Neurocrine Biosciences Inc (NBIX) 2007 Q2 法說會逐字稿

Good day, ladies and gentlemen. All sites are now online, and in a listen-only mode. I'll now turn the program over to your moderator for today, Gary Lyons. Go ahead, sir.

Good, thank you. And thanks everyone for joining us for Nuerocrine's second quarter earnings update, and R&D update as well. Joining me in San Diego, is Kevin Gorman, Chief Operating Officer, Tim Coughlin, who is VP and Chief Financial Officer, and joining us from a remote location is Chris O'Brien, SVP and Chief Medical Officer.

So the program for the day, will be, first to start with Tim, who will review financials. I'll provide a brief update, on Indiplon FDA interactions, registration, update. Kevin Gorman, will review commercialization, pre-commercialization efforts surrounding Indiplon, and then we'll wrap this up with Chris O'Brien, who will review the pipeline, and I think expand upon the press release of yesterday, related to the in-licensing of what we think, is a very interesting compound Valnoctamide and with that, let me just turn this over to Claudia Woodworth, briefly for our Safe Harbor statements, and then we'll get on with the program.

Good afternoon. I want 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 intentions, hopes, 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 filings, 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.

Thank you. As always, Claudia, well done.

Thank you.

Let me turn this over then, to Tim, to review financials.

Thank you, Gary. Neurocrine reports a loss of $26.4 million, or $0.69 cents per share, for the second quarter of 2007. This compares to a loss of $27.4 million, or $0.73 cents a share for the second quarter of 2006. Our 2007 year to date loss, is $52.1 million, or $1.37 per share. This compares to a loss of $53.4 million, or $1.42 per share, for the first half of 2006.

Overall revenues have decreased from 2006 to 2007, due to the cancellation of our collaboration agreement with Pfizer. However, this decrease in revenues, has been fully offset, by a corresponding decrease in operating expenses, due to our 2006 severance program, coupled with broad expense management efforts.

Research and development expenses have remained relatively stable from the first quarter of 2007, to the second quarter of 2007. Significant progress was made during the second quarter in our research and development programs, including the re-filing of NDA- indiplon capsules, continued patient enrollment in our GnRH phase two DEXA scan trials, and the in-licensing of the stereoisomers Valnoctamide. We expect R&D costs to increase through the rest of the year, as we incur costs for our Indiplon Phase III B program, and continue to advance the balance of our pipeline.

Sales, general and administrative expenses have increased from the first quarter of 2007, to the second quarter of 2007. We've expanded pre-commercialization activities for Indiplon, including hiring an ad agency, completing quantitative market studies for Indiplon, and engaging a public relations firm. We expect SG&A costs to increase throughout the balance of the year, as pre-commercialization activities for Indiplon intensify.

Included in our quarterly expenses are non-cash expenditures. These include FAS 123R expense of $28 million, and depreciation expense of $2.5 million, for the second quarter. Our year to date FAS 123R expense is $5.2 million, and depreciation expense is $5 million year to date. We have maintained a well control burn rate for the first half of 2007, yielding a cash balance of June 30, 2007 of approximately $147 million.

In closing, we are currently working on a refinancing of our building, which will gross approximately $37 million of additional cash. We expect to conclude that transaction during the third quarter, of this year. Upon completion of this refinancing, our expected year end cash balance will increase to approximately $140 million. I'll turn it back over to Gary.

Okay, thank you, Tim. Let me make a few comments related to, Indiplon re-filing. As you know, we refiled or provided the FDA with a complete response for Indiplon 5 and 10-milligram capsules. That complete response, was sent in on June 12, and within a week was uploaded and fully operational, at the FDA. Our regulatory department received correspondence from the FDA last week, and in that correspondence we're advised of three things.

First, that our application appears to be complete. The submission is now under review, and there are no requests at this time from the review team, nor have there been since that correspondence. So we feel comfortable, as to where we stand right now.

We, of course, still awaiting for an official letter for the agency, the importance of that letter will be to confirm the actual PDUFA action date, and our guidance on that, has been to expect this to be a class two review, which therefore would give us a PDUFA date, on or around, December 12, of this year, give or take a couple of days, and we would expect that correspondence in the very near future.

