Jane Sorensen - IR Kevin Gorman - CEO and Director David-Alexandre Gros - President, Interim CFO and COO Eric Benevich - Chief Commercial Officer Christopher O'Brien - Chief Medical Officer.

Anupam Rama - JPMorgan Brian Skorney - Robert Baird Paul Matteis - Leerink Biren Amin - Jefferies Charles Duncan - Piper Jaffray Ian Somaiya - BMO Capital Tazeen Ahmad - Bank of America Andrew Peters - Deutsche Bank Geoff Meacham - Barclays Phil Nadeau - Cowen & Company Jay Olson - Oppenheimer.

Good day, everyone and welcome to today's Neurocrine Biosciences Report Second Quarter 2017 results. At this time, all participants are in a listen-only mode, later you will have the opportunity to ask questions during a question-and-answer session. [Operator Instructions] Please note this call is being recorded.

I'll be standing by if you should need any assistance. It is now my pleasure to turn the conference over to CEO, Kevin Gorman. Please go ahead, sir..

Thank you. Good afternoon and thank you everyone for joining us today. I'm going to start out, I'll be making forward-looking statements, so prior to getting started. Jane could you please read our Safe Harbor statement..

Yes. Certain statements made in the course of this conference call that are not historical statements may be 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, quarterly reports on Form 10-Q and in today's press release.

Copies of these filings may be obtained by visiting the Investor Relations page on the company's website. Any forward-looking statements are made only as of today's date, and we disclaim any obligation to update these forward-looking statements.

Kevin?.

Thank you, Jane Today I am joined by D.A. Gros, our President and COO, Eric Benevich, our Chief Commercial Officer and Chris O'Brien, our Chief Medical Officer. I assume that everyone has seen our press release that went out about now an hour ago and clearly this has been a tremendous quarter for Neurocrine.

We're seeing great enthusiasm from patient's, healthcare providers for INGREZZA and I do have to say that it is extremely gratifying for everyone here at Neurocrine to see the years of their work come to fruition. Now in this call Eric is going to be talking about the launch and in more detail just a little later.

I'd like to highlight that the sales numbers we report in earnings released this afternoon and demonstrate the need that exists for an effective therapy for TD patients. We do not believe that the demand we are seeing is due to any warehousing of patients or one-time events such as let's say the rollover of patients from our extension study.

And moreover we continue to see strong demand for INGREZZA into this quarter. Now as promised the D.A. will provide the total scripts systems and the net sales for the quarter. And while we're very excited about this, it is still very early days in the launch.

So as previously stated, we're not going to be providing information regarding a gross to net ratio, the number of patients that are under therapy, new scripts versus refilled, nor we will be providing guidance for the rest of the year. Give us time for this launch. Let's get through this year and then we will re-evaluate.

Now in addition to having a wonderful launch, we submitted the F&DA for the 80 milligram capsules and our PDUFA date is October 14th. The capsules are manufactured. They're just waiting for the approval. We will announce pricing, when we launch the capsules.

But as we have stated numerous times, they will be priced substantially similar to our 40 milligram capsules. This is not going to be on a per milligram basis at all. Now in addition to our activities in the U.S.

with INGREZZA our partner Mitsubishi Tanabe has been working quite hard and they will be starting their pivotal program in Asia for TD patients this quarter. Now we're not just INGREZZA at Neurocrine, as many of you know.

So what is going on beyond that, our partner AbbVie has remained committed and on track to submitting an NDA for elagolix and endometriosis later this quarter. And they anticipate reporting top line Phase III data uterine fibroids late this year.

And I will caveat that just the little that I'm sure you'd realize that the holidays really come into play than that might - that might go to very early next year. We continue to make very good progress on our R&D pipeline. And Chris is going to talk about that in more detail a little bit later.

Finally, we significantly strengthened our cash position in Q2 by raising over $500 million through a convertible debt offering in DA's comments he'll go through how that's being handled on the balance sheet. So all-in-all, an outstanding quarter. But at this point I would like to turn the call over to D.A. he'll go through the financials.

He'll be followed by Eric to talk about the launch. And finally Chris to discuss medical fairs and the pipeline, and then we'll open it up to questions.

So D.A.?.

Good afternoon. And let me thank you as well for joining us on today's call. As Kevin highlighted, we had another very productive quarter on all fronts and this is true from the finance perspective as well. The first sale of INGREZZA occurred on May 1st, 2017. During the first two months of launch there were 745 total prescriptions filled.

Our net revenue for the first two months of launch was $6.3 million. We're using a sell-in methodology for revenue recognition. Although, the difference between sell-in and sell-through was quite small since our select group of pharmacies and distributors hold less than one week of inventory.

We do not recognize revenue for INGREZZA's INBRACE program where physicians are able to prescribe sometimes for eligible patients a free trial period of the drug as they initiate therapy. We ended the second quarter with total assets of $754.1 million, including cash investments and receivables of $739.6 million.

These assets include the $502.8 million raised after expenses via the company's convertible notes offering which closed on May 2, 2017. Our loss for the quarter was $60 million or $0.68 loss per share compared to net loss of $14.3 million or $0.46 loss per share for the same period in 2016.

For the six months ended June 30 2017, the company reported a net loss of $138.3 million or $1.58 loss per share as compared to net loss of $59.5 million or $0.69 loss per share for the first half of last year.

Research and development expenses decreased to $21.9 million during the quarter compared to $26.9 million for the same period in 2016, principally due to the completion of pivotal studies for INGREZZA. For the six months ended June 30 2017, R&D expenses were$ 73.8 million compared to $50.8 million for the same period last year.

This increase was primarily due to a $30 million payment in the first quarter of 2017 from our entering into an exclusive licensing agreement with be all for the development and commercialization of a opicapone in the United States and Canada which was expenses in-process R&D.

