Good day, everyone, and welcome to Neurocrine Biosciences’ Reports Third Quarter 2017 Results. At this time, all participants are in a listen-only mode. Later you will have the opportunity to ask questions during the Q&A session. [Operator Instructions] Please note today’s call is being recorded and I will be standing by should you need any assistance. 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 Q3 call. Before I get started, I will be making forward-looking statements. So, Jane, could you please read our Safe Harbor statement.

Of course, 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. I'm joined here today on this call with Tim Coughlin, VP of Finance; Chris O'Brien, Chief Medical Officer; Eric Benevich, Chief Commercial Officer. I trust you’ve all seen our press release that has gone out and leave it to say that we continue to be very pleased with the launch of INGREZZA. I'd say by far the most satisfying aspect of this launch of INGREZZA has been our ability to meet with patients, who have been treated with INGREZZA and seen the impact this has made on their and the positive impact it has made on their life. And then obviously it is very nice to see how the drug is being received out there in the marketplace and Eric is going to go into that in some detail. Just a couple of things that I'd like to say at the outset. It's still early days in this launch. And I know that many of you, you would love to have a lot of data around this new patient, the new RX’s versus total RX’s length of time to refill the patient mix and it goes on and on and on. Unfortunately, we're not going to be sharing those as of yet. It's still way too early in the launch for us to be drawing any conclusions from any of this other than to say we're very happy with how this is going. So I asked you to be patient and hang on to those because at some point in the future we will be answering those questions. The other caution that I want to give you is that we've been on the market now. It's just over six months going on month seven. So we're getting more and more data and you now have…

Good afternoon. I also like to thank you for joining us on today’s call. As Kevin stated, the third quarter of 2017 is very productive on both the commercial and R&D fronts and the fourth quarter is continuing this positive trend. Since our launch on May 1st of 2017, INGREZZA have shown strong continued month over month growth in prescription volume over the initial six months. During the initial two months of sales reported net revenue of just over $6.3 million of equivalent of approximately 745 prescriptions filled. During the third quarter of 2017, our first full quarter of INGREZZA sales, there are already equivalent of approximately 5,100 total prescriptions filled representing net revenue for the first full quarter of sales of $45.8 million. We’re using a sell-in methodology for revenue recognition. This means we recognize product sale revenue when the drug arrives at the select pharmacy or select distributors warehouse. The other revenue recognition method typically employed by pharma companies is called sell-through where a company records revenue upon the fulfillment of prescription to a patient. Beginning on January 1st 2018, the accounting rules are changing for revenue recognition and all companies selling pharmaceuticals will no longer be committed to use the sell-through model and will migrate to a sell-in method of revenue recognition. We as a company made the election early adopt this change in accounting rules. We determined it was easier for both the company and investors to understand an early adoption of the new accounting rules for revenue recognition rather than switch from a sell-through model to a sell-in model, a short eight months after launch. I would also note that the difference between revenue recognized using the sell-in versus sell-through methodologies quite small. This difference arrives as inventory has been shifted to distributors and pharmacies…

Thanks, Tim. Q3 was our first full quarter on the market following our INGREZZA launch midway through Q2. And I am pleased with both the execution by our team and the results they achieved as we continue to build the team market and customer preference for our product. As I stated on our previous earnings call back in August, it is still very early in our launch process. We’re executing on a commercial plan that is focused on several key strategic imperatives. Educating health care providers, or HCPs, to help them better recognize and diagnose TD, building awareness of INGREZZA as a new breakthrough treatment for TD and supporting patient access through our patient services hub and engagement with payers to support broad reimbursement. So let me provide some color on some important initiatives. Our efforts to educate HCPs on tardive dyskinesia are primarily driven through our specialty sales team. And key resources for them to educate on differential diagnosis include a series of video then yet showing TD patients with a range of uncontrolled movements across multiple body regions including the face, neck, trunk, hands and feet. In addition, we are investing in peer to peer programming, presence at key medical meetings and other initiatives to reach our target audience with our TD educational messages. Our promotional efforts are focused on private practice and community mental health psychiatrists as well as a strategically important subset of neurologists that specialized in movement disorders. In addition, we have increased coactivity to Advanced Practice Registered Nurses and other allied health professionals that are critical providers of care to patients with TD. In Q3, we invested in a significant commercial presence at important medical meetings including the U.S. Psychiatric and Mental Health Congress and the American Psychiatric Nurses Association Annual Conference where we…