So with that, let me then turn this over to Kevin to review precommercial activities.

Thank you very much, Gary. It's a very exciting time for Neurocrine right now. As you heard Tim say, our budget is, has a lot of marketing activities that are going on. Our marketing team is working at full throttle. We're working closely with our agencies of record, for consumer, professional and PR.

Our medical science liaison team has been deployed, and is performing medical education, across a variety of specialties, including the primary care practitioners. We're completing our positioning work now. That's going to be followed by our messaging research, and simultaneously, we are now developing our launch materials. Now, in addition, we have completed manufacturing of all launch supplies of the bulk drug, and we will have finished drug product, completed before year end.

What I would like to go into in just a little bit of detail, is to date, we've undertaken a substantial amount of market research, both qualitative and quantitative, with both physicians and sufferers. Our largest research initiative, was a quantitative study with over 500 insomnia sufferers, and nearly 600 prescribers, throughout, again, a number of specialties, but the bulk of which, were primary care and internal medicine docs.

Now, the objectives of this, were to now determine, how patients suffer from insomnia, and with the, with the recent launches of Ambien CR, and with Rozerem, and with Lunesta, having been on the market for sometime now, to really assess in realtime, the treatment practices within the insomnia market. And then also, to get patients and prescribers' attitudes towards those current treatment standards. The output of that research has been very eye-opening.

What we have found first and foremost, is that nighttime awakenings, far and away, are the most prevalent and bothersome insomnia symptom, and bothersomeness is the main reason that drives sufferers to their physician, asking for a prescription. In addition, these nighttime awakenings, they're intermittent. They don't occur every night of the week. On average, about three nights, perhaps four nights per week, and importantly, they are unpredictable.

The vast majority of patients, cannot say with any certainty, or know when they go to bed, is this going to be a good sleep night, or a bad sleep night. Now, with the sleep maintenance product launches, that targets this-- these communities, this still seems to be quite a large dissatisfaction, around both efficacy and tolerability, with these agents. Sufferers have an ongoing desire for a better night's sleep. You can see this by the still large switching behavior, that takes place in this market, and even the switching behavior that goes between Rx and OTC, and OTC and Rx, in this marketplace.

Patients clearly, would like to have-- treat their insomnia only when it occurs. That not only means which night of the week it occurs, but when, during the night that it occurs. They do -- they would prefer to have an agent that they don't have to take, prophylactically at the beginning of each night, whether they need it or not. This research that was completed by us just this past two to three months, is being backed up now, as we've discovered, in the, in the academic community, independent of us.

There's been a large research initiatives, and those, those papers are going to be coming out later this year and early into next year, with very similar findings, around nocturnal awakenings, as being the predominant symptoms suffered by insomniacs, and I think the first presentation of this will be taking place at the world insomnia conference, that will be in Sydney, in September.

Now, with that, I think I'll turn it over to Chris, but first, could I just say that we have put off partnering, as you know from our previous calls, until we had our resubmission, and now that that resubmission has been in, we have been very active on the partnering front. We have quite a bit of interest in Indiplon at this state, and we have a number of parties, that we're at various stages with, so the partnering is going well, at this point in time. Chris?

Thanks, Kevin. So as Kevin mentioned, in addition to the medical affairs activities, and focus on Med Ed, one of the things that we're working on, is our Phase III B program, and this, for Indiplon is to explore the impact of a drug like Indiplon, that is successful at helping patients fall asleep, or initiate sleep, even in the middle of the night, and the impact of that, on next day function. So the Phase III B studies will be beginning shortly, and will provide us, for information as we look to expand our post-approval Phase IV programs as well.

In addition to the Indiplon Phase III B program, there's a lot of activity. We focused on our key programs within clinical development, specifically the GnRH non-Peptide antagonist program. I think as people are well aware, we are in the midst of a Phase II B study, primarily designed to assess the impact of our drug, on bone mineral density, and with the goal of demonstrating preservation of bone, despite modulation of the hormone levels responsible for the painful symptoms associated with endometriosis.

