Good morning everyone, and welcome to today's program. (Operator Instructions) It's now my pleasure to turn the conference over to Kevin Gorman.

Thank you very much, and good morning everyone. Thank you for joining us this morning. As usual, I'm joined here with Tim Coughlin, our CFO, and Chris O'Brien, our Chief Medical Officer. Before we get started, I'd like Jane Sorenson, in charge of Investor Relations to read our Safe Harbor Statement. Jane?

Good morning. I want to remind you of Neurocrine's Safe Harbor cautions. Certain statements made in the course of this conference call that state the company's or management's intentions, hopes, beliefs, expectations or predictions of the future are forward-looking statements, which are subject to risks and uncertainties. Information concerning factors that could cause actual results to differ materially from those contained in or implied by the forward-looking statements is contained in the company's SEC filings, including but not limited to the company's annual report on Form 10-K and quarterly reports on Form 10-Q. Copies of these filings may be obtained by visiting the Investor Relations page on the company's website at www.neurocrine.com. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. Kevin.

Thank you, Jane. So what we're going to do this morning is, Tim will take you through our financials and then Chris will give you an update on our programs, just to start out. I hope that everyone had a chance to see our press release last night on the first quarter results. As you can see, from both a financial standpoint and from our clinical development standpoint, all of our programs are right on track, the numbers are as we have given guidance for at the beginning of the year. So I look forward to your questions as soon as Tim and Chris are done speaking. Tim, do you want to start?

Thank you, Kevin, and good afternoon, or morning to everyone, I should say. We released our financial results yesterday after market close. We met our targeted burn from operations for the quarter of less than $12 million, as well as our budgeted revenue and expense items. Our loss for the quarter was $8.6 million or $0.19 per share. This compares to a loss of $19.7 million or $0.51 per share for the first quarter of last year. The reduction in net loss is primarily due to a restructuring program implemented in the second quarter of last year, coupled with strong cost control measures across all functions within the company. This was slightly offset by an increase in external clinical development costs. Research and development costs as well as general administrative costs were in line with our expectations for the first quarter and significantly lower than the prior year, primarily due to lower personnel related costs and across the board reductions in non-clinical related expenses. We continue to invest in our Elagolix program, in particular the 901 Daisy Study. This study recently completed the eight-week placebo-controlled portion of the trial, and we are actively preparing for the end of Phase II meeting. We're advancing our VMAT2 program in movement disorders, which recently commenced its second phase I trial in Canada. Additionally, we've been industrious in moving our other programs forward through joint ventures with academic or other researchers at little or no cost to Neurocrine. Chris O'Brien, our Chief Medical Officer will speak to our clinical programs in greater detail later in the call. In early March, we completed a public offering of approximately 10.5 million shares of common stock, yielding gross proceeds of approximately $23 million. This offering was very successful with a significant number of the new shares being placed with Blue Chip long-focused mutual funds. For 2010, we reiterate that our operations burn will be approximately $40 million to $45 million exclusive of any partnering agreements. This burn includes all the activities related to our Elagolix and VMAT2 programs, as well as our base research programs. Our operations burns for the second quarter will drop to approximately $11 million, and additionally we plan to file our 10-Q with the SEC this morning. Thank you for your attention. With that I'll turn it back over to Kevin.

Thanks Tim. So Chris, do you want to give an update of each of the programs?

Certainly. As you know, we have continued to focus all of our attention and resources on the Elagolix program. And as Tim mentioned, the 901 Daisy PETAL study has moved along nicely. This is a trial that we began the screening say since last September. We completed randomization in February, and we just recently had the last of the women enrolled in the study complete her week-8 visit, which is the (primary) placebo Elagolix comparison point. The data is now being gathered by our field monitors, and the electronic data transfers are underway. We are still blinded to the data, but once the QA/QC process is done, we will be able to take a top-line look at the treatment group output, and we will report as soon as we have that available, the results of the trial. You may recall that the 901 trial is designed to do two things for us; one is to confirm the utility of the modified wording for the non-menstrual pelvic pain scale that we worked out with the FDA, and the second is to give us a appreciation of the effect size for Elagolix versus placebo on non-menstrual pain so that we can properly setup for our Phase III trial. The 901 study has been going well. We have an excellent group of investigators. We've learned how to do recruitment for these trials quite well, and we had a tremendous response for women who are interested in well-tolerated oral therapy for endometriosis. To-date we randomized 137 women in the trial. You've seen us present or talk about the baseline characteristics from the blinded data that we have from the screening period. So we're very happy that we have avoided the floor effect associated with the previous non-menstrual pelvic pain scale. And I will mention…

