Neurocrine Biosciences Inc (NBIX) 2004 Q4 法說會逐字稿

Good day, and welcome to the Neurocrine Biosciences fourth quarter 2004 results conference call. (Operator Instructions) At the end of the program, there will be an opportunity to ask questions. I would now like to turn the program over to the President and CEO of Neurocrine Biosciences, Gary Lyons. Go ahead, Mr. Gary Lyons.

Thank you. Thank you everyone for joining us. The purpose of the call, you know, is to report on Q4 results, as well as our full-year '04 results and provide an update on our R&D. So joining me today from San Diego is Paul Hawran, EVP, and CFO, along with Wendell Wierenga, EVP, research and development, Bob little, Senior VP of commercial operations, and Kevin Goreman Senior VP of business development ,as well as Claudio Jones from Investor Relations. So the outline of the call is as follows. Paul will provide an overview of the financials as outlined in our press release today. I will then have some comments on Indiplon time line filing, FDA meeting, detail, et cetera. Bob little will provide a brief update on where we are in our commercial operations. Wendel will focus on R&D pipeline, provide a brief update on where we are in respect to our other clinical programs and then as always we will turn this over to Q&A. So with that, let me ask Claudia to refresh you with our Safe Harbor statement and then we will move on with the program.

Thank you. Before we begin, I would like to remind you of Neurocrine's Safe Harbor cautions. Certain statements made in the course of this conference call that state the company's or management's intention, hope, beliefs, expectations or predictions of the future are 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 filing, including but not limited to the company's annual report on form 10-K, and quarterly reports on form 10-Q. Copies of these filings may be obtained by visiting the Investor Relations page on the company's Website at www.Neurocrine.com. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

Very good. Thank you. And I will turn this now to Paul Hawran to review financials.

Great. Thank you, gary. And welcome all. As far as the year results for 2004, it is pretty much spelled out in our press release. But I will just highlight some of the key issues that came up during 2004. Total revenues of 85 million is down from 139 million in the year before. Obviously, the reason for that is the down scaling of the Phase III Indiplon program which was in full scale in 2003 and ramping down in 2004. Part of revenues in 2004 are $57.6 million, was approximately 20 million that we received in milestones from Pfizer relating to the successful achievement of our long-term trials and trials relating to sleep maintenance. In terms of expenses, our expenses are down from 197 million from the previous year to 137 million in 2004. As far as development expenses are concerned, that amounted to approximately $47 million. R&D expenses were about $67 million. And G&A was approximately $22 million. Giving you a break down of $137 million. In addition to last year, we also recorded a profit of $18 million, one-time profit on the sale of property. This year we are recording a loss of 45 million as compared to 30 million last year. We are recording approximately -- we do have approximately 314 million in cash at the end of the year. With very little debt.

As far as guidance is concerned, for 2005, we are projecting to have a loss of approximately 35 to $40 million. We are expecting to have revenues of between 145 to $150 million. And expenses of roughly around $185 million. We are expecting that the acceptance filings of the NDAs for IR and MR will occur in 2006, while the approval milestones have been pushed to -- I'm sorry, to 2006, the acceptance filings have been put into 2005. And with, that I will turn it back over to Gary.

Okay. Let me first start then with a review of our FDA meeting, which as we told you, would happen at the end of January. It did. This was a meeting run by Neurocrine, attended by Pfizer colleagues. The meeting itself was held with the division head of Neuro pharm Dr. Russell Catz, who is in this division, as I remind you is now responsible for our filing. Also were in attendance were members of the actual review team that were involved in the preliminary review of the IR and MR, NDAs.

The key topics for this meeting, primary topic was of course navigation issues. We reviewed all of the changes that had been made with IR and MR. Actually showed screens, 12 pages, to confirm that the changes we made, in fact, met their guidance and they did. And the agency appeared satisfied with all of the changes we made to make this a more user friendly application for them to review and whatever format they would like to review it in. It was also important at this meeting for us to confirm prior accordance and agreement with the agency, since we had originally been with Neuro pharm and then with anesthesia critical care and now with Neuro pharm again. So, it was important to review all of our minutes from those prior meetings to ensure that all prior agreements remained in tact, and they do. So, we have no disagreement and I think there is a clear understanding the guidance in the past is what will direct us in the future.