SG&A expenses increased to $41.7 million for the second quarter of 2017 from $15 million for the second quarter of 2016. For the six months ended June 30, 2017, SG&A expenses were $69.7 million compared to $26.9 million for the first half of 2016.

The increase in SG&A is primarily due to commercialization activities for INGREZZA and in particular the on-boarding of our full sales organization.

And now looking forward starting with revenues, in term of milestones from our partners we expect to receive a $30 million milestone payment from AbbVie in the second half of this year upon acceptance of the NDA for elagolix in endometriosis.

Also in the third quarter of 2017 we expect to receive $15 million in milestone payments from Mitsubishi Tanabe from their initiation of a pivotal trial of INGREZZA in Asia for the treatment of tardive dyskinesia. In June, we amended the lease of our headquarters and extended it until 2029.

As a result, we will now recognize the proximately $9 billion remaining in our deferred gain relating to the sale leaseback of our headquarters which will now be through 2029 instead of through 2019.

Looking forward, regarding expenses cost of product sales is very low this quarter, since the vast majority of the costs related to the initial sale inventory was already expanded in accordance with gap when the product was manufactured prior to FDA approval.

Costs of product sales will that's increase as a percentage of sales over the next quarters as we turn over our inventory.

Correspondingly, the value attributed inventory on our balance sheet is low this quarter and two it will increase through the second half of the year and into 2018 as we complete new production runs and product is capitalized into inventory.

With regards to SG&A while during the second quarter we have seen the largest quarter-over-quarter increase we expect for the year SG&A will continue to increase as the commercial organization further ramps its activities. R&D on the other hand has reverted to a more regular baseline since our payments to BIAL for last quarter was a one-time event.

Turning to our convertible debt and interest expense, we completed a $517.5 million financing of convertible debt in May. This new convertible debt has been added to the balance sheet net of debt issuance costs.

The carrying amount of this debt on the balance sheet will increase through the maturity date of May 2024 when the value on the balance sheet will equal the face value of the debt. This accretion of liability is charged to interest expense over the seven years. In addition, the notional interest at 2.25% is also charged to interest expense.

This new debt will add approximately $20 million in interest expense to our P&L during 2017. Interest payments are due every May and November. So approximately $6.3 million of this interest expense will be paid in cash in November of 2017, while the remaining approximately $13 million are accretes the balance of the long-term debt liability.

The convertible debt was not taken into account when we gave original expense guidance for 2017 so the debt interest expense is incremental to our earlier guidance. Finally, this date was primarily placed with high quality, long focused debt funds.

It has a low coupon, very tight file to offer discounts and a conversion premium at a 142.5% of the market price with a four year no call, three year provisional call provision. I'll conclude my prepared remarks here. But for those looking for additional details, our queue is now on file. And with that I'll turn the call over to Eric..

Thanks, D.A. We have now completed our first partial quarter on the market with INGREZZA. And I'm pleased with the execution and the results of the early phase of our launch.

As I previously described when INGREZZA was approved back in April, we're executing on a commercial plan that is focused on several key strategic comparatives, Educating Health Care Providers or ACP's on the range of TD presentations and patient types.

Building awareness of INGREZZA has the first and only treatment for TD, supporting a patient access through our patient services hub and active engagement with payers to drive broad reimbursement. So let's - let's dive into these topics.

We have multiple types of health care professional awareness efforts underway currently to increase TD recognition and build familiarity with INGREZZA.

The majority of our current promotional efforts are focused on psychiatrists who are the largest segment of the market as well as a numerically smaller but strategically important subset of neurologists that specialize in movement disorders.

To-date specialty sales team has now reached virtually all of our targets ACPs at least ones with tailored messages about TD and INGREZZA. In fact many of our priority targets have been called on multiple times.

Beyond direct personal promotion in Q2, we have a significant commercial presence at major medical meetings including the American Academy of Neurology, the American Psychiatric Association and the International Parkinson's and Movement Disorder Society annual meeting where we hosted exhibits with strong traffic and organized products cyphosia [ph] that drew crowds that were standing room only.

In addition, we conducted a well-attended national broadcast webinar and have conducted local peer-to-peer speaking programs for HCPs throughout the country. These live programs serve as educational forums for healthcare professionals who wish to learn more about TD and INGREZZA.

Today we've been very pleased with the early feedback from the medical community. HCPs and psychiatry and movement disorder neurologists have been receptive to our educational focus on TD and our message about INGREZZA as the first and only FDA approved treatment for TD.

We're hearing from our prescribers that product attributes such as rapid and robust efficacy, the clean tolerability profile, compatibility with common psychiatric medication regimens and simple once daily dosing without complex titration or motivators for initial product trial.

And as a result, we are seeing rather than being prescribed for a wide range of TD patients with varying underlying psychiatric illnesses. Most importantly, we have been receiving many patients' success stories from prescribers across the country where treatment with INGREZZA has already made a meaningful difference for patients living with TD.

With regard to market access, we have already seen reimbursement of INGREZZA across all segments of the payer landscape including commercial Medicare Part D and Medicaid plans. As a reminder, however, it's very early in our launch and payers have not yet conducted formulary reviews of INGREZZA.

We expect those reviews to occur primarily toward the end of this year and into the first half of next year.

In this early stage of our launch, our national accounts team has been engaging with payers to ensure that they - as they conduct their formulary reviews they enact coverage policies that are medically appropriate and consistent with our data and labeling.

In the meantime, coverage for INGREZZA is arranged using a formulary exceptions process featuring prior authorization for non-formulary drugs. In most instances the requirement from the health plan is simply that the HCP complete a prior authorization form confirming the patient's diagnosis of tardive dyskinesia.

