Neurocrine Biosciences Inc. Q2 2008 Earnings Call Transcript

| About: Neurocrine Biosciences, (NBIX)

Neurocrine Biosciences Inc. (NASDAQ:NBIX)

Q2 2008 Earnings Call

July 30 2008 5:00 pm ET


Kevin Gorman - Moderator

Tim Coughlin - CFO

Chris O'Brien - Chief Medical Officer

Claudia Woodworth - Investor Relation

Steve Myers - Jefferies

Brian Abrams - Oppenheimer & Co.


Thomas Wei - Piper Jaffray

Brian Abrahams - Oppenheimer & Co.

Phil Nadeau - Cowen & Company


Good day ladies and gentlemen. (Operator Instructions).

I'll now turn the program over to your moderator for today Kevin Gorman. Please go ahead.

Kevin Gorman

Thank you very much. Welcome to our second conference call. I'm joined today with Tim Coughlin our CFO, Dr. Chris O'Brien our Chief Medical Officer and Claudia Woodworth, in charge of Investor Relations.

Today what we'd like to do is have Tim take you through our Q2 financials. Chris will then give you an update on our GnRH clinical programs, Urocortin 2, CRF and indiplon.

Before we start, I'd like, Claudia, could you please read our Safe Harbor statement?

Claudia Woodworth

Sure. Good afternoon, and I want to remind you of Neurocrine Safe Harbor caution. Certain statements made in the course of this conference call will state the company's or the management's intentions, hopes, beliefs, expectations or predictions of the future or 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 the 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 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, Claudia. Tim can you take us through the Q2 financials?

Tim Coughlin

Thanks Kevin. During the second quarter of 2008, the Company continued to meet its financial planning cash burn targets and in the quarter with approximately $133.5 million in cash and investments.

For the second quarter of 2008, we had a loss of $21 million, or $0.55 a share. Our year-to-date loss is $42 million or $1.10 per share. This compares to a loss of $$52 million for the first six months of 2007, or $1.37 per share.

The main difference between the two periods is cost savings recognized under our severance program which we enacted in the fourth quarter of 2007. This is coupled with license fee revenue earned under our collaboration with e Dainippon Sumitomo during 2008.

Research and development expenses increased in the first quarter of 2008 to the second quarter by approximately $2 million. This is primarily due to efforts around closing the dosing portion of our 603 elagolix study and steady enrollment in our 702 elagolix study.

General and administrative expenses decrease in the first quarter of 2008 to the second quarter, primarily due to severance expenses recognized during the first quarter together with other cost saving measures. Interest expense increased from 2007 to 2008 related to the sale and leaseback of our corporate headquarters at the end of 2007.

Under Generally Accepted Accounting Principles, our rent payments are treated as interest expense for a period of time. We again reaffirm our previous guidance of $75 million to $80 million loss for the year, or $1.95 to $2.08 per share based on 38.5 million shares outstanding. We will end the year with approximately $100 million in cash and investments.

With that I'll turn it back to over to Kevin.

Kevin Gorman

Thank you, Tim. As you can see we are on right on track with the guidance that we gave at the beginning of the year. Now I'd like to turn it over to Chris O'Brien to take us through the R&D programs. Chris?

Chris O'Brien

Thanks, Kevin. I'm very happy to talk about the steady progress with the clinical development programs. I'll touch on the full range of elagolix activities as well as an update on urocortin 2, CRF antagonist and indiplon.

So let's start with the elagolix program since that's obviously what has us quite excited and is the main focus of our clinical development and regulatory groups at the present time. We've made steady progress on the three studies that are currently active, the 603, the 702 and the 703 studies.

As I've described them before, the 603 is a very important study for Neurocrine because it is our first opportunity to look at the impact of six months of elagolix treatment on bone mineral density. And so this is the trial that has enrolled 252 women. The last woman completed her last visit of six months therapy at the end of June, and we are now just in the midst of assuring the integrity of the data, we are still blinded to the data, so I don't know results yet, but we will be unblinding in August and reporting the results out in early September as we've given guidance in the past, So that's nicely on track.

