Jane Sorensen - Head, IR Kevin Gorman - President and CEO Tim Coughlin - CFO Chris O’Brien - Chief Medical Officer.

Geoff Meacham - Barclays Anupam Rama - JP Morgan Charles Duncan - Piper Jaffray & Co. Robyn Karnauskas - Deutsche Bank.

Good day, everyone and welcome to today’s program. At this time, all participants are in a listen-only mode. [Operator Instructions] Please note this call may be recorded. I will be standing by if you should need any assistance. And it’s now my pleasure to turn the conference over to Mr. Kevin Gorman. Please go ahead, sir..

Thank you very much, and good morning, everyone. Thank you for joining us on the Q1 earnings call. Today, I’m joined by Tim Coughlin, our CFO; and Chris O’Brien, our Chief Medical Officer. Before we get started, I’d like Jane Sorensen to read our Safe Harbor statement, please..

Good morning. I want to remind you of Neurocrine’s Safe Harbor caution. Certain statements made in the course of this conference call that state the company’s or management’s intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements, which are subject to risks and uncertainties.

Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements is contained in the company’s SEC filings, including but not limited to the company’s Annual Report on Form 10-K and quarterly reports on form 10-Q.

Copies of these filings may be obtained by visiting the Investor Relations page on the company’s website, www.neurocrine.com. Any forward-looking statements are made only as of today’s date and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

Kevin?.

Thank you, Jane. So we’ve had a very successful and busy first quarter. So let’s get into it. And with this, Tim is going to start out with the finances..

Okay. Good morning, everyone. Thank you for joining us in our first quarter 2015 earnings call. As Kevin said, we had a very productive quarter on all fronts, excellent progress in the clinic, a new collaboration agreement in Asia and successful follow on financing.

We ended the quarter with over $0.5 billion in cash investments and receivables and very strong financial position. Our loss for the quarter is $1.2 million or a $0.01 per share. This compares to a loss of $11.8 million or $0.17 per share for the first quarter of 2014.

There are two main drivers in our financial results when comparing the first quarter of 2014 to that of 2015. The first was the significant increase in overall research and development cost led by a $6 million increase in our external development expenses related to our VMAT2 program as your [ph] CAH program.

During the first quarter of 2014, we’re in the final phases of winding down our Phase II program for NBI-98854 and preparing for an end of Phase II meeting with the FDA. Contrast that to the first quarter 2015 where we’re in the heart of our Phase III program.

External development cost for VMAT2 or $5.2 million for this past quarter versus $600,000 in the first quarter of 2014. Our CAH program also saw an increase in external development cost increasing by $1.2 million to a spend of $1.5 million in the first quarter of 2015.

Additionally, we added to our headcount in R&D over the 2014 levels to fully exploit our pipeline adding key regulatory CMC and clinical personnel over the past 12 months to manage our growing pipeline. We also had an increase with stock option expense primarily driven by higher Black-Scholes valuations.

A number of annual equity awards is down substantially over the prior year. However, the recent increase in our stock prices yielded a significantly high Black-Scholes valuation for these awards and that’s a higher non-cash expense for a lower number of awards.

Looking forward, we expect expenses to increase in each quarter for the balance of 2015 as we continue to execute on our pipeline including moving NBI-98854 to Phase III development, finishing our two congenital adrenal hyperplasia clinical trials for CRF antagonist, completing our Tourette study and bringing in another compound into the clinic.

The second significant item impacting our P&L for the quarter was license fee revenue over the new Mitsubishi Tanabe agreement. Under the terms of this agreement, Mitsubishi paid us $30 million upfront for rights to NBI-98854 in Japan, China, South Korea and other select Asian territories.

Approximately two-thirds of this upfront amount or $19.8 million was allocated to the license and technology transfer and recognize this revenue in this first quarter. The agreement also calls for up to $85 million in milestones to be paid Neurocrine as well as a royalty on sales on the Mitsubishi territories.

