Kevin Gorman – President and CEO Claudia Woodworth – Manager, IR Tim Coughlin – VP and CFO Dr. Christ O'Brien – Chief Medical Officer

Brian Abrahams – Oppenheimer & Co. Sapna Srivastava – Morgan Stanley Eun Yang – Jefferies & Co. Elizabeth Naldi – Piper Jaffray

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. And as a reminder, this call may be recorded and I would now like to turn the program over to Mr. Kevin Gorman. Please go ahead.

Thank you, very much, and welcome to our first quarter conference call. I am joined today with Tim Coughlin, our CFO; Dr. Chris O'Brien, our Chief Medical Officer; and Claudia Woodworth, in charge of Investor Relations. On the call today, Tim is going to take you through our Q1 financials, and Chris will give you an update on the GnRH clinical program, Urocortin 2, and CRF. Before we start I would like Claudia, could you please read our Safe Harbor statement?

Sure. Good afternoon. I want to remind you of Neurocrine Safe Harbor caution. Certain statements made in the course of this conference call that state the company's or the 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 the quarterly reports on Form 10-Q. Copies of these filings may be obtained by visiting the Investor Relations page on the company's web site at www.neurocrine.com. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

Thank you, Claudia. Tim, I'll turn it over to you.

Thanks, Kevin. For the first quarter 2008, we had a loss of $21 million, or $0.55 per share, compared to a loss of $25.7 million, or $0.68 per share in the first quarter of 2007, the difference being primarily driven by savings realized as a result of our severance program in the fourth quarter of 2007. During the first quarter of 2008, we had revenue of $1.7 million, we received a $1 million milestone under our CRF collaboration with GSK for moving a third distinct compound from the lab into the clinic. Additionally, we recognized 700,000 under our DSP collaboration for indiplon. Research and development expenses decreased from $19.1 million in 2007 to $14.2 million, primarily the result of our 2007 severance program. Additionally, we had overall lower external development costs. General and administrative expenses remained flat from period to period. In the first quarter of 2008, we recognized 2.2 million in severance expense. This severance cost was completely offset by a decrease in general and administrative expenses that were a direct result of our severance program enacted in the fourth quarter of 2007. Interest expense increased from period to period. Recall that during the fourth quarter of 2007 we sold and leased back our headquarters. Under Generally Accepted Accounting Principles, our rent payments will be treated as interest expense for a period of time, post this transaction, hence the resulting increase in interest expense. Our guidance for 2008 is reaffirmed at a loss of $75 million to $80 million for the year, or $1.95 to $2.08 per share based on 38.5 million shares outstanding. Our non-cash expenditures will approximate $17 million, and our non-cash revenue will approximate $3 million. Our cash burn from ongoing operations will approximate $65 million to $70 million. And (inaudible) including the impact of any out license activities, we expect to end 2008 with at least 4100 million in cash and investments. With that I'll turn it back over to Kevin.

Thanks, Tim, and I would like to turn it over to Chris O'Brien right now to take us through our R&D programs.

Thanks, Kevin. So I am happy to talk about the intense amount of activity that's currently underway with the GnRH program and then some additional updates on the other programs. As we have discussed in the prior conference call, the focus of the GnRH clinical team right now is on the three Phase II trials that are currently underway. The one 603 trial that is primarily focused on giving us information about change in bone mineral density after six months of treatment was fully enrolled in December of 2007, and we anticipate the last subject to have their week 24 visit sometime in June. There's obviously some flexibility in these trials based on scheduling and when the DXA scan occurs. Once that occurs we proceed with data collection and QC and anticipate top-line results in bone mineral density in September. The study that was started this winter with an investigator meeting in January is the so-called 702 study, also known at the Lilac Petal Study. And this trial is a very important trial for us, in that it – it is planning on enrolling 150 women with moderate severity endometriosis. And most importantly, it incorporates for the first time, modification of the clinical end points as recommended to us by the repro division of the FDA. So we'll have a chance to test their recommended assessment method. We are including a higher dose than we have used before, a 250-milligram dose in addition to the already shown to be effective 150-milligram dose. And we are taking advantage of recommendations from the NIH, and the American Society of Reproductive Medicine Guidance on endometriosis trial designs and we are including a placebo single-blind wash-in period. This should help counter balance, if you will, the placebo effect that we and other companies in…

