Neurocrine Biosciences Inc (NBIX) 2012 Q4 法說會逐字稿

Good day everyone, and welcome to today's program. At this time, all participants are no listen only mode. Later you will have the opportunity to ask a questions during the question and answer session.

(Operator Instructions)

Please note this call may be recorded, and I will be standing by should you need any assistance. It's now my pleasure to turn the call over to Kevin Gorman, President and CEO of Neurocrine Biosciences. Please go ahead sir.

Thank you very much and welcome everyone to our year end earnings call. I'm joined this morning by Tim Coughlin, our CFO, and Chris O'Brien, our CMO. Before we get started I'd like to turn it over to Jane Sorenson who will read our Safe Harbor statement. Jane?

Good morning. 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 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. Kevin?

Thank you, Jane. So, hopefully you've had a chance to take a brief look at the press release this morning, which had our financial statements in it. Tim is going to walk you through that at first. After Tim, then Chris is going to give you an update on our pipeline and our research activities. After that we will be happy to take any questions. So, Tim, could you start off?

Sure. Thanks Kevin. Good morning, everyone for participating on the call. About an hour ago we released our earnings for the fourth quarter and the year ended December 31, 2012. It was another good quarter for Neurocrine, highlighted by progress in both the clinic with the start of our second Phase IIb study of our VMAT2 inhibitor, and financially exceeding our year end cash investments and receivables target. At the beginning of 2012 we guided to revenue of $40 million to $45 million and the net loss of $9 million to $14 million. We also stated that we would end 2012 with at least $170 million in cash, investments and receivables. Yielding a cash burned from operations of $40 million to $45 million. We exceeded these revenue targets ending 2012 with revenue of $53 million and net income of $5 million. This reduced or net burn to approximate $27 million. Representing a $13 million improvement over our original guidance in revenue, operating results and cash burn. This improvement was due exclusively to $13 million of one-time revenue from AbbVie we recognized this revenue during the fourth quarter of 2012.

This revenue related to the completion of the collaborative development period, and had originally been anticipated to occur early in 2013. As a result of this, we ended 2012 with approximately $188 million in cash, investments and receivables. Our net income for the fourth quarter was $9.5 million, or $0.14 per fully diluted share. This compares to net income of $1.3 million, or income of $0.02 per fully diluted share last year. For the full year of 2012 our net income was $5 million, or income of $0.08 per fully diluted share, compared to net income of $37.6 million or $0.67 per fully diluted share for the full year 2011. The change in operating results year-over-year is primarily driven by $30 million in milestones that were recognized in 2011 under our collaboration agreement with AbbVie.

Revenue for the fourth quarter 2012 at $21.9 million compared to $11.1 million last year. For all of 2012 revenue was $53.1 million down from $77.4 million in the prior year. Again driven by the previously mentioned milestones. Research and development costs increased year-over-year and quarter-over-quarter, and this was primarily driven by increased cost related to our VMAT2 program as it continues to progress to later stage clinical trials. This was coupled with an increase non-cash equity compensation expense. During 2012 we also added several key employees into the early research group, and we ended the year with 78 full time employees compared to 72 in the prior year. All of these new employees were in research and development.

The general and administrative expense increased year-over-year and quarter-over-quarter, and this increase was driven solely by non-equity or non-cash equity compensation expense. On another note, we executed one more sublease during the fourth quarter, we sublet 14,000 square feet to a local biotech, and this resulted in a one time $1 million non cash charge during the quarter. This completed our subletting process for the building. For 2013 our financial guidance is a net loss from operations of approximately $50 million to $55 million or $0.75 to $0.83 per share, based on 66.5 million shares outstanding. Revenue for 2012(sic-see press release "2013") was expected to be $3 million, which consists of the remaining amortization of upfront license fees. And other income should be approximately $4 million for the year. Expenses for 2012(sic-see press release "2013") are expected to be $55 million to $60 million, the increase in expense is driven by higher VMAT2 development costs, and general and administrative costs should approximate for the Q4 2012 burn rate. The balance in the increase in expenses is allocated to research and development.

A non cash equity spend for 2013 should approximate $6.6 million for the year. Our net cash burn for the year expected to be $50 million to $55 million or expect to end 2013 with over $130 million in cash, investments and receivables. So, that concludes prepared remarks on the financials and our 10-K should be on file with the SEC later today. And I'll turn that back over to Kevin and Chris for the balance of the call.

