Good day and welcome to the Neurocrine Biosciences Reports Third Quarter 2011 Results conference call. All lines are currently in a listen-only mode. Later you will have the opportunity to ask questions during the question-and-answer session. And please note, today's call is being recorded. It is now my pleasure to turn the program over to the President and CEO, Kevin Gorman. Please go ahead.

Thank you very much. Good afternoon, everyone, and welcome to our third quarter earnings call. I'm joined today by Tim Coughlin, our CFO, he'll give you an update on financials, and Chris O'Brien, our Chief Medical Officer, and Chris will update you on the progress of our clinical programs. Before we start, I'd like to turn it over to Jane Sorenson to read our Safe Harbor Statement. Jane?

Good afternoon. I want to remind you of Neurocrine's Safe Harbor caution. Certain statements made in the course of this conference call that state the company's or management's intentions, hopes, believes, expectations or predictions of the future are forward-looking statements which are subject to risks and uncertainties. Information concerning factors that could cause the 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 my be obtained by visiting the Investor Relations page on the company's website at neurocrine.com. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances. Kevin?

Thank you very much, Jane. Before I turn it over to Tim, our quarter was very good. From a financial aspect, we had $30 million of milestones that we received from Abbott, and I believe that, as Tim will go over, our guidance for the year remains unchanged. Tim, why don’t you take it?

Sure. Thanks, Kevin, and good afternoon. After today's market close, we released our results for the third quarter of 2011. We had another good quarter and continue to meet our financial plans through the first nine months of 2011. We also remain on target for both annual net income of $37 million to $39 million and a net cash burn of $3 million to $6 million for 2011. We will end the year with approximately $130 million in cash, investments and receivables, that is consistent with the guidance we have provided at the beginning of the year. Our net income from the third quarter was $31.4 million or $0.56 of income per fully diluted share, compared to net income of $3.3 million or $0.06 of income per fully diluted share in the third quarter of last year. Our year-to-date net income of $36.2 million or income of $0.64 per fully diluted share as compared to a net loss of $10.5 million for the first three quarters of 2010, yielding a loss of $0.20 per share, a significant improvement in operating results as a direct result of our collaboration agreements with both Abbott and Boehringer-Ingelheim which were entered into in June of 2010. Revenue recognized under our collaboration agreements was $41.6 million for the third quarter and $66.3 million year to date. The bulk of these revenues recognized were two milestones achieved during the third quarter under the Abbott agreement. A $10 million milestone was earned that related to starting elagolix Phase II studies in uterine fibroids and the $20 million milestone that was related to the outcome of an FDA meeting related to elagolix for endometriosis. Amortization of upfront licensing fees was $9.2 million for the quarter and $27.7 million year to date, while reimbursement of internal and external research…

Thank you, Tim. No surprises there from a financial standpoint. Before I turn it over to Chris, I'd just like to say that he and his team and preclinical team have VMAT2 well on track. Started the Phase II trial earlier this quarter, that will read out early next year, and Chris will give more detail there. The elagolix program, Abbott is in full control of the program, and this past quarter they moved into a large Phase II study in uterine fibroids. And as Tim said, we received a $10 million milestone payment for that. Abbott has also been making progress in their discussions with the agency in finalizing the Phase III program trial designs; and for that we received a $20 million milestone. So, Chris can add some more color to that. Chris?