In summary, we're off to a strong start and we're excited to be providing a new option for patients living with TD. Our sales team is introduced INGREZZA to their target customers in neurology and psychiatry and they are also educating allied health professionals in community mental health settings.

Our payer account team is educating formulary decision makers about INGREZZA as the first and only medication indicator for TD. Tardive dyskinesia is a completely new market and we are introducing a new treatment paradigm.

It will take time to educate the thousands of HCP's that care for patients with TD and to change their ingrained behaviors that have developed over decades. But we are committed to making a difference for people living with TD and we are energized and inspired by both the initial results of our efforts and the emerging patient success stories.

With that I will turn it over to Kevin..

Thank you, Eric. Just one request here to break in on our, what we're doing here is that apparently conference watch all of the questioners have dropped off the list. So those of you who are going to be wanting to ask a question when we're done with our prepared remarks, could you please queue up again. So sorry about that, thank you.

I see that you've started to queue up right now that's perfect. Thank you, Chris. I am sorry..

No problem. Thank you Kevin and thank you to the participants on the call, the clinical and medical groups continue to be very productive working hard and they're achieving some pretty significant goals. So let me talk through some of these updates.

For tardive dyskinesia of course the focus has moved from running clinical trials to now data analyses and publications of INGREZZA from these studies.

We anticipate over the next six to nine months multiple manuscripts and presentations at various scientific meetings and in particular we're very pleased to focus on the long-term safety and efficacy data, drug metabolism data, subgroup analyses looking at different kinds of response to INGREZZA and specific subpopulations and other topics.

So we anticipate you will continue to see a steady stream of output from the clinical and medical groups.

As Kevin mentioned we're - we're also very excited about the games Mitsubishi Tanabe has made our colleagues there have created a Phase a clinical trial they called the JKinect study which is similar in design to the KINECT 3 trial that we ran in North America.

Tailored for the Japanese audience and this study is getting underway as we speak So very excited about the progress that they've made and we wish them the best in their efforts. Turning to the Tourette syndrome program as I've mentioned on a prior call our analysis of the data have given us a clear path forward.

It was quite evident that we needed to employ higher doses of benzene and we had put into the T-Force green study. We've taken that data and used extensive exposure response modelling to select the doses for the next trial. We've done so.

We've vetted that with our outside experts and consultants and we've taken that final protocol and given that to the FDA for their review and we anticipate starting the next study will be the T-Force gold study beginning in October with anticipated completion around the end of 2018.

Details about that protocol will be posted on ClinicalTrials.gov at the time of study start our usual practice. We have made very good progress with opicapone, catechol-O-methyltransferase inhibitor for Parkinson's disease.

The technology transfer from BIAL our European partner is completing now as we speak and we're putting together the material for FDA review.

We will send in our meeting request shortly to the FDA and we hope to discuss the program requirements with the neurology division as soon as possible given the way the FDA process is meeting the request and sets up formal meetings. We would expect them to grant a date late in Q4 early in Q1 of 2018 for that meeting.

That will give us the path forward for the opicapone program. The Phase I dosing has completed in our Essential Tremor Program and we are now awaiting some of the ongoing preclinical work that was running in parallel to the clinical trials.

These data output that is both the clinical and the pre-clinical will allow us later in Q3 to make some decisions about next steps for the ET program. So keep your eyes and ears open for that. And the Congenital Adrenal Hyperplasia Program with our CRF-1 antagonist is nicely on track.

As you are aware, we recently completed the multiple ascending dose Phase I studies and we are anticipating the Phase II proof-of-concept study in patients with congenital adrenal hyperplasia to begin actually next month in September. A data readout would be expected in Q1 of 2018 from that proof-of-concept study.

Kevin mentioned that our colleagues in at AbbVie are on track with elagolix NDA plan, as they recently confirmed in their public comments information about their previously announced Phase IIIB study with elagolix is now up on ClinicalTrials.gov.

This is that separate project where they're looking at high dose elagolix in combination with low dose add back really nice for us to see is after that excellent New England Journal of Medicine article they had published on elagolix and endometriosis. They have a stream of data output planned at upcoming scientific meetings.

So, really good progress there. And Kevin already touched on the Uterine Fibroids data output later this month. So, all of the clinical stage, our programs are moving along very nicely. We have our preclinical pipeline work continuing to go well with approximately 10 programs underway.

Two of them are in later stage, IND enabling tox studies and we hope to be able to talk about these new programs once the INDs are up and running. So, good progress on the teams, and with that, I'll turn it back to Kevin..

Thanks, Chris. So, now I'd like to open it up for questions..

[Operator Instructions] And we can take our first question from Anupam Rama with JPMorgan. Please go ahead, sir..

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

Are there any trends here, you're seeing in the physician prescribing habits for they investigate it from Connect 3 or prior clinical trials versus the community physicians and any trends in sort of repeat prescribers?.

Yeah, I think Kevin touched on that a little bit earlier in terms of not seeing a pent-up demand or a bolus or majority of new patients coming over from clinical trials. So there's nothing that we can point to.

I think that the trend is that the prescriptions are really coming from where we're focusing our call efforts and they're in line with effort both in movement disorder in neurology, as well as in community psychiatry..

And by the way, Anupam just to be clear though, we're talking about looking at that overall the territories all the physicians that are prescribing. As you know, we are blind to who was in the clinical trials. We are blind to the patients who are actually receiving scripts right now.

So can we just distinctively say how many people from any trial came? No, we can't do that. But, with what we're seeing out there, we're very confident that this doesn't have anything to do really with anyone rolling from a clinical trial over..

I would just put one point on that though, some of the psychiatrists that were our investigators in our clinical trial are absolutely advocates for INGREZZA and TD and they are prescribers of the drug and they are speaking and educating their colleagues. So that's been a good thing..

Right..

Great. Thanks so much for taking the question..