Well, thanks Erik for the comments, thanks for the participants in the call this afternoon. As Kevin mentioned, I’ll provide some clinical updates on our pipeline specifically five programs, which are all moving along well. So let's start with the two valbenazine programs. First up tardive dyskinesia, you just heard about the commercial aspects of the INGREZZA launch from Erik, we are also very pleased with the engagement that our medical affairs team has been having with scientific leaders both in psychiatry and neurology. The medical affairs group has been successful with multiple manuscripts recently submitted for publication including the connect three long-term extension of data, which has been accepted and specific subtype patient analyses, psychiatric stability and other topics of clinical importance. We do anticipate sharing more data at upcoming scientific meetings including the American College of Psycho-Neuropsychopharmacology coming up later this year and a steady flow of data is planned in 2018. For Tourette Syndrome, we're very pleased that the FDA recently granted us orphan disease designation for valbenazine for pediatric patients with Tourettes. The clinical team is currently very busy with wrapping up the T-Force fusion study, which was that open label extension study, which followed T-Force screen. And the data from that fusion study is important because in conjunction with our exposure response modeling that we've got some T-Force screen study, we were able to come up with a sufficient set of data to design the T-Force GOLD study. So following the investigator meeting, which was held just in October, a couple weeks ago, the T-Force GOLD study is now enrolling pediatric patients. You can see it on clinicaltrials.gov. And as we noted in our press release last week, this new trial is a randomized double blind placebo controlled trial as one to one randomization of…

Thanks, Chris. There's a lot of very good data that we've just shared with you financially commercially and from our pipeline. So at this point, I would like to open it up for questions.

[Operator Instructions] Our first question comes from Charles Duncan with Piper Jaffray. Please go ahead.

Hi, guys. First of all thanks for taking my questions and congratulations on a very good quarter. I just have one commercial question, one pipeline question and maybe a question for Tim. So on the commercial question, I know you're not really going to talk about number prescribers or scripts per prescriber even patients on drug, but now that you’ve had I will call it six months of some experience and some of those patients may have been on the drug for a while. I am wondering if you have a sense for percentage of patients that have come off the drug using the 40 milligram tablet. And if you think that that percentage is going to contract or reduce or you might be able to pick up those patients again with the 80 milligram tablet going forward.

Charles, I guess, you're asking us if I can – if I can paraphrase is what is the persistence of each patient in taking the drug.

Yeah.

And again while we're pleased with what we're seeing, we don't feel comfortable in putting this out there because it is such a short period of time still. And in part of this goes to the fact that the physicians will start only a very small number of their patients on drugs. And then they will wait usually about three months later to see their patient, again see how they’re doing, get their input as well as making an evaluation themselves into this. So as you can imagine being out about six months that's still a very small number. So we're not going to draw a whole lot of conclusions based on that small number now. So give us more time and when we feel comfortable that what we see is real and we – and it really reflects how the market is going then we will be happy to share that.

So you feel good about persistence, but is it logical for me to assume that 80 milligrams tablet may actually be slightly better than two 40s?

As far as an 80 milligram table being better – they’re bioequivalent. And as a matter of fact in our clinical studies, the patients were given two 40s throughout that that was our 80 milligram dose, two 40s given at the same time once a day. So – and there's no reason to believe that a single 80 milligrams tablet behaves pharmacologically any different than taking two 40s simultaneously.

[Indiscernible] takes. So moving on to my pipeline question for Chris, I guess I am wondering with regard to the GOLD study, you’re changing a little bit the end point. And I'm just wondering how you’ve deal the premonitory urge for Tic Scale compares to the Yale Global. And if you feel good about using that one in that study and how the previous study informed the use of that?

Well, Charles, I'm taking a back here just a second and I hope something didn't happen that you're describing. We did not change anything about the primary end point. If the Yale Global Tic severity scale, that’s used not the premonitory urge. The premonitory urge is an exploratory or secondary endpoint we’ve had that in every study.

Okay, my mistake. We read it wrong. And then I know pick upon you suggested that you might be filing an NDA, but I guess we’re assuming that you would still need to do a Phase III. Is that still going in assumption?

Well, I mean, our base case has all been and we always said publicly is we assume we'll have to do a Phase III study, but we really rather not do a Phase III study. So that's the question that we're going to bring up with the FDA.

Okay, last question is for Tim, the only CFO that I've know that has seen, I'll call it downgrading his title despite the stocks are performing slight…

Very clever, Chuck.

Quick question for you on inventories. I think you said it’s about a week so really. Is that the case and has there been a shift in over the course of the last six months?

No, I think well we have – we have plenty of inventory to basically fill the pipeline. Well, we have sitting in inventory basically at our select pharmacies and select distributors that’s somewhere a little less than a week is sitting on their shelves. So that drugs has been shipped to them. We've recognized the revenue on that because we have shipped to them, but they have not distributed to them. That's probably more like three days. They were on average every two to three days.

Okay, thanks for taking my question and congrats on the court.

Thanks, Chuck.

