Neurocrine Biosciences, Inc. (NBIX) Q3 2016 Earnings Report, Transcript and Summary

Good day everyone and welcome to today’s program. At this time all participants are in a listen only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. [Operator Instructions] Please note this call maybe recorded. [Operator Instructions] It is now my pleasure to turn the conference over to Mr. Kevin Gorman, President and CEO. Please go ahead sir.

Thank you very much and welcome everyone to our Third Quarter Earnings Call. I’m joined by Tim Coughlin our CFO; Chris O’Brien, our Chief Medical Officer. And before we get started since we will be making forward-looking statements, Jane could you please read our Safe Harbor statement.

Yes, good afternoon. 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 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 much of this quarter, our efforts have been around preparing for commercialization of INGREZZA. We now have PDUFA date as we learned in this quarter. The FDA gave us a priority review in a PDUFA date of April 11 of next year. Chris will be taking you through the progress of INGREZZA in its ongoing clinical trials both the ongoing clinical trials extension studies in tardive dyskinesia and also the two Phase II studies in Tourette syndrome. In addition this past quarter, our partner AbbVie with elagolix have a number of presentations at the American Society of Reproductive Medicine and they introduced their disease state education campaign in addition to all the data that they presented I believe in eighth presentation throughout that. I think many of you have already gotten all of the posters and slides that have been associated with those presentations. But we’d have to be happy to entertain questions for those either during this call or offline. Right now, what I would like to do is turn the call over to Tim to take us through the financials for the past quarter and year-to-date.

Good, thanks Kevin, and good afternoon, everyone. We appreciate you attending our third quarter 2016 earnings call. This quarter similar to the second quarter is fairly straightforward from a fiscal perspective. Cash expenses for research and development, as well as general administrative, continue to increase sort of pair for the potential commercial loss of INGREZZA and tardive dyskinesia. From a cash perspective, we ended the quarter with over $385 million in cash investments and receivables, again a very strong financial position. Our loss for the quarter was $36.9 million or $0.43 per share and this compares a loss of $34.4 million of $0.40 per share for the third quarter of last year. Our net loss for the first nine months of 2016 was $96.4 million compared the loss of $59.6 million for the first nine months of 2015. When comparing expenses from 2015 to 2016 is an important to remind you of investing of certain performance our issues that happened during the third quarter of last year. does starts (4:20): So R&D expense in the third quarter actually decreased by $3.5 million sort of the comparable period in 2015. They were up $12 million year-to-date 2016 compared to 2015. In addition to the after mentioned share based compensation expense change, the primary drivers of these changes in R&D expenses are the cost associated with ongoing clinical efforts tardive dyskinesia and our NDA preparation activities for INGREZZA. Additionally our clinical and CMC teams are increasing their focus and both are Tourette and Essential Tremor programs. We’re also making excellent progress on moving another compound back to the clinic for congenital adrenal hyperplasia program. General and administrative expense increased quarter-over-quarter and for the first nine months of 2016 compared to the same period in 2015, up $6 million for the quarter and almost $21 million year-to-date. The main driver of this increase was external consulting up almost $12 million primarily related to the commercial preparation of INGREZZA. In addition personnel related expenses increased by approximately $8 million year-to-date, compared to the first nine months of the previous year. These personnel and external consulting cost for almost entirely incurred across all facets our newest departments. Our MSO Group was fully deployed in the first quarter, our marketing health economics payer relations and sells for preparation groups. While we have increased spending significantly we have done some of the judicious inprudent manner. Accordingly, we are revising our 2016 expense guidance downward by approximately $20 million. This was primarily a result of lower than budget headcount coupled with lower than expected costs of external resources in both R&D and G&A. In a few minutes Chris will speak to you about our R&D progress this year and he will convey that we have remained essentially two plan across all the programs. We have been diligent in our R&D spending at an headcount only when necessary and anticipated need is not materialized. Our current employee base have been able to manage the NDA filing will continue to move the other programs forward. In addition the R&D cost related external development across our clinical programs has all come in well under our preliminary estimates. On the G&A front, we have added significantly to the MSL marketing and sales headcount throughout the year and have also been engaging the appropriate outside consultants to help prepare for the commercial launch INGREZZA. The G&A budgetary savings are mainly driven by the timing of events rather than true ongoing lower cost of operations. For example our G&A headcount will essentially beyond budget by year end. But the timing of adding some of these personnel migrated from early to mid-2016 and to later in the year. External expenses were also completed on an as needed basis. Both of these have resulted in the savings to plan throughout the first nine months. Accordingly, our cash burn for the year is also decreasing. We now expect to end 2016 with over $340 million in cash investments and receivables. So with that I’ll conclude my prepared remarks. Our 10-Q is on filed with SEC if anybody wants see anymore details. Now I will turn it back over to Kevin.