In addition to that ongoing six-month trial, which is about a third, a little more than a third, enrolled at the moment, we have a, just completed an additional formulation study, finalizing our choice of tablets, that we will take into any additional clinical trials from now on, in particular the Phase III trial, trials that we will need to carry out. So the GnRH program is going well, and we're targeting, ultimately sitting down with an end of Phase II meeting, with the FDA, and working out the details of that Phase III package.

Now, as you also know, we have a Phase II program with our CRF agent. This is the partnership program with GSK, and they currently have two compounds, one in the midst of proof of concept Phase II trials, in parallel, both social anxiety disorder, and irritable bowel syndrome, as well as a second lead compound, which is just recently completed the multi-dose Phase I study, and will be moving on into similar Phase II studies shortly. The goal with these programs, is to generate data to move best product forward, best compound forward, and we expect to begin hearing clinical data from GSK in late -- toward the end of this year and early 2008.

Another Phase II program, of course, is the Urocortin 2 program, this is the Peptide infusion, targeting congestive heart failure. We had successfully completed the short-term infusion studies, that is a four-hour infusion studies, inpatients with CHF earlier this year, and we asked our colleagues in preclinical, to complete additional preclinical trials that would allow us to carry out longer-term infusions, for example, 24 or even up to 72 hours, after we had seen some initial signal of efficacy and improvement in cardiac output, and other heme-dynamic parameters. So our preclinical colleagues are in the midst of that. And the goal is that, once complete, this molecule will be ready for additional clinical development. We expect the output of those preclinical initiatives, in very early 2008, and at which point, I think as we've mentioned, we would be looking for potential partners in the cardiovascular arena.

Beyond the Urocortin program, we've just completed the first first Phase I study with our selective norephenephrine re-uptake inhibitor. This molecule is targeted initially for neuropathic pain, but as other potential neuropsychiatric and other indications. I just got the initial data output on Monday of this week from our statisticians, so we're in the midst of the data analysis, as we speak, and once we've had a chance to complete that data analysis, we'll make some decisions about how to take that forward.

Most importantly, and I think as Gary mentioned, we're very excited about this in-licensing opportunity that was announced earlier this week, with Valnoctamide stereoisomers. Valnoctamide is an interesting drug, and the stereoisomers that we're interested in, are very potent and very selective, and preclinical models of neuropathic pain, epilepsy, and other CNS disorders. The parent compound [eracimate] has been used in Europe, where it was originally approved as anxyolitic, the stereoisomers that we're working with, we aim to take one forward, into humans in early 2008, and explore these multiple possible CNS indications, including neuropathic pain, epilepsy, bipolar disorder, and other potential indications.

The goal with this molecule is that it has the potential to be a very safe, or a safer valproate, namely, avoiding the terogenicity, and hepatoxicity risks associated with valproate, and yet retain its marked potency.

So I think I'll actually pause at that point, and turn it back to Gary.

Kevin, comment on partners?

Yes, on the partnering front, particularly with GnRH, is the goal in that program, was last year, to hold the program in the United States, but partner regionally, Europe and, or, Japan. We've gotten quite a bit of interest now from a number of different parties. Those women's health parties in Europe obviously have large presence in the United States, and also multinational companies, and so we're looking at potentially doing a license, for a worldwide territory, with that at this point in time.

Okay. With that, I think we covered everything that we planned to. I'm sure there are questions, so let me open it up to Q&A at this point.

(OPERATOR INSTRUCTIONS). It looks like we'll take our first question from Brian Lian, of CIBC World Markets. Go ahead, please.

Hi. Thanks for taking the question. In the past you've talked about conducting a pilot study, in maintenance comparing the IR, versus MR formulation. I was just wondering if you have any update on plans there, and secondly, is there any update on pilot studies for elderly MR doses?

