Neurocrine Biosciences Inc (NBIX) 2016 Q4 法說會逐字稿

Good day, everyone, and welcome to Neurocrine Biosciences report fourth-quarter and year-end 2016 results.

(Operator Instructions)

Please note, today's call is being recorded.

(Operator Instructions)

It is now my pleasure to turn the conference over to Kevin Gorman, CEO. Please go ahead, sir.

Thank you, and good afternoon, everyone. Thank you for joining us. Here today I am with Tim Coughlin, our CFO; D.A. Gros, our President and Chief Operating Officer; Chris O'Brien, our Chief Medical Officer; and Eric Benevich, our Chief Commercial Officer. I will be making forward-looking statements during this call, so I would first like to turn it over to Jane to read our Safe Harbor Statement.

Good afternoon. Certain statements made in the course of this conference call that are not historical statements may be forward-looking statements which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-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 and in today's press release.

Copies of these filings may be obtained by visiting the investor relations page on the Company's website. Any forward-looking statements are made only as of today's date, and we disclaim any obligation to update these forward-looking statements. Kevin?

Thank you very much, Jane. We have actually been speaking a lot by conference calls here this year. This is our third thus far.

As you all know, we had a very good year in 2016, the filing and acceptance of our NDA for INGREZZA being chief among them. And 2017 is going to be even more of an exciting year for us. A lot of our conversation here today I think is going to be around INGREZZA, and also getting ready for commercialization, and Eric will certainly be happy to discuss that.

In addition to our PDUFA date on April 11, we also have the readout taking place next quarter for the Tourette's pediatric study, which we are very much looking forward to. Then our partner, AbbVie, is also going to be in third quarter of this year filing the NDA for elagolix for endometriosis is their plan. And in addition, by year end they are going to be reading out the Phase III trials for uterine fibroids.

In addition to all that, as you know, we have the essential tremor program that is ongoing. And then we have other extension studies with Tourette that are ongoing. In addition we are looking forward to getting CAH back in the clinic.

Last but certainly not least, as we announced last week and discussed with you, extending pretty substantially our pipeline with the in-licensing of opicapone from BIAL, and now having a Phase III ready drug, or potentially even an NDA ready drug. A lot going on. Why don't we go first into Tim who is going to take us through our performance, financial performance in 2016.

Okay. Thank you, Kevin. Good afternoon, and thank you all for joining us on our year-end 2016 earnings call. We have successfully transformed the Company over the past 12 months, and now look forward to our evolution into a fully commercial Company.

On the R&D side we now have four Phase III programs, recently adding opicapone for Parkinson's disease just last week. The investment we made in acquiring the US and Canadian rights to opicapone was the correct one for this Company at this time.

It is a mature compound for movement disorders. It has been through rigorous clinical trials in Europe, with a long patent life (inaudible) alignment with our commercial strategy.

It was approved last year by the European regulators. If there was ever an in-license asset that is a perfect fit, this is it for Neurocrine.

On the G&A side, during 2016 we ramped up our pre-commercialization activities on both physician education and outreach for our medical science liaisons and started to build out our commercial infrastructure. Today most of the behind-the-scenes commercial personnel are in place, and we're ramping up our recruiting efforts on the 140 sales reps to fill out our ranks upon FDA approved of INGREZZA.

This increase in activity led to significant increase in expenses from 2015 at 2016. However, we were still diligent in managing our cash reserves, ending the year above our guidance at over $350 million in cash, investments and receivables.

Our loss for the fourth quarter of 2016 was $44.7 million, or $0.51 per share. This compares to a loss of $29.3 million, or $0.34 per share in the fourth quarter of 2015. Our net loss for the year was $141.1 million compared to $88.9 million in 2015.

Revenues for the year were down $4.8 million from the previous year. During 2016 AbbVie initiated the Phase III program for elagolix in uterine fibroids, and that generated a $15 million milestone payment from AbbVie. In 2015 we outlined some certain Asian rights of INGREZZA to Mitsubishi Tanabe, and that generated a $30 million upfront payment, of which $19.8 million was recognized as revenue in 2015.

Research and development expenses were approximately $13 million higher in 2016, increasing from $81 million to $94 million. This increase was basically due to two items: the work necessary for preparing the INGREZZA NDA represented the bulk of the increase, also activity surrounding the INGREZZA clinical programs contributed to the increase.

Our 2016 R&D cost peaked in the second quarter 2016 as we approached the filing date for the INGREZZA NDA. Since then these costs have leveled out.

General and administrative expenses, however, increased every quarter in 2016, primarily driven by the pre-commercialization activities related to INGREZZA. G&A costs for 2016 were $68 million compared to $32 million in the previous year.

This was driven by both headcount and external consultants. During 2016 we added our entire medical science liaison team, our payer relations team, built out our marketing group, as well as health economics, in-house analytics and sales operations support.

The entire group of approximately 60 employees at year end 2016 represents a significant increase over the 2015 headcount. In addition, external costs related to market research, communications, planning, compliance, implementing infrastructure, et cetera, increased dramatically as the year progressed.

Lastly, as I mentioned at the open, we ended yet another year on a very strong financial position. And we head into our planned commercial launch here with over $350 million in cash. I will conclude my prepared remarks here and pass it over to D.A. to provide some color on what to expect in 2017.