Thanks, Chuck.

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

Hey, guys. Thanks so much and congrats on a great quarter. Just a few questions for you. First I was wondering if you could quantify the difference in what revenues would have been on the sell-in method versus the sell-through method and whether or not any change in inventory in the quarter could have had an impact.

This is Tim, Paul. So we use sell-in. Sell-through as I described is when you recognize revenue once it prescribed to patients. So we actually did at back the outlook calculation and of the 52 million we’ve recognized in revenues so far under sell-in, how do we’ve been recognizing under sell-through, it would be about $3 million to $4 million less. So it's a rough estimate because we don't know exactly the fill of all the scripts, on the other side and the timing of that, but that's about one would be. So not a huge difference at all. And as I just told Chad, as we're talking about you know roughly a little less than a weeks worth of inventory there, so that all lines up, it’s somewhere in the neighborhood of 6%, would come off the top.

Okay, oaky, that’s helpful. And then can I just ask about kind of gross to net adjustment dynamics? So, right now, the drug is not on formulary largely. Once you get on formularies and kind of get into the whole kind of contracting element of strategy, you expect gross to net to go up over time. I guess I don't have a great understanding of what the gross to net should be at this stage from the launch versus say one year from now?

Yeah, without – as we said, we’re not going to be giving specific guidance on gross to net, so I'll take the first stab at this is that there are no plans for us to do contracting with this product even in the near future. So that's not going to be something that will be changing our gross to net from that standpoint.

And the thing I will add and let [indiscernible] that our gross to net has been pretty steady over the first – let’s call five months of Q2 and Q3. We're happy with it. Our estimate in the bills that came in for Q2 were pretty much spot on. So we're also happy with that. And again, as Kevin said, contracting is really where you see the compression in gross to net as well as you know as you pick up more Medicaid business that will also impact your gross to net. If you recall, we were just getting on the Medicaid listings. We did have Medicaid business in Q2, but obviously pick up in Q3.

Okay, okay, fair enough so just to clarify. You guys expect formularies in PBMs that carry both VMAT2s and reimbursed growth and that’s going to be a contracting battle?

What we anticipate is that that the formularies will be carrying our drug. I can't speak for anything about Teva’s drug?

Okay, thanks. And if I just – I am just having one last question, which you probably won’t answer. So far what are you observing? We did a physician survey and we found that 30% of patients from our survey were taking the forty mg dose as their maintenance dose. And I'm not sure if it's just a sampling error or if this is accurate. So what are you seeing in the channel?

Hey, Paul, it’s Eric. What I can’t say is that the vast majority of prescriptions that are written are for 80 milligrams a day at maintenance. And I think that there may be some patients that inadvertently taking one 40 instead of two a day. As we transitioned over to the 80 milligram capsule as new patients are starting and refills are happening, I would expect that dynamic would decrease, but certainly I think what you saw in your research was a little different than what we're seeing in terms of the pattern.

Okay, awesome. Thanks so much, Erik. I appreciate it.

Thanks, Paul.

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

Thanks, just two questions on my end. First, I would love to get your take on the recently published in the ICER report [indiscernible] draft evidence report. Just the analysis and the conclusions they reached. And then separately I don't know if you have any updates – updated thoughts on the development of valbenazine in Europe.

Hi, Ian. Chris is here. So with the ICER report, obviously we've seen the draft and we applaud that ICER has reached out to other companies and the patient groups to seek input on this draft. They have a formal meeting coming up in December where input from various groups will be taken into account. The fundamental question that we would raise is for an indication like tardive dyskinesia where you have evidence of efficacy as measured by rating scales in a clinical trial. You don't have what ICER normally wants to do to create an economic and utility impact model because there are no monetary assessments of burden of illness and things like that. So its very nature is you end up making a just how much does this drug cost to change an AIMS scale. And they don't have the other pieces that they'd like to incorporate in their models. So it becomes somewhat an unbalanced position. So, obviously, we're working hard to try to generate data about the impact of treating tardive dyskinesia through some of our clinical trials at our HEOR research. And over the next couple years, we may be able to get closer to understanding that impact from a utilization and HEOR point of view. But right now we think they're in a difficult position because they don't have the data they need to come up with a really a meaningful position. And some of the key aspects of why it's important to tardive dyskinesia as stated quite eloquently by patients and patient efficacy groups they don't incorporate those things into their model. So as such it is what it is. But it can't really do much more about it.

And Ian as far as your second question goes, specifically in Europe right now with INGREZZA our focus is totally on our launch here in the United States and getting the education and this drug to patients here in the United States. And that is our first priority. Secondly from a business development aspect, we have other priorities with business development right now other than INGREZZA in Europe.