Yes, the plan was, as you know, FDA for MR access to explore a lower dose. We had various formulations, but not all formulations below 15. We can safely say that 15-milligram MR, is the adult dose. So the studies that we're about to do, that pending formulation development, which is completing, and they will evaluate lower doses of MR, versus placebo, versus an IR, equivalent dose, to at least have that comparison. So the PK portions of that are expected to start and complete year end. The -- what was the second question?

That was the second question. The first question is just a straight-up pilot study of IR versus MR to look at maintenance, not excluding sort of the elderly population?

No, that would just be part of the overall MR dose exploratory study.

Okay, and then Chris, I just have a question on the follow-up data for the 2A trial of 56418. Has the 12-week follow-up been presented?

It has not been presented, other than an abstract presentation at the European ESHRE meetings in, earlier in July. We've made a comment about the lack of impact of 56418 on the bone resorption as measured by the biomarker ateolpeptide. So at this point, the 12 -- the additional 12 weeks of no treatment follow-up, for both the Phase II A studies has been quite unremarkable. No safety issues, no signals of bone loss, and that obviously, has been encouraging for us, going into the six-month study.

Okay, thanks a lot.

Next we'll go to the site of Thomas Wei, from Piper Jaffray. Go ahead, please.

Thanks, and thanks for sharing some of the initial market research for Indiplon. You had mentioned that, the patient seemed to be most bothered by the nighttime awakenings. Did you have a chance to assess any feedback on the interest, or acceptability, of taking an insomnia drug in middle of the night?

Yes, actually we did. We asked those questions directly.

We both asked them of the patients prior to them, seeing any sort of product profile allowing, letting -- prior to any product profile, and then letting them see a drug such as Indiplon in the research, and what you see is that there is a large proportion of the patients, over 40%, that would prefer to take the drug at the, in the middle of the night.

Now, having said that, that's 40% of that population. There was another 28%, that their only symptom, was difficulty falling asleep. So the drug was appealing to them to be taken at the beginning of the night, first giving themselves a chance to see, will they fall asleep that evening, if not, then they would take that.

The minority of the patient population, was those that had both trouble falling asleep, and, and nocturnal awakenings. So the largest population of patients are those that have nocturnal awakenings only, or that have a problem falling asleep, but in both populations, they would prefer, to first see if they are having a problem that evening, before taking medication.

I guess I'm curious. Did you in the line of questioning here, have a chance to gauge, what I would have thought would have been patient misperceptions, or fears, around taking a drug very late in the evening, next day residual sedation effects, or the inability to wake up in the morning, did you get any sense or feedback on that?

No, we did not. The patients were given a product profile that showed that the drug would be one that would have to be taken when you had four hours left in bed, and so the answer to their questions based on that type of profile.

Okay, thank you.

Our next question comes from the site of Phil Nadeau, of Cowen and Company. Go ahead, please.

Good afternoon. Thanks for taking my question. My first is a follow-up to Thomas' question, and that's on a middle of the night dosing claim, for Indiplon. Can you remind us if you've submitted, for that claim, and what your expectations are about securing it, securing one this December?

Yes. What we have is we have several clinical trials that were submitted, both Phase I studies and Phase III studies, in which we showed that the drug in the Phase I studies, when given to patients, both elderly and also adult patients, there were no impacts on next day residual effects, four hours later.

In addition, we did a large double-blind placebo control one-month long study, with patients and the drug proved itself to be very efficacious, in putting them back to sleep, when they woke up in the middle of the night. And in addition, increased their total sleep time, in that last half of the night, by nearly 60 minutes. So -- and we appear confident, we feel confident that, that would be a claim that would, that we could have in our label.

Okay, and was the middle of the night dosing, addressed in the prior approval letter?

Yes, well -- yes, it was, but not as part of any, of any question by the FDA.

Okay, so was it addressed meaning like, you could secure it?

It was -- yes, the data that was in there, was not in question for that.

Then my second question is on the potential timing of a partnership. Given that we're probably about four months away from a product launch, do you think it's possible that you'll have a partner signed at the time of the FDA approval, or is there chance you would launch this on your own and then bring a partner in later?

