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Neurocrine Biosciences, Inc. (NASDAQ:NBIX)

Deutsche Bank 2013 BioFEST Conference Call

December 3, 2013 2:15 PM ET

Executives

Kevin Gorman – President and CEO

Unidentified Analyst

Thank you all for joining us. My name is Robin [Krunesco]. Next we have Neurocrine Biosciences and we have the President and CEO, Kevin Gorman. We thank you so much for joining us and thank all of you for staying this afternoon. Anyone in the audience with questions please raise your hand and I am happy to answer them, I don’t have my phone up here so I will let you keep track of what time it's for me.

So Kevin I just want to start off actually for me just wanted to know what is the latest and what you have learned regarding VMAT2 program, have you learned anything new since in your last quarters call from the dataset that showed successful higher doses and alternative lower doses?

Kevin Gorman

Yeah first of all thank you Robin, thank you Deutsche bank for having here and I will be making forward-looking statements. So I guide you to our recently filed SEC documents. Yeah we have learned quite a bit but we have quite a bit more to learn. Before I go into what we have learned let's talk about what's going to be happening in just the very next couple of three weeks. So that Kinect 1 study that read out the top line data at the end of six weeks of dosing is the one that showed that a 100 milligrams was highly effective, the 50 milligram didn't give us a P-value in that study.

That study was designed such that then at the end of week six, the placebo group randomizes down to 50 milligrams and then the 50 milligrams continues until week 12 and then after week 12, there is a four week washout period and we reevaluate that at the end of week 16. All that data, so the closeout of that trial is going to happen right before Christmas, actually December 23 about is when that's going to close up.

So for the first time we are going to be un-blinded on a per patient basis in that trial. So we were going to be able to now look at PK drug levels, match it to response or non-response in that individual patient and look at adverse events on a per patient level. So all of that we will get in and we will importantly be able to look at safety and tolerability at the end of 12 weeks of dosing with the 50 milligram dose. So we will be able to answer those questions now on looking at depression, looking at suicide, looking at the effects of the drug on the underlying disease of schizophrenia all that on a 12 weeks will have the data for. So we will have that unless I say we close that out right before Christmas, we will have that data in the first week of January is when I am thinking we will be able to share that with the holidays in between.

Secondly is the week between Christmas and New Year is when the data closes out for the Kinect 2 study. Now the Kinect 2 study if you recall is a dose titration of the NBI-98854 in a mixed population half being schizophrenia patients the other half being bipolar major depressed patients. So that is where we are titrating optimizing dose, two weeks on 25 milligrams than they have the opportunity to go up to 50 milligrams for two weeks and again the opportunity to go as high as 75 milligrams. All of that is placebo controlled in addition.

That's going to answer questions for us such as what does the placebo response look like in a titration design, what does these doses of Elagolix look like in a bipolar population, are they safe and well tolerated as they have been in a schizophrenia population and then what obviously does 75 milligrams look like in efficacy and they should step back from that as it's a dose optimization. So some patients will go the full six weeks on 25 milligrams, some will be on 50, some will be on 75. I think the vast majority will be on 75 at the end of the day. But each one will be optimized to for the dose for both safety and tolerability in that study.

So within those last two weeks of December which we'll share all of that in that first seven, eight days of January is going to add tremendous amount of information to us. We'll have over 210 patients then, that is more to-date then what we've been able to look at. We'll drop that into our PK, PD modeling at that point in time. And then take one of the several protocols that we have already designed out for the Kinect 3 study and take that forward at that point in time. So what have we learned so far to get back to your question?

There is a number of things, a 100 milligram is a safe and well tolerated and highly efficacious dose in that schizophrenia population for tardive dyskinesia. We also know in unblinded basis that the 50 milligram basis actually was a highly efficacious dose in a number of the patients, it's not enough in that study to get us a P-value.

I think what we know and bringing together our SAB of eight neurologists, movement disorder specialist and they have looked over 100s of videos now on site at Neurocrine, they all agree that we have active drug here, they have helped us design out some of these designs for the Kinect-3. again which will be data driven which design we will take and they have also made the suggestion that it may be, let's look at the data, it may be more appropriate to look at an end that’s at the end of 12 weeks of dosing rather than end of six weeks still up in the air we need to see the data from all of this to take a look at that.

They have also helped us in that they all agree that you can't have the end point, the aims endpoint being administered by psychiatrist nurse practitioners PhD’s at the individual sites it has to be centrally read by movement disorder specialist. And as they said two movement disorder specialists have to read them simultaneously all randomized and reach consensus on the AIMS score there. So that is how Kinect 2’s protocol has been amended so that’s how that will be read.

