Neurocrine Biosciences' (NBIX) CEO Kevin Gorman on Q4 2015 Results - Earnings Call Transcript

| About: Neurocrine Biosciences, (NBIX)

Neurocrine Biosciences, Inc. (NASDAQ:NBIX)

Q4 2015 Results Earnings Conference Call

February 11, 2016 04:30 PM ET

Executives

Kevin Gorman - President and CEO

Tim Coughlin - CFO

Chris O’Brien - CMO

Jane Sorensen - IR

Analysts

Charles Duncan - Piper Jaffray

Anupam Rama - JP Morgan

Cristina Ghenoiu - Cowen

Biren Amin - Jefferies

Operator

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

It is now my pleasure to turn today’s program over to Mr. Kevin Gorman. Please go ahead, sir.

Kevin Gorman

Thank you very much. And thank you, everyone for joining us this afternoon on our earnings call. As usual, I am joined by Tim Coughlin, our CFO; and Chris O’Brien, our CMO.

Before I start, I would like Jane to read the Safe Harbor statement, please.

Jane Sorensen

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

Kevin Gorman

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

But before I turn it over to Chris, I’d like Tim to take you through our financial report.

Tim Coughlin

Great. Thanks, Kevin. And good afternoon, everyone. We appreciate you joining us for our year-end earnings call.

2015 was truly a transformational year for the Company. And we now have three Phase 3 programs, two of which have completed the placebo controlled testing and we are poised to file an NDA this year and plan for commercialization in 2017. While we have been fortunate to have tremendous success in the clinic, at the same time, we have not forgotten our paths. We continue to maintain strong fiscal discipline.

We exceeded our 2015 year-end cash target, beginning 2016 with over $464 million in cash, investments and receivables. Our loss for the fourth quarter was $29.3 million, or $0.34 per share. This compares to a loss of $19.4 million and $0.26 per share for the fourth quarter of 2014. Our net loss for the year was $88.9 million compared to a loss of $60.5 million last year. When comparing expenses from 2014 to 2015, for the fourth quarter and year-to-date, we show an increase in expenses of approximately $10 million and $50 million respectively. This is primarily due to higher research and development expenses, coupled with significant increase in overall share-based compensation expense.

R&D expenses in the fourth quarter increased by $6.3 million over the comparable period in 2014 and they are up $35 million year-to-date compared to last year. $3.2 million of the quarterly increase and $19.4 million of the year-to-date increase in R&D was related to external development expenses, primarily related to our Phase 3 work and our VMAT2 program. We also increased our R&D headcount during 2015. We added key regulatory CMC and clinical personnel to manage our pipeline as well as to prep for NDA filing this year.

Personnel related costs increased by $12.6 million year-to-date. The majority of this increase in personnel related costs of $7.9 million is due to higher share-based compensation expense for R&D personnel. This is primarily driven by performance-based restricted stock units, which we began expensing in the third quarter of 2015, as a result of our success of Kinect 3 clinical trial. Scientific consulting costs were also up year-over-year by approximately $2 million, as we initiated a number of NDA preparation activities during 2015.

G&A expense increased quarter-over-quarter and for all 2015 compared to the respective time frames in 2014. The main drivers of the increase in cash related G&A expenses are the recent upswing in pre-commercialization activities coupled with the hiring of some key personnel. Personnel related costs increased by $2.6 million quarter-over-quarter and $12.1 million year-to-date. A significant portion of this increase, $2.4 million for the quarter and $10.1 million year-to-date is due to higher share-based compensation expense for G&A personnel, again driven by the performance-based restricted stock units we previously discussed.

For 2016, our financial guidance is that we expect to have a cash burn of approximately $135 million to $145 million. This includes $15 million revenue under the AbbVie collaboration agreement that will be earned upon first patient randomized into a Phase 3 uterine fibroid study. Both of these Phase 3 studies in uterine fibroids were recently initiated by AbbVie. From an income statement perspective, we expect expenses to range from $185 million to $195 million in 2016 on a GAAP basis.

