Unidentified Analyst: Wonderful. Thank you so much.
Operator: Our next question comes from Marc Goodman with Leerink Partners. Please go ahead.
Marc Goodman: Good morning, Matt. Can you talk about SG&A leverage into 2024, I mean, given that crinecerfont is really going to be a 2025 event, I was just curious how much leverage we should be expecting there and are you still kind of guiding us to the R&D at 30% level? Thanks.
Matt Abernethy: Yeah. Hi, Marc. Nice to hear from you. From an SG&A perspective, you can see this year that we drove around 300 basis points of leverage and testament to the investments we’re making and how the sales team continues to drive INGREZZA sales growth. We’ll clearly be investing behind CAH next year to prepare for a potential launch of the medication, and as you mentioned, most likely revenue starting in 2025. So that will put a little bit of pressure on our SG&A leverage, but I would say that, you should anticipate some healthy SG&A leverage next year and we’ll provide more specifics when we get to our February earnings call. On the R&D front, yes, as we’ve said before, around 30% spending on R&D is what we’re thinking from a capital allocation perspective.
But that is really dependent upon having quality assets and those that we think can make a difference for patients and then ultimately for our shareholders and we’ll be providing more insight on some of those investments that we’re making during our R&D Day in early December.
Operator: Our next question comes from Jeffrey Hung with Morgan Stanley. Please go ahead.
Michael Riad: Hi. This is Michael Riad on for Jeff Hung. Thank you for taking our question. Could you walk us through the NBI-570 M1 / M4 dual agonist in the recent Phase I? I guess I just want to touch on what makes it selective for CNS or maybe what are the differentiated strengths versus a pure M4 like 5, 6, 8? Thanks so much.
Eiry Roberts: Yeah. Thanks, Michael. So, obviously, we just initiated our Phase I clinical program on 570 and we’re very excited to be able to take the second of our portfolio of muscarinic agonists into the clinic. So we don’t have clinical data as yet, obviously, on this asset. But it did was successful in navigating toxicology, preclinical and all of the biology necessary to enter the clinic. I mean, I think we feel very strongly that the M muscarinic agonist approach in treating both neuropsychiatric and potentially neurological conditions, including those impacted by cognition, would actually provide a very broad set of opportunities for patients moving forward. And in that regard, although obviously, our M4 selective 5, 6, 8 agent is targeted very directly to treating psychosis and schizophrenia and that M4 mechanism is now validated in the clinic with both Karuna and Cerevel’s assets.
There is still a lot of room beyond M4 agonism alone to add potential value for patients. And so in this first foray, we are taking M1 and M4 selectivity with a view to being able to broaden the range of indications that could be considered for this drug into those impacting cognition as well as the psychosis related indications that we’ve already studied.
Michael Riad: Thank you so much. That’s really helpful.
Operator: Our next question comes from Myles Minter with William Blair. Please go ahead.
Myles Minter: Hey. Thanks for taking the question and congrats on the quarter. I think you’ve previously mentioned that the long-term care facility INGREZZA opportunity is an additional 10% to 15% of the market, seems like you are penetrating better than you previously expected into that market. So has that additional TAM expectation changed at all from that 10% to 15% number? Thanks.
Matt Abernethy: Yeah. Our estimate is that approximately 10% to 15% of people living with TD are currently living in long-term care facilities. And as I mentioned, we just launched into that segment last year. So on a relative basis, it’s less developed, let’s say, than the psychiatry or the neurology segments where we’ve been for six plus years. But we are growing nicely. I wouldn’t say that it’s exceeding expectations. We always had high expectations for the opportunity in LTC and the team is doing a great job on delivering on those expectations.
Operator: Our next question comes from Yatin Suneja with Guggenheim Partners. Please go ahead.
Yatin Suneja: Hey, guys. Thank you for the question. Just a clarification on the FOS study. I think in the past, you have sort of articulated that you would like to see about the seizure reduction of about 15% in placebo to 30% in the active. So basically implying doubling off of the effect. But today you sort of shy away from putting those numbers, but did say that the bar is high or the efficacy shouldn’t be robust. I’m just curious, like, what is — like, what do you mean by robust? Is it close to 50% or is 30%? Any color that you can provide would be helpful? Thanks.
Eiry Roberts: Yeah. A placebo rate of 15% with an active treatment of 30% is about what’s been seen with some of the therapies that would be at the top end of the range with recent trial readouts and so I think that’s a reasonable bar. This is a proof-of-concept study, though. And so, it’s our first Phase II study and we will be looking beyond just that seizure reduction frequency into other elements of the data to understand just how robust the information is. Also, very importantly, in the context of this selective mechanism is the tolerability and safety profile, and because at the end of the day, we’re aiming for an improvement in benefit risk for these individuals.
Operator: Our next question comes from Laura Chico with Wedbush Securities. Please go ahead.
Laura Chico: Hey. Good morning. Thanks very much for taking the question. Just one on INGREZZA. Has the duration on treatment continued to grow at this point? And then related to that, what are your assumptions on continued growth of antipsychotic usage going forward? Thanks very much.
Eric Benevich: Laura, I didn’t catch the first part of your question about treatment. Can you repeat that?
Laura Chico: Sure. Is the duration of treatment on INGREZZA continuing to expand at this point?
Eric Benevich: Yeah. We’ve been very fortunate with INGREZZA, really, since the early days of the launch that we’ve had very good persistency and compliance. And the rates of persistency and compliance have been quite steady from the early days of the launch through — really through 2023. And so we’re not seeing any big changes there, but they were already quite high to begin with. So I think that that’s one of the drivers for the continued growth of INGREZZA.
Todd Tushla: Okay. Nikki, we’ll go on to the next question, please.
Operator: Our next question comes from Sumant Kulkarni with Canaccord. Please go ahead.
Sumant Kulkarni: Good morning. Thanks for taking my question. So assuming all goes well on an eventual approval for crinecerfont and CAH, how do you expect that market to play out perhaps a couple of years after you’ve launched in the U.S. and is there anything that precludes the use of a CRF1 receptor antagonist in combination with an ACTH antagonist, for example?