Question-and-Answer Session

Unidentified Analyst

Okay a couple of questions there. I guess well first of all what is do you have the baseline yet for Kinect 2 and AIMS versus Kinect 1? Or AIMS is much higher?

Kevin Gorman

Yeah it's to be honest it was about the same but now we are working with the baseline that was from the onsite not the video and so we are not using any onsite scoring in Kinect2 so that baseline is actually meaningless. The baseline will be done at the end of the study where the two movement disorder specialists sit down with all 204 because there is 102 patients, all 204 videos all randomized they don’t know when they are looking at the patient whether that was their baseline or whether their weak sex and then they will determine what the baseline was.

Unidentified Analyst

But you have the baseline for the independent.

Kevin Gorman

For the independent, for the onsite scores so approximately the same.

Unidentified Analyst

Approximately the same. The next question I have is so when you think about just keep thinking about how hard was the score the AIMS and the ability that is. What does that mean as far as commercially diagnoses and then like who gets treated and how you’ll decide who should get treated.

Kevin Gorman

The sites don’t have a problem in recognizing TB where they have a problem is applying an AIMS score in a clinical trial setting to differentiate a two from a three or a three from a four. But for them to apply the AIMS to score 2 schizophrenia or bio-polar patient that’s been on an anti-psychotic they see that they have Tardive Dyskinesia that they can see and therefore they could eventually prescribe our drug.

Now clearly if you look at the Kinect data they weren’t able to apply the AIMS score at the end of the treatment in a sensitive enough way to show that there was a treatment effect, centrally reading they clearly could. But there is a physician on site another physiatrist who was treating the patient and their CGI scores clearly showed that the patients were helped and very much improved and much improved.

So that treating physician to recognize Tardive Dyskinesia and then to treat it and recognize the treatment effect that can be done, to apply AIMs that’s where the problem lies. They wouldn’t be doing that in clinical practice now.

Unidentified Analyst

What about given that the in different patient populations there is different side effect profile or the different levels of the drugs are tolerated so do you need to be accurately analyze the AIM in the beginning so that the AIMS score in the beginning to know where that patient falls as far as what dose they might be able to have?

Kevin Gorman

Well we don’t know and what we know about tolerability is that a normal healthy patient has a normal healthy volunteer has a different tolerance for our drug then does a Tardive Dyskinesia patient. So know that that normal healthies will be treated with our drug. We don’t know yet until we get the Kinect-2 data whether schizophrenics or bipolars have a differential tolerability of the drug. And what I would imagine is going to be done in real world practice as is done in the Kinect 2 study and where psychiatrist mainly do with all their drugs, they titrate up to their determination of tolerability versus efficacy and that’s just what they are doing they do that often anyway and the rest of our program will be in guiding them.

Unidentified Analyst

So the Phase III Kinect 3 will incorporate a dose titrations too?

Kevin Gorman

I don’t know that yet we have to see with the Kinect-2 because that’s our first time in doing those titrations so I have to look at that data first to say whether that would be the case or not but clearly there because psychiatrists titrate everything we will have guidance to titration.

Unidentified Analyst

What did Kinect2 -- I am little confused what it tells you. So as far as deciding whether or not to dose titrate up or not?

Kevin Gorman

One of the things that we have to look at is that in Kinect-1 we had a really manageable placebo response in there and we spent a lot of time and effort again to designing in there how are we going to do this to make sure that we have a manageable placebo effect and was about a 20% placebo rate that we had in there. I need to see where Kinect-2 is going to work out because generally since you are touching a patient a placebo patient multiple times in the titration you generally have a higher placebo rate. Now if it's still manageable 30% or so then that’s fine, then I think the titration trial is where you would want to go of things being equal going forward.

But if that touching these patients those several time leads to a much elevated placebo response than you have to rethink that, that’s what I would be concerned.

Unidentified Analyst

And why would have we too?

Kevin Gorman

Because they know that they are coming in every two weeks or even if in subsequent trials you are extending that out where it may be there they are going to be titrated every four weeks or something. You are making contact with them and they know something is happening at these doctor visits. And so just by knowing something happens generally leads the higher the placebo responses.

Unidentified Analyst

From a safety perspective given the Kinect1 data do you think you need those titrations?

