Kevin Gorman – Chief Executive Officer Jane Sorensen – Head-Investor Relations Matt Abernethy – Chief Financial Officer Eric Benevich – Chief Commercial Officer Chris OBrien – Special Consultant-Neurocrine Eiry Roberts – Chief Medical Officer.

Geoff Meacham – Barclays Tazeen Ahmad – Bank of America Anupam Rama – JP Morgan Jeffrey Lin – Leerink Brian Skorney – Robert W. Baird Philip Nadeau – Cowen and Company Biren Amin – Jefferies Charles Duncan – Piper Jaffray Andrew Peters – Deutsche Bank Jay Olson – Oppenheimer.

Good day, everyone, and welcome to Neurocrine Biosciences’ Reports Fourth Quarter and Year End 2017 Results. [Operator Instructions] Please note, today's call is being recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Kevin Gorman, CEO. Please go ahead, Sir..

Thank you very much, and welcome, everyone, to our fourth quarter earnings call. Today I’m joined by Matt Abernethy, our Chief Financial Officer; Eiry Roberts, our Chief Medical Officer; Eric Benevich, our Chief Commercial Officer; and Chris OBrien, our Special Consultant to Neurocrine.

Before we get going I’ll have Jane Sorensen read our Safe Harbor statement. Jane. .

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 very much Jane. 2017 is, as most of you know, was a very special year for Neurocrine. The obvious headline was the approval of INGREZZA. And INGREZZA was approved with an actual label that reflected all the important attributes of the drug based upon thorough clinical trials program that we had done.

This great label along with outstanding work from our clinical affairs, our clinical team, regulatory and also the commercial team led to a year that we did not imagine. It allowed us to bring this drug to many more patients than in such a short period of time than we had planned for.

In addition to that we have been able to push forward in 2017 a number of our clinical and preclinical programs. And so what you’re going to hear from us today is going to be an update on our financial performance in 2017 from Matt, also an update from Eric on the continuing progress that is being commercially with INGREZZA.

And then Eric and Chris will go over our R&D programs and bring you up to speed on those. So what I’d like to do now is turn it over to Matt..

number one, our sales and marketing organization to maximize the potential of INGREZZA by enhancing disease state awareness. And number two, internal R&D to meaningfully advance our programs and Tourette's syndrome, opicapone for Parkinson's Disease, congenital adrenal hyperplasia and post marketing studies of INGREZZA for tardive dyskinesia.

In addition to these programs we also intend to file one IND in 2018, which we will provide further insight to when the timing is right. We look forward to another year of tremendous commercial and clinical development progress. With that I will now and the call over to our Chief Commercial Officer, Eric Benevich who will provide a commercial update..

Thanks Matt. Our commercial team is very excited about how our launch has gone so far and very energized about our prospects in 2018. As noted earlier, we ended the year strong with approximately $65 million in Q4 net product sales and approximately $117 million net for the eight months since we launched last May.

We saw a strong month-over-month and quarter-over-quarter prescription growth. We are still very early in our launch and are building an entirely new market for tardive dyskinesia. Our focus has been to increase awareness, recognition, diagnosis and treatment of TD. Many patients who have TD are currently undiagnosed for a variety of reasons.

There were no approved medications to treat patients with TD prior to INGREZZA. But now with INGREZZA the first FDA approved drug for TD, we remain focused on growing the market and committed to driving disease state awareness to health care providers and patients in order to help as many patients as possible.

Our breakthrough product, INGREZZA is very attractive to HCPs who are taking care of patients with TD, both in terms of its label and clinical product profile.

INGREZZA’s rapid and robust efficacy, simple once-daily dosing and compatibility with common psychiatric treatment regimens, as well as tolerability profile, no box warning or any contraindications are all product attributes that support the rapid uptake that we have seen since launch.

As Matt previously stated we have substantially completed the transition to our 80 mg capsule. The full pricing impact from this transition which is approximately 40% less than 240 mg capsules will be filled in Q1.

In addition, we will be experiencing pay-related impacts to our gross to net for the first time in Q1, including the reset of donut hole contribution from Medicare Part D patients and reset of annual out-of-pocket co-pay contributions for commercial patients. The combined effect of these payor related market factors will impact our gross to net.

However, since this is the first time we're going through a Q1, it is challenging to model the impact. Regardless of these Q1 specific dynamics we expect to see continued strong demand reflected in prescription growth as we move and through 2018. We're seeing early adopters expand their use of INGREZZA.

And additional health care providers are now gaining their initial experience. We are very pleased with the early feedback from these – from those with clinical experience. Especially we are hearing that INGREZZA is drug that performs in the real world as it did in clinical trials.