Thank you, Tim. In terms of 2017 guidance, one of our major activities this year will be our expected launch of INGREZZA, and we're actively investing in a full range of launch preparedness activities, which Eric will discuss later in the call. As a result, we expect expenses net of our upfront to BIAL to range from $230 million to $240 million on a GAAP basis, primarily driven by an increase in costs related to our commercial activity. Approximately $40 million of our expenses will be non-cash share-based compensation, with the growth being driven by the number of employees, again primarily commercially related.

With regards to R&D, we expect 2017 spend to remain broadly flat. But we have internally budgeted for an additional Phase III trial for opicapone, should that be a required Phase III. Most related costs would only start later in the year. We will not be discussing revenue guidance until we have an approved product, and thus clarity on factors like label and pricing.

For the same reason we will not be providing 2017 net cash burn and year-end cash guidance at this time. Of note, in terms of cash, based on our current plans, taking into account the $30 million upfront we paid to BIAL and our expected milestones from AbbVie, such the $30 million that will be earned upon filing of the first NDA for elagolix in endometriosis, we currently have well over two years of cash. With that, I will turn things back over to Kevin.

Thank you very much, Tim and D.A. I will now turn it over to Chris to review our programs.

Thank you, Kevin, and thank you for the investors for joining the call. As noted in our press release, there is quite a bit going on, starting with the INGREZZA valbenazine program. We are very happy with the progress that we have had with our NDA filing, of course, 2016, and we are now just some eight weeks away from our PDUFA date on April 11. That program is on track, and we are eagerly looking forward to that day.

The tardive dyskinesia trials, as they exist today, include a final winding down of the Kinect 4 study, the 1402 study. There are a few patients left in that one-year open-label extension trial, or one-year open-label safety trial, sorry, I should say. And of course we have the so-called rollover study, the 1506 study, which has approximately 150 subjects continuing to take valbenazine while awaiting commercial supplies.

The Tourette program, as we reported earlier this quarter, we had a Phase II readout from the adult Tourette study. And although not a significant P value at week eight for Yale Global Tic Severity scale, I considered that a successful Phase II study in that we learned quite a bit about the adult population with Tourette's, about the response to valbenazine, about the conduct of the Yale Global Tic Severity, the excellent work by the investigators that are running our trials. And overall, we saw very nice directional support for tic reduction in adults, and to the extent that there is read-through through to the pediatric study, those are very positive things.

The peds study is going well. We closed screening for the pediatric Tourette study a few days ago and the last patient should be randomized into that trial this week. As Kevin mentioned earlier, we anticipate after the six weeks of placebo-controlled treatment, the two weeks of safety wash-out follow-up, and then the data clean and lock, we should have top-line results in the May time frame.

Very nice progress on that trial, very happy with the conduct of the study, and I was happy that our data safety monitoring board, the DSMB, again gave us the green light to carry on with no changes in the conduct of the trial based on their unblinded review of the clinical and safety data. That was very good news.

The extension trial, the T-Fusion study, allowed patients from both the adult Tourette's study and the pediatric study to continue receiving treatment. That is going along well and that will continue during the summer.

Once we have data in hand from both the pediatric and adult studies, we will put a package together to request a meeting from FDA. And depending on the nature of that package, the readout from the peds study, our goal is to have a -- work out a path forward for what a Phase III program would look like going forward for pediatric Tourette syndrome. We would hope to meet with the FDA later this year so that we can start a Phase III trial during the second half. Again, that is contingent upon not only data from the pediatric study but our discussions with the FDA.

As Kevin mentioned, we hope to get back into the clinic for a CAH. The IND was filed and we are waiting to get started with the human studies with the follow-on molecules shortly.

The essential tremor program is completing its dosing in the multiple ascending dose trial. And once we have a readout from that Phase I study in healthy volunteers, we will make a decision about moving into a proof of concept study into patients with essential tremor. The goal is to start that study in the second half of the year if all the data hangs together the way we hope, and that is a huge actually step forward for what should be a very important program for Neurocrine in its move into franchise in Tourette's, tardive dyskinesia, Parkinson's disease, and essential tremor.

We also know that AbbVie is making great strides with the elagolix program. We've talked about that at length, so I won't spent too much time on it. They are on track, as Kevin mentioned, for their NDA filing this year for endometriosis, the two Phase III uterine fibroids trials are going along well.

We expect top-line data the end of the year. And those trials and AbbVie, with its extensive work, not only in clinical development but health economic and outcome work and medical affairs, is gearing up to share an extensive array of clinical data from their program at upcoming scientific meetings in 2017 and 2018. We've had an opportunity to see what they have planned, and it really is an impressive rollout of data.

Finally with respect to opicapone, we talked about that in some detail last week on our conference call. Again, I have to emphasize we're very excited about this, not only for fit for Eric and his team from a commercial point of view, but the franchise of movement disorders is really what is the heart of what we're focusing on here. And this is a really new-generation COMT inhibitor that has some really unique characteristics.