Thanks, Jim. As you can see from what Tim had just said to you, we are in a very good financial position right now. We ended the year with more cash than what we had anticipated. We are fully funding our programs here to move them as rapidly as possible. And with that I'll turn it over to Chris.

Thanks, Kevin and good morning to the listeners. As you know our elagolix program is fully in the hands of AbbVie and they are working very hard both on the Phase III endometriosis project, as well as the Phase IIb uterine fibroids. The endometriosis program is moving along briskly as we've described before. Abbott is enrolling women in the Violet Petal study at approximate 160 to 170 sites in the US and Puerto Rico and Canada. They are describing this program as on track and have said publicly that they will be reporting out data in early 2014. At the same time they are very rapidly moving the uterine fibroid program along, as Abbott has disclosed publicly -- AbbVie, sorry -- has disclosed publicly they are intending to initiate the Phase IIb trial in uterine fibroids this year, and anticipate starting the Phase III trials in uterine fibroids in 2014.

We are very pleased with the really quite intense focus that AbbVie has placed on the program. We are very pleased with the rapid pace that is being made with uterine fibroid program and looking forward to good things as that moves along the pipeline. Our efforts internally obviously are focused on our VMAT2 program, and it is really all hands on deck as we are intensely focused on the two Phase IIb trials that are currently being conducted in the United States. The first Phase IIb study is the Kinnect study, this is the trial in patients with moderate or severe tardive dyskinesia whose underlying diagnosis is schizophrenia or schizoaffective disorder. The study started screening patients in late September and we anticipate top line results in Q2.

We are very pleased with the quality control mechanisms that we have put into place with this trial. Absolutely a critical element is that the screening process for enrolling patients involves a videotaped structured neurological examination, and this video exam is reviewed by an outside group of external experts as well as myself and this has allowed us to have confidence that the quality of the patients, the appropriateness of the patients enrolled in the Kinnect study is spot on. For example, in round figures for the first 100 patients screened in this trial, about half of them are appropriate patients with moderate or severe tardive dyskinesia and their enrolled and go on to randomize.

The other half of the patients are screened failures and approximately half of those screened failures, failed because of all the usual things you see in trials. They're medically unstable, they have a prohibited mediation. They have laboratory abnormalities that are unsuitable for a Phase II study et cetera. The half of the half of the patients who are screened failures who are medically stable but fail, failed because there AIMS examination reveals that their AIMS scores are in the mild category and we're only allowing for this trial, moderate severe. The balance of the AIMS failures are because they have a mood disorder a drug induced mood disorder that is not tardive dyskinesia and that's common. These are complex drug induced mood disorders, but the beauty is that the video exam is part of the screening process allows to keep us exactly where we expected to be, basically at 50% screen fail rate and only enrolling appropriate patients in the Kinnect trial.

So that's going well. So far no safety signals. Obviously we will get the full safety profile once the database is locked and the study's complete and we report out the placebo controlled result, but knock on wood at this point, no treatment emergent serious adverse events that are drug related and so far no safety signals from our lab and ECG monitoring, that sort of thing. So, very pleased with the progress on the Kinnect study. The Kinnect II study is the slightly smaller study, 90 subjects, 30 sites. That subject began screening at one of our sites in December. We had our very productive investigator meeting in January, and that study is up and running now, and we anticipate top line results in the Q3 timeframe. All of this with the intention of getting to our end of Phase II meeting by end of year this year. You'll recall that the Kinnect II study is for patients with an underlying diagnosis of bipolar disorder, mood disorder or reglan induced tardive dyskinesia. So very pleased with that progress.

We have a series of initiatives to support both of these studies that are in various stages of rolling out, so for example you should see in the near future a youtube advertisement with the some video of patients. We are collaborating with the National Alliance for Metal Illness so there will be some activities there as we reach out to patients and caregivers across the nation. It has been a very instructive process as no one has done well controlled registration type trials in tardive dyskinesia, ever. And we're really on the cutting edge of figuring out how to do these and this will obviously position us well when we get to starting Phase III trials in 2014. So, good progress in the VMAT program with the Phase IIb studies, we have supportive activity going on in the background led by our pre clinical group.