And we are hearing many impactful stories of patients experiencing meaningful benefits from treatment with INGREZZA. This feedback is very gratifying to all of our employees who worked so hard to discover, develop and launch INGREZZA. So in summary, we are pleased with our early launch success.

We realize there are many thousands more TD patients out there that can benefit from INGREZZA treatment and we are committed to our mission and delivering hope to all those patients. So with that I'll turn it over to Kevin..

Thank you, Eric. Thank you, Matt. So as you can see we're in a real, good financial position and commercially we remain very pleased with the launch of INGREZZA. And I think as Matt had pointed out and Eric has given a little more detail to if that the next best dollar that can be spent at Neurocrine is on the commercial success of INGREZZA.

And now let's go to the other focus of Neurocrine, which is our pipeline. And to that I'm going to turn it over to Chris and Eiry.

Chris you want to start up?.

Yes. Thanks Kevin and thanks to those joining the call this afternoon. It was a great pleasure that I get to welcome Dr. Roberts to Neurocrine. She has a unique set of skills which will really help expand our pipeline and continue the successes we have enjoyed in recent years.

As the physicians who are training in cardiology, immunology and neuroscience, she has helped bring over 100 molecules from the lab into the clinic. She has had an opportunity to lead both large and small discovery and development efforts and her personality is a great fit with the Neurocrine team.

I am very pleased to turn over the role that I've had as Chief Medical Officer over the last 12 years to Eiry, who will provide an update to our clinical programs for congenital adrenal hyperplasia and opicapone after I provide the update on our INGREZZA valbenazine programs. Let's start off with an update on valbenazine for Tourette's syndrome.

The T-Force GOLD study is well underway, recruitment is on track with our goal of recruiting 120 pediatric patients at multiple sites around the U.S. We are very pleased with the conduct of the study and the support we are getting from investigators, families and the Tourette Association of America.

We still anticipate top line data at the end of this year, but also we'll have or they'll have more clarity on timing as we randomize the last subject in the second half of this year. Neurocrine also continues to conduct a variety of Phase I and Phase IV studies INGREZZA with INGREZZA for tardive dyskinesia.

This includes the so-called post approval commit study such as pharmacokinetics and patients with renal impairment. We are also planning a Phase IV study to see about the factors which may be associated with INGREZZA induced clinical remission of tardive dyskinesia.

Our Medical Affairs Group also continues to receive request to support exploratory clinical trial using INGREZZA in the hands of independent investigators. At this point I'd like to turn this back over to I Eiry. And she will give an update on our other clinical development program.

Eiry?.

Well thank you Chris. And I'm delighted to be here as part of the Neurocrine team and to be able to provide an update on our clinical development program for congenital adrenal hyperplasia and Parkinson's disease. The proof of concept study for adults with CAH is currently underway here in the U.S.

With patient screening ongoing at a number of academic centers of excellence. We anticipate top line data from just study later in Q2 of this year. And with those data in hand we would plan to meet with the FDA to determine next steps for the pediatric trial and for the overall development program sometime in the second half of 2018.

Turning to opicapone on for Parkinson's disease, as planned, we met with the Neurology Division at the FDA, in January, to discuss the next steps for this program, including whether another Phase III trial would be necessary ahead of filing an INDA. We will not comment on the discussions with the FDA until we receive the meeting minutes.

The company has, however, provided previous guidance on a base expectation that a Phase III study may be required and we've been planning accordingly.

If it is determined that a Phase III study is not required, we still have a tremendous amount of work ahead to compile the required data for an FDA filing which would likely take our filing date into 2019. We will report the outcome of the meeting with the FDA later this month once we receive the official meeting minutes.

As part of our planned NDA submission we have identified the need for some additional Phase I data to round out the data package for opicapone and meet U.S. regulatory requirements. These studies have been initiated and they're on track to be part of the NDA submission. With that I’ll hand it back over to Chris. Thanks Chris..

Thank you, Eiry. Just a few closing thoughts. 2018 is a year of great opportunity with these programs that are currently in place at Neurocrine. And Eiry and me and entire clinical and Neurocrine team are really up for the challenge.

In closing from my end I wanted to just say what an honor it has been to be part of this company and to see its growth and its success. And I look forward to continuing on as an advisor. We’ll been working closely with some of the Neurocrine colleagues to see about continued opportunities to enhance our topline internally.

So with that I'll turn it back over to Kevin. Thanks very much..

Thank you very much Chris. And I think as all of you can know that Chris has been an integral part of Neurocrine success. We've never be here without Chris and also without Tim. By things changed, and we do have now Matt and we have Eiry on Board.

