Please stand by. Your teleconference is about to begin. Please stand by for a technical difficulty. Please stand by. Your teleconference is about to begin. Good day ladies and gentleman and welcome to today's teleconference. At this time, all participants are in a listen-only mode. Later, there will be an opportunity to ask questions during our Q&A session. (Operator Instructions). And now I would like to turn the program over to Mr. Kevin Gorman. Please go ahead.

Good afternoon and thank you for joining us for our earnings call today. Joining me today is Tim Coughlin our Senior Vice President and CFO, Chris O'Brien our Chief Medical Officer and Claudia Woodward our Investor Relations Manager. Tim will be taking you through our financials for the quarter and end-of-year. Chris will give an R&D update on the company and then we will move over to field your questions for the remainder of the time that we have this afternoon. I would like to start out right now and have Claudia read our Safe Harbor statement.

Thank you. Good afternoon. I want to remind you of Neurocrine Safe Harbor caution. Certain statements made in the course of this conference call will state the company's or the management's intentions, hopes, beliefs, expectations or predictions of the future or 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 investor relations page in the company's website at www.neurocrine.com. Any forward-looking statements are made only as of today's date and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstance.

Thank you Claudia. Tim?

Thanks Kevin. During the fourth quarter 2007, we have four events that primarily drove our financial results for the quarter and the year. The first was the severance program and active in mid December in response to the correspondence with the FDA related to indiplon capsule. That action resulted in a one-time $7 million charge to earnings. The second event was the write-off of the prepaid royalty related to indiplon. This represented a non-cash charge to earnings of $94 million. The third event was the execution of the license agreement for the Japanese rights to indiplon with Dainippon Sumitomo. This agreement netted Neurocrine $20 million in upfront cash as well as $115 million of potential future milestones of royalties of sales of indiplon in Japan. The final event was the close of the sale of our real estate which we sold for $109 million that retired debt of approximate $48 million netting a $61 million in cash from the sale lease-back transaction. For the fourth quarter, we reported a net loss of $128 million or $3.35 per share as compared to a net loss of $14.7 million or $0.39 per share in the fourth quarter of 2006. The main difference between the two being the severance accrual and the write-off of the prepaid royalty. Our 2007 loss is $207.3 million compared to $107.2 million in 2006. The major trial for the increase regarding that net loss year to year was the prepaid royalty write-off. Research and development expenses were $24.3 million for the fourth quarter of 2007 compared to $18.6 million in the same period last year. This is primarily due to our severance plan in the fourth quarter of 2007. Annual research and development expenses were $82 million in 2007 compared to $97.7 million last year. This decrease was…

Thanks Tim. I would like to take this opportunity to talk with you about the changes that we have made since FDA decision approximately six weeks ago. We move swiftly and decisively to re-shape this company for a success independent to build indiplon. We downsized the organization and we have removed all the functions that were dedicated to indiplon. We have no patients currently under treatment with indiplon and I have suspended all pre-commercialization activity. We are meeting with the FDA this quarter to begin discussion to see if there is a rational, realistic path to approval. Now if there is such a path for indiplon, we will not take it alone. There are no or minimal expenditures in our budget for indiplon going forward. We have deployed all of our efforts towards our high value programs and projects and research preclinical and clinical development. We have changed the leadership of the company that includes O’Brien here our Chief Medical Officer, Haig Bozigian our head of Preclinical Development and Dimitri Grigoriadis, Head of Research to our senior management team and this is an addition to my new position as President and CEO. Adversity offers us opportunity and we have eliminated three layers of management through our reorganization. Now make no mistake, we have retained all the functions necessary to discover and develop the important new therapeutics. RND has been completely restructured from a departmental organization to a team structure to consolidate our research groups working either in neuroscience, metabolism, endocrinology and our new technologies team to make them more accountable with streamlined decision-making abilities. What we are doing is building on our strength and research to identify and take a leadership position with targets that are innovative and our development expertise to intelligently and efficiently take compounds from the bench into advanced clinical trials. In addition, we are consolidating the entire company into one building; this will both increase communication and collaboration but it will also cut our overhead expenses. We are fortunate we are in a very cash position as Tim has just talked about, we are starting the year with $180 million virtually no debt, and this allows us to not only push forward our internal program, but to aggressively pursue external opportunities. It’s key for our future success that we continue to be in active acquire of technologies and compound. We have a revised pipeline but we will continue to add meaningful drugs to it. Now with that I would like to turn it over to Chris O’Brien to give you an update on our pipeline, particularly our three Phase II programs. Chris?