We can take our next question from Brian Skorney from Robert Baird. Please go ahead..

Hey, good afternoon guys. Thanks for taking my question. So also on INGREZZA commercial launch, understanding it is very early where your prior conversations look like in terms of how you expect coverage decisions to look once you go through a formal medical review decisions.

It sounds like it's going pretty well right now in terms of initial prescription coverage, but you know, should we anticipate that the medical review decisions will look as simple as on label approval or is there anything that we should be thinking about in terms of broad or more restricted coverage once we see some formulary associates?.

Yeah. Our goal is to make sure that the policies that emerge from the formulary reviews are consistent with good medical practice with our labelling and with the data from our trials. And so I don't want to predict what formulary access looks like in the future, but certainly that's the goal for our account payer team.

And what we're seeing now is that the majority of instances where there's a prior authorization required is simply to confirm that this is a patient with the diagnosis of Tardive dyskinesia.

And certainly, we've got action plans in place where we may see some divergence from that where we can educate the health plan formulary decision makers, the medical directors and so on. And we've got our colleagues from medical affairs to assist with that.

But ultimately, that's the goal is to make sure that the access to the drug is consistent with our label and so far that's what we're seeing..

And then just if I can ask a follow-up. Just curious I think given that it's early I assume that most of the coverage coming from private payers right now.

But I got to say is that the case, are you seeing any public coverage and at the end of the day what would you expect the private public split to be here?.

Well we said previously that ultimately we expect the majority of the reimbursement to come from government pay. And you know I mentioned in my prepared remarks that we are seeing coverage across both commercial as well as Medicare Part D and Medicaid plans. So we don't expect to see anything different over time.

It may shift a little bit as we sort of move through the launch, but so far coverage really across all segments of the payer landscape..

Okay, great. Thanks guys..

We can take our next question from Geoff Meacham with Barclays. Please go ahead. Please go ahead..

Hi guys. This is an Evan on for Geoff. Thanks for taking the question.

So with regard to the initial demand - what are - what some of the pushback that you're getting from payers and whatnot and physician as well?.

I'm not sure, I totally understand the question. In terms of payer coverage….

No, in terms of pushback from payers.

And then any physician pushback that you are getting?.

Well, let me take - the payer piece first. You know I think - it really is just - the process of going through that a formulary exceptions process that I've described. This is a new drug. They haven't had time to review it and automatically you have to go through formulary exceptions process to get access to reimbursement.

And so from a pushback perspective I would say it's the procedural steps of having to do prior authorization, which were providing support for practices to help with that. So that adds time and that's a step in the process of securing coverage for an individual patient claim.

From a physician perspective, you know, we're not really getting what I would call pushback. We're actually seeing a lot of enthusiasm from the physicians and I think they are very impressed with the efficacy data that we presented.

They are very interested especially in the psychiatry space about this mechanism of action that's really new to the psychiatry. They like the fact that this is a very convenient product that has once daily dosing without a complex titration regimen.

And then it can be used safely with existing antipsychotic or other psychiatric treatment regimens of patients are on. So we're getting a lot of enthusiasm I wouldn't say pushback is part of what we're hearing..

And we can take our next question from Paul Matteis with Leerink. Please go ahead..

Great. Thanks so much. I want to try to and I know you're not giving patients on drug numbers, but I want to try to reconcile the script number reported this quarter with patient demand. My understanding is thus far the scripts are written for the 40 milligram dose and the long-term dose of INGREZZA is 80 milligrams.

So when we think about patients demand versus a script number you are reporting today, is it reasonable to think that most patients for a month's supply would be using two prescriptions today? Or is that not the right way to think about it?.

Let me just clarify that for the labeling the recommendation is that the first week is a 40 milligram capsule one per day and then from Day eight onward its 80 milligrams a day. And what we're seeing is pretty consistent with that in terms of the way prescriptions are written.

Is that answered your question?.

Yeah, yeah it does but logistically if a patient gets a prescription for the drug is there prescription 40 mg single tablet for one week and then to 240 mg tablets for the rest of the month. And how does that work with kind of a net cost of the lack versus what the true net cost is prescript..

So you're - I guess - I want to clarify are you asking if they're writing two separate prescriptions for that first month or sort of if a patient is taking 80 mg grow to three weeks that month does that require?.

Joe I will answer that. That is one that would be one prescription that first that first month of therapy would be one prescription. We have now counted two prescriptions if you will the first seven days and that in the following days afterwards..

Okay. Got it.

So a refill would be 60 pills and for us calculating that we would functionally double the whack and price Rx today is that right?.

So you are you are correct..

Okay. Thank you..

So for a week its 30 day refill would be 60 pills..

Perfect..

Currently using it if the patient is on 80 milligrams and receiving - taking two pills of 40 milligrams every day..

Got it. So that would imply that the amount of inventory revenue in this quarter is less than 1 million.

Is that a reasonable estimate?.

Yes..

Okay. Thank you for clarifying that. And then if I could just ask one other question on patients demand dynamics. What are you seeing in terms of demand from patients with depression versus schizophrenia? Is that is early demand BIAS towards one versus the other..

Yeah I will take it so we're seeing that the physicians and other ACP's with prescriptive authority are prescribing for the types of patients that they manage. That doesn't appear to be any particular pattern. Now I can't say for certain. You know what the numbers are because we don't capture that information when the prescriptions come in.

But ultimately you know in psychiatric settings where they treat lots of patients with schizophrenia or Schizoaffective Disorder you're going to see more prescriptions written for those kinds of patients. We certainly move discover patients are more predominant in office based psychiatry settings. And we're seeing utilization there as well.

So there doesn't seem to be any selection of patients based on their underlying psychiatric illness. It's really based on the degree to which they should be able to identify their TD and their willingness to treat..

Okay. Thanks so much. Appreciate you burn all the questions..