And you're going to be hearing a lot from them in the future, but as you also caught from Chris there he's not fading off into the sunset. We’ll very much in touch with Chris and he will be continuing to work with us in moving Neurocrine forward for years to come. So this is not a goodbye. A couple of things just before I turn it over for questions.

AbbVie has been doing a great job with the Elagolix program and moving it along at all fronts. We anticipate that this quarter. Q1 2018 AbbVie will be reporting top line data on each of the two Phase III clinical trials in uterine fibroids. Also that PDUFA date for Elagolix Endometriosis is next quarter Q2. So we look forward to that.

I'm sure many of you have seen a number of advertisements that have taken place on television, in print, on radio bringing up awareness of endometriosis that has been sponsored by AbbVie. And I think that that is a very important responsible activity that they've undertaken well in advance of the launch of this drug.

It is a disease that is – that hits women in the prime of their life, in their 20s or in their 30s can last all the way through menopause. And it is one that affects nearly 7.5 million women in the United States, and yet it is one that had not received the attention that it deserves out there.

So I think their campaign in bringing it to the forefront of physicians and to the women and their loved ones who suffer from this is very important. So with that I'm going to open it up for your questions..

[Operator Instructions] Our first question comes from Geoff Meacham with Barclays. Please go ahead..

Hey guys thanks for the question. I have one commercial and one clinical.

For INGREZZA can you talk about persistence trends? I know it’s obviously pretty early in the launch, but has there been much discernible with respect to whether there is a drug holiday and when it if it is the big clusters and do background meds or baseline PD matter? And then I'll follow-up..

Yes, hi Geoff. With reference to persistence it is early in the launch. And we haven't seen any pattern like you've talked about with regards to drug holidays or any inconsistencies there. It's all too early yet and for us to have a good feel for how things are going to be in the long run, I think, we need a little bit more time..

Okay. Then Chris sorry to see you go. Good luck in your next endeavor..

Thank you, it's retirement Geoff..

I know you'll be bored though, I think, pretty soon..

We'll keep him busy..

When you think about the Tourette's, I guess the design of the study and the potential outcomes, what are the – I know you've been asked a lot about the regulatory and the fileability [ph] I mean do you feel like what you have in front of you in terms T-Force, is enough, I think, for registration or is it – do you feel like you're just – you're still in the dose sort of finding mode? I know you've been asked that a million times I just want to give may be an updated view..

My perspective is that we designed a study that is a very robust, high quality study that could stand as a registration trial. But obviously it depends on the results of the study and a conversation that we would have to have with the FDA.

Until I have that data and well until Eiry has that data in hand she would sit down with the psychiatry division and decide works out the next steps. It's really premature to say how they're going to think about it. But clearly the study is designed to be a robust study for both efficacy and safety.

With respect to the comment about dose finding, well yes in the sense that we're exploring higher doses in this trial that had previously not been used in the placebo-controlled Tourette study. But Those doses were selected based on very careful exposure response modeling.

So to the extent that we think these are the right doses I’m quite comfortable with that. And obviously the study was designed with that concept in mind that these are the right doses that additional exploratory work would not be necessary. And this is meant to just confirm that..

Okay, great. Thanks a lot..

Thank you. Our next question comes from Tazeen Ahmad with Bank of America. Please go ahead. .

Hey guys, thanks so much for taking my questions. A couple on INGREZZA. Can you tell us what initial feedback you're getting from physicians on the switch to the 80 mg doses because that’s viewed as the preferred option by most physicians, or are there still some docs who like prefer the 240 mg/day dose? And then I have a follow-up..

Yes hi actually not a lot feedback with regards to going from 2 by 40s to 1 by 80 in the sense that most physicians recognize that they're the same from a bio equivalence perspective. The message to the physicians is now it's one capsule, once a day, which is even more convenient than previous.

So for them it's a relatively transparent process for patients that are already on INGREZZA and being maintained on 240 milligram capsules once a day. Essentially when they were due for refill that's when that switch happened. And then of course for new patients they're getting on to their 1 by 80 capsule after the first week.

So it's been a smooth process from that perspective..

Okay.

And as far as your salesforce do you feel like you've right sized, you’re still early in the launch and I’m still trying to figure out the market opportunity, but do you anticipate out a more sales drop as this launch progresses this year?.

We feel good about the salesforce size and structure that we put up for launch. And obviously the results that we have so far, I think, speak testaments to the quality of the team that we hired. We’re going to continue to look at the market dynamics and understand everything that we need to do to optimize INGREZZA and invest appropriately.