Thank you as Tim has said, there we’ve basically fully hired into our entire marketing group, medical affairs, the payer market access group and our health economics outcomes group. As we said though we do stay diligent on our spend and I do have to congratulate those groups along with R&D in how well they have controlled our external costs we’re not to – we’re certainly going to spend absolutely everything that is appropriate for a successful launch into support INGREZZA post launch, but the groups have done a terrific job and it exceeded our expectations about what they can actually accomplish here. So we are going to have lower expenses for the year. So what I would like to do now. So Chris can take you through INGREZZA in particular and then the other portfolio compounds. Chris?

Thanks very much, Kevin and thanks for participating for those online. Let me say INGREZZA to last. So I’ll will quickly walk through the other non-VMAT2 programs has pointed out, the congenital adrenal hyperplasia program is on-track for us to bring that follow one molecule in as a new IND. I would like to have – we plan on submitting that end of this year. And we should be back in the clinic in 2017 for CAH. The essential tremor program is currently in the midst of a multiple ascending dose sequence and pending the results of that trial, safety the PK et cetera. We would then plan on starting a proof-of-concept trial in essential tremor next year. So they’ll probably be no real additional disclosure around that program until we’re at that point. Now the elagolix activity has been very intense as mentioned they are colleagues that AbbVie had a large role lot of data and a presence at the ASRM meetings earlier this year. And really impressive amount of work that’s going on looking that ATOR aspects of endometriosis the burden of illness, the impact of, the cost of managing the disease state and adding context of a effective oral medication for managing endometriosis associated pain really opens up a whole opportunity in the space of women’s health for a very large under-served market. So we’re very pleased with the progress that AbbVie has been making and they are on track for the NDA next year as they have outlined. So let’s turn now to the VMAT2 program INGREZZA valbenazine and as you heard so far tremendous progress has been made. As we’ve previously discussed the NDA for tardive dyskinesia was submitted in August and we got official acceptance of the submission by the FDA with that announcement in October. And the PDUFA date has been determined as April 11. If you do the arithmetic from October to April you’ll see that this is indeed a priority review that means the FDA is very aggressively going through the review process and we anticipate being engaged with them on discussion as the months unfold leading up to the April PDUFA date. So very, very, very pleased with that propriety review status and our accelerated timeline if you will. The tardive dyskinesia program obviously the pivotal studies are complete. And we have ongoing right now the so-called 1402 study or Kinect 4, that’s the one year open label safety study. We still have a few dozen subjects that remain enrolled in that trial and that will complete in early April. Obviously completion of that study was not controlling factor in our timing of submission of the NDA. In addition to that Kinect 4 study we have the 1506 study, which was really trial that was designed to give access to drug for subjects that have been in our previous studies, who had expressed a very impassioned desire to stay on valbenazine before its commercial availability. So that trial has allowed more than 100 subjects to continue to get access to drug for up to 72 weeks of treatment and that’s going well. The Tourette syndrome program is moving along very well. The press release earlier few weeks ago announced the closing of recruitment for the T4 study, so-called 1502 adult drugs trial. As you recall, this is a placebo controlled study in adults with Tourettes comparing two doses of INGREZZA to placebo using the Yale Global Tic Severity Scale as the primary endpoint. This trial was originally designed to enroll approximately 90 subjects and we found somewhat to our surprise two interesting things, right as we were getting ready to wind down the enrollment process besides had recruited a large number of subjects, who are highly qualified for the study. So we ended up with a slightly lower screen failure rate than we had anticipated, which means that we enrolled more than the 90 subjects in the trial. So the sites were very enthusiastic, the quality of the subjects enrolled was very good and we’re very pleased with the conduct of that study. You can do the arithmetic with last – patient last visit anticipated eight weeks after the enrollment and then time to clean and lock the database. We should be reporting our top line results from the T-Forward study in mid-January. So that’s something we’re very much looking forward too. The pediatric Tourette trial was also going well and that is the T4 screen study, the 1501 study that study started approximately a quarter after the adult study started. And it’s approximately two-thirds enrolled at this present time. So we find obviously it’s always harder to enroll small children in clinical trials. I assumed this study would enroll faster than the adult trial, simply because there are so many more patients with address that our pediatric age. But we’re marching along that they had a good pace and we would expect completion of screening for this trial by the end of the year with top line results couple of months after the adult study. So that that is going very nicely [indiscernible] where you live, you may actually be hearing radio campaign ads, you get a lot of calls saying heyI heard your recruitment ad for the T-Force GREEN study, which is currently running in North America. So that that Tourette program is going well, now to support all this INGREZZA activity particularly with respect to tardive dyskinesia the medical affairs group has been very busy. The health economics and outcomes group is involved in a range of activity to help support the commercialization of INGREZZA. The field based MSL team are very engaged with the scientific leaders across the country at scientific meetings and workshops and in a variety of data analysis and publication activities. This year there have been 24 abstracts for INGREZZA as scientific meetings, next two to come up we hope will be first opportunity people have to see some long-term, safety in efficacy data. So keep your eyes and ears open for that coming up. And obviously, multiple manuscripts are either under review at journals or in preparation to help support the data from INGREZZA trials. So that’s a range of activities that are going on right now for CAH, ET, TD, TS and med affairs. And with that I’ll turn it back over to Kevin.

