Neurocrine Biosciences' CEO Citi 2012 Global Health Care Conference (Transcript)

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Neurocrine Biosciences (NASDAQ:NBIX) Citi 2012 Global Health Care Conference Call February 29, 2012 11:00 AM ET


Kevin Gorman – President and CEO

Kevin Gorman

Thank you very much and thank you to Citibank of giving us the opportunity to present here today. Before I get started, I put up our safe harbor statement here and I direct you to our recent SEC filings, our 10-K, we'll be making forward-looking statements throughout this presentation and that would show you a detailed level of the risk factors for the company.

2012 is going to be a very event driven year for us. We're going to have four Phase II clinical trials reading out, three of them are going to be in our two lead programs. There's going to be a Phase II reading out at the end of the year and our uterine fibroids program and then in about three weeks we anticipate releasing the results of our Phase II clinical trial in VMAT2 in schizophrenic patients. That's a two week long study. We'll then be starting up two Phase IIB studies this year in our VMAT2. We'll then be starting up two Phase II b studies this in our VMAT2 program large Phase IIB I one schizophrenic patients that will start up mid-year and we'll also read out at year end a second Phase II will be starting up in Tardive Dyskinesia but this time in bipolar and depressed patients, that will read out in approximately Q1 of next year. And then next year we will then have our Phase II meeting with the FDA and start our Phase III program in Tardive Dyskinesia.

In addition, this year we plan on having the data from our Phase II euro court in two programs in acute congestive heart failure that's with our collaborators in New Zealand. If that program turns out to be very positive, it's an area of focus for us in the longer, we will then look for a partner and out license that to acute cardiovascular program and then in addition this year we plan on having ready for an IND new novel molecule from one of our internal research programs. Our research has been very productive this past year and we look forward to bringing a new compound into the clinic having nothing to do with any of the other programs that we have ongoing right now.

So today I'd like to briefly talk about our lead program Elagolix. Again, a first clap opportunity with a number of advantages over the drugs that currently exist for endometriosis and I won't go into all of those advantages, this is truly first in class opportunity and this is also a pipeline within a program. You'll see that theme a bit more as I go on in these primary indications that our partner is taking us into endometriosis and then they have it in Phase IIs and Uterine and Fibroid. There is a number of other women's health opportunities here anywhere from assistive reproduction therapy to polishes stickle viracle variance germ and is only listed about six or seven on this slide that there's a couple of dozen that can be taken into. And we have a robust follow on that are in that Abbott tense that can be taken into men's health or into oncology indications and women health.

The current activities is what Abbott is doing right now is they have a series of very successful types of meetings with the FDA culminated ended December last year and at that point Abbott and as we've announced the Abbott and the FDA that there would be a filing of an SPA in order to basically memorialize all the agreements that were reached through those meetings. And so that SPA was filed with the Abbott with the FDA there is a 45 day clock on that. So mid-March is when we anticipate hearing back from the FDA. Abbott is currently poised to then submit that final protocol to the IRBs in all the clinical trial sites that have been identified and contracted and ready to start in the Phase III program.

So moving on from our Elagolix program which is moving forward, I'd like to spend the rest of this time talking about our VMAT2 program. This is wholly owned by Neurocrine, I'll state right from the beginning that we plan on keeping this program to ourselves and commercializing ourselves in the United States at the appropriate time. We'll look for an ex-US partner.

Now here again, is a program, a pipeline within a program. VMAT2 is a very attractive target for a number of moments to sort. The first one we're going after is Tardive Dyskinesia. Tardive Dyskinesia is an irreversible movement disorder by and large that is caused by the anti-psychotic drug both typical and atypical antipsychotics.

Our next program that we hope to have our first demand studies this year is Tourette's syndrome and this is yet another movement disorder primarily in adolescence that this found. And something that I am going to touch on at the end of this talk is some work that we've been doing that further bolsters the promise that perhaps while we're treating schizophrenics for their Tardive Dyskinesia with our drug, that we may also be able to be an effective treatment for the underlying symptoms of schizophrenia itself which should be a very nice upside for this drug and for the patient population.