One interesting side comment about the 603 study and then also what we are learning now from the 702 study is that, the investigators and many of the subjects who have been participating in these trials seem to be quite enthusiastic. We are getting now requests for compassionate use of elagolix and in general enthusiasm from the key investigators so that helps really round out, I think our so far very favorable safety and tolerability profile that we've gotten and it supports the early exploratory trials giving us an indication that we were seeing improvement in some of the symptoms of endometriosis.

A couple of key things about this 603 study to point out what we are expecting. As I've mentioned, this is a trial that was designed to look at change from baseline in the bone mineral density. So, the way that gets reported out is a percent change from baseline after six months of treatment. And typically, women with endometriosis at this age group that is early 30s, if you follow them with no treatment, there's a little bit of bone loss even with no treatment.

So in the 0.5% to maybe even 1% range, depending on the trial and the methods used to track a bone. So, our expectation with elagolix is that we'll have very minimal, if any, bone loss. So that would put us more or less in that same ballpark.

Now, when we designed the trial, we knew that this was an important study for us, and we wanted to absolutely make sure we had a study that was adequately powered and designed to detect even subtle changes if those were to occur.

So, part of the technique used to do that is; one, have enough limit in the trial, but two to have a positive control, something that we could used to assure that we had assay sensitivity, that is, DXA scans were capable of picking up subtle change.

Now DXO scans, they have some degree of precision, so, we expect a little bit of noise and that's why we have the 252 women randomized. What we'll expect is that we'll see a small change, if any, and I'll report that out as a percent change from baseline for elagolix.

I'll remind the listeners that this trial was not set up to be a superiority trial. It was not set up to be a non-inferiority trial. It's a trial that was designed to give us the ability to make a statement about statistical significance in change from baseline in bone mineral density for elagolix.

And so, we'll be able to do that. And by having DMPA or Depo-Provera as the positive control, I'll have greater confidence that assay sensitivity was retained, and that this trial will read out with interpretable and useful results.

Now, the other important thing about this study is that we will be looking at efficacy, and these are of course secondary endpoints after the primary bone endpoint and the anticipation is that we will see a confirmation of the previously observed beneficial effects on pelvic pain, on dysmenorrhea, on some of the disease-specific health outcome measures and those will also all be reported out at the same time in early September.

The reduction in pain that we will be reporting is using the composite pelvic pain signs and symptoms scale, a variation of the old BMD scale that was used in our earlier studies, and I point this out, because as most of you know, as I've said before, the 702 and 703 trials have incorporated FDA recommended modifications to that endpoint, and I'll talk about those in just a minute.

The study of course is still ongoing. Women who have completed six months of treatment continue to be followed with no treatment to determine several things. Number one, how long they continue to enjoy benefit if they've had benefit.

Number two, how long until evidence of the ovulation emerges. As you know this is a key differentiation point for elagolix. We know that women after discontinuing elagolix have rapid emergence of ovulation, and this is a highly desirable characteristic, particularly for women with endometriosis who have been suffering from infertility.

I can't say the same thing about the Depo-agents for endometriosis as they tend to suppress ovulation for many months, even after discontinuing the treatment, so, we'll continue to follow these women with no treatment and get a next round of DXA scans at week 48, and this is consistent with the recommendations that the FDA have provided to us for this development program.

There is a wealth of data that will come of this 603 study. We'll have six months of PK data. We'll have six months of estradiol data. We'll have biomarkers for bone resorption that is n-telopeptide.

And we'll have the DXA scan. We'll be able to tie these together add to our current PK/PD modeling and this will really put us in a good position when it comes to dose justification at our end of Phase II meeting that we anticipate next year.

So the 603 study, very important study for Neurocrine, study ramp-up is going well, and we are on track for reporting results particularly percept change from baseline and BMD in early September.