Kevin Gorman

From a safety perspective it doesn’t look like it because these patients have tolerated at least schizophrenics have tolerated those up to a 100 milligrams quite well. And what I can tell you from the Kinect2 study is just looking at the blinded data reports that we get in is that there is very few AE's and very low dropout rate in Kinect2 so we are not seeing any signal if you will in there.

But I can tell you that at week four at week two for the first opportunity that titrate. Virtually everyone titrated that not a 100% but a lot. At week four about 80% titrated up and mind you people can be titrating up placebo for all we know. And but at week four a couple of people titrated down. Now that could help them placebo also titrating down I don’t know at this point we are not.

Unidentified Analyst

And so with the advantage of having a dose titration that when you are in the real world it's much easier for doctors to figure out right does in in terms of wide range in schizophrenia patient, some handle 50 milligrams fine and even though it sounds like for the clinical trials you don’t really need that is it more for a real world?

Kevin Gorman

It's for real world use and it also is for clinical trials because I can’t look at the patient in advance we don’t have any bio-markers or anything that say this patient this patient will respond well to 50 that one will respond well to 25 and that one to a 100. We don’t have those so in that respect if you want to optimize your dosing in the clinical trial you would do with titration up into the clinical trial.

Unidentified Analyst

So as you said what percentage of people responded to the 50 milligrams in Kinect1?

Kevin Gorman

And it would be somewhere between 20% or 30% responded well.

Unidentified Analyst

But you don’t know the individual patient information to sort of compare those patients to the Kinect, the original Phase I trial and can’t understand what was mostly on.

Kevin Gorman

That’s exactly right so once right before Christmas when we completely un-blind on a per patient level then we are going to be able to marry their blood levels to the response and non-response and so that then we drop into our PKPD model and that’s going to give us a very good handle on how to decide on the doses going forward.

Unidentified Analyst

Do you know the twelve week safety data yet as far as depression scores?

Kevin Gorman

No we don’t know any of that.

Unidentified Analyst

Okay and what will the wash out tell you?

Kevin Gorman

And in wash out we are just looking to see from a return to symptomology how they handle that. You always want to be sure although there is no reason to expect it. We’ve not seen it before. We do follow patients after they leave. But you always in all your trials as you go along you want to make sure there is not going to be a rebound at most what they do is they return back to their baseline.

Unidentified Analyst

Okay. Given what you learned as far as enrolling these patients with the busses and late night commercials, how quickly do you think, I guess what strategy would you employ to quickly enroll in that trial?

Kevin Gorman

Yeah it's a good question I think the thing is that the two things right now that is most useful to us is that we know the best sites to go to so we have we use them we are going back to those sides you have to use fresh patients do novo patients, you can’t go back to ones that have already been exposed to drug. And what you also know is that you need to have an outreach into the communities psychiatric centers and that’s how you are going to best get your patients enrolled into there, that’s really the optimal way to run these trials.

The advertising on radio the advertising late at night at television I think those are helpful but the number one is the outreach into the community psychiatrist centers.

Unidentified Analyst

Are you already starting to broaden like the number of sites that will be able to participate?

Kevin Gorman

Yeah actually while we await this data not only have we already finished several protocols and now we get the data to figure out okay this is the protocol we are going to use but we have already been out there selecting sites, validating the sites, getting all the sites up in running and then from a manufacturing standpoint making sure that we have already manufactured the drug product such that we can handle whatever dose ranging or placebo that we need to get in this study. So a lot of the ground work has been done already.

Unidentified Analyst

Okay. And before I think you said on the last call directly we could have data, depends on I guess the duration of the trial, but theoretically more quickly we should be able to have data by the end of the year is that possible?

Kevin Gorman

I think that if you were to trust me I would say that we were going to be go into a longer trial rather than a shorter trial and I would also say that we were going to have a tremendous amount of data now and we haven't met with the FDA for quite a while. So I would want to have a meeting with the FDA whether we have that meeting with the FDA, we launch the trial at risk with the protocol prior to having a good thorough discussion with the FDA to meet with the FDA first and make sure because we are talking about a number of things here with this, we are talking about dose, we are talking about duration, we are talking about central reading and we are talking about whether you have to handle bipolar schizophrenia patients differently or they just all handle the same in a dosing regimen. Those are all things that you need to speak with the agency about make sure that they are on the same pages as we are.

So that would be a thorough type C meeting and that you get granted about 75 days after requesting it. So long answer to your question is I wouldn't look for the data coming in 2014 and it would be more in the early part of 2015, but I get firm timelines probably at the very beginning of next year.

Unidentified Analyst

At JP Morgan?

