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Neurocrine Biosciences Inc (NBIX) Q2 2019 Earnings Call Transcript

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Neurocrine Biosciences Inc (NASDAQ: NBIX)
Q2 2019 Earnings Call
Jul 29, 2019, 4:30 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Hello, and thank you for joining the Neurocrine Biosciences Reports Second Quarter 2019 Results Call. At this time, all participants are in a listen-only mode. Later, you will have an opportunity to ask questions during the question-and-answer session. Please note this call may be recorded. I will be standing by, should you need any assistance.

It is now my pleasure to turn today's conference over to Kevin Gorman, CEO. Please go ahead.

Kevin C. Gorman -- Chief Executive Officer

Thank you very much, and thank you everyone for taking the time to join us on the Q2 earnings call. On this call, I'm joined by Kyle Gano, our Chief Strategy and Business Development Officer; Eiry Roberts, our Chief Medical Officer; Matt Abernethy, Chief Financial Officer; and Eric Benevich, Chief Commercial Officer.

Now, during this call, we will all be making forward-looking statements. So Jane, could you please read our Safe Harbor statement.

Jane Sorensen -- Head of Investor Relations

Yes, good afternoon. Certain statements made in the course of this conference call that are not historical statements may be forward-looking statements, which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements is contained in the Company's SEC filings, including but not limited to the Company's second quarter 2019 Form 10-Q filed today, and in today's press release. Copies may be obtained by visiting the Investor Relations page on the Company's website. Any forward-looking statements are made only as of today's date, and we disclaim any obligation to update these forward-looking statements. Kevin?

Kevin C. Gorman -- Chief Executive Officer

Thank you very much. I trust everyone has had a chance, at least, briefly look over the press release that we made available just prior to this call. I'm more than pleased with the efforts of our commercial and medical teams, here at Neurocrine. They've continued their educational efforts with healthcare professionals, patients and their family members on increasing the ability to recognize and diagnose TD, and clearly the value of treating this important disorder.

As you can see, we had a very good quarter of sales. As we said, after Q1, the second half of that quarter set us up nicely for this quarter, and for the rest of the year. Now, Matt, and Eric are going to be addressing this quarter in more detail, in just a bit, and through your questions, which we'll get to.

We expect that the trends that we have seen in the first two years of our launch will persist. That is increased uptake of INGREZZA quarter-over-quarter, year-over-year, but as always, as we have stress, there is seasonality with Q2 and Q4 being stronger quarters, and Q1 and Q3 being relatively slower quarters but, nevertheless growth quarter-to-quarter.

Now, in addition to INGREZZA, which we will go into detail on, the quarter since our last conversation, we have seen very good progress there with the rest of our business. We've submitted and the FDA accepted the filing for opicapone. We have started the pediatric CAH Phase II study. As with our adults study, this is an adaptive design. And we have been preparing for discussions with FDA on both our adult CAH program and our collaborative AADC program, with Voyager. So each aspect of the business is moving forward quite nicely and to plan.

So what I'd like to do is, I'd like to hand over to Matt, and to Eiry for some prepared remarks, so that we have plenty of time for your questions. So, Matt, I'll turn it over to you.

Matthew C. Abernathy -- Chief Financial Officer

Thank you, Kevin. Good afternoon, and thank you for joining our second quarter 2019 earnings conference call. To begin, I'd like to acknowledge the team for completing our NDA submission for opicapone, positioning us for possibly have reapproved medicine, by this time next year. In addition, our commercial teams did an excellent job, delivering a strong second quarter for INGREZZA.

During the second quarter of 2019, INGREZZA prescription volume increased to approximately 31,600 scripts resulting in $180.5 million in net product sales. This compares to 16,700 scripts, and $96.9 million in net product sales for the second quarter of 2018. For the first half of 2019, INGREZZA net product sales were $317 million compared to $168 million for the first half of 2018, with over 80% year-over-year growth.

During the second quarter, our strong sequential 7,400 TRx increase was primarily driven by a record number of new patient addition, and improved refill rates as compared to the seasonally slower first quarter. These results reflect the success of our expanded commercial organization, the patient focus talk about TD disease state awareness campaign, and continued healthcare provider educational initiatives. In addition, channel inventory increased during the quarter, leading to a slight increase in days on hand inventory, resulting in a $4 million benefit in Q2, which would equate to approximately 600 TRx.

During the second quarter of 2019, net revenue per script increased from $5,600 in Q1 2019, to $5,700 in Q2 2019, primarily as a result of the lower impact due to the Medicare Part D donut hole.

Moving now to our financial results for the second quarter of 2019. During the quarter, we've recognized the profit of $51.3 million or $0.54 diluted earnings per share. Our net income includes a non-cash gain of $21 million associated with the appreciation of the Voyager Therapeutics equity investment. Our R&D and SG&A, operating expenses excluding the Voyager IPR&D were $142.5 million during the second quarter of 2019. The increase in R&D as compared to Q1 2019 reflects a $10 million milestone to -- related to the FDA's acceptance of the opicapone NDA filing, and full quarter impact from the ongoing expenses related to the Voyager collaboration.

Regarding cash and investments, we ended the second quarter with $766 million in cash and investments, reflecting a $66 million increase from last quarter.