There were other organization and technical items that were discussed. We reached full agreement and I would say and my regulatory colleagues will confirm this was a very successful meeting. We're very pleased with the outcome. And feel we have clear direction and agreement with the agency necessary to move forward expeditiously. I might add that there is no additional data or studies required for submission.

Now, as far as timing, the IR guidance and IR as you've seen from our release is end of Q1 or if there is any slippage, very early in the second quarter. For the MR, we've given guidance of second quarter. One of the reasons that the MR -- or the reason that the MR will follow IR is that we have decided to add our recently completed Phase III study for '04 which is a one-month, 15 milligram versus placebo trial in adults with total sleep time as the primary end point of that trial. It is typically taken up to 60 days from data that is top line data which we call table listings and figures to final confirmed QA/QC results that will be incorporated into the document and of course all pagination, et cetera, modified to accommodate this inclusion. Some of the data also for the MR will be incorporated into the IR. Some of the safety data, since the two applications support one another. The MR is, of course. the time limits application because the plan is to launch IR and MR together. The PDUFA action dates on this one now, predicting assuming all goes well, our goal is, I should remind you, is to receive approval status on our PDUFA date and that is our objective and we believe that is possible in Q1 '06 or early Q2 '06.

Having completed 8,000 patients extensive safety, consistently demonstrating safety, and all of our preclinical and other studies that exceed ICH guidelines, we feel very comfortable this is a very complete application and one that is able to be navigated with ease by the agency. Pfizer is providing significant QA/QC support for both applications. Our focus is to ensure that the application is complete. And that there are no subsequent requests for additional data. That everything that needs to be there is in fact there.

We also work very closely with Pfizer's electronic submissions group who will be on-site and in total we estimate there is some 50 full-time equivalents of personnel from both Pfizer and Neurocrine working specifically on this submission to make sure it is of top quality and also timely. In closing, I would just like to say that there are no safety or technical issues that relate to IR, MR as some may have speculated. And this product I need not remind you is not only extremely important to Neurocrine, but also extremely important to Pfizer. And with that, let me just turn this over to Bob little for a few comments on our commercial activities.

Thanks, Gary. We've commenced Neurocrine's commercial build on schedule. We started in late December 2004. Intent to first co-detail Zoloft with Pfizer and then secondly obviously to get ready for the launch of Indiplon. So far, we have hired the senior sales management team and actually very close to have all district management positions filled. The full complement of our 200 person sales force will be fully trained by Pfizer to their very high standards in selling and product skills. The first wave will be selling Zoloft by late May, and the fully completed sales force in the field, fully operational by early July.

In addition to that, the alliance marketing team is also moving forward with pre-launch activities, which include market development, market research, attendance is the key psychiatric and sleep congresss, which is APA, APSS, will be exhibiting as well as providing some unrestricted grants to support medical symposia, focusing on insomnia. Medical education programs I think are clear are key to advance the science of insomnia and to advance Neurocrine as well as Pfizer and our entrance into the future sleep market.

Thank you. The press release also contained a lot of information on the pipeline and we've accomplished a significant amount recently, and Wendel will update you on that.

Thank you, Gary. I think it has actually been a remarkable year for Neurocrine in terms of its R&D programs. Not only have we completed the IR and MR development programs for Indiplon but we've progressed three new drug drugs into the clinic this year. We advanced another drug through phase I into a six-week study. And I will give you a little more update on that in just a moment. And completed the enrollment of two other phase II clinical programs. All told, we had eight different clinical programs ongoing this past year. Which is clearly a record for Neurocrine and its history.

A couple of highlights then, in addition to Indiplon. The GnRH antagonist 418, that we've been talking by that has been in phase 1, an extensive phase 1, single dose, all the way out to 42 day studies. Been studying it in males and female. We have seen an excellent safety profile to date, and also, it has yielded very predictable pharmacico dynamic relationship showing a exposure response of in reduction of esterdiol, or of testosterone in males. And this, of course, then allows us to titrate dose to response. The 42-day study which we just completed in premenopausal female, it was a trial involving 60 patients blinded, placebo controlled, two doses, we saw a nice dose response from the fencentral levels, and as I said, this really allows us based on the precedented relationship of estrogen levels of disease end points such as endometriosis to then be able to predict the appropriate doses for a study in a disease population. We are beginning those studies in the second quarter of this year. And endometriosis, we have a 12-week clinical trial planned. With several doses. And placebo controlled. Looking at Titration of the appropriate dose to minimize bone loss.