The, the -- as Gary said, the approval date of the date would be December 12. Now, what you need to realize also is that this would -- we anticipate this to be a schedule for drugs, so in addition, there would be approximately, eight weeks that would be added on to that, into the first quarter of '08 for scheduling, and then the DDMAC materials have to go through. We would anticipate that we would have a partner on board, prior to launch in next year.

Okay, great. Thank you.

Next, we'll go to the site of Sapna Srivastava. Go ahead, please.

Hi. It's actually Dave Freeman calling in for Sapna, just a question about the Urocortin program. What exactly has to be done pre-clinically, to go from four-hour infusions, to longer infusions?

Chris, do you want to handle that?

Sure. The main requirement is that you have adequate exposure during the entire duration of the infusion, and there's some unique aspects of this Peptide, that make it challenging to, in animals, not humans, but in animals, to maintain adequate exposure, so they are working on some kind of technical issues, of just getting adequate exposure.

So is this, is it a question of how it's formulated, or is it -- I guess is there any more sort of detail about that, or--

Let me try, Chris. I think what we're talking about is long-term infusions in primates, that go well beyond, or a multiple of the 72-hour duration, you do in humans.

Yes, so these are, these are two-week studies, two-week infusions with exposures, many multiples of what's required in humans, and that's just technically a challenge to get it in, and maintain it at that level in primates.

Okay, and so how long do you anticipate having to do those studies for, preclinical work?

So we expect output from these trials in early '08.

Okay, and then you'll be able to -- are you going to start then, or wait for a partner before starting anything further?

Well, I think--

We would do this with a partner.

Yes, and I--

So you would wait for a partner before you did any longer infusion studies?

Yes.

Okay. Thank you.

All depends on other business development activities, revenues, and such, and just overall, product priorities.

Sure. Okay. Great. Thanks very much.

Next we'll go to the line of John LeCroy, from Natexis. Go ahead, please.

Thanks for taking my call. Can you tell us what the active comparator is in the GnRH trial?

Sure, Chris?

Yes, it's DNPA.

Depo-pavera.

Okay. Thanks. That was my question.

The reason is, I believe, it's the only thing approved for Endometriosis, correct?

Not quite, the others, obviously Lupon, but Lupon has such severe bone loss, and hot flashes, and other characteristics that unblind it, and make it not a fair comparison, when looking at bone.

Okay.

Next, we'll take a question from the site of Jason Napadano, of Zachs. Go ahead, please.

Thanks for taking the question. You touched mostly on my question already, with middle of the night dosing, but I just wanted to clarify the label that you're going after, or what you expect to be on the label, would be, you need to have four hours, or you need to be four hours, from when you plan to wake, is that right?

Yes.

Yes. Versus existing labels that call for eight hours.

Okay. So -- and you expect that to be -- or you expect that to address roughly 70% of the suffering population, 40% that wake, and another around 30%, that had essentially, induction?

Correct.

So if that's 70% of the market, then, what's the point in going after the remaining 30% by doing maintenance claim or spending a whole bunch of money, to try to bring an MR product to market, for a maintenance plan?

Well, first--

Targeting 70%?

Correct. Yes, we would expect obviously to be in partnership, and partner, funding, as we view an MR classic maintenance product offering, as a product line extension, and to have a complete offering for all patients, to give them more choice.

Okay. You hear so much from other companies about how, the maintenance is really where the market is, so I guess it's interesting that you're saying, roughly 70% of the market could be addressed by, by an immediate relieve formulation.

It's an evolving marketplace right now. It's a unique opportunity. Again, what we direct you to, is those of you who keep an eye on this marketplace, is to watch for these, what we believe are going to be landmark publications, that are going to be coming out this year, and into next year.

There are more ways to achieve sleep maintenance in different ways. We think this represents a more attractive alternative, that not only is preferred by patients, but obviously you can imagine payors would rather see drugs taken PRN. Chris, comment on the publication time line around middle of the night study?

We've -- the data from our middle of the night study that Kevin was describing earlier, that manuscript has been submitted, comments from the reviewers have been addressed, and sent back in, so we would hope to have our data out and peer reviewed, top tier publications, later this year.