Looking at the kinds of pre clinical toxicology's necessary -- studies necessary to support our plans for a Tourette's syndrome. So those are going on as we speak. And we look forward to being able to be in Tourette's syndrome studies in 2014. We are also working on a variety of other supportive activities better understanding our molecule and potential applications and a range of other neuropsychiatric disorders, and as we make progress in that arena obviously we will fill you in accordingly. That's the update from elagolix and VMAT2. I think I'll turn it back over to Kevin and look forward to some of your questions.

Thanks, Chris. So as you see we're moving the program forward as rapidly as we can. We have all of the resources that we need in order to do that, so right now we'd be very happy to take your questions.

(Operator Instructions)

Robyn Karnauskas, Deutsche Bank.

[My concern is] for the second-year in fibroid trial. Is that going to still be in the pre-op setting, and do you have any sense of whether or not the pre-op setting is where you will be for Phase III? And then, second, you mentioned starting a Tourette's trial in 2014. Does that mean, given some of the safety data that you see, I assume, on an ongoing basis, that you're more comfortable with it being a (technical difficulty) profile?

Thanks, Robyn. So, for the first question, I don't think the phrase pre-op setting is one that has really been a part of the discussion about elagolix for uterine fibroids. That's not a concept that the FDA has really been using as a regulatory target. There is some historical use of that kind of concept in European literature in trials, but here in the US, elagolix is seen as a iconic medical therapy allowing women with heavy uterine bleeding to bridge to menopause. So, it is not seen as a pre-op goal.

The second question on the VMAT2 study, for Tourette's, there is nothing about the safety profile that we see that we need to get comfortable with for Tourette's. What we're doing is the kind of work that you always have to do when you want to go into a pediatric population. You go into adults first. You get clinical data in hand. You do the supportive of juvenile toxicology studies in a free clinical setting to meet FDA requirements. Typically, you do a bridging kind of study, whether it is a PK study or a small, a Phase II bridging study in adolescence. And then, with that data package and the blessing of the FDA, you go into the pediatric study.

I'm comfortable with VMAT2 inhibition as an appropriate target and mechanism for children with Tourette's. What we just need to do is walk through this process to get us where we need to be. And obviously, we focused our initial efforts on the TD population in adults. But juvenile tox can only happen after you complete the initial adult tox package, and that just takes a little while. And that's exactly what we are doing.

Sara Slifka, Morgan Stanley.

I have two quick ones. The first one, on VMAT2 it sounds like you still have, based on your last comment, it sounds like you still have some pre-clinical work to do pre-Phase III. Can you just tell us what's left to do there before Phase III in tardive dyskinesia? And then, secondly, your revenue guidance does not include any milestones, and I'm just wondering if this was conservative, and if there's some potential milestones you could possibly be receiving this year? Thanks.

Sara, this is Tim. Yes, the revenue guidance for 2013 does not include milestones. We expect the milestone stream to pick back up in 2014, and we think that the $3 million is the number for the year. We don't see any milestones in 2013.

And as far as the VMAT question, the -- there are, of course, a whole range of pre-clinical programs that are necessary to get to the NDA. A lot of these things happen in parallel, overlapping as we marched through Phase II and into Phase III. So, for example, the chronic toxicity in the six-month and nine-months studies, those are ongoing. And they are going very nicely. So, those are not things that are hanging out there that are rate-limiting.

Likewise, we have a series of Phase I studies that are necessary to get to the NDA. Some of those, depending on the programs, some you do in parallel with Phase III, some you do prior to Phase III. In our case with VMAT2 inhibitor, we have a some Phase I studies that will be initiated this year that will help support the overall safety profile of our drug. Those will include the requisite special population studies like, for example, patients with hepatic impairment will do a Phase I study in those individuals. Patients -- we'll do a drug-drug interaction studies. We'll do a series of those. And we will do the requisite thorough QT study to look for any QTc prolongation.

Having said that, you may have heard me say before, we have been very pleased with our molecule. We did extensive testing in pre-clinical. We have no [HRG] signal with 854. We have also done extensive 12-lead digital Holter monitoring in our Phase I studies, and triplicate ECG monitoring in our Phase II studies, all to help give us some assurance that our molecule doesn't have any QTc prolongation. And so far it looks very nice in that regard, but we will do the thorough QT study to meet FDA requirements.

And the only thing I would add is that our pre-clinical group has started the discussion with the CAC committee at the Agency in order to design the carcinogenicity studies.

Great. Thank you.

Ian Somaiya, Piper Jaffray.