Approximately $30 million of this expense will be non-cash share-based compensation expense. Our entire share-based compensation expense is $28.4 million for the full year of 2015. The shift of the Company to a more risk-based compensation has been the main driver of the increase in share-based compensation costs in 2015 and anticipated in 2016.

Approximately $75 million increase in Company-wide GAAP expenses from ‘15 to ‘16 is due to four main factors.

First, external development costs are anticipated to increase by approximately $14 million to $17 million. This increase will facilitate the completion of our Phase 3 program in tardive dyskinesia, our two Phase 2 Tourette studies, and Phase 1 efforts in essential tremor, as well as other CMC and preclinical work.

Second, we will increase our personnel. We ended 2015 with 120 full-time individuals. We plan to hire up to 100 additional personnel in 2016, primarily in the sales and marketing, medical affairs personnel and related support functions will represent approximately 70% of these new hires. Overall, our personnel cost is expected to increase by $21 million to $24 million year-over-year.

Third, our expenses for our pre-commercialization spend to prepare the launch of valbenazine in tardive dyskinesia will ramp up significantly in 2016. Our pre-commercialization activities are currently slated to cost $22 million to $25 million in ‘16. These costs include medical affairs outreach, marketing work for both branded and disease state, market access activities, health economics and outcomes, research and national and regional meetings and presentations, in addition to other items. The last reason for the increase in expenses is related to the filing of the NDA for valbenazine in TD. The cost associated with preparing and actually completing of the filing is approximately $6 million, $7 million of which $2.6 million is the NDA filing fee.

Overall, we expect to have a GAAP net loss from 2016 in the $165 million to $175 million range, and we’ll end the year with over $320 million in the bank.

I’ll conclude my prepared remarks here. For those looking for additional financial details, our 10-K has been filed with the SEC. And for now, I’ll turn it back over to Kevin.

Kevin Gorman

Thank you very much, Tim. I couldn’t agree with Tim more that this is the transformational year for Neurocrine, as described in his comments about turning the Company from being solely an R&D-based company over to now a fully integrated commercial company.

What I’d like to do now is to turn the call over to Chris. And so, Chris can give you his thoughts and views on the recent release by AbbVie and also an update on all of our R&D programs. Chris?

Chris O’Brien

Thanks, Kevin. And thanks to the participants who are joining the call. I’m going to talk about four programs, elagolix, tardive dyskinesia, Tourette syndrome, essential tremor, and also CAH, so will cover the full spectrum.

With elagolix, the press release yesterday I think said it all, really positive results. And I want to put this in perspective. If you think about what’s happened in the field of women’s health over the last decade or more, there have been very few breakthroughs that have approached some of the unmet medical needs in women’s health.

And when you think about the fact that we have both the Violet Petal study and the Solstice study as two very large, more than 800 women each, clinical trials with positive results in the form of statistically significant and clinically meaningful benefit for both co-primary endpoints, both doses, and both time points at month 3 and month 6. This is big news. And it’s gratifying to see such an important outcome in women’s health. It’s very complementary of AbbVie for releasing some additional detail around data from this trial in this most recent press release.

And when you look back at these results and then the prior Phase 3 pivotal trial results, and then even before that the Phase 2b Daisy Petal study run by Neurocrine, these results all angst together. They show efficacy for dysmenorrhea and non-menstrual pelvic pain. They show what appears to be a very reasonable safety and tolerability profile. And this is no small feat. I mean when you think about endometriosis-associated pain, while we’re dealing with a women’s health issue and an endocrine target, we’re really talking about chronic pain studies. And they’re not easy. I mean we’re very familiar with how challenging it is to deal with neuropathic pain, for example.

And, in fact while dysmenorrhea is more akin to acute pain that is pain with menses, non-menstrual pelvic pain occurs the rest of the time outside of the menstrual period and is much more like neuropathic or chronic pain syndrome. So, to see this kind of separation of responders with elagolix from the placebo group with such robust and statistically significant result is really quite remarkable. So, we are pleased with that.

The other point that I think is worth noting is that AbbVie has shown some of the preliminary bone mineral density data. And, again, consistent from our Petal study, the 603 study that Neurocrine had run, we were looking at 150 milligram dosing for six months and then the current Solstice and Violet Petal studies, we see a very nice profile that angst together showing minimal impact on bone at this dose. And, as AbbVie has said, there is dose related suppression of estradiol or hormones with the higher 200 milligram bid dosing, and you see a corresponding impact on BMD.