Thanks Kevin. I am happy to talk about the activities that are going on despite the tumultuous changes that Kevin just outlined. Our clinical group is intensely focused right now of course on our lead program in development; that is, the GnRH antagonist which I am happy to say now has as a name. It is called (inaudible), which is the US pen name that was recently issued. So (inaudible), as you know became programmed from the origins in our discovery group and as we have mentioned in previous calls and press releases this program is in mid-Phase II. Our first two Phase II trials were small, exploratory trials that we have spoken of before. These were important because we were trying to understand whether we had a proof of concept. And then we could we get a dose related partial reduction in estradiol and make some sense of the impact on what were clinically important endpoints mainly pain control. So, we worked with the traditional endpoints in the field of endometriosis, the so-called B&B scale or what we have referred to as the CPSSS scale, a Composite Pelvic Sign and Symptoms Scale. We saw with those initial small exploratory dose-ranging studies that at three months we had a nice dose-related reduction in pain, a dose-related reduction in estradiol, but we avoided profound suppression of estradiol as one might see will provide and that the adverse events and safety primaries that were monitored were quite reasonable for the small studies. Most importantly, we used a biomarker for bone resorption as a biomarker for potential bone loss and that biomarker suggests that we would not see much bone loss. Of course, if any so we have to then go on and do the appropriate long-term studies with DEXA scan. As you…

Yeah. As far as you can see this is a broad Phase II programs that Chris is running here. And this is an important strategic asset for the company. A strength of the company has always been our business development group which I headed up for a number of years. We have completed high quality deals with virtually all the major pharmaceutical companies in the world but the basic tenet that we have always held to and always will hold is doing the right deal with the right company. Now we are currently negotiating with multiple partners. We are well passed the economic terms and now we are in that aspect of negotiation in those late stages where you need to insure that the strategy and vision of the program is accurately captured throughout the written agreement. Now within large pharmacies, this takes coordination among multiple internal stakeholders for collaboration that some of their own Phase II programs this large that addresses multiple therapeutic areas. We are motivated to complete a deal and our prospective partners are motivated. We will get the right deal done with the right partner and it will be done in a timely manner. Chris do you want to keep going with the….

Sure. So, in addition to GnRHs there are a couple of other kinds of high profile programs that are in Phase II in our pipeline. The CRF program I think people are well familiar with this also goes back to the early discovery programs here at Neurocrine that resulted in this case a very fruitful collaboration between Neurocrine and GSK. From that collaboration, multiple compounds were identified, several brought into clinical development and in fact there are three compounds now in the clinic from this collaboration I will talk about those. We have just received data from GSK regarding the social anxiety trial which was recently completed and then shared the data with us regarding the compound that for a full '08 and the 008 compound was one that was in development for both irritable bowel syndrome as well as social anxiety disorder. The irritable bowel syndrome program is ongoing. The trial has completed enrolment but the patients are still enrolled in the treatment phase of the trial and GSK tells us we should have read out from that trial the second half of 2008. The 008 compound completed the treatment phase in the social anxiety disorder and the data that we were just provided showed that this R1 antagonist had no statistically significant difference observed between placebo and active drug on the key social anxiety efficacy endpoint at week 12. This study had more than 200 adult subjects and was a fairly classical design that GSK is quite familiar with. Safety and tolerability, PK, these results were consistent with what I have been seeing in the Phase I stages and no serious AEs were noted. The second compound that GSK has had from this series is the so-called 679 compound. This drug, we know from recent preclinical and clinical…

Yeah, thank you very much Chris for a very good overview of our three Phase II programs moving forward here and now I would like to open up the lines to question.

(Operator instructions). We will take our first question from the side of Annabel Samimy from UBS. Please go ahead.

Thanks for taking my call. I just want a quick question on the CRF program. You mentioned that 008 has different pharmacology from the 679. Could you give us a little more color on the pharmacology and help us understand how it might be different from the next program?