Thanks..

We can take our next question from Charles Duncan with Piper Jaffray. Please go ahead..

Hi guys. Thanks for taking our questions and don't want to overtake this, just wanted to say, really nice start with the aggressive launch, congrats to that..

Thank you..

Wanting to ask you though a question regarding if you've heard any teens from prescribers who are early adopters versus non-adopters thus far and what those are and how do you plant to address those also if you had any goals for the year that you could share with us in terms of the effective sales practices either new prescribers or patients within a prescriber practice, just some color around how you track the revenue effectiveness of the sales force..

Yeah. It's Charles. It's a little early for us in terms of prescriber, non-prescriber analyses..

Yes..

We're still effectively one quarter into our launch. But there's something certainly that we're going to be doing over time. And looking at the dynamics of who's adopted, who's an early adopter and sort of why.

Some of the attributes today I mentioned earlier in my prepared remarks are really the feedback that we're getting not only through our field sales team, but also in direct interactions with customers of why they've decided to initiate treatment with TD patients in their practice.

One thing that we are encouraging a lot with our field sales team is sharing of best practices communication not only laterally within the sales regions, but across regions and also communication with our national accounts team and with our medical affairs colleagues. And so I think that this is a learning launch for us.

We're going to be picking up on what's the best practice. What's scalable and making sure that that we're able to replicate that on a larger scale in a compliant manner as we go forward. And that's part of what we think is going to make us successful being a rather nimble organization..

It's helpful. And then with regard to guidance I imagine it's going to be a while, but could you see a yearend being required to checking confidence and begin able to talk about guidance.

Could you perhaps talk about guidance at the beginning of this coming year?.

It's DA. Thank you for the question. I think right now we're still early within the launch. This is a rapidly evolving marketplace as you know. So as soon as we're able to provide guidance, we will and until then we'll keep considering when the right time to do so is..

And then last quick question for Chris regarding the Tourette's plants, you've mentioned that we'll soon see that first gold kit off I guess in the early part of the fourth quarter.

Wondering if you could give us any color around the patient population and really what's driving the timelines it seems like kind of 2018 data and then a wild, wild cancer which has providing me ample time to get the study done in a good way..

Thanks Charles. So it is a - it's approximately a 12 to 14 month program from an initial investigator meeting getting the sites up and running the recruitment the trial the data readout analysis. I would really like to see it a little faster than that.

That would be a good goal but you know a year a year is for a study like this is I think a pretty balanced position to be between an aggressive goal and a realistic one. And if I can move faster I certainly will, But the population, it's we know the population these a pediatric population, these are six year olds through 17 year olds.

And the excitement enthusiasm by the investigators to participate in this trial has been terrific. The rapid responsiveness of the St. Yes sign me up and get me involved has been really good. So we're excited about the fourth T-Force gold.

And we're actually if my enthusiasm didn't come through about the exposure response analyses that we did in helping us support the doses and going forward I would just reiterate that it is it's really pretty nice data. So we are very excited about this trial..

Excellent. Thanks for the added color. Again, congrats on a nice start and greater launch..

Thank you..

We could take our next question from Biren Amin with Jefferies. Please go ahead..

Yeah. Thanks for taking my questions. Maybe if I could just start on INGREZZA launch.

Can you just - can you describe the proportion of prescriptions written in psychiatry versus neurology?.

I can't give you that proportion Biren, but I can say that - and I've said publicly before that about three quarters or so of our call effort is against psychiatry versus movement disorder neurology, and generally we're seeing uptake across both segments sort of consistent with the promotional effort..

Got it. And then, I noticed that the ICER analysis is ongoing.

Maybe if you could just describe what role the company is taking and what you think that analysis - and how that analysis would influence payer coverage decisions at the end of the year?.

I think, - hey, Biren, Chis here. So two parts to your question. The first part is how the process is going. And so our medical affairs team and our health economics and Outcomes Research Group have been collaborators ICER has offered the opportunity for sponsors to get involved and contribute data and provide feedback.

And so we've been very happy with how our collaboration has been. We've stepped right in and have gotten back and forth. They have their process that they go through and they come out with their assessment.

And it's a challenging role for them because normally when you want to look at what is the cost effectiveness of a treatment, you have - sometimes you have good data to work with. Right? You understand what the disease does economically and what intervention does economically.

As Kevin mentioned before we're going into a market that didn't exist before and TD has been woefully under-study. So it's tough for ICER to get the hands on the kind of quality of life and disease burden kinds of impact that they would like to have. It just doesn't currently exist.

Now as far as how does that influence payers, I'll - maybe I'll turn that to Eric because I've not seen ICER position have - it's relatively new and I'm not sure how much impact that has with payers at the present time but maybe Eric can say something there..

Yeah, it's hard to say. And the reason I say that is that ICER hasn't conducted that many assessments yet in other therapeutic areas. It doesn't appear looking at the assessments that they've done in other areas like multiple sclerosis, psoriasis and so on that has had significant impact on payer dynamics.

But obviously we're going to monitor the results closely and certainly - this is all going on sort of in the background while we're continuing to engage directly with payers..

And last thing I would add is that as Chris has said, we're providing ICER with anything that they ask for. ICER process is one which they can only rely though on published data. And so there is no data or work that we've done that has yet to be published is not data that they can that they can utilize and rely on..

Got it. And then maybe if I could - have a question on the pipeline the CAH program.

Chris, are you enrolling patients with 218 [ph] mutations of deletions in that trial? Or are you going to evaluate based on by biomarker - enrolling base on biomarker levels? And I guess how are you looking at defining a response in that study?.

Sure. Thanks, Biren. So as you are aware some 95% of CAH patients have the common enzyme mutation. We are - genotyping patients but we are not requiring a specific genotype to get into the trial. They have to have CAH and they have to have - the absence of cortisol that's being treated with hydrocortisone replacement.

