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Neurocrine’s ‘Robust’Development Pipeline Holds Promise

NEUROCRINE BIOSCIENCES INC.

CEO: Kevin Gorman.

Revenue: $77.4 million in 2011; $33.5 million in 2010.

Net income or loss: Net income of $37.6 million in 2011; net loss of $8 million in 2010.

No. of local employees: About 80 full time.

Headquarters: San Diego.

Year founded: 1992.

Stock symbol and exchange: NBIX on Nasdaq.

Company description: Discovers, develops and intends to commercialize drugs for the treatment of neurological and endocrine-related diseases and disorders.

Key factors for success: Concentration on building a product portfolio focused on neurological and endocrine-related diseases and disorders; identifying novel drugs to address unmet market opportunities; establishing corporate collaborations with global pharmaceutical companies to assist in the development of products and mitigate financial risk while retaining commercial upside; acquiring rights to complementary drug candidates and technologies.

Diversification is a key ingredient in Neurocrine Biosciences Inc.’s business strategy as it develops drugs for the treatment of neurological and endocrine-related diseases and disorders.

The San Diego-based company has 11 programs in various stages of research and development, including six programs in clinical development. Its assorted product candidates are targeted to treating endometriosis, stress-related disorders, pain, tardive dyskinesia, uterine fibroids, diabetes, insomnia, and other neurological and endocrine-related diseases and disorders.

Neurocrine Biosciences is currently collaborating with Illinois-based Abbott Laboratories on developing its lead clinical program, elagolix, which treats endometriosis and uterine fibroids.

Abbott announced recently the initiation of a Phase III clinical trial designed to evaluate the safety and efficacy of elagolix in female patients with endometriosis. The 24-week trial being conducted at 160 sites in the U.S., Puerto Rico and Canada is a randomized, double-blind, placebo controlled study that involves 875 women with moderate-to-severe endometriosis-associated pain. Elagolix has been studied in more than 20 clinical trials totaling in excess of 1,000 subjects, according to an Abbott statement.

“Endometriosis can be a debilitating disease that affects millions of women around the world and the exploration of new treatments could offer other options for women with this disease,” said Dr. Hugh Taylor, chief of the division of reproductive endocrinology and infertility at Yale School of Medicine.

A Phase II trial is also under way to evaluate elagolix as a treatment for uterine fibroids.

Looking for a Better Way

Neurocrine Biosciences President and CEO Kevin Gorman said women don’t really have any good treatment alternatives for endometriosis and uterine fibroids, which account for 400,000 hysterectomies per year in the United States. Although some women use oral contraceptives to treat endometriosis it’s not effective for pain, he said, so women rely on pain medications from over-the-counter products to opioids.

“It’s not a good way to treat a condition that starts in their teens and lasts until menopause,” Gorman said.

Another focus of the company is advancing its compound NBI-98854, which is in Phase II clinical trials for the treatment of movement disorders known as tardive dyskinesia. Gorman said tardive dyskinesia, which makes it difficult to talk, speak or eat if it affects the tongue or makes it difficult to move or take care of basic functions if it affects the legs, is caused by drugs used to treat bipolar conditions and schizophrenia and is an irreversible, lifelong condition even if the patient stops taking an anti-psychotic drug. As yet there’s no effective treatment on the market for tardive dyskinesia, he said.

“We’re not going to do any me-too drugs,” said Gorman, who explains the company sets a goal of moving one program from the research stage to the clinical stage each year. “The role of biotech in the biopharmaceutical industry today is novelty. We try to go after novel targets for needs that are either underserved or unmet.”

Looking to Get on the Market

Although Neurocrine doesn’t have any products on the market, Gorman foresees getting NBI-98854 on the market as early as late 2015 since it’s been given an FDA fast-track designation and is hopeful of FDA approval of elagolix in 2017.

Ranked at No. 40 on the San Diego Business Journal’s Largest Public Companies list, Neurocrine Biosciences reported revenue of $77.4 million in 2011 and $33.5 million in 2010. Besides more than doubling its revenue in one year the company turned around a net loss of $8 million in 2010 to a profit of $37.6 million in 2011. Most of that additional revenue can be attributed to milestone payments from Abbott Laboratories, which paid Neurocrine about $30 million in milestones in the third and fourth quarters of 2011.

Phil Nadeau, managing director at Cowen and Co. in New York City, said elagolix looks promising given the number of Phase II trials it has undergone, but cautioned that potential sales are still a number of years away as the compound just entered its Phase III studies. Nadeau said an estimated 7 million women in the U.S. have endometriosis and at a $4,000 per patient per year price that would suggest a total market opportunity for elagolix of about $2.8 billion, or realistically in the several hundreds of millions of dollars as women use oral contraceptives as a treatment option. Additional sales could be achieved if Neurocrine markets elagolix for uterine fibroids and enlarged prostate as well.

Nadeau said he doesn’t foresee any major shifts in the direction of the company, which is well-diversified.

“They have a good group of drugs in development, their pipeline is robust and they’re likely to continue developing that pipeline in the next few years,” he said. “The diversity of products means that over any quarter or two there’s some development milestone being reached by one of the products.”

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