Okay, great. Thanks.

Okay. Thank you, guys.

Next we'll go to the site of Annabel Samimy, from UBS. Go ahead, please.

Hi. This is Stacy [Hurata], calling in for Annabel. You mentioned that the SG&A expenses were going to be wrapping up in preparation for the Indiplon launch. Could you provide more specific guidance around those increases?

Well, they are going to be increases related to, as we ramp up, all the pre-commercialization activity. So working with the ad agency, et cetera, and what I would expect to see, is in the neighborhood of a, probably a 20% increase over the rest of the year, over where we are right now.

And all of those numbers are baked into the guidance we've given you, and to step back, I think, a quarter or more, of those funds, became available when we cancelled the, what was known as the insurance, the other Phase III IR trial, and that provided the resources to direct, into pre-commercial activities and then obviously expect a partner to step in, and bring that to another level.

Great, thanks.

Our next question comes from the site of Aaron Reames of AG Edwards. Go ahead, please.

Thank you. I just -- the first question that I had was regarding the marketing study. Did you gain any insight on whether or not Sonata was being used as a middle of the night agent, and can you just maybe talk to what you learned about the off-label usage of that compound?

Well, Sonata is a, has in its label, that it's safe to be used, but it's never shown effectiveness in the middle of the night. And as far as the awareness among physicians, or patients, of Sonata, it's virtually nil, at this point. The beauty of this marketplace is, that it's highly efficient. The safety is your card into the game, but then you absolutely have to have reliable efficacy, in order to stay in this game. Any compound that hasn't shown itself to be efficacious, is crushed almost immediately.

Sonata is a clear example of that. It's a very weak impotent drug. Sonata has a -- its potency at the receptor is approximately 200 fold less, than Indiplon's potency at the GABAA, so Sonata through its clinical program, and clearly commercially, right away showed itself not to be an effective drug.

Then I was wondering if you could just touch upon what the PSG requirements are for the agency now. It seems like following Ambien CR review, that those requirements had changed somewhat, and that they may be looking for a longer study, longer PSG study.

I think you've captured that correctly, yes. It appears that the standards are now, both for elderly and adult populations, longer duration, both objective, and subjective data. So for example, in adults, a one-month PSG trial, followed by, either six months or even 12 months of subjective data collection.

And I didn't recall previously, did you run a 30-day PSG study for IR?

Yes, we did.

Okay. Excellent. And then last question I had, can you characterize where you're at in the partnering discussions? Is it, you know, early in the process, or have you -- has there been some due diligence meetings? Can you just talk about that a bit further?

Yes, it, it cuts across the range.

Okay.

Various partners.

All right, thank you.

(OPERATOR iNSTRUCTIONS). Next we'll go to the site of [Gene Camboli], from Lehman Brothers. Go ahead, please.

Hi, guys. I was wondering if you could go into some detail on what your market research revealed, in terms of the elderly patient population, and how, how middle of the night awakenings effects them. And then can you remind us what the date it looks like for Indiplon capsules, 5 and 10-milligrams in terms of the resubmission, and the elderly population.

I'll take the first half of that question and then Chris can answer the second half. The elderly appear to suffer very similarly to the, to the adult population. They also have severe, and prolonged nocturnal awakenings, is what the research has shown. Chris, do you want to take the second part?

Sure. So in the NDA for Indiplon capsules, includes the requisite objective PSG, and subjective outpatient trials in the elderly, the recommended dose that has been proposed in the NDA, is the 5-milligram capsule for the elderly. So, 5-milligrams for elderly, 10-milligrams for adults.

Great. I was hoping you could go into some more detail on the Phase III B studies, and when can we see those start?

So the initial III B study that's just in the close to launching stage, is looking at some exploratory outcome assessments, of next day function, and related things, and we expect that, to have completed enrollment by end of year.

Probably all we want to get into now.

Yes.

And I think we'll get further along in the approval process, we'll be clearer of the other Phase III B programs, as well as the phase IV program.

