Neurocrine Biosciences, Inc. (NBIX) Earnings

Management highlights

- Strategic Transformation and Diversification * The company has evolved from a single-product firm to a diversified biotech with three commercial growth drivers, an expanding multi-phase pipeline, and strong financial strength to support long-term innovation. * The successful acquisition and integration of Soleno Therapeutics (and its lead product Vicat XR for Prader-Willi syndrome, PWS) strengthened the company's position in rare disease and expanded its leadership in endocrinology. - Commercial Operational Progress * Ingresa delivered all-time record new patient starts and total prescriptions in Q2 2026, and remains the market-leading most-prescribed VMAT2 inhibitor, outgrowing the overall market in the most recent quarter. * Crinesity's prescriber base has nearly tripled year-over-year, with balanced adoption across adult/pediatric patients and all provider segments (CAH Centers of Excellence, pediatric endocrinologists, and community adult endocrinologists). Reimbursement has exceeded expectations, with over 90% of patients paying $10 or less per month. * Vicat XR integration is progressing on schedule, with management already beginning to roll out Neurocrine's commercial, medical, and patient support capabilities to the PWS community. - Clinical and Pipeline Updates * New two-year data for Crinesity in CAH (presented at ENDO 2026) demonstrated durable, meaningful improvements in cardiometabolic outcomes, bone health, quality of life, and pediatric growth, with a sustained favorable long-term safety profile. * Three-year data for Vicat XR in PWS showed significant, sustained reductions in hyperphagia across all time points, with improved outcomes when patients restart therapy after discontinuation, reinforcing the benefit of continuous treatment. * The company remains on track to report Phase III top-line data for Osov-Ampitor (Ossiphampertor) in major depressive disorder and for direclidine (directlidine) in schizophrenia in the second half of 2027; a second Phase III study for direclidine is on track for 2028 readout. * The company will host a neurology and immunology strategy update webinar in early December 2026. - Financial Position Post-Acquisition * The Soleno acquisition was completed for ~$2.9 billion, financed entirely with cash on hand. Neurocrine ended Q2 2026 with ~$500 million in cash and no debt, and the acquisition is immediately accretive to non-GAAP earnings.

Guidance

- Full-year 2026 Ingresa net sales guidance was revised upward from the prior range of $2.7 billion to $2.8 billion to a new range of $2.825 billion to $2.875 billion, representing ~13% year-over-year growth at the midpoint. - Operating expense guidance was updated to include Soleno operating costs, transaction/integration costs, and purchase accounting amortization impacts for the remainder of 2026. Total acquisition-related costs for 2026 are expected to be ~$150 million, with $130 million recognized in Q2 2026. - Management expects sequential quarterly revenue growth for Vicat XR exiting 2026, with Q3 2026 sales expected to be roughly similar to Q2 2026 levels, followed by incremental growth in Q4 2026 after the company works through initial launch-related discontinuations. - Management maintained the existing timeline for key pipeline milestones, with all Phase III readouts currently expected on schedule in the second half of 2027. - The company has not yet issued formal long-term peak sales guidance for Crinesity, and does not provide long-term steady-state operating margin guidance at this time.

Segment performance

Neurocrine Biosciences operates three commercial product segments, all aligned with its core therapeutic areas of endocrinology and neuropsychiatry: 1. Ingresa: Second quarter 2026 net sales were $716 million, representing 15% year-over-year growth. This accounts for 75.4% of Neurocrine's total reported Q2 2026 net product sales, driven by record new patient additions and sustained underlying demand. 2. Crinesity (Crenesi): Second quarter 2026 net sales were $184 million, reflecting 20% quarter-over-quarter revenue growth. This accounts for 19.4% of total reported Q2 2026 net product sales, supported by strong launch execution, consistent new patient starts, and expanding prescriber adoption. Approximately 15% of the estimated diagnosed congenital adrenal hyperplasia (CAH) patient population has now been prescribed the drug. 3. Vicat XR (BICAT XR): Second quarter 2026 proforma net sales were $94 million, with $54 million recognized by Neurocrine following the May 18, 2026 close of the Soleno Therapeutics acquisition. This accounts for 5.7% of total reported Q2 2026 net product sales (9.4% of proforma total sales including the full quarter of Vicat XR revenue). New patient demand remained consistent with Q1 2026, and discontinuation rates matched management expectations following the 2025 initial launch bolus. In total, Neurocrine reported Q2 2026 total revenue of over $950 million, with 40% year-over-year growth, and proforma total revenue (including a full quarter of Vicat XR sales) of $998 million. Non-GAAP EPS for Q2 2026 was $2.85 per share.

