Good day, everyone, and welcome to today’s Neurocrine Biosciences Reports Fourth Quarter and Year-end 2015 Results Conference Call. At this time all participants are in a listen-only mode. Later on, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call may be recorded. [Operator Instructions] It is now my pleasure to turn today’s program over to Mr. Kevin Gorman. Please go ahead, sir.

Thank you very much. And thank you, everyone for joining us this afternoon on our earnings call. As usual, I am joined by Tim Coughlin, our CFO; and Chris O’Brien, our CMO. Before I start, I would like Jane to read the Safe Harbor statement, please.

Good afternoon. I want to remind you of Neurocrine’s Safe Harbor cautions. Certain statements made in the course of this conference call that state the Company’s management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements, which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements is contained in the Company’s SEC filings including but not limited to the Company’s annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of these filings may be obtained by visiting the Investor Relations page on the Company’s website at neurocrine.com. Any forward-looking statements are made only as of today’s date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

Thank you very much, Jane. So, you’ve probably all seen our AbbVie’s press release yesterday on the positive results from the second and final Phase 3 trial for elagolix in endometriosis. And Chris will be talking a little bit about that. And also, we look forward to any questions you have on that. But before I turn it over to Chris, I’d like Tim to take you through our financial report.

Great. Thanks, Kevin. And good afternoon, everyone. We appreciate you joining us for our year-end earnings call. 2015 was truly a transformational year for the Company. And we now have three Phase 3 programs, two of which have completed the placebo controlled testing and we are poised to file an NDA this year and plan for commercialization in 2017. While we have been fortunate to have tremendous success in the clinic, at the same time, we have not forgotten our paths. We continue to maintain strong fiscal discipline. We exceeded our 2015 year-end cash target, beginning 2016 with over $464 million in cash, investments and receivables. Our loss for the fourth quarter was $29.3 million, or $0.34 per share. This compares to a loss of $19.4 million and $0.26 per share for the fourth quarter of 2014. Our net loss for the year was $88.9 million compared to a loss of $60.5 million last year. When comparing expenses from 2014 to 2015, for the fourth quarter and year-to-date, we show an increase in expenses of approximately $10 million and $50 million respectively. This is primarily due to higher research and development expenses, coupled with significant increase in overall share-based compensation expense. R&D expenses in the fourth quarter increased by $6.3 million over the comparable period in 2014 and they are up $35 million year-to-date compared to last year. $3.2 million of the quarterly increase and $19.4 million of the year-to-date increase in R&D was related to external development expenses, primarily related to our Phase 3 work and our VMAT2 program. We also increased our R&D headcount during 2015. We added key regulatory CMC and clinical personnel to manage our pipeline as well as to prep for NDA filing this year. Personnel related costs increased by $12.6 million year-to-date. The majority…

Thank you very much, Tim. I couldn’t agree with Tim more that this is the transformational year for Neurocrine, as described in his comments about turning the Company from being solely an R&D-based company over to now a fully integrated commercial company. What I’d like to do now is to turn the call over to Chris. And so, Chris can give you his thoughts and views on the recent release by AbbVie and also an update on all of our R&D programs. Chris? Chris O’Brien: Thanks, Kevin. And thanks to the participants who are joining the call. I’m going to talk about four programs, elagolix, tardive dyskinesia, Tourette syndrome, essential tremor, and also CAH, so will cover the full spectrum. With elagolix, the press release yesterday I think said it all, really positive results. And I want to put this in perspective. If you think about what’s happened in the field of women’s health over the last decade or more, there have been very few breakthroughs that have approached some of the unmet medical needs in women’s health. And when you think about the fact that we have both the Violet Petal study and the Solstice study as two very large, more than 800 women each, clinical trials with positive results in the form of statistically significant and clinically meaningful benefit for both co-primary endpoints, both doses, and both time points at month 3 and month 6. This is big news. And it’s gratifying to see such an important outcome in women’s health. It’s very complementary of AbbVie for releasing some additional detail around data from this trial in this most recent press release. And when you look back at these results and then the prior Phase 3 pivotal trial results, and then even before that the Phase 2b Daisy…

Thanks, Chris. The only thing I would add to Chris’ statement also is that our R&D organization has been very productive as of late. And we do hope to put yet another new compound into the clinic for a different indication than anything we’ve talked about thus far, in a completely different mechanism than anything we’ve discussed in addition to ET, CAH, elagolix and valbenazine. So, with that we’d like to take your questions now.