Thanks Chris. I failed to mention that one of the other things that we are also spending quite a bit of time and effort on is getting ready for almost certainly would be having an advisory committee meeting. We feel that that would happen probably sometime in February. And so we’re doing everything to be completely prepared for that when we’re advised other scheduling for that. So with that, why don’t we open it up for questions now?

[Operator Instructions] We will go ahead take our first question from Ian Somaiya with BMO Capital. Please go ahead. Your line is open.

Hi, this is Nate on for Ian. Thanks for taking my question. So first could you comment little bit more on the specific preparation that you’re doing for the valbenazine panel. And then on Tourettes, what did you confidence in the upcoming Phase 2 read outs and if you if the data are positive, would you advance in the Phase 3 are they needed. And what would you do if the data are mixed. Thank you.

Yes. I’ll take the first question, so with getting ready for an advisory committee, it’s nearly as much work as preparing our NDA for submissions. So we have the full team working with an outside group in order to prepare all of the slide decks in order to be able to answer everything that an advisory committee would ask also our book briefing documents that would be submitted to the FDA in advance and to the advisory committee members. We also do mock panels, getting ready for the advisory committee meeting actually multiple mock panels. And we try to in every way possible both physically and also and how they would be conducted to be identical to an actual advisory committee meeting. Chris, you want to take the second half on TS.

Yes. So the second half was what would we do once we have the results of the adult Tourettes trial, which we anticipat in January. So if the results are mixed then it depends on what they’re mixed about obviously if it’s – I assume it’s going to be a very informative trial. So we will act on whatever the trial informs us. I mean this dose is better than that dose or these investigators are more reliable investigators from future trials. We’ll learn from all of that information, but one – I assume that we’ll see a reduction in Tic Severity based on the Yale Global primary endpoint. And then the question is, how does the FDA see that data and what is our fast forward. And for that we will need to sit down and talk with the FDA. So I can’t tell you what the next step is until I have that discussion with the FDA going forward. And that’s for the adults. For the Tourettes, pediatric population obviously we’ve always assumed that pediatrics are different than adult and that it is more likely than not that we will need additional studies in pediatrics for a submission to the FDA. And again, I need to sit down once I have data in hand meet with the FDA and reach consensus on the path forward.

Great. Thank you.

Thank you. And we’ll go ahead and take our next question from Alan Carr with Needham and Company. Please go ahead. Your line is open.

Hi, thanks for taking my questions. If you talked a bit about you’re outreached with MSLs and med affairs. I wondering if you can give us a sense of how that’s going what sort of feedback you’re getting any areas of resistance maybe. And then which specialties are you targeting? Thanks.