Thanks, Chris. Just to add a bit on to what Chris has said. The Elagolix program and all the programs are moving along right on schedule just as we had been talking with most of you about for the past several months. We've had continuing discussions with the FDA; it's been a very communicative division with us. They are well aware of our timelines, and expect the end of Phase II request and the SPA coming down. So the only piece of trust in place is as Chris said, at the end of May getting the 901 data in and getting that to the agency. Again, we're leveraging our relationships with researchers both in the United States and throughout the world on several heart programs in order to make our resources go even further. We've got a good discovery platform here at Neurocrine. That's been very productive. Every single small molecule compound that we have in the clinic right now, either alone or with our partners, was discovered and developed here at Neurocrine. So we count on our discovery platform in the future to give us more compounds. So the only final thing I'll say before we open it up for questions is, I'm very pleased with the fundraising that we did earlier this quarter. It wasn't just the cash to bring into the company that put us in a real good position to get through all of the Elagolix program as far as we're going to take and be in a good position to complete our negotiations with the partner, but it was the intent to bring in additional high quality long investors as Tim had mentioned, and we are quite successful with that. And I think the market has responded well to our fund-raising efforts. So we're positioned well right now. We continue to be a multi-faceted company with programs that are late stage, all the way through early discovery. We're well financed at this point. And I think we are poised for some real great success here. And a lot of data is going to be coming down throughout this year, starting with the 901 data, leading through with the CRF data, additional VMAT2 data. So we're looking forward to the rest of this year. Now with that, I'd like to open it up to questions.

(Operator Instructions) We'll take our first question from Brian Abrahams from Oppenheimer.

This is Brian (inaudible) for Brian Abrahams. I guess my first question on Elagolix is, what percent of patients would you say have continued on into the open label extension?

Just to clarify the term Open Label Extension. This is actually a six month trial. The latter four months are open label but it's not an extension. So we randomized 137 women in this trial, and we've had less than 10% discontinue so far during the study. I won't know what the exact final number is at the week-24 visit until the study is done. But the drug is very well-tolerated.

And what is your expectations for potentially reporting the full data? Could be potentially later this year? Would this be at a medical conference or would you just press release the data?

We'll probably press release it. As you know, for most of the medical conferences the deadline for getting an abstract in is often six months before the meeting. And because this trial will not finish up until late Q3, I think the best way of informing our investors is through a press release.

Our next question comes from Craig Gordon with Cowen and Company.

In terms of the partnership talks, I know you guys obviously are going to say a whole lot. Just curious to kind of get your general feeling as to how they are going and if you think that all your timelines are still tracking okay.

Yes, the talks are with multiple parties, they're going well. As you can imagine four weeks out from an important data point that's what ourselves and our partners are looking at. We anticipate, and have prepared everything to bring in the partners when that date is in, so that they can come back in. The partners only need to refresh themselves just on the 901 results and data set, and so that will all be available to them and we'll move forward from there.

So assuming you guys can get the phase III started by year end or perhaps worst case, early Q1, what are kind of your timelines in terms of when you think you can complete enrollment and have all the data to satisfy an MDA filing?

So the general expectation for conducting two efficacy trials and an additional one-year safety trial is about two years. So pick your time point if that's late 2010 to late 2012, that would be about right.

Yes, and just to add on to that. Of course this is all contingent on meeting with the FDA and getting good concurrence on the look at the phase III program. And then it's also going to ultimately be up to our partner in addition, and what their expectations are going to be and what they may bring to the table.

And then one final question if I may. On the VMAT2 program, assuming you guys are able to begin doses having phase II trial, do you think that completing that and having that all keyed up to go, is that still on track for like a mid next year event?

Yes, let me clarify. We wouldn't have an ascending dose there. It would be a proof of concept study in patients with Tardive Dyskinesia, typical phase II A study and we would probably have results summer of 2011.

Our next question comes from Jon Lecroy with Hapoalim.

