Jane Sorensen - Investor Relations Kevin Gorman - Chief Executive Officer Tim Coughlin - Chief Financial Officer Chris O'Brien - Chief Medical Officer.

Charles Duncan - Piper Jaffray Geoffrey Meacham - Barclays Anupam Rama - J.P. Morgan Evan Seigerman - Deutsche Bank Matthew Luchini - Nomura Paul Matteis - Leerink Cristina Ghenoiu - Cowen.

Please standby, your program is about to begin. Good afternoon, everyone. And welcome to today’s Neurocrine Biosciences' Reports Second Quarter 2015 Results. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask a question during the question-and-answer session.

[Operator Instructions] Please note this call maybe recorded. I will be standing by if you should need any assistance. It is now my pleasure to turn the conference over to Mr. Kevin Gorman. Please go ahead, sir..

Thank you very much, and good afternoon. And thank you all for joining us for our second quarter earnings call. As usual, I’m joined today by Tim Coughlin, our CFO; and Chris O'Brien, our Chief Medical Officer. Prior to starting, I’d like Jane to read our Safe Harbor statement..

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

Kevin?.

Thank you, Jane. Now this has been a very busy and productive quarter for us, and first and foremost, we have been focusing on the best execution possible on Kinect 3, Kinect 4 and the T-Force trial. Again, Kinect 3 and Kinect 4 are our Phase III trials for tardive dyskinesia and the T-Force trial for Tourette syndrome.

All of these trials are enrolling to schedule and most importantly, are enrolling the appropriate patients. Now as we had reported earlier last quarter, our CAH program has a set back after a preclinical finding in long-term juvenile tox study.

Now we are working through this finding with the lead compound 860, as well as bringing two more compounds to the clinic. This is an important program for the company and we are dedicating the appropriate resources to get it back on track.

Now in addition, we have not yet announced and brought through our new compound into the clinical in the first half of this year as planned as we are working through a developmental issue with this. I will have more to say on both of these programs and give you an update later this quarter.

Now, finally, before turning the call over to Tim and Chris, I would also like to say how pleased we are to hear AbbVie’s recent announcement last week on their earnings call that they have completed the 12-month extension of the first Phase III trial in endometriosis.

And as they stated, they saw both efficacy and safety consistent with the six-month time point. This is very promising. Chris will talk in a bit more detail about this and our clinical programs.

Now, in addition to the progress and development that we have also made significant strides in preparing for commercialization for NBI-98854, a very important set of activities that will ensure the marketplace is ready for the first treatment for tardive dyskinesia is being undertaken by our medical affairs group.

We recently hired Bill Aurora as our Vice President of Medical Affairs, and Bill was Head of Worldwide Medical Affairs for Amgen for a number of years and then most recently at Merck. Now, in addition, Eric Benevich has joined us as our Chief Commercial Officer. Eric headed up marketing at Avanir and launched NUEDEXTA.

Eric brings up a really important track record of success in an area that is not dissimilar to TD and has already started several initiatives with sales group that will be crucial to the success of our drugs. Now, at this point, I would like to turn the call over to Tim to give you a financial update..

Thanks, Kevin, and good afternoon, everyone. And thank you for joining us on our second quarter 2015 earnings call. This quarter is fairly straight-forward from a financial perspective. We met our internal financial plan with our year-to-date total expenses being almost to the penny versus budget.

We did, however, exceed our expected quarter end cash target and ended the quarter with over $0.5 billion in cash, investments and receivables, a very strong financial position. Although, we anticipate a continued increase in operating expenses through the balance of 2015, we do expect then this year with over $450 million in the bank.

Our loss for the quarter was $24 million or $0.28 per share. This compares to loss of $13.4 million or $0.18 per share for the second quarter of 2014. Our net loss for the first half of both 2015 and 2014 was $25.2 million.

When comparing expenses from 2014 to 2015 for both the standalone second quarter, as well as year-to-date expenses, we show an increase of $11 million and $20.3 million, respectively. This was primarily due to higher research and development expenses.