So, very good results. They are going to be presenting in much more detail around this at scientific meetings. I think the next planned presentation is at the American Society of Reproductive Medicine, the ASRM meeting coming up in the fall. And I’m sure that this will be an opportunity to dig into this a little more. And we’re very excited that they’re planning on the targeted NDA submission on elagolix for the treatment of endometriosis associated pain in 2017.

So, really congratulations to AbbVie and the teams there, and good news for women’s health overall.

So, let’s move now to valbenazine. We’ll talk about both tardive dyskinesia and Tourette syndrome. I think the last time we had our conference call, we had an opportunity to talk about the Kinect 3result. And, as we had a very good efficacy results from that trial. The primary endpoint was a reduction in dyskinesia as measured by the Abnormal Involuntary Movement Scale, and we saw very robust reduction in dyskinesia, highly statistically significant and a very nice responder rate. That data has been shared with the FDA and we are currently in the process of winding down the extension phase of the Kinect 3study. As you may recall, after the placebo controlled treatment period, subjects continued in the extension period on either 40 or 80 milligrams of valbenazine. And that study is winding down over the next couple of months.

At the same time, we have continued with the Kinect 4 study. And this is the open label one-year safety trial with 40 and 80 milligrams of valbenazine. We’re just in the process of winding down enrollment now as we speak. And this study is going well. We have approximately 60 sites in North America running this trial. We’ve been very pleased overall with the general safety and tolerability to-date. And we will continue to collect long-term safety data of this trial.

We are also taking advantage of the fact that we still have our independent data safety monitoring board, a group of expert consultants who continue to look at our safety data from our Phase 3 trial and keep us informed of their impression about this safety and tolerability of the drug. And their last meeting just recently again encouraged us to carry on with the program as is.

And as we mentioned before, with the wealth of data that we now have from Kinect 3 and also data that we have from prior studies, Kinect 2 for example, we have been delving into additional analyses and multiple ways of looking at the data, understanding how to translate this into meaningful information for clinicians. And we have submitted or are in the process of submitting multiple abstracts and manuscripts for these analyses. And we will be planning on presenting detailed data at upcoming meetings, such as the neurology and psychiatry meetings in the first half of this year. And all of these meetings have their own kind of embargoes on when the details of that can be released. So, I can’t really say anything about it until the time comes. But we look forward to sharing the details of our programs at upcoming meetings.

I think we also talked recently about the Tourette syndrome program. We had the T-Force study, which was the Phase 1b trial in children with Tourette syndrome. We were very pleased with that outcome, as you’ll recall. Our main purpose was safety, tolerability and PK. We got what we needed from that and allowed us to proceed into the next placebo controlled Phase 2 trial. And we were also pleased that the pharmacodynamic assessment of tic and tic severity for Tourette syndrome in those in open label trial showed us what we would anticipate a nice reduction in tic severity even after just two weeks of treatment and a fairly robust percentage of responders, more than half of the kids in Phase 1b study would be considered a responder in a normal controlled trial.

So, with that good data behind us, we got approval to go ahead and start the Phase 2 studies. The T-Force study is the adult Tourette trial, placebo controlled trial. Currently recruiting patients and the T-Force GREEN study is the pediatric placebo-controlled trial. We had a successful investigator meeting to kick off the start of this study a couple weeks ago, and screening is this month, and dosing shortly thereafter.

So, these trials are up and running. I think as Kevin has said from the podium before, we’d like to see data from these trials turn of the year -- end of this year, turn of the year. It’s hard for me to know yet which one is first, but if I were to bet, I would bet on the pediatric one being a little easier to recruit since 80% of Tourette patients are children and 20% are adults. So, it’s a little easier to recruit for Tourette syndrome trial. And frankly, the interest level from parents and families on the Tourette syndrome association is very strong for new and well-tolerated treatment option for children. So, those are going well. That’s the valbenazine program.

