Neurocrine Biosciences' CEO Discusses Q1 2012 Results - Earnings Call Transcript

Neurocrine Biosciences Inc. (NBIX)

Q1 2012 Earnings Call

May 2, 2012 05:00 pm ET

Executives

Kevin Gorman - President & CEO

Jane Sorenson - IR

Tim Coughlin - VP & CFO

Chris O'Brien - CMO

Analysts

Thomas Wei - Jefferies

Ian Somaiya - Piper Jaffray

Presentation

Operator

Good day everyone and welcome to Neurocrine Biosciences reports first quarter 2012 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). It is now my pleasure to turn the conference over to Kevin Gorman, President and CEO of Neurocrine Biosciences. Please go ahead sir.

Kevin Gorman

Thank you and good afternoon everyone. Welcome to our call. Today I am joined by Chris O'Brien, our Chief Medical Officer and Tim Coughlin our Chief Financial Officer. Before we get started I would like to have Jane Sorenson to read our Safe Harbor statement.

Jane Sorenson

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, believes, 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?

Kevin Gorman

Thank you Jane. We've had a real productive first quarter here at Neurocrine particularly in the VMAT program and everything moving forward with the Elagolix program. We’ve also hit our numbers right on spot for guidance that we gave at the beginning of the year. So what we will do today is Tim will take you through our financials in more detail and Chris can give you a brief update on each of the programs.

And then I would like to turn it over to the rest of you to answer any other questions that you may have. So without further ado Tim.

Tim Coughlin

Thank you, Kevin and good afternoon everyone. Today we released our financial results for the first quarter of 2012. We again met our financial plan for the quarter losing a penny per common share outstanding.

This compares to $0.05 of income per share for the first quarter of 2011. The main differences in this managed results from quarter to quarter are lower income realized under the Abbott collaboration coupled with higher research and development costs primarily related to our VMAT2 Program.

We remain on target for an annualized cash burn from operations of $40 to $45 million consistent with the guidance we provide at the beginning of this year. Revenues for the first quarter 2012 were $11.3 million compared to $12.5 million for the first quarter of 2011.

The decrease in revenue is attributable to clinical and pre-clinical efforts around Elagolix which continue to tread through to Abbott. We expect revenue recognized under this collaboration agreement, both Abbott and BI to continue to decline throughout the year.

Research and development expenses increased quarter over quarter. The main driver of this increase is activity in our VMAT2 program which continues to move forward in Phase II studies as well as drug product manufacturing, drug packaging for future clinical studies and a battery of pre-clinical work to support longer-term dosing in the ultimate NDA filings.

Additionally utilization of external experts and external (inaudible) studies for some of our early research programs also contributed to the increase in R&D expense. Personnel expense from both the R&D and G&A expense lines increased from 2011 to 2012. The main driver of this increase was higher non-cash stock based compensation costs related to options created during 2011 and 2012.

Stock based compensation expense increased approximately $700,000 companywide quarter-over-quarter. $300,000 of this increase was in research and development expense and $400,000 was reflected in general administrative expense. The company continues to believe that options are an extremely effective mechanism to align employee and shareholder interests. Overall for the quarter, expenses were in line with our expectations and budget.

We expect research and development expenses to increase as the year progresses and general and administrative expenses to remain relatively flat through the year. We began 2012 with approximately $132 million in cash investments or receivables. In January, we replaced 10.9 million shares of stock with high quality investors and yielded $83 million in net proceeds to the company.

The funds raised from the offering were offset by cash burned from operations of approximately $11 million in the first quarter yielding approximately $203 million in cash investments or receivables at March 31, 2012. That concludes our prepared remarks and the financials. For those looking for more information, our 10-Q is on file with the SEC and with that I will turn it back over to Kevin and Chris.

Kevin Gorman

Thanks Tim. And as you can see we are in a strong financial position right now and as always we are going to stay very vigilant on our burn going forward. Chris, how about a brief update on the programs.

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