Neurocrine Biosciences' CEO Presents at Lazard Capital Markets 9th Annual Healthcare Conference (Transcript)

| About: Neurocrine Biosciences, (NBIX)

Neurocrine Biosciences, Inc. (NASDAQ:NBIX)

Lazard Capital Markets 9th Annual Healthcare Conference Call

November 13, 2012, 01:00 pm ET


Kevin Gorman - President & CEO


Joshua Schimmer - Lazard Capital Markets


There it is; a quick introduction. Alright, I think we are going to get started. Welcome, I am Joshua Schimmer, from Lazard Capital Markets biotech team. It’s a pleasure to introduce Neurocrine Biosciences, a company that has two late stage assets that seem to be threading the needle on dosing profile, elagolix for endometriosis and 854 for tardive dyskinesia. Here from Neurocrine, we have Kevin Gorman, President and Chief Executive Officer and Tim Coughlin the Chief Financial Officer.

Kevin Gorman

Thank you very much Josh and I would like to thank Lazard for the opportunity to come and speak here today. In addition, we have Chris O'Brien, our Chief Medical Officer in the back of the room in case you ask questions that are just two hard for Tim and I.

I only have just a couple of slides here, as a way of overview, I think investors and everyone finds it the fireside chat format and to having questions a lot more illuminating than me standing up here and talking. But I will say that as I show our Safe Harbor statement here, I will be making forward-looking statements, so please go through our recent SEC filings for all the risk factors associated with the company.

As Josh had said, we have two main programs; the first is elagolix, our women’s health program that we partnered with Abbott Pharmaceuticals about two and a half years ago. Abbott is in full control and has all decision making associated with that. They are running a Phase 3 study in endometriosis currently. This is a study in which they are looking at two doses of elagolix against placebo. The primary endpoint is at three months. Then there is going to be a secondary endpoint at the end of six months of dosing in order to look for persistence of efficacy.

At the end of that time then everyone will be on elagolix. Then they will stay on that for an additional six months and we will have 12 months of continuous dosing going on there. And then following that cessation of that, then there will be a follow-up that would be six months or maybe even up to 12 months of no treatment. We wouldn't anticipate it going 12 months, probably six months and then the number of safety measures will be taken during that period of time particularly we’re looking at bone mineral density. There will be bone mineral density checks throughout the study and the treatment period following from our six months experience of continuous treatment with elagolix, we don't anticipate to have very much bone loss at all in the study; but we can talk a lot more about this during the Q&A.

Elagolix is something that we like to refer to as a pipeline within a program. Abbott is not only running the Phase 3 trials in endometriosis, but they also have Phase 2 program in uterine fibroids that they have ongoing now and so there is a simultaneously development of both of these programs ongoing at Abbott. There also are a number of women’s health indications here. I have listed a few here that you know that this mechanism of action is involved in and elagolix could be an ideal drug to treat this anywhere from a assisted reproductive therapy to polycystic ovarian syndrome.

The second program is the one where we at Neurocrine spends the vast majority of our time on. It's our VMAT2 inhibitor program. This is wholly owned by Neurocrine. Vesicular Monoamine Transporter 2, is what that stands for. We currently have it in the first of two Phase IIb studies. This one, the KINECT study or I some times call it KINECT1 because the second Phase IIb study is a KINECT2 study will start a just later this year.

We are working in treating the movement disorder, tardive dyskinesia and tardive dyskinesia is the movement order that is caused by anti-psychotic drugs. In this first one, the KINECT study, we are working exclusively with patients who have tardive dyskinesia, whose underlying disease schizophrenia or schizo effective disorder and the basic design of this trial shown here which is a little busy, but it's not so much so as it's two doses of our lead drug, NBI98854, we call it 854 for shorthand, against placebo. There will be six weeks of treatment and then the primary endpoint is taken at that point. The placebo patients then all randomized into drug treated group. They go on for additional six weeks. So then you have patients who have three months of continuous therapy. We will then look at persistence of effective at the end of week 12 and then we will have a four week follow-up to that. So this study we will read out in late April of next year, so about six months from now.

The second study as I said, there is the KINECT2 study again in patients with tardive dyskinesia, but this time the patient population that we are going to be looking at in KINECT2 are the mood disorder population, not the schizophrenia population, so these are people primarily with bipolar disease who have taken the antipsychotic drugs and have developed tardive dyskinesia. In addition, there will be patients who have taken the GI drug Reglan and have developed tardive dyskinesia. They will be in this study also and we will fill it out with again some more schizophrenia population.

