomes commercial. Is there any chance that the trends you're seeing in April are partially due to a lag and some of those NRX were actually based on patient visits earlier in March or before COVID hit?

48:03 Eric, do you want to take that?

48:04 Yeah, you know, certainly there is a bit of a lag time. It depends on the site of care and what pharmacy the patient's getting their prescription from. You know, it could be a few days or, in some cases, a couple weeks. So prescriptions that were filled, NREXs that were filled at the very beginning of April likely would have been written Some time in the latter part of March. But as we said, we saw a nice uptick in momentum in the second half of Q1, and that really did continue to carry through into Q2. It's early still, and we're monitoring things very carefully, but the impact was not as significant as we feared, given the dramatic changes in the external environment.

48:58 Thanks for taking my questions.

49:00 Thanks, Phil. We'll take our next question from Vamil Devang of Mizuho Securities.

49:10 Great. Thanks so much for taking the question. Maybe just one to clarify, and then one actual question. That $4 million that you mentioned, the channel inventory, does that include stocking benefit at the patient level? Also, people maybe are trying to fill scripts before the pandemic picked up, or is that just really in the channel? And then my actual question was more on the business development side. I'm just curious, With the pandemic impacting companies differently, is there any way to change your priorities or opportunities potentially to pursue business development, maybe some smaller companies that are not able to withstand the pressures as well?

49:46 Thanks. Matt, do you want to take the first clarifying aspect?

49:51 Yeah, the channel inventory is actually in our channel, so our pharmacy network. It's not at the patient level. And also just to note, we did not see any significant change in how patients were getting refills, you know, nothing to note in March. So I would chalk up a very little impact in Q1 associated with anything in connection with COVID-19.

50:18 And Kyle, you want to talk about BD? Yeah, so make sure I captured your question here. A little bit about our interest, though. You know, atop an investing for Ingresa and Epicopon in our internal pipeline, of course, we continue to be interested in things happening on the outside. There's only so much we can do internally, and we're really in an interesting time right now. with a lot of people doing some great science outside of our doors. So we're trying to learn and get smarter on what's going on out there. So of course, we continue to look and see if there are other partnership types of opportunities. I think that if you look across our pipeline at some of the partnerships that we struck recently, Xenon, Voyager. You see the types of things that are of interest to Neurocrine.

51:07 Strong science, platform technology, and intellectual property. Those are things that are very important to our current internal programs, and that's something that is the cornerstone of our interest to engage in discussions with other companies. So whether they're large or small, those are the pieces that we're looking for. Does that answer your question, or do you have a follow-up there?

51:30 Yeah, I think I guess I was just kind of also curious, have you seen like a change or maybe more conversations starting as smaller companies maybe struggling to manage their way through the pandemic? I don't know if you can comment on that level.

51:44 Yeah, we haven't seen that yet. I think most of the people are just trying to understand how their business might change and making those adjustments. Not to say that can't happen down the road, but we haven't seen that yet.

51:55 Okay, thanks so much. We'll take our next question from Carter Gould of Barclays. Your line is open.

52:05 Great. Thank you. Good afternoon. Thanks for taking the question, and congrats on the impressive performance. I guess first for Kevin or Eric, just looking for, I guess, a little bit more color as you think about managing the sales force during the re-engagement in person with clinicians, and just sort of, I guess, the guiding principles as you think through that, and is your expectation that you'll see sort of in asynchronous kind of re-engagement by region, or are you going to hold back the entire sales force until it's sort of like an all or none type phenomenon? And then maybe just on a pick-up hone, given the delay here, is our expectation that maybe you'll see, I guess, better access and formulary sort of out of the gate, given that you've had some time here to engage with payers, maybe a little bit more. Thank you.