But would this be something you'd consider potentially partnering out? I don’t know if you’ve had any sort of inbound interest and the asset aspect?

No, we've had a number – we have had a lot of inbound interest from Europe. It's just not the right timing for us to be able to – to be able to entertain that.

Okay, and if I just may add one more question. Just trying to understand I guess the importance of the elagolix study in endometriosis where you’re looking at add-back. Just given that you’d only have one patient has surpassed a Z-score of two based on the data that’s released most recently. Just do we need add-backs in endometriosis? I guess the question.

Oh, I can’t really speak for AbbVie, but from my perspective we’ve also felt that for the majority of patients with endometriosis related pain, 150 milligram once a day dose is a very effective intervention with a great safety and tolerability profile. I think from AbbVie’s perspective, what they're looking at is really the full range of potential opportunities for elagolix in the marketplace and there may be situations clinically where women might be more appropriately managed with high dose elagolix for a much longer period of time at which point add-back may be useful. But that would be a good question for you to add them. Based on the data that we have today, do you need add-back for getting elagolix to market in helping patients? No.

And also just to reiterate what Chris said the 150 milligram dose. The difference in efficacy between 150 and the higher dose is not that great and it continues as it was in AbbVie’s hands as it was in our hands really looks quite neutral on both.

Thank you and congratulations.

Thank you.

Thank you. We’ll go next to Jeff Meacham with Barclays. Please go ahead.

Hey, guys. Also runoff my congrats and thanks for the question. The [indiscernible] Kevin you probably want to answer this, but I want to get your perspective on will you see today – or do you feel like the number of patients with TD is more than you thought or do you feel like they’re reaching that number quicker? And then maybe just help us sort of qualitatively with some of the prescriber basis namely the psychiatrists that you [indiscernible] initially going to be lagging adopters and maybe if you need to come up learning curve on the signs and symptoms of TD and maybe your – just any sort of metrics on what you can give us with that patient or that that physician subset. And then I have one follow up for Chris.

Sure, so thanks for the questions, Jeff. What I will say is that we've only just scratched the surface of this patient population. As I said for nearly two years expect a slow but progressive growth month over month quarter over quarter as we launched this drug. But somewhere around quarters four, five or six, that's when you're going to start the market will – will start truly revealing itself. So we're quite pleased. We've done very well to date, but we have just barely scratched the surface of this marketplace. And we have lots of data that that leads us to believe that. And when it comes to the prescriber base as we said before and this is held true now through the launch that about 75% or so of our effort, our promotional effort, is with psychiatrist and maybe 20% to 25% with neurologists. We – so you're seeing that the way that the scripts are breaking out is approximately the same with both of them based on that and that was based on who sees the patients and the vast majority of TD patients are seen by psychiatrist. Having said that most of our sales force time is still spent on education to the health care practitioner whether we're talking about a neurologist or whether we're talking about a psychiatrist, they all recognize TD when it isn’t above the – I will say the oral facial TD where a lot of the education comes as the TD and the other body areas that that's what they misattribute to other things. And that's where a lot of that education is and then – and then the most appropriate way to treat that is where the education is going so. So that that’s – I hope I've answered your question and maybe Erik do you want to have anything to add?

Yeah I mean I mentioned in my prepared comments that that we're focusing on TD education. We're helping various kinds of HCPs whether it's a psychiatrist or an allied health professional whether it’s other nursing staff working in these facilities to really help identify patients that are suffering from TD and to distinguish it from especially in psychiatry, this isn't so much in neurology, but in psychiatry sort of this paradigm of EPS or extra pyramidal symptoms. An EPS is sort of an umbrella term that's used to describe really anything unusual that's happening with these patients after the initiate treatment from a movement perspective and certainly it can include things like akathisia and acute dystonic reaction parkinsonian tremor and so on. And part of our effort here on differential diagnosis is to help those professionals really distinguish TD, which is by default a late occurring issue versus some of these acute movement disorders that can occur when the patients initiating on treatment or when their psychiatric regimens are adjusted. So we're helping them to sort of separate TD from EPS and I think that that's a big part of as we continue to develop the market and grow the market as to continue that educational effort in psychiatry.

Hey, Jeff, you had a question for Chris.

So the follow up and just one not for – it seems that [indiscernible] when you look at the – if you were to – if you just were to form the basis for filing, I know for the last study, you guys are a little nervous about moving up the dose curve in pediatric patients. But I am just wondering what leading factors are left in [indiscernible] for example of separate safety, tolerability or any kind of toxicity study. I guess he potential filing package is the question.