R&D expenses in the second quarter increased by $8.5 million for the comparable period in 2014 and are up $16.6 million year-to-date 2015, compared to 2014, $5.3 million this second quarter increase, $11.2 million of this year-to-date increase was related to our external development expenses, primarily for our VMAT2 program.

Recall that during the first half of 2014, we are in the final phases of winding down our Phase II program for NBI-98854 and preparing for -- and holding the Phase II meeting with the FDA. Contrast that to the first half of 2015 we are in the middle of our Phase III program.

In addition to the external development cost personal costs were up both on a quarter and year-to-date basis. We increased our R&D headcount over 2014 levels, adding key regulatory, CMC and clinical personal over the past 15 months to manage our pipeline.

Our general and administrative expenses also increased quarter-over-quarter and for the first six months of 2015 compared to the same period in 2014. The main drivers of this increase in G&A expense are the -- the recent upswing in pre-commercialization efforts in both market research and hiring of certain key employees.

This allowed an increase in share-based compensation costs similar to that we saw in the first quarter of 2015. Across both R&D and G&A, the increase in stock option expense was primarily driven by higher Black-Scholes valuations. The quality of equity awards was down over the previous year.

However, the recent increase in our stock prices yielded significantly Black-Scholes value for these awards and that’s a higher non-cash expense for a lower number of awards. As I mentioned previously, looking forward, we expect expenses to increase in the second half of 2015.

Another significant item impacting the year-to-date P&L was license fee revenue recognized under the Mitsubishi Tanabe agreement that we entered into in the first quarter of 2015. Under the terms of that agreement Mitsubishi paid us $30 million upfront for select rights in Japan, China, South Korea and other Asian territories for NBI-98854.

Approximately two-thirds of this upfront was allocated to license and technology transfer, and recognizing as revenue in the first quarter this year. With that, I’ll conclude my prepared remarks and those looking for additional information, our 10-Q is now on filed with the SEC. And I’ll turn it back over to Kevin..

Thanks Tim. So good financial position. Chris, if you can give us an update on the programs..

Thanks very much, Kevin and thanks both Kevin and Tim for talking about the significant additions to our team members here at Neurocrine.

We are very pleased that Bill Aurora has joined us in Medical Affairs as this is a typical element of successful launch of all programs in tardive dyskinesia partnering with our investigators and clinical colleagues.

Bill and his team will be supporting the medical education initiatives, publications and ultimately a team of medical center liaisons to help support the NBI-98854 effort. Starting out with the clinical programs to date, as you’ve heard from Kevin, the endometriosis progress has been good.

AbbVie has recently made their report but they are very encouraged about the 12-month safety profile and clinical effectiveness of elagolix and the treatment of endometriosis. And as I think, most people are aware, the second Phase III study is ongoing.

AbbVie has indicated that topline results from the second Phase III trial will coming up early in 2016. The uterine fibroid program also is going well. And AbbVie has indicated that the Phase IIb uterine fibroid study has completed enrollment. And this has been posted on clinicaltrial.gov past January.

And we anticipate that they will be reporting results in the third quarter of this year and anticipate Phase III program beginning shortly thereafter if things go as planned. Next program to talk about is the CAH program as Kevin mentioned and as we reported in our recent press release.

We have not proceeded with dosing the adolescent repeated dose studies that we had planned. After discussions with the FDA, based on results from our preclinical juvenile toxicology study, a partial clinical hold has been put in place.

Currently, our research team, both the clinical and preclinical members are working to determine if the questions raised by juvenile tox study indicate a problem with the target molecule, the fact this particular non-human species or the fact that this was development juvenile tox study are the basis for these questions.

The compound NBI-77860 had cleared all prior toxicology work with -- and that had supported the ability to do long-term clinical trials in human adults but no one had done any preclinical juvenile tox because no one was interested in pediatric use of this molecule in the past.

So these studies that were done by Neurocrine indicated that some questions that needed to be resolved, it was this awareness or caution that we put in place led to our discussions with the FDA, the partial clinical hold and our efforts to sought this out.

Obviously, we have been very cautious about this but we’re still very interested in finding a path forward for this orphan indication. And as Kevin mentioned, we have back up on follow-on molecules that have been accelerated into additional studies so we can determine what’s the best path forward and if we need to monitor that molecule or not.