So that study is of a somewhat similar design, different dosing regimen that KINECT2 study actually will be a dose escalation study that we will be doing and it will be total of six weeks in duration of treatment; it won’t be going out as far as three months. It should read out late June of next year, so we will have our Phase IIb program done then by midyear and then we will be meeting with the agency later next year in order to add our interface two meeting in order to start the Phase III program.

Again, our VMAT2 program is a pipeline within the program; tardive dyskinesia is the first indication that we are looking at and another indication that we are currently doing the preclinical work on right now is in Tourette's syndrome; we know that this mechanism is involved in Tourette's and before you go in to children, which Tourette's is primarily a children’s disease, you need a different sort of preclinical package; you need to be in young animals in your preclinical talks, just as we were in older animals in our preclinical test for adults. Additional indications that we have for this program is dystonia and also Levodopa-Induced Dyskinesia or LIDS, but the first two that we are going to be concentrating on are tardive dyskinesia and Tourette's syndrome.

Tim will be talking about this little later on, but we are continued to be in a very nice cash position with the company. So we are quite fortunate to be in that position and I would say from there we have a real good pipeline within the company. We have a very active research group; we have eight to 10 research programs going on at any one time; we have two in preclinical development right now. We really don't start talking about those until they enter the clinic, so look forward to talking you about the more in the coming year as they enter into the clinic.

So with that I would like to be able to sit down and take any questions that Josh have and you are welcome.

Question-and-Answer Session

Joshua Schimmer - Lazard Capital Markets

Great, so I think we’ll probably share this mic; so I guess on the Phase III elagolix program, how did you come to finalize the primary endpoint and what was the FDA’s ultimate input into that selection?

Kevin Gorman

Thank you, Josh. Really coming to that endpoint was a collaboration with the FDA, and I would like to say a very healthy and good collaboration with the FDA. The old point which we had used in earlier in Phase II, our earliest Phase II was the one that had been around for many years called the CPSSS score, Composite Pelvic Sign and Symptoms Scale. Our drug worked extremely well in that scale; we showed very good efficacy, as matter of fact, we showed non-inferiority to one of the gold standards which is DMPA in endometriosis. However, the agency asked that we change that scale and we didn't disagree with them actually. It was not a 21st century pay and scale. It was a one month look back scale. It was cumbersome. The agency then said they wanted to see a daily scale and they only wanted rather than five components they only wanted two.

And it’s very important those two. Its dysmenorrhea which is pain during menstruation and non-menstrual pelvic pain and they want them measured on a daily basis, that's never been done before. The agency gave us wordings and a scale to use there and they again zero to three on each one of them as it was in the CP SSS scoring system and they said they grandfathered that and it’s a validated scale. Well, we took that scale out and we tested it in two Phase 2 trials and we found the sensitivity lacking in the way that the wording was designed.

We could always show that we could differentiate substantially from placebo on dysmenorrhea but the way the non-menstrual pelvic pain question was formed did not have enough sensitivity there as a matter of fact, when we did the psychometric testing on that with women who suffer from endometriosis, we did individual interviews, we did group focus groups, women found the way the question was put forth to them actually to be quite insulting.

We took all this data to the agency and they are extremely interested in it. They wanted the transcripts for all that work. We showed them that. They then wanted the videos from all that work. We showed them that and we had also given them, we said it only takes a small changing around of this wording and you actually get to how women suffer and the agency came back and said we agree, you are absolutely right.

What we had provided was not how women suffer. Neurocrine you've done a very good job here. They had one extremely useful change to it where they put their mark on it also and again as we went back and did the full testing on it, they were right on that so it really was quite a good collaboration. So as the primary end point stands, and what was agreed to in the end of Phase 2 meeting, it is co-primary endpoints, dysmenorrhea and non-menstrual pelvic pain, each one has to be hit independently.

Joshua Schimmer - Lazard Capital Markets

On the travel design, I guess, just step back I tend to think of endometriosis, this is a chronic disease that would just continuous therapy but it looks like you have built into the trial almost dose interruptions versus sensational therapy, is endometriosis a chronic disease and if so why would you design the trial to interrupt therapy?