The CRF program has also been a productive program this past year. We have been studying the R 1 receptor for a number of years and the last four years been doing it collaboratively with GSK, and we're pleased to report we have an antagonist CRFR 1 antagonist in clinical study against GSK's sponsorship, phase 1, and targeting of course anxiety, depression, irritable bowel syndrome and other possibilities down the road.

And secondly, we have a backup in the wings hopefully entering phase 1 clinical studies later this year. GSK has committed to having at least two of the CRF antagonists under clinical study to evaluate them in this very promising area. Secondly, we've been studying the R 2 receptor, also binds with CRF but its distribution anatomically is quite different from the R 1. And we put into clinical study in the latter part of 2004 and agonist called Urocortin II and the goal here is to develop it for the treatment of acute decompensated heart value, ADHF, and the phase 1 study that we've initiated was, of course, initially in volunteers. We're giving the drug by one-hour infusion. Over a 24-hour time point monitoring hemo-dynamic, and monitoring various hormone levels, and, of course, monitoring pharmaco kinetics. And we're very pleased so far and the volunteers that we've been studying to see a very nice pharmaco kinetic pharmaco dynamic response showing a remarkable increase, actually, in cardiac output alone, as well as a concomitant reduction in after load and preload parameters. Obviously, one of the opportunities here is taking advantage of what is a growing marketplace, 1 million patients in 2004, having been either diagnosed or hospitalized for the treatment of acute decompensated congestive heart failure. This market opportunity has grown by a fact of three over the last 15 years. And we believe some of the early results here are indicating we have something that is more than a vasodilator and could be very useful in this disease.

Lastly, the two APLs that we have in phase II clinical studies, one for type 1 diabetes and the other for multiple sclerosis. I'm pleased to report have completed enrollment in both of these clinical trial program, now the diabetes trial was completed in February of this past year, enrolling nearly 200 patients. We will have an interim analysis on this two-year clinical study, at multiple analysis the analysis is coming up this year and we will have early data 2006. And lastly, the multiple sclerosis study, we have completed enrollment of just over 150 patients now, and again looking for data in early 2006. So looking forward then to the coming 12 to 15 month, we will have a read-out on 4 phase II programs. And we will have progression of a CRF antagonist with GSK. Hopefully into phase II later this year. We also plan to enter two new drugs into clinical study and to resubmit the two NDA's for Indiplon. So a very exciting year ahead of us with opportunities.

Okay. Thank you Wendell.

(Operator Instructions)

We will take our first question from the site of Mattt Geller, CIBC. Go ahead, please.

Thanks a lot. A couple of questions, Gary. First of all, there is a lot of speculation going around that 404 is required by the FDA and there are some issues with that study. Could you clarify whatever you can say about that? Second of all, in terms of the GnRH antagonist, can you talk a little bit about endometriosis has been a tough indication, can you talk about what we should be looking for in the phase II studies, what are the biggest risk factors in terms of that study, in terms of whether this can be a marketable drug?

I will take the first, and Wendell will take the second. The 404 study was planned, I guess well over a year and a half ago, initiated over a year ago. Our plan had been, since we had already filed, was to add this as part of 120 day safety update. The fact that we're adding it now is temporarily a reflection that it is completed. And rather than supplement the application with any ongoing studies, it simply makes sense to include it now, so there is no need to update with any other data. I remind you the elderly study, 15 milligram versus placebo is two-week treatment. This is 4-week treatment. In that study, we saw robust efficacy with almost an hour improvement in total sleep time. From a safety standpoint, one of our cleanest studies. So, we're, obviously, very confident in that study. And the decision to include that is simply a reflection that it is now done. So you know, why hold it? I think that probably covers that. Wendell, do you want to cover endometriosis?

Matt, in terms of endometriosis with hormonal modulation, the GnRH, of course, that have been used has the limitations of players and the fact that there are long term administration requiring estrogen supplementation to minimize or preclude bone loss. What we're looking for here is basically validating what we already know and that is if you lower estrogen you will in fact see improvements in pain scores for pelvic pain, for example, for endometriosis. The question is, can we titrate the dose appropriately on a daily oral administration that we're using to minimize or,in fact, have no bone loss whatsoever, and still achieve the same degree of efficacy? And we believe, of course, that this is feasible. It is the resident for the program. We are also looking of course for other opportunities such as DPH and we will be doing some preliminary studies of that later on this year as well.