Additionally, Neurocrine will, if requested, perform a clinical trial in patients with Korea associated with Huntington’s disease. If conducted, this 100-patient trial is expected to cost approximately $12 million and the remaining one-third of the upfront payment or $10 million is allocated to performing this trial.

In February, we raised a net of almost $271 million to a fully marketed equity stock offering to replace 8 million shares of our common stock. We launched our offering on February 17th and priced the following day. After one day of marketing, this offering was multiples oversubscribed with high quality long-focused investors.

Across the board, a very strong quarter highlighted by excellent progress in the clinic and ending the quarter in a very strong capital position, the best ever for this company. I’ll conclude my prepared remarks here. For those looking for additional details, we’ve planned to file our Q later today. And I’ll turn it back over to Kevin..

Thanks, Tim. Yes, as Tim said, we now have the cash run rate to take and follow the way to commercialization. What we are doing right now is we are affecting all of our clinical programs for this year.

We have a wealth of data that is going to be coming out starting in the second half of this year, not only from us but our partner, AbbVie, on the elagolix program.

Now, in addition to Chris’ group being extremely busy, as you’ve seen our business development group has brought in a very good partner with Mitsubishi Tanabe, and we welcome them onboard in this program. And we look forward to working with them for the next several years on this program. It seems like a long time ago, but it was this quarter.

But AbbVie published or announced the data from the first Phase III clinical trial which was very successful and really helped to kickoff the success that we’ve seen throughout this quarter, both in the stock and with that program, as they continue to move it forward expeditiously, you saw that they post-enrollment in the Phase IIb in uterine fibroid.

And we look forward to them announcing data on that later this year, in addition to the second Phase III trial which should be completing up towards the end of this year also. So what I would like to do right now is turn it over to Chris O’Brien and he can give you more of an update on our clinical programs.

Chris?.

Thank you, Kevin, and good morning to all the participants here in the call. So Kevin just gave you the updates from AbbVie regarding the elagolix program for endometriosis and the uterine fibroid Phase IIb program. So I’ll focus on our activities internally.

The largest effort of course is in the VMAT2 program, specifically, the tardive dyskinesia Phase III trials that are currently underway. There are two Phase III studies called, for shorthand purposes, Kinect 3 and Kinect 4. A Kinect 3 study is the final placebo-controlled efficacy trial prior to NDA filing. The study itself is going well.

We initiated the first site for recruiting last fall and bringing on site as we went in through the winter. And now the enrolment is going extremely well. I’m very happy with the high quality of subjects that are being enrolled and the participation of approximately 70 investigative sites, not only in the United States but in Puerto Rico and Canada.

We have four Canadian provinces participating in this trial. And very happy again with the progress that we’ve made. We flip forward to enrolling the last subject in this trial sometime over the next couple of months. And as reported, we would then have top-line results in the second half of the full year.

As part of this process, we obviously monitor very closely the safety of this trial. We do have a product safety monitoring board and independent group of experts who have told us that we can continue the trial. There’s no focus symbol [ph] at the present time.

And we continue to have a good relationship with the FDA with respect to a good communication afforded to us under the breakthrough therapy designation for this program. The Kinect 4 study continues on as well. And this is an open label from your safety trial. This program began in April and we all continue in parallel with the Kinect 3 study.

The second effort with the VMAT2 program of course is the Tourette syndrome program and the T-Force trial is a Phase Ib study that is currently underway, recruiting both adolescents and the pediatric children into this trial. The ages range from age 6 through 18. This study is midway to completion.

And as previously announced, we look forward to reporting top-line results in the second half of this year. Kevin did mention the Mitsubishi Tanabe partnership. We’re pleased to be working with this team in Japan.

And as mentioned, if requested by Mitsubishi Tanabe, do it to help support their efforts with NBI-98854 for Asian development, in particular, a possibility of doing a Huntington’s disease clinical trial to support their registration in mixed agents [ph] in Japan.

We would potentially conduct this study for Mitsubishi in the United States to support their Japanese filing if requested.