And I couldn't have planned this better, I would point you to a publication that just came out this week, two publications actually, in JAMA Neurology. One, a report on Phase III data of opicapone in patients with motor fluctuation, and the accompanying editorial by Drs. Boyle and colleagues about a novel adjunct for an old standard, and they talk about the important role that a well-tolerated, once-a-day a drug would have as an adjunct with robust efficacy and good safety profile.

That is again in JAMA Neurology, what used to be called Archives of Neurology, two articles, one by Dr. Andrew Lees and the other by Dr. Allison Boyle about opicapone. So excellent timing in that regard.

What we have summarized last time in our call was that we are now in the process of working with our partners in Portugal to affect the technology transfer of all the data sets as we assemble a package to request a meeting with the FDA. Our goal is to find out what is necessary to submit an NDA for opicapone in the US. To the extent that we can use the extensive data that have been collected by BIAL in their clinical development work and whether anything additional is needed before we can file an NDA in the US for Parkinson's Disease. I think I will pause there and turn it back to Kevin, and look forward to any questions.

Thank you very much, Chris. There's a lot going on.

Chris's group, our regulatory group, are extremely busy with all these programs. Equally as busy is our commercial group. And Eric, you want to give an update?

Thank you, Kevin. These are very busy and very exciting times at Neurocrine. As Chris mentioned, we're now within two months of our PDUFA date for INGREZZA. We've been preparing the market for the past year with the goal of building momentum around tardive dyskinesia.

To that end, we have conducted a number of activities such as we've had a presence at major medical meetings like the American Academy of Neurology, American Psychiatric Association and other scientific congresses where we have presented data and hosted a TD disease state booth. Additionally we've built an educational website for healthcare professionals called takeonTD.com. We recently added content to that website specifically for patients and caregivers, and we've been partnering with key patient advocacy organizations over the past year to make TD content, educational content available to their constituencies.

As a result of our efforts, recent market research indicates increasing awareness of TD, increasing perceived importance to diagnose and treat TD, and increasing estimates on the number of patients with TD in neurology and psychiatry practices. These are all positive indicators that our market developments efforts are taking root.

In addition to prepping the market, we have been busy creating the commercial infrastructure to support the launch, as Tim indicated. All the home office positions required to support the launch have been filled, including the marketing brand team, sales operations and analytics, and of course market access.

In addition, dating back to last year we hired our sales leadership team, including the national sales director, the east and west zone directors, and about half of our planned front-line managers, which would be called regional specialty managers. They've been very busy for about the past four months identifying, screening, interviewing and ultimately recruiting our future sales force.

We have had over 8,000 applicants for the approximately 140 sales territories, and we are very pleased with the caliber of talent we have been able to attract. We have now identified lead candidates for about 95% of the territories and have begun making contingent employment offers.

Our plan is to lift the contingency upon FDA approval and have the sales candidates give notice to their current employers so that we can get them into our training program. We expect to be able to deploy our fully trained sales team approximately six weeks after FDA approval of INGREZZA and commence promotion to physicians.

In addition we have hired and deployed our payer accounts team. This group has been out there for about 1.5 quarters calling on health plan decision makers, introducing them to Neurocrine and collecting information on new drug coverage policies to help fine-tune our account targeting and strategies post-approval.

In summary, we are very excited at the prospect of making INGREZZA available to the many thousands of TD patients in need of an effective, safe, and importantly FDA approved breakthrough therapy. Our team is now ready for an expected FDA approval date on April 11, or sooner if that is case.

With that, I will turn it back over to Kevin.

Thank you very much, Eric. That'll conclude our opening updates. And so now I would like to open it up for your questions.

(Operator Instructions)

Our first question comes from Charles Duncan with Piper Jaffray. Please go ahead.

Hi, guys. Thanks for taking the question, and congratulations on a good quarter of progress. You guys have been clearly very busy. First question may seem obvious, but with a possible INGREZZA approval here near term, would that be the kind of news that you might hold a conference call around to run through your perspective on the label and then also to discuss pricing at that time?

We would expect to hold a conference call around all of those things at the time of approval.

Okay, great. And then hopping over to the Tourette's program for valbenazine, in terms of T4 screen, thanks for the update, Chris. Is there any way for you to provide color on the patient population that was enrolled in terms of, say, baseline severity or previous medication history or age?

Sure, Charles. The patient population are a combination, one group of children that is age 6 to 11, and the other group adolescents aged 12 to 18. It is about equally split between the two groups. We enrolled a little more than the original 90 that we had estimated, but very happy with the enrollment there.

The patients have a wide range of prior medication exposures before enrolling in this trial. The usual mix of things that one sees in children with moderate or severe tic disorder, including a prior history of alpha adrenergic drugs like clonidine, ADHD stimulants, OCD, serotonin, reuptake inhibitors, and of course some dopamine receptor antagonists, antipsychotic medications. In the trial, in this Phase II trial, they were not permitted to be on concomitant dopamine blockers when they enrolled in the trial.

We know their baseline Yale Global Tic Severity score is in the range that we have talked about on prior calls and what one sees in the literature with well-run placebo-controlled trials, namely in that kind of 30, 32 range. That is what we have, and we are very happy with how the investigators have applied the Yale Global Tic Scale in terms of consistency of the data variability, et cetera. Now it's just a matter of having the trial finish its six weeks of placebo-controlled treatment and top-line results in May.