Great. Thanks a lot.

Thank you, Matt.

Thank you. We will take our next question from the site of Matt Duffy, Black Diamond Research. Go ahead please.

Hi and thanks for taking my call. Two different things. As you prepare the refiling for IR and MR, is everything that needs to be done from this point forward internal at Neurocrine Pfizer or is there anything you require from outside groups, organizations, anybody, or do you control all the steps yourself? And secondly, can you review for us quickly the day that you expect to present at APA and APSS?

Let me turn it over to Wendell for the first, is are we relying on any outside vendor support work, I believe the answer is. No is that correct, Wendell?

We are not relying on any outside vendors at this point in time for our filing. We are doing it all internally with Pfizer. We are certainly, of course, well along in terms of manufacturing. We're ready to go for preapproval inspections at our manufacturing sites together with Pfizer, and of course we're also prepared to deal with the DEA at the right time as well.

Not only with the labeling ultimately but also with manufacturing sites. Obviously, Pfizer has enormous resources and extensive experience in regulatory filing, and has been successful with electronic filings in the past, so coordinating our efforts with theirs I think gives us all the capacity we need. As far as the second question, the upcoming meetings, we have submitted at least 5 different abstracts that are a reflection of our phase II, Phase III trials. These are studies that we release top line data on via press release but now will be presented in a more complete format in peer review.

All right. Thank you very much.

Thank you. We will take our next question from the site of James Birchenough, Lehman Brothers. Go ahead, please.

Hi, guys. A couple questions. To follow-up on the prior question, will we see data from sleep and restful studies at APS or APA meeting?

Yes, you will.

And then just in terms of ongoing studies, I understand there is a driving study ongoing and I just want to get a sense of how that fits into the filing strategy, whether that is going to be an amendment, whether that comes in at a time of labeling discussion, and how that might impact timing, in terms of, you know, avoiding any delay in getting Indiplon on the market?

It will have no impact on timing, driving studies, were discussed with the agency. We're not considered to be necessary for filing but could be useful during labeling discussions. There are no Phase III B or Phase IV studies that are ongoing that would be part of any application or amendment to any application.

Great. Well thanks for taking the question.

Thank you. We will take our next question from the site of Ean Somaiya, Thomas Weisel Partners. Go ahead please.

Thanks. Two questions, first for Wendell. Can you -- I think you mentioned that we should expect data from four phase II studies by the end of the year. Can you just give us the name of the drug, the design of the study, as well as the timing, inspection timing for the data release. And then I just have one question, follow-up question for Gary.

Yes, I would be happy to do that. Actually just to make sure that you understand the timing here, I was saying that in the next 12 to 15 months we will have a read-out from four phase II clinical studies. Those 4 clinical studies are in order, the APL 6024 for the treatment of type 1 diabetes, which we will have final data on in the first quarter of next year. The second is the APL 5788 for the treatment of multiple sclerosis, which we will also have data on in the first quarter of next year. We will be completing by the end of this year our three-month clinical study in endometriosis, with the GnRH antagonist 418 and have the data readout then again in early 2006. And the fourth clinical study will be the phase 2 A data from the treatment of patients with congestive heart failure with Urocortin II.

And when is the timing for that?

That will be in the fourth quarter.

Okay. Fourth quarter. Okay. And just the question for Gary, on again the regulatory time line for Indiplon. I think you, as well as I think everyone else on this phone, or on this call, have been frustrated by, you know, by the delays and the cause of the delays. What in your conversations, the recent conversations with the FDA gives you confidence that this is all behind us?

Well, the delays are solely responsible for the -- the delays are responsible as a result of the refuse to file and the resubmission of the MR application. Obviously, if we had not hit that road bump, we would not be discussing this year today. That was totally unexpected. In retrospect, looking back I can't say that there is anything different that we would have done with those applications, since, you know, we believe that they met the standard for electronic submissions, for full complete applications but were surprised with the FDA's response.

So, having now had the opportunity to meet with the agency to discuss this and the other things I mentioned, I think gives us more confidence, prior to the submission, we didn't have the opportunity to meet with the agency. And now that we have, we're aware of what they want. They've agreed our changes of what they're looking for and as I have said have confirmed past guidance to ensure that there were no surprises. Obviously, bolstering this with more data that is completed between now and then, we think represents a full package. They there have been delay, others are faced with neuro pharm, and if I'm not mistaken most of the time this relates to having an incomplete application. This application is not incomplete, as a matter of fact as mentioned, we exceeded ICH guidelines on almost every front both clinically and frequently. And I think it is a solid application. The product continues to perform. And we're optimistic.