So stay tuned for progress on that. Obviously, the bulk of our activities and very large amount of our excitement is around VMAT2 program both for tardive dyskinesia and for Tourette syndrome.

So for tardive dyskinesia first, there are two studies currently underway that Kinect 3 study which is the placebo-controlled trial, followed by long-term extension and then Kinect 4 study which is the open label one-year safety trial. Both of these studies are ongoing. The Kinect 3 study recoupment process is completing as we speak.

And the last subject, first visit is anticipated actually next week. We are very pleased with how our investigators are doing, they are working hard. We’re very pleased with the characteristics of the subjects that have been enrolled to date. Our drug safety monitoring board is an independent both unblended DSMB.

They have met twice and today, they have recommended both times that the Kinect 3 and Kinect 4 trials continue. We anticipate having the last subject complete the double blind placebo controlled portion of the Kinect 3 study in the late September time period with topline results four to six weeks later depending on how the data comes up.

The Kinect 4 open label study is underway as well as -- again we’re very pleased with the progress of that study. And we are on track for NDA submissions in -- NDA submission in 2016 as planned. The T4 study or The Tourette syndrome Phase Ib study that we mentioned is also going well.

I think as most people are aware, this is a stagnant cohort designed with three adolescent cohorts and three young children cohorts. We’ve completed two adolescent and one of the child cohorts, the third adolescent and the second child cohort are in active dosing phases right now.

And we expect overall that this T4 trial will complete in Q3 as projected and with topline results in the second half of this year. Because of the progress that we’re making with this, we are gearing up for larger longer duration placebo controlled trials in Tourette syndrome. And we anticipate starting those trials would be under this year.

So very pleased with the progress that we are making with the VMAT2 program. I think what I’ll do Kevin is to pause there and leave enough time for questions and discussions..

Thanks Chris. So at this time, we’d like to open up the lines for your questions..

[Operator Instructions] And we’ll go first to the site of Charles Duncan from Piper Jaffray. Please go ahead..

Hi guys. Thanks for taking the question and congrats on the progress in the quarter. My question was probably for Chris is on the VMAT2 program. Kevin mentioned the appropriate patients being enrolled.

I know that I have asked this in past but how are you tracking that and how you feel about progress thus far in terms of the patients being enrolled in the tardive dyskinesia studies?.

It’s a good question. Thanks. The Phase III program includes a couple of key elements. One is that only patients with tardive dyskinesia get enrolled and you say, well that seems kind of obvious. But the reality is drug-induced movement disorders are complicated.

And not all investigators have a broad or deep experience in diagnosing and managing tardive dyskinesia and some of these movement disorders are very unusual in their appearance.

So, we have built in -- as part of the screening process for inclusion and exclusion of subjects, team of expert -- external reviewers that look at screening videos and make sure we have high quality subjects enrolled. And secondly, we have internal monitoring process that keeps track of patient compliance and obviously all the safety factors.

But we also keep track of how well the high definition video, recording of the AIMS examination is done so that only good quality AIMS videos are available for the blinded central raters. And we monitor that on a real-time basis and so far very pleased with that progress.

We’re continuing to have the appropriate mix of patients with schizophrenia, schizoaffective disorder and patients with mood disorder including a biopolar disorder and depression as the underlying psychiatric diagnosis. We said it’s going to be in the 60-40 range, 70-30, something in that area and that is also tracking to plan..

That’s helpful, Chris. Thanks for the added color. If I may just one follow-up and that would be on the next steps in terms of Tourette syndrome.

When would you be in a position, do you believe to be able to talk little bit more about those larger studies that you anticipate perhaps starting by year end?.

Usually, we talk about when we post them on clinicaltrials.gov and get them up and running. It will be right around the time they are ready to go. I mean, there is no reason to hold back information on that..

Okay. Cool. Thanks for the added information..

Thank you, Charles..

We will take our next question from the side of Geoffrey Meacham from Barclays. Please go ahead..

Hey guys. Thanks for taking the question. I was just curios from the AbbVie call, there was incremental delay in the second endometriosis study and I just wasn’t sure. There wasn’t a lot of detail on that.