The next study to talk about is the 702 trial. This is the so-called Lilac Petal Study in contrast to the 603, which was the Petal Study. The 702 study is being conducted here in the US a 150 women to be randomized.

That's the goal. And I'm happy to say, because of the learnings that we've had now carrying out four trials in patients with endometriosis that we understand about some of the recruitment challenges, and we've been able to really do quite well in enrolling women into the Lilac Petal Study.

We closed screening for this trial last week and we had more than 6,000 callers to our call center. So that went quite well. We expect to randomize the last woman in the trial, the active treatment double-blind controlled portion towards the end of the summer.

And we'll be in a position to report top-line results as promised early in the first half of 2009. So that's going well. The enthusiasm of the investigators I've already commented on and the quality of the data that's being collected with electronic diaries and other instruments is quite good at this point.

In the 702 study, there are three key aspects that make this also a very important study for us. The first is that, we've incorporated the guidance given by the reproductive division at the FDA namely these revised endpoints that look at dysmenorrhea and non-menstrual pelvic pain.

So we'll be testing these out, with modification of the BMD. In addition to those scales, of course, we have other efficacy measures to round out the assessment of elagolix compared to placebo in this superiority trial for efficacy.

Now, second aspect of this study that's important, in addition to the revised endpoints, is that we have an initiative to mitigate some of the placebo effects that are commonly seen in endometriosis trials and we've acted on the guidance from the NIH and the American Society of Reproductive Medicine.

We've incorporated a single-blind placebo lead-in period prior to the randomized placebo-controlled treatment phase. So that will be an important element to learn in this Phase II study as it will help us reach agreement with the FDA on pivotal trial designs next year.

The third aspect that's important is, in addition to the 150 milligrams once a day, a dose that we know is associated with clinical benefit and different than placebo, we are also are testing 250 milligrams once a day, a dose that my PK/PD modeling tells us should give us some additional efficacy and I'm anticipating will help me determine whether I've reached to maximum tolerated dose.

As you know, one of the goals of Phase II program, any Phase II program is to fully understand the dose response continuum for minimal effective dose to maximum tolerated dose, and any decent Phase II program when they go to end of Phase II meeting with the FDA should have a full understanding of that dose response continuum. That generally requires a number of adequately powered and appropriately designed Phase II studies. So we are very keen on seeing that result.

We have in the 702 study also a six-month treatment phase. The first three months are the placebo-controlled, at which point, any women who has randomized a placebo will get re-randomized to one or two doses of elagolix, we'll be reporting off the top-line results of the first three months of placebo-controlled treatment as mentioned early in the first half of 2009, women will continue on through six months of treatment and then post treatment as previously outlined.

So very important study. Very happy that's going as well as it is, and so far safety and tolerability are quite good in this trial.

The 703 study is study that was initiated recently in Central and Eastern Europe, and here we have six countries with some of the best gynecology investigators available, and this trial is similar to 702, and that it's placebo, 150 milligrams once a day, 250 milligrams once a day.

But I've also incorporated a fourth dose treatment arm namely leuprolide for the first three months. Leuprolide Depot for three months, and then women on placebo or leuprolide are re-randomized to one of the two doses in elagolix.

Here we get to also test the FDA recommended endpoint revisions. The higher dose of elagolix and we get some experience doing trials in Europe and collecting DXA data across multiple countries with all the attendant challenges technical issues of doing that.

Now this is an important study for us, because we expect that at some point that pivotal trial against an active competitor will be necessary particularly for European regulatory authorities, and as many of you know, when you do an active competitor trial to a drug that is effective, a drug like Lupron, you do a non-inferiority trial and you need a non-inferiority margin, a statistical margin in order to be able to make a statistical assessment.

And so, we want some experience with Lupron and placebo and this will give us the ability to calculate a margin and order to design an appropriate pivotal trial when we talk to the authorities. So that trial, all the sites are ready. The regulatory documents are in, and we are waiting to begin screening until after the holidays, given that some of the differences between Europe and US.