And they have to have elevated androgens, in particular the biomarkers that we're interested in our 17-OHP. And so that's kind of the - what you needed to get into the trial because what we're measuring is what changes in those biomarkers, - there is no agreed upon threshold of - what's normal or abnormal in a trial like this.

But there is certainly a kind of reduction in ACTH reduction in 17-OHP and [indiscernible] that would give us enough indication do we have the path forward.

Ultimately, what we have to continue to do is have our conversations with the FDA and see if CAH, is this the kind of program that would be like a subpart H where you could use those well-accepted laboratory tests to get a drug approved because that's what clinicians use to manage their patients or do you have to show some longer term clinical impact of the disease that may be a little trickier to measure for which there isn't really clear regulatory precedent.

So where - our discussions today and our plan is that we are using the laboratory parameters as the primary endpoint of these studies..

Great. Thank you..

We could take our next question from Ian Somaiya with BMO Capital..

Thanks for taking my question, and congratulations on a great start. Couple of questions on INGREZZA. First I was hoping I could speak to compliance. Just what are you seeing from a patient compliance standpoint? And what if anything are you doing to ensure compliance going forward.

And that's been obviously one area of concern given the back on disease to the patient population..

So we're not going to get into the detail metrics, but I can I can tell you that from a compliance perspective it's as we expected. I mean it a very early stage and we're still getting lots of new patients at this point..

Okay..

And I'm sorry can you give me the second part of your question..

Well, I mean that's separate question I have for you, the other part of the question was what are you doing in terms of whether those patient assistance, physician assistance to ensure that patients remain compliant in the future..

Yeah. So I can describe our program a little bit, I think that will help..

Sure..

We obviously it's very early in the launch there's a lot of focus on securing reimbursement for new patient starts. But one element that we offer through our embrace program is access to a psychiatric nurse.

So after patient enrolled in the program, they get a phone call from the psychiatric nurse walking - welcoming them educating them a little bit about TD and about INGREZZA and helping them to understand what to expect with treatment. We do a follow up call a couple of months after they've initiated treatment to continue to assess how they're doing.

Answer any questions they might have et cetera. So that I think helps - could help with compliance. So it's a little bit early to make that determination. The other thing I'll mention is that it's not just the INBRACE team, that's contacting the patients. It's the specialty pharmacies.

Each month when before their month supply runs out they're going to get a phone call asking if they where they would like to have their next month shipment sent and this is a phone call from a pharmacist.

So between they contact from the specialty pharmacies and have been contact from the INBRACE program those are elements that can help with keeping patients that are doing well on therapy - on their therapy. But like I said it's awful early yet to make any comments or speculate about compliance..

Okay. And one of the questions I had was just on your marketing efforts outreach to physicians.

Can you just - maybe just stick to the number of your target physicians that you have had conversations with? Just overall awareness of the therapy and how you're attributing - how much of the initial sales that you are attributing to this conversion of these from conversations to do writing of a prescription?.

Okay. So we've said publicly that we have a target universe of approximately 10,000. About three quarters of those HCPs are in psychiatry. I think I mentioned in my remarks that we've visited virtually all of our targets by now and many of them we've seen multiple times.

Our field sales team has been active in terms of cleaning up the target list, meaning they've been adding physicians. They've also been adding mid-level providers that weren't in our target list, such as nurse practitioners and physician assistants both in psychiatry and in neurology.

So how much of the initial prescribing is due to those initial contacts? Hard to say. You know we didn't have any kind of awareness campaign for INGREZZA before launch that weren't coming soon adds or anything like that. So in many instances, before it was approved, many of our current customers hadn't heard of INGREZZA.

So I would have to attribute the majority of these prescriptions to those initial efforts..

Okay. Thank you very much..

Thank you..

And we could take our next question from Tazeen Ahmad with Bank of America. Please go ahead..

Hi. Thanks for taking my questions. I think most of them have already been asked, but I just wanted to get a sense of how you're thinking about metrics going forward. So you've already said that for now you're not providing sales guidance and scripts are obviously being blocked.

Are you considering maybe providing additional metrics in the next few quarters as we try to get a better sense for how to model uptake initially. And then, you talked a little bit about the profile of the patient pool that you have.

But I'm curious to know for doctors who have prescribed INGREZZA has your sales force found that they were already familiar with the drug before having had that point of contact with the sales rep. And then maybe a last question for opicapone.

You talked about putting it together, preparing rather for an FDA meeting, given some events that have happened with FDA recently where they've had early responses to producers in some cases, some companies have no longer have to do certain trials.

How are you feeling about the potential of not having to do a study to get approval for opicapone and just getting approval based on the data that was collected in previous studies? Thanks..

Both cases in. So yes, a lot of things there and we're just going to kind of go round robin here in answering.

It in the first part, one of the metrics that we're going to be giving we'll be discussing that internally and as time goes on we will continue to evaluate whether the metrics if any beyond total scripts and net sales that we'll be doing from quarter-to-quarter. So I'm sorry but that's the answer that I have right now. You want to add anything to it..

Its DA just wanted to add you mentioned that we were blocking scripts. What's happening is it's not that we're interfering with IMS for example or as we said the forehand working through a select group of pharmacies. This isn't your typical drug that is sold at Walgreens and then the Walgreens reports the numbers to IMS.

We're not going through that system. We're going through our select pharmacy network and as such that data is not making it to the typical sources where IMS or symphony might pick up the data. And Eric you want to..

Yeah, I think the second part of your question was around awareness of INGREZZA prior to launch to the extent that that was driving early uptake. Obviously, some awareness in thought leader communities and psychiatry and neurology some awareness amongst investigators obviously.