[Operator Instructions] And we’ll take our first question from Geoff Meacham from Barclays. Please go ahead.

Hi guys. This is [indiscernible] on for Geoff. Thanks for taking my questions. I’m just wondering if you can talk about some of the gating factors for AbbVie filing the NDA for elagolix. And do you expect them to file for both doses? Chris O’Brien: Obviously, I don’t have the details because we’re not AbbVie and we’re not involved with the preparation of this NDA or the submission. As you know and as we’ve said publicly, all the other pieces that go into the NDA have been completed, so the preclinical toxicology work, the CMC work, all of that is done; the Phase 1 studies, all that is done. So, the gating piece is the last part of this second pivotal endometriosis trial. Now, you may recall that the trial design is outlined on clinicaltrials.gov. The trial is designed as a six-month placebo-controlled trial followed by six months of all active treatment followed by up to 12 months of open-label follow-up -- not open label, sorry, I misspoke. Up to 12 months of off drug follow-up with the idea that additional safety measures including DXA scans can be done to round out the dataset. So, with that -- I think the dates on clinicaltrials.gov say all in, if the data collection continues for the full 12 months of post treatment for all subjects, it puts the second Phase 3 trial ending up in, I believe it’s -- sometime early in 2017, first half of 2017. So, that would be the gating item for NDA.

And then just on the TD program, any incremental feedback when discussing with KOLs and how they plan to use the drug or additional subgroups and subpopulations that they would like to see you explore their drug further in? Chris O’Brien: Yes. So, let me answer the second one first. When we talk to both psychiatrists and particularly movement disorder neurologists, they have a whole list of other hyperkinetic movement disorders that they would love to see clinical research done on. Obviously, we’re focused on our main goal that is approval of tardive dyskinesia first and then Tourette syndrome second. And that’s the bulk of the unmet need, if you will. As for the first part, when you ask patients -- when you ask physicians about the data that we’ve presented and how they think about, how they would use the drug, I think what you hear is pretty predictable, namely that those docs who have high experience in managing TD are ready to jump in right away and treat a spectrum of patients, both moderate, severe, and a range of tardive dyskinesia phenomenology. So, you get the classical so called buccal oral-lingual dyskinesia, but you also have the limb dystonia and athetosis and other clinical phenomenology. And so, the docs who have quite a bit of TD experience are ready to jump in and use the drug. They are most interested in hearing three things about this drug. One is, can I use this safely in a psychiatric population who have complex underlying psychiatric problems and complex polypharmacy with their psychiatric medications? Because the last thing these docs want to do is destabilize their patients. And so, one of the things we’ve built into our study design is to try to answer that question. We allow a fairly broad spectrum of patients into our clinical trials. As long as they are reasonably stable psychiatrically, they can have a range of concomitant medications for their psychiatric condition. They have, as you know, bipolar disorder, major depressive disorder, schizoaffective disorder, schizophrenia. And we actually allow them to have scores on their psychiatric sales that show they can still have pretty active psychiatric disease, they just can’t be wildly unstable. And we allow them to stay on their meds and be managed for the up to the one-year study. So, this is very encouraging. Docs want to know, can I use this drug and just add it on to the existing milieu and not destabilize the patient. Secondly, they want to know, is this an easy drug to use? This drug is a once-a-day drug, doesn’t require titration, and it can be used safely in conjunction with these other meds. And that’s the goal with our data. Obviously, what’s in the label will come after our discussion of the matter with the FDA. This is our projection based on the data that we’ve accumulated to-date. So, that’s what they want to know and that’s what are hearing so far.

And we’ll take our next question from Charles Duncan with Piper Jaffray. Please go ahead.

I have one on elagolix and one on valbenazine; I’ll start with the latter, more important to my thesis. But I’m wondering if you’ve had any feedback in terms of dosing persistence or compliance, either from Kinect 3 extension or even Kinect 4 that you can share with us at this time? Chris O’Brien: So, in a general sense, we have a good handle on compliances in terms of the subjects taking the medications as directed, the study medications as directed. We know that this can be a somewhat challenging population. What we do see is that if you look at the literature for schizophrenia trials for example, overall persistence in a schizophrenia trial out to a year varies in the literature. In general, it’s in the ballpark of about half the subjects continue to follow the program after one year. We’re doing a little better than that. And I can’t say what that means at this point, whether it’s the kind of subjects that have been recruited or how they like the medications. So overall, we’re seeing as good or better than predicted compliance and persistence with the drug. At the end of the day, we’ll have to see how that translates into the real world. As you know, compliance overall can be challenging, hence our interest in having the once a day, easy to use drug that doesn’t require titration.