So the MSL’s are booking with both a psychiatrist and neurologist, because both groups have an interest in tardive dyskinesia. What we’re hearing is no surprise, namely that the tardive dyskinesia that some of us knew from 30 years ago with first generation high dose anti-psychotic medication is less prominent today. That we don’t see the same high amplitude severe TD that we did 30 years ago. But we also hear quite loud and clear from all of our doc’s that, even though the severity is as prominent. The prevalence is greater that there is a lot of tardive dyskinesia in America. And it’s present and prevalent even in the Phase of second generation a typical anti-psychotics. For example, we were recently at the U.S. Psychiatry Congress Meeting in San Antonio meeting in San Antonio and the MSL’s had a medical affairs booth at the meeting. And literally 100 of psychiatrists came by to talk about what they see in their practice. And they see a lot of TD. And we hear this from academic psychiatrist, community psychiatrist, psychiatry nurse practitioner et cetera. So that that interaction has been going well what we have learned is that the psychiatrists generally don’t know much about VMAT-2 as a target. And when they learned that there’s a new mechanism and a potential for a new medication become very excited and they want to know more. Every single one that we talked to have said that a key component of any program going forward is the education about TD. And so that’s obviously an important focus of the medical affairs group now. And it will obviously be a focus of the commercial group post-launch.

Kevin, thanks very much.

Thanks, Alan.

Thank you. And our next question comes from Charles Duncan with Piper Jaffray. Please go ahead. Your line is open.

Hi, guys. Thanks for taking the question. And congratulations on a good quarter progress. My question was along the lines of Kinect 3, Chris, you mentioned that there had been I think, about 100 subjects are as much as 100 subjects for up to 72 weeks. I’m wondering if you can provide any more color on the numbers of subjects actually in and any additional color on the experience in terms of the number of the persistence within that study so far.

So Charles thanks, perhaps I wasn’t quite clear on that. What I was talking about was the so called rollover study or 1506 study. And in that that’s more or less just an opportunity to receive open label drug in a post-study environment, it’s open to anybody who is in Kinect 3 or Kinect 4 after they had been it one year of treatment in those trials. If they still wanted access to drug. So as you remember Kinect or maybe recall Kinect 3 in randomized 234 subjects and the Kinect 4 had, I think 100 something subjects, I can’t remember the number, right, I can’t. And so when we opened up that opportunity for people, we’ve been clammering for continued access to drug. We calculated that be somewhere in the 100 to 200 range and originally thought it’s going to be 75, but we couldn’t accommodate everybody who wanted to get in. So that’s our trial. It’s not part of Kinect 3 directly or Kinect 4 directly.

Okay.

But the patients continue to benefit.

Absolutely, absolutely there’s no question that the investigators, the patients, the caregivers want these individuals to continue to receive drug because there’s a perception of benefit.

Okay. That’s helpful. I might get on the specific nature of that study. If we could hop over to Tourette syndrome, Chris, you also mentioned that you were a little bit surprised that adult trial enrolled as quickly as it did or is there’s much demand and first is the pediatric trial. Are you more surprised that the pediatric trial have been enrolled quickly or more surprised at the adult trial did enroll quickly. And what does that say about the awareness of Tourettes and interest in this area.

So I guess I was more surprised that the enthusiasm for the adults to get into the trial. Because as you know, it’s a much, much smaller number, but the really was seems to be a pent up demand for a drug that’s potentially better tolerated and the approved anti-psychotics. But I’m not surprised that is – it’s easier to recruit at adolescence than it is young children for clinical research. That and that’s independent of what indication you’re talking about – that’s not a surprise at all. That doesn’t mean there’s not interest. The interest is really high. One of the interesting challenges has been for the kids who have really severe Tic disorder. Most of them are on anti-psychotics. That is dopamine receptor blocking drugs like Pimozide, Haloperidol or Risperdal or Abilify. And they’re obviously not satisfied by those treatments. So they want to be in a trial. But for these Phase II studies, we had designed them to be Tourette patients, who are not receiving concomitant antipsychotic medications. And so that means they can’t enroll for this Phase II study. In the future would we have studies that allowed people to be on antipsychotics just like we did in tardive dyskinesia, probably but for these are earlier Phase II studies, we had that as the exclusion criteria and hence a lot of the patients and families who were eager to be enrolled in these trials couldn’t.

