Neurocrine Biosciences, Inc. (NBIX) Q2 2025 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call summary highlights strong financial performance and optimistic guidance, with record new patient starts for INGREZZA and early success with CRENESSITY. The Q&A section reveals a positive sentiment from analysts, despite some management evasiveness on specifics. The reaffirmed sales guidance and strong balance sheet further support a positive outlook. The stock price is likely to react positively, potentially in the 2% to 8% range, driven by the promising growth trajectory and market confidence in the company's strategic initiatives.

Key Financial Performance

Net Product Sales $682 million in Q2 2025, representing 17% year-over-year growth. This growth was driven by the performance of CRENESSITY and INGREZZA.

CRENESSITY Sales $53 million in Q2 2025, up from $15 million in Q1 2025. This reflects strong early adoption by CAH patients and clinicians, with over 75% of all dispensed prescriptions being reimbursed.

INGREZZA Sales $624 million in Q2 2025, representing 15% sequential growth and 8% year-over-year growth. Growth was attributed to sales force expansion, enhanced marketing initiatives, and increased contracting for Medicare formulary coverage.

Cash Reserves $1.8 billion in cash, highlighting a strong balance sheet to support commercial and clinical development strategies.

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Operating Highlights

CRENESSITY: Strong early performance with $53 million in Q2 2025 sales, up from $15 million in Q1 2025. Over 75% of prescriptions reimbursed, with widespread adoption across pediatric and adult patients. Positioned to become a commercial blockbuster for classical congenital adrenal hyperplasia (CAH).

INGREZZA: Achieved $624 million in Q2 2025 sales, reflecting 15% sequential growth and 8% year-over-year growth. Record new patient starts and total prescriptions due to strategic investments in payer access and Medicare formulary coverage. Expected net sales guidance for 2025 is $2.5 billion to $2.55 billion.

Market Access for INGREZZA: Expanded Medicare formulary coverage to approximately 70% of Medicare beneficiary lives in the tardive dyskinesia (TD) market, representing a 25-point increase in coverage over two quarters.

Revenue Growth: Net product sales reached $682 million in Q2 2025, a 17% year-over-year growth. Sustained revenue contribution from both INGREZZA and CRENESSITY is expected to drive long-term growth.

R&D Investments: Initiated multiple Phase III programs for osavampator and NBI-'568. Advanced preclinical biologics candidates, including NBIP-1435, into clinical trials.

Pipeline Diversification: Focused on expanding neuroscience-focused pipeline with new Phase III programs and early-stage muscarinic programs. Positioned to address a broad range of diseases.

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Risk or Challenges

Market Access Investments Impact: Investments in expanded access for INGREZZA, including Medicare formulary coverage, have led to increased gross-to-net impact, which could affect near-term financial performance despite long-term growth potential.

Regulatory and Clinical Trial Risks: The registrational studies for osavampator in major depressive disorder and NBI-'568 in schizophrenia are ongoing, with data readouts expected in 2027-2028. Delays or unfavorable outcomes in these trials could impact strategic objectives and pipeline advancement.

Product Launch Challenges: While CRENESSITY has shown strong early adoption, most prescribers have only initiated treatment for one or two patients, indicating potential challenges in scaling adoption.

Revenue Dependency: The company’s financial performance heavily relies on the success of INGREZZA and CRENESSITY. Any market or operational disruptions affecting these products could significantly impact revenue.

Increased Operating Expenses: SG&A expenses have been increased by $25 million to support sales growth, which could pressure margins if revenue growth does not meet expectations.

Pipeline Diversification Risks: The company is advancing multiple early-stage programs, including biologics and muscarinic programs. These initiatives carry inherent risks of failure or delays, which could impact long-term growth.

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Guidance & Outlook

Revenue Growth: Neurocrine expects sustained revenue growth driven by both INGREZZA and CRENESSITY. The company has refined its net sales guidance for INGREZZA to $2.5 billion to $2.55 billion for 2025, reflecting anticipated double-digit volume gains.

Product Performance: CRENESSITY is expected to become a commercial blockbuster, with strong early adoption and over 75% of prescriptions reimbursed. INGREZZA is projected to continue gaining market share and volume growth, supported by strategic investments in Medicare formulary coverage and marketing.

Clinical Pipeline: The company has initiated multiple Phase III programs for osavampator in major depressive disorder and NBI-'568 in schizophrenia, with top-line data expected in 2027-2028. Additionally, Phase III results for valbenazine in dyskinetic cerebral palsy and Phase II results for NBI-'770 are anticipated in Q4 2025.

R&D Investments: Neurocrine is advancing its preclinical and early-stage programs, including NBIP-1435 for congenital adrenal hyperplasia and muscarinic programs for schizophrenia. Phase II and Phase I results for these programs are expected later in 2025.

Capital Allocation: The company plans to continue investing in revenue growth, R&D programs, and business development while maintaining a strong balance sheet with $1.8 billion in cash.

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Shareholder Return Plan

Capital Allocation Priorities: Our capital allocation priorities remained intact, drive revenue growth, advance our R&D programs, enable business development and return capital to shareholders.