Thank you very much, Chris. Just to add a little bit on – more to the color, the FDA rescheduled our meeting at the last minute due to unfortunate scheduling conflicts that they had there. We were prepared and have been fully prepared to meet with the FDA. They have all the documentation and the entire pre-meeting package that is required of us there. What I would like to do right now is to address the current status of our partnering program with GnRH. Now, as stated previously, we have been, and we continue to be in various stages of contract negotiations with multiple large pharma partners, in addition we have new parties that have expressed interest in the program. Going forward, it will not be our practice to speculate on a timeline to complete this deal. This does not serve the program's interest in our negotiations. The parties that we are speaking with are satisfied with the program and its current data set. The elagolix program is our strongest asset and we do not want to complete a deal simply for the sake of doing a deal. We have a track record here at Neurocrine of entering into very good strategic partnerships, and we are going to continue with that track record with a partnership in this program area. We want a partner that will fully exploit this asset, and a partner with a shared vision for this program. Now, as you heard from Chris, the program continues to mature nicely, with three Phase II trails up and running. We have treated approximately 500 patients with elagolix without any serious AEs. Our biomarkers estradiol and n-telopeptide in addition to pain scores continue to show efficacy and safety. Our intellectual property position, the preclinical work, our manufacturing and commercial formulation…

Thank you. (Operator instructions) We'll take our first question from the site of Brian Abrahams from Oppenheimer & Co. Please go ahead. Brian Abrahams – Oppenheimer & Co.: Hi guys, thanks for taking my question and congratulations on getting 703 underway. Just a question on the DXA data, I'm wondering what results from the six months DXA scans would one look for such that you would not necessarily need to do long-term bone loss studies? I'm just wondering if there is kind of degrees of variability that are allowable or if there is a certain window around the difference from baseline?

Right. Thanks, Brian. That's a really important question. Two points, if I may. The most important thing we get out of this 603 study is for the first time we get to link all of these moving pieces. So we have drug exposure, we have estradiol levels, we have n-telopeptide, which is the biomarker for bone resorption and DXA. So with all of those we can have a good understanding of what happens to populations of women with these things, and we can model and argue, we hope, to the FDA, that with the expected range of clinical response at a clinically useful dose that DXA scans are not needed long-term based on the mechanism of action. To your point of how much change is too much, there is no document from the FDA that says, here is the line in the sand. This is something that always comes down to, after you submit your NDA and label discussions about – is there a black box, is there not? And how – what kind of warnings or restrictions and prescribing information, et cetera? So what we have had is discussions with them to-date about what they would consider clinically meaningful, but they will not commit to here is a specific amount. Now to put that in context, we know that with a drug like leuprolide depot that at six months – after six months of treatment you get anywhere from 5% to 7% bone loss if you don't use add-back, and then even if you stop treatment right then and there, the bone loss continues to mount for months after treatment. Now, for our program we know that within days of discontinuation of elagolix, estradiol starts to come back up, and we would not anticipate any delayed secroli [ph] from this therapy. So at that point, even if there is a little bone loss, which we don't expect, but even if there were, you wouldn't need a pivotal program that required 6, 12, 24-months of follow-up DXA. So we hope at the time of the end of Phase II meeting we can negotiate our way out of these long-term follow-up studies. Brian Abrahams – Oppenheimer & Co.: Great. Makes sense. And then, just one quick follow-up. Is your plan to move in to Phase III with the six-month DXA data from study 603, plus three months efficacy data from 702 and 703? Or are you planning to wait until you have the six-month DXA data from 702 and 703 before starting a pivotal program? I will hop back into queue. Thanks.

That's a good question also. The plan is to go to the end of Phase II meeting with the six-month DXA data from 603, and the three-month data from 702 and 703. Obviously, at the end of Phase II meeting, how that discussion goes depends on what that data looks like. And our best case scenario is that shortly after the end of Phase II meeting, we would be in a position to begin the pivotal trial later in 2009, but, again, I know what the FDA wants depending on what the data shows will dictate those time lines. Brian Abrahams – Oppenheimer & Co.: Thanks for the added information.

We'll take our next question from the site of Sapna Srivastava. Please go ahead. Sapna Srivastava – Morgan Stanley: Hi, I just had a quick housekeeping question. What was the options expense in this quarter?

The option expense for the quarter is – it's $2.2 million. Sapna Srivastava – Morgan Stanley: And how does it break between R&D and SG&A?

Give me one second, as I find it in here. I think it's 1.3 and 0.9, so 1.3 G&A, 0.9 R&D. Sapna Srivastava – Morgan Stanley: Okay. And one more quick question regarding the interest, sort of the rent on the sales and leaseback transaction. How should we go about modeling that in the coming quarters?

That number should be pretty flat, it’s a fixed rent. So if you take the interest expense and just take that straight line out, you'll be pretty close. We probably have about 400,000 of interest, maybe a little less than that of interest in there related to some equipment loans we have that will be going out at the end of this year, but if you want to call me I can walk you through how the accounting works, but if you take this quarter's number and kind of flat line it, you should be pretty darn close. Sapna Srivastava – Morgan Stanley: Okay. Great. Thank you so much.

Sure.