Okay. Thank you.

Thank you. Our next question comes from the site of Thomas Way, Piper Jaffray. Go ahead, please.

Thanks very much. I had wanted to ask a question, Gary, just a clarification on a comment you made about the time line for the PDUFA date. You said first quarter of '06 or early second quarter of '06. How do you get to early second quarter of '06 given it is 10 months time line for review?

The guidance, obviously, we're given for filing is end of this quarter, early second quarter, and then for MR, simply it is the second quarter. So adding 10 months to whatever month you want to select within the second quarter would bring you into that range.

Okay. And then can you give any comments on further strategies for dose selection on the label for each formulation, and whether or not the data from the 404 study plays into that, those selections?

No, it doesn't. As I said we file on all doses an recommend, you know, up to 4 dose. We haven't disclosed specifically what those doses will be but we have clinical experience, both safety and efficacy from everything from 5 to 30 milligrams, so we have more than enough choices.

And maybe just one last question. You had mentioned that there were various key points that -- from your previous conversations with the anesthesia division, you wanted to make sure that the neuro pharm division was all on board with, can you give us a sense as to what those -- what those points were?

Obviously, I can't be specific. But just to go back with a little history, our end of phase II meeting was held with neuro Pharm. So it was important to review those minutes to ensure their prior direction was the same. Our preNDA meeting was held with Anesthesia Critical Care. So, again, reviewing those minutes, and then using this last meeting as an update for any future guidance. So we just wanted to make sure that there had been no direction given us in the past that didn't apply today. And we provided all minutes and all documentations from prior agency meetings and were assured that nothing has changed . Does that answer your question, Thomas?

Yes, thanks.

Okay.

Thank you. (Operator Instructions) We will move next to the site of Mark Augustine, CSFB. Go ahead, please.

Thanks. A question for Gary or Wendell. With respect to the GnRH study, you can tell us a bit about the baseline characteristics of these women in the 60 patient, 6-week study? I guess where I'm going with this is, when you're looking at -- pardon me, when you're looking at lutenizing hormone, how do you get comfortable that you're suppressing them, if conceivably they're in the normal range, and tell us how you walk through that and feeling more confident coming out of this study to durably suppress throughout the dosage interval those hormones in this type of population.

I will turn this over to Wendell with a comment going in that that was the importance of this 42-day study. Previously, we only dosed for 1 week. So, it was important for us to know that we could suppress but not decastrate levels estrogen within a range that we believe will be efficacious without inducing bone loss. With that intro, Wendell?

Yes, Mark, the obvulatory cycle is, of course 28 days, and we wanted to make sure we treated all the way through that. And hence, we chose 6 weeks. We did synchronize these patients, or premenopausal subjects in the study and then monitored estrogen levels on a weekly basis, and also did 24-hour estrogen monitoring at various time points throughout the study. So we could look at it not only weekly but also what happens even during a 24-hour period. And of course, looking at LFH and E and under those conditions. And the placebo-control, of course, provides us with a minimization of bias in terms of where the baseline is for these individuals coming in. Where we're evaluating, of course, the data on the basis of comparison of 2 doses to placebo. And of course, looking at their baseline. Everything looked very normal in terms of the baselines of the placebo. Versus the 2 treatment cohorts. And as soon as we get the study cleaned up and finalized here in the next 3 or 4 weeks, we will come out with more detail on the outcome. All right. Thank you.

Thank you. We will take our next question from the site of Phil Nato with SG Cowen. Go ahead, please.

Good afternoon. Thanks for taking my question. Gary, I have I guess two related questions for you. Now, the first is, I was wondering if you could give us maybe a little bit more detail on what exactly you need to do for the IR submission between now and late this quarter and early next quarter? And the follow on to, that the related follow-on, is, it was my impression that had the FDA meeting gone exactly as planned, you would have been able to file an IR very soon after the meeting. It does sound like the meeting went just as you had expected but now it seems like we are going to wait 6 to 8 weeks to see the IR filing. So I'm wondering if anything came out of the meeting, any additional work needed to be done after the meeting versus what you had expected before, before the meeting?