Kevin Gorman

Yeah probably around there at JPMorgan, I can give more firm timelines.

Unidentified Analyst

But you won't have met with the FDA?

Kevin Gorman

No we will not have met with them yet but we'll have the timelines that we would be anticipating meeting with them at that point.

Unidentified Analyst

So theoretically would you start are you leaning towards starting it without FDA approval or…?

Kevin Gorman

No, I am more conservative I lean towards, they are my partner in developing this drug, so I would rather meet with the FDA first.

Unidentified Analyst

When is the latest you think the trial can get underway next year?

Kevin Gorman

The latest I would say would be late first quarter.

Unidentified Analyst

Really. But if you request to a meeting with the FDA and it takes two months to get that.

Kevin Gorman

75 days.

Unidentified Analyst

75 days so you request them at the beginning of January. So you have some clarity coming back and start

Kevin Gorman

And everything is all clear and you have agreement on the protocol you put that into the IRBs, they take 14 to 30 days and during that period of time you can be doing other activities that you need for start- up and then you…

Unidentified Analyst

And how many months did it take to enroll Kinect 1 and Kinect 2?

Kevin Gorman

Kinect 1 and Kinect 2, probably I’d look at Kinect 2 as being a better barometer because we have the learnings for Kinect 1 going into that and I would say that if you look to that about three or four months, in that this would be probably be a larger trial. So I would add on to that let's say six months to enroll and then you have your baseline period and then 30 months of treatment and close out you have to follow.

Unidentified Analyst

Do you need more for Phase III, do you need more long-term safety data?

Kevin Gorman

Yeah you need one year safety data.

Unidentified Analyst

But we would get the efficacy readout and keep those patients on drug and that would be the read.

Kevin Gorman

Well potentially and that's for a lack of better name let's call the next study Kinect 3 if that would be a pivotal study but I would not call that a pivotal study after it's done and finished and try to negotiate something like that perhaps. I think Kinect 3 would be a Phase IIb study.

Unidentified Analyst

Okay. And as far as Tourette's what is the status of…

Kevin Gorman

So we have finished -- in order to go into children, you have to do juvenile toxicology, we have finished the initial period in the juvenile tox that is now all the organs throughout for histopathology, we should have the histopath in, in January. So if the histopath is clean then under the current IND, we will then go into a single dose in adolescence I would say teens like 15, 16, 17 year old kids with do a single dose with Tourette's and that would take place early in 2014 and then after we done with that we would open up the IND specifically for Tourette's do a multi dose in Tourette's patients let say week of multi dose treatment and they are going to a phase II proof-of-concept study.

Unidentified Analyst

So what is specific endpoint?

Kevin Gorman

It's a kick scale, so again your move, you are utilizing a movement disorder scale that you would use that would be administered by neurologist, similarly to the way that you….

Unidentified Analyst

But you have the central read and all?

Kevin Gorman

We probably would do central read, yes.

Unidentified Analyst

And so when I think and looking at the timelines and you are telling us we have to pay attention between Christmas and New Years and write some notes in between that time frame?

Kevin Gorman

We will at this point, our plan is to announce I think January 1st is a Wednesday so I wouldn't think that week, so the week right after that somewhere around January 7th, 8th or 9th that's when we would announce probably, both 12 week Kinect plus the Kinect 3.

Unidentified Analyst

So you will spare us the….

Kevin Gorman

I will spare you the holidays.

Unidentified Analyst

I appreciate that.

Kevin Gorman

Because with the holidays this is a closeout of entire study now, this isn’t top line data. So it takes us longer to do that and then when you have the holidays dropping into there and two studies simultaneously it will take that time.

Unidentified Analyst

Okay. What is the latest do you know at clinicaltrials.gov lately on the timelines for the endometriosis and uterine fibroids?

Kevin Gorman

So on endometriosis it continues to be -- Rick Gonzalez, the CEO of Abbvie he stated that it would be summer that they’d have the top line data on the first phase III in endometriosis. The clintrial.gov says August for that. So that all make sense and that hasn’t changed now.

Unidentified Analyst

August is the six month endpoint so when it actually be…

Kevin Gorman

No it would be August for top line data, is how clinicaltrials.gov describe that. Okay, and there for what it's worth on there for the HCV the first Phase III trial it said November of 2013 and on November 19 or last month they announced that top line on that first Phase III. So I will go by how they behaved with that, they will behave with Elagolix. So it says August 2014.

