Executive Summary / Key Takeaways

• Neurocrine Biosciences is transforming from a single-blockbuster company centered on INGREZZA into a diversified neuroscience leader, leveraging its expertise to address significant unmet needs across neurological, neuroendocrine, and neuropsychiatric disorders.
• INGREZZA continues to demonstrate robust performance, with Q1 2025 net product sales of $545.2 million, driven by record new patient starts and improved gross-to-net dynamics, despite a challenging payer environment and increased competition. The company reaffirmed its 2025 INGREZZA sales guidance of $2.5 billion to $2.6 billion, anticipating accelerated growth in the latter half of the year fueled by sales force expansion and expanded Medicare Part D access.
• The recent U.S. launch of CRENESSITY for classic congenital adrenal hyperplasia (CAH) marks a critical step in revenue diversification, contributing $14.5 million in Q1 2025 net product sales with encouraging early adoption metrics (413 enrollment forms, 70% reimbursement rate for dispenses), positioning it as a potential second blockbuster despite anticipated measured initial growth due to reimbursement hurdles.
• Neurocrine is aggressively advancing a deep and broad pipeline, initiating Phase 3 programs for osavampator (MDD) and NBI-1117568 (schizophrenia) in early 2025, with significant R&D investment planned (low-to-mid 30% of revenue in 2025) and multiple Phase 2 and Phase 1 readouts/starts expected in 2025, including next-generation VMAT2 inhibitors and biologics, aiming for a new commercial launch every two years at steady state.
• The company maintains a strong financial position with approximately $1.8 billion in cash as of March 31, 2025, supporting its investment priorities in revenue growth and pipeline advancement, complemented by a share repurchase program reflecting confidence in its underlying value.

A Foundation Built on Neuroscience Expertise

Neurocrine Biosciences is a biopharmaceutical company singularly focused on neuroscience, driven by a mission to alleviate suffering for individuals facing severe neurological, neuroendocrine, and neuropsychiatric conditions with limited treatment options. Over three decades, the company has evolved from a research-centric entity into a fully integrated biopharma player, successfully discovering, developing, and commercializing innovative medicines. This journey has been marked by strategic partnerships and a commitment to addressing high unmet medical needs, establishing a strong foundation for future growth.

The company's strategic approach is multifaceted, prioritizing revenue growth from its commercial portfolio, aggressive development of its most promising pipeline assets, pursuing external opportunities to expand its therapeutic reach, and returning excess capital to shareholders. This framework underpins Neurocrine's ambition to transition from a company primarily defined by a single blockbuster product to one with multiple successful therapies and a sustainable engine for future innovation.

Central to Neurocrine's competitive positioning is its differentiated technological expertise, particularly in targeting key biological pathways implicated in neurological disorders.

Technological Differentiation: Precision in Neurological Pathways

Neurocrine's core strength lies in its deep understanding of neuroscience and its ability to develop molecules that precisely modulate specific targets within the brain and body.

• VMAT2 Inhibition: The cornerstone of Neurocrine's commercial success is INGREZZA (valbenazine), a selective vesicular monoamine transporter 2 (VMAT2) inhibitor. This technology offers a targeted approach to regulating dopamine transport, addressing involuntary movements associated with tardive dyskinesia (TD) and chorea associated with Huntington's disease. A key benefit highlighted by the company is its once-daily dosing without the need for complex titration to reach an effective dose, simplifying treatment for patients and physicians. Real-world data presented at AMCP 2025 demonstrated that all patients treated with INGREZZA reached a therapeutic dose from Day 1, contrasting with approximately half of patients treated with deutetrabenazine (a competitor VMAT2 inhibitor) reaching a therapeutic dose within six months. This ease of use and rapid therapeutic dose attainment represent a tangible benefit over alternatives. The recent launch of an INGREZZA sprinkle formulation further enhances its accessibility for patients with dysphagia or difficulty swallowing, estimated to affect upwards of 10% of the target population. Neurocrine is also developing next-generation VMAT2 inhibitors (e.g., NBI-1140675, NBI-675) with the stated goal of potentially offering improved profiles or alternative formulations like long-acting injectables, aiming to build upon the success and understanding of VMAT2 biology.
• CRF1 Antagonism: CRENESSITY (crinecerfont) represents another technological advancement, targeting the corticotropin-releasing factor type 1 (CRF1) receptor. This first-in-class mechanism for classic CAH directly reduces excess adrenocorticotropic hormone (ACTH) and downstream adrenal androgen production. This is a significant departure from the historical standard of care, which relied on high, supraphysiologic doses of glucocorticoids to suppress ACTH indirectly. CRENESSITY's approach aims to enable endocrinologists to reduce glucocorticoid doses to more physiologic replacement levels, potentially mitigating the long-term adverse effects associated with high-dose steroid therapy (e.g., decreased bone mineral density, increased insulin resistance, higher BMI). The company's Phase 3 CAHtalyst studies demonstrated lasting reductions in glucocorticoid doses and improvements in clinical outcomes, including androgen levels, in both pediatric and adult patients.
• Muscarinic Receptor Modulation: Neurocrine is heavily invested in modulating muscarinic receptors, with a portfolio including selective M4 orthosteric agonists (NBI-1117568), dual M1/M4 agonists (NBI-570), M1-preferring agonists (NBI-567), and selective M4 antagonists (NBI-986). This suite of molecules allows the company to explore the therapeutic potential of different muscarinic subtypes across various neuropsychiatric and neurological conditions like schizophrenia, bipolar mania, and movement disorders. The selective M4 orthosteric agonist approach is highlighted as potentially offering efficacy without the need for peripheral add-back therapies required by pan-muscarinic agonists (like Karuna's KarXT), which hit multiple subtypes (M1-M5) and can cause peripheral side effects. The dual M1/M4 approach aims to potentially add cognitive benefits through M1 modulation.
• AMPA Modulation: Osavampator (NBI-1065845) is a potent, highly selective positive allosteric AMPA modulator advancing to Phase 3 for major depressive disorder. This mechanism targets glutamate signaling, a different pathway than traditional antidepressants, offering a potential novel approach for patients with inadequate response to existing treatments.
• Other Modalities: Beyond small molecules, Neurocrine is expanding its R&D into biologics, including peptides, antibodies, and gene therapies (e.g., the Friedreich's ataxia gene therapy program with Voyager Therapeutics (VYGR)). This transformation aims to establish a sustainable internal innovation engine capable of developing symptomatic, disease-modifying, and potentially curative therapies, with the goal of bringing new modalities into the clinic starting in 2025.