Could you give us any update on sort of guidance for the year, and with the new (race) you did, how long you expect that cash position to last?

So we ended the quarter with, using round numbers, about $70 million in cash, 40 to 45 for the year, so we had $12 million, again using round numbers, first quarter burn from operations, second quarter is going to be around $11 million, and then kind of trailing down from there. So we get down to a base burn in the neighborhood of $8 million to $9 million of base operations given our current building situation. So you can do the math from there to figure out how long we have, but the run rate is over 18 months at this point.

And any line item guidance for the income statement?

Line item guidance, I think if you look at the G&A line, that line's going to remain pretty static during the period, so in the 3 million range. And you're going to have the fluctuation in the R&D line as the cost from the Elagolix program start to weigh in, because we're not going to be initiating phase 3.

Our next question comes from Steven Willey with Thomas Weisel.

Can you just comment on maybe how the visibility into the end of phase II meeting and the SPA request is driving the pace of the partnership discussions?

I think that in all of the discussions with all the partners that we've had, obviously you map out what our expectation is and the department's expectation is for what a phase III program is going to look like, and each of us checking the boxes for all the things that the agency is going to be looking for in an end of phase II meeting. So I think we have good alignment with the partners that we're in discussions with on that. If you're asking, will a partner need to want to be at that end of phase II meeting? I think certainly, in several cases that is true; in some cases it may not be true. Maybe a partner may want to run there, or more may want to wait until that end of phase II meeting to make sure that the alignment that appears to be the case with ourselves and the agency is actually only in place of an end of phase II meeting. But that is not the case with all the parties involved.

You don't necessarily feel that the results of that meeting and the granting of an SPA will preclude anything on the BD front?

No, I don't think that is necessary. However, we're fully prepared that if that turns out to be the case, that we are in a good financial shape, and we have everything in place that that can usually be done here.

Our next question comes from Jason Napodano with Zacks Investment Research.

Just a question for Chris on VMAT2. If Tardive Dyskinesia doesn't look like an orphan indication or any of the other potential indications for the drug orphan, like Huntington's or Tourette's?

The answer Jason is, yes. You could certainly apply for orphan status for Huntington's (3F), although it's not clear whether that would be the best use of the VMAT program. In some ways the orphan status can be a good thing in that it may slightly improve the facility or communications with the division that you are interacting with at the FDA, and it also may allow you to have a slightly smaller data package, slightly fewer trials for example or fewer subjects in the trials. And ultimately of course there are some beneficial aspects, if you needed exclusivity protection, for example if you had weak IP on your module. In this case, this is an NCE from our labs that weak IP will be a restricted factor. So, going after Tardive Dyskinesia as a much bigger population, if it's greater than the 200,000 patients in the U.S. then essentially it's a more attractive market opportunity as well. We saw with the recent orphan status with Xenazine that there were some challenges for getting that drug approved, that the neurology division at the FDA clearly had certain objections to approving that drug (pre-associated) with Huntington's disease, that it required an advisory committee to kind of get that over the line. So it's not a (inaudible) drug, and there are arguments to be made otherwise. With Tourette's syndrome, that's an interesting opportunity. The only drug approved for the treatment of ticks currently has a significant set of limitations to the safety profile. And there is an unmet need. Our compound 98854 could certainly be appropriate for tick disorders associated with Tourette syndrome. But as Tourette's is primarily a disorder of adolescents, age of 8 to 21, there are some special requirements in terms of pediatric drug development that would make it…

As far as CRF1, the trial that Emory and Mt. Sinai are doing, why would that take several years to complete? Is that a long enroll?

So in contrast to the Major Depressive Disorder trial, which is a well-run, efficient multi-center trial that GSK obviously has considerable expertise in executing, these other trials that you've read about or we've talked about are typically investigator-initiated, academic one or two site trials that have none of the bells and whistles for recruitment, and none of the urgency for completion that an industry-run trial would have. And so it's subject to all those limitations for recruitment, and the inclusion/exclusion criteria are such that it's a limited population that you're addressing.

Yes, in addition, Jason, the GSK, and particularly their neurology side has had a longstanding relationship with Emory University. And the CRF trials and the program that they have with them is just one compound amongst several, and different mechanisms. Pretty big program project grant that they have there.

It would seem like if GSK was truly interested in that indication, they could speed it along, but that's not the case?

