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Neurocrine Biosciences, Inc. (NASDAQ:NBIX)

Announcement of Positive Results of VMAT2 Inhibitor NBI-98854 in Kinect 2 Study Conference Call

January 7, 2014 5:00 PM ET

Executives

Kevin C. Gorman – President and Chief Executive Officer

Tim Coughllin – Vice President and Chief Financial Officer

Christopher O'Brien – Chief Medical Officer

Analysts

Robyn Karnauskas - Deutsche Bank

Thomas Wei - Jefferies

Phil Nadeau – Cowen & Co. LLC

David Ferreiro – Oppenheimer & Co., Inc.

Marko Kozul – Leerink Swann LLC

Bert Hazlett – ROTH Capital Partners LLC

Roy Buchanan – Piper Jaffray, Inc.

David Friedman – Morgan Stanley & Co. LLC

Operator

Good day and welcome to Neurocrine Announces Positive Results of VMAT2 Inhibitor NBI-98854 in Kinect 2 Study. At this time all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the Q&A session. (Operator Instructions) Please note this call is being recorded and I will be standing by should you need any assistance.

It is now my pleasure to turn the conference over to Kevin Gorman. Please go ahead.

Kevin C. Gorman

Thank you and good afternoon everyone. Obviously, we are very pleased to share with you today the Kinect 2 results, very powerful results that we have. Before we get started though, Tim Coughlin our CFO is going to read our Safe Harbor statements.

Tim Coughlin

And one other thing is that we did put up a set of slides if you go to www.neurocrine.com you will see in the cover latest corporate presentation, should be on the right hand side about mid page. If you click on that, the slide deck should come up and this will say Kinect 2 Week 6 Results January 2014.

So 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 or 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 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. Kevin?

Kevin C. Gorman

Thank Tim. So what we’ll do is Chris O'Brien, our Chief Medical Officer is going to take over now. He is going to take you through that slide set. Once he is done, we will open it up and be happy to take all of your questions. So, Chris please.

Christopher O'Brien

Thanks, Kevin, and good afternoon. Sorry for the late hour on the East Coast, but this is fresh data, truly very fresh. We are sharing with you what we have. There is obviously a lot of work still ongoing and there are some data that we haven’t even had time to dig into yet.

So what you are seeing is the important primary and secondary endpoints and an overview of safety. If you start on the slide deck that Tim mentioned, you’ll see the summary of the study design and conduct. This trial was conducted at 29 sites all here in the U.S. and we were able to randomize 102 subjects to this trial.

The distribution was 58% schizophrenia, 38% mood disorder and as you recall, this is the first time we’ve had an opportunity to study our compound NBI-98854 in subjects with bipolar disorder and depression. So a very important opportunity and we were very happy that we have approximately 40% of subjects with bipolar disorder and depression.

As we had seen in our prior Phase II work, approximately half of patients, who present to be potential subjects failed the screening process either due to unstable medical condition, laboratory abnormalities or as we often have seen they have only mild tardive dyskinesia or some other drug induced movement disorder.

The beauty of this system, though, is that the screening video AIMS exam is a powerful tool for making sure only appropriate subjects enroll in the trial, and that worked very nicely here.

Now in this trial, we pre-specified there were three datasets for analysis; a safety set which includes all subjects who were provided a dosing kit, and that was 102 subjects, and an intent-to-treat set, which is any subject with at least one dose of blinded study drug, active or placebo, and one post-treatment AIMS, and that’s 89. And then a per-protocol set, which is the same as the ITT set but excludes any subject who had no detectable drug on board at the time of the AIMS evaluation. And that, again, was a pre-specified data analysis set, because we know that in neuropsychiatric trials there are so-called professional subjects that is patients who enroll get paid, but don’t take the study medication, and that was borne out here.

The Kinect 2 trial schematic is shown on Slide #3, but just to remind you that this was a one-to-one randomization trial, that is half the subjects got active and half the subjects got placebo. They were seen every two weeks and there was an opportunity for dose titration at each two-week interval. This was based on an algorithm, pre-specified algorithm where all subjects would be escalated to the next dose unless they were having trouble with tolerability or unless their dyskinesia had completely gone away or was at a very low level. And so, following that algorithm most subjects, as you’ll see, went through the dose adjustment process up to the next possible dose of placebo or active and the same thing occurred again at Week 4. At Week 4 if the subject was not tolerating that higher dose of active or placebo they could go back to their previously well-tolerated dose.

The primary endpoint, it’s important to just reiterate, was a comparison of the AIMS change from baseline in the active subjects versus the placebo subjects. So at Week 6 all active subjects, regardless of which dose they ended on, were compared to all placebo subjects. And most importantly for the quality of the study is that the AIMS assessment was conducted by movement disorder and neurologists in a triple-blind fashion, that is the subjects were blind as to treatment assignment, the investigators were blind to treatment assignment, and even more the people doing the AIMS scoring were blind as to which video they were looking at. Was it the baseline AIMS or the Week 6 AIMS? So these were scrambled in a randomized fashion. So this triple-blind allowed us to have some very clean data to work with.