Kevin Gorman

Yeah, endometriosis is a chronic disease but we don’t have any dose interruption during the study. You might be thinking of the VMAT2 program where there is a changeover of dose but in this in the Phase 3 program the women are treated either placebo or Elagolix for six months and then placebo rolls over into drug treated group and then everyone goes for an additional six months. And so there is the vast majority of the patients are going to be having year of continuous treatment going on here.

So we will get quite a bit of efficacy data obviously but you do have one year of continuous dosing and monitoring of bone mineral density which is one of the things that is of concern to the agency and also that we want to show because it’s I think one of the hallmarks of our drug that we have outstanding efficacy with minimal to no effect on bone.

Joshua Schimmer - Lazard Capital Markets

It might have been a hard angle to see I thought you had some patients on six months of therapy and then go off and the (inaudible).

Kevin Gorman

No, it’s after we are on for a total of one year then they will go off and then you will monitor the patients particularly bone mineral density to see if there were any outliers that had some decrease in bone over what period of time does it take for that bone to come back.

Joshua Schimmer - Lazard Capital Markets

So would patients then get a year of therapy or would they get more than a year of therapy?

Kevin Gorman

Yeah, at least they would get a year of therapy that obviously will come down to when we have discussions with the agency after the program is completed and NDA submitted or I should say Abbott we will have those discussions.

Joshua Schimmer - Lazard Capital Markets

Other patients who continue on the ongoing here as well?

Kevin Gorman

That is possible as of this point, but at this point that will be a question for Abbott.

Joshua Schimmer - Lazard Capital Markets

Is that the effect on bone density that's kind of driving the decision to start at one year and maybe you can talk little bit about what you see on bone density relative to some other?

Kevin Gorman

Yeah, its not the decision on bone density stop at one year, its that you for ICH guidelines we usually do a year of safety, for many indications to get chronic use, you either have to have three months or six months of efficacy data and that’s built into here and then the one year for ICH guidelines. We have done, we have measured bone mineral density in six months of continues treatment in over 700 women in this program.

And what you see is that on the agency, the original guidance they gave us is that they didn't want to see a change in bone density that the lower bound of the 95% confidence interval showed a change of more than minus 2.2% bone density.

We did not see that at all, we never even came close in those studies to going about 2.2%. We were I think a negative point 1% change in bone density, its also instructive to note that in an individual 2.2% bone mineral density change is meaningless. There is no clinical correlate to that, that's an extremely small amount, a normal healthy young women could loose anywhere from 1% to 4% pound in any given year and gain another 1% to 4% pound in the next year. It has to do with just the normal fluctuation and more to the point just the sensitivity of the measurement the (inaudible) use for it so what we see is virtually no change inbound.

Joshua Schimmer - Lazard Capital Markets

I guess, I think we are used to seeing for chronic therapies patients will continue after an initial year of exposure and see two to three better characterized for safety profile if the question were to come up well, yeah does that (inaudible) what happens after two years when you can come back to that decision to cut it off after one year and how do we reconcile that decision with a more standard practice to continue beyond.

Kevin Gorman

Yeah, and these would be questions for Abbott as they go through this, whether they are going to be then characterizing patients for the Phase 3B potentially Phase 4 and keep them on therapy, but use the one year safety database in order to submit the NDA.

Joshua Schimmer - Lazard Capital Markets

Why from (inaudible) Phase 2 trial what is it about that indication that what comes in the second position relative to endometriosis as opposed to a parallel track Phase 3 or the lead indication.

Kevin Gorman

Mainly because before we partnered with Abbott we had treated a 1000 women with endometriosis and we never treated a woman with uterine fibroids. So we had the program several years in advance for endometriosis. We didn't have the wherewithal financially in order to run both of those simultaneously. We did when we were done with the Phase 1 program several years ago and we were entering into Phase 2 as we had the debate within the company, do we go to uterine fibroids or do we go to endometriosis first. At that point in time the end point from a regulatory path for endometriosis are much clearer than they were for uterine fibroids.

Now it’s kind of interesting that during that period of time, the uterine fibroid endpoint became much, much clearer as defined by Abbott actually with the FDA, with the previous drug that they had that had a safety problem in Phase 3 and then the end points for endometriosis changed throughout there. So once Abbott got a hold of this program, they got it into Phase 3 for endometriosis, get that moving along and then they started in earnest with the uterine fibroid. So they have been going on a Phase 2 proof of concept study here and Abbott or I should say AB-V has gone on their road show this week. So they now have up on their website as AB-V. They have a number of slides describing the Elagolix program at this point on their state [trip] they will be starting the Phase 2B program in next year in uterine fibroids.