But the majority of our target audience were not aware of INGREZZA before it got approved. Our efforts in the year leading up to launch were really around TD education and we had a TD campaign that we launched in a lot of activity at medical meetings and so on with publications to help support all that.

So we chose to focus on developing TD market versus sort of a brand awareness approach. And then we kind of flipped a little bit when we got to launch and we've been focusing a lot obviously on raising awareness of INGREZZA. We're in the process of doing some market research and we'll be tracking that over time.

But at this early stage I can say pretty confidently that most of the physicians that we've been calling on and then started to adopt INGREZZA we're not familiar with it prior to the sales person walking in the door of their practice..

And then with respect to a pick upon the neurology division is a hardworking division at the FDA and there has been some high profile early approvals.

But the majority of files that are NDAs that are under review are really struggling with the hard heavy workload that the FDA is trying to process and until we sit down with them and meet with them we won't know what the time lines are.

Obviously we will share that once we have a meeting minutes from that meeting but our - our expectation is you know we - we plan for the best and we expect you know challenges. So we have two very different scenarios. One is no additional trials are needed.

We can file with the existing data package that be all so nicely assembled, the other extreme is you have to do a full Phase III North-American trial to show what North-American Parkinson's patients look like in the hands of North American investigators. And until I have that meeting I won't know they the FDA is not familiar in detail was impeccable.

This was a drug that was developed outside of the U.S. So we have a lot of we have to bring them up to speed on this program and I really can't and I can't speculate where they're going to be..

Okay. Thanks for that call or maybe just to follow-up on FDA. Thanks for clarifying the point and craps. When do you think he'd be in a position to have wrap-up getting the right group of specialty pharmacies in this quarter? So we already have an obviously the initial group of pharmacies were we're - we're happy with them.

Obviously over time as things evolve we may decide to expand that network. But yeah that's really it's going to be an operational decision as things move on. Ultimately what we're trying to do is to as we've stated help get as many patients access to residents as possible..

Okay. Thanks..

And we go to our next question from Andrew Peters from Deutsche Bank. Please go ahead..

Hi. Thanks for squeezing me in and congrats on this launch. Couple of final questions on INGREZZA if you don't mind, I guess the first one in terms of the initial prior authorizations. Have you experienced many rejections or a kind of failure to sales and if so has it been around confirmation of diagnosis or have there been other reasons.

And then just what is typically been the time course between first scripts and ultimate patient fell Phil just trying to understand kind of how long that prior authorization process has worked. Thanks..

Yeah. Andrew, its Eric. We said that we weren't going to get into the metrics but overall I've been pleased, with the conversion rate from prescriptions being written to product being filled.

I think that the timing how long it takes really that cycle time from the treatment form coming in till the products dispensed can take anywhere from days to several weeks. And that really depends on the patient physician on the health plan.

You may remember in my prepared remarks, I talked about the formulary exceptions process and that involves some back and forth when you do the benefits investigation, you discover there's a prior authorization required then we, our system sends that PA form to the physician to complete.

So it's dependent on them completing it in a timely manner and getting that submitted into the insurance company. On the other end, once we have confirmation of reimbursement from the health plan and the pharmacy now has to reach out to the patient to contact them and say, where would you like here and rather ship.

Sometimes they don't answer the phones, so it may take multiple attempts in some instances to track down the patient. So that's why I saying, there's sort of a range of timing from days to several weeks just depending on how all the parties interact in that process.

So, that answer your question?.

It does. Thank you.

And then I guess just a quick follow-up, in terms of I don't know if you've been tracked these metrics, but of the patients on drugs so far, do you have a sense of how many of them have been on prior treatment for TD with off-label tetrabenazine for example or give a sense there?.

Yeah. We have no way of knowing..

I can tell you just a clinical universe is overall only name most of them have never even missed VMAT2 inhibitor..

Great. Thank you..

So we know from looking at prescription data, if there would be a patient, it would be most likely patients treated by neurologists as we mentioned most of our calls are going to psychiatrist..

I will qualify in my comment Andrew that in psychiatry, generally speaking, there's very low awareness of tetrabenazine. In fact, part of educational opportunity that we have to with valbenazine and INGREZZA is to orient them to VMAT2 as a mechanism to treat TD. So like I said, we don't have any data, but Chris mentioned, it's bound to be very low..

We can take our next question from Geoff Meacham with Barclays..

Hey, guys.

Thanks for the follow-up question, and just on the Chris I want to ask you in the recent - for the most recent question on tetrabenazine just today's publication on comparing valbenazine and tetrabenazine we get your perspective on that, do you think this explains some of the baggage with tetrabenazine from a safety perspective? And then does it have any implications kind of with how you think about the clinical programs going forward or having things like IP.

I am just trying to figure out how you can best use this publication today..

Thanks very much, Geoff. That's publication that came out was actually just published today in drugs and R&D. We have an opportunity to answer a question that's puzzled us for a long time.

As - tetrabenazine has been - it's called VMAT-2 Inhibitor, but we knew that there are four metabolites from tetrabenazine and they have different kinds of pharmacology. They bind a variety of other receptors posting [ph] dopamine receptors, serotonin receptors not just the transporter.

And so - but nobody really understood what that was like because we had no assay for measuring those metabolites. So, we put one in place and we measured plasma concentrations of metabolites in patients who are taking tetrabenazine as a therapy.

And shocking to us was that the patients have almost no exposure to the active metabolite that valbenazine makes. So the so-called plus alpha-dihydrotetrabenazine, which is made from valbenazine is almost non-existent in patients taking tetrabenazine.

Whereas those patients have primarily minus alpha-dihydrotetrabenazine and plus beta- dihydrotetrabenazin. So minus alpha and plus beta. What's interesting about that plus beta is VMAT-2 inhibitor, slightly less than plus alpha and minus alpha is a D2 antagonist - based D2, D3, 5HD7 [ph] and is much less posted VMAT-2.