The corticotrophin releasing factor program for congenital adrenal hyperplasia, as mentioned, there are two small trials that have been designed and that process has started, though, new news at the moment, we look forward to reporting some top-line results in the second half of the year for this condition affecting kids and adults with this adrenaline gland deficiency.

So intense amount of activity with the VMAT2 program. We are building considerable momentum with the Kinect 3 trial. Looking forward to reporting results in the second half of the year. And with that, I’ll turn it back over to Kevin, and look forward to any question..

Thanks, Chris. I couldn’t be happier with the way our programs are progressing right now. You heard financially from Tim, we’re right on track with the guidance that we gave at the beginning of the year.

Chris and his team are doing an excellent job, actually ahead of schedule where we had laid out the Kinect 3 and the Kinect 4 and the T-Force trial to be. So we’re very much looking forward to all the data that is going to be coming out of the clinical group.

I’m also very pleased we have a new head of regulatory that we brought on approximately six months ago, Malcolm Lloyd-Smith, and working with Chris. He’s done an excellent job in transitioning now all the regulatory responsibilities in the regulatory group over to him.

And between him and Chris with the brave new designation we continue to have just very fruitful and productive conversations with the Division of Psychiatry. So that entire program, the VMAT2 program, is doing quite well right now. And as I said, I couldn’t be more pleased. What I’d like to do is open it up for questions for myself, Tim, or Chris..

Thank you. [Operator Instructions] First we’ll move to Geoff Meacham with Barclays. Please go ahead. Your line is open..

Hi, good morning, guys, and thanks for taking the question. I had a question on VMAT2. It obviously makes sense to go into Huntington’s chorea versus tardive or Tourette’s, but what are the subtleties from an endpoint or from a mechanism standpoint when you look at this indication versus the others? And I have a couple of follow-ups..

Chris, why don’t you take that one?.

Sure. Thanks, Geoff. There’s a lot of subtleties. I mean, the VMAT2 inhibition is a very sensible target for hyperkinetic disorders. Obviously these are all targeting dopaminergic pathways in the striatum. And VMAT2 inhibition can be successful in reducing chorea tics, dyskinesia and other hyperkinetic movements.

So the main point is making sure you have the right study design and the right doses selected for a program. And the beauty of NBI-98854 is a once a day drug with a 20-hour half life, so it reaches a steady state with a very narrow kind of peak to trough so-called cmech-cmen [ph] ratio.

So that gives you a very nice exposure in the targeted range without having excessive exposure or variability. And it’s a once a day dosage and makes it very convenient for the patient. So for the record, we hadn’t chosen Huntington’s as a target.

We were after to make sure [ph] that medical needs of tardive dyskinesia and then following it with pediatric indication in Tourette’s in the U.S. But our partners in Japan are targeting Huntington’s disease as their initial indication. So that’s something - and we’re happy to do parts of both the activities..

Got you, okay.

And then, Chris, outside of the one-year safety and obviously the Phase III - for the Phase III for tardive, what are the other gating factors with respect to the file the NDA for next year?.

Well, as we’ve mentioned on previous calls in the three big components of an NDA, the clinical, the non-clinical and the CMC manufacturing have all moved forward in parallel. And the expectation is that we will submit the NDA in 2016.

And given that we have both Fast Track Designation and a Breakthrough Therapy Designation, it allows us to submit these three components in a rolling fashion. So you would expect to see us submit the - as I say, submit the non-clinical pieces ahead of the clinical pieces.

So really, it’s the lead-out of the final clinical data that is the gating factor for getting this NDA..

Yes. And, Geoff, just to add on there, as I talked about how Chris and his team with the clinical aspect of this is right on target, if not ahead of target, that the same is true for the pre-clinical work and our CMC. We’re moving forward with both of those on target..

Okay. Thanks, guys..

Thanks, Geoff..

Thank you..

Thank you. We’ll take our next question from Ian Somaiya with Nomura. Please go ahead. Your line is open..