So you’ve asked two separate types of questions, Jeff. So from a – we have enough of data on the – what is the right dose for the right population. We should get that all from this T-Force GOLD study. But that – in and of itself, would not constitute normally what was necessary for a full data safety package for an NDA that package wouldn't generally include long-term exposure. And so we have a number of an issue there's obviously the T-Fusion study was a six month study. Remarkably we had very high persistence of Tourette patients in that T-Fusion study and we actually saw increasing Tic reduction or improvement in the long term study. So it showed us that for particularly for those patients that were at the high end of slightly under dosed that we're doing well if you just waited another month or two they continue to get better. So hence we now have a twelve week study for T-Force GOLD. Secondly after T-Force GOLD, we will have an open-label extension study. So we will have considerable longer-term exposure in pediatric population. And the question then becomes is that enough data to submit as an NDA and what does the FDA require. Right now, its way premature for me to answer that because I don't have a positive study to take to them. I need to have the T-Force GOLD study work well and then I need to sit down and have a discussion with the psychiatry division about what they would then require for a supplemental NDA as we do get the piggyback on a lot of the long-term safety data that we have from our tardive dyskinesia program even though it's in a different population it is useful and we have completed all the necessary pre-clinical safety work including juvenile toxicology studies to support a pediatric NDA.

Okay, great. That's it. Thanks a lot guys.

Thank you.

Thank you. Our next question comes from Andrew Peters with Deutsche Bank. Please go ahead.

Hi, thanks for taking my questions and congrats on the quarter. I guess we just wanted to come back to the competitive landscape in TD and in particular kind of the formulary front. So I know you guys mentioned that you're not planning to kind of go down the contracting and formulary routes. But just wanted to get a sense of kind of what your plans are if you Teva does decides to be a bit more aggressive on that front. And if any of your kind of initial conversations on the payer side have suggested that they're waiting to figure out what Teva is going to do before kind of figuring out the formulary positioning for INGREZZA. Thanks.

Hey, Andrew, it’s Eric. So you know a couple things. One we've been focused on educating payers about TD what it is, who are the appropriate patient types for treatment with INGREZZA, who are the appropriate prescribers. And I think at this early phase of the launch, they put interim policies in place that allow them to get visibility on who's receiving prescriptions, who are the doctors that are writing and so on because they want to get comfort that this drug is going to be used appropriately and consistent with the clinical studies in the label. Second thing is when we do have conversations with payers, we're not bringing Teva and their tetrabenazine product into the conversation and typically payers aren't bringing it into the conversation either. So far I'd say that we're seeing favorable coverage and I'm very pleased with where we are in terms of the coverage policies and the way they're being enactive. Obviously, we're continuing to monitor the competitive landscape. We haven't seen any signal of any sort of aggressiveness on the part of our competitor. And you know keep in mind that they need to manage there franchise not just for the TV indication but also for their other indication of Tourette. So to sum it up we're in Huntington's. But there's some of that we feel good about where we are with the process and maybe a little ahead of where we expect it to be at this point from a coverage perspective. We're going to continue to work with payers to make sure they understand that INGREZZA is being used appropriately with the right patients and being prescribed by the right doctors.

Great, thank you.

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

Hey good afternoon guys thanks for taking my question. I guess I heard your comments at the beginning of the call in and I want to give too much details around prescription. But I guess just to kind of your general thoughts I mean I think it's surprising to all of us how well this is doing off the back considering the view and discussions we've had this is really kind of a building market and you've lot of education a lot of building. So do you have any change thoughts on what you think the addressable market is for TD in the United States? And then just in terms of next quarter I mean it seems like there’ll be a lot of choppiness in terms of what to expect for revenues. Are there any nuances that we should expect there or if we just assume that there's no growth in new patients would last quarter just essentially be revenue cut in half from those patients for next quarter? Thanks.

Okay Brian, so yes a number of things there. I'll take the first stab at it as far as it's been a nice launch. The launch is going actually to plan the launch is going pretty much current with our expectations with that. As I said all along it's going to be a launch that is going to continue to grow. But over four to six quarters you're not going to see a real dramatic growth until after that period of time. So where are we and I'm happy with the launch and I think that our commercial team has done the job, a very good job. But the job that we expected them to do in this patient population it hasn't changed what we think the price of the market is, or what the opportunity market is we've always been very confident about that. We continue to be. Now when its next quarter I kind of laid out for you what I thought are going to impact next quarter. But I’ll give it to Eric to kind of give his views on what he sees next quarter has been.