Next to talk about is the essential tremor program. We have successfully completed the first couple of cohorts of our single ascending dose trial and that will finish up shortly. The way you’ll know that we’re happy with those results is when we tell you about starting the multiple ascending dose trial, which we would anticipate after successful completion of the single ascending dose trial. So, that is going well so far. Obviously early days, but we’re excited to have a new molecule with a new mechanism of action in the clinic and for a very large unmet medical need. There is something like 8 million people with essential tremor in the U.S., which is 10 times the number of people with Parkinson’s disease.

And last up then is our CAH program. As we’ve discussed before, our initial compound which we numbered as 860, had a nice signal in our early pilot study. But then we have finding in a juvenile toxicology study, which we felt important to conduct before we had gone into children. And because of that we decided to take 860 out of clinical development and move in one of our backup compounds. We have several to choose from. The one that we’re -- we plan on having one open as a new IND within the next year, hopefully later this year and that compound would then be moved into CAH trials.

So, that program suffered a setback with 860, but that’s the nature of drug discovery and development. While we have extensive experience with that compound in toxicology studies, standard toxicology studies, no one had ever done a preclinical juvenile tox study. And as we mentioned earlier in our press releases and phone calls that really with abundance of caution we want to be sure we’re very comfortable with what we take into the clinic with young children with this orphan disease. And so we’re very excited to move this backup compound along. It’s cleared its hurdle of juvenile tox and now we are embarking on things we need to open the IND to get into the next set of clinical studies.

So, I think I’ll pause there, turn it back to Kevin, and I look forward to your questions.

Kevin Gorman

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

So, with that we’d like to take your questions now.

Question-and-Answer Session

Operator

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

Unidentified Analyst

Hi guys. This is [indiscernible] on for Geoff. Thanks for taking my questions. I’m just wondering if you can talk about some of the gating factors for AbbVie filing the NDA for elagolix. And do you expect them to file for both doses?

Chris O’Brien

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

Unidentified Analyst

And then just on the TD program, any incremental feedback when discussing with KOLs and how they plan to use the drug or additional subgroups and subpopulations that they would like to see you explore their drug further in?

Chris O’Brien

Yes. So, let me answer the second one first. When we talk to both psychiatrists and particularly movement disorder neurologists, they have a whole list of other hyperkinetic movement disorders that they would love to see clinical research done on. Obviously, we’re focused on our main goal that is approval of tardive dyskinesia first and then Tourette syndrome second. And that’s the bulk of the unmet need, if you will.

As for the first part, when you ask patients -- when you ask physicians about the data that we’ve presented and how they think about, how they would use the drug, I think what you hear is pretty predictable, namely that those docs who have high experience in managing TD are ready to jump in right away and treat a spectrum of patients, both moderate, severe, and a range of tardive dyskinesia phenomenology.

So, you get the classical so called buccal oral-lingual dyskinesia, but you also have the limb dystonia and athetosis and other clinical phenomenology. And so, the docs who have quite a bit of TD experience are ready to jump in and use the drug. They are most interested in hearing three things about this drug. One is, can I use this safely in a psychiatric population who have complex underlying psychiatric problems and complex polypharmacy with their psychiatric medications? Because the last thing these docs want to do is destabilize their patients.

And so, one of the things we’ve built into our study design is to try to answer that question. We allow a fairly broad spectrum of patients into our clinical trials. As long as they are reasonably stable psychiatrically, they can have a range of concomitant medications for their psychiatric condition. They have, as you know, bipolar disorder, major depressive disorder, schizoaffective disorder, schizophrenia. And we actually allow them to have scores on their psychiatric sales that show they can still have pretty active psychiatric disease, they just can’t be wildly unstable.

And we allow them to stay on their meds and be managed for the up to the one-year study. So, this is very encouraging. Docs want to know, can I use this drug and just add it on to the existing milieu and not destabilize the patient.

Secondly, they want to know, is this an easy drug to use? This drug is a once-a-day drug, doesn’t require titration, and it can be used safely in conjunction with these other meds. And that’s the goal with our data. Obviously, what’s in the label will come after our discussion of the matter with the FDA. This is our projection based on the data that we’ve accumulated to-date. So, that’s what they want to know and that’s what are hearing so far.