Just had a couple of questions. First, on the VMAT2, if you go back to the Phase III data, I think you mentioned previously that the trial, despite its goal to enroll moderate to severe patients, did, in fact, enroll milder patients with TD. And you still saw about a 41% reduction in the AIMS scale. I was just wondering if you're right -- the patients in the Phase IIb study are spot on, and you did enroll moderate to severe patients, what kind of a treatment effect should we anticipate?

I'd also expect in this trial about a 50% reduction in AIMS score in the TD -- in the active treatment arm, and I'm guessing about a -- not guessing, that my educated estimate is about a 20% reduction in AIMS in the placebo recipients based on the nature of this condition and the assessment tool. The earlier trial that you're referring to -- the figure of 41% reduction was in a very small, open-label trial that was in Canada, six subjects. The Phase II crossover trial that was done, as you recall, when we had blinded expert go out and review and score the blinded videos at all the sites, what he found was that overall, there were quite a few mild subjects. And with that population, the AIMS score on active drug 50 milligrams was about a four-point difference from their AIMS score on placebo, and that was highly statistically significant, and a clinically meaningful reduction.

Now, the overall -- the absolute number, the point reduction in our current trial may be larger, because I anticipate the baseline scores will actually be higher than when the AIMS expert scored the videos on that crossover trial. One point I would just reemphasize is that in that crossover trial, the investigators were the ones who determined subject eligibility. And they did that by generating an AIMS score, and there was a threshold where the AIMS score had to meet this threshold for the patient to be eligible. When we went back and scored the blinded videos, the actual baseline AIMS score was much lower than what the sites had generated. And that kind of baseline score inflation, as you know, is not an uncommon problem. We have completely mitigated that by having the inclusion of subjects in our Kinect and Kinect 2 studies be determined by an outside expert. So the site doesn't determine eligibility. That's done by the outside experts. That's why we are confident that the moderate and severe patients are being enrolled.

Okay. Makes sense. Just one question on the uterine fibroid program. Can you just share with us what the intent or the goal of the Phase IIa study was, and what would prompt AbbVie to be as vocal, if not aggressive, as they are being with the development program, given they still have two more arms in the Phase IIa study that have yet to complete?

Sure. So, the Phase IIa study was for Abbott, a proof-of-concept study. It was a series of cohorts that were looked at sequentially at a range of diff -- of doses and regimen. There are a very careful company, and they are trying to understand the molecule and its application in a very detailed and broad way. What they have said was that once they saw proof of concept from any one of these cohorts, they were going to pull the trigger on the Phase IIb study. So, they've done that. It doesn't mean they are done exploring the whole range of dosing and dose regimens, and so that's what they're looking at with these sequential cohorts. But what they needed, proof of concept, they saw. Hence, their aggressive move into the Phase IIb study.

Okay. Thanks a lot, Chris.

Jon LeCroy, MKM Partners.

Just three quick ones. Can you update on AbbVie's expectations for the filing for elagolix again? And then, on your partnering plans for the VMAT2, can you discuss just generally what you guys are thinking about post-Phase II? And then also on that, can you talk about timing to start Phase III if everything runs smoothly in Phase II for VMAT? And then finally, just after VMAT, what is next in the pipeline we should start looking at?

So, John I'll take the first question that you had there. What AbbVie has up on its website and what they've been publicly stating is that they will have -- they anticipate filing and approval in 2016, I believe is what they have. And I'll punt the other questions over to Chris.

So, in reverse order -- so, for the VMAT to Phase III question, John, I would anticipate kind of the Q2 timeframe of 2014. Obviously, we are hoping the FDA schedule allows us to have our end-of-Phase II meeting in the end of this year. And then we will be completing some of the activities around some of the Phase I studies I had mentioned earlier, like the tQT and [pack] impairment. We will be getting sites qualified. We will be pulling together what we think is a pretty ambitious educational campaign about tardive dyskinesia to help our -- support our recruitment efforts, and so Q2 start in 2014.

As far as what's in the pipeline, we don't talk about that in much detail. We've been very much focused on CNS activities. At any given time, there are 8 to 10 programs that our Discovery Research Group is working on. Some of them include some movement disorders or orphaned CNS diseases. The goal is to get one of these through as IND enabling tox studies this year. Obviously, this is a tough, uphill battle, but we've got some very attractive targets, very novel targets in movement disorders and neurologic disease. And I very much would like to get one of these into clinic in the near term. I don't know, Kevin, if you have any other thoughts?