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Key Q&A

Q:Why did the company narrow the top end of guidance by $50 million?

A:The adjustment was due to a change in assumption around pricing. Initially, the company assumed flat pricing based on existing contracts, but they experienced a negative 5% price decline for the year due to pulling forward major programs in contracting from 2026 into 2025. Volume growth, however, remained strong with record numbers of TRx, new patients, and double-digit volume growth.

Q:What are the dynamics encountered at clinics for CRENESSITY, and is there a bolus of patients?

A:The company observed steady and consistent adoption of CRENESSITY, with no bolus of patients waiting for the treatment. Patients are being initiated after in-person visits, and there is strong interest and excitement from both clinicians and patients. The transition of patients from clinical trials to commercial CRENESSITY is steady, and the pediatric open-label extension trial is ongoing.

Q:How concentrated is prescribing for CRENESSITY, and what are the dynamics of the patient population?

A:Prescribing is not highly concentrated. Around 15% of the total CAH patient population flows through a small number of centers of excellence. Pediatric endocrinologists and community endocrinologists also play significant roles. Most prescribers have written for one or two patients, reflecting the thinly spread patient population. The company is still in the early stages of the launch and sees room for growth.

Q:What is the status of patients transitioning from the adult open-label trial to commercial CRENESSITY?

A:There are fewer than 40 patients transitioning from the adult open-label trial to commercial CRENESSITY. Some transitioned in Q2, and others are expected to transition in Q3. This is considered de minimis in the context of over 600 patient starts in the quarter.

Q:What attracted Sanjay Keswani to join Neurocrine?

A:Sanjay Keswani was attracted by the company's transformational stage, evolving from a small molecule two-product company to a multiple modality company targeting multiple therapeutic areas. He was also motivated by the potential to impact patients' lives and the high probability of success in the late-phase psychiatry portfolio. He expressed excitement about the early-phase portfolio, which includes large molecules with transformational potential.

Q:What led to the decision to contract INGREZZA midyear, and what are the expectations for future contracting?

A:The decision was driven by the goal to maximize patient access and provide flexibility for the IRA era starting next year. Contracting efforts initially targeted 2026 but were pulled forward to 2025. The company does not expect additional major contracts that would further aggregate pricing beyond 2025 levels. Pricing is expected to remain similar into 2026.

Q:What are the learnings from the valbenazine schizophrenia study, and how will they inform future programs?

A:The study confirmed the safety and tolerability profile of valbenazine in acutely unwell individuals and provided positive efficacy signals in the PANSS positive scale. The data will inform the next generation of VMAT2 inhibitors regarding patient population, indications, and trial design.

Q:What is the derivation of the CRENESSITY figure, and are there inventory dynamics?

A:The quarter included a $5 million inventory build, reflecting growth in the channel. Gross-to-net adjustments were primarily due to co-pay assistance and distribution fees, with no contracting yet. The company observed consistent demand throughout the quarter.

Q:What are the implications of the IRA for INGREZZA access and pricing?

A:The company aims to maximize patient access and maintain broad access and parity. They are monitoring the IRA's impact on the market and believe INGREZZA's differentiation and stickiness will help maintain its position. The company expects to learn more about IRA dynamics in 2025 and 2026.

Q:What is the penetration of CRENESSITY across different physician segments, and how is prescribing evolving?

A:Most endocrinologists have treated one or two patients, reflecting the thinly spread patient population. There is significant room for growth, especially among pediatric endocrinologists and centers of excellence. The company is focused on raising awareness and increasing adoption.

Q:What are the discontinuation rates for CRENESSITY in clinical trials, and how do they compare to real-world expectations?

A:Discontinuation rates in clinical trials were very low, with over 95% of patients rolling over into open-label extensions. Real-world persistency is expected to be high due to good coverage and affordability, with no significant barriers anticipated.

Q:What are the company's thoughts on using CRF1 receptor antagonists for weight loss?

A:The company is encouraged by the 1-year data on weight-related effects of CRENESSITY and is considering a broad range of potential indications for CRF1 receptor antagonists, including weight loss. They are leveraging their extensive knowledge of CRF biology to explore these opportunities.

Q:Review of Unclear Management Responses

A:Management avoided providing direct answers or clarity on the following: 1) Specific metrics or data on the number of filled prescriptions for CRENESSITY, 2) Detailed reauthorization criteria for CRENESSITY, 3) Exact pricing dynamics and gross-to-net adjustments for CRENESSITY, 4) Specific plans for using CRF1 receptor antagonists in weight loss or other indications, and 5) Detailed expectations for IRA's impact on INGREZZA access and pricing.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

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The earnings call summary indicates strong financial performance and optimistic guidance, particularly with the anticipated growth of INGREZZA and CRENESSITY. The Q&A section provides additional positive sentiment with high adoption rates and strategic sales force expansion. While there are concerns about unclear responses to regulatory issues, these are outweighed by the positive market strategy and product development outlook. The company's focus on R&D and potential new indications further support a positive sentiment. Overall, the positive aspects are likely to result in a stock price increase of 2% to 8% over the next two weeks.

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