And if that means potentially making some changes downstream, especially as we prepare for adding new products and new indications then we'll certainly do so. But for now we feel like we're in a good place in terms of our sales force..

Okay, thanks very much..

Thank you. Our next question comes from Anupam Rama with JP Morgan. Please go ahead..

Hey guys thanks so much for taking the question. For the CAH program update in the first half of 2018, can you just remind us how 74788 is different than the first generation compound? And kind of walk through what a win scenario would be here for the first half of 2018 update. Thanks so much..

Yes so this is Kevin. The main thing that it's different on and if you recall and I'm taking this question because of all the historical contacts that comes in here. The first compound we put a single dose into the clinic. If you recall in that handful of patients that we treated they were all adults.

And we had a significant impact just with one dose on their endocrine profile. As we were then moving that into the clinic into a multi dose in adults and then wanting to go to the single dose in the children we were out running our preclinical program. And we have an ongoing long-term juvenile preclinical tox study that took place and then read out.

And there we saw tox signal that had never been seen before with adult animals.

That's when we decided to stop, look back, see if we could understand this tox signal and then determine was it drug-related, meaning compound-specific, was it a species-related phenomenon or was it mechanistic? We went into our library of CRF antagonist, which is pretty vast because we've been in this field for about 24 years, with CRF antagonist.

And what we found was that indeed it was just compound specific, so we had taken another one of our backup compounds, put it through that very same model of the juvenile tox, long-term juvenile tox, it was clean that is the compound now that is in the clinic..

Got it.

And I'm thinking about the first half 2018 update, how should we be thinking about the win scenario there?.

Yes, I think, a win scenario there is going to be one where we see a lowering of androstenedione and 6-hydroxyprogesterone levels in those patients. Much like what we looked for in that very first single dose study that we did previously..

You got it Anupam?.

All I would add is that this is a multiple dosing study in a dose. And we completed a single dose study with this compound in healthy subjects last year. And to Kevin’s points the primary end points for the study is the 17-hydroxyprogesterone. Also we're measuring ACTH levels.

And if we see what we anticipate could be a clinically meaningful change in those bio markers in this study, then we would take that data to the agency and discuss with them the potential possible for the molecule in treatment of children who are potentially also on adult..

Great, thanks so much for taking the questions guys..

Thank you..

Thank you. We’ll go next to Paul Matteis with Leerink. Please go ahead..

Hi this is Jeffrey Lin on for Paul Matteis. Thanks for taking our question.

So I guess the first question is with a couple quarters update on hand, do you happen to have a snapshot of the patient mix who are on INGREZZA like what percent have mood disorders versus one percent have schizophrenia?.

We don't capture that data through our prescription we’re in the process, however, anecdotally what we're hearing from the physicians is that they're treating whoever they see with TD regardless of what their underlying psychiatric should.

So it appears in general the patient mix is probably not too dissimilar from our clinical trials, but certainly I think it's a function of the type of practice that the physician has whether they are movement disorder neurologist or a psychiatrist..

Okay. And I know you're not giving product guidance in the 2018.

But perhaps you can give us some insight as like what other, I guess, recent CNS launches have you looked at sort of gauge your internal assumptions for the Q1 impact?.

Go ahead Matt..

Yes obviously we're still really early in our launch of this product. And we're going to continue to assess. When we feel comfortable to be able to come out from a guidance perspective. So for example, items that we're looking into number one, is payor mix. We can continue to shift on the payor mix side from quarter-to-quarter.

And then the second piece which was one of the first questions asked was in regards to persistence. That's a huge aspect to what your revenue assumptions would be to be able to build out a more formal trajectory from a lens of guidance. And then the overall market patient potential. And Eric can add some more commentary here. .

There’s not much to add. I mean we’re still very early in the launch. We're going through Q1 for the first time. And just as you asked about are there any good analogs, we've been trying to see if there's anything out there that is going to be helpful for us as we try and predict what the future looks like.

But for the most part this is about just going through the corner seeing where we're at in terms of these variables that Matt talked about with the payor mix understanding what patient persistence is like and continued strong demand for the product. And we’ll be able to give guidance further out in the future when we have bigger dataset to look at..

Okay, great.

And then finally on the CAP program sort of along the same lines I was asked – I guess asked sort of asked differently is with the data that should come out with the first half 2018, how should we be thinking about the data in the context of the disease?.

So I think as I mentioned a little earlier the biomarkers that we’re looking at in the context of the dosing, the proof-of-concept study, are core to the disease mechanism and to the downstream long-term clinical impact that is associated with this disorder. And so they are very relevant in the context of measuring the disease itself.