Risks & headwinds

- Pricing and access uncertainty related to the 2029 implementation of the Inflationary Reduction Act (IRA) and Medicare's Most Favored Nations (MFN) pricing program for Ingresa; final pricing and access terms for 2027 and beyond are still being negotiated with payers, and potential additional costs to maintain current access levels are unclear at this stage. - Discontinuation risk for Vicat XR following the initial 2025 launch bolus; while management expects discontinuation rates to settle in line with peer orphan drugs (25% to 30%), near-term sales may see some choppiness during the integration period as the company works through the remaining backlog of initial discontinuations. - Competitive risk in existing commercial markets: new competitors have entered the VMAT2 inhibitor space and the CAH space, and large existing competitors dominate the large target markets (major depressive disorder, schizophrenia, obesity) that Neurocrine's pipeline targets. - Pipeline clinical risk: all mid- and late-stage pipeline assets have not yet completed Phase III development, so their efficacy and safety profiles are not fully confirmed, and trial failures or negative readouts would materially impact long-term growth projections.

Analyst Q&A

• Q: What visibility do you have into 2027 Ingresa pricing and access under the new Austado MFP rules, and what additional costs might you face to maintain access? /

  A: In 2026, Ingresa already has strong access, covering ~70% of all Medicare lives under existing contracts, with pricing expected to remain consistent through H2 2026. Payer discussions for 2027 are ongoing, with clarity expected later in 2026. Management expects the market to continue growing double-digit annually, and as the category leader, they see a clear path to maintaining strong access through 2027 and 2028. It is too early to estimate potential incremental access costs at this stage.

• Q: What strategic actions are you taking to accelerate Vicat XR's launch now that the acquisition is complete, and what growth trajectory do you expect? /

  A: Q2 2026 results aligned with management's pre-acquisition expectations, and the opportunity for Vicat XR to become Neurocrine's third blockbuster remains intact. The company is deep in integration, focused on expanding patient outreach, finding undiagnosed patients, and educating physicians on appropriate patient selection and titration protocols. Management expects to be through the bulk of initial launch-related discontinuations by Q3 2026, with sequential growth starting in Q4 2026 and continuing beyond.

• Q: How do you expect to handle commercial infrastructure needs for the upcoming potential launches of Osov-Ampitor in MDD and direclidine in schizophrenia? /

  A: The company already has a strong existing commercial foundation in psychiatry that can support these launches. If Phase III data is positive, the company will make targeted incremental adjustments to its commercial footprint, including a moderate step-up in SG&A investment for an MDD launch in the 2028-2029 timeframe. No major near-term changes to the company's commercial footprint are planned before positive Phase III data readouts.

• Q: How would you characterize your competitive position in the VMAT2 inhibitor space following strong results from your closest competitor? /

  A: The overall TD market continues to grow very rapidly, with a large pool of still undiagnosed and untreated patients, so the overall pie is expanding. Ingresa has been the most preferred and most-prescribed VMAT2 inhibitor since launch, and in the most recent quarter, Ingresa outgrew the overall market. Management expects this momentum to continue, supported by expected strong coverage and access through 2027 and 2028.

• Q: Can you outline your strategy for your muscarinic agonist franchise for CNS disorders? /

  A: Neurocrine has four muscarinic agonist assets in development, all orthosteric agonists that do not require add-back antagonists to manage side effects, which differentiates them from competing programs. Direclidine is in Phase III for schizophrenia and Phase II for bipolar mania, on track for 2027 readout. NBI 570 is in Phase II for schizophrenia, with potential development as a long-acting injectable, a unique opportunity in the muscarinic space. NBI 569 is in early development for Alzheimer's disease psychosis, and NBI-567 will soon start Phase II testing for Alzheimer's cognition.