Now Tardive Dyskinesia is actually a debilitating side effect from the anti-psychotics. It leads to discordinated involuntary movement, primarily of the mouth, the jaw and the face. It also does affect trunk and the limbs. It leads to impaired eating, breaking of teeth. Very difficult to swallow. It leads to shortness of breath, makes it difficult for these patients to breath, effects their speech profoundly and all of these can lead to yet a further social disability for these patients. This is not a cosmetic disease. This is one that has true implications for their health and their ability to function in society and there really is nothing out there to treat these patients.

Now the epidemiology in Tardive Dyskinesia is approximately 500,000 patients in the United States, interestingly enough now, the vast majority of them are on atypical anti-psychotics. Only about a quarter of them are on the typical anti-psychotics and then interestingly enough, more than 50% of the patients who suffer from Tardive Dyskinesia are not schizophrenics, they are bipolar or major depressed patients. So while atypical anti-psychotics have a much lower incidence of causing Tardive Dyskinesia that is offset by the much more widespread use of the atypical antipsychotics now outside the schizophrenia and into indications and depression.

So let's talk a bit about the target that we have here. And the target is an intra-cellular target and importantly it's pre-synaptic. That makes it very different in dopamine modulation and any drug that is currently being used in Tardive Dyskinesia or as an anti-psychotic. All of the other typical and atypical anti-psychotics are post Symantec and they hit one more of the dopamine receptive. Here we're working pre-synoptically and specifically intra-cellularly. At transporter which is called the vesicular monoamine transporter 2 or VMAT2. It is coupled to a proton linked ATTA and what it does is it moves dopamine and other monoamines by preferentially dopaimines that is being synthesized of cytoplasm into this vesicle and then the vesicle fuses with the membrane and releases it into the synaptic clasp. This is a normal VMAT2 picture here where you're seeing dopamine being synthesized in the cytoplasm. If it isn't rapidly packaged into these vesicles by VMAT2, that dopamine is then readily degraded. Released into the synaptic clasp where its then interact with its dopamine receptor.

Now as I said, all of the currently available antipsychotics that are out there, they interact post-synaptically as those receptors. In a part Tardive Dyskinesia patient, the passive psychology here is quite dramatic. There is tremendous amount more dopamine that is now being produced in the cytoplasm. A lot of it is being then packaged by VMAT2 into these vesicles and then quite a bit is now being released into the synaptic clasp and you're seeing also an up-regulation of the dopamine receptors post-synaptically.

Our drug shown in green here in this space filling model is a pure antagonist of the VMAT2 molecule. It then down regulates the ability of VMAT2 to be able to package dopamine and the other monoamines. So what our goal with this program is to go from this passive psychological state here with the massive amount of dopamine that's being packaged and then released into a more normal psychological state where there is less dopamine packaged and you're normalizing the amount of dopamine that is being released into the synaptic clasp. We're not looking to stop it; we're looking to normalize it.

Our lead molecule here NIB98854 has gone through a large battery of preclinical testing now. It is very potent as VMAT2 and highly selective for just the VMAT2. We've tested it at over 100 other receptors and transporters and it has greater than 100 fold selectivity. It is a dopamine depletive here and intended to be. It’s a very well behaved drug. Doesn’t appear that there's going to be any drug interaction risk here. The drug has an elegant metabolism meaning that it metabolized by a number of enzymes so therefore it's not reliant on any enzyme, its neither inductive nor inhibits the enzymes. So we shouldn’t have any problems with the other drugs that patients take confidently with this drug.