Joshua Schimmer - Lazard Capital Markets

And beyond the 854 when you are almost run on time, I guess is there anything the other VMAT2 inhibitor which seems sort of run into trouble on the side effect, side of things partly because they just kept pushing the dose until everyone got side effects. With that context, how do you think about kind of finding the right dose for 854 and what are your side effects, do you try to find more the minimally efficacious dose or what are the goals that you (inaudible).

Kevin Gorman

Yeah, and it’s a good question. So its instructive to note as Xenazine is a VMAT2 inhibitor but it’s a mixture of four isomers. And where it runs into its side effect problems such as depression, suicidality, QTC prolongation, a number of those side effects has to do with two things. Number one, that there are four different drugs in there and number two, and so there is a lot of off target, and number two is that the PK profile for Xenazine is it throws a very high, immediate level, so a high Cmax and then it rapidly declines and that’s why it has to be given, three, sometimes, four times a day and you are throwing these very high brain levels of the drug three and four times a day.

With our drug, we design when we set out to develop a drug in this area, several years ago, it was with the goals of we want a drug that is highly specific just to be inactive. So that’s what we have. We’ve tested more than a 120 different channels, receptors, enzymes and we have basically, the drug is dead on every single one of those. So any off target is mitigated there and number two, the design in the drug itself was such that we would have a very blunted Cmax. So that we're only just going up and then we have a prolonged half life, so that you are getting almost a square wave. So it leads to once a day dosing, no high levels going there.

What we do look for in the program is to find minimally effective dose, but then what the agency does demand is that they do demand to see what happens at higher dose, what's the maximum tolerated dose within a group, and so that’s why with the two Phase 2b studies that will be taking to them at the end of Phase 2, we're going to have a full dose range here; 12.5 milligrams, 25 milligrams, 50, 75 and a 100. We will have a fix dosing paradigm, which we believe is going to be the dosing paradigm for this drug and we will be able to show the agency and give guidance in the label to physicians that if they do want to titrate the dose up for any reason, we will have that data available to them also. So the Phase 2 program is really to be able to recapitulate in a Phase 3 and to be able to give the agency everything that they’ve wanted. Once again with this division of psychiatry, we have a very engaged division, a very knowledgeable division and one that has given us very good guidance going through and that’s how we have designed the Phase 2B program.

Joshua Schimmer - Lazard Capital Markets

[Question Inaudible]

Kevin Gorman

No the scale that the agencies wants us to use which is the gold standard is the aim scale, the Abnormal Involuntary Movement scale. There are seven components to that scale a zero to four scoring on each component, and so one of them is arms, so the involuntary movement of the arms the other one is trunk, the third is the legs and then there are four that have to basically do with the neck up. So you have oral, buckle, facial, tongue movements. And when the assessment is being done by the physicians giving the AIMS test, it’s really about a 10 to 12 minute neurological exam and they focus on each one of those body areas exclusively at any one time and then move on to the next body area, giving a zero there is none, one is minimal, two is mild, three is moderate and four is severe.

Joshua Schimmer - Lazard Capital Markets

May be just a quick answer to question in the Phase 2 study of (inaudible) you had one site throughout the AIMS score based on (inaudible) I know you have talked on your calls of what you have done to make sure that doesn’t happen in the next trial. Have you learned anything more at that clinical stage what is (inaudible)?

Kevin Gorman

No, we haven't other than what we’ve said before is that they entered patients who did not qualify for the trial and the scores that they gave them to the conduct of the trail did not line up to a blinded expert AIMS score who then went and did all the videos. We learned a lot from that trial however, and we applied all of our learning to the safe guards in the current trail and connect two trail that will startup, and I do have to say we have a wealth of evidence that VMAT2 is the appropriate target to treat tardive dyskinesia.

We strongly believe that the drug 98854 is the right drug for this target. What's crucial for us in these trails is to involve the correct patient and have consistent and accurate AIMS scoring, and everything that we have done is been put in place to adjust that, and we are as we are enrolling now we’ve screened approximately 50 patients in the connect one trail, all these safe guards are working. We are getting the patients into this study that we want into the study.

Joshua Schimmer - Lazard Capital Markets

Of 25 minutes goes by quickly, we have a lot going on. Thank you very much for future updates for Neurocrine.

Kevin Gorman

Thank you Josh.

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