I think you mentioned for T-Fusion, the Tourette's extension study, that that is going well. Does that suggest that there is patient interest, and that perhaps some of those patients are going over there and is it maybe the majority? Can you characterize it at all?

Absolutely. I can say there is tremendous enthusiasm, perhaps most loudly from parents of children in the trial. Again, that's not really a surprise, but the majority of the patients who have completed the placebo-controlled trial elect to continue in the extension phase. Obviously, I'm not giving numbers out at this point, but it is very satisfying.

Okay, thanks. I will hop back in the queue. Look forward to the upcoming call.

Thank you, Charles.

We'll go next to Geoffrey Meacham with Barclays. Please go ahead.

Hey, guys. Afternoon, and thanks for the question. One commercial and one clinical.

For the TD launch, I know you guys have been asked a ton about pre-launch plans, but I just am curious, hasn't this changed over time when you look at the prescriber base or as you do more work on the patient population, how maybe what you initially thought would be the population or the size of your sales force or the investment and then as you do more work to expand that? And then I have a follow-up on Huntington's.

Hey, Geoff. It is Eric. Yes, of course over the last year, we've been getting more insight and understanding in terms of not just TD but how it is managed in various care settings. Early on when we were doing our sales force size and structure work, we really had to look at where are these patients, how are they being managed, and what kind of sites of care are they being care for primarily.

Ultimately we've made the decision to focus our efforts really in two distinct care settings, private practice for neurology, mostly movement disorder neurology, as well as psychiatry. And then in addition, community mental health centers. There are other care settings where TD patients get their care, such as long-term care, the VA, DoD and so on, but ultimately we decided to prioritize and focus our efforts in private practice and in CMHCs.

I think that gives you a sense of how our evolution of thinking has occurred. Rather than trying to go after everything at once, we are trying to focus at launch, especially with the thought leaders in neurology and psychiatry. And of course this will be, because it is a new therapeutic area essentially with no previously approved treatments, it's a new mechanism of action especially in the psychiatry, I think we will continue to learn as we get out there with our launch and continue to make course corrections along the way.

I'll tell you, after that, Eric, I think one of the interesting things that we have seen at some of the scientific meetings and clinical congresses that we have attended, some of the meetings with key opinion leaders and scientific leaders, is how I am actually pleasantly surprised at how fast the level of interest rises among the psychiatrists when they know that there might actually be something they can do for these patients. It went from, I would rather not think about it, to this could change things. That has been very gratifying.

Geoff, you had another question about a clinical topic?

Yes. I know it is Mitsubishi's program for valbenazine in Huntington's, but Chris, could you give us a sense for where we are there? Is there anything you have learned from, say, a PK or mechanism perspective from TD or Tourette's that we can somehow read into the Huntington's program, or is it just completely disparate diseases?

Let me address that in two different ways. The first is, our partnership with Mitsubishi is for valbenazine in Asia. It is a broad partnership across multiple disease opportunities, and we know Mitsubishi is doing a very good job at looking into tardive dyskinesia, for example.

They are not solely focused on Huntington's. And they are interacting with the Japanese regulatory authorities as well as regulatory authorities in other Asian countries about which indications they might go after first. It is not restricted to Huntington's Disease, and indeed it might not even be the first indication that they go after.

Secondly, about -- and they are continuing to do the requisite work necessary for understanding whether there are any potential differences between metabolism and exposure, PK, in Asians rather than North Americans. We have no data to indicate there is a difference so far, but they are doing a good job on putting all those pieces in place.

Now from a mechanism point of view, I actually think we are in a very strong position of understanding that VMAT2 inhibition is unified across hyperkinetic movement disorders, that there is nothing that we actually don't understand that says Huntington's, Tourette's, tardive dyskinesia, all of these things are appropriate targets for VMAT2 inhibition with respect to involuntary movements. And I would say, as we have on prior calls, one could think a whole range of other involuntary movement syndromes that potentially would be appropriate, whether it is stereotypies in developmentally disabled patients or other kinds of hyperkinetic movements, those all potentially could be appropriate.

I don't think we are missing anything. The challenge with Huntington's disease, and one of the reasons Neurocrine has not focused on Huntington's, is obviously there are approved drugs on the market for Huntington's Disease, Huntington's Chorea in the form of tetrabenazine. The number of patients who have Chorea that's severe enough to warrant treatment at any given time is small, in that kind of 3,000 or 4,000 range, I think, out of the 30,000 diagnosed patients with HD.

So for us to do the investment of valbenazine clinical development to go after that market doesn't make a lot of sense from a formal development point of view. Now, potentially would a once-a-day well-tolerated VMAT2 inhibitor be useful and could we explore that in a post-approval environment? Sure, that is definitely worth thinking about post-approval.

Great. Thanks, guys.

Thanks, Geoff.

We will go next to Paul Matteis with Leerink. Please go ahead.

Great. Thanks so much, guys, for taking the questions. A couple, one regulatory and one clinical.

I'm wondering -- look, I'm assuming you won't expand in detail upon conversations on the NDA, but Kevin, Chris, you've both talked about how the NDA was progressing as planned in the eyes of the FDA. So I would just love to hear any updated thinking or context you could offer there.

