Neurocrine Biosciences, Inc. (NASDAQ:NBIX)
30th Annual JPMorgan Global Healthcare Conference Call
January 12, 2012 5:00 pm ET
Kevin Gorman - President and CEO
Mike Ulz - JPMorgan Securities LLC
Good afternoon, everyone, and welcome to day four of the JPMorgan healthcare conference. I'm Mike Ulz from Geoff Meacham's biotech team here at JPMorgan. And it's my pleasure to introduce Kevin Gorman, CEO of Neurocrine.
Thank you very much, Mike, and thank you very much, JPMorgan, for the opportunity to present here at the beginning of the year. Before I get started, I direct everyone to our Safe Harbor. I will be making forward-looking statements, and I also direct you, to a more complete set of specific risks, to our recent SEC filings.
What I would like to do and start this year out, as we start every year out, is putting up right away what are the major goals that we have planned for 2012. I list them here for you today, and these are goals that add value to the company and to shareholders, and several of them are quite aggressive. I'd like to spend a couple minutes going through them.
We have a Phase II trial, two weeks in duration, placebo controlled, in our VMAT2 inhibitor program. That Phase II study is going to read out towards the end of March this year. In addition, based on having successfully completed our three months toxicology studies in rodents and dog.
We are now going to then in the middle of this year, embark on two large Phase IIb studies in tardive dyskinesia. The first of which is going to be in schizophrenic patients. The second one will then start up in bipolar and depressed patients. A stretch is going to be that we hope, if enrollment goes well, that we're going to be able to report out by the end of this year, topline data from that first TD study in schizophrenic patients.
We are then hope to initiate another Phase II study with our VAMT2 inhibitor in a different indication, and this time Tourette's syndrome. And then working alongside our partner, Abbott Pharmaceuticals, as they have stated two days ago at this meeting, they plan on completing the large Phase II uterine fibroid study and reporting on that data later this year.
And in addition, Abbott plans on, they're on the verge of initiating the Phase III program with our drug Elagolix in endometriosis. And we'll assist them in all ways possible in doing those and moving that late-stage program forward.
In addition, in working with our collaborator in New Zealand, we were very pleased to report that, as of last week we had finished the 50 patient Phase IIb placebo controlled trial in acute congestive heart failure with our drug Urocortin 2. And we anticipate reporting that data out in February or maybe the very beginning of March.
And the finally, we have three programs that are moving along quite well, from our research group that's been very productive. These programs we are entering into IND enabling preclinical toxicology. We plan on bringing one of those forward to file the IND this year and yet another neuroscience indication area and we'll be talking about that more this year. So a very aggressive and a very busy new year for us.
Let's go back and as I present throughout the year, you will see me checking off these goals, as we go along. How did we do in 2011 in our planned milestones? We actually completed seven of the 10 that we have there. If you look at what was not completed in 2011, it was the kickoff of that Phase III endometriosis trial with Abbott. And it was also the results from that Urocortin 2 trial in Phase II. But as you see these are all going to be happening very quickly in 2012.
I'd like to take now a few minutes of your time to go through these two main programs that we have at Neurocrine. Elagolix, which was partnered with Abbott Pharmaceuticals and this features a small-molecule GnRH compound. This is a first-in-class drug. Elagolix has a number of attributes, not just one or two differentiating attributes, but several.
These are things that are of high value to patients, prescribers and payers. In addition, it's not just one compound for one indication. This is truly a pipeline within a program. Our lead compound Elagolix is simultaneously being developed in both endometriosis and uterine fibroids, as I've said. But there are a number of other women's health diseases that this is absolutely applicable for by mechanism of action in polycystic ovarian syndrome, assisted reproductive therapy are just to name a few.
In addition, we have a very robust follow-on program here. And we hope that in very near future, where ourselves and Abbott are going to be brining one of the backups into the clinic. And there is another host of indications that that could be used for.