As you saw in our earnings release, we are updating our SG&A and R&D expense guidance range for 2019. We expect SG&A, R&D and IPR&D expenses to be $658 million to $688 million. Ongoing SG&A and R&D, excluding IPR&D, are expected to be $540 million $570 million, which compares to our previous guidance range of $550 million to $600 million. Our updated expense guidance range reflects the decision to discontinue the T-Force PLATINUM study, slightly offset by expanded investment in INGREZZA.

I'd like to take a moment to provide a few comments about our revenue outlook for the second half of 2019. Upon FDA acceptance of AbbVie's anticipated elagolix NDA submission for uterine fibroids. We will recognize revenue for a $20 million event-based milestone, as part of our collaboration agreement with Abbvie. As it relates to INGREZZA, with two years of commercial experience now in hand, we do believe that as a specialty tiered neuropsychiatric drug INGREZZA experience a level of seasonality during the year.

We believe the seasonality relates to slower sequential growth quarters in Q1 and Q3, with faster sequential growth quarters in Q2 and Q4. For the third quarter, we do expect continued incremental new patient demand, and an increase in overall prescription volume, but anticipate our growth to be tempered by seasonal dynamics impacting steroids [Phonetic] per patient and potential channel inventory softening. Overall, we remain very encouraged by the progress that our team continues to make with healthcare providers and patients.

With that, I will now hand the call over to our Chief Medical Officer, Eiry Roberts.

Eiry W. Roberts -- Chief Medical Officer

Thank you, Matt. And good afternoon to everyone on the call. I'm happy to provide an update on our clinical efforts this quarter for tardive dyskinesia, Parkinson's disease, congenital adrenal hyperplasia and our Phase I program. Educating healthcare professionals and key stakeholders about tardive dyskinesia, and its impact on people's lives is a key focus for the medical group here at Neurocrine Biosciences.

As part of this, in Q2, we were pleased to share additional quality of life data from the ongoing RECONNECT study, the largest real-world screening study of patients with clinician-confirmed possible tardive dyskinesia. These data demonstrate that involuntary movements have a significant negative impact on a patients' health-related quality of life with nearly 30% of patients reporting moderate-to-extreme difficulty performing usual activities in their family, work and social life.

Also, almost half of patients in the RECONNECT study experienced moderate-to-extreme symptoms of anxiety or depression in association with abnormal involuntary movements. It was noteworthy in this study that, while patients were very consistent in evaluating both the severity and impact of their involuntary movements, clinician assessments tended to be less severe and well correlated with those of the patients. This will speak to the potential value of including more patient-related assessments in the diagnosis and management of TD in the doctor's office.

I would also like to highlight that during Mental Health Month, we were proud to work with advocacy partners, legislatives and governors across 28 states, in order to declare the first four week of May as tardive dyskinesia awareness week. These efforts placed us spotlight on this important movement disorder and the debilitating effect that it can have on the physical, social and emotional well being of patient. Moving forward TD Awareness Week will continue to be an important step toward broadening awareness of this often isolating condition and support the patients living with tardive dyskinesia.

In April, we submitted a new drug application or NDA for opicapone, a novel, once-a-day COMT inhibitor, for the treatment of motor fluctuations in patients with Parkinson's disease. We received FDA acceptance of the NDA earlier this month. And the FDA has set the standard 12 months review process for opicapone, with the Prescription Drug User Fee Act or PDUFA target action date of April 26, 2020.

The submission of this NDA was a huge amount of work for the teams at Neurocrine [Indecipherable], given the robust database that exists for opicapone. The NDA contains 38 clinical studies, and includes an extensive assessment of efficacy and tolerability generated predominately from two large Phase III studies, BIPARK-I and BIPARK-II. More than 1,000 subjects with motor fluctuations due to Parkinson's disease were included in the clinical development program for this medicine.

I would like to thank our staff across the two companies for their collaboration and hard work on the program to date. I'm proud of the quality of the dossier that we submitted to the FDA, and we look forward to continuing to work with the agency to bring this new treatment option to patients in the US coping with this debilitating disorder.

Turning now to our congenital adrenal hyperplasia program in adults and pediatric patients. The adaptive Phase II proof-of-concept study examining the pharmacokinetics, pharmacodynamics and tolerability of NBI-74788 in adult patients with congenital adrenal hyperplasia continues to progress well. We are currently using the positive initial data generated from this study to support discussions with the FDA around the designs of our NDA-enabling studies for adult patients with congenital adrenal hyperplasia.

We also advanced our -- the program in pediatric patients with the initiation of a Phase II proof-of-concept study that is also adopted in nature and will examine the pharmacokinetics, pharmacodynamics and tolerability of NBI-74788 administered for 14 days. Initial subjects enrolled in this study will be 14 years to 17 years of age. Later this year, after our first several 14 year to 17-year-old have been treated, we will adopt the study to include the younger subjects.

Throughout Q2, we continued to work closely with our colleagues at Voyager to progress the Phase II VY-AADC Gene Therapy program for the treatment of motor fluctuations in Parkinson's disease, and to bring forward subsequent programs including a program targeting Friedreich's ataxia.

I'd like to now give an update on our Phase I program. We continue to progress the Phase I clinical program for our internally discovered vesicular monoamine transporter-2, VMAT2 inhibitor, with potential use in the treatment of a range of neuroscience disorders. We will provide further updates as this molecule moves forward in the clinic.