And then separately on the pediatric Tourette study, Chris, this study is a little bit smaller than the adult study, so maybe expecting a P-body of less than 0.05 years is too optimistic, but given that there is a lot of comp studies in pediatrics, I'm wondering if you could expound upon how you're conceptualizing success from the efficacy side? And maybe specifically should we be using the Abilify study in Tourette's conducted in 2014 and the responder rates there as a benchmark? Thanks so much.

Hi, Paul. Thank you. With respect to the regulatory, the only color is we're marching forward to the PDUFA date with frequent interactions with the FDA. And they've been quite clear that, as of today, there have been no significant review issues that would interfere with our April 11 PDUFA date.

This has been a really good division to work with. We have very engaged medical reviewers and stat people and clin-pharm people, and we've had frequent interactions with them if not weekly, multiple times a week. So everything is moving forward. At the present time, there is nothing that has been identified as a significant review issue.

With respect to the Tourette's peds study, so both studies were originally designed as Phase II studies based on assumptions about what an effect size might be, and they both were 90-subject trials by initial plan for recruitment. Obviously we ended up with a bolus of additional adult patients who became subjects in the adult trial, and we'll be right around, I think, the target of 90 subjects for the pediatric study, maybe slightly over.

Again, those are all based on assumptions. You don't have a lot of assumptions about adults. All we know is there haven't been many well-controlled placebo-controlled trials in adult Tourette.

There have been trials, as you point out, in pediatrics, so we have a little firmer ground to stand on in what responder rates might be, what placebo effect size might be. So if anything -- if we have identified the right patients to put in a trial and if we have the right dose of valbenazine for children and adolescents, then I have a little more confidence about being able to see a P-value that shows statistical significance in the pediatric study.

Again, these are Phase II trials. There are a lot of assumptions built in here, and as I've said on numerous occasions, Phase II is where you spend your time and money figuring out, do I have the right endpoint, the right dose, the right patients, the right trial design, and we'll look forward to those results in May.

Okay, thank you, Chris. If you don't mind, just one more quick one I forgot to ask at the beginning.

I don't know if you are there yet in your FDA discussions, but a couple of key pivot points for investors are, one, will you guys get a REMS, and two, will the label get a black box for suicidality? I knew you opined on the latter previously, but if you could give your quick thoughts there to the extent that you're willing, that would be great. Thanks so much.

Again, until we get the documents from the FDA leading literally to the day of the PDUFA date, I don't know what the FDA is going to say about black box warnings or about REMS. Our assumption is we know enough about this drug, its safety profile and how to guide physicians. My assumption is we can do that with labeling language that we will not need an elaborate REMS program, but obviously until that is finally done, we will see.

As with respect to suicidality, again as you point out, I've said repeatedly I wouldn't be surprised if all drugs in this space get class labeling regardless of your data. But one would hope that you get to put in your label what you actually saw in your clinical development program in terms of frequency of adverse events, et cetera. Hang on, wait until PDUFA date and then we will talk details.

Thank you, Chris.

We will go next to Ian Somaiya with BMO Capital. Please go ahead.

Thanks for taking my question. Would really love to get your thoughts on the upcoming data set from Teva, their second tardive dyskinesia study. Just what will you be keeping an eye out for? Are there any nuances that you would like to make us aware of? That's one.

On opicapone, can you just discuss the treatment paradigm in Europe and how it relates to the US? Just trying to understand the pricing decisions that were made there and whether we should expect something similar in the US.

Sure, Ian. Thanks for the questions. Let me start on your question about Teva's data. What I'm really looking forward to is actually having published data in a manuscript that we can actually sit down and look at and think about.

To date we haven't really had that opportunity. I'm interested in all sorts of things like what is the effect size, what are the dosing differences, are there a clear dose response effects, how does it compare to what they've published with the Huntington's? All of those I'm interested in, but until we have something that is published in a public forum other than a poster, I will be very interested.

So for example, one of the things at one of the last scientific meetings, there was some uncertainty on my part on understanding this business about excluding patients who didn't have an AIM score at baseline of 6 or greater, and whether that constitutes an ITT set or how that was done. I don't fully understand that, so I'll look forward to getting some of those details.

Again, tetrabenazine or deuterated tetrabenazine, the drug should work in TD. The question is, do you have the right dose and is it a profile and dosing administration, titration, et cetera that is acceptable to docs and patients.

We will see, as I think Kevin has said before, we are very happy with a once-a-day a drug, that has a good safety and tolerability profile. And I look forward to, I assume at some point we'll have a marketplace where there'll be two drugs approved in TD, and that's the time when the two labels will go head to head.

Now, with respect to opicapone, it is clear that treatment paradigms of Parkinson's disease are not identical in Europe and US, and I'm not even going to touch the pricing story because that is a totally different universe there compared to here. What specifically were you hoping we could comment on?

Just the importance or the focus on off time versus dyskinesia amongst European doctors versus US doctors. Anything else that you care to mention.

Those two things are the key when one thinks about these kinds of adjunct therapies in motor fluctuation. You nailed it. Those two things are the most important to both European and US doctors.