Okay. That’s helpful. And last question is in terms of going to market with INGREZZA, I have to ask [indiscernible] but I’m wondering if you were to see approval for the drug and say April, if you’d be able to launch shortly thereafter. So sounds…

Yes. What our plans are as that from a manufacturing a drug standpoint it will be ready within 72 hours after an approval mark on what comes through. So from a sales force standpoint, what we’ve hired thus far is the much of the management of the sales force. The National Sales Director, the East and West Zone Managers and six out of the ultimate 18 Regional Managers, what they’re all doing right now is going through 1000 of applications for sales reps. And so they’re sorting through those they’re go up first just on paper, then taking the top of those going through video, interviews. And then we have several hubs across the United States that we’re bringing than the finalists in such that mid-January is our goal to have contingent offers to the entire sales team in the remaining Regional Sales Managers. And then what we do with that is that all of them are in place locked and loaded at the time of again [indiscernible] approval on April 11 they then give their two weeks notice to because the vast majority of them are employed with different companies at the end of that two weeks. Then they will have approximately two week home study that they’ll be doing then we bring them all down here to San Diego for an additional two weeks of training and then they’re deployed. So post-approval we would be launching six weeks with a full – the full field force.

Okay. It’s helpful. Thanks for the added color.

Thank you

Thank you. And we’ll go ahead and take our next question from Geoff Meacham with Barclays. Please go ahead. Your line is open.

Good afternoon, guys. Thanks for the question. Chris on the valbenazine I wanted to ask you about Tourettes, just thinking about the disease variability itself and how that’s capture than Yale Global Tic Scale, curious if it’s as predictable as it was with the AIMS Scale and tardive and what would you view for the adult in pediatric studies as a clinically meaningful result.

Yes. Thanks Geoff. So Tourettes by its very nature is probably a little more variable oftentimes people with tics, one set of motor tics or noise tics will wax and wane over a six week period. And then new step will come on. And they kind of keep rolling through different kinds of tics over time. So the studies obviously are designed to take that into account. We know that there’s a certain amount of variability overtime. So when we do our simplified estimations and power calculations, those are built into those assumptions. Now with the Yale Global Tic Severity Scale is a scale that looks back on the prior week. So if there is some waxing and waning from day to day, the clinician, the caregiver, the parent, the child or the patient are able to capture that information of the past week, in terms of both noise and movement tics. And that ultimately gives the score. Now in clinical trials with Tourettes, we typically enroll people who are fairly symptomatic. And what that translates into is a Yale Global Tic Severity Scale score of 25% to 30% something in that range. And it’s not usually plus or minus eight. That would be a typical well run placebo controlled type trial. And in those studies, we have some literature that informs us about what would be a clinically – minimally clinically – minimal clinical improvement detected. So in MCID and this score is typically at a minimum of four point change, but most clinicians like to see a six or seven point change to have a substantial relevance and when you look at clinical trials of Tourettes that have been well controlled with an effect of agent. Typically what you’ll see is for the group at 30% reduction in Tic Severity has kind of being here. This is what we need to be at least a decent clinical effect. So we know in our trials to date blinded baseline data are in that 30 range. We have a good handle on variability and consistency among the raisers and we assume that will see an effect size of at least that magnitude.

Got you. Okay. And I know AbbVie is obviously running the program for elagolix. But I want to kind of you get you guys perspective on how much work has been done in the past on co-formulation with ad back probably you got my question a lot. Is it easy to do? Do you feel like that could be a major differentiator down the road or does the datas in EM sort of speak for itself with respect to add back on the separate basis.

Geoff AbbVie has not disclosed what their plans are for the introduction of the drugs. So I think that’s probably more of an appropriate question for them and not us at this point.

Okay, okay. All right. Yes.

Okay. Thank you.

Thank you. And we will go ahead and take our next question from Anupam Rama with JP Morgan. Please go ahead. Your line is open.

Hi, guys. This is Eric in front on this evening. Thanks for taking the question. So our understanding is that valbenazine or the INGREZZA, India is being reviewed by the psychiatric division, re-correct there in which case. Just want to get a sense of what that the divisions experiences with medicines meant to treat more neurological indications. Is there significant experiential overlap with the neurology division or any presentedyou might points to it.