In Q2, we also made the decision to discontinue the development of a novel molecule to address neurological diseases. This molecule was a first in a series under evaluation in our research labs, against this target. While the lead molecule was well tolerated in healthy participants in the initial Phase I study, it's pharmacokinetic profile was less than favorable. And therefore, we plan to advance the backup compound into the clinic in the near future to address this novel targets in neurological diseases. I'm very pleased by the progress made this quarter across our clinical development efforts.

I will now hand the call back to Kevin for closing remarks.

Kevin C. Gorman -- Chief Executive Officer

Thank you very much, Eiry and Matt. So, in order to answer your questions, let's start taking them now. Operator, if you could queue everyone up now, please?

Questions and Answers:

Operator

[Operator Instructions] And we will take our first question from Brian Skorney with Baird. Please go ahead.

Brian Skorney -- Baird -- Analyst

Hey, good afternoon, guys. Great quarter. So we saw a really big step-up in terms of the number of TRx this quarter. As you mentioned, 7,400 increase over last quarter. And you'd spoken about the reauthorization seasonality impacting first quarter in -- sort of in qualitative terms before. But as we think of the increase, can you kind of give us any color on what portion of the 7,400 is related to the reauthorization headwind versus kind of the underlying demand from new patients? And if we kind of look at the average increase over the launch it's somewhere in the 35 to 4,000 range. Do you think that's what we're seeing here with the 1Q seasonality providing most of the increase over this base number? Or is this kind of like a new normal from the sales force expansion that we should be thinking of now?

Matthew C. Abernathy -- Chief Financial Officer

So. Hi, Brian, this is Matt. Good to hear from you. So as we reflect on what we talked about in our last quarter call, we had acknowledged that we had a slowdown in overall TRx from patient as a result of the payer-related seasonal dynamics that did impact the rate of refills. But importantly, what we saw in the first quarter is our team worked through all those headwinds that put in place at the beginning of the quarter, and how we exited. We saw a good trajectory from an existing patient perspective. We did not see a change in discontinuation rate. But importantly, we also saw a record number of new patients in the first quarter. So those factors factors -- those factors combined definitely provided a lift to us in the second quarter.

But I would say that, as we've said, we know that there is going to be ebbs and flows throughout this quarter or throughout our launch based upon different seasonal dynamics. And the most important metric that we looked at it within this quarter is another record of new patient additions that really positions us well now and going forward. Eric, anything to add?

Eric Benevich -- Chief Commercial Officer

Yes, just to peg you back on what Matt said, I do think that we're starting to see the benefit of our expanded field sales team as well as some of the other initiatives that we implemented last year, and in the first half of this year, including our talk about TD unbranded disease awareness initiative. So it's really, I think, a cumulative effect of our total promotional effort, and we see the benefit of that more so than just sort of a lower jumping off point from Q1.

Brian Skorney -- Baird -- Analyst

Great. And then maybe, if I could just ask a quick follow-up on COGS. Are we still seeing previously expensed product being sold? Or are we looking at what the real gross margins on INGREZZA are here?

Kevin C. Gorman -- Chief Executive Officer

I think, this is a good representation of what our gross margins are on INGREZZA, Brian.

Brian Skorney -- Baird -- Analyst

Thanks, guys.

Operator

Our next question comes from Tazeen Ahmad with Bank of America. Please go ahead.

Tazeen Ahmad -- Bank of America -- Analyst

Hi. Good afternoon, guys. Thanks for taking my questions. Maybe, Matt just to continue about the quarter. I think on the 1Q call, you had provided some color saying that 70% to 80% of scripts that have been written, have been able to be dispensed thus far. Can you comment on whether or not that trend has stayed stable? Or if at all it has changed?

Secondly, can you talk about persistence rates as it relates to, I would say, last quarter or maybe even since launch? And then lastly, you talked about a $4 million impact coming from an inventory build in the quarter, would you expect any kind of stocking impact as well in the third quarter?

Matthew C. Abernathy -- Chief Financial Officer

Yes, hi Tazeen, thanks for the question. Eric will talk through what we saw from a persistency perspective as well as what we saw from a distribution access, and then I'll close off with comments on the inventory build that we saw in the quarter.

Eric Benevich -- Chief Commercial Officer

Yes. So, the short answer is, that we didn't see any meaningful drop-offs or change in terms of patients being persistent over the course of Q2 versus Q1. So that's been very steady. And also in terms of the -- what I call the fill rates, meaning the percent of written scripts that are ultimately filled. And it's still remains very high above 70% looking across the three-payer segments. And so we feel really good about the coverage that we've had with INGREZZA from a payer perspective, and the proportion of patients that are able to get on medication. Matt, you want to handle the last part?

Matthew C. Abernathy -- Chief Financial Officer

Yes. So as it relates to the channel inventory as you know, from a revenue recognition perspective, we've recognized revenue on a sell-in basis, which is basically what we ship to our distribution network. And in the quarter, we did see a slight increase in our overall days on hand. There's different dynamics that can cause that. But overall, we're still under two weeks of channel inventory, but did see a slight increase that we felt important to call out, so that you can get a representation of what our underlying performance was in jumping off point. That could because due to the July 4, we coming right after the end of the quarter and could have caused a little bit of increased stocking within some of our channel to deal with the -- with those dynamics. And then overall, one is the flagged [Indecipherable] as a best inventory and got a clean read on the quarter, but then also as you think through setting expectations for the third quarter.

Tazeen Ahmad -- Bank of America -- Analyst

Okay, thanks.

Operator

Our next question will come from Paul Matteis with Stifel. Please go ahead.