I think that GSK, like many Pharma, like even ourselves leverage their resources with those institutions that they have a great and longstanding relationships with in order to utilizing new mechanisms to explore in different areas, while they put all of their efforts and focus on Major Depressive Disorder and Generalized Anxiety Disorder.

(Operator Instructions) Our next question comes from (Larry Smith with DOH Research).

Chris, in 702 and in 703 the FDA imposed upon you a scale for measuring non-menstrual pelvic pain which (lacked) the range to really changes, given that some women probably had little or no pain on several days. Could you give us an insight into how you changed the FDA's scale to the scale that you're using in Daisy PETAL? And also, you've indicated I think that you looked at blinded data from the screening period in Daisy PETAL but suggested that your scale did have more dynamic range. Could you give us an insight into what you did, and what the screening period results indicated the new non-menstrual pelvic pain scale might do for you?

The main change to the scale had to do with the descriptors or the scores. So all of these daily scales have looked at a modification to the (inaudible) scale where you've had to look at none, mild, moderate, or severe. But the issue is, what are the descriptors that support each of those severity levels? And what we found in our extensive focus group research and cognitive briefing efforts is that women with endometriosis have intense dysmenorrheal, that is consistent and moderate or severe and disabling on menstrual days. What varies among women with endometriosis is, in women with severe endometriosis is the frequency, intensity, and impact on the non-menstrual pain. So you find that it's extremely variable. And women with endometriosis will tell you that non-menstrual pelvic pain is intermittent, rarely severe, and almost never disabling, because they have to go to work, they have to raise their families, etcetera. So the change was simply aligning the descriptors with the non-menstrual scale with what we found in our focus group; that is, basically removing some of the disability component if you will. And when we took the results of our focus group and our clinical work into the division at the FDA, showed them the results of our trials, Kevin has mentioned, you had multiple, very productive and collegial discussions with this division. And they've complimented Neurocrine and the work that we've done, in fact that we're listening patients and listening to what they are telling us. And they said, the scale appears to match how women actually experience their symptoms. That has allowed us to go into the 901 study. And one other bit to emphasize; as you pointed out, the non-menstrual pelvic pain doesn't occur everyday. So if you're collecting data on a daily basis for…

And Chris this is just intuitive without any factual basis, but it sounds like that you might have to have a fairly large sample size, given the variability in pelvic menstrual pain among women and the variability in the number of days that they may or may not have pain. In your statistical planning, was there a way of really getting a good fix on the sample size?

So sample size estimates are based on effect size, and effect size, that is contingent upon the actual variability of the change score. And so, right now I know what the variability of the baseline score is, and with the new scale it's actually tighter than the old scale, so that's good. And in the end of May we'll know what the variability of the change score is, and that will allow me to calculate the sample size. Now, I know that the effect size for dysmenorrhea is substantial; it has been through all of our phase II studies, no matter which scale, monthly or daily or which version we use, it's always robust. So, from a sample size estimation for dysmenorrhea, you really don't need very many women in a trial. And in that sense we would have way more subjects in a pivotal trial than we would need for power and dysmenorrhea. Now for non-menstrual pain, we will take the 901 data and be able to use that change and the effect size to calculate what's necessary for phase III. I expect these phase III trials to be large trials, and that's simply to meet the ICH guidance on how many subjects we need in our database for efficacy. So let's say we have 500 women in each of the pivotal efficacy trials, even with a noisy non-menstrual pain as one of the co-primaries, that should be far and above the number that we would need for a statistical comparison.

At this time, there are no further questions in queue, and I'd like to turn it back to our speakers for any closing remarks.

I appreciate all the questions this morning. This was good discussion. Obviously at the end of the month, end of May, we're going to continue this discussion as Chris I think has laid out in some detail this morning. There's a lot of reasons why we expect this to give us a positive outcome, but still it's a Phase II trial, so we need to get the data in and we're really looking to forward to that and then sharing it with you immediately. So with that, I'm going to close. I would like to remind all of you that we're going to be at the Deutsche Bank Conference next week. So if any of you are there, I look forward to getting together with you and continuing our dialogue. Thank you and we'll be in touch as always. Bye-bye.

This concludes today's conference. You may disconnect at any time. Thank you for joining us, and enjoy the rest of the day.