The "so what" for investors is that these technological differentiators are not merely scientific curiosities; they form the basis of Neurocrine's competitive moat. They enable the development of first-in-class or best-in-class products with potentially superior efficacy, improved tolerability profiles, or more convenient administration options compared to existing or competing therapies. This differentiation supports pricing power, market leadership (as seen with INGREZZA), and the potential for significant market penetration in underserved areas, driving future revenue growth and shareholder value.

Performance Reflecting Strategic Execution

Neurocrine's recent financial performance underscores the impact of its commercial strategy and the foundational strength of INGREZZA, while also signaling the initial contributions from CRENESSITY.

In the first quarter of 2025, Neurocrine reported total revenues of $572.6 million, a notable increase from $515.3 million in the same period of 2024. Net product sales, the primary revenue driver, grew to $563.7 million from $509.0 million year-over-year. This growth was predominantly fueled by INGREZZA, which posted $545.2 million in sales (up from $506.0 million in Q1 2024), driven by underlying patient demand, including a record number of new patient starts in the quarter, and favorable gross-to-net dynamics. The successful launch of CRENESSITY in December 2024 added $14.5 million in net product sales in Q1 2025, providing an early glimpse of its revenue diversification potential. Collaboration revenues, primarily royalties from partnered products like elagolix (AbbVie (ABBV)) and valbenazine in Asia (MTPC), also saw an increase, reaching $8.9 million in Q1 2025 compared to $6.3 million in the prior year period.

Operating expenses saw a significant increase in Q1 2025, totaling $549.0 million compared to $416.0 million in Q1 2024. This rise reflects the company's strategic investments. Research and development expenses surged to $263.2 million (from $159.4 million), driven by increased investment in late-stage programs (osavampator, NBI-1117568), expanding research and discovery efforts (including gene therapy), higher personnel costs, and increased facility expenses. Notably, R&D included $45.4 million in milestone expenses in Q1 2025, primarily for initiating Phase 3 studies for osavampator ($37.5 million to Takeda (TAK)) and NBI-921355 ($7.5 million to Xenon (XENE)). Selling, general, and administrative expenses also increased to $276.5 million (from $243.1 million), reflecting continued investment in the commercial organization, including the expanded psychiatry and long-term care sales team for INGREZZA and launch-related activities for CRENESSITY.

The increase in operating expenses outpaced revenue growth in Q1 2025, resulting in a lower operating income ($23.6 million vs. $99.3 million in Q1 2024) and net income ($7.9 million vs. $43.4 million). This financial profile reflects a period of strategic investment aimed at fueling future growth, rather than maximizing near-term profitability.

Looking at the full year 2024, INGREZZA delivered strong performance, with Q4 sales of $615 million contributing to full-year sales of $2.3 billion, representing 26% year-over-year growth. This performance, described as an "all-time record growth year" for INGREZZA, provided a strong foundation heading into 2025.