So what we need to do though once we have access to those is understand with the regulatory agencies what their expectations would be in terms of the relevance of those data relative to other clinical data that they might be interested in that patient population.

And the first step towards doing that is obviously completing the CoC study, engaging and then initial interaction with the agency..

Okay, thanks a lot for taking our questions..

Thank you. Our next question comes from Brian Skorney with Robert W. Baird. Please go ahead..

He thanks guys for taking the questions. I guess when we’re just kind of think about your base case scenario for opicapone that you want to do another study, or do another study prior to approval. I mean, how should we think about the context of what the study would look like? I mean are we thinking of just U.S.

version of BIPARK-I or BIPARK-II? Would it be placebo controlled or Comtan be an appropriate comparator here? And in terms of end point do you think that would also be consistent something like off time over a three or four-month period?.

I think we believe that the study would be similar to placebo controlled study outside the United States that was part of the BIAL application. And we do not believe we would need to include an active comparator in the study. And the end points that you mentioned are consistent with those measured in the European setting.

The end points that we believe are most relevant to the patient in this setting off time and a reduction in off time together with the potential to improve the amount of time with troublesome dyskinesia associated with levodopa treatment. So it would be very consistent and would just be a case of generating U.S. level data to support the NDA.

If the agency requires that, that has been our base case scenario that we’ve looked under price to go into the FDX..

Thanks.

And if I could just ask a follow-up, I just wondered if you have any concept of where AbbVie is with regards to a Elagolix as it pertains to European approval?.

Yes actually AbbVie has not shared any concrete plans with us over in Europe any work that they're doing there we're not aware of. So that probably would be a more appropriate question for AbbVie..

Great. Thanks guys..

Thank you..

Thank you. We’ll go next to Philip Nadeau with Cowen and Company. Please go ahead..

Good afternoon. Thanks for taking my questions. And congratulations on the progress especially with INGREZZA..

Thank Phil..

One question the INGREZZA trends in Q4, could you talk a bit about how the rate of new patients starts compared Q4 versus Q3. I guess our model it looks like it may have been some fewer new patient starts per month in Q3 versus Q3. But there's so many unknowns it's really hard to have any confidence in what the model says..

Yes, we've previously shared TRx numbers. And we've stated that we're very pleased with the demand that we've seen throughout the launch, both from a month-over-month into quarter-over-quarter basis. And we continue to be very pleased with the demand and also the feedback that we're seeing from physicians..

Okay.

And so do you have any sense of I guess quantitatively the impact of the Teva launch on the uptake? And maybe similarly quantitatively the impact of the Free Drug Program or the first sampling program that you started last quarter on reported revenue?.

Yes, so we did roll out the free trial program starting in October and we've said the majority of treatment forms that have come into have had associated requests for the free trial. Obviously we have a strong Q4. And we're pleased with the continued demand that we're seeing.

With regards to our competitor we're really focused on doing what we need to do in terms of building the market and that means you're raising awareness to having diagnosis and treatment with INGREZZA and then letting the results speak for themselves..

Great thanks for the information. And then just one last question AbbVie and Elagolix actually, I guess, we are anticipating uterine fibroids data this quarter. We had actually thought it would be earlier in the quarter.

Do you have a sense of where it is and when we might see it?.

Well we only have about six more weeks left to the quarter. So it will be sometime within those six weeks that is all completely in AbbVie’s control. And as you know the way that we’ve behaved in the past we only wore know about the data and when they're going to be releasing no more than 48 hours in advance.

So they don't share anything with us until just before you guys get it..

Great thanks for taking my questions. And congrats again on the progress..

Thanks Phil..

Thank you. We'll go next to Biren Amin with Jefferies. Please go ahead..

Yes thanks for taking my questions.

Just on your prior comment regarding you shift s in payor mix, are you seeing more commercial patients over government Medicaid patients?.

I think we've said previously that we've seen increasing Medicaid. Over times we've moved through the launch and it has shifted from quarter-to-quarter. And we wanted to get to a place where we're in more of a steady state before we can really comment on what that payor mix looks like..

Got it.

And then what are your efforts or what efforts are you undertaking to minimize the impact of the donut hole in Q1?.

Well I can tell you that the pharmacies that are part of our specialty pharmacy network, they have procedures in place that they use not just for patients that are on INGREZ, but really all medicare patients to ascertain prior to the end of the year whether the patient is going to be staying on the same Medicare plan or it’s going to be switching plans? Is that patient going to require re-certification for the medications, and so on? And so they reach out proactively to determine whether or not there are any administrative steps to maintain that patient on treatment and avoid any interruptions in their therapy.