We’ve done a full battery of geno-toxicity and this drug proves clean on all those, the aims and the in vivo micronucleus. We then extensively studied it for cardiovascular side effects. It is negative on herd. We have done a full dog 2TC profile. It's clean there and also we have monitored patients, normal healthy, volunteers, approximately for 24 hours with 12 lead EKGs in there is no signal there for ATCT prolongation.

In December, we had reported that we completed our three months toxicology in rat and dog and those turned out to be very nice and clean. We've also done the Seg 1 and Seg 2 development of reproductive studies, those turned out nicely, we're getting ready to do the Seg 3s with Seg 1 and Seg 2 done, we're now able in the two Phase 2B study so it will be starting up later this year, we will be able to go into women so far without having those well we had those we had this next, the study that we poured on out in Phase III, we have women in there also.

So some total to date we've treated now, this slide is a bit dated, we've treated over 80 patients with our VMAT2 inhibitor. However, we have been limited by only having two week toxicology until very recently, so the patients have only been treated for two weeks maximum with the drug.

It's been very well tolerated. The adverse events that we see in our Phase I and Phase IIs are just those that you would expect from any CNF acting drug, there is some drug that's there. In the Phase Is when we pushed the dose high, we see what we would expect which is an exaggeration of the pharmacology which is lethargy and sedation.

Now the scale that we use for efficacy with this drug is one that's been around since 1975 and in our discussions with the FDA, it’s the scale that they want us to use in our efficacy trials, it’s the abnormal involuntary movement scale or AIM for short. It's an assessment that has been done by the clinician. It looks at seven body regions and gives a zero to four scales on each of those body regions. There are four of them for oral, facial, movement, there is one for arms, one for legs and one for trunk movement and there is a global assessment that also given by the investigator.

In our small Phase IIA study that we reported on last year, where we had six patients with Tardive Dyskinesia, these were schizophrenic patients, they were treated for 12 days with the drug. At baseline they came in and they were moderate to severely suffering TB patients. They had aim score of approximately 14 and within 12 days of treatment, that had a greater than 40% reduction, they were down to approximately 8.5 on the aim scale. When they were taken off drug, within seven days, their symptomology returned nearly too normal, they were approximately 13. This was a very significant, you can't say anything about statistics but from a clinical standpoint, this is greater than any other drug that we've been able to show in Tardive Dyskinesia and they are faster only 12 days treatment with the drug.

So we were very encouraged by these results. Based on that, last year we started a Phase II study, now it’s two weeks long as usual because we started this up before we had a three months talks done, but here we're going against placebo for the first time. We chose two doses of VMAT2 98854 inhibitor and here is the schematic of this trial. The patients come in and they are given a name score the day before they start the trial, that's their baseline, that score is only used in order to admit them in trial. Then what they do is, they are either on placebos for two weeks and then given a name score at the end of that two weeks which will be day 15 and then they go on drugs for two weeks and then given a name score after that which will be day 29.

The patients are their own control. So it's going to be day 15 name score versus day 29 aim score and as you can see here the first two weeks of either placebo or drug followed by either placebo or drug.

32 patients was for this design, eight patients in each. Enrollment went very well. We weren't able to close enrollment in time so [Audio Gap] seven patients in the trial. The trial is currently complete and as I said we are now in the process of closing down the study and we will have results in approximately three weeks from today.

I have a high degree of confidence that that trial is going to turn on positive with a positive study there, we then plan on approaching the FDA laying out the full program to them again at that point in time and then starting up two Phase IIB studies this year, the first one in schizophrenic patients and the second one in bipolar patients. Yet once again, the primary endpoint is going to be aim score in each one of these. The first study is going to read out December, the second study as I said would read out in the first quarter of 2013 with those two studies under our belt and positive we will then move into Phase III next year.