On the next slide, Slide 4, you’ll see the baseline characteristics of these subjects. Typically they were in their mid 50s. They had tardive dyskinesia for on average seven years, but many for much longer and we have slightly more males in this trial.

At a screening tool, we used the Brief Psychiatric Rating Scale to make sure that patients were relatively stable from a psychiatric point of view and this was borne out with mean scores in the 30 range, which is quite standard stability in psychiatric trials. And their baseline video AIMS score, scored by these blinded expert raters using the consensus adjudication process for scoring was a score of 8. I’ll remind you the AIMS is a seven body region. Each region has the potential for a score of 0 to 4, and what we typically see is 1 or 2 body regions have moderate dyskinesia, that is scores of 2 or 3, and several regions have somewhat milder, and not every region is affected. So this is the baseline score.

Now Slide 5 gives you a little more color on the titration process. You can see that at Week 2, 90% of the placebo subjects went through the dose escalation versus 84% of the active subjects. And at Week 4, 84% of the placebo subjects were dose escalated to the next possible level, and 76% of the active subjects were escalated to the next possible level. We had a couple subjects during the titration process that went back to the prior well-tolerated dose. So at the end, at Week 6, what you see is 44 subjects on placebo, 5 subjects randomized to 25 milligrams and at 25 milligrams at Week 6, 50 milligram subjects, 9, and 75 milligram subjects, 31.

Now also on this slide, you’ll see in parentheses the subjects who met the per-protocol definition, namely that they had a Week 6 AIMS and quantifiable drug concentrations at that time point. So 21 subjects on 75 milligrams, 8 subjects on 50 milligram, and 5 subjects on 25 milligram.

Slide 6, shows the primary endpoint for the AIMS and I’m showing this in two ways, both the LS Mean change from baseline and a responder rate, and I’m showing you both the ITT and the per-protocol definitions. And it’s quite telling, several things on this slide. One, of course, we were very happy with the p-values that you see, a very nice statistically significant and clinically meaningful separation of active from placebo. But you’ll notice a couple of things that I should just point out here. For the ITT and the per-protocol population, they were both highly significant. So even having some subjects in the active group and the ITT population who had no drug on board didn’t dilute the statistical signal very much.

The other thing you may notice is that when you look at the per-protocol population the LS Mean change in the placebo group is slightly different. Instead of 0.2, it’s 0.3. That’s because the ANCOVA model uses all available data and it slightly recast that. But again, that separation of 3.3 versus 0.3 is a fairly robust effect size. If you do calculate the Cohen’s d, that’s an effect size that’s approximately 1, which is quite robust.

The other way of looking at the AIMS of course is the responder rate data and in this case we’ve defined a responder as a subject with at least a 50% improvement of their AIMS from baseline and you can see here with the – regardless of the ITT or per-protocol, it’s a very nice separation with a very acceptable placebo response rate in this kind of trial. 50% or 60% improvement in the active versus 18% in the placebo group, highly statistically significant.

Now, one of the criticisms sometimes of responder rate data reporting is that the sponsor sometimes cherry-picks a responder threshold that hit and then ignores the others around it. So the next slide shows you – the next two slides show you the cumulative proportion of the responders basically a sensitivity analysis that shows that for all definitions of the responder threshold you see a robust separation of active from placebo.

Clinically of course, we believe that 30% to 50% reductions from baseline are the – in a clinically meaningful range and by the time you get up to 90% reduction from baseline those are kind of unrealistic in these kinds of populations with this disorder.

So, for us that particularly for the per-protocol plot on Slide 8, 60% responder rate versus an 18% responder rate is a very robust separation. Now as a key secondary endpoint, we like to look at some other way of looking at the patient’s condition or the subject’s condition, and so in this case the clinical global impression of change or the CGI is a measure that the clinicians have of improvement of the subject and you can see the scale the 7-point Likert Scale depicted at the bottom of the Slide 9, where 4 is no change, one is very much improved and 7 is very much worsened. And you can see that both for the mean change at Week 6 and for the responder rate we have highly statistically significant separation of that different placebo again supporting what we’re seeing on the blinded central video raters.

So the on-site investigator saw the CGI change and with the fairly strict definition of responder namely someone who is much improved or very much improved you see a 67% or 68% responder rate in active versus a 16% responder rate in placebo very much reinforcing what we’re seeing with the AIMS scores.