Paul Matteis -- Stifel -- Analyst

Great, thanks so much for taking my questions. And let me add my congrats on the quarter. I wanted to try to get one more time, the seasonality component. And Matt, I was wondering if you'd be willing to speak to fluctuations you saw this quarter and last quarter? And your expectation going forward for average script per patient? And within that, are you seeing pretty consistent underlying patient growth, and is really just kind of a script and timing of refills that's driving most of the year around seasonality? And then secondarily, Eiry, I was wondering if you just speak to CAH and ahead of your FDA meeting, what you're proposing for a potential registrational path? Is it a steroid sparing endpoint? Or is it something else? Thanks so much.

Matthew C. Abernathy -- Chief Financial Officer

Yes. Thanks, Paul. I don't know we understand the question around seasonality and the dynamics, but I would say is what seasonality does for the INGREZZA business. It's really have a more pronounced impact on our existing patient population, and what the overall rate of refill is within each quarter. As we mentioned last quarter, Q1 would be a lowest rate, Q2 steps back up to what we would deem a more normal rate, Q3 soften a bit from a refill rate perspective for dynamics that may be tied to vacations and/or patients being more transient. And then in Q4, we see the step back up in the overall refill or TRx for patients.

So that's how we look at the cadence. As our patient pool grows, these seasonal dynamics cause a bit more volatility in our overall sequential TRx performance, as you saw, both in Q1 and then in Q2. If we were a more matured products, you would likely look at our year-on-year metric, but obviously we're still two years, and only two years into the launch with significant year-on-year growth as well to the T-cell [Phonetic]. So that's how we see seasonality. There is some dynamic on new patients. Some of that is basically how new patient is distributed within a quarter. We do see seasonality there, but I would call out of the more meaningful impact being on existing patients in their overall refill rate per quarter.

Eiry W. Roberts -- Chief Medical Officer

And thanks, Paul. On the CAH question, we continue to be very encouraged by the data that we're seeing from the ongoing adults POC study that we released. We see a very meaningful reduction in ACTH 17-hydroxyprogesterone in androgen levels from the initial data from that study. We submitted those data with our package to the agency, and we're looking forward to the dialog with them this quarter, around the plans for the next steps in development.

Our position on endpoints and design of the registration program will remain unchanged. We believe the steroid hormone levels are critical to the management of patients in an ongoing fashion. With this disorder, we also believe strongly that the CRF1 antagonist approach could allow us to have a significant impact on those steroid hormone's without the need for super physiological glucocorticoids. And we look forward to engaging with the FDA around that. As we finalize our plans moving forward, and obviously as we start the next phase of clinical development, that study will be articulated on clinicaltrials.gov.

Paul Matteis -- Stifel -- Analyst

All right, great. Thank you both, very much.

Operator

Our next question will come from Biren Amin with Jefferies. Please go ahead.

Biren Amin -- Jefferies -- Analyst

Yeah, hi guys thanks for taking my questions. Can you just maybe talk about script per prescriber? How much of the NRx growth was driven by new prescribers versus prior prescribers?

Eric Benevich -- Chief Commercial Officer

Hi Biren, it's Eric. So the way I would describe it is that we're starting to see a greater proportion of NRxs and TRxs driven by repeat prescribers. And as Matt mentioned earlier, we are little over two years into our launch now. Certainly, I think, the focus of the sales force expansion was to be able to go a little deeper with existing customers as well as to be able to access individuals that we hadn't been able to reach previously. But overall, I think the trend is that we're seeing more and more of our business coming from our existing prescribing base.

Biren Amin -- Jefferies -- Analyst

Got it. And then, I guess, just a follow-up question on the payer dynamics, and given the Express Scripts decision earlier this year, have you had -- maybe conducted any payer outreach? And has there been any sentiment changes on expectations for a rebate?

Eric Benevich -- Chief Commercial Officer

Yeah, so let me start off by saying that patient access is one of the highest priorities that we have. And what we found, thus far, in this market is a little bit unusual that being on or off formulary doesn't really have, hasn't had a meaningful impact on the likelihood of securing reimbursement for a particular patients claim.

Our goal is to have open access, meaning that we want to leave the choice in the hands of the patients and their providers to choose the right drug for them. And so when we choose to contract with the plan, we're not trying to secure exclusive position on a formulary. And we think it's best to allow the patient and the provider to have a therapeutic options. So in terms of what the dynamics have been, certainly we weren't contracting early in our launch. More recently, we've started to engage selectively with payers. And when we do that, we do it with the understanding that we were making an investment in patient access, and we're doing it on a selective basis, where we think the patient is going to benefit.

Overall, we haven't seen any significant shifts in terms of payer dynamics in terms of likelihood of scripts getting approved by the plan. And certainly, we're going to continue to monitor the payer situation very carefully. But like I had mentioned earlier, we're very pleased with the access that we have for our patients with over 70% of written prescriptions getting filled. Patients being able to afford INGREZZA with the majority paying less than $10 per month and over 90% of patients being covered for INGREZZA. So it's a very favorable position to be in, and we want to maintain it.

Biren Amin -- Jefferies -- Analyst

Got it. Thank you.

Operator

Our next question will come from Phil Nadeau with Cowen. Please go ahead.

Phil Nadeau -- Cowen -- Analyst

Good afternoon. Let me add my congratulations on the quarter. Just a couple of follow-up questions. First, on the insurance coverage, with proposed changes to healthcare. In Washington, people are trying to figure out Part D exposure. Have you ever disclosed or would you be willing to disclose either INGREZZA's Part D exposure? Or have done any analysis on what the proposed and the finance change could impact revenue would be?

