Neurocrine Biosciences Reports Fourth Quarter and Full-Year 2020 Financial Results
SAN DIEGO, Feb. 4, 2021 /PRNewswire/ -- Neurocrine Biosciences, Inc. (Nasdaq: NBIX) today announced its financial results for the fourth quarter and full-year ended December 31, 2020 and provided full-year 2021 financial expense guidance.
"In 2020, we served more patients with tardive dyskinesia than ever before despite the pandemic weighing on the development of the overall market. We are pleased with the recently updated guidelines from the American Psychiatric Association that now recommend first-line treatment for tardive dyskinesia with a VMAT2 inhibitor, which we hope will benefit even more patients as the vast majority of patients living with tardive dyskinesia remain undiagnosed," said Kevin Gorman, Ph.D., Chief Executive Officer of Neurocrine Biosciences. "In 2021, we plan to initiate eight mid-to-late stage clinical studies and look forward to important data read-outs for NBI-1065844 in the negative symptoms of schizophrenia and valbenazine for the treatment of chorea associated with Huntington's Disease."
Financial Highlights
Three Months Ended Twelve Months Ended
December 31,
December 31,
---
(unaudited, in
millions, except per
share data) 2020 2019 2020 2019
---
Revenues:
Product sales, net $
241.3 $
237.9 $
994.1 $
752.9
Collaboration revenue 6.6 6.2 51.8 35.2
Total revenues $
247.9 $
244.1 $
1,045.9 $
788.1
GAAP Research and
Development (R&D) $
66.7 $
55.3 $
275.0 $
200.0
Non-GAAP R&D $
59.4 $
47.9 $
221.3 $
164.2
GAAP Selling, General
and Administrative
(SG&A) $
106.5 $
101.3 $
433.3 $
354.1
Non-GAAP SG&A $
92.8 $
87.4 $
367.0 $
304.6
GAAP net income $
347.9 $
34.0 $
407.3 $
37.0
GAAP net income per
share - diluted $
3.58 $
0.35 $
4.16 $
0.39
Non-GAAP net income $
88.1 $
102.2 $
402.3 $
283.8
Non-GAAP net income
per share - diluted $
0.91 $
1.05 $
4.11 $
2.96
(unaudited, in millions) December 31, December 31,
2020 2019
Total cash, cash equivalents and debt securities available-for-sale $
1,028.1 $
970.2
Fourth Quarter and Full-Year Net Product Sales and Revenues Highlights:
-- INGREZZA net product sales for the fourth quarter and full-year 2020
were $240 million and $993 million, respectively, representing an
increase of 1% and 32% versus respective 2019 comparable periods
-- INGREZZA inventory adjusted net product sales for the fourth quarter of
2020 were $258 million representing 4% sequential growth vs. the third
quarter of 2020
-- INGREZZA end of fourth quarter 2020 days-on-hand channel inventory
decreased by $18 million relative to the third quarter
-- INGREZZA new prescriptions increased in the fourth quarter of 2020 vs.
the third quarter of 2020
-- Refill and persistency rates continued to be strong for existing
INGREZZA patients
-- ONGENTYS launched in the United States in late September 2020 and net
product sales for the fourth quarter of 2020 were approximately $1
million reflecting growing uptake throughout the quarter
-- Elagolix royalties received from AbbVie on combined fourth quarter 2020
net sales of ORILISSA(®) (elagolix tablets) and ORIAHNN(TM )(elagolix,
estradiol and norethindrone acetate capsules and elagolix capsules)
totaled $6 million
Financial Highlights:
-- Fourth quarter 2020 GAAP net income and diluted earnings per share were
approximately $348 million and $3.58, respectively, compared with
approximately $34 million and $0.35, respectively, in the fourth quarter
of 2019, primarily driven by a non-cash tax benefit of $296 million
related to the release of substantially all of the Company's valuation
allowance against its deferred tax assets on December 31, 2020
-- Fourth quarter 2020 non-GAAP net income and diluted earnings per share
were approximately $88 million and $0.91, respectively, compared with
approximately $102 million and $1.05, respectively, in the fourth
quarter of 2019 driven by:
-- Increased Research and Development (R&D) expense primarily due to
increased investment across our expanded pipeline programs and
higher headcount costs
-- Increased Selling, General and Administrative (SG&A) expense
primarily due to increased investment in marketing initiatives and
higher headcount costs
-- 2020 full-year GAAP and non-GAAP net income of $407 million and $402
million, respectively, represents year-over-year growth of approximately
10 times and 41%, respectively
-- Total debt outstanding decreased by $136 million to $381 million after
repurchase of approximately 26% of debt outstanding during the fourth
quarter of 2020. The total aggregate repurchase price of $187 million
was paid in cash and the transaction resulted in an $18 million loss
recognized during the fourth quarter of 2020.