And finally, and somewhat interesting for me is that the PGIC, the Patient Global Impression of Change at Week 6 also showed a very nice separation with 58% responders using the strict responder definition versus 32% responders. Now you may recall that in the Kinect Study we didn’t see much in the PGIC in that everybody felt better, there wasn’t much separation, but I can – it appears that this trial was different in that the PGIC did differentiate active from placebo, and I suspect but I cannot say for certain today that this may be because of the more insightful bipolar population that’s in this Kinect 2 Study.

I have to – say in advance, I do not have the sub-group analyses, subset analyses done schizophrenics versus bipolars. There is a lot of ongoing work that have to be done and I – but I suspect that that will be one of the reasons why the PGIC probably differentiates here in this Kinect 2 Study.

Slide 11, shows the Safety and Tolerability top line summary. The drug was very well tolerated. We saw about 43% of the placebo subjects reported adverse events at any time during the trial versus 33% for the placebo. So overall low AE reporting frequency, there were no treatment-related serious adverse events, there were no safety signals from the hematology, chemistry or ECG assessments and the discontinuations during the trial were the same, five of the subjects randomized are active discontinued, five randomized to placebo discontinued and none of the discontinuations during the double-blind treatment period were study drug related. There was one AE in an active subject, a subject with a history of prosthetic hypertrophy who had recurrence of urinary retention, but this was drug adjudged not study drug related by the investigators.

The three AEs that I have reported here in the slides are the ones that stand out although there are low frequency, fatigue in five subjects on active versus two on placebo, headache in four subjects on active versus two on placebo and somnolence in three subjects on active versus placebo.

So the summary slide I think says that namely that we see an improvement in dyskinesia in this trial, the drug was generally safe and well tolerated in patients with tardive dyskinesia regardless of the underlying disease, and that we saw a statistically significant and clinically meaningful improvement in tardive dyskinesia following dose titration in both the AIMS scale and the CGI scale.

Critical to the success of this trial I think again comes from the work that was done this fall after our Kinect Study and our Scientific Advisory Board and worked with consultants, namely the blinded central video rating being done by movement disorder neurologists using consensus adjudication and the randomized sequence of video scoring this helped us keep the placebo response low helped us to have a low, less noise in the data. And obviously, the dose titration process through 75 milligrams gave us a nice differentiation of active from placebo.

There are quite a few things but I won’t be able to answer questions about, I don’t have the subset analysis for the sub-groups I don’t have some of the other psychiatry scales such as the PANSS I don’t have that data yet. I don’t have all the PK analysis and I can’t tell you, did 50 milligrams work in the schizophrenics and 25 in the bipolar – I can’t tell you that. I don’t have – not only do I not have all the data analyses done, but this study clearly wasn’t powered to give you that kind of discrimination at this stage.

So I think probably I should stop at this point and turn it back over to Kevin.

Kevin C. Gorman

Thanks Chris. So I want to reiterate what Chris has said, we’ve shared with you virtually everything that we have right now to date on the Kinect 2 study. We did put the Kinect 1 12-week data read out almost right on top of the Kinect 2 data, we put the Kinect 1 data on the back burner as the team works through the holidays on Kinect 2, we will share the totality of the Kinect 1 data which is important data in our planning going forward with you as soon as we have it all put together.

I think it’s safe to say, we are extremely pleased with the way that this trial turned out as Chris alluded to there at the end, there was a lot of work, a lot of soul searching that went on after the Kinect 1 data, a lot of challenging of assumptions going through literature and it really did come down to that we needed a better instrument and we needed a better way to apply the instrument, and I think that with all the work that was done that’s exactly what made the difference that we see between Kinect 2 and Kinect 1 in the outcomes here.

So where do we go from here? The team is now ramping up to have not a Type C meeting with the FDA as we said previously, but now with such robust data here, such a clear signal that we will be going into an End of Phase II meeting to give the FDA all the data that we have acquired in the multiple Phase IIa and Phase IIb studies, the Phase I studies and all the preclinical studies that we’ve completed to date and then to reach agreement with them on the Phase III study design going forward. And so we’re putting all that together. That will take us the next several months to put all that together and get the meeting on the FDA’s calendar. So we look at that happening in the first half of this year. And then in second half, during the summer, late summer we would start on the Phase III study.

So now I would like to open it up for questions.

Question-and-Answer Session

Operator

(Operator Instructions) Our first question comes from Robyn Karnauskas with Deutsche Bank. Please go ahead.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

Hi, guys. Congratulations. I am so happy to start off the New Year with some good news. Congrats.

Kevin C. Gorman

Thank you, Robyn.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

So I had some questions, just to help us understand this data versus Kinect, and there’s three questions. I guess the first is how should we interpret the data given that the Kinect study had sicker patients? Remember it was 12.3 AIMS on the video assessment versus around 8 in this study. And then, maybe why the lower placebo effect, 2.7 mg reduction in the 100 mg arm of Kinect 1 and only 0.2 milligram reduction in this study? I guess those two questions to start.