Matthew C. Abernathy -- Chief Financial Officer

Hi, Phil. No, we haven't disclosed what our payer mix is nor exposure to Part D. As far as the discussion is going around on the healthcare reform, that's important. And it is obviously an important debate about affordability, access and long-term sustainability for the industry. We're staying very close to those discussions and negotiations, not only through the trade associations bio and pharma, but also through our internal and our external government relation teams at Neurocrine. So we like you, remain very interested in this. Will add our voice at the appropriate time to -- in the appropriate way.

Phil Nadeau -- Cowen -- Analyst

Got it. And then just one follow-up question, Matt. I think in some of your remarks, you mentioned that Q2 was the highest new patient start number, that Neurocrine has seen. I just want to confirm that I heard that correctly? And you weren't referring to your prior comments on how Q1 ended?

Matthew C. Abernathy -- Chief Financial Officer

Yeah, Q1 was our old record. And Q2, is now another record. And as Eric mentioned, really a cumulative effect of the expanded commercial organization. The talk about TD disease state awareness campaign and all the educational initiatives. We know we're going to have seasonal dynamics that either headwinds or tailwinds. And the number one focus of this launch continues to be aiding in the diagnosis of patients struggling with tardive dyskinesia, and then ultimately getting them on INGREZZA and getting them help. So we're quite pleased with the progress and the efforts of our team. They've done an incredible job to help a lot of patients, and Q2 was once again another record quarter for us.

Phil Nadeau -- Cowen -- Analyst

That's helpful. Thanks for taking my questions and congratulations, again.

Matthew C. Abernathy -- Chief Financial Officer

Thanks, Phil.

Operator

Our next question will come from Anupam Rama with JPMorgan. Please go ahead.

Anupam Rama -- JPMorgan -- Analyst

Hey guys, thanks for taking my question and congrats on the quarter. Maybe just a quick one on opicapone. With the PDUFA now set, can you just remind us how your sales infrastructure might change upon approval? And what type of pre-commercial activities are ongoing for opicapone? Thanks so much.

Eric Benevich -- Chief Commercial Officer

Hi, Anupam. It's Eric. So I think the short answer is, that we are prepared from a commercial infrastructure perspective. When we did our expansion in Q4 of last year, it was really to accomplish two goals. One was to optimize our sales team for the tardive dyskinesia opportunity with INGREZZA, and secondly, to make sure that we have adequate reach into neurology to prepare for the eventual launch of opicapone in Parkinson's disease. So we're well prepared in terms of our sales force structure, and our overall commercial set up.

And then in terms of really preparing the market, so to speak, for opicapone, we're going to be launching a unbranded campaign later this year to really start to remind prescribers about COMT inhibitors, and the role of the COMT enzyme in terms of patients that are diagnosed with Parkinson's disease, and being treated with levodopa and carbidopa. And so, certainly, we think there is an opportunity to elevate the importance of COMT prior to the approval and launch of opicapone. And so far, at least, in the early work that we've done in that campaign and that educational content has been very well received with our consultants and the neurology community. So we're looking forward to rolling it out later in the year.

Eiry W. Roberts -- Chief Medical Officer

I would just build on that as well. I think that we have mobilized our medical sales organization, including our MSL group to be working with key opinion leaders and other neurologists in the field to ensure that we are educating around the already published data on opicapone. We've also been preparing our own publications and starting to release that on the medicine and preparation.

I mean, obviously, this is an area where there is still significant unmet need for patients with Parkinson's disease and most fluctuations. And we're really hopeful that opicapone will provide a very useful additional opportunity for treatment in this space of patients. And just to remind you of some of the reasons why we're really looking forward to that is, obviously this is a simple once-a-day treatment, which is -- has been very well tolerated and demonstrated significant impact on -- on time without troublesome dyskinesia in patients with motor fluctuations. Also it doesn't suffer from some of the challenges of previous COMT inhibition, including a better profile from the perspective of GI-tolerability, and in not closing discoloration of bodily fluids that we're seeing with other COMT inhibitors. And so, we're very excited about the opportunity and we're making sure that we have our own medical sales staff, and the external community ready for this medicine.

Anupam Rama -- JPMorgan -- Analyst

Thanks for taking our question.

Operator

Our next question will come from Jay Olson with Oppenheimer. Please go ahead.

Jay Olson -- Oppenheimer -- Analyst

Well, congrats on the quarter, and thanks for taking the questions. Now that you've put together two consecutive quarters of record new patient starts, is that a sustainable trend? Or is that something that could be subject to the seasonality headwinds that you mentioned in the 3Q?

Matthew C. Abernathy -- Chief Financial Officer

Yes, I think, as I mentioned and as we've said in previous quarter, when you're developing a market like this, there is a huge gap between the prevalent population and the diagnosed population. We estimate maybe at this time around 10% have actually been diagnosed with tardive dyskinesia, and not all of those are on VMAT2. Our focus is going to remain on a new patient additions and getting patients access drug.

The initiatives that we've laid out, the commercial team expansion, the talk about TD disease state awareness campaign has definitely lifted our trajectory from a new patient start perspective. But where does it go from here? Our focus is going to continue to be quarter-to-quarter and continuing -- and continually expanding this market from a diagnosis perspective. So how I describe it is, we did -- we have seen a big step up in the last two quarters. Will it continue on that level of the trajectory? Our expectations are, we're going to continue to call at the same frequency for the providers that we are today, and remain focused on new patient additions.