Eric, you’re correct that valbenazine is under review by the Division of Psychiatric products. And they are very knowledgeable about tardive dyskinesia, they have been dealing with this for decades. They are very knowledgeable about the AIMS as a primary endpoint and they are completely confident and comfortable of handling this. And they have a long track record of doing these kinds of things. So for example, the Tourette syndrome program – Tic disorders that’s in psychiatric division. They have responsibility for those programs. They have a long history and they certainly understand the place that is involuntary movements have in the overall setting up people suffering up with significant mental health issues. So they really are probably the best division to take this on. But that’s the way it’s done.

Got it, thanks. And maybe I guess I have to ask given the relatedness to is there’s been serotonin, how are you thinking about the potential for a black box warning and would it’s [indiscernible] what impact with that have our potential runs have in terms of launch timing. Thanks.

No impact on launch timing. I mean obviously I was involved in the development of valbenazine I mean in my former life and I’ve used VMAT2 inhibitors, as a clinician for 30 years. And there is a long baggage registry about we met to Reserpine, as a drug that had significant issues. So I would not be surprised if we get just a class label for VMAT2 inhibitor with respect to suicidality. And I mean the FDA has been giving class a label for suicidality for epilepsy compounds for SSRIs, because all spectrum of things. So I would expect that any VMAT2 inhibitor would have class label. We certainly haven’t seen any data that there is a specific risk for suicidality or depression with valbenazine our data has been quite good in that respect in terms of safety signals. So, again I think cross labeling probably a reasonable expectation, but data that supports good safety and tolerability profile. We will argue, yes, Tim is correct. We will argue for not having it. But in the end of day, the doc’s that take care of these patients. Are taking care of patients that are using two or three drugs at a given moment that all have cross labeling for sudicality. So they are expert in this population, they know how to manage it and I don’t think it’s a major impact on the ability to use such medication.

Great. That’s very helpful. Thanks for taking the questions, guys.

Thanks, Eric.

Thank you. And we will go ahead take our next question from Phil Nadeau with Cowen and Company. Please go ahead. Your line is now open.

Good afternoon, thanks for taking my questions and congratulations on the progress. The first Tim, one for you as we look forward to the launch early next year. How should we expect SG&A expense to trend? Its look it’s been adding about $2 million to $3 million in the incremental expense for quarter, is that reasonable to expect for the next several quarters as well or will be there any acceleration.

Yes. I think it’s reasonable to expect a little more pickup in Q4. And it probably little more into Q1 and then Q2 is Kevin out – laid out will be bringing on the sales force knock on would they will start April 18 there over so. And at that point you’re going to bring out 150 reps, you’ll have a full component of the sales management team then with 18 different Regional Managers, and two we call them Zonal Managers. So you got approximately 160 more people come on Phil and you can use whatever multiplier you want on that, but that is going to be the main driver of G&A next year. The other piece, I would mention is that we have put the pen to paper on this and finalized. But there’s also the external spend outside of headcount. That should run a little bit higher than it is this year, but we will be able to really hang on that number at our Q4 earnings call at early February. But that number is going to run probably in the $20 million range using round numbers right now. But that will be able to put or find our pen point on that so.

Okay. That’s really helpful. Then second on the market sizing at your R&D event last year, you talked about 250,000 to 300,000 patients with tardive dyskinesia, who had moderate to severe symptoms in the food probably appropriate for treatment with valbenazine. As you’ve done more market research and gone out to stress with physicians more, as you’re what’s your estimation of the number change is 250 to 300 still the right number.

I think the 300 still the right number for the moderate to severe category. We’ve been conservative that we’re going to stay that way at this point there is when you look at some of the literature they would pointed you to a higher number as far as the prevalence rate, but we can right now put our hand over hard looking ICD9 codes the things get it to that 300 number we feel good about that from moderate to severe. So there is we believe upside there, but right now we’re going to stay with that.

Okay. And as we think with your aspects, what physicians should we concentrate on just to find these patients. I know you sort of above that Tourette syndrome I’ll just any, you seem to find them as well as – is there some piece we should really focus.