The second Phase III which is up in running that's says mid-year of 2015. For uterine fibroids they have a Phase IIb trial that is ongoing on that, that one they just updated clinicaltrials.gov to add a second dose of Elagolix too and then they updated the timeline for top line data there to be July of 2014 on that. So that's what clintrials.gov has. We have our every six months we meet with Abbvie so that will be taking place on January so have more clarity on the U.S. program at that point in time.

Unidentified Analyst

And a couple of questions there. Do you have any sense of what percentage of enrollment like how closely we are for the first endo trial?

Kevin Gorman

No, I don't have an enrollment update.

Unidentified Analyst

And then do we know why they added a second dose?

Kevin Gorman

No.

Unidentified Analyst

Was that planned?

Kevin Gorman

The phase I would imagine so I would say that way because they have the phase IIA that's continued to be ongoing where they looking at doses and then that informs their Phase IIb. So they have been using that sort of paradigm the Phase I forms of phase IIA as they overlap and now their Phase IIA overlap with this Phase IIb. So I think all along they did plan on adding another dose.

Unidentified Analyst

Okay. And what will you learn in January from your meeting?

Kevin Gorman

I am going to learn more about timelines from them and I will probably learn about enrolment numbers as you said to see how on track they are for enrollments.

Unidentified Analyst

And will you be able to share that?

Kevin Gorman

Probably some of it. My partner is the one that call the shots with the Elagolix program now and so they are doing a very good job and they’ve got a tremendous amount of resource behind it and I think as people listen to Abbvie out there at the conferences they see that that’s an important program to them so they are giving it all the attention which you would want.

Unidentified Analyst

Okay and then just trying to think about the timelines for the Tourette's program so we could have data from the single dose trial in the first quarter is that possible?

Kevin Gorman

We would start it in the first quarter and I don’t think you’d have data in first quarter and then we could have multi-dose data by end of year and then we would at that point in time we would go into a proof-of-concept study.

Unidentified Analyst

Did you learn anything as far as like tolerability I mean how are you thinking about addressing Tourette's, given what you learned in Tardive Dyskinesia.

Kevin Gorman

Yeah I think that what we’ve learned is that you have to just use a very broad dose range when you are going into a de novo patient population. So we are going to start real low with these kids and then very carefully work our way up.

Unidentified Analyst

Are you going to see anything along one week though?

Kevin Gorman

Probably not, no I don’t this is just going to be safety I wouldn’t anticipate seeing any efficacy in that population that one we could dose it.

Unidentified Analyst

Even at a high dose how quickly do you typically see with the 100 milligram how quickly will you see it?

Kevin Gorman

There is really nothing with this mechanism that’s been used in Tourette's that you can point you to say what time frame you would see it in, so there is anecdotal evidence with tetrabenazine but I wouldn’t rely too heavily on that.

Unidentified Analyst

What is the anecdotal evidence as far as time, how long?

Kevin Gorman

Some of the kids respond in a couple of weeks.

Unidentified Analyst

Okay so you really won’t have proof-of-concept in for Tourette's at all?

Kevin Gorman

Not this, not next year.

Unidentified Analyst

So it will be ’15 for proof-of-concept..

Kevin Gorman

Right.

Unidentified Analyst

Great, any questions from the audience.

Unidentified Analyst

Two questions [inaudible] which anti-psychotic causes the most tardive dyskinesia if as you can say which one is the worst? And secondly is tardive dyskinesia reversible?

Kevin Gorman

Good questions the hope was the atypical anti-psychotics would have a lower rate of TD than the older typical anti-psychotics. That turns out not to be true. The reason why that was initially thought was that the high doses of the typical anti-psychotics that were used in 80’s and early 90’s were causing a rate of around 20% or more and the new atypicals were showing a rate of around 5% to 7%. But now with typical anti-psychotics utilizing lower doses for probably the last 15 years they are all at about 5% to 7%.

Now when you develop tardive dyskinesia, if you can be removed from your anti-psychotic like a bipolar patient or a major depressed patient, that’s put on -- that develop TD you have other therapeutic options for them. So you can remove the anti-psychotic immediately. About 70% of those patients will have TD lifelong even if they never touch another anti-psychotic again. That 30% there is about a 10% remission rate per year for about 3 year. So 30% will remiss and will be gone 70% is lifelong.

Unidentified Analyst

That’s schizophrenics and bipolar.

Unidentified Analyst

That’s schizophrenics and bipolar. It's harder to say with schizophrenia because you can’t just withdraw their anti-psychotic.

Unidentified Analyst

Great, thank you very much.

Kevin Gorman

Thank you.

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