Operator

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

Charles Duncan

I have one on elagolix and one on valbenazine; I’ll start with the latter, more important to my thesis. But I’m wondering if you’ve had any feedback in terms of dosing persistence or compliance, either from Kinect 3 extension or even Kinect 4 that you can share with us at this time?

Chris O’Brien

So, in a general sense, we have a good handle on compliances in terms of the subjects taking the medications as directed, the study medications as directed. We know that this can be a somewhat challenging population. What we do see is that if you look at the literature for schizophrenia trials for example, overall persistence in a schizophrenia trial out to a year varies in the literature. In general, it’s in the ballpark of about half the subjects continue to follow the program after one year. We’re doing a little better than that. And I can’t say what that means at this point, whether it’s the kind of subjects that have been recruited or how they like the medications. So overall, we’re seeing as good or better than predicted compliance and persistence with the drug. At the end of the day, we’ll have to see how that translates into the real world. As you know, compliance overall can be challenging, hence our interest in having the once a day, easy to use drug that doesn’t require titration.

Charles Duncan

Appreciate that, Chris. But that said, you do believe that you enroll patients that are pretty representative despite it being kind of a clinical trial population?

Chris O’Brien

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

Charles Duncan

And then, if I could ask a quick question on elagolix. First of all, congrats on the recent results. I know you are not directly involved but wondering if you have a perspective on bone mineral density? It’s been a topic of debate in the last couple of days. And I’m just wondering if you have a perspective on what you think the regulators are looking for in terms of kind of a base level of wanting to exclude, say a certain percentage decrease. How do you feel about that; has that standard changed or anything or what do you think?

Chris O’Brien

Well, I’m a little bit at of disadvantage. The last time I sat down with the FDA to discuss BMD and percentages and things, was almost six years ago, at the end of the Phase 2 meeting in 2010. So, a lot of time has passed. And I have not been involved with the discussions that AbbVie has had with the Division of Reproductive and Neurologic Products. I can tell you that the kinds of changes that are described in AbbVie’s press release, they are certainly in the ballpark of what’s reasonable for bringing a new drug to market. The question would be what does AbbVie negotiate with the FDA in terms of what’s in the label? And I really don’t have insight into that. I can’t tell you how that’s going to be. That’s really going to be a discussion between AbbVie and the regulators.

Kevin Gorman

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

Charles Duncan

That low dose seemed pretty low in terms of placebo adjusted change? [Ph]

Chris O’Brien

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

Operator

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

Unidentified Analyst

Hi. This is Yuko [ph] on the call for Anupam. Regarding the essential tremor program, are there additional data points of the safety that are being assessed in Phase 1 study in healthy volunteers?

Chris O’Brien

No. At this point, it’s PK and safety. Obviously PK is important. Because these healthy volunteers don’t have any tremor and there is no other really biomarker to work with, in a single dose Phase 1 study, there is nothing -- there is no kind of surrogate or biomarker that you can look for.

Operator

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

Cristina Ghenoiu

I’ll start with elagolix and endometriosis. I was just wondering if you could remind us on which aspects, like efficacy and tolerability, does elagolix need to differentiate itself from Lupron to be adopted? And a quantitative answer to this would be great, and if the 150 milligram dose passes that bar?

Chris O’Brien

It’s kind of an interesting question because Lupron is such a tiny share of the treatment options for women with endometriosis. It’s just not used because of this -- I mean it’s a very small percentage of patients with endometriosis use it. It can only be used for two six-month cycles, has black box warning on bone loss and it makes young women post menopausal. So, there is not a very high bar to surpass. We’re talking about really a tiny number of patients overall with endometriosis who use Lupron to manage their symptoms. Whereas for an oral, well-tolerated medication without that kind of restriction, you can imagine that it’s -- how do you even begin to say what the comparison is because they’re so completely different. You can’t use Lupron as a comp to figure out what the market opportunity is for elagolix. We know that and obviously AbbVie knows that.

Lupron is very effective at managing the pain of endometriosis, but it does so with a pretty heavy hammer. What we’re talking about is young women in their 20s and 30s who need to manage a chronic pain syndrome and having an oral drug like elagolix to be used long-term, obviously is a completely new path.