Sure. So as you may be aware of all the group here, the discovery group here has a worked quite a bit using some animal models particularly the ABX model that have allowed us to explore the differences in several families of compounds at the receptor and we have identified a few characteristics that seemed to be profoundly important for growths with similar binding affinities yet very different impact, and this is how compounds were selected by the collaboration to take into clinic namely pick ones that were quite different in their pharmacology and we know from GSK that in some of the early clinical work that has been done namely translational medicine studies using SNRI in small numbers of subjects that these compounds act quite differently in terms of the impact they have so, similar exposure different impact of SNRI suggest that one might be more useful for example in depression than in other. That was how that decision was made.

And Annabel this understanding of the different chemotypes and their interactions with GPCR receptors has allowed us to carve out a unique position I believe within the CRF field and also within our GnRH program.

And it is the same kind of observation that we are making with this pharmacology difference that have allowed us for a follow on our GnRH program to choose molecules that have a profound endocrine suppression effect, for example that would potentially be useful in oncology and other indication.

Just a quick remark to clarify, the 702 study is a six months study but you are first requiring a three month and you will have some DXA for scans for six months?

Exactly. Thank you for picking up that up. So the way these trials are designed both the 702 and the 703, their total treatment duration of six months with additional post treatment safety follow up in DEXA scan but you need six months to adequately interpret DEXA data. However, we do want a read-out on some other kinds of data that will help us enter into Phase II meeting with the FDA and we can get that in three months. So for example with efficacy data and hormone data, we can get read-out within a couple of weeks but we are using the 12-week time point to give us topline information that will help inform trial design. We will know whether the FDA’s guidance with these new clinical end points has born fruit and whether I found what I would consider to be dose permitting toxicology at the highest doses, the 250 milligrams. So we will know that at three months and we can get that us a topline read-out.

Okay. And then just really quickly, expecting any milestones from Glaxo this year at all?

No, those are not in our projections right now. The milestones we have already received from Glaxo so far for the compounds that have put in the program. It would probably be late in ’09 that we would expect our next set of milestones from GSK on CRF program.

Okay. Great. Thank you.

We will take our next question from the side of Jon Lecroy from Natixis. Please go ahead.

Is 008 essentially shelved for anxiety?

I think for anxiety, yes. For other indications, no.

Okay. And then just looking at your guidance, your guidance implies a fairly significant reduction in your operating spend and R&D and M&A, can you talk a little bit about how that should kind of show in our models. Are there charges you are taking again in the first quarter?

John, let me run through real quick. I would expect G&A to drop to about $5 million per quarter by there being additional, we have got another hit of about $2 million in Q1 so you are going to see that number in Q1 being a little bit higher. And then R&D should drop to the neighborhood of $15 million or so per quarter.

Will there be a charge in the first quarter on that?

Not on the R&D side. No.

Great. Thanks.

Sure.

We will take our next question from the side, Mr. Pinash Shevatcheva. Please go ahead.

Hi. This is Ami Fadyah calling for Stahpmah. Can you hear me well?

Yes, we can.

Okay. Thank you. Some of my questions were answered but I just wanted to ask about the $94 million royalty write-off in this quarter. Could you throw some light on what that is and if we can expect something like that in the following quarters?

This will not repeat itself and that $94 million arose out of us buying the royalty strained out from Wyeth on indiplon back in 2004 and we hung that number out in the balance sheet as an asset and because of the uncertainty surrounding Indiplon at this point under the guidance for asset impairment promulgated under GAAP (generally accepted accounting principles) we are required to write that off at this time.

Okay. And another quick question just to understand your guidance a little bit more clearly, how do you calculate your cash bond?

Based on ongoing operations and I can walk you through if you want to call me off line, I can walk you through the details but essentially I just walked through it with John as far as the spend and if you look what I walked through in my discussion points earlier in the call, you should be able to piece it all together. If you have problems give me a call and I will be glad to help you fill in the blanks.

Thank you.

Sure.

We will take our next question from the side of Richard Cabot from Emertech Financial. Please go ahead.

Thank you. On the GnRH partnership which you are currently negotiating, do you envision this going to be with one company or do you see this with multiple partners either broken up by territory or by invitation?