Christopher O'Brien

Sure. Those are good questions, Robyn. Thanks. The most important thing to point out about the AIMS is that the Kinect and the Kinect 2 studies did things very differently. The AIMS scale application by these movement disorder neurologists looking at blinded, scrambled videos and using some of the modifications that are part of the AIMS gave us lower overall scores.

The actuality is that the patients are almost identical in the two studies. It has to do with the way the scale was applied by the blinded experts. And I think movement disorder neurologists in general they’ve seen a lot more severe dyskinesia in their clinical experience and tend to not give out very many 4s or severes, whereas the psychiatrists tended to score patients more highly and this is a big difference.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

So even in the video assessment of Kinect 1, you’d say that that video assessment is different? Are you sure it’s different than how would be video assessed by the person who assessed Kinect 2?

Christopher O'Brien

Yes, obviously we haven’t had these Kinect 2 raters score the Kinect 1 videos, and that would be the best way to answer that question for you. I can say having looked at the videos myself that the patient populations are very similar. A couple of points difference maybe, but mostly it comes down to the raters.

Kevin C. Gorman

And the second part was on the placebo…

Christopher O'Brien

Placebo effect. So I think several things help with the placebo, minimize the placebo’s effect. Again, I think one of the important ones is scrambling the sequence of the videos. No matter how good the raters are, I think you get inherent bias that comes in when you know this visit was first and this visit was second. When you have a randomized sequence of videos, you are just calling what you see, and that bias tends to be minimized.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

All right. That’s helpful. And I guess one last follow-up around this whole difference between the patient populations or maybe lack of difference. So if that’s true that the patients were similar, how do you explain the lack of benefit in the 50 milligram video assessment? It’s again just a difference in the quality of the video assessment in Kinect 1 versus Kinect 2?

Christopher O'Brien

I think the biggest difference is the instrument, but I think we’ve said this before, that in the Kinect 1 study, when we post hoc went to the video assessments at Week 6, we see if we do just an observed cases analysis, we see a very nice separation of 50 milligrams from placebo, but again we haven’t talked about that much because it’s post hoc. It wasn’t pre-specified. So that is the way it turned out. And as we’ll see when we talk about the Week 12 data once it becomes available from Kinect 1, I think you’ll see a very consistent story.

Robyn Karnauskas – Deutsche Bank Securities, Inc.

Okay, great. Thank you very much.

Operator

Thank you. We’ll go next to Thomas Wei with Jefferies. Please go ahead.

Thomas Wei – Jefferies LLC

Thanks. I wanted to see if you had – so when you talk about the Phase III trial, and maybe – am I correct guessing you’re going to skip over Kinect 3 now and just go right in to Phase III? And how do you do that with very different dosing regimens having been tested and the learnings going from one study that looked very messy to this near perfect set of data here? How do you choose things like doses and titration regimens and duration and all that?

Christopher O'Brien

Sure. Thanks, Thomas. So the Kinect 3 study will be a Phase III study. So all the work that we’ve actually been working diligently in the background, planning for all the work that goes into education and recruitment efforts because it’s a big project ramping up for the next study.

The Kinect 3 study was designed to be a 12-week study, was designed to be either a fixed-dose or a titration study depending on the Kinect 2 results. It was designed to pool schizophrenic, schizoaffective, bipolar and depression patients. It was designed to look at probably a 50-milligram and a 75-milligram dose. So in fact there’s not really a lot of change. The only difference is to be worked out with the FDA, is it one study or is it two studies for Phase III? Is it 6 weeks of placebo or is it 12 weeks of placebo? It’s going to be a 12-week study no matter what, and we only need to finish. We need to finish our PK/PD work to decide what the final dose is for the titration design. So it’s actually not a big leap. The biggest leap is it has got to be video AIMS scored by movement disorder neurologists with this consensus adjudication process.

Thomas Wei – Jefferies LLC

That’s helpful. And then it does sound like just on the last point that you mentioned, it sounds like when you look at the data in totality from Kinect 1 to Kinect 2, you are really kind of honing in on the new modifications to AIMS, the independent movement disorder specialists' central review as what really drove the differences from one study to the other. I guess how do you know that it's not things like schizophrenia, shcizoaffective disorder versus bipolar? Or maybe even something like the difference in the sites that were used for the studies? How have you eliminated those things?

Christopher O'Brien

Those are good questions. So, we know it’s not the size because the high enrollers in Kinect were the high enrollers in Kinect 2. And so we are using many of the same sites are overlapping. And secondly although as I mentioned I haven’t had a chance to do detailed subset analyses I do know that overall both the schizophrenic groups and the bipolar groups responded in a similar fashion.