So Brian we are very pleased with the receptivity that we've got really from all the different audiences. Physiatry, in neurology and different types of care from private practice to cumulative mental health. TD has been a problem for a long time. And this is the first category that I've worked in where not only was there nothing approved, but there was actually nothing effective. No real viable off label treatment strategies and for many people the choice was either trying to adjust [indiscernible] regimen or more commonly do nothing. And so we've brought a real breakthrough therapy and I think that the initial reception that we've gotten is consistent with that. And I did mention that the feedback that we're getting from customers is that it's performing in the real world as it did in the clinical trials, which is something that often there's a little disappointed factor when the drugs come to market and the initial experience is not as good as what you would expect it to be based on the clinical data set. We ran our trials in a manner with real patients, very complex patients, with a variety of underlying psychiatric illnesses, a lot of concomitant medications and so these are the patients that are out there that are being treated with the INGREZZA. The other thing that I mentioned was that a lot of our customers have really just treated the initial cohort of patients in their practice. They think about I've got a patient or a few patients, but I want to try this on. And then I want to see how it does when they come back. And then that's what's really driving where do I go next with this medication and how do I sort of proceeding getting that initial experience. Chris?

One other comment I would make is that, I think, Brian I heard you say that something to the effect of no new patients in the fourth quarter and that is not the expectation. We expect to continue prescribing for new patients going into the quarter. I think Kevin was talking more about revenues rather than [indiscernible].

Yes I do want to clarify that we're going to continue to see growth in prescriptions, both in terms of new patients starts and refills, but I think what Kevin was getting at with his comments was that there are a couple of factors that are unique to this quarter that impact that net sales number. And obviously introducing the 80 milligram capsule, at a price that is even though it's at a premium to the 40 milligram it's still substantially less than getting two bottles of 40 per month. We're getting patients that are in maintenance therapy will be getting one bottle of 80 milligram capsules for a month. So that's about 60% of what that revenue would be previously. Obviously, having a new competitor in the market, there will be some initial trial of that product from our customers that want to get some experience in both our drugs. And then I mentioned earlier that we've rolled out a new free trial offer, which is five weeks of treatment. And so that may have some impact in terms of timing of prescription fills or refills. So all of these things are events that are occurring in the fourth quarter and as you've said that could lead to some of choppiness. But I do want to reiterate that we expect to see continued month over month growth in terms of new prescriptions and returning patients.

Sure you are clear on that. I just mentioned that purely from a modeling perspective if their are 100 patients on at the end of the quarter with the expectations be for fourth quarter, the revenue recognized from a full quarter last quarter would be 40% less for those.

Yes. the other challenge with this, Brian. This is Tim, is that you'd expect insurance would flip from the 240s to the 80s and the timing of that is really dependent by insure, and dependent by patients. Some patients have a 90-day script, and they're going to let that 240s roll for the next month. Rather than insurers will flip more quickly. Those are things out of our control and makes it difficult for us moderate this as well.

Got you.

Thank you. We'll go next to Anupam Rama with JP Morgan. Please go ahead.

Hey guys thanks so much for taking the question. And congrats on the launch here. Just one from me. I know there's a lot of – you guys are getting a lot of data and there is going to be some various factors in the market Teva being at a use of some 80 milligram dose for you guys. But you might have enough data and be comfortable with providing some forward yield type of guidance for INGREZZA? Thanks so much.

Anupam thanks for the question. I would just say that's something that we'll look at from quarter-to-quarter. But my feel right now it's probably about a year out is where I see that.

Got it. Thanks so much for taking my question.

Your welcome.

Thank you. We'll go next to Phil Nadeau with Cowen and Company.

Good afternoon thanks for thanks for taking my questions and let me add my congratulations on the launch. First the question on the impact of Teva. I know you have repeatedly mentioned that as a risk factor for Q4, a factor to consider for Q4. Teva has been on the market for two months. Can you qualitatively give was any assessment of the impact that you've seen on new patients starts since its launch?

Honestly no, at this point in time with them being in the market for such a short period of time. And we believe they have kind of a free good start to get the patients to the two months of titration that they go through. That's why I said that, I don't feel comfortable in saying anything about Teva for this first period of time. The two months that they've been around, I really think it's going to be Q4 where we get our first hint of what it's like with both of us on the market. And as Eric said, it would be reasonable to assume that our customers are going to want to try the Teva drug also.

One other thing I'll point out though is that there is a sort of silver lining to having a second product in the market. And that is another team out there talking about TD making noise and increasing the educational level across these different practices. So it certainly seen as another therapeutic areas with the addition of second and sometimes third products to market it really does accelerate the development of the category.

Great. And second question about Teva it seems like there's not perfectly clarity on that dose that patients are getting in tardive dyskinesia and what translates – and we’ll call that translates to price. Do you have a estimation for what the relative pricing differences is between your 80-milligram pill and the average dose that Teva would be giving to patients in the price of that dose in target Dyskinesia?