-- At December 31, 2020, the Company had cash, cash equivalents and debt
securities available-for-sale of $1.0 billion
A reconciliation of GAAP to non-GAAP financial results can be found in Table 3 and Table 4 at the end of this earnings release.
Income Tax Benefit:
The Company's fourth quarter financial results include the reversal of substantially all of the valuation allowance recorded against the deferred tax assets of the Company. This reversal resulted in the recognition of a non-cash income tax benefit in the fourth quarter 2020 of $296 million, or $3.05 earnings per diluted share. The Company has performed a continuing evaluation of its deferred tax asset valuation allowance on a quarterly basis. The Company has now concluded that, as of December 31, 2020, it is more likely than not that the Company will generate sufficient taxable income within the applicable net operating loss and R&D carryforward periods to realize substantially all of its deferred tax assets. This conclusion, and the resulting reversal of the deferred tax asset valuation allowance, is based upon consideration of a number of factors, including the Company's strong financial performance over the past few years and its forecast of future profitability.
After recognizing the valuation allowance reversal, the Company's net deferred tax assets totaled $319 million at December 31, 2020, net of a valuation allowance of $50 million. The ability to recognize the remaining deferred tax assets that continue to be subject to a valuation allowance will be evaluated on a quarterly basis to determine if there are significant events that would affect the Company's ability to utilize these deferred tax assets. As a result of this reversal, the Company will begin recording federal and state tax expense on its earnings beginning in the first quarter of 2021. No federal cash tax is expected in 2021 based upon a net operating loss position of approximately $500 million entering 2021.
Recent Events
-- In October 2020, the U.S. Food and Drug Administration (FDA) requested
additional non-clinical data to support the Investigational New Drug
Application (IND) we submitted in August 2020 in support of a Phase II
clinical study for NBI-921352 in patients with SCN8A Developmental
Epileptic Encephalopathy (SCN8A-DEE). Based on feedback received in
January 2021, we plan to initiate a Phase II clinical study in
adolescent patients (aged 12 years and older) with SCN8A-DEE in the
third quarter of 2021, and the study protocol will be amended to include
younger pediatric patients (aged 2-11 years) with SCN8A-DEE as soon as
the FDA has reviewed and approved additional non-clinical information.
We are also advancing clinical plans to initiate a Phase II clinical
study of NBI-921352 for the treatment of adult focal epilepsy in 2021.
In addition, in October 2020, we announced the FDA granted us Rare
Pediatric Disease Designation for NBI-921352 for the treatment of
SCN8A-DEE.
-- In November 2020, the Company announced the initiation of a Phase II
study of NBI-827104 (formerly ACT-709478) in Epileptic Encephalopathy
with Continuous Spike and Wave during Sleep (CSWS), a rare pediatric
epilepsy. NBI-827104 was licensed from Idorsia and is a potent,
selective, orally active and brain penetrating T-type calcium channel
blocker.
-- In February 2021, the Mitsubishi Tanabe Pharma Corporation (MTPC)
reported positive top-line results from the J-KINECT Phase III Study,
designed to evaluate the efficacy and safety of valbenazine in tardive
dyskinesia. Detailed results from this trial will be presented at a
future medical conference. With positive data in hand, a marketing
authorization with the Ministry of Health and Welfare is planned for
2021 in Japan. In addition, MTPC submitted filings for marketing
authorization in South Korea, Thailand, Singapore, Indonesia, and
Malaysia in 2020.
-- In February 2021, the Company notified Voyager Therapeutics, Inc.
(Voyager) of the Company's termination of the NBIb-1817 (VY-AADC)
development program in Parkinson's disease (the Program). The Company
will work to transfer the rights to the Program to Voyager by August 2,
2021.
Full-Year 2021 Expense Guidance
Range
(in millions) Low High
Combined GAAP R&D and SG&A
expenses $
800 $
850
Combined Non-GAAP R&D and
SG&A expenses $
675 $
725
-- GAAP and Non-GAAP expense guidance range reflects increased investment
in:
-- R&D expense including meaningful investments in collaboration
programs (specifically with Idorsia, Xenon and Takeda) and the
planned initiation of eight mid-to-late-stage clinical studies
-- INGREZZA and ONGENTYS marketing costs
-- GAAP-only guidance includes approximately $125 million of share-based
compensation. GAAP-only guidance does not include any potential
milestones or in-process research and development costs associated with
current collaborations or future business development activities.