So that trial will read out topline results towards the latter part of first half 2009, and you can see that we then will have the 501 and 504 studies that we completed earlier, three month duration, we'll have the 603, 702 and 703 data. We'll have a full inspection of the dose response continuum, we'll have a large safety database with close to 600 subjects on elagolix for up to six months of treatment. We'll have a substantial pool of DXA data and a very comprehensive PK/PD assessments.

This will allow us to go into an end of Phase II meeting with really a robust data package, a good understanding of the investigators, the patient population, the endpoints and hopefully workout an acceptable registration path for the pivotal trials of elagolix.

So, I think I hope you can tell from my comments that I am very pleased with how the elagolix program is going. I compared it to other Phase II programs and other disease states, or even within this disease data, I think we are well ahead of remaining Phase II programs are and looking forward to being able to have a steady release of clinical data beginning in September into 2009.

So, I'll stop talking about the elagolix program at the moment and make a few comments about the other Phase II programs here at Neurocrine. You recall my comments regarding urocortin 2. This is the infused peptide that has very potent effects on cardiovascular hemodynamic parameters. We have completed two small Phase II studies in stable heart failure of patients with infusions up to four hours of duration and seen nice improvements of cardiac output in other hemodynamic measures.

Now, my next step was to go ahead and do longer duration infusions of 48 or 72 hours or longer in a variety of heart failure populations, but FDA asked us to complete two-week continuous infusion study, pre-clinically in animals to support a longer duration infusions in patients.

And when we set out to do that, it proved to be a technical challenge because we had to give really quite high doses at high concentrations to get a kind of exposure needed in animals. We struggled with that, but the team here at Neurocrine ultimately has been successful in figuring out a formulation that would allow us to do those trials.

We reached that to our own satisfaction with some non-GLP tox studies in-house and are currently doing confirmatory GLP tox studies and those read out over the next few months. We expect to have a final read out towards the end of the year, and if favorable, which we expect they will confirm what we've seen to date then this program is ready to go into longer-term infusion studies in patient populations.

Now, as I've also mentioned before, the goal for Neurocrine at this point is to engage a cardiovascular company to take on the development of urocortin 2, because this clearly is a program that would benefit from adequate resources in a company that has cardiovascular expertise. And so, we will begin our discussions with potential partners as the tox data comes forward, and we are very excited about that. Frankly, even the unsolicited interest from some of these companies has reaffirmed that this is an important unmet medical need, and we think we have a very potent agent for heart failure. So that's urocortin 2.

And then talk a little bit about the CRF antagonist program for affective disorders and potentially other indications. As you know this is the partnership that Neurocrine has with GSK. There are three molecules that are currently in human trials 008, 679 and 529. 008 GSK continues to inform us that they'll have read out of the irritable bowel syndrome trial in the second half of 2008.

And they also informed us that they anticipate starting the clinical trial, Phase II trial in major depression later this summer. And finally 529 is in Phase I studies as we speak. So a big commitment on the part of GSK, a lot of enthusiasm for one of the first new mechanisms for treatment of affective disorders in a long time, and we are very keen on seeing this program move forward.

So finally an update on indiplon. As you know, we had originally anticipated meeting with the FDA earlier this year due to scheduling changes the FDA and other issues. The meetings have been rescheduled on a couple of occasions.

We did get our chance to sit down with the neurology division in July earlier this month, and the meetings were cordial. I would say the division was engaged, they were thoughtful. We had good discussions, but as we have said before, because the agency often sits down and has their own internal post meeting discussions.

We are waiting for the official meeting minutes. They are public disclosure about where that program would be going. Typically, the agency provides their official minutes 30 to 60 days after this end of review meeting. So obviously we'll give an update once that's available.

So I think I will stop there and turn it back to Kevin, and obviously I'll be happy to take some questions on urocortin and CRF, on GnRH, elagolix as we go along.

Kevin Gorman

Thank you very much, Chris. So we are on track with each of our programs as we have discussed throughout this year. We are looking very forward to the 603 data next month, and so I should say, at the very beginning of September.