It's obviously, very early and I don’t know that we have any better information than you do about what the real world utilization of that product looks like. But from our pivotal trial the mean dose was 38.5 milligrams per day. And that's the dose that’s a little bit above one of the doses within the range which is 36 milligrams per day. And at 36 milligrams per day the WAC price would be approximately $90,000 annually. And if you look at our pricing for maintenance therapy at the 80-milligram dose, that's a substantial price differential. But our focus isn't on selling INGREZZA based on the price is, it's based on the clinical profile and the benefit that we've been able to demonstrate with our data. And we're focusing on that. And letting doctors pick what they think is the best treatment for the patient.

Great, that’s helpful. One last commercial question. And that's on the idea of a [indiscernible] patients it sounds like in a most of your prepared remarks where you expect continued growth in new patient starts, are you not seeing any evidence of ebolas, but one thing I think you just said in response to another question was physicians do sort of have cohorts of patients and maybe they've gone through the first cohort now. And we’ll wait to see how those patients respond before moving on to other patients. Is there some idea that there could be a small bullets that we've just seen a new patients ads could slowed down over the next couple of months? Or would that be just too early to tell, or hard to say?

I think yes, I wouldn't describe it as bullets, I would say know generally speaking what our people have gone into these offices and introduced INGREZZA, doctors immediately think about a patient or several patients so they would like to try it on. And it usually they are thinking about who's going to be coming in over the next few weeks, that would be a good candidate here. And then they'd like to get a few patients started, see how they are doing, and get some feedback from them before they determine where to go next in terms of expanding utilization within the practice. So that component of the known patients that are immediately available in sort of the next short period of time. But also, our effort is working with staff and other clinicians to help with identifying additional patients that could benefit from treatment. And as I've mentioned earlier, also helping to sort of clear up some confusions that may be out there around TD versus other types of drug induced movement disorders.

Cohort may have been the wrong, what some people think cohort means a group and its initial trial.

So it’s not, you haven't seen any evidence patients – physicians having warehouse patients or having a set of…

No, not now...

Okay.

No, So new much education, it's real eye-opening. that's not warehousing.

Yes. I would, just qualify, a lot of the education, the key education is on the psych sides of our franchise. The movement disorder neurologists, they're all aware of the differences between TD and other types of movement disorders. However, there are patient opportunities are really driven by referrals where as going into these private psych offices, these community mental health centers, it's more about identifying patients that are flowing through over the course of time.

Got it. Okay. And just one development question on NBI-74788. As far as I can recall, you’ve never disclose the mechanism for that compound. I'm curious if I'm wrong and you have disclosed it is and could you remind us what it is. Or if you haven't disclosed it, would clearly disclose it.

Just to be clear, that is our CRF 1 antagonist and we absolutely disclosed the mechanism and we even publish on it. This is for CAH.

Yes, okay, I’m sorry. I must be mistaken. Thanks for taking my questions.

Thanks Phil.

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

Hi, thanks for taking my questions. Thanks so much I've been thinking of 756 for essential tremor. Can you give us an update on the essential tremor program? And I was thinking that one with a mechanism for that one, is there any update on that? And then also coming back to your Tourette's program. And Jeff has some questions around what your plans were in terms of whether or not this tremor will be still for registration, but can you give us an update on the last set of discussions you had with the FDA around with what they want in Tourette's and the background on that, thanks.

So for the Tourette's response, no detailed information obviously we collaborate closely with the FDA, they see all our protocols and all the details. And we're not treading new paths here Tourette Syndrome trials. Their primary endpoint, et cetera those things have been pretty much sorted out. So there's no new precedent that has to be established unlike what we have to do with tardive dyskinesia. So no other details obviously the next stage of our interactions really depends on whether we can bring them some compelling data from the T-Force GOLD study. With respect to our Central Terminal program as you know we took one of our ET compounds out of the lab and put it into healthy volunteers in a single ascending dose and multiple ascending dose trials. And what we learned just recently after completing those and some additional preclinical toxicology studies is that the variability of exposure to the compound in healthy volunteers was more than we had thought. And because of the kind of relative safety margins was the preclinical tox data, it made us decide to shelve that molecule, keep the ET program going and go back into the lab and bring forward an alternative molecules. And we have not disclosed the mechanism of action of those.

Is this something that might move back into the clinic next year? How much pre-clinical work do you need to do here? Do you have your candidates ready back up here when it’s ready.

A general policy is not to provide any kind of detail on that until we have an IND open, because every time I've done that something happens. I mean that is a tough business with getting molecules out of the lab into the clinic. Lots of surprises along the way. As you know most molecules don't succeed in getting into the clinic. So until it's an IND open, you'll probably won’t hear anything more from us.

Alright, thanks for taking my questions.

Thank you, Alan.