We'll take our next question from the site of Eun Yang, please go ahead, from Jefferies. Eun Yang – Jefferies & Co.: Thanks very much. Question on the CRF receptor antagonist program with Glaxo, this program has been going on for sometime and it seems to me that the program never goes – hasn't really gone beyond larger Phase II study, and yet Glaxo is coming up with more backup compound. So, are there some characteristics that Glaxo or you would like to see before moving into a later stage of development?

Well that's an interesting question. Let me see if I have captured what you are trying to get at. You are correct that there is a large commitment to this target, the CRF receptor and the R1 antagonist, and Glaxo has systematically moved these three compounds through development in a fairly classical fashion. So the 008 compound was the furthest along, had the most support, so it got into clinic first, went through the usual Phase I. And then Glaxo put the 008 compound into it's standard model that they use for affective disorders, the social anxiety, and then because of some really quite striking preclinical model data for irritable bowel syndrome, invested in the IBS program. As you heard, earlier this year, the social anxiety, because that didn't have a successful outcome for 008, that arm of this investment was truncated. The IBS arm will continue to play out until we get a signal, good or bad. Following that, the next compound, 679 was close behind 008, and therefore now is going – and GSK actually did have – does have data through its collaboration and other efforts that they made a judgment call that this would be the appropriate follow-on compound to take directly in to major depressive disorder. So that's the investment – going. So it's actually moving along quite nicely in terms of timing, and of fairly typical timelines for that, and then 529 is a – simply a backup to 679 in case anything comes up there. Eun Yang – Jefferies & Co.: Are there any other companies actually developing products for affective disorder and IBS for this target?

So for affective disorder, yes, BMS has a program, and Ono Pharmaceuticals both have R1 antagonist programs currently in mid-stage development. I'm not aware right offhand about IBS, but I can check on that. Eun Yang – Jefferies & Co.: Okay. And then lastly, the – last time you guys guided that a selective norepinephrine reuptake inhibitor is kind of on hold. Is it the ongoing status for that program?

Yes. As you recall that decision was made as kind of a portfolio review, and given our resources, and the number of people we have here, I wanted my entire team devoted to the GnRH program, so that's just on the shelf. Eun Yang – Jefferies & Co.: Okay. Thanks very much.

Thank you. (Operator instructions) We'll take our next question from the site of Elizabeth Naldi from Piper Jaffray. Please go ahead. Elizabeth Naldi – Piper Jaffray: Hi, thanks for taking my call. If you could just talk a little bit about how the FDA’s scale for endometriosis symptoms differs from how you are measuring it in your first Phase II study.

Sure, they have given guidance not only to Neurocrine but to several companies who are interested in women's health that they very much are interested in the two primary systems of women suffering from endometriosis, namely, dysmenorrhea, that is pain associated with menses, and non-menstrual pelvic pain. And historically, as you know, the primary scale that has been used for approval of drugs like Lupron or Depo-Provera for this indication has been the B&B scale, which in our early development program, we called the composite pelvic signs and symptoms scale or the CPSSS. There have been several versions of this. So the agency told us and others that they liked the B&B because it was historically important and they considered it a validated scale, but this scale was a once-a-month questionnaire done paper and pencil with three components based on the reports of the subject, and two components scored based on the investigator's findings on pelvic exam. And so those five subcomponents were used. And the FDA told us they wanted us to use two of those components because they had this link to what was historically useful, namely dysmenorrhea and non-menstrual pelvic pain. But they wanted – but they really liked the data that we had shown them from our early Phase II studies, using electronic diaries, which were used to capture daily pain rating, and daily vaginal bleeding assessments by the subjects. So they said why don't you modify the B&B, give us electronic diary information daily on dysmenorrhea, non-menstrual pelvic pain, vaginal bleeding, and oh, by the way, we would also like you to also update the language. It was somewhat archaic and they wanted us to modify it. And they give us suggestions – a recommendation of how they wanted their language to work. So we took their recommendations and built that into the trials, the primary end points. Now in addition to that, you may be aware that about a year and a half ago, there was a consensus meeting sponsored by the NIH, and the ASRM, the American Society of Reproductive Medicine, and they came out with their recommendations on endometriosis trials, particularly as it relates to assessment of pain and related systems. And they recommended that a zero through 10 numeric rating scale be used for pelvic pain much like is done in most other therapeutic classes that assess pain, an NRS scale is the commonly used acronym. And so we also have this NRS scale in and this will – has replaced the VAS that was used in the early Phase II studies, so we'll be able to pool this information together in addition to continuing to use the validated endometriosis health profile measure as three ways of getting at the symptoms of endometriosis.

Okay. Well I want to thank you very much. These have been excellent questions. I think that with what Chris has presented to you, and with the depth of your questions that you see the strength of this program. And we continue to make very good progress in focusing on our key strengths and moving all of our programs forward. Now, while the size of this company has decreased, our commitment and the scope of our mission remains quite strong. I look forward to meeting with many of you in the next few weeks, and I would like to thank you again for your time. Good-bye.

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