That's part of what the pharmacies do is not, like I said, specific to INGREZZA, but that’s part of the benefit of having a limited distribution strategy like we have..

Is there also the reason why you have added a third specialty pharmacy provider recently?.

No, I would I want to actually attribute that more towards growth..

Got it.

And then maybe the last comment on the pipeline, are there any thoughts on developing INGREZZA for Huntington's chorea?.

There‘s a number of indications that we have been to review they are in various planning stages. And so we're probably not going to comment on our which indications those are. But any indications, any new indications that we go out on pass to reps will announce those as they appear on clinicaltrials.gov..

Awesome, thanks for taking my questions..

Thank you..

We’ll go next to Charles Duncan with Piper Jaffray. Please go ahead..

Hi guys first of all, congrats on a good quarter of progress. And to Chris on an opportunity to spend more time pursuing your hobbies, a couple of questions perhaps one for Eric and then one or two for Chris and Eiry.

And Eric my first question is regarding your comment that the feedback on INGREZZA is the drug performs as in the real world as is it in clinical trials.

And I’m kind of wondering if you could provide any additional colors there with regard to kind of efficacy, response rate, or another aspect of that efficacy or perhaps information from longer-term follow-up? Any further information on that?.

Yes I’m happy to call up on my comments a bit Charles. So what I mean by that is the feedback that we've gotten from physicians is often when a new drug gets introduced into the market their personal clinical experience doesn't necessarily match up to what they expect from the clinical trial data.

In this instance the feedback that we have gotten from physicians that have had their initial trial in the adoption of INGREZZA is that it really does work like it did in the Kinect 3 study. You're seeing patients coming back with meaningful reductions in their TV symptoms, it's well tolerated.

For patients that were started earlier in their launch, their continuing to show meaningful response to treatment. And so they're very pleased with how INGREZZA is performing. And one of the things that they really like is that it's a very simple product to prescribe and take.

And they don't have to really think a whole lot about who are the patients that appropriate versus inappropriate for treatment because it's been a study their real world setting across a wide variety of patients with TD on a wide range of underlying psychiatric treatment regimens.

So this is a medication that they can prescribed, it can be layered on top of the antipsychotics that these patients are taking. And it fits right in with their practice workflow. And so that's what I mean by performing as it did in the clinical trials..

Excellent, it's helpful. And then perhaps for Chris or Eiry, Chris mentioned INGREZZA induced clinical remission Phase IV trial, I'm intrigued with that.

I’m wondering if you could provide any provide any more insights on the timing or and/or if the design and the point of that trial? And then I had a question on opicapone?.

Sure, for the question on clinical remission, we do see from time to time both in our clinical trials and in the post approval world patients who have been on INGREZZA for a period of time TD gets profoundly better, than for whatever reason they go off the drug. And the TD doesn't come back.

That we saw this in that in a small percentage of patients in our clinical trials. And it was not clear to us what factors were associated with that remission. That is I couldn't really predict who might have that in advance. And we had some discussions with the FDA about that those observations.

And they said we think this could be important information for clinicians and patients alike, we'd like you to do a study post approval where we could understand that a little better. So we are in the process of designing the clinical protocol which would allow us to follow patients who have a randomized withdraw period imposed.

So take patients on drug, who are doing well and then in a blinded fashion randomize some to go on to placebo and some to continue on drugs and then follow them for an extended period of time and to see if indeed the TD symptoms failed to come back in some of the patients on placebo.

And if so who are those patients? What are their concomitant medications? What's their underlying diagnosis? What are the other factors that may be associated with clinical remission? And so we would plan on starting the study after we workout the nuances of that protocol design with some additional, pending discussions with the FDA.

So I expect to see something start in clinicaltrials.gov not early this year, but maybe even moving into later this year or early next year..

Okay, very cool study protocol and hypothesis. My last question on opicapone perhaps for Eiry did a great job outlining, what you would anticipate a Phase III to look like to a previous analyst’s question.

But I'm wondering of the timing, could you start that in 2018 and would you anticipate that you could have data by the end of 2019 or what's your thoughts now at this point?.

Well we are working hard [indiscernible] for this study and hoping to stop that as expeditiously as possible if it required. We anticipated that it would add about 12 to 14 months to the timing of our NDA if it compared, if we were not to need the data. And so that really would push into a latter part of next year or maybe even a little beyond..

I have few more questions albeit, but I know you won’t answer, and that is what do you think if you were a betting person will it be required?.

I’m not the betting person..

Yes when we have the F.D.A. minutes, we're going to share those with everyone..