Endometriosis, uterine fibroids, these are debilitating disease for women. Endometriosis strikes women in the prime of their life, very early, sometimes it's early as they are in their late teens. It's during the most productive points of their life. Uterine fibroids, this is again a debilitating disease. Each one of them affect 10% of the female population of reproductive age.
Women resort at the rate of nearly 400,000 women a year to that very last option that they have. And that last option is a hysterectomy. It is the goal of this program to significantly reduce the number of women that would have to go to that last option to be able to give the millions of women in the United States and around the world a therapeutic option that is safe and effective for both of these diseases.
As I referred to earlier, the current activities that are being done is finalizing the Phase III protocol through an SPA filed with the FDA after a series of very productive meetings that Abbott had with the FDA. All the other activities that are necessary to launch this trial after the SPA is approved are ongoing right now.
This is a program that is protected with a very strong intellectual property position. We have six issued U.S. patents and importantly they cover composition of matter. And that composition of matter patent expires in 2024, and that does not include the five years of patent term extension available to it. All the foreign applications are pending or issued at this point in time.
What I'd like to do is turn my attention now to our other program, our wholly-owned program. It's VMAT2 inhibitor program. VMAT2 is vesicular monoamine transporter 2, and I'll give you a bit of background on that in a moment.
This is a very important program to us. It is a program that we intend on keeping through to commercialization in the United States. This, again, is a program where this target, the VMAT2 transporter, the inhibition of it, we know is relevant to several different movement disorders.
The first one we are going after is tardive dyskinesia. This is the movement disorder that is actually caused irreversibly by antipsychotics. There's approximately 500,000 patients in the United States that suffer from tardive dyskinesia. This is a growing population. There are no therapies, either on-label or off-label available to these patients.
Next would be Tourette's syndrome as I mentioned, 440,000, affecting primarily children and adolescents. And then as I'll get to a little later in this talk. The mechanism that we're pursuing here could have relevance to treating the underlying symptoms of schizophrenia itself.
Tardive dyskinesia, what is it? As I said, it's a movement disorder caused by the antipsychotics. It's caused by both the typicals, the older typicals, and the newer atypical antipsychotics. It features movements that impair all the body systems, whether it's the mouth, tongue, jaw and lead to impaired eating and swallowing, unintelligible speech or it can hit the trunks and the limbs causing problems with walking, discoordinated movement at the arms. And all-in-all it leads to a social disability and further isolates these patients and leads to severe anxiety and depression.
As I said, this disease is caused by the typicals and as well as the atypicals. And now with a widespread use of atypical antipsychotics outside of schizophrenia and in to the bipolar patients and the major depressed patients, there are actually more tardive dyskinesia patients that are on the atypical antipsychotics today than there are on the typical antipsychotics.
Here's a bit of a cartoon that describes the molecular target. This is unique and target is that is presynaptic. And I'll explain more there. But the target given here is a transporter and is responsible for loading vesicles presynaptically with dopamine. It is a energy-dependent transporter mechanism that relies on the movement of ions.
Here's another cartoon that shows a normal dopaminergic synapse. VMAT2 is on these vesicles. The dopamine is produced in the cytoplasm presynaptically. It's packaged and it has to be packaged by VMAT2, before the vesicle can fuse with the presynaptic membrane, and then release dopamine in for the neurotransmission to react with one or more of the dopamine receptors.
All current antipsychotics, all current modulators of dopamine, work postsynaptically in antagonizing one or more of the dopamine receptors. And there's a host of unintended side effects that go with antagonizing the receptors. Our drug does not work there, meaning that that is not our target, the receptors.
In tardive dyskinesia, the path of physiology is that there is excessive dopamine. There is much more dopamine being made in the cytoplasm. There is much more dopamine being packaged and released into synaptic cleft, you've seen up-regulation of receptors.