Hi, good morning. It’s Matthew on for Ian. I was just wondering if you could help us think about the longer term impact on Elagolix on bone mineral density based on the six months Phase III data. Specifically, can you help set expectations for the extension data and ultimately the label? And then I have another follow-up as well, please..

Yes, I’ll let Chris talk about our experience with Elagolix at the 150 milligram dose. And as far as label, there I think really is premature for us to speak about that - nominally premature for us to speak about that because that’s something that would be in consultation with the FDA and negotiations with them.

But all of that will fall to our partner AbbVie. And so I would leave that for them to answer at the appropriate time.

But, Chris, why don’t you address what our expectations would be?.

Sure. I mean, not much to add to that in that we have experienced with up to six months of treatment at the 150 milligram dose of Elagolix than as we’ve reported both in readings [ph] and in manuscript journal articles. The change that one sees in bone mineral density is very small, really no clinically significant change.

Now, the systems of osteoclasts and osteoblasts that maintain bone mineral density is one that typically in the phase of any kind of hormonal change is one that takes about six months to reach its new homeostatic state.

And so then what you see - in six months, you see the bulk of whatever change, if any, occurs at that time and then a stabilization over the subsequent months. There is obviously a lot of interest in seeing that the one-year data is from the Phase III trials.

We certainly haven’t seen it and obviously we’re waiting to see the results just like everyone else..

Okay, thank you. And just I guess the other question I would ask is, can you guys maybe share your thoughts on the Teva acquisition of Auspex and really in the context of any potential impact that might have on your commercialization strategy for 854? Thank you..

Sure. Teva is a very good company. But at the same time, Auspex was a very good company, too. We designed our program from the very beginning from top to bottom to bring an optimal therapy, both from a safety efficacy standpoint to the sufferers of TD and Tourette’s and their family members and caregivers.

And, really, that is not impacted by the competitive environment. We have begun the process of building our commercial group here. So we will be very active pre-commercially and also very active and I think very successful once we do hit the market.

The drug, I think, is going to stand on its own and we’re going to make sure that we optimize every aspect of this drug..

Okay, thank you..

Thank you. We’ll take our next question from Anupam Rama with JP Morgan. Please go ahead. Your line is open..

Hey, guys. Thanks so much for taking my question. Just a quick one on 98854. Can you remind us how many periodic updates on the DSMB you were getting on to Kinect 3? And also on the safety study, how frequently would DSMB give you feedback on the trial and when we might get the next update? Thanks..

So the updates occur based on number of patients completing. I would expect that I would have another update at our next quarterly earning call and probably the one after that. And that would be - that would cover both Kinect 3 and Kinect 4. The DSMB covers just Kinect 3 because obviously their role is to look at blinded data.

Once the blinded portion of the study is completed, DSMB doesn’t function [ph] in role because the rest of the subjects are unblinded..

Great. Thanks for taking our question..

Thank you. Next we will move to Charles Duncan with Piper Jaffray. Please go ahead. Your line is open..

Good morning, guys. Congrats on the recent clinical and business development progress. My question is regarding 854 and in particular Kinect 3. Chris, you mentioned very high quality patients.

And I know you’ve provided some color on this in the past but can you provide any additional color on the enrolment patterns thus far?.

Sure. So the key to running a trial like this is that you want to make sure you not only have good investigators but particularly with patients who have complex medical problems in probably [ph] pharmacy and that they’re appropriate for undergoing your [ph] trials.

So we have - and we’re [ph] to recruit and enroll the patients with both schizophrenia, schizoaffective disorder, as well as depression and bipolar disorder. The mix of patients is approximately 60% schizophrenia, 40% bipolar disorder.

And we have a screening process that assures us that these patients do indeed have moderate or severe tardive dyskinesia.

It may not be a surprise to you if you’ve done any research in this area that these - actually, some of the difficult patients that sort out, we found that we have to put in place really good screening mechanisms to make sure that the drug-induced movement disorder that these patients have really is indeed tardive dyskinesia and not some other drug-induced movement disorder.