52:55 So I'll just take briefly the first part of your question, and that is, as Eric has said in his opening remarks, we are very fortunate to have such a highly skilled and experienced sales force that has built the relationships that they have that allows them to, even during these times, bring Ingresa to our patients. They're real skilled, even in the closed part of this, the most difficult part of this as to when they interact and when they engage their customers. And they're going to be using that same skill as we reopen. But Eric can probably go into a bit more depth with you.

53:42 Yeah, certainly this has been a learning opportunity for us. We've said that this has been a learning launch and it continues to evolve. I think one of the hallmarks of the way that we've adapted as a company is to really increase our communication, not just with the field sales organization, but really across the entire organization. It's almost as if you can't communicate too much. and so certainly with everyone being physically distanced and people having to deal with a lot of personal issues and concerns about the future of the country and their own personal circumstances, that communication has been really key and pivotal in terms of helping us as an organization navigate all of these changes.

54:33 In terms of that process of going back into the field and reengaging face-to-face again, you use a term that I haven't heard before but I like, which is asynchronous reengagement. And that's, I think, how it's going to play out. We have A number of different internal planning teams that are helping us to prepare for what going back into the clinics and into the various healthcare settings looks like, as well as bringing our home office team back to our headquarters. Changes are not happening at the same pace in different parts of the country, and already we're seeing some states that are lifting restrictions.

55:18 And so our expectation is that this is going to be a process that occurs over a number of likely weeks to months in terms of individuals in different parts of the country being able to reengage with their customers. And what that looks like is probably going to evolve over time as well. The second or maybe the third part of your question was really related to Ungentis and the fact that we're looking at launching in the latter half of this year. Certainly, we want to take advantage of the opportunity. You can always use more time to prepare. But with regards to the payers specifically, we've got a plan in place in terms of how we're engaging with payers and how we're introducing on Gensys. And now we have a label. So certainly that gives us additional opportunities to engage with plans to understand how they manage the Parkinson's class and to educate them about the labeling and where we see this medication fitting into the current treatment paradigm for those Parkinson's patients.

56:21 So that and the fact that we're going to continue our efforts to educate neurologists on the importance of COMPT inhibition as we have been in the months leading up to our PDUFA date. We'll take our next question from Evan Cederman of Credit Suisse. Your line is open.

56:49 Hi, all. Thank you for taking my questions. Congrats on the progress, and I hope you are all staying safe and healthy. So I know you touched on this, but on Ingressa, can you provide more color on the feedback you're getting from physicians on the virtual sales rep interaction model? Are these reps still getting the same level of engagement? I'm really trying to understand if they're as effective now in driving prescription growth versus during normal times, and then just a follow-up on the Ongentis launch.

57:15 Yeah, thank you, Evan. I'll just take a first quick, and again, put it over to Eric. As you can imagine, with the sales force working from home, and as Eric has talked about with so many of the offices, Thank you very much. They continue to excel as they move along. So, no, I can't say that for structural reasons that they're as efficient as they were with all of their clients. However, with many of their clients, they are as efficient.

58:18 So, with that, I'll turn it over to Eric.

58:20 Yeah, and I can provide a little bit of additional color, Evan. You know, calls generally have gone down. And I say calls. Calls on HCP customers have gone down across the board, regardless of what therapeutic area you're talking about. However, and I think that's true also in our TD market. However, what we have found is that in some instances, we're replacing quantity with quality, meaning that we're getting... Thank you. Thank you. and we've done a nice job thus far I think of leveraging peer-to-peer educational programs utilizing physician speakers from different parts of the country and being able to make that resource available.

59:36 So we've adapted to the reality of our customers that are no longer practicing the way that they used to, but we've certainly seen that even though the call volume is less than what it used to be, certainly the quality is very high for those calls that we are able to engage with customers.

59:56 Okay, and then just a follow-up on the Angensis launch. So how should we think about the total addressable market for this asset? Is it just patients now who are on inhibitor therapy, or should we think beyond that to all PD patients on levodopa carbidopa therapy?