2021 Expected Milestones and Key Activities
Program
Indication
2021 Milestones / Key Activities
---
Valbenazine
Chorea in Huntington's Disease
Phase III Top-Line Data Expected in Q4 2021
Tardive Dyskinesia Marketing Authorization with Ministry of Health and Welfare in Japan
---
Neurological Indication
Initiate Phase III Registrational Study
---
Psychiatric Indication
Initiate Registrational Study
---
Crinecerfont
Congenital Adrenal Hyperplasia (Adult)
Continue Phase III Registrational Study Enrollment
Congenital Adrenal Hyperplasia (Pediatric)
Initiate Phase III Registrational Study
---
NBI-1065844
Negative Symptoms of Schizophrenia
Phase II Top-Line Data Expected in Q1 2021
---
NBI-1065845
Treatment Resistant Depression
Initiate Phase II
---
NBI-1065846
Anhedonia in Depression
Initiate Phase II
---
NBI-827104
Rare Pediatric Epilepsy: CSWS
Continue Phase II Enrollment
Neurological Indication
Initiate Phase II
---
NBI-921352
Focal Onset Seizure in Adults
Initiate Phase II
---
Rare Pediatric Epilepsy: SCN8A-DEE
Initiate Phase II
---
Conference Call and Webcast Today at 4:30 PM Eastern Time
Neurocrine Biosciences will hold a live conference call and webcast today at 4:30 p.m. Eastern Time (1:30 p.m. Pacific Time). Participants can access the live conference call by dialing 800-895-3361 (US) or 785-424-1062 (International) using the conference ID: NBIX. The webcast can also be accessed on Neurocrine Biosciences' website under Investors at www.neurocrine.com. A replay of the webcast will be available on the website approximately one hour after the conclusion of the event and will be archived for approximately one month.
About Neurocrine Biosciences
Neurocrine Biosciences is a neuroscience-focused, biopharmaceutical company dedicated to discovering, developing and delivering life-changing treatments for people with serious, challenging and under-addressed neurological, endocrine and psychiatric disorders. The company's diverse portfolio includes FDA-approved treatments for tardive dyskinesia, Parkinson's disease, endometriosis*, uterine fibroids* and clinical programs in multiple therapeutic areas. For nearly three decades, Neurocrine Biosciences has specialized in targeting and interrupting disease-causing mechanisms involving the interconnected pathways of the nervous and endocrine systems. For more information, visit neurocrine.com, and follow the company on LinkedIn. (*in collaboration with AbbVie)
Non-GAAP Financial Measures
In addition to the financial results and financial guidance that are provided in accordance with accounting principles generally accepted in the United States (GAAP), this press release also contains the following non-GAAP financial measures: non-GAAP R&D expense, non-GAAP SG&A expense, and non-GAAP net income and net income per share. When preparing the non-GAAP financial results and guidance, the Company excludes certain GAAP items that management does not consider to be normal, including recurring cash operating expenses that might not meet the definition of unusual or non-recurring items. In particular, these non-GAAP financial measures exclude: milestone payments received from licenses and collaborations, milestones paid related to licenses and collaborations, non-cash collaboration revenue, acquired in-process research and development, share-based compensation expense, non-cash interest expense related to convertible debt, changes in fair value of equity security investments and certain adjustments to income tax expense. These non-GAAP financial measures are provided as a complement to results provided in accordance with GAAP as management believes these non-GAAP financial measures help indicate underlying trends in the Company's business, are important in comparing current results with prior period results and provide additional information regarding the Company's financial position. Management also uses these non-GAAP financial measures to establish budgets and operational goals that are communicated internally and externally and to manage the Company's business and evaluate its performance. The Company provides guidance regarding combined research and development and sales, general, and administrative expenses on both a GAAP and a non-GAAP basis. The guidance regarding GAAP research and development expenses and sales, general and administrative expenses does not include estimates for expenses associated with any potential future business development activities. A reconciliation of these GAAP financial results to non-GAAP financial results is included in the attached financial information. In addition, INGREZZA net sales are presented in accordance with GAAP and as inventory-adjusted net sales, which is a non-GAAP financial measure. The difference between INGREZZA net sales and inventory-adjusted net sales reflects changes in channel inventory that are not representative of the underlying prescription demand. Management uses inventory-adjusted net sales to manage the Company's business and evaluate its performance.