And by having these filters in place and having very careful screening to make sure that these are medically and psychiatrically stable patients assures us that this is an appropriate population.

It’s interesting, it took us a couple of Phase II studies to sort out all those details and find out how to recruit these subjects, where they are, what it is that motivate subjects to participate in clinical trials, et cetera. So no one has done registration trials for TD before and there was no kind of roadmap.

But I think we’ve really made some impacts for TD. And ultimately, I think this is going to be good for patients and families and physicians as we start learning how to better care for these patients who up to today really haven’t had any opportunity of therapy..

And I’m sure the FDA appreciates the nuance.

One additional follow-up regarding the Tourette syndrome program, T-Force, can you share with us potential data timing versus data from Kinect 3? And as you look at TS versus TD, I know you said that the VMAT2 mechanism should work across hyperkinetic movement disorders, but how do you see the risk in these two programs? Are they equivalent or is one higher and what could be the confronting variable?.

Sure. The main risk for TD and TS is not mechanistic. We know we [indiscernible] for hyperkinetic movement disorders. The risk is trial design and execution and characteristics of the primary endpoint of assessment tools. And you saw this with our TD program. We knew this going into TD.

And we want to provide a study design, patient screening mechanisms, scoring assessment tools in order to get that sorted out. I think no one has done that before.

In Tourette’s, it’s interesting that while Tourette’s has been a registration target for the FDA in the past, historically, those were small programs with let’s just say less than adequately controlled trials in the past. And the primary endpoint in Tourette’s is the Yale Global Tic Severity Scale.

And this is a two-week retrospective composite scale that has, shall we say, less than ideal polymetric [ph] properties. But it is the gold standard. It is the validated instrument. And it is the tool that the FDA wants to use.

So we are actually working quite closely with some expert clinicians [ph] and scale and stat [ph] people as well as individuals who have quality assurance mechanisms for applying these scales. And we will take the Phase IB data.

Obviously a study is not powered [ph] for efficacy but it gives us some real-time hands-on experience with our investigators and with scale to learn about how to optimize. So really, as I say, the risk for TD and TS is not mechanism. The risk is to get the dose right and you know how to use the instruments properly.

And for TD, we went through that process, we’re very comfortable with where we’re at, as is the FDA. For TS, we’re in the early stages of sorting that out. But we assume that will go quickly as we move forward..

And, Charles, with respect to the first part of your question on timing is that the TD data will precede the Tourette’s data. The Tourette’s data will be coming more towards the very end of the year..

Thanks, Kevin and Chris for the added color and taking the questions..

Thank you..

Thank you. Our next question will come from Robyn Karnauskas calling from Deutsche Bank. Please go ahead. Your line is open..

Hi, guys. Thanks for taking my question.

So first off, like what is the latest on what you’ve negotiated with AbbVie regarding what you can disclose and when you can disclose data for uterine fibroids? And the second question basically is that with Tourette syndrome, what are you learning in enrolling the trials like you learned a lot with initial TD studies, what are you learning right now as far as how these patients are and what are their issues? Thanks..

Chris, I’ll take the first one. Hey, Robyn, it’s Tim. As far as AbbVie, we actually have our meeting with them in just a little over a month. At that point, we’re going to sit down and start talking through that with them. As you probably saw on ClinicalTrials.gov, they closed down the enrollment for the study for uterine fibroids in the first quarter.

And so it’s six-month treatment period. So we’re anticipating data sometime second half of the year. But we’ll start those discussions in the next month..

Hey, Robyn. It’s Chris. So with the Tourette’s trial, the thing that’s most interesting so far in the T-Force study is that this is a trial with intensive decay sampling. So there’s a lot of blood collection and a lot of assessments. And I thought this was going to be a very difficult trial for recruitment.

I’m presently surprised at the eagerness of patients and families, caregivers to participate. There’s such a hunger for a well-tolerated once a day medication in the pediatric population that families are working closely with our investigators. And so far so good.