Jay Olson -- Oppenheimer -- Analyst

Great, that's very helpful. And then maybe -- sorry, go ahead.

Eric Benevich -- Chief Commercial Officer

No. Jay, the only thing that I was going to add to that is, it is again just a statement that we've only been through one real Q3, as of yet. And that was in 2018, and as you know expectations for Q3 or being able to draw conclusions from that in Q3, are little bit low because we are going through the sales force expansion, right in the middle there.

So this is going to be the first Q3 that we're going through -- so we can actually kind of see exactly what is the seasonal dynamic too in Q3. And at the end of that, I think we'll be able -- we'll better prepared than to talk to you a little bit more about seasonal dynamics. So we're still learning along the way.

Matthew C. Abernathy -- Chief Financial Officer

And the other aspect that we -- and we've talked before, as our patient pool grows when you have natural discontinuation that fall off of the bottom of the funnel, we know, as an organization, we need to continue to add more and more of an increased based on the -- of that funnel that keep out the growth trajectory that we've had. So we're mindful of that and just wanted remind you that when you're thinking about building expectation.

Jay Olson -- Oppenheimer -- Analyst

Okay. Thanks for that color. Maybe, if I could ask capital allocation question. Based on the strength of your balance sheet and the cash flow you're generating, are there any updates you could share with us with regards to your thoughts on deployment of capital and particularly with regards to potential business development?

Kyle Gano -- Chief Business Development and Strategy Officer

Hi, this is Kyle. Good question. I think at the outset of that, I think it's important to mention that we're very excited about our internal pipeline that we share with you today as well as a bit of our collaborations, which provide a balance of best-in-class and first-in-class medicines here at Neurocrine as well as the potential to provide the cures for patients.

Our first goal is to make sure we execute on what we have in hand. First and foremost, and there's a lot going on here at Neurocrine as you can see from our earnings release. That being said, our internal research and pre-clinical teams as well as business development will continue to work in [Indecipherable] programs, the pipeline. And I can say, and this is will continue to be -- it is, I think, a part of our strategy, both now and moving forward.

So you can see that we are living up to that with our Voyager collaboration early this year. We also had degenerative collaboration that we reported on toward the end of 2018. We look to continue to build the pipeline by adding projects over time.

Jay Olson -- Oppenheimer -- Analyst

Great. Thanks again for taking the question.

Operator

Our next question will come from Charles Duncan with Cantor Fitzgerald. Please go ahead.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Thank you. Hi, Kevin and team, very nice quarter. Congrats on the nice top line beat. Lots of good questions asked. Had one additional one on INGREZZA though. In terms of the prescriber base, are you getting more traction with psychs or neurologists? And are neurologists playing a bigger role in terms of new patient adds? And would you anticipate with the assuming approval of opicapone that that could be further, I guess, enhanced?

Eric Benevich -- Chief Commercial Officer

Yes, hi, Charles, it's Eric. So I would say that our results from a neurology versus psychiatry perspective remain in line with the promotional effort that we're allocating across those two physician specialties. Essentially about 80% of our collectivity is directed toward specialists in psychiatry, and then the balance is toward neurology. In terms of how that plays out with new patient adds, I don't think that there is any differential growth from a new patient perspective. Keep in mind that, most of the undiagnosed patients with TD are really in this psychiatry area. Patients that get treated by neurologists have been referred most commonly from general neurologist or even a primary care physician, so -- or in instances where a patient self refers to that neurologists. So certainly the neurologists are very conversion in making the diagnosis and certainly very comfortable with treating TD with INGREZZA. But I'd say the majority of our acceleration of TRx and interacts is coming from psychiatry, which is where we have the majority of our promotional effort. And I think it's really a testament to the high performance of our team as Kevin mentioned earlier.

Charles Duncan -- Cantor Fitzgerald -- Analyst

That makes sense to me. One quick question for Eiry, regarding VMAT2 inhibitor. You just mentioned this toward the end of your prepared remarks, and I know it's not really the focus this year. But I would like to hear when you might be able to designate the second candidate and a second targeted indication is? Do you sense that could be this year? Or is it maybe next year?

Eiry W. Roberts -- Chief Medical Officer

We're obviously continuing to work through Phase I with this molecule, and we're pleased with the progress in Phase I. We are working on our Phase II program. And as soon as we have the clinical trial available for that initial Phase II study, we will probably from starting this trials.gov, and obviously then be communicating around that. And as you mentioned, given this is a very important platform to us, we have continued research efforts going on back in discovery to identify potentially future candidates as well that we might bring into the clinic in due course.

Charles Duncan -- Cantor Fitzgerald -- Analyst

I'm sorry, if I missed it. Is it possible the second or the Phase II could be, by the end of this year that you might mention? Or post-standing clin trials that it would it be next year?

Eiry W. Roberts -- Chief Medical Officer

We are still working through that and we'll update you as we have the timing of the mix.

Charles Duncan -- Cantor Fitzgerald -- Analyst

Okay. Thanks for the added color. Congrats on the quarter.

Matthew C. Abernathy -- Chief Financial Officer

Thanks, Charles.

Operator

Our next question will come from David Amsellem with Piper Jaffray. Please go ahead.