So when we do the statistical assessment of just the schizophrenics, they respond when we do it as a bipolar, they respond. So I haven’t been able to breakdown depression type of bipolar, type of schizoaffective, exposure, all those kinds of things. I don’t have that yet. But when you just to say all the schizophrenics and all the mood disorders that also stands up to the statistical test. So I know it’s the effect was a little more robust in the bipolars than the schizophrenics. So, I’m sure that’s partly responsible for the quality of the outcome we have, but it’s not the only explanation.

Thomas Wei – Jefferies LLC

And so things like maybe a difference in compliance, you had mentioned bipolar patients have more insight. Maybe they are better at taking their drug. Do you have data, are you going to be able to go back and look at data like that?

Christopher O'Brien

Yes, I will. I don’t have that yet, but we will see if the schizophrenic population have better exposure or not and that sort of thing.

Thomas Wei – Jefferies LLC

And so it sounds like in order to validate the premise that the change in the endpoint, in the way the endpoint and who scored the endpoint is really what's driving the difference. You probably should go back and look at Kinect 1 and redo all of that using the modified AIMS with movement disorder specialists doing central blinded review. Are you going to do that? And when would we see the data to be able to corroborate your theory here?

Christopher O'Brien

Yes, we will do that. I can’t give you a date yet, because the process of having taking this scrambled videos and having the consensus adjudication process, it’s a Herculean effort corralling the movement disorder neurologists and getting them to do this. So, it’s something that we will do prior to starting Phase 3, but I can’t give you a date yet.

Thomas Wei – Jefferies LLC

Okay, thanks very much.

Operator

Thank you. Our next question comes from Phil Nadeau with Cowen & Company. Please go ahead.

Phil Nadeau – Cowen & Co. LLC

Yes, thanks for taking my questions. One that's sort of a followup to Thomas', in the past, you've discussed going to higher doses, and now, seems like you think that you've identified the right dose or at least the dosing scheme. But without many side effects, could there still be a benefit to a higher dose?

Christopher O'Brien

That’s a good question Phil. So, I hope to be able to answer that once I’ve gotten into the detailed PK analyses by individual subjects and been able to look at also what the Week 12 data will be reporting on that shortly from Kinect 1 looks like, in general my assessment as of today is that the difference between what we saw at a 100 milligram at Week 2 in the Kinect Study and the 50 milligrams or 75 milligrams at Week 6 in the Kinect 2 Study are in the same ballpark that in fact the Kinect 2 data look even a little better than the Kinect data, and if we don’t have to go to higher doses, I don’t think we will. But again once I get the – all the exposure data and then I’ll be able to answer that more directly.

Phil Nadeau – Cowen & Co. LLC

Okay. Wouldn't it be possible that 100 milligrams at Week 6 would look even better than 50 milligrams or 75 milligrams at Week 6?

Christopher O'Brien

It’s possible, it’s possible, but unlikely given that the percentage of subjects who had a more than 50% reduction is as good as anything that’s ever been reported in the literature for this population.

Phil Nadeau – Cowen & Co. LLC

Okay, fair enough. Then a couple of questions on side effects, I can't recall, did you look at the Calgary Depression Scale in the trial, and were there any signs on that scale or any other scale of increased depression due to NBI-98854?

Christopher O'Brien

So as I mentioned the psychiatry rating scale is the Columbia Suicidality, the Calgary, the PANSS, I don’t have those data yet on hand. We know that from an adverse event point of view there weren’t any of those kinds of issues that were reported as adverse events. But I don’t have the data yet from the scale.

Phil Nadeau – Cowen & Co. LLC

Okay. And then what about Parkinsonism? I know you discussed that…

Christopher O'Brien

Yeah I did, we do have the Simpson-Angus and the Barnes Akathisia scale and so we don’t see the baseline scores going in showed great mild or low scores on those two scales, and they showed no worsening during the trial, and we certainly didn’t have people reporting the adverse events of Parkinsonism for example.

Phil Nadeau – Cowen & Co. LLC

Okay. Can you remind us, how long does it take to develop Parkinsonism when on tetrabenazine?

Christopher O'Brien

You can see it within days potentially if the dose is too high.

Phil Nadeau – Cowen & Co. LLC

Great, thanks for taking my questions.

Kevin C. Gorman

Thanks Phil.

Operator

Thank you. We’ll go next to Marco Kozul with Leerink Partners. Please go ahead.

Marko Kozul – Leerink Swann LLC

Hey good afternoon, and congrats, and thanks for taking the question. Most of mine had been asked already. But I just wanted to ask if this data at all impacts your plans for Tourette's, and if so, how? Thanks.

Christopher O'Brien

Yes, the Tourette's program is marching along in its own pace, so it doesn’t impact it in any way. And as you know our big push with the Tourette's program was to finish all the preclinical juvenile toxicology work and get into a single-dose bridging study in adolescence before we get into the more classical dose response in pediatrics. So that’s all marching along as scheduled.