Thank you, Kevin. So, exactly correct, we're most excited about the progress that's being made with the VMAT program here at Neurocrine. The team has been intensely involved in the successful initiation of the Phase II randomized double-blind placebo-controlled crossover trial which is currently enrolling patients. This is the 1101 trial. The details are available on ClinicalTrials.gov, for those who are interested. Eleven sites in the US are currently activated and recruiting and enrolling patients. These are patients with moderate to severe type of dyskinesia due to antipsychotic medication with an underlying diagnosis of schizophrenia or schizoaffective disorder. So, so far, we're pleased with that study, and as Kevin mentioned, our goal is to have clinical data to discuss in Q1. While that's going on, we're also investing in some other activities. We are in the midst of a Phase I study, looking at a solid dosing formulation of our VMAT2 inhibitor drug, and this will be the basis for taking a solid dose formulation into larger and long-term Phase II trials which we plan on initiating in 2012 after the read-out of the 1101 crossover trial. While this is going on, our preclinical colleagues are completing all this necessary preclinical work that will allow us to do these long-term trials. And so we're looking forward to getting the read-out from our three-month toxicology, preclinical data sometime this winter as well, which will then position us nicely to start the next studies. So, while that activity is going on with both the Phase I and the Phase II studies and VMAT2 into bear, we are collaborating with Abbott. As Kevin mentioned, they are running the programs in uterine fibroids and endometriosis, and we are helping support their activities. For example, the team at Neurocrine has been very busy in identification and qualification of sites to run the Phase III endometriosis trial and [sustaining with the mono tran] and support of the uterine fibroid Phase II study. So, the Abbott team is very focused on these activities. That collaboration is going nicely. And as more detail emerges regarding, for example, the uterine fibroid trials, we'll be happy to share those -- that information with you as we have that information available. I think what I'll do rather than speak more is turn it back over to Kevin, and then if there are specific questions, I'll be happy to take those during the Q&A.

Thank you very much, Chris. So, why don't we go now, and we'll be happy to take your questions?

Thank you. At this time, if you would like to ask a question, please press star then 1 on your touchtone phone. You may withdraw your question at any time by pressing the pound key. Once again, if you do have a question, please press star then 1 on your touchtone phone. We'll take our first question from Ian Somaiya with Piper Jaffray. Please go ahead. Ian Somaiya – Piper Jaffray: Thanks. A couple of questions. So, on the elagolix program, maybe it would just help for you to give us an idea what the timelines are going to be for elagolix in Europe, and what, if any, changes there are in terms of your partners' commercial strategy for the program? Then I just had a quick follow-up on the VMAT2 program.

Yeah. As far as timelines, Ian, for Europe, as we've discussed before, is that we did not go over to Europe to seek scientific advice or to have any discussions with EMA prior to partnering this program with Abbott, and that's been left completely to them. And where they are right now is that they are seeking scientific advice in formulating their European strategy for both uterine fibroids and endometriosis. And then you had another question for elagolix or was that then over the VMAT? Ian Somaiya – Piper Jaffray: We can go to VMAT. I think you'll cover a lot of those in the subsequent questions. But on VMAT2, I guess you talked about, or at least mentioned in the press release that with the increased cash on the balance sheet, you wanted to accelerate the program or further invest in it. Do you feel at this point any resource constraints related to the VMAT2 program? Would an extra $30 million, $40 million help further drive the timeline from the realization of the opportunity for that drug?

Well, I would say that VMAT2 is the highest-priority program that we have in the company right now, seeing how elagolix is completely handled by Abbott. Thirty million dollars or $40 million would always help with anything that we could do. But seriously, when you look at what we're doing with VMAT2 right now, I think we're putting everything behind it that we can. Clearly we have a couple of real seminal events that are coming up, and one is having the three-month toxicology completed, and the second -- and that'll be by the end of this year. And then early next year, as we said, is having this first placebo-controlled trial done. Now, positive outcomes on both of those I think you will see the -- everything that we've been putting together to date in order to really launch into a robust program with our VMAT2 inhibitor. Chris, you want to --

Yeah, I would add, Ian, the other thing that we are actually able to do and it's in the plan and timelines, as I mentioned earlier, is a second indication. And so I'd really like to, you know, get some information that we're in a good place with the three-month toxin, with the target dyskinesia program, and then we start thinking about what are the options of additional work. But right now, there are no constraints on our ability to move our program forward to this fully resourced and moving ahead [quickly]. Ian Somaiya – Piper Jaffray: Okay. I'll jump back in queue.

Thank you.