Our small molecule orally active drug binds to the VMAT2 molecule and inhibits it in an allosteric way such that less dopamine, and specifically dopamine, is packaged. So that we can go from this path of physiology situation and when our drug is in placed, you now normalize the dopamine toned here.
We've completed a number of preclinical studies to date on this drug. We've shown that we have a very potent and highly selective VMAT2 inhibitor. We've been able to characterize it on many drug levels. The DMPK has been done in mice, rats, dogs and monkeys. We've gone through a battery of genotoxicity tests, AIMS, chromosomal aberration and the micronucleus test.
We've done extensive safety pharmacology in here and importantly as everyone worries about in cardiovascular pharmacology, and we have no signal on HERG. We, as I said, completed three months toxicology in rats and dogs and that came out with no target organ toxicity. And then we have completed a partial completement of the developmental and reproductive toxicology to date. So a good and extensive now preclinical package that we have on this lead compound.
In addition, we've treated now patients in a single dose Phase I studies and multiple ascending dose Phase I studies. Drugs well tolerated in these normal healthy volunteers. We then took the drug into a small Phase IIa open-label trial, where we took six schizophrenic patients who had tardive dyskinesia, treated them for 12 days with our drug in ascending order.
And I'll show you some of that data in just a moment. And currently, as I said, we now have the drug in Phase IIb, two week crossover study in TD patients who are schizophrenics. There is 32 patients in that study. So we have either treated or ongoing treatment 80 patients at this point, at doses either given once up to 150 mg or multiple doses given up to 100 mg, and found the drug to be well tolerated at those levels.
What did we find in that open-label small Phase IIa study? Well, we had schizophrenic patients who had moderate-to-severe tardive dyskinesia, on a scoring system of the AIMS scale, which is a scale that is widely accepted and is been validated for over 30 years, and in discussions with the FDA, it's the scale they want us to use going forward, they had a score of approximately 14 on this scale.
By the time we ended the 12 days of dosing, which was wasn't even long enough for the drug to reach steady state at any one of the levels that we stepped up. They've had a 40% reduction in their AIMS score. That is very clinically meaningful. There are no drugs here. Any drug that has ever been tried with tardive dyskinesia has not shown such reduction.
When we followed them for two weeks after dosing stopped, we saw that their tardive dyskinesia came up and they're nearly back to baseline levels again. This was a very good finding, but it has to be tempered by the fact that there is no placebo, and the N is only six in this. So we've embarked now after opening the IND in the United States on a true placebo-controlled double-blind study.
And here you see a schematic of the design of this study. The patient comes in on day one. They are given the AIMS scale to see what their baseline tardive dyskinesia is. They are either given placebo or drug 98854 at 12.5 mg or 50 mg, treated for two weeks and then given an AIMS scale after that two weeks.
There then immediately no washout, put over. If they were on placebo, they're now on one to the two doses of drug or if they were on drug, they now go over into placebo. And then at the end of 28 days of dosing, on day 29 the AIMS scores, and each patient serves as their own internal control here. That study reads out in just a few weeks, as I said the end of March.
With positive outcome in that study, we've already designed and started to work in order to be able to startup in the middle of this year two large Phase IIb studies in tardive dyskinesia. First, as I said, TD patients with schizophrenia. And then second study will start up our TD patients whose underlying disease is bipolar disorder. There will be approximately 120 patients in each of these studies. The first study, as I said, we hope to have read out also this year.
The reason for studying these patients separately is because there are two different types of psychiatric patients. We want to make sure in Phase II that there aren't any special trial design issues that may have to do or recruiting issues with these two different types of patients.
In addition, as the FDA had noted and Dr. Laughren, at the Psychiatric Division of the FDA, which is where our IND resides, the mechanism of action here of lowering the dopamine tone can actually have a beneficial effect on the symptoms of schizophrenia that would be a very nice upside for this drug.
So in that schizophrenia trial, our primary endpoint is on the movement disorder, using the AIMS scale again, as the FDA is agreed with. But we are also going to be following their statuses of schizophrenia. So we'll be having a PAN score within this.