Marko K. Kozul – Leerink Swann LLC

Terrific, thanks for taking the question.

Operator

Thank you. We’ll go next to Bert Hazlett with Roth Capital. Please go ahead.

Bert Hazlett – ROTH Capital Partners LLC

Thank you for taking the question. Congratulations on the [candy] [ph] moves with regard to the trial design. I think you touched on this previously, but just a little bit more elaboration if you could. Did any of the AEs appear to be dose related?

Christopher O'Brien

No.

Bert Hazlett – ROTH Capital Partners LLC

Okay. And then can you talk about how these very strong results might affect any potential partnership discussions with the therapy?

Christopher O'Brien

We kept in contact with numerous interested partners and so we will be sharing this data with them to in the coming weeks.

Bert Hazlett – ROTH Capital Partners LLC

I appreciate it. Congratulations. Thanks.

Kevin C. Gorman

Thank you.

Christopher O'Brien

Thank you.

Operator

Thank you. We will go next to Charles Duncan with Piper Jaffray. Please go ahead.

Roy Buchanan – Piper Jaffray, Inc.

Hi, guys. It's Roy in for Charles. Thanks for taking the question. Nice data. So just a couple of quick ones, most have been answered. But you mentioned clinically meaningful in the PR. I just wondered if you could help us understand what you consider clinically meaningful?

Christopher O'Brien

Sure. So, a 50% change from baseline is a very robust effect in this business with AIMS and then the CGI being much improved or very much improved and the PGIC being much improved or very much improved they all track together. And so that is the basis of clinically meaningful.

Roy Buchanan – Piper Jaffray, Inc.

Okay, thanks. And then I guess the follow-up comes on Robyn's. You said the biggest difference is in the instrument, and that instrument being the modified AIMS?

Christopher O'Brien

The AIMS, as you may recall was introduced in the 1970s by the NIMH, and it was a 0 through 4 scale for each of the seven body regions. And since that time there have been many modified AIMS used in the literature. And the versions of modifications have to do with how people delineate the descriptors for the mild, moderate to severe levels.

And we will just take an advantage of the modified AIMS that gives a little better sensitivity to change based on our scientific advisers.

Roy Buchanan – Piper Jaffray, Inc.

Okay. So has the FDA made any comments on the particular AIMS that you are using?

Christopher O'Brien

They are the ones that want us to use the AIMS and all of these versions are – have been in widespread use.

Roy Buchanan – Piper Jaffray, Inc.

Okay.

Christopher O'Brien

Well, obviously, we'll be reviewing these data extensively with them at our End-of-Phase II meeting. And that's where we get consensus on going into Phase III and the primary endpoint in Phase III.

Roy Buchanan – Piper Jaffray, Inc.

Okay. And then last kind of general question as well. You also mentioned defining the study population in the PR. Can you go into a little more detail about what that means?

Christopher O'Brien

Yes, the first and the biggest one was, can we pool patients with schizophrenia, schizoaffective disorder with patients with mood disorder, including bipolar disorder and depression? And so I think we have been able to address that. Yes, we can pool them.

Secondly, we have tried to understand how we get patients into the trial based on the severity of their dyskinesia. So using the screening video AIMS and using the outside external reviewers to qualify the subjects not the investigator, so that’s been important.

And then finally and one of the things that we will be spending time on over the next few weeks is trying to understand, are there any subsets of patients, for example, the different kinds of dyskinesia is at mostly the buccal-oral-lingual dyskinesia that's responding, or is it the dystonic component that's responding. We'll have to tease that out and see. This will put us in a good position to define who we bring into Phase III.

Roy Buchanan – Piper Jaffray, Inc.

Okay, thanks again.

Operator

Thank you. We will take our next question from David Friedman with Morgan Stanley. Please go ahead.

David Friedman – Morgan Stanley & Co. LLC

Yes, thanks for taking the question. Just a couple of quick ones. The first is, in the press release, you defined ITT and per-protocol differently, and so I just wanted to clarify which definition was the correct one.

Christopher O'Brien

Maybe you’re catching me on, I’m not sure to what you are referring. I mean the ITT is all subjects who randomized to – let me pull up the press release, see what you’re looking at. I mean ITT are…

David Friedman – Morgan Stanley & Co. LLC

Oh, sorry. I guess there's a couple of extra words in the slide, but in the press release it says the ITT is all the people who had the Week 6 AIMS, and in the slide deck, it says at least one dose and at least one post treatment.

Christopher O'Brien

Yes, those are the same.

David Friedman – Morgan Stanley & Co. LLC

Okay. So do you have the actual ITT efficacy data? All the patients, including dropouts? How were dropouts handled?

Christopher O'Brien

Well, since – the only endpoint here was Week 6 change from baseline. If they didn’t have a Week 6 there was no score. We didn’t do baseline observation carried forward, if that’s what you’re saying.