No, other than that, as you all know, we are very active also looking outside with our business development efforts. We have performed in the last 14 months over 52 due diligences -- on-site due diligences on compounds and companies. We demand a lot from our internal programs, and we have those same demands from external. And we have yet to find something that we are willing to pull the trigger on, but that does not stop us. And we are continuing to look at the number of opportunities external. So, between external and internal, our goal still is to have something that is ready for the clinic by the end of this year.

If not in the clinic.

Or if not in the clinic. Yes.

And then on the partnering plans for VMAT?

Oh, yes. So --.

So, on the partnering plans for VMAT, we don't -- we've got a lot of interest coming in to us on VMAT from regional partners and from multinationals. As you know, we are going to keep VMAT2 ourselves and commercialize it ourselves in North America. So we are talking about doing a regional partnership in the rest of the world. We are not going to actively engage anyone in partnering discussions until after the Phase IIs have read out. We've had our end-of-Phase II meeting. Because we would really -- it is the focusing to try to bring in a partner while we're getting our Phase IIIs up and running. So don't look for us to pull the trigger on a partnership on that prior to having our Phase III protocols locked.

Okay. Thanks.

Marko Kozul, Leerink Swann.

I just wanted to come back briefly to a previous question and ask if you could remind us, specifically, what needs to be seen in the Phase IIa elagolix uterine fibroid study to advance into Phase IIb testing? In other words, how would you define proof of concept, and would it be clinical and statistical significance in lowering bleeding rates?

That's exactly it, Marko. It's a clinically meaningful reduction in uterine bleeding. And as you know, these women have very high amounts of uterine bleeding in the order of 300 milliliters, as measured by the quantitative alkaline hematin method. So, what Abbott had done last year, and what AbbVie is doing this year, is looking for that profound reduction in uterine bleeding. They have not disclosed details of the kind of specificity that I think you are asking about. I would suggest that you direct those questions to AbbVie, since it is their program. And we get our quarterly reports, just like you do at this stage. So, I would have you ask them for details.

All right. That's helpful. Thanks a lot. And just a quick question on endometriosis. Can you talk at all a little more about pace of enrollment in the Phase II? I know you said that the data will be available in early 2014.

Yes. That's -- so you know what we know. They've said Q1, 2014 for the top line results and that enrollment is on track. That's the extent of what we know.

Okay, great. Thanks for taking the questions.

Phil Nadeau, Cowen and Company.

First, on the Kinect I and II studies, could you remind us of your rationale for breaking apart tardive dyskinesia into the underlying neuropsychological disorders that have caused it? Is there something in the literature that's just that TD could respond differently to VMAT based on its -- based on the underlying disease of the patient, or are you just digesting the patients into smaller groups to get more consistent data?

Thanks, Phil. So, the real -- it is not an efficacy question. The pathophysiology of TD is the same, whether it is from Reglan in GI patients, bipolar disorder patients, or schizophrenia patients. My interest in the Phase II environment is to thoroughly understand the nature of the patients, the safety profile, the dosing requirements before I got to Phase III. So, as you know, an important part of the stage of development is understanding the safety profile with respect to the kinds of scales that the FDA likes to see. So, the -- well, the -- for example, the Columbia suicidality scale is common to all drugs that have any impact on CNS. That's an FDA requirement. In our case, we believe that our drug 854 has the potential for some beneficial effects, potentially on the schizophrenia symptoms.

So, we would monitor the PANS. Now that's an efficacy scale and safety trial, but it's a safety scale -- sorry, it's an efficacy scale in schizophrenia trials. It is a safety scale in our study, but it is unique to schizophrenia and, obviously, we wouldn't be administering that to bipolar patients. Likewise, in the bipolar population, one might use the MADRS scale to monitor that you are not making depression worse. In our case, we think it is -- the stabilizing element from 854 could have some beneficial effects. We want to have an opportunity to look at those scales, specifically for each population. It turns out it doesn't matter, there's nothing unique or nothing special, well, I can pool patients in Phase III. If there is something unique that we have to do for the populations, I've learned that from Phase II and can respond accordingly.