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

Hi guys congrats on the launch. And thanks for taking my question. I have just one question kind of big picture question. But with $750 million in cash on your balance sheet, can you comment on your priorities for cash deployment and whether or not your vision for business development has changed at all based on the remarkable early success of the INGREZZA TD launch?

,: Third is there is that we are always very active out on the business development front. And being a larger company having more resources, having a franchise with INGREZZA now where we can see continued growth we're obviously looking vigorously outside for the right opportunities that will – that we believe bringing them in house is going to add substantial value to those compounds, or our projects out there. And that we can truly enhance shareholder value as we do that. So we are in a real nice position right now and I'd say for the first time in the company's history to have this strong commercial arm going and to have the financial resources to be an active player out there.

That's very helpful thank you.

Thanks Jay.

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

Yes, thanks for taking the questions and congrats on the great INGREZZA number. Kevin how many of the 1,500 prescriptions in the third quarter were repeat consumers? And I guess subjectively are the vast majority of these moderate to severe and severity versus mild?

So I’ll answer some of what you had asked. First off there wasn’t 1,500 total scripts it’s 5,100 total steps that we had in second quarter. As far as how many of those are repeat scripts versus new scripts, as I said we're not going to be giving that information here. The third question that you basically asked was the fact that – say it again.

Moderate to severe versus…

Oh yes moderate to severe versus, actually what we are seeing out there feedback from the sales force feedback coming from our MSL team out there is that the physicians aren't prescribing them overall to a wide variety of patients that are as far as the severity of TD goes. It's really a holistic determination that the physicians are making, is how troublesome this incident patients and their loved ones or caregivers, and that's how they are making this determination of who to prescribe to. And Tim is reminding me of a couple of things is that, one, in Q2, that first two months of commercialization, we had 745 scripts written. And as I've said in Q3, our first full quarter, it's 5,100 scripts written in that quarter. And the last thing that I will tell you is that, we – I met a patient just a day before yesterday who came into the office with her husband. This is just them on their own time coming from where they live because she wanted this – she wanted to meet the people in the company that developed a drug that changed her life so dramatically. And she wanted to thank us. Here's the situation that's interesting. This is I don't know how we can say it more, patient had nothing for this condition prior to INGREZZA being there. And doctors, regardless of who their physician was hesitated or did not have the knowledge base to be able to adequately diagnose here. She was actually diagnosed by her orthodontist in all the biting and chewing on her tongue and the problems that she was having with her teeth and she fortunately went to an orthodontist that was a teaching hospital, her orthodontist she brought in students and she diagnosed there with having TD. She then went back to her treating psychiatrist. It took a while to get that referral and in that period of time, she really educated herself now I'm hearing the words Tourette's dyskinesia. She was able to then track us down knew her psychiatrist had told her that we were done with our trial, the drug is under review, she found our PDUFA date, called this on a April 11, had said, okay what's going on and she actually called us about 15 minutes before the FDA contacted us. Nine days on 40 milligram dose. And this woman got her life back. It is those kinds of not stories, I don't want to diminish it by that, it is those people that we've now been all exposed to that really show us what the value of INGREZZA really is.

That’s sweet. And then maybe there’s a question for Chris on pick up on. Are you planning to submit a briefing document to FDA head of your meeting with them?

Yes.

And I guess should we expect a clear resolution on go, no go on filing from the minutes, is that the one we should expect to hear from the company?

I hope so, as I mentioned in my prepared remarks if we meet with them in January normally it's about a month later we get the formal FDA generated meeting minutes. And I'm looking forward to having that discussion with that neurology division, very straightforward set of questions we're asking them and hopefully we'll get a very straightforward answer.

Great, thank you.

Thank you it appears we have now from our questions at this time. I'll turn it back to you Mr. Gorman for any closing remarks.

Thank you much. I really do appreciate all the questions that were asked. I think we went to the heart of the matter with everything and the heart of the matter is, is that we've got – we were very pleased with the way the launch was going. As I said it is going as to our plan, our commercial team is doing an outstanding job. But again while I've said we've only scratch the surface of the potential of this drug, it is still just going to be steady growth is what you're going to see over the next several quarters. And then I would say by towards the end of next year that's when we're going to really – the drug and the patient population will truly start revealing itself. I'm also extremely pleased with the progress that we have with our internal pipeline and also with the outstanding job that Chris has talked about, with what AbbVie is doing with Elagolix, both in endometriosis and with uterine fibroids. And the uterine fibroids Phase 3 data is still due to be released top line by Abbive, somewhere around the turn of the year, either very late this year if it runs into the holidays then it'll be early next year. But I would really encourage you to take a look at these ASRM abstracts because the data that AbbVie has generated on the drug is very compelling. So with that I thank you all for your attention. And we look forward to catching up with you in the meetings that are coming up later this year, starting next week. Take care.

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