So Phil, the absolute certainty is that the majority of patients with the TD are care for biopsychiatry. The challenge is when you go to talk to docs about TD in the psychiatry community oftentimes they say it’s really interesting that they like to believe that the second generation and a psychotic have been successful in making TD go away. But when you actually show the videos of patients with TD when you actually talk about claims data when you look at prescription data, you recognize that the prevalence really has gone up. So sometimes when you if you as an analyst will go and talk to a psychiatrist. The first thing you’ll get is a kind of a position like I never see TD, are Oh my god, TD all the time my whole clinics feel with that. You have people with very strong opinions that are often quite disparate. And it just – it’s a reflection of the fact that there is no reason to diagnose TD, people don’t use the codes correctly. And there are medical legal issues around TD diagnosis and they don’t have any available treatment to offer patients. They certainly don’t want to disrupt. The patient’s psychiatric therapies by potentially scaring them off of taking their antipsychotics. So it’s really an interesting – the only thing I would suggest to you is don’t rely on the opinion of two or three docs. You really have to go out and talk to our broad spectrum of psychiatrist if you really want to get and understanding was out there?

Great, that’s really helpful. And then last question for me. Is on pricing, I know it’s too early to for you to probably comment on these exact price. But for the past you’ve given us ranges for the type 2 crisis that you’re considering for the tardive dyskinesia market. And appreciating that sometimes ranges due evolve over time I was curious for your most recent picking and what would be a good price range for a drug like valbenazine in tardive dyskinesia.

Yes. So, Phil. We’re going to stay there’s no evolution here we’re still at 20 to 60 per year – 20,000 to 60,000 per year on a net basis.

Great. That’s helpful. Thank you.

Thanks.

Thank you. And our next question comes from Paul Matteis with Leerink. Please go ahead. Your line is open.

Hey guys. Thanks a lot for taking our questions. I appreciate it. Just one for Chris on the Tourettes study in the adult data. Chris I’m wondering how you would interpret that data in the context of the pediatric study, which you read soon after. For example if the adult study fails, do you think it’s safe to assume that drug won’t work in pediatrics or vice versa? Be curious on your thoughts on that.

No, I don’t think if the adult study fails, it would necessarily handicap the PE [ph] study. The real question is why would a study have failed, is it the conduct of the study, is it the right dose, wrong dose, were their inclusion exclusion criteria that should have been different. So really it depends on what happened. It was a beautifully run study with super clean data and perfect exposures. And if it didn’t work then you end up in the conundrum that I know you and I have discussed before is Tourette syndrome in adults are different pathophysiology than in kids. We've already seen an indication in our open label Phase Ib T-Force study that we see even with subtherapeutic doses and short trial. We see a pretty good sized reduction in Tic Severity. So I wouldn't let the adult study results handicapped a pediatric study unless there was some growth safety signal or something that came out of it.

Okay, great. Thanks a lot.

Thank you. And our next question comes from Biren Amin with Jefferies. Please go ahead. Your line is open.

Hi, thanks guys for taking my question. Just on the Valben, I believe you have sorted a patient registry for Valben recently, where you’re planning enroll up to 1,400 patients across many sites. Is this I guess – first of all what’s the objective of the registry? Can you tell us what data you would collect? And is this a patient pool that would be eligible for valbenazine upon approval and product launch?

Hi, Biren. Thanks. So there is a study that is just getting underway called the re-Kinect study, which is actually not a valbenazine study. It’s a project through our HEOR group where community psychiatrists have the opportunity to see if patients have involuntary movements, patients who are receiving a long-term antipsychotics whether they have drug induced movements. I think those movements are in fact impactful on them in some fashion. So they're collecting data about the presence of movements whether it's I mean an impact on their function and their quality of life that sort of thing. Again, it's not a valbenazine study. It’s not an interventional trial. It’s kind of a cross sectional look at TD presence or prevalence in amongst patients on antipsychotics in community psychiatrists. And so that’s something that we would hope to have some data about some time toward the middle of next year. And then if we’re lucky and that study works well, those patients can continue to be tracked for a year to see what happens, do they change or not. If not, again it’s not a valbenazine trial, so there is not a specific intervention for that. It’s more – to learn more about the burden of – and the prevalence of TD and the impact of burden of illness.

And would those patients be eligible for valbenazine once it approved?

They’re not a part of the study, but if they have TD and valbenazine is approved to treat TD, absolutely they would be candidates for treatment that would be up to their physician and looking of the patient.

And then just on the Tourettes trial in pediatric and adolescence. Can you remind us what the doses were in that trial? I don’t think they’re disclosed on ClinicalTrials.gov.