Thank you. We'll take our next question from Thomas Wei with Jefferies. Please go ahead. Thomas Wei – Jefferies & Company: Hi, thanks. Actually I had a general question on the whole year in fibroids program. If you could just go over, what correlation is there between the size of the fibroid or estradiol levels and blood loss in those patients, and just a little bit of background there might be helpful.

Okay. Thank you, Thomas. It's an interesting question. The key aspects from a clinical regulatory viewpoint for uterine fibroid is the primary endpoint in the clinical trial, and the FDA has been recently clear on this. The primary endpoint for a trial is blood loss. And blood loss can be related to the uterine fibroid size, but not very closely. It's mostly related to the uterine fibroid location. So, those fibroids that are closer to the endometrial lining in the myometrium, for example, tend to be more likely to bleed. So, uterine size per se has not really been an aspect of getting a drug approved for uterine fibroids in the United States. So, correlation is not terribly good. Thomas Wei – Jefferies & Company: And so, how does that play into the risk of elagolix showing a positive benefit on the blood loss endpoint?

I'm not sure I understood the question completely that -- Thomas Wei – Jefferies & Company: If it more has to do with the location as opposed to the actual size of the fibroid, is what elagolix is doing here shrinking fibroids and so it'd be unclear if you would actually have an impact on blood loss in the end?

So, elagolix does reduce blood loss. We've seen that in healthy volunteers with normal menses. We've seen that in endometriosis patients with heavy menstrual flow. And we've seen it in endometriosis patients with heavy menstrual flow and who happen to have some small or moderate-size fibroids at the same time by ultrasound. Now, the loss of blood in uterine fibroid patients, to get into a uterine fibroid trial, you have to have heavy blood loss. So it's independent of location or size of your fibroid. So that won't be a gatekeeper. Somebody comes in and has heavy blood loss and they have a uterine fibroid, it would potentially qualify for the study, and we know that a GnRH antagonist with reduction of estradiol and progesterone is associated with a marked diminution of blood loss. And so, the only question is, you know, you want to nail down some of the details about the patient characteristics and the dose response range so you can then plan on subsequent studies. Thomas Wei – Jefferies & Company: Okay. And with the end of Phase II meeting behind you now with the FDA on the endometriosis program, what can you share with us about some of the key points of agreements or maybe how the program for Phase III trials differs from maybe what you'd originally expected prior to the agreement being signed with Abbott?

So, as you know, the program is an Abbott program at this point, not a Neurocrine program, and a lot of the details of the Phase III study design is in Abbott's hands, and I think their timing on disclosing those details will be when it's posted on ClinicalTrials.gov. So, I don’t want to -- I'm not really in a position where I can speak for Abbott. I a general sense, what we've said all along about having six-month trials and placebo-controlled comparison of elagolix to placebo, with co-primary endpoints, women with moderate to severe symptoms, long-term follow-up post-treatment, looking at [BMD], safety. All of those things have been nailed down and agreed to. And so there's no substantive changes at any of those levels. So, in that sense, things are the same and consistent with our discussions with the division at the FDA over a period of actually a couple of years. Thomas Wei – Jefferies & Company: Okay. Thank you.

Thank you.

And once again, it is star 1 if you do have a question. We'll take our next question from Phil Nadeau with Cowen & Company. Please go ahead. Phil Nadeau – Cowen & Company: Good afternoon, and thanks for taking my questions. First, on 98854, I think -- or I know we've already seen Canadian Phase IIa data, and after 12 days, there's I think a 41% change in the AIM score. Can you just talk a little bit about how the trial that you're doing in the US differs in design from that study, and therefore, should we expect -- or can we expect a 41% change from baseline, or are there any subtleties to the design that would bias that number one way or the other?