Just wanted to know if this just had to do with enrollment, or endpoints, or anything more earnest than that with regard to the push out from 4Q to 1Q?.

No. Geoff, there is nothing earnest that’s taking place here. AbbVie has a process that they go through when they close out the trials. We saw this year that they had closed out that first Phase III clinical trial actually in the November timeframe, but they didn’t release the data actually until the second week of January.

I think we cautioned to people as AbbVie had said that they will have the data at the very end of this year on the second Phase III, that back then lead to release of data later than that and go into next year. And I think that’s what we’ve seen is that there is nothing -- to our knowledge, there is absolutely nothing untoward here.

This just seems to be something that I believe was always a possibility and now AbbVie is just getting a good amount of nervous on it..

Okay.

And then uterine fibroids still set for 3Q of this year of the Phase II?.

Absolutely correct..

Okay. Great. Thanks, guys..

Thanks, Geoff..

We will take our next question from the side of Anupam Rama from J.P. Morgan. Please go ahead..

Hey, guys. Thanks so much for taking the question. Maybe just a quick one for Tim.

Just in terms of R&D and SG&A expenses over the next couple of years in the context of what you envision your pre-clinical programs to be, as well as commercial infrastructure and then just a quick clarification question that the CAH program and the nature of this developmental setback for the new clinical program will be disclosed later this quarter? Thanks..

Yeah..

Take the second..

Let me take the second part of it. This is Kevin, Anupam -- is that we are working through both the CAH and for our new clinical program right now. We are working through the setbacks. And yes, later this quarter, we will be giving an update on these programs and where we are in getting them back on track..

Anupam, this is Tim. I would expect for the rest of this year, you would see R&D go up and G&A flat line and the only caveat I would give to that is that we do have some incentive based compensation related to RSUs to invest upon a positive Phase III. So those would come through as a non-cash charge, pending the VMAT2 card turns over.

But for the rest of this year in G&A, it will probably bump up a little bit but not tremendously. R&D would go up.

And what we’ve said for future years is that next year’s cash burn will be little bit higher but you are going to see a shift between R&D go down because of Phase III, it will be winding -- we will have to complete the placebo controlled portion and the G&A efforts will begin in earnest around the medical affairs function as well as the -- starting to build out the sales force piece, see that slip next year.

We haven’t given any firm guidance as far as what next year’s burn rate looks like. But it will be slightly higher than this year, but I don’t think it’s going to be dimensionally higher..

Great. Thanks for taking our question..

Thanks, Anupam..

Yeah..

And we will go next to the side of Robyn Karnauskas from Deutsche Bank. Please go ahead..

Hey. This is Evan Seigerman for Robyn from Deutsche Bank. Thank you for taking my questions and congrats on the progress.

So, can you give us any color around what data will see in the fall for uterine fibroids?.

So, right now -- this is Tim Coughlin. We are actually just starting those discussions with that, as to what level of detail they are going to give out around uterine fibroids. This is an important program to them. So, you will definitely see more than you saw around the Phase IIa, which is simply be going to Phase IIb.

We will update you later on in the year, later on in this quarter once we have those Kinect sketched out. We’ve got a couple of conferences coming up and we should be able to tell you at one of those what the data is going to look like as far as from a disclosure standpoint. Right now, I’d expect p-values and then some discussion around effect.

But we’ve got to finish those discussions without the first..

And then just a follow-up.

In regard to the updates you are supposed to get later this quarter, are we going to get a go-no go decision for the -- on CAH program and then what type of detail are we going to get around the new asset?.

So, I think what you will learn from us is, as I said I think what committed to CAH as a program. Now the question is, will it be 860, or will it be backup molecule or follow-on molecule? Both of those are, as I say, being accelerated.

So I hope to give you some more color on which assets looks like it’s going to be moving ahead, what we’re trying to find the right path with one of those three..

Great.

And then regard to the new asset, are we going to learn kind of the accretion or the tore of timing?.

Yes. And my hope is that what we’re not doing for you is a go no go decision on that, but the path for it..

Okay. That’s what we’re trying to work out. So that’s my hope that what I will be giving you is that leg around this quarter..