Got it. Thanks yes, thanks for taking my questions..

Thank you. We’ll go next to Andrew Peters with Deutsche Bank. Please go ahead..

Hey thanks for taking my question.

So just one question on Kevin's comments around the next best dollar spent on the commercial side, just wanted to see if you could provide a little more color on what sort of efforts could you imagine increasing kind of the spend there or kind of on the sales and marketing effort? And then a related question to that around the competitive landscape, with Teva kind of singling out Austedo as one of their kind of key areas of focus mid their period of transition, I guess.

What can you do from a scenario planning perspective if they choose to be particularly aggressive on the sales and marketing effort? What can you expect just in a scenario planning case? Thank you..

I’ll start out with the second one. We have a lot of respect for our competitor, they're very sophisticated, they have enormous capabilities. But what we actually do from a sales standpoint, from a marketing standpoint is we concentrate on all the attributes for our drug as Eric had said.

We don't spend any time with health care professionals talking about competitor. And I may even preempt a little bit on the first party of your question on the next best dollar spent. What we've said from the very beginning is very true today.

The ultimate success of INGREZZA is going to be based on being able to educate physicians about tardive dyskinesia. And so that they can easily recognize diagnose and have a called action to treat these patients. And so that's really where our efforts lie as we move forward. Eiry, do you have anything to add to that? Okay..

Great, thank you..

Thank you. We will go next to Jay Olson with Oppenheimer. Please go ahead..

Oh, hey, guys. Congrats on all the progress and thank you for taking my questions. I had a question about capital allocation and you touched upon this in the opening remarks when you prioritize the investment in INGREZZA and your other pipeline products.

But with $800 million on your balance sheet how – can you frame for us how you would prioritize business development and how that fits into your capital allocation plans and in particular for 2018?.

Yeah, to begin as we highlighted on the call and Kevin just spoke to earlier and our number one investment is on our INGREZZA.

And then number two to that is on our own internal pipeline investment to be able to become a four product six indication company in four years from now is what we're really aspiring to and believe there is going to be significant long-term value creation created through those investments.

So as it relates to how would we utilize the $800 million on the balance sheet number one it could not distract from maximizing the opportunity with INGREZZA as well as making the advancements that we desire to make on our pipeline.

So we obviously have some financial flexibility at this time, but it really focused on executing INGREZZA as well as our internal pipeline..

Thank you for that. And I had a follow up on opicapone. There's a 500 patient Phase IV study of OPTIPARK that looks like it will have results this year according to clinicaltrials.gov.

Could you comment on how the results from that trial may contribute to an NDA filing for opicapone?.

Yeah, so, the OPTIPARK trial is really a Phase VI trial that's being conducted by BIAL over in Europe. And so that's one that we wouldn't see as being part of our submission at all to the FDA.

I would say that that more important to the agency is having all the – having the existing safety database that BIAL has and then all of the post-marketing safety that’s done. The OPTIPARK is basically a pharmaco economic study..

Okay, great. Thank you very much..

Thank you. We’ll go next to Alan Carr with Needham & Company. Please go ahead..

Hi, thanks for taking my questions. A couple of them are on your OpEx guidance. Can you give us a sense of how that sort of the kind of growth is distributed between R&D and SG&A and how much contribution from that potential opicapone Phase III program in R&D.

And then also any updates on that essential tremor program that any new developments there? And then also can you give us a sense of those Phase I trials that you're running for opicapone? And what – can you tell us a little bit more about those? Thanks..

Yeah, we can go backwards first. So Eiry wanted to talk about the Phase I programs of opicapone..

So we have several Phase I trials ongoing and they're actually listed in clinicaltrials.gov now for opicapone. One is to study the molecule in patients with mild hepatic impairment. BIAL has performed a study in moderate hepatic impairment.

And we think it’s important for us to assess the behavior and exposure of the medicine that the appropriate therapeutic doses in mild hepatic impairment it was labeling in the U.S. There is also – there was no safety and pharmacokinetic data included in the BIAL submission in Parkinson's patients.

And so we are completing a patient PK study that will be a part of the NDA submission as well. And then the two other studies, our drug, drug interaction study looking at potential for interaction around the transporters – drug transporters.

And again, the profile that would shown in the Phase III package from BIAL was – a very well tolerated molecule at the dose that was approved with very low density for drug, drug interaction.

And so, we're confident that that will continue to be the profile as we move forward to the NDA, but we just needed to fell in these small gaps in the package in order to fully address the requirements of the FDA..

So from a financial perspective, a couple of comments. Number one, when you look year-on-year from a spending perspective, we're going to have a whole year of expense from the commercial investments that we made in 2017. So that's obviously a big driver for year-on-year expense increase.