No. Our preference actually is to work with one partner worldwide on all of the indication. This is a program where what we are doing right now is exploring only one indication within Women’s Health which is endometriosis. It has applicability into a number of other Women’s Health indications particularly uterine fibroids. It also can be applied on to the Men’s Health side with benign prostate prosthetic hypertrophy and as Chris had talked about with our second generation compounds. I should refer to him actually of our third generation compounds that are coming through research. Those with essentially utility in the oncology setting both for prostate cancer and potentially breast cancer.

Just to be clear, the negotiations that we are having are for the whole program, not just for endometriosis. It could be a rather complex deal.

It is a large deal.

A deal like this, would this involve a partner potentially taking an equity stake in the company?

At this share price we are not interested in selling any equity.

So it will be strictly a cash payments in miles, though.

That is correct.

On the indiplon, with you going to the FDA, will you be going in alone or will you be taking a potential partner with you to discuss where indiplon is going from here?

No. We are not going to be taking any of the potential partners in with us. We are going to be going into the agency ourselves with our advisers. We will be very straightforward and very aggressively arguing for indiplon in that meeting. However, as you are all well aware, some very significant hurdles have been thrown up in front of this drug. This will probably not be a situation where following that meeting that we have great clarity as the last time but what has taken place is that there are additional conversations that we have with the agency, if they are open to continuing discussions with us after this meeting. And also, we need to wait for their internal meetings to take place following the meeting and minutes to arrive from the agency.

Thank you very much.

You are welcome.

(Operator instructions.)

I believe we have time for about one more call.

I would take our last question from the side of Michael Winkler who is a private investor. Please go ahead.

Good afternoon, Kevin. How are you doing?

Good afternoon. Doing well, Michael.

Kevin, I would like to make a comment. I am talking on behalf of shareholders. We are getting really frustrated about promises from the company. Can you be more specific on the time of partnership for GnRH? We have been hearing about it. It was going to be in December, then it was January, now it is February and we still do not have a partnership. I know it takes a lot to get the partnership going on but can you be more specific? Can you give us more guidance on that?

Michael, I can appreciate your and other shareholders’ frustration and the deal that we would have been able to enter into at the end of December was not the correct deal for this company nor for this program and we chose not to enter into that deal. As I said we do the right deal with the right company. I cannot and I will not give more clarity on the exact timing because I think with the frustration that you are feeling there, this could just potentially exacerbate that. It would seem to give the impression that I control the pen in my partner’s hands which I do not. We are aggressively pursuing this. The potential partners that we are talking to are aggressively pursuing us. We complete deals in a timely manner. We will complete this deal in a timely manner and I have very great confidence but a deal is not done until it is done. We are dedicated to give clear guidance and have straightforward communication with our shareholders and all our business partners and that is what I want to give you. I want to give you clear guidance. And right now, when you are in negotiation, you cannot give a date certain.

I see. Do you have any date set with the FDA in regards to indiplon.

And again, with indiplon, we have this quarter a date set for an end of review discussion and the only reason why I do not give an exact date for that is again leading to false expectation there is that we do not expect based on our previous interactions with the agency and other companies, you do not come out of that meeting with the ability to give any guidance generally. If we are, we will give it at that point in time but you have to wait for your discussions to complete with the agency and most importantly there is nothing binding on the agency or even close to binding on the agency until they release the written minutes, that is, by guidance of the FDA should occur in 30 days, post the meeting. However, we have had the situations where it has taken up to 60 days to get those written minutes so as soon as we have concrete information in order to get shareholders’ guidance we are going to do that immediately. I assure you.

Just one more comment. Please do not keep shareholders in the dark. We are not really happy at this point. We are really frustrated and upset about what has been going on with this company. So, please we want to see some change here. We have had enough disappointment from Gary Lyons, we would like to see something different here.

I think that you have seen that there have been a number of changes which I have outlined at the beginning of this call. Thank you very much.

Thank you.

I would like to end this call with acknowledging our employees. While we have let go of many talented people, we have retained the highest quality of group of personnel that the company has ever employed. If there is one thing our employees have clearly demonstrated is there ability to weather adversity and have shown an immense adaptability to change. With multiple Phase II programs, a good cash position and a motivated scientific and business team, we are well positioned for future success. I would like to thank you for your time and your questions today. Bye-bye.

Thank you. This does conclude today’s teleconference. You may disconnect at any time. Have a great day!