Neurocrine Biosciences' CEO Discusses Q2 2012 Results - Earnings Call Transcript

Neurocrine Biosciences, Inc. (NBIX)

Q2 2012 Earnings Call

July 31, 2012 5:00 p.m. ET


Kevin Gorman - President & Chief Executive Officer

Jane Sorenson - Investor Relations

Tim Coughlin - Vice President & Chief Financial Officer

Chris O'Brien - Chief Medical Officer


Thomas Wei - Jefferies

Ian Somaiya - Piper Jaffray

Phil Nadeau - Cowen & Company



Good day everyone and welcome to Neurocrine Biosciences Reports Second 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) Please note that this cal 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. Please go ahead.

Kevin Gorman

Thank you very much and welcome everyone this afternoon to our mid-year earnings call. Before I get started I would like Jane Sorenson to read our Safe Harbor statement.

Jane Sorenson

Good afternoon. I want to remind you of Neurocrine’s Safe Harbor caution. Certain statements made in the course of this conference call that state the company's or management's intentions, hopes, believes, expectations or predictions of the future are forward-looking statements which are subject to risks and uncertainties. Information concerning factors that could cause 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 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

Thanks Jane. I am joined here this afternoon with Tim Coughlin, our CFO; and Chris O'Brien, our Chief Medical Officer. Tim will go through the financials, Chris is going to give you a brief update on our programs and then we would be happy to take all of your questions for the remainder of the call.

I will just start off by saying that this has been a very good first half of the year for us, a good quarter, hitting all the numbers as you will see from Tim. And all of our programs continue to briskly along and more on schedule with everything, and I am really looking forward to the second half of this year. So with that said, Tim, why don’t you take us through the financials for the quarter.

Tim Coughlin

Thank you, Kevin, and good afternoon everyone listening on the call. Today we released our financial results for the second quarter of 2012 and we also have our 10-Q on file with the SEC. We met our budget for the quarter losing a penny per common share this quarter. It’s the same as the first quarter of 2012. Year-over-year we have lost $0.02 per common share for the first half of 2012 compared to net income of $0.09 per share in the first six months of 2011.

The main difference in the financial results year-over-year is due to lower income realized under the Abbott collaboration agreement. That coupled with higher R&D costs driven by increased costs in the VMAT2 program and other early research programs. We also had higher non-cash option related expense which increased by about $1.7 million from 2011 to 2012. This is driven due to the timing of option grants.

We remain on target for an annualized cash burn this year of $40 million to $45 million. Revenues for the first half of the year were $21.8 million compared to $24.7 million for the first half of 2011. The decrease in revenue is attributable to the continued transfer of our efforts around elagolix to Abbott. We expect revenue to decrease for the balance of the year due to the continued transfer of this work to Abbott, and the completion of the amortization of the upfront from Boehringer Ingelheim which occurred in June of this year.

Research and development expenses increased year-over-year and quarter-over-quarter. Year-to-date R&D expense increased $2.7 million in 2012 to $18.2 million, and this is a results of increased activity in our VMAT2 program, as well as efforts around our early stage research programs. Additionally, the aforementioned or the previously mentioned option cost, due to the timing of option grants was responsible for about $1 million increase in R&D expense. We expect our R&D expense to continue to increase for the second half of 2012 as the Phase IIb program for VMAT2 commences.

G&A expense for the quarter was moderately higher than the prior year, primarily due to higher option related expense. We expect G&A expense to continue at the current run rate for the balance of the year. Overall, for the quarter expenses were inline with our expectations and our budget, and the management team and employees of Neurocrine have continued to discipline over the company's expenditures.

We started this quarter with approximately $203 million in cash investments and receivables, and we ended with about $195 million of cash, investments and receivables. Our cash burn for the first six months for the year was $20 million, and as we previously stated, we expect the full year 2012 burn from operations to be between $40 million and $45 million.

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