And in addition to that on the R&D front, 2017 was a really like clinical investment year for the company. So when you take an aggregate, the Tourette program, opicapone CAH, the post-marketing INGREZZA studies that Chris had highlighted earlier, it aggregates to a significant spend increase.

But like I said earlier, it really positioned us well to become as we’re aspiring to become the four product six indication company four years from now..

Okay, thanks very much..

Thank you..

Thank you. We’ll go next to Ian Somaiya with BMO Capital Markets. Please go ahead..

Yeah, hi. Thanks for taking the question. This is Steve on for Ian. In the past, you guys have mentioned, I think you expect about 20% of patients to remain a 40 milligram dose of INGREZZA. Is that still your expectation? And one of the characteristics of those patients that remain on 40 milligram.

I know there is some stuff in the label, just regarding 2D6 metabolizers and liver impairment is everything captured in the label or there other reasons that we should be aware of that patients would be remaining on 40-milligrams?.

This is Kevin, I can take a first thing in that and then Chris can chime in.

So the label sales that you go one week on 40-milligrams and then the recommended dose is 80-milligrams, and you're correct that we had said in the past that based on the Phase III program that we looked at that we would anticipate around 20%, 25% of the patients would be on the 40-milligram would be there for system dose that would really satisfy that patient population quite well.

Now, that was in a clinical trial setting, what it's going to end up in here it's way too early to tell what we see is – well within that ballpark, but we just don't know yet, how that's going to work out. So the vast majority of the patients are stable on an 80-milligram dose.

Chris, you have anything else you want to add to that?.

I think you’ve captured it, it clearly in the real world there are patients that start on the 40 and either go to 80 and back down or start on 40 are doing so well that they don't go up to 80. But it is too early to know is that you know 15%, 20%, 25% it's somewhere in that ballpark..

Okay, thanks. And can you speak about the impact of tax reform relates to you obviously corporate tax rate, but specifically your ability to use your existing NOL carry forwards. I think your federal NOLs start to expire in 2021. So are you still able to get the full benefit of those? Yes. Go ahead..

Yes, yes. On tax reform any NOL that was created prior to the end of 2017 will be able to have full access to realizing the benefit of those NOLs prospectively without limitation. So any NOL that gets created post 2017 I believe you're limited to being able to utilize 80% of those in a given year of the taxable income.

But anything that was created any NOL prior to the end of 2017 will be able to have fully realized subject to future profit..

Okay, thanks.

And just last on formulary access for INGREZZA, I think you're expecting many decisions around you enter into 1Q 2018, maybe you can just comment on where you are there and how much progress is left to be made and whether that should be mostly predominantly completed this quarter or next?.

Yes. I should saying that we've been pleased with the coverage that we've gotten thus far in our launch. What we've seen is that some of the plans are moving forward with making transitioning I should say from interim coverage decisions to solidifying those coverage decisions, in some cases they doing so without a full formulary review.

What we see is that and what has been the case and continues to be the case is that for the vast majority of patients the requirement for reimbursement is that the provider does a prior authorization submit it to the health plan.

And in most cases there their documentation requirement is a confirmation of a diagnosis is tardive dyskinesia before the plan will approve reimbursement for that particular patient.

So we have seen plans essentially published their coverage criteria for INGREZZA in some cases without doing a formal formulary review just based on the utilization that they've seen and the data that we provided to them..

Thanks very much..

Thank you..

Thank you. It appears we have no further questions at this time. I’ll turn it back to Kevin Gorman for any additional or closing remarks..

Thank you very much. So I hope you share our enthusiasm for this year in front of us.

There's a lot of important milestones that we're going to have as the year progresses and they spend from the very near term all the way to the end of the year just to kind of start lifting things out we'll be providing you with the opicapone path forward once we have the FDA minutes.

We'll have our partner AbbVie will be as we had said the uterine fibroids Phase III data later this quarter and then obviously the Elagolix PDUFA date, which is very important next quarter. We’ll have CAH Phase II, we'll have Phase IIb data for our Tourette program will be announcing a new and novel compound in the clinic.

And then of course just the continued commercial progress of INGREZZA that we’ll be reporting out as the year goes on. So quite a bit on our plate a lot of important readouts and we're looking forward to having a 2018 that matches our 2017. So what I want to thank you very much for your attention.

And then one last time thanking Chris and thanking Tim for they are important contributions that they made in over the last decade and more. Thank you very much..

Thank you. This does concludes today's conference. We appreciate your participation. You may disconnect at any time, and have a great day..