Appreciate that, Chris. But that said, you do believe that you enroll patients that are pretty representative despite it being kind of a clinical trial population? Chris O’Brien: Yes. To the extent that we can look at their baseline characteristics and compare them to the populations at large, they typically have almost equal males and females. These are patients who have psychiatric disease for several decades. They’ve had TD for seven years or so at average. They are polypharmacy; 90% are on antipsychotics, 70% are on antidepressants; and they have lots of comorbid medical problems. I mean these are very complicated patients with very complicated comorbid medical conditions. About 40% of our patients have a history of suicidality even before starting our studies. So, we know that this is a difficult group, and yet they’ve done pretty well in these long term trials.

And then, if I could ask a quick question on elagolix. First of all, congrats on the recent results. I know you are not directly involved but wondering if you have a perspective on bone mineral density? It’s been a topic of debate in the last couple of days. And I’m just wondering if you have a perspective on what you think the regulators are looking for in terms of kind of a base level of wanting to exclude, say a certain percentage decrease. How do you feel about that; has that standard changed or anything or what do you think? Chris O’Brien: Well, I’m a little bit at of disadvantage. The last time I sat down with the FDA to discuss BMD and percentages and things, was almost six years ago, at the end of the Phase 2 meeting in 2010. So, a lot of time has passed. And I have not been involved with the discussions that AbbVie has had with the Division of Reproductive and Neurologic Products. I can tell you that the kinds of changes that are described in AbbVie’s press release, they are certainly in the ballpark of what’s reasonable for bringing a new drug to market. The question would be what does AbbVie negotiate with the FDA in terms of what’s in the label? And I really don’t have insight into that. I can’t tell you how that’s going to be. That’s really going to be a discussion between AbbVie and the regulators.

Having said that also, just to add in is that the bone loss -- the change in BMD, I should say for the 150 milligram once a day dose that was released by AbbVie in this is right in line with everything we saw in our Phase 2 program and they saw in their first Phase 3 program. So, it’s very reproducible what’s being seen here. And as Chris said in his opening remarks and as we’ve said before, one would expect that as you increase dose meaning the 20 mg bid. dose and then you would have a concomitant larger change in BMD. And that’s exactly what was seen here and exactly what was expected.

That low dose seemed pretty low in terms of placebo adjusted change? [Ph] Chris O’Brien: I mean, there is really minimal impact when you’re talking about a large group of women like this and seeing these kinds of 1% BMD change over a year, when the precision of DXA scan is plus or minus 3%. I mean, these are pretty small changes. Now, obviously the regulators are very sensitive to BMD. And there will obviously be guidance for clinicians about how to think about to it, how use this data, how to manage patients. I just am not privy to those discussions.

And we’ll take our next question from Anupam Rama from JP Morgan. Please go ahead.

Hi. This is Yuko [ph] on the call for Anupam. Regarding the essential tremor program, are there additional data points of the safety that are being assessed in Phase 1 study in healthy volunteers? Chris O’Brien: No. At this point, it’s PK and safety. Obviously PK is important. Because these healthy volunteers don’t have any tremor and there is no other really biomarker to work with, in a single dose Phase 1 study, there is nothing -- there is no kind of surrogate or biomarker that you can look for.

And we’ll take our next question from Cristina Ghenoiu from Cowen. Please go ahead.

I’ll start with elagolix and endometriosis. I was just wondering if you could remind us on which aspects, like efficacy and tolerability, does elagolix need to differentiate itself from Lupron to be adopted? And a quantitative answer to this would be great, and if the 150 milligram dose passes that bar? Chris O’Brien: It’s kind of an interesting question because Lupron is such a tiny share of the treatment options for women with endometriosis. It’s just not used because of this -- I mean it’s a very small percentage of patients with endometriosis use it. It can only be used for two six-month cycles, has black box warning on bone loss and it makes young women post menopausal. So, there is not a very high bar to surpass. We’re talking about really a tiny number of patients overall with endometriosis who use Lupron to manage their symptoms. Whereas for an oral, well-tolerated medication without that kind of restriction, you can imagine that it’s -- how do you even begin to say what the comparison is because they’re so completely different. You can’t use Lupron as a comp to figure out what the market opportunity is for elagolix. We know that and obviously AbbVie knows that. Lupron is very effective at managing the pain of endometriosis, but it does so with a pretty heavy hammer. What we’re talking about is young women in their 20s and 30s who need to manage a chronic pain syndrome and having an oral drug like elagolix to be used long-term, obviously is a completely new path.