David Friedman – Morgan Stanley & Co. LLC

Yes.

Christopher O'Brien

No, we didn’t do that and we wouldn’t do. I mean that doesn't make any sense in a trial like this.

David Friedman – Morgan Stanley & Co. LLC

Okay. So how were dropouts accounted for in the efficacy analysis? They were just excluded?

Christopher O'Brien

If you didn’t have a Week 6 visit, you weren’t part of the analysis.

David Friedman – Morgan Stanley & Co. LLC

Okay. Is that standard for this?

Christopher O'Brien

For a 6-week trial where you are comparing Week 6 to baseline…

David Friedman – Morgan Stanley & Co. LLC

Right.

Christopher O'Brien

That’s all you can do. And since the discontinuations were equal in placebo and active, it doesn't matter.

David Friedman – Morgan Stanley & Co. LLC

Okay. Was it the same treatment in Kinect 1? I think in Kinect 1, it seemed like the ITT set was anyone who had at least one dose of drug.

Christopher O'Brien

Remember, in Kinect 1, there were other time points that were assessed. There was a Week 2 assessment, and so you could use a week-2 visit and do a last observation carried forward.

David Friedman – Morgan Stanley & Co. LLC

How is that different than using baseline and carrying forward?

Christopher O'Brien

Because the week-2 visit they were on drug. At baseline, they’re not on drug.

David Friedman – Morgan Stanley & Co. LLC

Right. But isn't that the issue with just – if you drop out, that's the penalty of…

Christopher O'Brien

Well, I mean LOCF, or last observation carried forward is often what’s done and very standard and very appropriate when you want to assess treatment effects, but it’s virtually never done in these kinds of trials to have a baseline observation carried forward where there’s no drug onboard.

Now imputation, I mean imputation is important particularly if you’re dealing with complicated long-term Phase III type studies, but in a simple active-versus-placebo one-to-one randomization with equal dropouts, it doesn’t matter.

David Friedman – Morgan Stanley & Co. LLC

Okay. And then, just one or two others quickly. The first is in the 75 milligram, there were 10 patients that were not per protocol. Was that primarily due to no drug concentration or primarily due to no Week 6 AIMS?

Christopher O'Brien

Yes, in fact there were nine subjects in this trial who had been randomized to active that never took a dose of this drug. At any of the PK points during the trial, they never had measurable detectable plasma levels.

David Friedman – Morgan Stanley & Co. LLC

Okay. So that was one at the 50 and…

Christopher O'Brien

No, we don’t – I can’t tell you, I could tell you I don’t have it in front of me but that’s of these subjects randomized to active most of them that the nine subjects that had no measurable drug on board at any point went through the regular dose escalation process and should have been on 75, should have been on 50, should have been on 25 but never had any detectable drug in their plasma.

David Friedman – Morgan Stanley & Co. LLC

Okay. And then, just two last questions. Number one is the PGIC. It says statistics were not pre-specified, but were they done?

Christopher O'Brien

Sure, post-hoc and they are highly statistically significant.

David Friedman – Morgan Stanley & Co. LLC

Okay. And then just a last point is around the use of central rating and central review. Do you expect to use exclusively central review in the Phase III, and if that’s the case, how do you think about translating the data that you are seeing in a trial to a commercial

setting where that's not how practice would likely be done?

Christopher O'Brien

Well, that you bring up a really good point and the responses that clinicians in their practice they don’t use the AIMS, what they use is something like a CGI. Are you better than – are you minimally improved, much improved, very much improved and so that’s how you translate the blinded central raters’ results into the clinic is you have an investigator doing the CGI as we did here and as we will in Phase III. That’s a really important point that you bring up and it’s often true that our clinical trials that we end up with it a primary endpoint that’s a scale or some kind of assessment methodology that meets regulatory standards but is not something people do in practice. I mean in practice as a neurologists, do I do the UPDRS when I assess by Parkinson’s subjects? No. I don’t do that on a day-to-day basis, I do it in claim trials of course but same thing with Huntington's. Do you do the UHDRS on all your Huntington's patients for practice? No you do it for trials and so the CGI in fact is a way that you corroborate that scale.

David Friedman – Morgan Stanley & Co. LLC

And just okay, thank you.

Operator

Thank you. We’ll go next to David Ferreiro with Oppenheimer. Please go ahead.

David Ferreiro – Oppenheimer & Co., Inc.

Thank you for taking the question. I know this has been talked about already, but I'm just having a hard time reconciling the differences in baseline AIMS scores between all of your different trials. Maybe you can just explain how you're defining moderate-to-severe TD, and are you just looking at the total AIMS score or do they need severe TD in certain body region? And then if you can reconcile that back with how you did the Phase I where you said, I think, the cut off for moderate-to-severe was AIMS 9 or higher?