Forward-Looking Statements
In addition to historical facts, this press release contains forward-looking statements that involve a number of risks and uncertainties. These statements include, but are not limited to, statements related to: the benefits to be derived from our products and product candidates; the value our products and/or our product candidates may bring to patients; the continued success of INGREZZA; our launch of ONGENTYS; our financial and operating performance, including our future expenses; our collaborative partnerships; expectations regarding the impact of COVID-19 on our business; expectations regarding our ability to adapt our business to the evolving COVID-19 pandemic, mitigate its impact on our business and maintain business continuity, including our ability to protect the safety and well-being of our employees, to continue to support uninterrupted supply of INGREZZA, patient in-person access to their healthcare provider, to continue our ongoing clinical trials and other development activities, and to otherwise advance our business objectives; and the timing of the initiation and/or completion of our clinical, regulatory, and other development activities and those of our collaboration partners. Among the factors that could cause actual results to differ materially from those indicated in the forward-looking statements are: our future financial and operating performance; risks associated with the commercialization of INGREZZA and ONGENTYS; the impact of the COVID-19 pandemic on our business and the business operations of our customers; risks and uncertainties associated with the scale and duration of the COVID-19 pandemic and resulting global, national, and local economic and financial disruptions; risk and uncertainties related to any COVID-19 quarantines, shelter-in-place, social distancing and other government orders that are currently in place or that may be put in place in the future, including the impact of such orders on our and our customers' business operations and the business operations of the third parties on which we rely; risks related to the development of our product candidates; risks associated with our dependence on third parties for development and manufacturing activities for our products and product candidates, and our ability to manage these third parties; risks that the FDA or other regulatory authorities may make adverse decisions regarding our products or product candidates; risks associated with our dependence on AbbVie for the commercialization of ORILISSA and ORIAHNN, as well as the continued development of elagolix; risks that clinical development activities may not be initiated or completed on time or at all, or may be delayed for regulatory, manufacturing, COVID-19 or other reasons, may not be successful or replicate previous clinical trial results, may fail to demonstrate that our product candidates are safe and effective, or may not be predictive of real-world results or of results in subsequent clinical trials; risks that the potential benefits of the agreements with our collaboration partners may never be realized; risks that our products, and/or our product candidates may be precluded from commercialization by the proprietary or regulatory rights of third parties, or have unintended side effects, adverse reactions or incidents of misuse; and other risks described in our periodic reports filed with the SEC, including without limitation our quarterly report on Form 10-Q for the quarter ended September 30, 2020. Neurocrine disclaims any obligation to update the statements contained in this press release after the date hereof.
TABLE 1
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
---
(in millions, except per
share data) 2020 2019 2020 2019
---
Revenues:
Product sales, net $
241.3 $
237.9 $
994.1 $
752.9
Collaboration revenue 6.6 6.2 51.8 35.2
Total revenues 247.9 244.1 1,045.9 788.1
Operating expenses:
Cost of sales 2.9 2.5 10.1 7.4
Research and development 66.7 55.3 275.0 200.0
Acquired in-process
research and development - 36.2 164.5 154.3
Selling, general and
administrative 106.5 101.3 433.3 354.1
Total operating expenses 176.1 195.3 882.9 715.8
Operating income 71.8 48.8 163.0 72.3
Other (expense) income:
Interest expense (7.8) (8.2) (32.8) (32.0)
Unrealized loss on equity
securities (5.5) (7.2) (17.7) (13.0)
Loss on extinguishment of
convertible senior notes (18.4) (18.4)
Investment income and
other, net 1.6 5.2 12.6 19.2
Total other expense, net (30.1) (10.2) (56.3) (25.8)
Income before (benefit
from) provision for
income taxes 41.7 38.6 106.7 46.5
(Benefit from) provision