The company maintains a robust liquidity position, with cash and cash equivalents of $194.1 million and available-for-sale debt securities of $1,564.7 million as of March 31, 2025, totaling approximately $1.8 billion in cash, cash equivalents, and marketable securities. This strong balance sheet, coupled with ongoing cash flow generation from INGREZZA sales (Q1 2025 operating cash flow was $64.8 million), provides significant financial flexibility to fund its ambitious R&D pipeline and commercial expansion initiatives without relying on external financing in the near term. The company's capital allocation strategy also includes returning capital to shareholders, evidenced by the $500 million share repurchase program authorized in February 2025, under which $150 million was repurchased in Q1 2025.

Outlook and the Path Forward

Neurocrine's outlook for 2025 is centered on executing its growth strategy, driven by its commercial products and advancing pipeline. The company reaffirmed its 2025 INGREZZA net product sales guidance of $2.5 billion to $2.6 billion. Management anticipates an acceleration in new patient additions throughout the year, supported by the expanded sales force (fully deployed in Q4 2024, expected to show tangible impact a few quarters later) and improved Medicare Part D formulary access (effective April 1, 2025). This growth is expected to be partially offset by gross-to-net impacts from contracting activities. Management expects a sequential step-up in INGREZZA sales from Q1 to Q2 2025, positioning the company well for the second half of the year and into 2026.

For CRENESSITY, while specific annual guidance is not provided, the early launch metrics from Q1 2025 are encouraging. The company expects the initial growth trajectory to be measured, influenced by the time required for reimbursement approvals as the product navigates formulary reviews and exceptions processes. However, the positive initial reception from prescribers and patients, coupled with a 70% reimbursement rate for dispensed scripts in Q1, suggests a promising ramp-up potential. Neurocrine is committed to educating the CAH community and expects CRENESSITY to become a significant revenue driver and potential blockbuster over time, diversifying the company's revenue base.

The pipeline remains a key focus for future value creation. Neurocrine is significantly increasing its R&D investment in 2025, with spending expected to be in the low-to-mid 30% range of revenue. This investment supports the initiation of multiple Phase 3 programs in the first half of 2025, including osavampator in MDD (with top-line data expected throughout 2027) and NBI-1117568 in schizophrenia (with top-line data expected in the 2027-2028 timeframe). Beyond these late-stage assets, the company anticipates several key data readouts in the second half of 2025, including Phase 2 data for NBI-770 (NMDA NR2B NAM) in MDD and Phase 3 data for valbenazine in adjunctive treatment of schizophrenia and dyskinetic cerebral palsy. The early-stage pipeline is also expanding, with multiple new programs, including next-generation VMAT2 inhibitors, muscarinic agonists/antagonists, and biologics, entering Phase 1 studies in 2025. This robust pipeline and increased R&D productivity are aimed at delivering, on average, a new commercial launch every two years at steady state.

Competitive Landscape and Positioning

Neurocrine operates in highly competitive markets dominated by large pharmaceutical companies with extensive resources. Key competitors include AbbVie, Pfizer (PFE), Biogen (BIIB), Teva Pharmaceutical Industries (TEVA), and Eli Lilly (LLY), among others, who have overlapping interests in neurological, neuropsychiatric, and neuroendocrine disorders.

In the VMAT2 inhibitor market, INGREZZA competes directly with Teva's AUSTEDO (deutetrabenazine), which also has an extended-release formulation (AUSTEDO XR). While Teva has gained some market share, particularly with the XR formulation, Neurocrine maintains that INGREZZA remains the market leader, emphasizing its differentiated profile: once-daily dosing without titration, the sprinkle formulation, and demonstrated efficacy across a wide range of patients. Real-world data highlighting INGREZZA's rapid therapeutic dose attainment compared to deutetrabenazine is a key competitive point. Despite competitive pressures and increased payer utilization management observed in 2024, Neurocrine's strategy involves continued investment in its sales force and market education to drive diagnosis and treatment in the vast majority of TD patients (estimated 80-90%) who remain untreated with a VMAT2 inhibitor. The company's qualification for the small biotech exception under the Medicare Drug Price Negotiation Program provides an exemption from selection until 2027 (for 2029 applicability), offering a temporary buffer compared to competitors who may be subject to earlier negotiation.

In the CAH market, CRENESSITY is the first FDA-approved nonsteroidal treatment and the first new option in 70 years, positioning it as a potential paradigm shift. While high-dose glucocorticoids remain the current standard of care (manufactured by numerous companies), other companies, such as Crinetics Pharmaceuticals (CRNX), are developing alternative mechanisms like ACTH antagonists (Atumelnant). Neurocrine highlights CRENESSITY's upstream mechanism (CRF1 antagonism) that controls ACTH and downstream androgens, contrasting with downstream approaches that may only target androgens. While early, CRENESSITY's first-in-class status and broad label provide a significant competitive advantage.