So what you're getting is kind of a different metabolite profile that potentially does explain why maybe there are differences between tetrabenazine and valbenazine in terms of safety and efficacy profiles.

So we think this is just an interesting first observation and that a lot more additional work should be done and any drugs going forward that attempt to work through VMAT-2 has a therapeutic mechanism should be able to measure these metabolites and see whether there are important implications for safety and efficacy profile..

Yeah I would just like to add to that this new paper, it's a years of work to be able to develop the kind of assays, to be able both in animals and in human sera to for the first time really be able to discern all of the metabolites - major metabolites of tetrabenazine.

And then just to follow-up what Chris said it was very much of a surprise to us to see that valbenazine have metabolite is virtually non-existent. When we.

Two different drugs..

They are two completely different drugs..

Thanks, guys..

We will take our next question from Phil Nadeau with Cowen & Company..

Hi. Thanks for taking my question. And congratulations on the launch.

I guess first question is on T-Force gold is that trial likely to serve as the first pivotal for Tourette's or at least the support Tourette Phase II?.

I would its call the Phase IIB trial because I believe that Phase III trials should be confirmatory not exploratory in that sense. And so we are taking some new doses into kids that we haven't studied before. And so it's a Phase II B trial.

Now if the trial were spectacularly successful in terms of efficacy and safety would I sit down with the FDA and see if that could serve as one of the adequate - one adequate well controlled trial and if so, what if anything else would be necessary to submit an NDA.

So obviously, I'd love to be in that position when that trial reads out to have great data results and to ask that question to FDA. But it's called a Phase IIB study. We'll see how the data read out..

It's much Phil, I think what you're hearing from us is how we did the TD program actually with Kinect 3 and then with Kinect 4. But remember those agreements Kinect 3 being one of the two pivotal came late after discussions with FDA unique data before you can have discussions..

Got it.

And is it fair to assume that you do pivotal?.

I don't know the answer to that question because there's a drug that's approved on the market. We have a lot of safety information about the drug. It is one pivotal plus some long term safety data sufficient. I don't know. We'll have that discussion with the FDA..

Got it. Okay. And then same question Kevin in your prepared remarks you mentioned that you didn't think it was any of those patients.

I'm curious why that is, why you feel like you have information to say that with such certainty is it because I guess basically do you know that the patients that you have weren't in any way put on a waiting list that the physicians weren't assembling these patients.

I know you said most of the people in your prescribe base were unaware of, INGREZZA before it was launched but it does seem like if you just had a few high prescribers in there, there could be a little bit of a post effect?.

Yeah. And Phil what you described in your question that's actually what the case is. It's not that there's a few high prescribers that are doing this and it's not that. This is - this really is kind of the tip of the iceberg.

This really is what you're seeing is a broad prescribing pattern and there's no concentration by physician-by-physician type by region that's taking place here. So that's what leads to my statement that there's nothing here that would suggest that there was a warehousing in any place for these patients or in anticipation of the launch of this drug..

Great. And then just last to follow-up on Paul's question earlier, if you suggesting $1 billion in inventory was really about the contribution to revenue this quarter. So that means $5.3 million in end user demand, you're comfortable with that..

I think what - the way I understood it was we've guided, right I stated that there was less - typically they held on to less than one week of inventory. So if you look at the number of weeks in July, you can get back to that number and if it's less than a week then it's probably less than $1 million..

Got it. Okay, perfect. Thanks for taking my questions..

Thanks, Phil..

We could take our final question from Jay Olson with Oppenheimer..

Hey, guys. Congrats on the quarter and thanks for squeezing me in here at the end. Had a couple of quick ones. You've mentioned that the INGREZZA coverage that you've seen has been consistent with the label and since the label does include a broad indication for all patients with tardive dyskinesia.

Does that mean you're not seeing access restricted by severity of disease?.

Generally no..

Okay. And then the second question I had was just around.

Is there anything you can tell us around potential future indications that you might pursue for INGREZZA beyond Tourette syndrome?.

That, Jay we probably for competitive reasons wouldn't want to have a discussion about that..

Okay, thanks..

Thank you, Jay..

And I'll turn the program back over to Kevin Gorman for any closing comments..

Thank you very much. I really appreciate everyone. We've done quite a bit over. But again this has been a tremendous quarter for us where, as I've said before, we're very pleased with the launch and the continued strong uptake that that we're seeing. However, as you all know, I'm a bit cautionary and conservative. It's still very early days.

We do anticipate having a competitor on the market perhaps even as early next month. So let's let keep our heads down. We're going to keep working and - and as time goes on as each quarter we're going to be updating you as we go along.

But in closing I really would like to thank the outstanding work that's been done by our medical affairs group over the past two years since they've been in the field and been an important resource for the medical community with disease education and they've been a wonderfully valuable resource for their other colleagues in the field particularly the - the national accounts executives who've been working with the payers.

And that national accounts team have done a remarkable job working with the parent community to reduce Neurocrine and - and to explain the value that Neurocrine brings to patients and their caregivers.

And finally but certainly not least the outstanding job of the sales force has done and in truly collaborating with psychiatrists and neurologists to bring INGREZZA to their patients.

And I think really part of that it goes to just the quality of individuals that we hired and as we've said before an unusual situation here in the early days there not being the majority of our compensation actually does not have anything to do with script volume.

It really has to do with - with living the values and the collaboration with one another and - and what Neurocrine stands for. And that is really focused on patients. And that truly has led to the success that we're seeing right now. So a very strong thank you to them.

So with that I'll bring this to an end and I look forward to meeting and talking with - with you all in the upcoming conference season. Take care..

This does conclude today's program. Thank you for your participation. You may now disconnect. And have a great day..