So, you feel that the 150 milligram dose, both on efficacy and tolerability looks good from the standpoint of the patient population who want to go under medical you need to fill with that? Chris O’Brien: Yes.

And then, Lupron is currently used with add-back therapy? Chris O’Brien: Yes, it is. It’s a small number of patients here in the U.S.

And on the U.S. on the trial design, our physician checks indicate that the change in fibroid volume would be of interest to them, but I didn’t see that as one of the endpoints. So, I was just wondering if you think that that would be a problem if it is not being measured. Chris O’Brien: I’m going to tell you my personal opinion. Since we at Neurocrine have never run uterine fibroid trials, but we have talked to quite a few OB/GYNs about fibroids in the course of our work in this area. And I can tell you, historically, the European regulators were interested in fibroid volume. The U.S. regulators that is the FDA, were not interested in fibroid volume as a registration endpoint for clinical trials. And I think if you’re out doing doctor checks, it’s really important to know who you’re talking with, because the field of fibroid management is changing, right? So, historically -- and certainly for a certain group of OB/GYNs, fibroids is a very simple condition. It’s a surgical condition. If someone has excessive bleeding or symptoms related to fibroid bulk, you need a hysterectomy. And so, if you talk to those docs, that’s how they think. On the other hand, if you talk to particularly younger OB/GYNs, women OB/GYNs, who are interested in potential pharmacologic treatment options that do not involve a hysterectomy, they are interested in the potential for an oral medication to manage the symptoms. But from an FDA point of view, fibroid bulk is not a registration endpoint.

And two quick questions on Tourette. Is it possible to have the baseline YGTSS scores for adults and adolescents that you had in the Phase 1 trial? Chris O’Brien: Phase 1 trial was just in children and not in adults. And we have not disclosed any details about that trial for a variety of reasons. Firstly, it’s a Phase 1b study; it was not a randomized control trial, no placebo, sub-therapeutic doses included. So, we’ll eventually get some of that out in the scientific literature. But what you really want is to see the results from our placebo controlled trial hopefully in a year’s time.

And the baseline characteristics are similar between that and what we’ve seen in Phase 1? Chris O’Brien: Sure. So, what I can tell you is that our study like most well-run trials in Tourette syndrome requires that the Yale Global Tic Severity Total Score at baseline has to be greater than 20.

Okay, greater than 20? Chris O’Brien: Through some combination of vocal tics and motor tics. So that’s fairly standard and we certainly have adhered to that in the Phase 1b and the Phase 2 study.

And just one question, if I may on the data in Tourette that was released by Teva. It showed that over time you get a more pronounced response. Have you seen that into clinical models with your VMAT inhibitor? Chris O’Brien: I doubt that if somebody had a preclinical model of Tourette syndrome, there isn’t one. But what we know about this mechanism is that there is a time component to response. So, it doesn’t matter if it’s chorea, tardive dyskinesia, tic syndrome, in general when you have an intervention that targets that hyperkinetic movement disorder, generally continue to see a clear benefit over a period of weeks. Now, each drug is slightly different. We know from our TD data that what you see at week two is an initial response that separates from placebo; it’s more so at week four, even more so at week six. And obviously, we’re doing these up to one year of treatment to see about the continued accrual of benefit. What we don’t see, knock on wood, so far is, certainly in that one of our earlier Phase 2 studies we reported, we see additional accrual of benefit after week 12. So, I would assume that based on the biology of the striatum and how hyperkinetic movement disorders respond that we will continue to see improvement over time.

Great. Thank you.

Christina, this is Tim. One more thing, you asked a question about the endpoints of uterine fibroids trials that are on clinicaltrials.gov. And AbbVie just included simply the endpoints related to bleeding. There are a whole host of secondary and tertiary endpoints as well. They didn’t put everything on there, just the ones associated with that hemoglobin and reduction in blood flow. Chris O’Brien: They are looking at other things.