In the pipeline, Neurocrine's muscarinic programs compete with other companies developing similar mechanisms, such as Karuna Therapeutics (KRTX) (now part of Bristol Myers Squibb (BMY)) with its pan-muscarinic agonist KarXT. Neurocrine emphasizes the potential differentiation of its selective M4 orthosteric agonists and dual M1/M4 agonists, aiming for favorable tolerability profiles without the need for peripheral add-backs. Similarly, its AMPA modulator (osavampator) and NMDA NR2B NAM (NBI-770) compete in the crowded MDD landscape, seeking to offer novel mechanisms for patients with inadequate response.

Compared to larger pharmaceutical companies like ABBV, PFE, and LLY, Neurocrine operates at a smaller scale, which can result in higher operating costs per unit and potentially slower market entry for some programs. However, its focused expertise in neuroscience and partnership model enable agility and faster innovation in specific niche areas. While larger players have vast distribution networks and greater financial resources (e.g., significantly higher revenue, cash flow, and often better efficiency metrics like ROIC), Neurocrine's technological differentiation and focus on underserved patient populations provide a competitive moat, supporting premium pricing and market leadership within its core therapeutic areas. The company's customer concentration with a limited number of specialty pharmacy providers and distributors for INGREZZA (four customers representing over 90% of gross product sales) and CRENESSITY (one specialty pharmacy) represents a potential vulnerability if relationships are disrupted.

Risks and Challenges

Despite its strong position and growth prospects, Neurocrine faces significant risks inherent in the biopharmaceutical industry. These include:

• Commercial Execution: Successfully maximizing INGREZZA's potential and executing the CRENESSITY launch requires effective sales, marketing, and market access strategies in an increasingly complex and competitive payer environment. Challenges in securing timely and adequate reimbursement, particularly for CRENESSITY as a new-to-market product, could impact revenue trajectory.
• Competition: Intense competition from existing products (including generics and off-label use) and emerging therapies could limit market share and pricing power. Legal challenges to intellectual property, such as the ANDA filing for INGREZZA SPRINKLE by Zydus, pose a risk to market exclusivity.
• Clinical Development Risk: The success of the pipeline is uncertain. Clinical trials may fail to demonstrate sufficient safety or efficacy, be delayed due to recruitment challenges or unforeseen events, or regulatory agencies may not approve candidates or may impose restrictive labeling or post-marketing requirements. The deprioritization of programs like luvadaxistat highlights this inherent risk.
• Regulatory Environment: Changes in healthcare laws, regulations, and pricing pressures, including the implementation of the Inflation Reduction Act (IRA), could adversely affect revenues and profitability. While Neurocrine has qualified for certain IRA exemptions for INGREZZA, continued qualification is not assured.
• Manufacturing and Supply Chain: Dependence on a limited number of third-party suppliers and manufacturers for commercial products and clinical candidates exposes the company to risks of disruption, quality issues, and increased costs.
• Organizational Growth and Integration: Rapid growth in employee base and expansion into new modalities (biologics) and therapeutic areas require effective management, integration of personnel, and development of new capabilities, which can be challenging.
• Data Privacy and Cybersecurity: Increasing reliance on IT systems and processing sensitive data exposes the company to risks of security incidents, which could disrupt operations, lead to data breaches, and result in significant costs and reputational harm.

Conclusion

Neurocrine Biosciences stands at a pivotal juncture, building upon the significant success of INGREZZA to establish itself as a diversified, multi-blockbuster neuroscience company. The strong performance of INGREZZA, driven by continued market penetration and strategic investments in commercial infrastructure and market access, provides a robust financial engine. The early, encouraging launch of CRENESSITY marks the beginning of revenue diversification, addressing a long-underserved patient population with a first-in-class therapy.

Underpinning this growth trajectory is a deep and expanding pipeline, fueled by increasing R&D investment and a strategic focus on innovative mechanisms across multiple modalities. The advancement of osavampator and NBI-1117568 into Phase 3 represents the next wave of potential value drivers, while a rich early-stage portfolio, including next-generation VMAT2 inhibitors, muscarinics, and biologics, promises sustainable innovation.

While challenges remain, including navigating a complex competitive and regulatory landscape, managing organizational growth, and the inherent risks of drug development, Neurocrine's strong financial position and disciplined capital allocation strategy provide the resources and flexibility to pursue its ambitious goals. The core investment thesis centers on the company's ability to leverage its neuroscience expertise and technological differentiation to bring novel, high-value therapies to market, driving continued revenue growth and creating long-term value for shareholders. The successful execution of its commercial strategy for both INGREZZA and CRENESSITY, coupled with positive data readouts and successful advancement of its late-stage pipeline, will be critical indicators to watch in the coming years.