David Amsellem -- Piper Jaffray -- Analyst

Thanks. So two quick ones. So first on business development. Kevin, you have a large sales force now, an expanded sales force that, one, sensibly could look at as a leverageable asset. So in that vein, how do you think about the acquisition of commercial ready or even what, I guess, was market ready assets, either in neuro or psych? Or are you mainly going to be focused on the pipeline efforts on the more novel discussion? And second question is on VMAT2 inhibitors, and more generally can you comment on where you think you're taking the next molecule, maybe the types -- maybe I understand you're not going to comment fully, but as you think about movement disorders, the psychiatric disorders? Should we think about it being a rare indication or something more expansive? Maybe, help us understand your thinking there. Thank you.

Kyle Gano -- Chief Business Development and Strategy Officer

Hi, this is Kyle. On the business development, its -- I think there's a couple of variables that we think about of when we discuss the opportunity from a commercial asset or perspective. I think overarching, when you think about those types of products you typically are talking about public companies. We know the vast majority of those opportunities, concerns there are that the market [Indecipherable] runway or patent does not. One that we would see is, as valuable as perhaps some of the things that we're talking about here today, in terms of our own pipeline assets. The other piece is that we worry about a product that might be launched and disrupt the good progress that we've made on INGREZZA. And on opicapone, in terms of needs, we'll have two products in the bag moving forward. So we also consider that as well. And then lastly, if it's a product tied to a company, you think about it as an M&A type of opportunity, is it a licensing opportunity, and all these things go into our thinking about an optimal product for licensing.

I think what we -- where we get to ultimately is, looking at products that are new chemical entities that perhaps may not be a commercial product this year or next year, but maybe a couple of years down the road that might be a good step for us offering something. That's a bit different than we have in the pipeline. But still within neurology and psychiatry. So I think on -- in terms of your VMAT2 question, I'll let Eiry touch on that a bit.

Eiry W. Roberts -- Chief Medical Officer

So thanks for the question. We are very committed to VMAT2 mechanism, and believe that inhibition of VMAT2 can provide potentially value in a broad range of neurological and psychiatric disorders. And so, as we bring forward novel molecules to this target, including the one that we now have in the clinic, we will want to be examining the specific characteristics of each of those molecules in order to decide decide best way to position and then take them forward. So that's really what I could say at this point in time.

David Amsellem -- Piper Jaffray -- Analyst

Okay. Thank you.

Operator

Our next question will come from Jeff Hung with Morgan Stanley. Please go ahead.

Jeff Hung -- Morgan Stanley -- Analyst

Thanks for taking the questions and congrats on the quarter. For INGREZZA, the net revenue perspective was hard in the last couple of quarters. So, besides the lower impact due to Medicare Part D, were there other factors in 2Q? And do you see this higher net revenue per script as an ongoing trend or more specific to the quarter?

Matthew C. Abernathy -- Chief Financial Officer

Yeah, we really just point you to the impact from the Medicare Part D donut hole. The impact is more pronounced in the first quarter, as a result of the price of our drug and the impact of the donut hole on us. And really Q2 reflects having much less exposure. But that's really all, that I would flag. You do deal to some extent with mix between the 40s and 80s, and then some slight mix within the payer universe. But we really, would just flag the Medicare Part D donut hole.

Jeff Hung -- Morgan Stanley -- Analyst

Okay. And then I guess on the discontinuation of the T-Force PLATINUM. Can you talk about what led to the decision at the current time? And did you learn what you'd hope to since the top line results for T-Force GOLD were announced?

Eiry W. Roberts -- Chief Medical Officer

Yeah. We had announced when we first told the negative data from people's goals that we would be thinking in the consideration of the data that we can generate from T-Force PLATINUM. And looking at the data that distinguish whether or not there was a path forward for valbenazine in Tourette. I think, we looked at the totality of those data. It's important to say that the discontinuation of T-Force PLATINUM is not on the basis of the any safety finding or any challenges on the safety and tolerability front. But all in all, we decided it was the appropriate time for us to take you step back, look at the data in totality and determine whether or not there were any steps going forward in the future.

Jeff Hung -- Morgan Stanley -- Analyst

Thank you.

Operator

And we will take our next question from Marc Goodman with SVB Leerink [Phonetic]. Please go ahead.

Marc Goodman -- SVB Leerink -- Analyst

Yeah. Hi, we were just talking about ASPs a second ago was curious. This is really the first time you've talked about contracting, and whether we should expect ASPs to kind of come down, this gross to nets start to adjust for this contracting? And to what extent you guys have done some contracts? You started to talk about it, but you didn't really get into too much detail on it. Curious about that. And then second of all, the high-end of the spending range has come down. Obviously, we know that you stopped the study for Tourette's, but is that the only thing that changed? It just seem like a big change in numbers? The Voyager is still going to be roughly $50 million or so million as you had mentioned before. And then just one quick last question. DTC, you guys were on the TD before, you guys still there? Can you just give us the dates of when you are? Thanks.

Matthew C. Abernathy -- Chief Financial Officer

Yeah, hey Marc. I'll quick -- through your question. From the DTC front, we absolutely expect that to continue throughout the rest of this year, and have seen very great response from that program, and are proud of what those accomplishing, from just an overall educational perspective, engaging patients in this process of understanding tardive dyskinesia.