Okay, and just a follow-up on partnering discussions, I guess, if you could comment on, the sort of partnering, partnership you're looking for, with regard to Indiplon, and then separately with regards to GnRH, in terms of, you know, it sounds like for GnRH it's a worldwide partnership at this point, that you're considering, but then in terms of further development activities, and, you know, breadth of marketing, can you comment on that?

Sure, starting with Indiplon, we're looking for a partner who's going to be dedicated to the sleep field, and one that has the reach, from a primary care sales force, to be able to reach into there, and in addition, has the experience and the wherewithal in order to carry out the DTC campaign, that would obviously be necessary in this therapeutic class.

From the, from the GnRH -- yes, and also we -- with Indiplon, we are looking at the markets actually separately, and potentially having a different partner in Asia, than from the, from the rest of the world at that point in time. And so to have a partner who is dedicated to the Asian market.

Second is the GnRH partnering program, and here, we have a platform to, to work from in this program. We have multiple types of compounds. The farthest along is 418 and it is looking very good thus far, as you've heard. And that could be a very powerful women's health compound.

In addition, we have other drugs that are going, finishing up their preclinical tox programs right now, and those ones, may be ones, that could be taken into other indications, particularly in male health and also in oncology. And so we're looking for a partner that is going to be able to fully exploit, this program that we've put together.

Thanks for taking the question.

Next, we'll go to the site of Thomas Wei, of Piper Jaffray. Go ahead, please.

I knew you would be back, Thomas.

Thanks. Just to follow up, on the question about the middle of night dosing, and getting it on the label, our expectation should be when we see the label, that there will be data from the middle of the night, dosing study, in the clinical section, and then also a change in how many hours in advance of waking up patients can take it, that's how it will read when we see the label?

So obviously just the comment about label, labels are not labels, until they are done. And so those final negotiations and discussions will have to occur with the agency. But having said that, you would expect the statement that Kevin described before, about regarding four hours remaining in bed, to be part of any kind of, middle of the night dosing statement.

I think we might be expected to be more than what you just said, Thomas, but as Chris said, we think label's not a label until it's complete.

I see, but you're targeting something maybe more in the indications, in usage section of the label, that might actually say something, like you can take this in the middle of the night, the treatment of insomnia, and something else?

Like I said, I stick to my prior comment.

Okay. Thank you.

And we'll take our last question from the site of Eun Yang, of Jefferies. Go ahead, please.

Thank you very much. In terms of the commercial partnership for Indiplon, you guys had mentioned that you would spend more money the second half of this year for pre-commercial activities, and I'm just wondering, once you establish a partner, would you be involved in similar commercial activity, or during this partnership discussions, kind of a co-promotional arrangement is being considered?

As with the relationship that we had with Pfizer, we were a full partner with them in the commercialization and we would anticipate having the same with, with a future partnership.

Okay. So in this precommercial activities, are you actually planning to hire some sales reps in addition to medical liaison people?

We are going to -- we have an MSL force, on board right now, and as we negotiate a partnership, our preference would be to be able to co-promote this drug.

Okay, thanks. And any timing, potential timing for a GnRH partner?

That, that we're working on right now and we are, we're advancing discussions on, with numerous companies. So it's -- that is one, like a label. It's done when it's done.

But we're well along in our efforts.

Yes.

Okay. The last question is, you guys mentioned that you are getting about $37 million in the third quarter from refinancing. If I remember correctly, I think you mentioned in the past it's about $55 million. So are you expecting additional $18 million in the future?

So what we did actually is the larger number was when we were going to do a sale leaseback, and we've decided as a company to retain ownership of the property, so we're taking a loan to value ratio up to 85%, so it's another $15 million in equity in the building, another $10 million in the vacant parcel, we have next to the building, so you take the $25 million of equity we're not pulling out, plus the $37 we're pulling out, it gets you to that $60 million number.

Okay. Thanks very much.

It appear there is are no further questions from the phone lines. I'll go ahead and turn it back over to the speakers for closing remarks.

Okay. Thank you, everyone, for your time and attention, and as always, give us a call if you have any other questions you would like to have addressed. And we'll talk to you next quarter. Bye.