At this point, why don't we open it up to questions? We'd be happy to entertain them.

Question-and-Answer Session


(Operator Instructions). It looks like first we'll go to the side of Thomas Wei from Piper Jaffray. Please go ahead.

Thomas Wei - Piper Jaffray

Thanks very much. I had a couple of questions on the 603 study for elagolix. In listening to your commentary, it sounds like we should be careful about some of the comparisons that might be drawn between the elagolix arms and the Depo-Provera arm.

Can you just help us understand a little bit better when we see the data how we should interpret that and to what degree we should be drawing bone mineral density comparisons and also efficacy comparisons?

Chris O'Brien

Thanks, Tom. I said its cycle questions, because Depo-Provera although it has a black box in large part due to bone loss. The bone loss that occurs with Depo-Provera is something that is typically associated with longer duration treatment at a year, or year and a half.

At six months, the amount of bone loss is relatively small. Now of course Lupron at six months, the amount of bone loss is substantial, and that reflects the fact that the mechanism for bone loss with these drugs are different, so Lupron as you know causes post-menopausal levels of estradiol and that appears to be the mechanism for bone loss.

Elagolix is designed to give a partial reduction in estradiol, and by kind of hitting that therapeutic window, avoid estradiol levels that would be associated with bone loss. DMPA is not a drug that is designed to suppress estradiol. So its mechanism for bone loss is more likely reflects the facts that this synthetic progesterone acts in some measure as a cortical steroid (inaudible) is associated with that kind of bone-thinning effect, if you will.

So if you go to the literature and you look at Depo-Provera bone loss data at six months, it's not very big. It's in the kind of the 2% range although the variability is quite broad. The pivotal trial with Depo-Provera for endometriosis showed a range from an 18% bone loss to a 10% bone mineral density gain.

So, it's a broad range reflecting a lot of variability among women. But overall, at six months the bone loss was only in that kind of the 2% range. It's only when you get out to 9 months and 12 months then it really starts to build. So, we didn't choose DMPA as an active competitor to show superiority here, we chose it as a positive control to detect subtle changes, to make sure that we were comfortable in our position with elagolix.

So, that's a very important distinction and we are not looking to show superiority for example. If I see superiority, I'm sure I'll take advantage of it, but the fact is it a positive control for assay sensitivity. The other interesting thing is that, elagolix, if I over suppress estradiol with elagolix, the effect on a biomarker for bone like n-telopeptide will be rapid.

Likewise, when I stop elagolix, and estradiol rebound, the effect on a biomarket like n-telopeptide will be rapid. So, one of the things we hope to achieve in Phase II is to show the FDA that we don't need to do long-term DXA follow-up on women with endometriosis who are treated with elagolix.

What you see at six months is kind of, if there is any loss, it's the worst case scenario that with the discontinuation of drug there's a rapid rebound in estradiol, and no carry-forward risk of bone loss. That's quite in contrast to the depot agents that the risk continued reduction in BMD extends many months post-treatment.

Thomas Wei - Piper Jaffray

And Chris, if you say with Depo-Provera, the bone loss continues throughout six months and then 12 months and then 18 months, the bone loss continues with elagolix, one would expect that if you are having minimal, very little bone loss in that first six months, that's going to determine what your longer range bone loss you would see. It is a very different situation. Correct?

Chris O'Brien

Correct. And Thomas, I think you had a second part to your question?

Thomas Wei - Piper Jaffray

It was the efficacy data for Depo-Provera and how should we look at that? Well, first, are you going to provide the data around the secondary efficacy endpoint for each of the three arms? And then, what should we take from the comparison, what are your expectations for the efficacy data when you compare those two arms?

Chris O'Brien

Thanks. So as you know of the three arms, they are all active therapies, and the expectation is that women will have scores that show improvement. We know from the Depo-Provera data that, if a woman can stay on the drug, she has improvement. The problem with Depo-Provera has been tolerability.