for income taxes (306.2) 4.6 (300.6) 9.5
Net income $
347.9 $
34.0 $
407.3 $
37.0
Net income per share,
basic $
3.72 $
0.37 $
4.38 $
0.40
Net income per share,
diluted $
3.58 $
0.35 $
4.16 $
0.39
Weighted average common
shares outstanding,
basic 93.5 92.2 93.1 91.6
Weighted average common
shares outstanding,
diluted 97.2 97.2 97.8 95.7
TABLE 2
NEUROCRINE BIOSCIENCES, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in millions) December 31, December 31,
2020 2019
---
Cash, cash
equivalents and
debt securities
available-for-
sale $
801.0 $
670.5
Other current
assets 215.2 160.5
Total current
assets 1,016.2 831.0
Debt securities
available-for-
sale 227.1 299.7
Right-of-use
assets 82.8 74.3
Equity securities 38.2 55.9
Property and
equipment, net 44.6 41.9
Deferred tax assets 319.4
Restricted cash and
other long-term
assets 6.4 3.2
Total assets $
1,734.7 $
1,306.0
Convertible senior
notes
$ $
408.8
Other current
liabilities 186.5 156.5
Total current
liabilities 186.5 565.3
Convertible senior
notes 317.9
Operating lease
liabilities 94.4 86.7
Other long-term
liabilities 9.7 17.1
Stockholders'
equity 1,126.2 636.9
Total liabilities
and stockholders'
equity $
1,734.7 $
1,306.0
TABLE 3
NEUROCRINE BIOSCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP FINANCIAL RESULTS
(unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
---
(in millions, except
per share data) 2020 2019 2020 2019
---
GAAP net income $
347.9 $
34.0 $
407.3 $
37.0
Adjustments:
Milestones received
from licenses and
collaborations A - (30.0) (20.0)
Non-cash
collaboration revenue
B (0.9) (0.9) (2.7) (0.9)
Acquired in-process
research and
development (IPR&D) C - 36.2 164.5 154.3
Milestones paid
related to licenses
and collaborations -
R&D - 20.0 10.0
Share-based
compensation expense
- R&D 7.3 7.4 33.7 25.8
Share-based
compensation expense
- SG&A 13.7 13.9 66.3 49.5
Loss on extinguishment
of convertible senior
notes D 18.4 18.4
Non-cash interest
related to
convertible senior
notes 5.2 5.2 21.4 20.3
Changes in fair value
of equity security
investments E 5.5 7.2 17.7 13.0
Income tax effect
related to
reconciling items F (309.0) (0.8) (314.3) (5.2)
Non-GAAP net income $
88.1 $
102.2 $
402.3 $
283.8
Net income per diluted common share:
GAAP $
3.58 $
0.35 $
4.16 $
0.39
Non-GAAP $
0.91 $
1.05 $
4.11 $
2.96
A During 2020, the Company recognized a
$30.0 million event-based milestone as
revenue upon FDA approval for ORIAHNN
for uterine fibroids. During 2019, the
Company recognized a $20.0 million
event-based milestone as revenue upon
FDA acceptance of the New Drug
Application for elagolix for uterine
fibroids.
B The Company recognized non-cash
collaboration revenue under the
collaboration and license agreement
entered into with Mitsubishi Tanabe
Pharma Corporation in 2015.
C The Company incurred IPR&D expenses of
$164.5 million during 2020 in
association with the exclusive license
agreement entered into with Takeda
Pharmaceutical and the collaboration and
license agreement entered into with
Idorsia Pharmaceuticals. During 2019,
the Company incurred IPR&D expenses of
$154.3 million in association with
collaboration and license agreements
entered into with Voyager Therapeutics
and Xenon Pharmaceuticals.
D The Company recognized a loss on
extinguishment of $18.4 million related
to the partial repurchase of its
convertible debt in the fourth quarter
of 2020.
E The Company recognized an unrealized
loss to adjust its equity security
investments to fair value.
F Estimated income tax effect of non-
GAAP reconciling items are calculated
using applicable statutory tax rates,
taking into consideration any valuation
allowance. In the fourth quarter of
2020, the Company recognized a non-cash
tax benefit of approximately $296
million related to the release of
substantially all of its valuation
allowance against its deferred tax
assets on December 31, 2020. The fourth
quarter 2020 benefit associated with the
valuation allowance release has been
excluded from non-GAAP net income.
TABLE 4
NEUROCRINE BIOSCIENCES, INC.
RECONCILIATION OF GAAP TO NON-GAAP EXPENSES
(unaudited)
Three Months Ended Twelve Months Ended
December 31,
December 31,
---
(in millions) 2020 2019 2020 2019
---
GAAP R&D $
66.7 $
55.3 $
275.0 $
200.0
Adjustments:
Milestones paid
related to licenses
and collaborations - 20.0 10.0
Share-based
compensation
expense 7.3 7.4 33.7 25.8
Non-GAAP R&D $
59.4 $
47.9 $
221.3 $
164.2
GAAP SG&A $
106.5 $
101.3 $
433.3 $
354.1
Adjustments:
Share-based
compensation
expense 13.7 13.9 66.3 49.5
Non-GAAP SG&A $
92.8 $
87.4 $
367.0 $
304.6
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SOURCE Neurocrine Biosciences, Inc.