So no surprising insights other than the wonderful willingness to participate and the support that we’ve gotten as well from the Tourette Syndrome Association. They are in the process of setting up some new centers of excellence for Tourette’s. And we look forward to collaborating with them as we go forward.

But I’ll also put in a plug for - there’s an international Tourette Syndrome Association meeting coming up in just a few weeks in the U.K. and we will have a presence there as well. So lots of pending - no really huge insights for you as of today but let’s talk again in the fall..

Okay. And just as a follow-up on the uterine fibroids because I think it’s important for everyone.

So what are the bookends for when we could see the data? I know - because just from the experience of endometriosis varied - after you spoke with the company, like is it a possibility we couldn’t see the data next year even though we have the data during the quarter? What are the bookends do you think for investors?.

Robyn, I think AbbVie is on record saying they’d have the data second half of this year. But I’d be more confident providing tighter bookends as we talk through that with them in June..

Okay, cool..

Early in June, and just trying to figure out around that. But that’s going to be more confident in talking about these bookends..

Okay, cool. I appreciate it. Thank you..

Sure..

[Operator Instructions] Meanwhile we’ll move to Brian Skorney with Robert W. Baird. Please go ahead. Your line is open..

Good morning. This is Meg [ph] for Brian Skorney.

I just wanted to ask, what do you guys need to see from the CAH study that would start giving you the confidence to move into a Phase III study? And is it feasible to have this program move into Phase III in 2016? And how much of that pilot study has de-risked [ph] the CAH program in your view?.

Chris, why don’t you take that?.

Sure. So the pilot study obviously was critical for us to move forward into this next study. What I would look for particularly from a repeated dose study is that we see a reduction in the biomarkers of interest, namely ACTH, 17-hydroxyprogesterone and androstenedione after repeated dosing.

I need to have that data in hand in order to go meet with the division of - on metabolism and endocrine products at the FDA and work out what does a Phase III trial look like. But until I have that data in hand, I can’t do that.

Now, from a timing point of view, if we have good biomarker data from the repeated dose trial and at the end of this year, as we’ve said, second half of this year, then I would anticipate meeting with the FDA early in 2016 working out a trial design and it is quite possible that we would then start the pivotal registration [ph] trial in 2016..

Thanks..

Thank you. Our next question will come from Christine [ph] calling from Cowen and Company. Please go ahead. Your line is open..

Hi. Thank you for taking my question. Just a quick question on Kinect 3.

I was wondering if you have any idea about discontinuation rates and how do they compare to that of Kinect 2?.

Yes. Good morning, Christine. So the discontinuation rates so far have been quite good. We had built in an assumption of approximately 15% discontinuation during the placebo controlled portion of the trial. It currently is below that.

So we’ll see, obviously until we get to the study for the recruited and enrolled and patient through the primary week’s endpoint. But so far, so good..

Thank you..

Thank you. At this time, I’d like to turn the conference back over to Mr. Kevin Gorman. Please go ahead..

Thank you. Really appreciate all your questions. I hope you see from the probing that you’ve done that as we started out with, the programs are progressing quite nicely particularly our VMAT2 program. We’re very pleased with the quality of the patients that are enrolling in those studies, the conduct of the study.

Our investigators are doing a terrific job. And in addition, I left out the fact that when I talked about how well the programs are going, interactions with the FDA are going well. I left out a real major component that in a couple of programs and dealing our interactions with the advocacy groups.

They’ve been very helpful and we’re forming very strong relationships with them, both in Tourette and also in CAH advocacy groups. And to that point, I’m hoping that all of you have already received an invitation to our analyst day that will be taking place in New York City on Thursday, May 21st, it will take place from 11:30 AM to 3:30 PM.

And we’ll be joined there by several outside experts that can speak to the disease states that we’re heavily involved in right now, TD, TS and CAH and also the endocrine diseases that are for elagolix. So I’d look forward to seeing you all there. If you have any more questions for us, please feel free to contact us after this call.

And once again, I’d like to thank you very much for taking the time with us this morning..

Thank you. This does conclude today’s conference. You may disconnect at any time. And have a great day..