Cristina Ghenoiu

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

Chris O’Brien

Yes.

Cristina Ghenoiu

And then, Lupron is currently used with add-back therapy?

Chris O’Brien

Yes, it is. It’s a small number of patients here in the U.S.

Cristina Ghenoiu

And on the U.S. on the trial design, our physician checks indicate that the change in fibroid volume would be of interest to them, but I didn’t see that as one of the endpoints. So, I was just wondering if you think that that would be a problem if it is not being measured.

Chris O’Brien

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

Cristina Ghenoiu

And two quick questions on Tourette. Is it possible to have the baseline YGTSS scores for adults and adolescents that you had in the Phase 1 trial?

Chris O’Brien

Phase 1 trial was just in children and not in adults. And we have not disclosed any details about that trial for a variety of reasons. Firstly, it’s a Phase 1b study; it was not a randomized control trial, no placebo, sub-therapeutic doses included. So, we’ll eventually get some of that out in the scientific literature. But what you really want is to see the results from our placebo controlled trial hopefully in a year’s time.

Cristina Ghenoiu

And the baseline characteristics are similar between that and what we’ve seen in Phase 1?

Chris O’Brien

Sure. So, what I can tell you is that our study like most well-run trials in Tourette syndrome requires that the Yale Global Tic Severity Total Score at baseline has to be greater than 20.

Cristina Ghenoiu

Okay, greater than 20?

Chris O’Brien

Through some combination of vocal tics and motor tics. So that’s fairly standard and we certainly have adhered to that in the Phase 1b and the Phase 2 study.

Cristina Ghenoiu

And just one question, if I may on the data in Tourette that was released by Teva. It showed that over time you get a more pronounced response. Have you seen that into clinical models with your VMAT inhibitor?

Chris O’Brien

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

Cristina Ghenoiu

Great. Thank you.

Tim Coughlin

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

Chris O’Brien

They are looking at other things.

Tim Coughlin

Yes.

Cristina Ghenoiu

That’s helpful. Thank you.

Operator

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

Biren Amin

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

Kevin Gorman

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

Biren Amin

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

Kevin Gorman

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

Biren Amin

Okay. And then on Tourette, Chris, you mentioned there is a time component to response with both the pediatric and adult studies that are currently ongoing. I think that you’ve had two different treatment periods, six weeks for pediatrics, eight weeks for adults. Why the difference; and do you expect a more pronounced benefit earlier in pediatrics?

Chris O’Brien

That’s a good question. I don’t know the answer about the timing of response and data will tell us that. The difference -- the one placebo controlled period is six weeks, the other is eight weeks and simply a historical difference of about how Tourette trials were done in these populations, I don’t think it’s a terribly important distinction. I think the bulk of the response that you see to our drug we see within that six-week time period, and probably the bulk of that -- more than half of it occurs in the first four weeks. But obviously that is one of the areas I’m interested in analyzing in greater detail as we analyze this data.

Biren Amin

And maybe a few more just on Tourette. Are both of those studies statistically powering and can you maybe share what you would like to see from a treatment effect to achieve significance?

Chris O’Brien

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

Biren Amin

Is there any optionality to file the data if that’s positive?

Chris O’Brien

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

Operator

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

Kevin Gorman

Thank you very much. In closing, what I’d like to say is that we’re all very aware of the tough markets that exist right now. Here at Neurocrine, we are very fortunate, as Tim had outlined, we’re in a very good cash position. We have no need, no plans to access the equity markets. We’re going to be entering our commercialization year 2017 with greater than $300 million in cash on hand. So, this market doesn’t affect the way that we approach our business.

We are vigorously putting together our commercial team and fully supporting a launch that we anticipate is going to be next year with our drug. And at the same time, we’re pushing forward our pipeline and we’re adding to our pipeline by fully supporting our R&D organization. So, I really would like to thank the support that we have from our shareholders in this. And we look forward to talking to you at upcoming meetings and sharing more of our progress with you, as this year goes on. So, thank you very much for your attention.

Operator

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

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