Do you reduce off time, and can you do that without making bothersome dyskinesia worse? The key to that is measured by the patient diaries. And you get a nice opportunity to see about how European and US docs think about that.

I mentioned early in my prepared comments that the JAMA article that came out this week, both the manuscript by the primary author, Dr. Lees out of London, and the editorial by Dr. Boyle, really give you a sense of how these docs think about it. I don't think there are big differences between US and Europe, and the goal is to reduce off time and to do it without making bothersome dyskinesia worse.

Thanks, Chris.

We'll go next to Phil Nadeau with Cowen and Company. Please go ahead.

Good evening. Thanks for taking my questions. First a follow-up to Paul's question on the REMS. We've heard from some physicians that Xenazine's REMS for some reason was a barrier to update, was apparently somewhat complicated.

Do you have understand what they had to do in their REMS and which parts were troublesome for physicians? And will you have an opportunity to negotiate with the FDA over what elements, should you need a REMS, need to go into that REMS?

Yes, Phil, a couple of things. The Xenazine REMS program that existed was not terribly onerous, and in fact it went away once the generic forms of tetrabenazine came on the market. There is not a REMS in place now for tetrabenazine.

Of course, during an NDA review and labeling discussion, we as the sponsor discuss those things with our review division. And as I mentioned in my response to Paul's question, I think we can accomplish what we need to do with just the label, that we don't need an extensive REMS. But I can't say for sure where we will end up until we get to the approval date, or the PDUFA date. I don't see a complicated REMS in the future of the valbenazine program.

Just a matter of process, even not specifically referring to valbenazine but just overall on the approval process. What happens when the REMS and label is initially given to you? Is there then a lot of back and forth and negotiation, so that you can change it, or is it the FDA gives it to you and it is the day before the PDUFA and you either take it or leave it?

No, in fact it is really important to point out the REMS, at first -- but when you go back to the pre-NDA meetings that a sponsor has with a division, you talk about whether you think as a sponsor a REMS is going to be needed and the review division puts their thoughts out and you have a conversation at that time in a face-to-face meeting. Then when you submit your NDA, as a sponsor, you submit your proposal for a REMS or no REMS, and they have a chance to see what you propose or not propose, and they come back with their comments or questions during the review process.

You are not surprised. By the time you get to a -- God forbid you get to your label negotiations and you're surprised that suddenly a REMS has popped up, because that's not the way this process works. In particular, when you have a breakthrough therapy designation like we do, all of that is discussed well in advance so there are no surprises.

And also, Phil, just to be clear too, as Chris said, when we submitted our NDA we had the -- you would submit either a proposed REMS or no REMS at all. You also are submitting a label that the Company starts out with. That has also been submitted at the time of our NDA filing.

Yes, then they come back with their redline version and you go back and forth until you get agreement.

Okay. Would you be willing to share with us whether the FDA was generally on the same page with you in terms of your proposed label and REMS?

I would not be in a position to talk about that.

Thought I would try.

Good try.

Last question is just on pricing. I think the only times I've heard you comment on pricing in the public domain it was a very wide range of like $20,000 to $60,000 per patient per year for INGREZZA. I'm curious if you have narrowed that range. And if you haven't, maybe instead of giving us a narrow range, you could talk about what elements you will consider when you come up with the final price.

Phil, you are right. Your recollection was correct, and the range continues from us as $20,000 to $60,000. We are not narrowing that range now. However to the second part of your question, I will let Eric, what do you want to --?

Yes, hi. Obviously pharma (inaudible) pricing is a sensitive topic and it's in the news a lot lately. But the reality is that we have to pick a price at the time that we launch. We've done a fair bit of work to understand the perceived value that INGREZZA brings to various stakeholder groups including payers, patients, and prescribers.

We are going to pick a price that we think is in line with the value that is created, and ultimately we're going to be comfortable that, that price is going to be one that maximizes access for patients, because that is very important for us. It's not just the price, but it's also the various programs that we're going to put in place to help make sure that patients that need access to therapy get access to therapy.

Great. Thanks for taking my questions.

Thank you, Phil.

We'll go next to Alan Carr with Needham & Company. Please go ahead.

Hi. Thanks for taking my questions. You'd mentioned earlier that some work you'd done on market research, or some progress that you made on that. And I think you said that your estimates on the number of TD patients may have gone up. I'm wondering if you can elaborate on that and anything else that's come out of the market research recently?

Also when it comes to the essential tremor trial, you're ramping up the Phase I [MAD] now. I wonder if you could give us a sense of what you are looking for there in terms of potential AEEs and what sort of profile you are looking for this drug in general, too? Thanks.

Okay, this is Eric. I will comment on the market research. We do tracking studies with various physician audiences including movement disorder neurologists and psychiatrists. And what I was referring to is some recent market research that indicates that the various TD educational initiatives that we have been undertaking for the past year are making a difference in the marketplace, meaning that physicians are recognizing more of their patients with TD in the practice.

And it's indicated by the individual estimates for their practices, that the perceived importance to recognize, diagnose, and treat TD is increasing. And those are important indicators that we are doing a good job in terms of priming the market and prepping for our launch. I'll let Chris speak to the second part of your question.