Now what I'd like to do is just spend the remainder of our time on some recent preclinical data that we generated that really gives us a lot of hope that there is some upside to this compound and this mechanism for treating the underlying symptom of schizophrenia and not just with amnesia and that is generally in psychiatric diseases there are no good animal models of depression or anxiety but for schizophrenia there actually is a highly predictive translatable animal model and it's called the pre-pulse inhibition model. It's in wrap and if we can just start here and it translates very well to humans and that's why you see in this slide both a human and a rat and what this is, is that you give an intense found to the subject other than the animal, the human and you will see the rat jump or you will see the human as their face has electro (inaudible) ELCs I'm startled to this intense sound and you get this response, a nice large response, that's what a normal animal and human showed.

If milliseconds before that intense sounds, you give a pre-pulse, a fond of shorter duration and smaller intensity and then give the loud sound, you get this pre-pulse decrease less of a startle that takes place. That's a normal situation. Now this rat strain, a PPI rat strain that exists or rats that have been treated with PCP, you don't see this normal decrease if you give that first pulse. They still startle just as badly as they have never gotten that first pre-pulse. The exact same situation is in schizophrenia patients. Their startle mechanism stays just as high whether they've gotten that pre-pulse or not. Except when you give [Audio Gap] anti-psychotic either the atypical or the typical and then you see the normalization down to this pre-pulse in addition that they have. There is no antipsychotic that doesn't show this and you don't find any reports in the literature of a drug that did show this pre-pulse inhibition and yet did not work in schizophrenia.

So we contracted an outside lab to run this model for us in this PPI strain of rat and here is the data here, the gold stand of the haloperidol so they ran it with and without haloperidol and you see that haloperidol gives you a very nice reduction in that startle reflects there, approximately a 60% reduction in the startle reflects and when you look at our VMAT2 inhibitor, you see a very nice dose response and at approximately the same exposures, ours is given orally actually haloperidol here is given IP, you see a response that is equivalent to the gold standard of haloperidol. That's very encouraging to us along with the fact that just mechanism of normalizing dopamine receptors, you could have an effect on the underlying symptoms of schizophrenia. Why would that be important well as even the FDA division director had to said to us in our pre-IND meeting, saying you know this mechanism could have this effect, so what they would like to seek is if we are able with these TD patients with schizophrenia can we down (inaudible) their anti-psychotic while they are on it and that would be very nice seeing how very often there is intolerance to the anti-psychotics and if you can now reduce their exposure that would be a very good attribute of this drug.

So here again in summary, our VMAT2 program again is a pipeline within a program, lead indication of Tardive Dyskinesia and then we hope to go into our first in human studies in Tourette's Syndrome a little later this year. There are other additional indications, there is Tardive Dystonia, the career associated with Pennington's disease and then lid [Audio Gap] induced Dyskinesia but these are going to wait as we explore first these two diseases and rapidly move Tardive Dyskinesia in the Phase III clinical trials.

As with all of our programs, we demand that we have a very strong patent at stake. We have composition of matter that's issued in the United States and that we receive notification of issuance throughout Europe. The composition of matter patents on 98854 expire in 2029 in the United States and that does not include up to five years of patent term extensions so we have quite a long period of exclusivity here. We've also filed on a number of other patents not only for methods they use for this compound but an extensive backup program that we have here and then patent sensing around this to make it difficult for competitors to be to around our drug.

And finally, financial highlights, as per our guidance, we ended last year with approximately $130 million in the bank. Also in January of this year we did a fund raising and raised over $80 million that we netted out in to there. We plan on having a $40 to $45 million gross burn throughout the year and so our guidance is to end with a very healthy cash balance. We will end 2012 with approximately $170 of cash in the bank. So once again we have very event driven year this year with four Phase II trials reading out moving our VMAT2 program forward, our partner Abbott getting data on uterine fibroids and starting up the Phase III program and endometriosis and then also any upside that we might be able to garner from our year according to and moving this program VMAT2 in the turrets.

I thank you for your attention and happy to take your questions in the breakout room which I believe is the Duke of Windsor up on the fourth floor. Thank you very much.

Question-and-Answer Session

[No Q&A session for this event]

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