Likewise, we're also looking at, as you know, in the Kinect study, we have fixed doses of 50 milligrams and 100 milligrams. In the Kinect II study, patients titrate from 25 milligrams to 50 milligrams to 75 milligrams, according to how they are doing. And we are comparing those dose and dose regimen, so we have a good understanding of what makes the most sense to take into Phase III. Patients with schizophrenia, there are on their anti-psychotic drugs. The patients on bipolar -- with bipolar disorder in TD, most of them have been taken off their anti-psychotic drugs, because they can go on other mood stabilizers. At the present time, I have my clinical impression of whether that impacts your dose selection of your VMAT2 inhibition, but that's not enough. I need data. So, that's why I separated these two studies.

Okay. That's very helpful. Could you give us some sense of, within the market, what proportion of patients, or the number of patients that come from the various different groups?

We have a fairly good handle on the schizophrenia TD epidemiology. It is fascinating as we are doing this market research right now that -- it is very clear. People don't have a good handle on the bipolar and depression population. We are getting that information as we speak. The usage of anti-psychotic drugs, particularly the atypicals, is massive in the depression and bipolar population. It has eclipsed, obviously, the schizophrenia population. Having said all that, it is about 50/50. But, as Kevin has pointed out in the past, as we get closer to our Phase III timeframe and NDA, we will have completed an extensive amount of market research and we will be able to get some clarity on that.

Okay. And one last question for me. That's on the VMAT mechanism and whether there's tachyphylaxis over a long period of time. Looking at the xenazine literature, it is not entirely clear. There seems to be conflicting signals. What's your own interpretation of the xenazine literature on the longevity of the -- its impact on tardive dyskinesia and whether you think it is VMAT mechanism-based, or something specific to xenazine?

You said xenazine for tardive dyskinesia. As you know, there's only a small literature for TD, and the bulk of that comes out of Dr. Jancovic's work in Baylor, Texas, retrospective analyses of large numbers of patients treated in their movement disorder center. There are a couple of other, smaller studies. I would say, I don't think there is tachyphylaxis, and I don't think there's long-term loss of efficacy. I think the papers, the literature, are complicated to interpret. For example, if you're looking at chorea in Huntington's disease, that's a progressive neurodegenerative disease, and the nature of the movement disorder changes over time.

It is quite common in my patients with Huntington's disease who have been on tetrabenazine, that they benefit from the drug for a tic -- sorry, for a chorea suppression for a couple of years. But as their disease progresses, the utility of the medication is no longer there, and in fact, in late-stage Huntington's, chorea is a very minimal problem, as the akinetic-rigid syndrome takes over. In tardive dyskinesia, in my experience, the efficacy, in fact, is so good with VMAT2 inhibition, that oftentimes the -- you can put a patient into remission if they can stay off of their drug. But, of course, patients with schizophrenia, they cannot stay off their drug, so they stay on tetrabenazine long term, and end up being very stable on stable doses of VMAT2 inhibitor. I, personally, don't believe that either tachyphylaxis or long-term loss of efficacy are problems. If anything, you get a long-term sustained benefit. Obviously, we are going to do chronic-use studies in our Phase III programs, and we will have open-label experience out to one year to support our NDA filing.

Great. That's very helpful. Thanks for taking my questions.

Yale Jen, Roth Capital.

Thanks for taking the questions, and most of those have been answered. So I have just a few quick short ones. First of all, for the VMAT2 study, do you guys have a sense for the Phase -- for the upcoming potential Phase III study? Would that be rolled up into one or -- the underlying causes of the disease -- one type of it, or it would be mixed with different ones? And secondly, would that be just one study or potentially, two consecutive studies?

Thanks, Yale. At the present, time without the readout of the Kinect and the Kinect II studies, I'd say it is hard for me to tell you whether I will pool the underlying populations or run separate trials. My guess is we will pool them. But that's a guess. Obviously, this will be a data-driven decision made in conjunction with the FDA at the end of Phase II meeting. But, I think what we will end up with is two fixed doses,12-week placebo controlled trials, pooled populations of patients, and an open-label extension out to a year. There will be two of them. I will run them in parallel, not sequentially. I will start them in Q2 of 2014. I'd like to be ready to file an NDA at the end of 2015 or early 2016.

Okay. Great. Thanks a lot. And just a quick one in terms of the data from uterine fibroid. Is -- would that be possibly to provide some sort of clinical information of the Phase IIa study to -- if not the midyear, maybe toward end of the year, or those data could be kept until much later to be reported to the public?