I will turn it over to Wendell, but precede that by saying there was nothing, no extra work or additional activities that the FDA required or asked us to do. But Wendell has been more current with the regulatory process and can provide more color.

Well, basically, at our FDA meeting of course, we showed them what we had done, and what was still in progress. We had quite a bit of it in motion already, at that point in time, in terms of basically having an overlay of the NDA format with the ECTD format and making sure that whichever reviewer wants to go in one direction versus another, they had the abilities to do that. As Gary said, the FDA was fine with the changes in the direction that we had been going. Of course, we still need to get all the data sets as we're moving some of these from one module to another to make sure they're all integrated, that all the links are working. That is well along at this point in time. However, we do need also to put in an update on the safety. And with the 404 study coming out now, we need to integrate that as well. So that's taking just a bit longer. As Gary pointed out, there really is a negating or rate limiting activity here as the MR filing. Quite frankly, we're putting most of our focus in making sure that that is as fast as possible, and along the way, of course, making sure that the common modules are all in good shape between the two filings as we pull it all together here. So having said that, everything is working well. The QC of it is happening at both sites between Neurocrine and at Pfizer. So it is basically getting a double QC, to make sure that it is basically bullet-proof.

No mistakes this time around, and we are more inclined to invest a little bit more time with Pfizer's QA/QC to make sure there are no surprises on the back end.

Okay. Great. Thank you.

Yes..

Thank you. We will move next to the site of Bob Verenzi, Lerrick Swann. Go ahead please.

Thank you very much. A couple of quick questions for Paul. Paul on the revenue line, 145 to 150 for '05, can you just estimate what the milestone revenue will be of that for the acceptance of the 2 filings?

Well, as I mentioned back in, I think at the last quarterly call, we're expecting $70 million on the acceptance filings. So that would be 20 million on the IR acceptance and 50 million on the MR acceptance.

All right. And then one further on the Zoloft, what contribution do you see for '05?

Yeah, we've actually always considered -- we've not given out any guidance to the street as far as Zoloft revenues are concerned. We've always figured or put that in as more of an add-on. To us, the real key goal to getting this sales force up and running is one that Pfizer is obviously reimbursing us for it. We get a Pfizer trend sales force up and running, and we're able to start meeting with psychiatrists virtually immediately. So that helps our commercial operations. If we do end up with additional revenues from our efforts of selling Zoloft, we really believe that will be more of an add-on for us.

So for the 145 to 150, no Zoloft contribution?

None whatsoever, no.

Okay. Thank you, Paul.

Thank you. We will move next to the site of Tim Ackerman, SAI. Go ahead, please.

Yes, hi, thanks for taking my question. Could you elaborate on your ongoing Phase III B trials, other than the driving trials that are going on for label negotiations? And secondly, how will any Pfizer sales force changes impact on Indiplon?

You asked two questions very easy to answer because I can't answer either of them. The Phase III 34 program is run by Pfizer. The only time we've commented on trials is when -- when individuals find out that they're going on and ask us about those. Thus, the driving study. But other than that, we haven't commented in the Phase III and the Phase IV program for competitive reasons. And again, on the Pfizer sales force size, you know, despite any changes that may or may not happen, you know, we don't see that impacting Indiplon, with Pfizer still remains the dominant sales and marketing organization in the world, and we will have more than adequate capacity to make Indiplon the kind of drug we think it will be.

Okay. Thank you.

Thank you. We will take a follow-up question from the site of Jim Birchenough, Lehman Brothers. Go ahead, please.

Yeah, hi, just a follow-up question for Gary. Gary, I'm just wondering if you can comment on, you know, the evolving landscape of reimbursement for insomnia drugs, and how you expect to be competitive with a generic Ambian, and Ambien CR, Lanestin (ph) and perhaps some others. It seems like it is getting crowded and payers can be selective. So how do you address that challenge?

I think probably the easiest answer to that is I've commented often on generic Ambian and as we've always said, we viewed that as favorable. In that once Ambien does become generic, obviously it is not going to be promoted, share invoice increases, the label being sought by Neurocrine and also the label that has been achieved Bilanet (ph) is one that goes beyond what Ambien is approved for today. So I wouldn't consider Ambien substitutable for maintenance, middle of of the night or long term use because it doesnt have the label to support that. And, obviously, in working with Pfizer, they have significant managed care experience, product offerings, and we think that bodes well for us in the competitive marketplace.