Okay. Excellent. Thanks so much for taking the questions..

Thank you..

And we will take our next question from the site of Ian Somaiya from Nomura. Please go ahead..

Hi, good afternoon. And thank you. It’s Matthew on for Ian. Coming back to the elagolix data from AbbVie.

I was just wondering if we -- I guess first just, is there any bone data, and is it reasonable for us to infer given the qualitative comments about safety being the same at 12 months, is it reasonable for us to infer that bone losses is minimal? And then relatively or secondly, can you share maybe your thoughts on when if we don’t know the answer to these questions now, we can expect the data to actually be presented or communicated? Thank you..

Yes. So we have not had our usual in-depth debris by AbbVie on this data yet. So I really can’t add anything more than what both of us have seen that within their call on that.

And that when they said that they were very encouraged and the data was consistent with what they saw in the six months timeframe, which, as Chris had said, the efficacy at six months was very good, the p-value is a 0.001 and that there was a minimal bone loss there.

So we will have to -- before we can comment anymore on this, we would have to have discussions with AbbVie on that 12 months data. And as far as when they would be disclosing any of this data, in our last meeting with AbbVie they were putting together their publication and presentation planning, they were going to be including us in on this.

And that is those meetings are going -- are being planned for later this year, meeting with us on putting together that publication plan..

Okay. Thank you..

And we will take our next question from the site of Paul Matteis from Leerink. Please go ahead..

Hey, guys. Thanks for taking my question. Just a couple on the Tourette study. One is, I know it’s not an efficacy study because it’s open label. So it’s large to show safety in pediatric.

Can you just give a little bit more color on what a good safety outcome is or what unacceptable safety profile would be in that trial?.

Sure. So Paul, there are a couple things in the small two week repeat dose study like this looking for tolerability as the main thing, because we are starting with low doses and then escalating doses through the sequential cohorts.

And so basically, we expect not much out of the lowest dose and then at some point we expect some pharmacologic related side effects, like sleepiness or things like that. I really don’t expect to see a full safety profile that I would get from a long-term Phase II in this population.

So I am basically just looking for tolerability to help give me guidance about which doses I put into my larger longer duration placebo-controlled trial. Obviously in any drug, in any study, unacceptable safety are those things that you don’t want from any drug, hematologic or hepatic, other kinds of side effects.

So far we haven’t seen that with our 854 program and TD or TS, but mostly I am looking for that kind of acute intolerability due to predictable pharmacologically related side effects as if I would use probably too higher dose..

Okay. Great..

So far we haven’t hit that, haven’t had a clear signal yet, but as I mentioned I am in the midst of my third adolescent cohort and second child cohort as we speak..

Great. Thanks. And just one more on Tourette. So I guess today patients are treated off-label with a lot of different things, including nitrobenzene, benzodiazepine or even atypical antipsychotics in some cases.

In this study, in future studies, and I guess in the future when you think about this product in the marketplace, how do you seek in current treatment with other agents being handled? Thanks..

Yes. That’s a good question. So our goal with our Phase II program and ultimately Phase III is to have a patient population that reflects the real world.

And so one assumes that these patients, some of them are going to be on concomitant meds of different classes, as you will know Tourette syndrome patients often have the coexistence of obsessive compulsive disorder and the tension deficit hyperactivity disorder, so ADHD and OCD and many of these patients are on medications for those things.

So we would anticipate allowing these subjects to enroll with our trials and we would be looking at using NBI-98854 in conjunction with currently approved therapies for these patients. Now what I would not expect is that we would allow patients into our trials on the drug with the same mechanism of actions.

So if the child was using off-label nitrobenzene for Tourette syndrome, we would not allow them in the study with NBI-98854, but that is actually rather uncommon, not many kids are using nitrobenzene for Tourette syndrome in the United States right now..

Okay. Great. Thanks, guys. Thanks for taking my questions..

Thanks, Bob..

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

Hi. Congratulations on the progress and thank you for taking my question. Two quick one, so the first one is on TD.

We were wondering if you’ve learned anything interesting from Teva’s recent TD data?.