Yes. To be quite honest, Yale, we don't know. That is a good question for AbbVie to see what they are going to be disclosing, and when they are going to be disclosing it, both for the Phase IIa also the Phase IIb that they are going to be starting this year. So, we are listening, and I imagine many of you are, to their conference call from their presentations to see if we can't get more color on when those presentations would take place.

Okay. Great. Thanks a lot for taking the questions.

Thanks, Yale.

Josh Shimmer, Lazard Capital Markets.

Chris, how does the 25% screening of failure rate in Kinect I for severity specifically compare with the previous Phase II experience? And then when you say that there's no safety signals to date, does that include CNS and other clinical features, or is that just limited to lab and ECG? Thank you.

Thanks. With respect to the safety signal question, it includes any serious adverse events or any early terminations due to adverse events. Labs and ECGs. It does not include the normal kinds of mild AEs that a patient would report to the investigator that I am not privy to until the database is locked and we start the data analysis. So, I don't see those minor headache, or dizziness, or something -- cold, bladder infection. I don't see those if they are not serious or if they don't lead to study discontinuation until the study is over. With respect to the screen fail rate in the prior studies, in those trials we didn't have the same mechanisms in place for screening, so it is really hard to compare. If I had to go back and say how many of the subjects in that crossover trial would have screen failed, it probably would have been about -- another 50% of them probably might not have met our current stringent criteria. (multiple speakers) So we -- you mean for this year. So, for these trials, we are expecting 50%. We are getting 50%.

Got it. Thank you.

(Operator Instructions).

Jason Napodano, Zacks Investment Research.

Just a quick question on your BD efforts. Interesting that you looked at 52 molecules, or 52 companies that you've spoken to. Can you give us a sense of why you've turned down 52? Is it just -- is it things expensive out there, or what?

No. It is not that. I'm actually fairly agnostic to structure when it comes to the price of a deal, as long as the value is correct, then that's fine. A good, hard number is 92% of the compounds that we look at fail on IP. As you know, we are very rigorous in all of our internally developed programs, they all come with composition-of-matter patents and methods of use on top of that, and then a good patent sense around them on composition. 92% of everything we look at dies because it doesn't have good patent protection, and we won't touch anything without good patent protection or an orphan drug designation along with it. With the other things that have not met it, it has to do with finding that there is either a clear signal on safety, or then, finally, a lack of evidence of efficacy that goes along with that. So, that's kind of how they've been following out. Over the past 2.5 years, I would say, we probably lost two opportunities because we couldn't compete with the major pharmas that came in on there. And so in two opportunities, they did beat us out. I would say in one of those opportunities, it turned out the drug did eventually fail in Phase III, but those things happen. It is not really that we've been scooped based on price. Also, the last thing which Tim just reminded me on, too, is that there have been a couple of occurrences now where we don't just look at the clinical regulatory risk when we are looking at bringing another compound in, regardless of stage, whether we're talking pre-clinical-, Phase I-, Phase II-type of compounds. We actually do the research to go into the market of this. And by the market, we mean both the docs, the patients, and the payers. And we have found a couple of instances where there have been very attractive compounds, very attractive programs, good science, good IP. But you know what? There wasn't a payer for it. So, we passed there. Ultimately, you have to look all the way through the entire chain before you pull the trigger on internal programs for funding and also on external programs.

Good info. Thanks, guys.

I'd like to turn the call back to Mr. Gorman for any closing remarks.

Thank you very much. I really appreciate all of your participation this morning and the good questions that we got. I know you guys are probably getting ready to batten down the hatches on the east coast, and I wish you well with the storm that's coming in. Just finally, 2013 is a huge year for us, obviously. We've got a lot of data that's going to be coming through a little later this year on our VMAT2 program, and then meeting with the FDA and getting that program buttoned up to go into Phase IIIs. In addition, now having -- with AbbVie as they are going to be pulling the uterine fibroid program into Phase IIb studies. All of that happening this year. Next year, in addition, is going to be a very large year for us. Where we're going -- our partner, AbbVie, is going to be completing the top line data for the first Phase III clinical trial in endometriosis. And they've given guidance that in 2014 they will be entering into Phase IIIs with uterine fibroids. We'll be in Phase IIIs, knock on wood, with our VMAT2 program. So, there's a lot going on with us over 2013 and 2014, and we will stay close to keep you apprised with all of that. So, thank you once again, and we look forward to meeting you at the meetings that are coming up in just a few weeks.

This does conclude today's teleconference. You may now disconnect and have a great day.