Yes.

That’s helpful. Thank you.

[Operator Instructions] And we’ll take our next question from Biren Amin with Jefferies. Please go ahead.

Maybe if we can pin down the NDA filing timelines for valbenazine this year. Are you planning on filing a rolling submission after the Kinect 3 extension completes?

We do plan on filing a rolling submission. But other than it will be filed this year, we haven’t given any additional guidance.

Okay. And then what about Europe; what are you plans there for filing over there; and have you had any discussions with regulators there?

Yes. Thus far, all of our focus has been on the U.S. market. As you know, we partnered the program with Mitsubishi Tanabe over in Asia. And so between running, getting ready to file the TD, finishing off the trials for TD and the two studies we have in TS and bringing our partner up to speed in their marketplace in their territory, we don’t have the bandwidth to address Europe at this time. I wouldn’t see us responding to incoming interest from Europe until after our launch.

Okay. And then on Tourette, Chris, you mentioned there is a time component to response with both the pediatric and adult studies that are currently ongoing. I think that you’ve had two different treatment periods, six weeks for pediatrics, eight weeks for adults. Why the difference; and do you expect a more pronounced benefit earlier in pediatrics? Chris O’Brien: That’s a good question. I don’t know the answer about the timing of response and data will tell us that. The difference -- the one placebo controlled period is six weeks, the other is eight weeks and simply a historical difference of about how Tourette trials were done in these populations, I don’t think it’s a terribly important distinction. I think the bulk of the response that you see to our drug we see within that six-week time period, and probably the bulk of that -- more than half of it occurs in the first four weeks. But obviously that is one of the areas I’m interested in analyzing in greater detail as we analyze this data.

And maybe a few more just on Tourette. Are both of those studies statistically powering and can you maybe share what you would like to see from a treatment effect to achieve significance? Chris O’Brien: So, we haven’t shared the details on the effect size or on sample size calculations, power calculations at this point. They are sufficiently powered as Phase 2 studies. And what -- but it doesn’t take much to look at the literature and see what’s out there. I think I’ve said on calls before that there have been several nice publications on the Yale Global Tic Severity Scale that talk about the magnitude of change that’s considered clinically meaningful. So, you’d want to see something in that ballpark. At least a 30% reduction would be clinically meaningful. And what you see -- in most of the studies in Tourette’s baseline scores are in the 25 to 30 range, and a minimally clinically important difference is generally in the six-point range. So, you can kind of do the math from there. I would be happy at the end of the Phase 2 study, if we have the doses right in these trials and we’ve done the Yale Global correctly and that we’ve recruited the right population of patients. Would I expect to see something like a 50% responder rate in the active group and a 20% responder rate in the placebo group? Yes, that would be a nice robust six-week trial.

Is there any optionality to file the data if that’s positive? Chris O’Brien: Well, that’s a good question. I mean, we’d always want to keep that in consideration. There are a lot of factors that go into that process, most importantly in negotiations with the FDA, but they would consider. So for example, I think you can imagine that with an approval in tardive dyskinesia in adults that if we had really positive Tourette data in adults, those populations are arguably similar enough that maybe that’s enough. You could also argue that in pediatrics, you might need a lot more data to be reassuring for long term safety, but that’s a discussion. I’m looking forward to being able to have that discussion with the FDA on the back side of positive data.

And it appears we have no further questions at this time. I will turn the program back over to our presenters for any additional or closing remarks.

Thank you very much. In closing, what I’d like to say is that we’re all very aware of the tough markets that exist right now. Here at Neurocrine, we are very fortunate, as Tim had outlined, we’re in a very good cash position. We have no need, no plans to access the equity markets. We’re going to be entering our commercialization year 2017 with greater than $300 million in cash on hand. So, this market doesn’t affect the way that we approach our business. We are vigorously putting together our commercial team and fully supporting a launch that we anticipate is going to be next year with our drug. And at the same time, we’re pushing forward our pipeline and we’re adding to our pipeline by fully supporting our R&D organization. So, I really would like to thank the support that we have from our shareholders in this. And we look forward to talking to you at upcoming meetings and sharing more of our progress with you, as this year goes on. So, thank you very much for your attention.

And this does conclude today’s conference. We appreciate your participation. You may disconnect at any time. And, have a wonderful day.