Well, the only thing I’ve really learned is that not surprisingly VMAT2 Inhibitor can be effective for Tardive Dyskinesia. I don’t think we actually saw much in the way of data. So that’s the challenges. It’s hard to comment on something when there are just isn’t been much data.

We don’t know for example what that baseline scores or what -- any details around the secondary and points that we’re not successful. So, I’ll wait. I love to see a publication. I love to see a more complete data presentation.

Again, we think the drug works with the VMAT2 Inhibitor and we congratulate Teva on their progress for their program, but I don’t really have much data I can talk about..

Yeah. That makes sense. And about the Tourette study, is there anything that you expect to see on the Yale scale for this two-week study and what typically is the length of a trial that would show you some signals of efficacy? Thank you..

Sure. Thanks, Cristina. So you’re talking about the Yale Global Tic Severity Scale….

Yes..

… which is generally the primary endpoint. And depending on the mechanism of action of a drug, you can see change in the Yale within two weeks. Its design to be -- it’s a retrospective composite scale that looks backward. And so, based on our mechanism, we would anticipate a reduction in the Yale Tic score.

Obviously, ours is not a placebo control trial, so I can’t compare it to placebo, but it is not unusual in an open-label Tourette’s trial to see a 20% or 30% reduction of a Tic Scores in an open label trial and so it’s truly tough to assess that.

Ultimately, what you want to see is a true comparison to placebo where you can look at the difference between -- if we had a 40% to 50% reduction in the Yale Score on active and a 30% reduction on placebo than you feel like you really had something.

But that’s the magnitude and there have been some interesting publications recently about the Yale, for example, in clinical trials with Tourette syndrome patient. If they come in with base line, a Tic scores in the 25 or 30 range, our reduction of 4 or 5 points is considered that minimally, clinically important difference.

So, anything less than 4 or 5 points is probably not meaningful or even detectable. And then, as I say, with placebo, sometimes you get a -- even a 30% reduction, just by a placebo effect alone. So something in that range would be kind of your guide post that you’d be thinking about..

Okay.

So, if this particular study does not show the 20% to 30% reduction, is that something you’d be worried about?.

No. Again, because the study is not designed or power to show us anything and it may simply tell you that, my clinical operations team has done such a good job with our investigators and the scale that we’re seeing very little placebo effect, which was actually, potentially be a good thing in the long-term when we run our placebo control trial..

Okay. Thank you very much..

[Operator Instructions] We’ll go next to the site of Brian Skorney from R.W. Baird. Please ho ahead..

This is [indiscernible] for Brian Skorney. I have a couple of questions.

When you think of the commercialization for 854, how much of the factor will service pricing be intermitting your price? I know you’ve talked about the differential pricing between the two assets but what if you’re leaving money on the table, the price that have been discount to Teva?.

Yeah. I think that Teva and before them Auspex had made some statements about price. The statements we’ve made about price is that in responses we would anticipate we would be at a lower price point than that.

But when you really come down to it with a very sophisticated company like Teva, I’m sure that as they get closer and closer to commercialization, they’re doing the work that they need to do as we are also in doing quantitative pricing research. And both Teva and ourselves will be coming out and giving good direction right before each of us launches.

They’re clearly launching in the Huntington's disease first and that is a very different pricing model one would use in Huntington’s that orphan disease than what you would use into the much broader markets of TD and Tourette syndrome. So it’s a bit premature to talk right now in any granularity about the pricing..

Thank you..

And at this time, we have no further question. I’d like to turn the conference back over to Mr. Kevin Gorman. Please go ahead..

Thank you very much. And thank you all for the questions today. What I leave you with as you heard today that the second half of this year particularly the next three months or so, this can be quite a bit of very important data coming out. The Phase IIB trial results from AbbVie and then the Phase III topline data from us in tardive dyskinesia.

We’re very much looking forward to both of those. So there will be a lot for us to talk about on our next quarterly earnings call. And also the conferences that are coming up here in the summer and in the fall. So I look forward to talking with all of you at that point in time. So thank you very much for your attention.

I look forward to getting together with all of you soon..

We’d like to thank everybody for their participation on today’s conference call. Please feel free to disconnect your lines at any time..