Many women discontinue therapy because of spotting, vaginal bleeding, weight gain, other side effects that's limited its kind of uptake in the marketplace. So, we expect that we'll see improvement in Depo-Provera. We expect we'll see improvement in elagolix.

And in this case, we are not trying to show superiority. We can show it's adequately powered to show non-inferiority, and we'll be able to report that for all the treatment groups in September.

Thomas Wei - Piper Jaffray

Thank you.


Thank you. (Operator Instructions). Our next comes from the side of [Brian Abrams] from Oppenheimer & Co. Please go ahead.

Brian Abrams - Oppenheimer & Co.

Hi, thanks for taking my question and thanks for the comprehensive overview of the ongoing elagolix studies. Just a follow-up question on study 603, you talked a lot about the importance of placing the bone loss numbers in the context of estradiol levels, n-telopeptide and PK and some other measures.

I'm wondering, how long beyond the six month results do you think it will take for some of those analyses to be done and how might you plan to present those, both to the public and to potential partners? Thanks.

Chris O'Brien

Thanks, Brian. That's also good, because in fact, as I've mentioned, the no treatment phase of the 603 study is ongoing. And so even though, we are going to unblind the treatment groups in August so we can report out the topline results.

I will not be unblinded at an individual subject basis until the study is actually complete. So, looking at individuals, for example, the relationship between an adverse event and an estradiol level in an individual subject, I won't be able to do that until the week 48 data is locked in the database.

So what we'll be able to talk about is estradiol values per treatment arm and relative information about exposure, and certainly we have a blinded statistician who can help us with our modeling.

So, I will be able to talk about some of these PK/PD things. That will take a little longer than the top-line read out in September, but certainly, we'll be available as we are going into the fall.

One of the things to emphasize is that, I have very strong beliefs about the way clinical trials should be done, and we don't take multiple peaks at the data as the trial is ongoing.

These are set up to be truly studies that I can, if I give you a p-value, a robust p-value, it's something that where the data integrity is assured. And we are not cheating as we go along. So I'll be able to tell you about some of those things in September. And then as we close out the week 48, we'll be into a very refined level of detail.

Brian Abrams - Oppenheimer & Co.

Great, thank you very much for the additional information.


Our next question comes from the side of Phil Nadeau from Cowen & Company. Please go ahead.

Phil Nadeau - Cowen & Company

Good afternoon and thanks for taking my question. My question is actually a broader question on the 250 milligram QD dose and the need for good DXA scan data around that dose.

It seems like you'll get great DXA scan data and out three weeks and 150 milligram dose, but with the 250 milligram dose not in the study, how much DXA scan data will you have when you go to talk to the FDA about the clinical design? And how much do you think you'll need?

Chris O'Brien

Hey, Phil. So, yes. We will have the 250 milligram DXA data from the 702 trial by the time we get to our end of Phase II meeting. You call our report out on the three-month efficacy result in early half of 2009. I'll have the DXA data well in hand from both 603 and 702 and perhaps from some from 703, when we get to our end of Phase II meeting.

So the more we have the better, and I think what we'll see however if I have really done my job correctly and the PK/PD modeling is correct, the 250 milligram will be right on the edge of what the maximum tolerated dose is.

So I'll get a small percentage of women who that dose might be slightly too much, which will be perfect. That would help me and the FDA that I fully understand the dose response continuum and that will allow us to have a basis to go into the pivotal trials and dose selection for that.

So what the FDA needs, I think, is assurance that there's not a lot of bone loss with six months of treatment and that post treatment, there's no worsening or discontinuation with a dose that is adequate to relieve pain. So we may have explored the upper reaches a little bit and that's perfectly okay. That’s a very necessary part of Phase II.

Phil Nadeau - Cowen & Company

Okay. Just a follow-up question if I may. The 702 study I think had 150 patients in it. Is that enough to get reliable DXA data on that higher dose, or ideally would you need more patients than that?