Now, I'm going to tell you about a couple of the reasons of what more leads us to believe that there is the upside that is could actually have some effect on the symptoms of schizophrenia. Animal models for psychiatric diseases are woefully bad. There are no good animal models for depression there, animal models for anxiety, are not much better.
However, in schizophrenia, there actually is a mouse model that is highly predictive of what drugs will work as antipsychotics. And that model, the pre-pulse inhibition model, which I won't go into in any detail here, has a gold standard obviously, haloperidol, an antipsychotic. We contracted to have in a blinded fashion, our drug tested in the pre-pulse inhibition model. Any drug that has been shown to be effective in humans in schizophrenia has been effective in this model.
And as you can see here in the brown scale, over to the left, the lower bar is vehicle, the brown bar is haloperidol. And seeing the effect, a rising bar is a positive effect in this. Over on the right-hand side, the first bar is vehicle and then you see as you raise up to a 10 mg/kg dose of our VMAT2 inhibitor 98854, we reached the same level as haloperidol does. And I just would note that haloperidol was given IP here, whereas our drug is given orally in this model.
This is a powerful piece of preclinical data to have, what else. Well, in that open label study with the six patients that we looked at, we did put in utilization of the BPRS score, it's brief psychiatric rating scale in there. Now, there short period of time, 12 days, six patients, no placebo. I've given you every caveat here. It was in there as a safety just first time wherever in these patients. We want to make sure our drug doesn't make them worse even though it should make them better.
Well, at baseline, our patient population was nearly at 36 on this score that goes up from 18 to 126. These were stable schizophrenics. During the study, at the end of that 12 days of dosing, their score had dropped down to a 29. Small, right here in '12, in just a short period of time, I can't put any statistics to it, but it trended the right way. It trended in the way that people familiar with this mechanism of action would say that's where I would expect to see this go. That gives us some good comfort and encouraging that these two pieces of data, we might have a role for this drug also in schizophrenia.
So again, as I said, our VMAT2 program is a pipeline within this program. We're going after tardive dyskinesia and Tourette's syndrome first. There are many other movement disorders that this mechanism is known to be involved in, we just don't have a good drug that has ever been able to be applied here. And so these additional indications will be ones that we will go into an stepwise fashion, but we're committed to going forward with tardive at this point as the initial indication and adding Tourette's this year.
Again, we make it a point that we don't follow-up any program within Neurocrine. All of these that I've described to you today were all discovered and developed. All the compounds were made initially at Neurocrine and we have strong patent positions and it's composition of matter.
Earlier, in the 2011, we announced that our lead compound 98854, our VMAT2 inhibitor had received issuance of it's composition of matter in the United States. And just as we received notification from the European patent office that we had gotten allowance for the composition of matter claims over there. So again, this is another program where the patent expiry goes up to 2029 in the U.S., a lot of time to invest heavily in this drug going forward.
Financially, we started 2011 with $135 million in the bank. Our guidance was that we would end 2011 with $130 million in the bank. We ended 2011 with $132 million in the bank. We have always set our guidance.
This year and that had to do with also receiving $30 million of milestones from Abbott, which is why we have a net burn in 2011 of only $3 million as a biotech company. This year, there are no milestones that are anticipated coming from Abbott. Those will pick back up again in 2013.
And as we invest heavily in our VMAT2 program, we would expect to burn through approximately $40 million this year. So starting with a balance of $132 million, burning through $40 and then replenishing again in 2013 through milestones. So a very good position from a cash position that we are in the company. We keep a tight handle on the burn.
So in 2011, we moved our pipeline forward. We're a neuroscience company. In 2012, you are going to see our pipeline progress and you're also going to us deep in the pipeline, as I said, as we bring research programs now out of research through preclinical development and into the clinic.
I thank you for your attention. And I'll be happy to answer any of your questions in the breakout session. Thank you.