Thanks, Phil. Good question. So, you're exactly correct, the small open-label Canadian study in six patients was to give me some reassurance about the kinds of doses I might want to take into a properly powered placebo-controlled trial. So it's served its purpose very well. I was pleased that we saw a 40% reduction in dyskinesia literally within days of starting the studied medication. But I am the first to point out that it's an open-label trial, so we had no placebo control in those six studies. And the doses weren't looked at in isolation. So, all six subjects started at 12.5 mg, and then after four days went to 25 mg, and then after four days went to 50 mg. So, whether there was anything better regarding one dose over another, we really won't know until we look at it in a more careful proper placebo-controlled design. So, that is the big difference. This current study, the 1101 study conducted in the United States is a crossover trial, a randomized, double-blind, placebo-controlled crossover trial. So, study subjects come in and go for two weeks on active drug, then two weeks placebo, or vice versa. And for the active drug, they're either getting 12.5 mg or 50 mg of the study medication. So, I have a very nice way of looking at what we think is a dose that's well into the therapeutic range, 50 mg, and a dose that's right on the edge of what I think is beneficial. Given the long half-life of this drug, the patients reach steady state after that first week or so, and we should be able to isolate quite nicely the treatment effects, because it's within subject comparison. So there should be a very clear study as it gives us a very clear signal about efficacy on the AIMS and would allow me then to plan my larger long-term three-month trials.

And Phil, the other aspect of the study that's really informative to us different from the Canadian study is this is multi-center, so now we're going to have just shy of a dozen sites versus a single site. And so that's -- we're going to learn something, I'm sure, from that. Phil Nadeau – Cowen & Company: Okay. That makes a lot of sense. And then, second, I just want to be kind of clear what happened in the quarter that triggered the recognition of $20 million milestone for the pre-Phase III meeting with the FDA. So, if memory serves me correctly, you actually had the end of Phase II meeting in March. So, was this a separate meeting that led to new and different discussions on the Phase III design? Or is it something more subtle than that?

No, Phil. It's -- here's what the -- the way the agreement was originally written, was the fact that the $20 million milestone payment was triggered either by an agreeable SPA between Abbott and the agency, or the start of a Phase III clinical study. And as we've said before, the reason why it was written that way is that, left to our own devices, we always would have gone through an SPA route. Abbott has chosen not to go through an SPA route. So we made an amendment when they made that position not to through the SPA route that the milestone will be payable upon, again, starting the Phase III, or in a Type C meeting that we had with the agency, I believe that was approximately six weeks ago.

September 23.

Yeah, September 23. So, five weeks ago. That both companies would exit that meeting where we felt that the major substantive areas that would need to be nailed down that we had prescribed prior to the meeting were nailed down, and then the milestone payment would be made. And that's exactly what happened in that meeting. Phil Nadeau – Cowen & Company: Okay. Makes sense.

Okay? Phil Nadeau – Cowen & Company: Sorry. Go ahead.

No, that was it. Phil Nadeau – Cowen & Company: And I guess one final question. It is now basically early November and it does still sound like the Phase III is going to start by the end of the year. So, has Abbott begun to circulate the protocols to IRBs? Is that kind of what we're waiting for now? Or are there any remaining questions on what the actual protocols will be and design of the trial will look like?

They're still working out, and it's not just the single trial that they're dealing with, with the agency there. They're trying at this point in time to work out all of the entire Phase III program with the agency. And so, we are still and the team is still working towards that fourth quarter start on the first trial. But the proof is going to be in the pudding and see that trial start. Phil Nadeau – Cowen & Company: Okay. Thanks for taking my questions. That's very helpful.

Thank you.

Thank you. And it appears that we have no further questions at this time. I would like to turn the call back over to Mr. Gorman for closing remarks.

Well, thank you very much. It was a brief call today. I think it was a very successful quarter for us, moving forward with our programs. We don't talk about research a lot, as you know, but that doesn’t mean that research hasn't been doing an outstanding job thus far this year. And I'm looking forward to talking to you more about that in the coming months, with their progress on a number of fronts. So, with that, I look forward to meeting with all of you or taking your questions as the year progresses. Thank you very much, and goodbye.