Just a follow-up and to be clear there, Alan. Eric was, as he said, talking about basically the prescriber side of the marketplace and getting greater awareness there. He wasn't talking about has our number of TD patients out there gone up.

That is not the case. We still stick and by the number of approximately 400,000 to 500,000 patients.

Okay. That's helpful, thanks.

With the essential tremor, this is a healthy volunteer study. And in the best of all worlds, if you have a CNS active drug and you are marching up through a dose range in an ascending dose trial, you will start to see CNS side effects that are extensions of pharmacology. In the universe that I live in with CNS drugs, they are the top five, sedation, dizziness, headache, what else? Those of a big ones.

You hope that as you march up through those doses in healthy volunteers that if you are in a relevant dose range for brain pharmacology that you will start to see those things. The main thing you'll hear from us once that the study is complete is, did we have reasonable safety and tolerability in what we think will be clinically relevant exposures, and do we have enough information to feel comfortable going into a proof of concept study. You're not going to hear a lot of color or detail beyond that, other than yes, we are marching forward, or no, we're going back to the drawing board.

Okay, great. Thanks very much.

We'll go next to Anupam Rama with JPMorgan. Please go ahead.

Hey, it is Eric in for Anupam. Thanks for taking the questions. Just a couple from us. The first on essential tremor.

It is probably a little bit early here, but just wondering if you could give us a sense of timelines to data and a proof of concept Phase II study, given what you initially thinking about in terms of size and point selection, and maybe the trial being multi-site as opposed to single center? And also whether or not you would be disclosing the mechanism of action for 758 ahead of that trial starting?

I will take the second part of that. No, we would wait until after having proof of concept and moving more into a formal Phase IIb situation. That would be the earliest I would see that we would be talking about proof of concept -- talking about mechanism of action. Chris?

The proof of concept study is quite clear. It would be a multi-center trial, the Phase IIa study. It would be conducted in North America, most likely in the US, focused just in the US, but possibly in North America. And the study would enroll men and women and included older patients as the FDA calls them elderly, although I resent over 65 being called elderly.

And we would use a combination of endpoints both patient-reported endpoints, clinician-reported assessment scales, and device-related measurements of tremor frequency and amplitude. It will be a placebo-controlled trial.

It would be somewhere in that 6 to 12 week duration. You can imagine it would be a couple hundred patients. I would expect starting the trial, if we have good multiple ascending dose data to proceed and a good discussion with the FDA, we would want to start the trial in the second half of this year with data readout hopefully in the first part of next year.

Great. That's really helpful. And maybe just a commercial question. I guess maybe coming away from the opicapone deal with BIAL, curious to know whether your thoughts have evolved on the potential commercial opportunity for INGREZZA, what some of the remaining hurdles may be there for a regulatory filing, and whether that is something Neurocrine might be pursue on its own or whether the focus would still be via partnership? Thanks.

(Multiple speakers) Eric, you had started out by asking about that opicapone, but then you had INGREZZA in the middle of that.

Right, sorry. I guess I'm just wondering given the experience working with BIAL and over opicapone, whether there are any new insights on the sort of commercial opportunity for INGREZZA that have evolved, changed your thinking on the potential path forward there, [NPD]?

Just to clarify are talk about the commercial opportunity in the US or Europe?

In Europe.

For INGREZZA, what we have always said, Eric, all along the way is that we get the NDA approved in the United States and them look to Europe and how we are going to attack that market at that point in time. And it could be us alone, it could be through a partnership, we don't know at this point. We're still working through that.

It could be TS and not TD or vice versa.

Got it. Thanks.

Thank you.

We will go next to Andrew Peters with Deutsche Bank. Please go ahead.

Hey, guys, thanks for taking my questions. A couple on the commercial side. I guess on the physician education and market development efforts, are you focusing equally on the psych and movement disorder specialists segments?

Or I guess another way, how do you view the relative importance and size of each for the launch as well as the ultimate market opportunity? Where do you think the bulk of the commercial patients are going to be focused, and does that change in the initial launch segment versus kind of the broader, longer-term opportunity?

This is Eric. I will say that they are both important opportunities for us, movement disorder neurology as well as psychiatry. Movement disorder neurologists are very confident in their ability to diagnose and treat TD. They've got patients that have been referred to them already with a TD diagnosis or probable diagnosis of TD.

Psychiatry, they have the majority of patients that have been treated with antipsychotics that have TD or are at risk of TD. When I mentioned earlier that we are prioritizing the private practice setting, that is really where those prescribers or future prescribers are practicing. I think there are fewer movement disorder neurologists than there are psychs in our future call universe, but they are all critically important in terms of developing the TD opportunity for INGREZZA.

Okay, thank you. Just a quick follow-up on the market research question you mentioned earlier, the increasing awareness of TD. Can you describe that data a bit more, or quantify it in terms of some of the data points that you had collected prior to your efforts and how that has changed over time and a bit more on that? Thank you.

Yes. So like I mentioned before, we've been doing studies to understand what is the awareness and recognition of TD in these various prescriber communities or healthcare professional communities. And as we continue to invest in market development, what you want to see is that you're creating buzz in the marketplace, that you are increasing the level of conversations at medical conferences and so on. One way that we have of trying to quantify whether we're making an impact or not is through these tracking studies.