And is there an opportunity in advance of Indiplon launch for you to lay the ground work for that reimbursement so can hit the ground running.

Yeah, Pfizer has already deployed that both internally as well as with several external vendors.

Great. Thanks for taking the follow up.

Certainly.

Thank you. We will go next to the site of Aaron Reims (ph), Stanford Group. Go ahead please.

Good afternoon. And thanks for taking my question. Paul, I wanted to know, in that revenue guidance of 145 to 150, is that going to include the reimbursement for the sales force then? And can you give us an idea of what percentage that might be if it is the case?

Yeah, actually it does include reimbursement for the revi for the sales force. And where we're expecting that to be is just break even with our internal costs.

And then --

Expenses offset by revenues to break even.

Okay. And then, Gary, it seems as though you felt the meetings with the FDA went really -- or fairly well and they're aware now of some of the changes that you've made. Do you think that is going to expedite their acceptance of the filings, and do you think they will take the full 60 days for acceptance? Or will that potentially be shortened?

No, I don't think -- it can be shortened. I think it is 60 days by law, and 10 months or 8 months after that for PDUFA action date, and it wouldn't be any sooner. I think it may be an advantage that this is an application that they've seen before, started partially reviewing, and now they see it again, so that may have helped but it won't shorten up the acceptance date.

Okay. Thank you.

Thank you. We will take a question from the site of Satinna Abastaba (ph) Morgan Stanley. Go ahead, please.

Hi, thank you for taking my question. I had a couple of questions. If you can just give us some clarity of what the technical issues which are taking roughly, you know, 4 to 6 months to address? Secondly, a better clarity on the MR study, the MR filing, you had previously planned to put 3404 in the 120-day update and I guess now you're saying you would like the time which has been given to you because of the delay to include it. But are you still shifting the time by a little bit to include the study, or would you be better off if you're going to use it in the 120 update even now? And the last is, how are you amortizing, are you going to be amortizing a milestone or not?.

Paul, amortizing milestones?

No, we will cake them as they occur.

Thank you.

And the first question is 4 to 6-month delay, there is not a 4 to 6-month delay. We met with the agency at the end of the January, and the time to refile is less than that. The question on the 404 is yes, previously, we had planned to put it in the 120-day update because it wasn't going to be complete before filing. And now, coincidentally, it will be complete momentarily, so why not include it. It bolsters the package. If you -- I guess would rather not submit additional information, would rather submit everything at full complete application and think that will help us in the back end.

Is that why your IR, MR time line is different from each other, why you're not filing them together?

Yes.

So, I guess I'm probably still having problem understanding as to why you would delay the filing and not do it with the way you done previously, because it wouldn't delay your filing.

It is simile a result, now it is done. We filed before, it wasn't done. As I mentioned in my comments earlier, typically it has take 60 days from top line data knowing the results of the study and having full QA/QC study reports that can be incorporated in the document. So, 2 months we think is wise to do, it bolsters the package, it is done, it doesn't have to be added as an update. In the case of IR, all studies are done. There is no 120-day safety update related to IR because every study will be included in the application.

And the last question, the Zoloft co-promote; that at all contingent on acceptance of the filings?

No.

So that is independently completely.

It is already started.

Okay. Thank you.

Thank you. We will take a follow-up question from the sign of Ean Somaiya, Thomas Weisel. Go ahead please.

I think we're running low on time and we will take this call, and as always Paul and I are available, if you didn't have a chance to ask a question and want to, feel free to call us directly.

Okay. Just wanted to get an update on the status and timing of the regulatory applications in Europe and Japan.

Well, we don't control Europe and Japan. That's under the control of Pfizer. One of the advantages of filing in the ECT format is that it is fileable and acceptable around the world. So it is simply a question of the registration strategy. And I don't have more to say on that, since we've been focusing on the U.S. But remind you Pfizer is the largest pharmaceutical company in Japan. That is a very attractive market. And the strategy for Europe is, as I understand under review, but the package is fileable.

Okay. Thanks.

Okay. And thank you for your questions and again if we didn't have a chance to get to you I apologize but feel free to call me directly or Paul directly. The number here 858-617- 7650 -- or 7658. Thank you. And we will be updating you on our progress as time goes on. Thanks again.

That concludes today's teleconference. We like to thank you for your participation. Have a great day.