Chris O'Brien

It should be good, because we do double scans which improves the precision and allows us to look at the changes associated with 50 patients per arm. The other piece of that is that it adds to our PK/PD modeling, in this case the relationship between estradiol drug exposure and DXA n-telopeptide.

So we'll have a very robust collection of data to describe what's happening even with just the 50 women from the 702 and the 50 women from the 703 study at the higher dose, plus those that get re-randomized, however many that is to the higher dose. So it's quite likely that by the time we are at the end of Phase II meeting I'll have close to a 150 women at 250 milligrams a day.

Phil Nadeau - Cowen & Company

Okay, great. And then just one housekeeping question on the financials. I think it was mentioned that the lease is currently in the interest income, but that that wouldn't be the case forever. Could you talk a little bit more about when we should start pulling out the rent expense from the interest income?

Tim Coughlin

Sure. Right now when we did the sale leaseback back in December, we negotiated into the lease agreement that we had a buy back option on the property, simply an option, not anything that can be put to us. And that option expires in approximately three and a half years.

We are in the process right now of trying to sublease some of the space in the front building, and depending on how that goes, that may move that expense up into the R&D and G&A section earlier. But right now the outside would be three and a half years.

Phil Nadeau - Cowen & Company

Okay. That's helpful. Thank you.

Tim Coughlin



Next we'll go to the side of [Steve Myers] from Jefferies. Please go ahead.

Steve Myers - Jefferies

Hi this is Steve Byers in for Hein. Just a couple of housekeeping items as well on the model. I'm just trying to look at the expenses going out the next couple of quarters and into 2009.

And you had that little bump in R&D for the second quarter. And I believe from our last conversation you said there is going to be $16 million cash burn for both third and fourth quarter.

Tim Coughlin


Steve Myers - Jefferies

So I'm assuming we're going to see that come down a bit?

Tim Coughlin

Yeah. I think a lot of that was due to the 603 and 702. The 603 ramping down and the 702 ramping up as you are aware in the beginning of their trials. There's a lot of expense paid to recruit and get the trial up and running and that occurred primarily during the second quarter.

So that should even it's a small count, we also have the 703 initiated as well. So what you are going to see, I believe that the R&D should come down and kind of trail down for the rest of the year and you are a looking at that $16 million per quarter burn.

Steve Myers - Jefferies

Okay, perfect, and same with the G&A as well?

Kevin Gorman

G&A I think will remain a little static. I don't think I can see that bounce around too much, but I think it's in the ballpark now. The first quarter if you recall, we had about $2 million in there for a severance charge. So that's why that came down.

The other thing is, we've had some costs that came through in the beginning of the year that aren’t going to repeat themselves later in the year in the G&A section.

Steve Myers - Jefferies


Kevin Gorman

So, I think, if you stay in that $4.5 million to $5 million for the G&A, it should be in the ballpark.

Steve Myers - Jefferies

Alright, perfect.

Kevin Gorman



And it appears at this point, we have no further questions on the phone lines. I'll go ahead and turn it back over to Mr. Gorman for further remarks.

Kevin Gorman

Thank you very much. I really appreciate all of you participating today. As you can see, the GnRH program is moving along very well. We are anxiously awaiting the 603 data. That is going to be a very big event for the company when that comes through, it's right on track, we couldn't be more pleased with the way the study is closing out and the way that it's been conducted to date.

Chris touched upon the intangibles there. The feedback that we are getting from the investigators naturally, through them, the patients that are being treated wanting to have access to this drug that's very gratifying for us.

Also seeing how quickly the 702 study is enrolling, and Chris didn't talk about that, but so far the dropout rate, if you can say anything about it at such an early stage, is very low as we are looking here and that probably has to do with the fact that there's only elagolix and the placebo arm in here, there is no Depo-Provera going on.

So, the other programs are also on track and we are really looking forward to getting back in touch with you in September when we have the 603 data in hand. Once again, thank you very much for your time today. Good bye.

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