1:00:14 So if you... If you look at the labeling for ongentis, it's for patients that are experiencing off-time that are currently on levodopa carbidopa. So there's roughly a million people in the U.S. with Parkinson's disease. About 70% of them are on levodopa carbidopa preparations, and about two-thirds of those patients are currently on levodopa. Thank you for that call. I appreciate it. Thanks guys. Our final question comes from Tazin Ahmad of Bank of America. Your line is open.

1:01:10 Hi, guys. Thanks so much. Sorry about earlier. Thanks for squeezing me in at the end here. Maybe if you haven't already talked about this, and I apologize if you have, can you guys talk about what we should be expecting to see on June 8th as it relates to your CAH presentation? And I also wanted to follow up on a pick-up hone, and you've talked about really not wanting to launch until the time is right. Do you have a better sense of, you know, what the environment is going to be for the rest of the year? Is this something that could get pushed into 2021? Thanks.

1:01:43 Yeah, Tazine, I'll take the second part of your question first about the Apikapone launch, and then I'll have Irie talk about the first part of your question. With the Apikapone launch, without COVID being involved here, as I had said publicly in January, that there was an incident at one of the contract manufacturers offices for our partner, Bial, who is responsible for the supply chain. And we've been in constant contact with Bial as they move through that incident and make sure that we have resupplies that would come to us in a timely fashion so that We'd never have to worry about patients after our launch running short of drug supply. And that we will give an update to you about the timing of our launch in early summer.

1:02:43 So, I read.

1:02:45 Thanks, Dazeen. And so the data that was presented by Dr. Rich Arcus from University of Michigan on June 8th will be the full data set from our adult proof of concept study, which included four cohorts of subjects that were dosed for 14 days. And the data we'll present are the pharmacokinetics, the pharmacodynamic measures in terms of the hormone levels, and the tolerability and safety data. I will say we're very encouraged by the data from that study, and with that in hand, we did meet with the FDA in an end of phase two meeting in March, and we are moving ahead with our single adult global registration study, which we anticipate starting in the second half of this year.

1:03:37 Okay. Can you give us an idea of how long you expect enrollment for the adult study to take?

1:03:47 We actually have been working on, as you can imagine, on several different scenarios, particularly in the current situation, and we haven't given any detail around that at this point in time. Obviously, once the study is up and going in the second half of the year, the information will be posted on clinicaltrials.gov in terms of our sample size, and we'll continue to monitor that and adjust our expectations accordingly to the performance.

1:04:18 Okay, thank you.

1:04:20 Thank you, Suzie. This concludes our question and answer session. I would like to return the call to Kevin Gorman for concluding remarks.

1:04:28 Yeah, thank you. And I really do appreciate all of you joining the call today. Just a couple of things. You know, while Neurocrine is not a virology or an anti-infective company, our efforts, therefore, don't read directly on SARS-CoV-2. However, the impact of this pandemic on mental health is profound, and we work extensively and deeply with the mental health community, and that's where we're putting our efforts and our expertise to work in this. And as Eric had mentioned, it's very important to note that May is Mental Health Month. So I'd also like to say that we've spent the better part of two months quickly adapting to the rapidly changing pandemic. And as you've seen and heard, our people have really come through, as they always have in the past.

1:05:25 And I call this two months the very early and temporary condition or phase one. We're now actively preparing for phase two, which is returning to work both in the field and in the home office, albeit under very different circumstances when we were last there. But what we've done from the beginning and continuously to work on is what I'll call phase three, and that is the long term. Our vision for our work, our patients, and our company has not changed. Our ultimate goal is and always will be to discover, develop, and bring life-changing medicines to patients, and that's unwavering, and this pandemic will not change our course. So I want to thank you for being here today, and I look forward to speaking with you all as time goes by, but probably more importantly, I'm really looking forward to getting together again with you personally. Take care, and thank you very much.

1:06:22 This does conclude today's Neurocrine Biosciences Report Q1 2020 results call. You may now disconnect your lines. And everyone, have a good evening.