Right, its placebo low dose and higher dose.

Great, thanks for the clarity.

Thank you. And our last question comes from [indiscernible]. Please go ahead. Your line is open.

Hi, guys, thanks for taking the question. So I guess just wanted to ask, I know you have talked before about kind of some of the efforts on the MSL side building out a bit of market awareness. I just wanted to see kind of what sort of initial or early investment you have started to make in terms of awareness on the payer side. I know you have mentioned kind of some of the pharmacoeconomic studies that have gone on. But can you describe what sort of early groundwork you have started to lay in terms of those sort of payer discussions? Thanks.

Thank you, Andrew, and thanks for the coverage also I might add that that just came out today. It’s a good question and we have been doing a lot of work with payers. So as I said earlier on the call that we have a full payer market access team in place. They have been in place for sometime now that includes not only the in-house group, but also we have the market access team that is out in the field that covers the entire country. They have been meeting with both national and regional payers and also with government payers, because that’s going to be at least 50% of our patients will probably be covered in some form of government program. In addition, what we have been doing is quite a bit of market research with on payers attitudes how much they know about TD, what they think about if we started. I think I started talking about this, gosh almost two years ago, about the qualitative work that we started out. And then they’ve been a number of quantitative studies that we have conducted. And all of that is just about finishing up here as it comes to year-end. As with physicians as Chris has talked about in great lengths with the MSL is with the payers, there is quite a bit of education that goes into this and getting impressions and addressing what questions they have, which are many about the disease. Obviously, there is nothing to treat out there. So it’s not like there is anything that’s on their radar that impacts their budget. And so, we’re having very good discussions with payers as we have been going through this process. So obviously, we’re not going to make a pricing decision until we have an approval the last piece to a pricing decision is going to be having our label there but what we are doing is building a value story because it isn't just about quality of life. You have to really have an economic value proposition for these payers. And so all of that work has been ongoing and will be ongoing right up until the moment that we launch.

The other thing I would with the payers to what Chris said is that there's a different levels of awareness with TV some payers are very fluid into it others aren't at the elementary stage. They are aware of it. And that’s another place for if we are going to talk to payers you should also talk to more than just a couple to get a sense for what they – what their senses for the TV population within their patient population.

Great, thanks. And I guess just one quick follow-up to that. As you think about kind of Kinect 4 in the rollover study. How you think payer mix impacts the ability to transition those patients to commercial patients once INGREZZA is available is that going to be something you have a pretty good eye on or how do you think about kind of the clinical to commercial rollover from that sense?

Yes, it’s a good question, it’s not only with those patients but it’s with all patients that I then going to have scripts written for them by the efforts of the sales force that’s out there. As we’ve directed this is going to be a slow launch that takes place and tell you reach that inflection point. So for that first 18 or so, there is a lot of education that has to go on with the physicians lot of misperceptions as Chris has talked about out there. And what in addition that you have that you have to deal with is just getting on formulary with all these different payers. And so some of them can take many, many, many months some Medicare plans you will be on quickly others that’s going to take a long time same with Medicaid. The private payers are usually going to be a bit quicker than the public payers to go there. So in the beginning you can imagine for the first at least six months, almost every script that’s written its going to be an exception script that’s going to go. So you’re going to go through the process where the first time through is denied and then you have to go through that process in order to get the scripts fulfilled. What we are doing as we fully anticipate that’s nothing unique either to us either that what’s many drugs that are being launched now. And have to deal with it’s just the timing of when you get on to the formularies. And so what you what will have in place and what we've already contacted to is a really excellent hub services. So that we can assist both the patients and the providers in getting through that maze as painlessly as possible.

We do realize that about half of our TV population has private insurance and about half has government insurance. So rough numbers so that kind of gives you an indication of what was Kevin was describing.

Great. Thank you.

Thanks, Andrew.

Thank you. And it appears we have no further questions at this time.

So I'd like to thank everyone for your attention today and also the questions. We’ll still be at a number of meetings throughout the rest of this year. And there's going to be more publications and presentations that you'll see, coming out both from ourselves and our partner. So I do look forward to meeting with you as we head into the holidays. And stay tuned. Thank you very much.

And that does conclude today's program. We'd like to thank you for your participation. Have a wonderful day and you may disconnect at any time.