Seeing an increased recognition and awareness of TD on an unaided basis, seeing that there is an increased perceived need to recognize, diagnose, and treat TD in these physician communities is one way that we have of saying yes, that the indicators are moving in the right direction. We are preparing for a launch and we're increasing the buzz around TD as we get closer to our PDUFA date.

Great, thank you.

Our next question comes from Brian Skorney with Robert W Baird. Please go ahead.

This is Neena on for Brian. Just had a question about the CAH program. Could you just elaborate a little bit more on, given the history of the CAH program, what persuaded you to pick 74788 as the asset to move forward to IND, and how does it differ from your previous lead asset in CAH that gives you confidence that we won't see similar issues?

As you know, the molecule that was in the clinic before where we had such nice proof of concept data, when we did more extensive preclinical work to determine if we could go into children, pediatric population, revealed a safety signal in our preclinical so-called developmental toxicology. And so obviously we had a number of backup and follow-on molecules to look at.

The first thing we did was see, do we have one that doesn't have that same preclinical developmental tox problem. We found one that was clean, we showed that it was not related to mechanism, that it was a compound-specific tox issue, and that is the one we took forward.

We're still very enthusiastic about this opportunity. There is no question as we talk to patients, caregivers, patient advocacy groups and key opinion leaders that this is an unmet need, they are excited about this opportunity. We just needed to be able to get back into clinic with something that we felt good about being safe in small children. So that is where we are at.

Great. Thanks.

We'll go next to Jay Olson with Oppenheimer. Please go ahead.

Hi. Thanks for taking the questions. I was curious about a recent publication in the Journal of Clinical Psychiatry which suggests the prevalence of TD in patients taking second-generation atypical antipsychotics is perhaps higher than many people expected. I was wondering if that publication may have impacted your view on the commercial potential for INGREZZA and potentially how you may want to approach doctors in terms of education and patients in terms of awareness?

I think two parts. My part from the clinical end, and then I'll turn it over to Eric from the commercial end. That paper was no surprise to us and certainly didn't impact how we thought about the clinical development and the opportunity overall.

That idea that second-generation drugs were free of this risk was based on a very shaky foundation of short-term studies, and when you actually do prevalence studies, rather than incident studies, you actually find that lo and behold it's in that 10%, 15% prevalence range in people who have never seen a first-generation drug. You just have to look at people who have been on drug for a long time in the appropriate population.

From my end it was no surprise. Eric, what was your comment?

Just to add on to what Chris is saying, a couple of things. One, TD is not unlike other medical conditions, when you look for it, you see it. And certainly with the expanded labeling for antipsychotics and the much more widespread use into other psychiatric conditions beyond schizophrenia and bipolar disorder in recent years, the data would indicate that TD prevalence is increasing, if anything.

However, we are still comfortable with our estimate of around 500,000 patients in the US, and when you look at the literature you will see a range of estimates. Some are higher, but ultimately I don't think it really changes our go-to-market strategy.

We're still focusing on movement disorder neurologists and private practice psychiatrists, as well as putting emphasis around community mental health centers. I think that the go-to-market approach is the same, regardless of what the estimates are in the literature.

Okay. Then just a follow-up on the opicapone deal. Should we expect to see you do more of these types of deals, or should we look at this as kind of a one-off?

I will take the first stab at that. We are very active out there and constantly looking at opportunities for compounds or technologies that are almost at any stage. You will continue to see us being extremely active out there.

The opicapone deal is really one that was quite a unique opportunity, as I had discussed last week on the phone, for a very late-stage compound with over a decade of composition of matter on it, a novel compound, and it fits perfectly in with the strategy that we have to dominate here and be a market leader in movement disorders. But we will continue to invest in that and also to broaden the Company as we look on the outside to complement what we're doing internally.

Great. Thank you very much.

It appears we have no further questions at this time. I will turn it back to Kevin Gorman for any additional or final remarks.

Thank you very much. I do have a couple of final remarks here that are important, one of which is that we are less than two months away from our PDUFA date now. And as we get even closer to that PDUFA date, we are going to be not fielding questions any longer about the INGREZZA NDA.

I think that is just prudent on our part as we get closer, and as Chris has said, our interactions with the FDA as frequent as they are now, they are going to be ramping up and to be getting more frequent as we get closer and closer to that NDA. Just as a heads-up to everyone, we do not want you frustrated and you reaching out to us with a lot of questions that we're not going to be able to answer. Again, as we get closer to that, we will probably be not answering those questions any longer.

And finally, what I would like to do is, as many of you know, this is Tim's last conference call with us. He has a hat on and noise-makers. No, actually not.

But I do want to sincerely thank Tim for his dedication. And as you all know, the crucial role that he played in bringing Neurocrine back from a brink when we were less than a $100 million enterprise in 2008 to where we are today. And I sincerely thank Tim for that.

Now, he is not leaving us, as you know. He is here through the end of this year. But he is turning over his CFO and his investor relations duties over to D.A. So please now as you go forward, other than congratulating Tim, direct your questions over into D.A., please. Thank you very much.

Thank you. This does conclude today's conference. We appreciate your participation. You may disconnect at any time, and have a great day.