The second piece as it relates to the guidance range. Our initial guidance range was $50 million. Within that band, you did have a component that has to do with Tourette. And that program, obviously getting taken out of the mix, take down the top end of that range. In addition to that, you do have some assumptions around your clinical programs and other progression, and one of those investments being the Voyager Therapeutics collaboration. And previously given a guide that that would be between $40 million and $50 million and I would say that that's where our expectation remains to be within that range. So other than that, Marc, I really wouldn't flag anything beyond that. As it relates to ASPs and contracting, as we've said before, we've had great access today where a lot of our large majority of our prescriptions written ultimately get filled, and we've been pleased with that. We know over time as the class grows, we may have to engage in contracting. But, as Eric mentioned, we look at this as an investment to make sure that patient access continues and that remains to be -- our most important aspect is diagnosis and making sure they can ultimately get the drug.

So there is nothing material that we flagged in the near-term from a contracting perspective. But if there were to be anything material, we would give of the times of the investment community, if we thought it was going to be a really significant impact from a net revenue per script perspective.

Marc Goodman -- SVB Leerink -- Analyst

Thanks.

Operator

And we will take our last question from Evan Seigerman with Credit Suisse. Please go ahead.

Evan Seigerman -- Credit Suisse -- Analyst

Hi, guys, thanks. Hi, all, thanks for squeezing me in, and congrats on the great quarter. So you had mentioned that there is a natural number of patients who fall off therapy and stop taking it therapy. Can you help us quantify what percent of patients these are? And of these patients, what is the average duration of therapy that these patients are on INGREZZA for?

Eric Benevich -- Chief Commercial Officer

Yes, hi, this is Eric. So we haven't given numbers from quarter-to-quarter. What we have said is that the patient persistency that we've seen with INGREZZA has exceeded our expectations, really since the very early days of the launch. And going into it, prior to the launch of INGREZZA, what we were looking at from a -- from an analog perspective with the other drugs that these patients take typically antipsychotics, antidepressants, etc.

If you look at the published data on persistency, you'll see that over the course of the year, patients take their medicines in the range of 50% to 60% of the time. We have stated previously that the persistency has been better than that with INGREZZA, since the early days of the launch and really through -- and including up to the most recent quarter, we've seen favorable persistency rate.

So we feel good about that as one of the drivers of our growth.

Evan Seigerman -- Credit Suisse -- Analyst

And then just a follow-up on contracting. It's been kind of a topic on this call. Does this have anything to do with the Express Scripts decision to exclude INGREZZA from the National Preferred Formulary? Have you been getting similar feedback from other payers in the United States?

Eric Benevich -- Chief Commercial Officer

So the short answer is, no. We actually made the decision not to bid for the Express Scripts formulary, simply because we didn't think that we'd have a significant impact on the upside for patient access. We've said previously that commercial is the smaller segment for us. And the Express Scripts' formulary represented less than 1% of our patient volume. And so that didn't really have any meaningful impact on -- really our strategy.

As I've said before, our strategy has been to make sure that patients have access to medication and preferably open access. Where we choose to engage with the payer is because we think that is going to have an impact to the upside in terms of their access, and we view it as a investment for the future. So the Express Scripts situation didn't really impact our strategy or our results. However, we have begun to engage with payers on a limited basis. And as Matt said, if there is any meaningful impact on our gross-to-net, certainly we will disclose that.

Evan Seigerman -- Credit Suisse -- Analyst

All right. Thank you so much for taking the question.

Operator

And there are no further questions. I will turn it over to Kevin Gorman for final remarks.

Kevin C. Gorman -- Chief Executive Officer

Thank you very much. I think as most of you have been following us, you understand that we've learned quite a bit in the two years, since we launched INGREZZA, and we have a lot more to learn. We've only just begun to address the needs of these patients and the needs of the psychiatric community at large. We will be constantly adapting our efforts to bring this important treatment to patients. So you will see us adding more initiatives over time, because as you've heard over and over in this call its education, its access, its being able to service patients' needs and that's what we're dedicated to.

We will also continue to progress and expand our pipeline by investing in the internal groups here at Neurocrine, and partnering with exceptional science externally, as Kyle his team and the broader teams that Neurocrine work together to do this step. And finally, we've enjoyed the success that we've had, by being disciplined and investing in the science, and you can count on us that we will continue to do so.

So with that, I thank you very much for your attention, and I look forward to talking to you in upcoming meetings.

Operator

This does conclude today's program. Thank you for your participation. You may now disconnect.

Duration: 58 minutes

Call participants:

Kevin C. Gorman -- Chief Executive Officer

Jane Sorensen -- Head of Investor Relations

Matthew C. Abernathy -- Chief Financial Officer

Eiry W. Roberts -- Chief Medical Officer

Eric Benevich -- Chief Commercial Officer

Kyle Gano -- Chief Business Development and Strategy Officer

Brian Skorney -- Baird -- Analyst

Tazeen Ahmad -- Bank of America -- Analyst

Paul Matteis -- Stifel -- Analyst

Biren Amin -- Jefferies -- Analyst

Phil Nadeau -- Cowen -- Analyst

Anupam Rama -- JPMorgan -- Analyst

Jay Olson -- Oppenheimer -- Analyst

Charles Duncan -- Cantor Fitzgerald -- Analyst

David Amsellem -- Piper Jaffray -- Analyst

Jeff Hung -- Morgan Stanley -- Analyst

Marc Goodman -- SVB Leerink -- Analyst

Evan Seigerman -- Credit Suisse -- Analyst

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