Christopher O'Brien

Sure, you’ve asked actually a several different questions, let me see if I can respond to each of them. The first thing in Phase I obviously we didn’t do AIMS that was our healthy volunteers, so in our early Phase II studies, we had the investigators at the site determining who is eligible to be in the trial and they scored the AIMS and they decided whether the subject was eligible. We learned from that Phase IIa study that that with a threshold of 9 to get into the study that was a bad idea, because the investigators were not applying AIMS scale very well. And there was an inflation of baseline scores that is not an uncommon problem in neuropsychiatric trials where the investigators are so eager to get patients in that the higher scores tend to make that happen. And so we learn not to do that anymore and in fact in Kinect 2 we didn’t do that at all.

Kinect 1 and Kinect 2, the only way a subject could get into the trial and qualify had nothing to do with their AIMS score. It had to do with an external reviewer looking at the video AIMS exam and just making a clinical determination, does this subject have moderate or severe TD, yes or no, and if the answer was yes, they were a potential subject. So there was no score requirement.

But I think the main thing that you’re getting at and that was asked earlier is the numeric difference of doing a baseline score of 12 versus 8, for example. And these are two different AIMS scales. They are both modified AIMS scales, but they are different and they have different distribution of how the descriptors go for minimal, mild, moderate and severe. And as I mentioned, when you have two things in place with this scale, one; you have movement disorder neurologists applying it, and two; they’re scrambled in their sequence. You end up seeing a lower baseline score, but a greater sensitivity to detect change at a smaller placebo effect.

So having a modified AIMS, the scrambled order and most importantly, the movement disorder neurologists with the consensus scoring and adjudication process, seems to make the difference.

David Ferreiro – Oppenheimer & Co., Inc.

Okay. Thank you.

Kevin C. Gorman

Thank you, David.

Operator

Thank you. We’ll pick our final question from Thomas Wei with Jefferies.

Thomas Wei – Jefferies LLC

Sorry. I’ll take the rest of my questions offline. I tried to take myself out of the queue.

Kevin C. Gorman

Okay, Thomas.

Operator

And it actually looks like our final question comes from David Friedman with Morgan Stanley. Please go ahead.

David Friedman – Morgan Stanley & Co. LLC

Hi. Thanks for taking the follow-up. I just wanted to understand. For the patients that discontinued, in which analyses are they included in and which ones are they not included in?

Christopher O'Brien

If they discontinued and don’t have a Week 6 visit, they’re in none of the efficacy analyses.

David Friedman – Morgan Stanley & Co. LLC

And so, of the five how many of those – did zero of them have a Week 6 visit?

Christopher O'Brien

So, 5 active and 5 placebo discontinued during the double-blind control period and none of those 10 subjects had a Week 6 visit.

David Friedman – Morgan Stanley & Co. LLC

Got it. And just one last, sorry. When you’re talking about the progression of patients on Slide 5, 84% moved forward, 76% moved forward in terms of dosing. Is that 84% of 51 or 46?

Christopher O'Brien

It’s the percentage of subjects that – let’s say nobody dropped out between baseline and Week 2. So I know there were no discontinuations between baseline and Week 2. So at Week 2 you had your full complement of subjects potentially escalating.

David Friedman – Morgan Stanley & Co. LLC

Got it.

Christopher O'Brien

Between Week 2 and Week 4 you had some. In the active group I think there were three discontinuations and in the placebo group I think there were three discontinuations. And so it’s that percentage of those available subjects. And then between Week 4 and Week 6, I think there were two discontinuations in each group.

David Friedman – Morgan Stanley & Co. LLC

Okay, thank you.

Christopher O'Brien

I mean I just would point out the reason I even have that slide is because we weren’t sure whether subjects would – everyone would escalate to maximum dose, or would half the subject end up staying at 25-milligram. We really didn’t know. In this population, particularly when half the subjects were bipolar patients who were no longer on the dopamine antagonist that caused their TD. So this was a very important observation to make and again reinforces the idea that we can go forward into the next trial with a pooling of bipolar and schizophrenic patients and that titration is an acceptable method for dosing as long as one controls the placebo effect in the ways that we appear to have controlled it.

Remember, we talked before about that in the literature, titration trials are often fraught with excessive placebo response, and we instituted a whole series of measures to try to mitigate that problem and it appears this was successful.

Kevin C. Gorman

So if there are no more questions, I’d like to thank you all for your attention today and all the very good questions that we did receive throughout the call. Again, the data turned out as good as one could ever hope for in a study and particularly in a study with such a difficult patient population here.

Now we’re looking forward to meeting many, if not all of you, when we’re up in San Francisco next week, and we will, as always, be available to talk with you individually later this week. So thank you very much and I look forward to getting together with you.

Operator

And thank you for joining us today ladies and gentlemen. We do appreciate your participation. You may disconnect at any time and have a good evening.

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